Document:

EXHIBIT
        10.1

      SECURITIES
        PURCHASE AGREEMENT

      

      This
        Securities Purchase Agreement (this “Agreement”)
        is
        dated as of December 22, 2005, among New Dragon Asia Corp., a Florida
        corporation (the “Company”),
        and
        each purchaser identified on the signature pages hereto (each, including
        its
        successors and assigns, a “Purchaser”
        and
        collectively the “Purchasers”).

      

      WHEREAS,
        subject to the terms and conditions set forth in this Agreement and pursuant
        to
        Section 4(2) of the Securities Act of 1933, as amended (the “Securities
        Act”)
        and
        Rule 506 promulgated thereunder, the Company desires to issue and sell to
        each
        Purchaser, and each Purchaser, severally and not jointly, desires to purchase
        from the Company, securities of the Company as more fully described in this
        Agreement.

      

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

      

      ARTICLE
        I

      DEFINITIONS

      

      1.1 Definitions.
        In
        addition to the terms defined elsewhere in this Agreement: (a) capitalized
        terms
        that are not otherwise defined herein have the meanings given to such terms
        in
        the Certificate of Designation (as defined herein), and (b) the following
        terms
        have the meanings indicated in this Section 1.1:

      

      “Action”
        shall
        have the meaning ascribed to such term in Section 3.1(j).

      

      “Actual
        Minimum”
        means,
        as of any date, the maximum aggregate number of shares of Common Stock then
        issued or potentially issuable in the future pursuant to the Transaction
        Documents, including any Underlying Shares issuable upon exercise or conversion
        in full of all Warrants and shares of Preferred Stock, ignoring any conversion
        or exercise limits set forth therein, and assuming that any previously
        unconverted shares of Preferred Stock are held until the fifth anniversary
        of
        the Closing Date and all dividends are paid in shares of Common Stock until
        such
        fifth anniversary.

      

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

      

      “Certificate
        of Designation”
        means
        the Certificate of Designation to be filed prior to the Closing by the Company
        with the Secretary of State of Florida, in the form of Exhibit
        A
        attached
        hereto.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Closing”
        means
        the closing of the purchase and sale of the Securities pursuant to Section
        2.1.

      

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

      

      “Commission”
        means
        the Securities and Exchange Commission.

      

      “Common
        Stock”
        means
        the Class A Common Stock of the Company, par value $0.0001 per share, and
        any
        other class of securities into which such securities may hereafter have been
        reclassified or changed into.

      

      “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 exercisable or exchangeable for, or otherwise
        entitles the holder thereof to receive, Common Stock.

      

      “Company
        Counsel”
        means
        Loeb & Loeb LLP with offices located at 345 Park Avenue, New York, New York
        10154-0037.

      

      “Conversion
        Price”
        shall
        have the meaning ascribed to such term in the Certificate of
        Designation.

      

      “Disclosure
        Schedules”
        shall
        have the meaning ascribed to such term in Section 3.1.

      

      “Effective
        Date”
        means
        the date that the initial Registration Statement filed by the Company pursuant
        to the Registration Rights Agreement is first declared effective by the
        Commission.

      

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

      

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

      

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

      

      
        
          
          

        

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

      

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

      

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

      

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

      

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

       

      “Market
        Price”
        shall
        mean $1.52.

      

      “Material
        Adverse Effect”
        shall
        have the meaning assigned to such term in Section 3.1(b).

      

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

      

      “Maximum
        Rate”
        shall
        have the meaning ascribed to such term in Section 5.17.

      

      “Participation
        Maximum”
        shall
        have the meaning ascribed to such term in Section 4.13. 

      

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

      

      “Preferred
        Stock”
        means
        the up to 10,000 shares of the Company’s 7% Series B Convertible Preferred Stock
        issued hereunder having the rights, preferences and privileges set forth
        in the
        Certificate of Designation.

      
        
          
          

        

        
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      “Pre-Notice”
        shall
        have the meaning ascribed to such term in Section 4.13. 

      

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

      

      “Purchaser
        Party”
        shall
        have the meaning ascribed to such term in Section 4.11.

      

      “Registration
        Rights Agreement”
        means
        the Registration Rights Agreement, dated the date hereof, among the Company
        and
        the Purchasers, in the form of Exhibit
        B
        attached
        hereto.

      

      “Registration
        Statement”
        means a
        registration statement meeting the requirements set forth in the Registration
        Rights Agreement and covering the resale of the Underlying Shares by each
        Purchaser as provided for in the Registration Rights Agreement.

      

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

      

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

      

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

      

      “Securities”
        means
        the Preferred Stock, the Warrants, the Warrant Shares and the Underlying
        Shares.

      

      “Securities
        Act”
        means
        the Securities Act of 1933, as amended. 

      

      “Shareholder
        Approval”
        means
        such approval as may be required by the applicable rules and regulations
        of the
        American Stock Exchange (or any successor entity) from the shareholders of
        the
        Company with respect to the transactions contemplated by the Transaction
        Documents, including the issuance of all of the Underlying Shares and shares
        of
        Common Stock issuable upon exercise of the Warrants in excess of 19.99% of
        the
        issued and outstanding Common Stock on the Closing Date.

      

      “Short
        Sales”
        shall
        include all “short sales” as defined in Rule 200 of Regulation SHO under the
        Exchange Act.

      

      “Stated
        Value”
        means
        $1,000 per share of Preferred Stock.

      

      “Subscription
        Amount”
        shall
        mean, as to each Purchaser, the aggregate amount to be paid for the Preferred
        Stock purchased hereunder as specified below such Purchaser’s name on the
        signature page of this Agreement and next to the heading “Subscription Amount”,
        in United States Dollars and in immediately available funds.

      

      
        
          
          

        

        
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      “Subsequent
        Financing”
        shall
        have the meaning ascribed to such term in Section 4.13.

      

      “Subsequent
        Financing Notice”
        shall
        have the meaning ascribed to such term in Section 4.13.

      

      “Subsidiary”
        means
        any subsidiary of the Company as set forth on Schedule
        3.1(a).

      

      “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, or the Nasdaq National
        Market.

      

      “Transaction
        Documents”
        means
        this Agreement, the Certificate of Designation, the Warrants, the Registration
        Rights Agreement and any other documents or agreements executed in connection
        with the transactions contemplated hereunder.

      

      “Underlying
        Shares”
        means
        the shares of Common Stock issued and issuable upon conversion of the Preferred
        Stock, upon exercise of the Warrants and issued and issuable in lieu of the
        cash
        payment of dividends on the Preferred Stock in accordance with the terms
        of the
        Certificate of Designation.

      

      “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 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. Eastern Time to 4:02 p.m. Eastern Time); (b) 
        if
        the Common Stock is not then listed or quoted on a Trading Market and if
        prices
        for the Common Stock are then quoted on the OTC Bulletin Board, the volume
        weighted average price of the Common Stock for such date (or the nearest
        preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not
        then
        listed or quoted on the OTC Bulletin Board and if prices for the Common Stock
        are then reported in the “Pink Sheets” published by the Pink Sheets, LLC (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
        (d) in all other cases, the fair market value of a share of Common
        Stock as
        determined by an independent appraiser selected in good faith by the Purchasers
        and reasonably acceptable to the Company.

      

      
        
          
          

        

        
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      “Warrants”
        means
        collectively the Common Stock purchase warrants, in the form of Exhibit C
        delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
        hereof, which Warrants shall be exercisable immediately and have a term of
        exercise equal to six years.

      

      “Warrant
        Shares”
        means
        the shares of Common Stock issuable upon exercise of the Warrants.

      

      ARTICLE
        II

      PURCHASE
        AND SALE

      

      2.1 Closing.
        On the
        Closing Date, upon the terms and subject to the conditions set forth herein,
        concurrent with the execution and delivery of this Agreement by the parties
        hereto, the Company agrees to sell, and each Purchaser agrees to purchase
        in the
        aggregate, severally and not jointly, up to $9,500,000 of shares of Preferred
        Stock with an aggregated Stated Value equal to such Purchaser’s Subscription
        Amount and Warrants as determined by pursuant to Section 2.2(a). The aggregate
        number of shares of Preferred Stock sold hereunder shall be up to 9,500.
        Each
        Purchaser shall deliver to the Company via wire transfer or a certified check
        of
        immediately available funds equal to their Subscription Amount and the Company
        shall deliver to each Purchaser their respective shares of Preferred Stock
        and
        Warrants as determined pursuant to Section 2.2(a) and the other items set
        forth
        in Section 2.2 issuable at the Closing. Upon satisfaction of the conditions
        set
        forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of
        FW, or
        such other location as the parties shall mutually agree.

      

      
        
          2.2
            Deliveries.

        

      

      

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

      

      (i) this
        Agreement duly executed by the Company;

      

      (ii) a
        legal
        opinion of Company Counsel, in the form of Exhibit
        D
        attached
        hereto;

      

      (iii) a
        certificate evidencing a number of shares of Preferred Stock equal to such
        Purchaser’s Subscription Amount divided by the Stated Value, registered in the
        name of such Purchaser;

      

      (iv) a
        Warrant
        registered in the name of such Purchaser to purchase up to a number of shares
        of
        Common Stock equal to 50% of such Purchaser’s Subscription Amount divided by the
        Conversion Price, with an exercise price equal to $1.76,
        subject
        to adjustment therein;

      

      
        
          
          

        

        
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      (v) a
        lock-up
        agreement, in the form of Exhibit
        F
        attached hereto, duly executed by New Dragon Asia Food Ltd.; 

      

      (vi) an
        executed consent of the Company’s majority shareholder, in the form attached
        hereto representing the Shareholder Approval as Exhibit
        E,
        and a
        draft of the Information Statement on Schedule 14C to be mailed to the Company’s
        shareholders; and

      

      (vii) the
        Registration Rights Agreement duly executed by the Company.

      

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

      

      (i) this
        Agreement duly executed by such Purchaser;

      

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

      

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

      

      
        
          2.3
            Closing
            Conditions.

        

      

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      
        
          
          

        

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

      

      (v) from
        the
        date hereof to the Closing Date, trading in the Common Stock shall not have
        been
        suspended by the Commission (except for any suspension of trading of limited
        duration agreed to by the Company, which suspension shall be terminated prior
        to
        the Closing), and, at any time prior to the Closing Date, trading in securities
        generally as reported by Bloomberg Financial Markets shall not have been
        suspended or limited, or minimum prices shall not have been established on
        securities whose trades are reported by such service, or on any Trading Market,
        nor shall a banking moratorium have been declared either by the United States
        or
        New York State authorities nor shall there have occurred any material outbreak
        or escalation of hostilities or other national or international calamity
        of such
        magnitude in its effect on, or any material adverse change in, any financial
        market which, in each case, in the reasonable judgment of each Purchaser,
        makes
        it impracticable or inadvisable to purchase the Preferred Stock at the
        Closing.

      

      ARTICLE
        III

      REPRESENTATIONS
        AND WARRANTIES

      

      3.1Representations
        and Warranties of the Company.
        Except
        as set forth under the corresponding section of the disclosure schedules
        delivered to the Purchasers concurrently herewith (the “Disclosure
        Schedules”)
        which
        Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
        the
        representations and warranties set forth below to each Purchaser.

      

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

      

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

      

      
        
          
          

        

        
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      (c) Authorization;
        Enforcement.
        The
        Company has the requisite corporate power and authority to enter into and
        to
        consummate the transactions contemplated by each of the Transaction Documents
        and otherwise to carry out its obligations hereunder and thereunder. The
        execution and delivery of each of the Transaction Documents by the Company
        and
        the consummation by it of the transactions contemplated thereby have been
        duly
        authorized by all necessary action on the part of the Company and no further
        action is required by the Company, its board of directors or its shareholders
        in
        connection therewith other than in connection with the Required Approvals.
        Each
        Transaction Document has been (or upon delivery will have been) duly executed
        by
        the Company and, when delivered in accordance with the terms hereof and thereof,
        will constitute the valid and binding obligation of the Company enforceable
        against the Company in accordance with its terms except (i) as limited by
        applicable bankruptcy, insolvency, reorganization, moratorium and other laws
        of
        general application affecting enforcement of creditors’ rights generally and
        (ii) as limited by laws relating to the availability of specific performance,
        injunctive relief or other equitable remedies.

      

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

      

      
        
          
          

        

        
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      (e) Filings,
        Consents and Approvals.
        The
        Company is not required to obtain any consent, waiver, authorization or order
        of, give any notice to, or make any filing or registration with, any court
        or
        other federal, state, local or other governmental authority or other Person
        in
        connection with the execution, delivery and performance by the Company of
        the
        Transaction Documents, other than (i) filings required pursuant to Section
        4.6,
        (ii) the filing with the Commission of the Registration Statement, (iii)
        the
        notice and/or application(s) to each applicable Trading Market for the issuance
        and sale of the Preferred Stock and Warrants and the listing of the Underlying
        Shares for trading thereon in the time and manner required thereby, (iv)
        the
        filing of a Form D with the Commission and such filings as are required to
        be
        made under applicable state securities laws and (v) Shareholder Approval
        (collectively, the “Required
        Approvals”).

      

      (f) Issuance
        of the Securities.
        The
        Securities are duly authorized and, when issued and paid for in accordance
        with
        the applicable Transaction Documents, will be duly and validly issued, fully
        paid and nonassessable, free and clear of all Liens imposed by the Company
        other
        than restrictions on transfer provided for in the Transaction Documents.
        The
        Underlying Shares, when issued in accordance with the terms of the Transaction
        Documents, will be validly issued, fully paid and nonassessable, free and
        clear
        of all Liens imposed by the Company. The Company has reserved from its duly
        authorized capital stock a number of shares of Common Stock for issuance
        of the
        Underlying Shares at least equal to the Actual Minimum on the date hereof.
        

      

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

      

      
        
          
          

        

        
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      (h) SEC
        Reports; Financial Statements.
        The
        Company has filed all reports, schedules, forms, statements and other documents
        required to be filed by it under the Securities Act and the Exchange Act,
        including pursuant to Section 13(a) or 15(d) thereof, for the two years
        preceding the date hereof (or such shorter period as the Company was required
        by
        law to file such material) (the foregoing materials, including the exhibits
        thereto and documents incorporated by reference therein, being collectively
        referred to herein as the “SEC
        Reports”)
        on a
        timely basis or has received a valid extension of such time of filing and
        has
        filed any such SEC Reports prior to the expiration of any such extension.
        As of
        their respective dates, the SEC Reports complied in all material respects
        with
        the requirements of the Securities Act and the Exchange Act and the rules
        and
        regulations of the Commission promulgated thereunder, and none of the SEC
        Reports, when filed or amended, contained any untrue statement of a material
        fact or omitted to state a material fact required to be stated therein or
        necessary in order to make the statements therein, in the light of the
        circumstances under which they were made, not misleading. The financial
        statements of the Company included in the SEC Reports comply in all material
        respects with applicable accounting requirements and the rules and regulations
        of the Commission with respect thereto as in effect at the time of filing.
        Such
        financial statements have been prepared in accordance with United States
        generally accepted accounting principles applied on a consistent basis during
        the periods involved (“GAAP”),
        except as may be otherwise specified in such financial statements or the
        notes
        thereto and except that unaudited financial statements may not contain all
        footnotes required by GAAP, and fairly present in all material respects the
        financial position of the Company and its consolidated subsidiaries as of
        and
        for the dates thereof and the results of operations and cash flows for the
        periods then ended, subject, in the case of unaudited statements, to normal,
        immaterial, year-end audit adjustments. 

      

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

      

      
        
          
          

        

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

      

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

      

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

      

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

      

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

      

      
        
          
          

        

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

      

      (p) Insurance.
        The
        Company and the Subsidiaries are insured by insurers of recognized financial
        responsibility against such losses and risks and in such amounts as are prudent
        and customary in the businesses in which the Company and the Subsidiaries
        are
        engaged, including, but not limited to, directors and officers insurance
        coverage at least equal to the aggregate Subscription Amount. To the best
        knowledge of the Company, such insurance contracts and policies are accurate
        and
        complete. Neither the Company nor any Subsidiary has any reason to believe
        that
        it will not be able to renew its existing insurance coverage as and when
        such
        coverage expires or to obtain similar coverage from similar insurers as may
        be
        necessary to continue its business without a significant increase in
        cost.

      

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

      

      
        
          
          

        

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

      

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

      

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

      

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

      

      
        
          
          

        

        
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      (v) Registration
        Rights.
        Other
        than each of the Purchasers, no Person has any right to cause the Company
        to
        effect the registration under the Securities Act of any securities of the
        Company.

      

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

      

      (x)Application
        of Takeover Protections.
        The
        Company and its Board of Directors have taken all necessary action, if any,
        in
        order to render inapplicable any control share acquisition, business
        combination, poison pill (including any distribution under a rights agreement)
        or other similar anti-takeover provision under the Company’s Articles of
        Incorporation (or similar charter documents) or the laws of its state of
        incorporation that is or could become applicable to the Purchasers as a result
        of the Purchasers and the Company fulfilling their obligations or exercising
        their rights under the Transaction Documents, including without limitation
        as a
        result of the Company’s issuance of the Securities and the Purchasers’ ownership
        of the Securities.

      

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

      

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

      

      
        
          
          

        

        
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      (aa)Solvency.
        Based
        on the financial condition of the Company as of the Closing Date after giving
        effect to the receipt by the Company of the proceeds from the sale of the
        Securities hereunder, (i) the Company’s fair saleable value of its assets
        exceeds the amount that will be required to be paid on or in respect of the
        Company’s existing debts and other liabilities (including known contingent
        liabilities) as they mature; (ii) the Company’s assets do not constitute
        unreasonably small capital to carry on its business for the current fiscal
        year
        as now conducted and as proposed to be conducted including its capital needs
        taking into account the particular capital requirements of the business
        conducted by the Company, and projected capital requirements and capital
        availability thereof; and (iii) the current cash flow of the Company, together
        with the proceeds the Company would receive, were it to liquidate all of
        its
        assets, after taking into account all anticipated uses of the cash, would
        be
        sufficient to pay all amounts on or in respect of its debt when such amounts
        are
        required to be paid. The Company does not intend to incur debts beyond its
        ability to pay such debts as they mature (taking into account the timing
        and
        amounts of cash to be payable on or in respect of its debt). The Company
        has no
        knowledge of any facts or circumstances which lead it to believe that it
        will
        file for reorganization or liquidation under the bankruptcy or reorganization
        laws of any jurisdiction within one year from the Closing Date. The SEC Reports
        set forth as of the dates thereof all outstanding secured and unsecured
        Indebtedness of the Company or any Subsidiary, or for which the Company or
        any
        Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
        shall
        mean (a) any liabilities for borrowed money or amounts owed in excess of
        $50,000
        (other than trade accounts payable incurred in the ordinary course of business),
        (b) all guaranties, endorsements and other contingent obligations in respect
        of
        Indebtedness of others, whether or not the same are or should be reflected
        in
        the Company’s balance sheet (or the notes thereto), except guaranties by
        endorsement of negotiable instruments for deposit or collection or similar
        transactions in the ordinary course of business; and (c) the present value
        of
        any lease payments
        in excess of $50,000 due under leases required to be capitalized in accordance
        with GAAP. Neither
        the Company nor any Subsidiary is in default with respect to any
        Indebtedness.

      

      (bb)Form
        S-3 Eligibility.The
        Company is eligible to register the resale of the Underlying Shares for resale
        by the Purchaser on Form S-3 promulgated under the Securities Act.

      

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

      

      
        
          
          

        

        
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      (dd)No
        General Solicitation.
        Neither
        the Company nor any person acting on behalf of the Company has offered or
        sold
        any of the Securities by any form of general solicitation or general
        advertising. The Company has offered the Securities for sale only to the
        Purchasers and certain other “accredited investors” within the meaning of Rule
        501 under the Securities Act.

      

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

      

      (ff)Accountants.
        The
        Company’s accountants are set forth on Schedule
        3.1(ff)
        of the
        Disclosure Schedule. To the best knowledge of the Company, such accountants,
        who
        the Company expects will express their opinion with respect to the financial
        statements to be included in the Company’s Annual Report on Form 10-K for the
        year ending December 25, 2005 are a registered public accounting firm as
        required by the Securities Act.

      

      (gg)Seniority.
        As of
        the Closing Date, no indebtedness or other equity of the Company is senior
        to
        the Preferred Stock in right of payment, whether with respect to interest
        or
        upon liquidation or dissolution, or otherwise, other than indebtedness secured
        by purchase money security interests (which is senior only as to underlying
        assets covered thereby) and capital lease obligations (which is senior only
        as
        to the property covered thereby).

      

      (hh)No
        Disagreements with Accountants and Lawyers.
        There
        are no disagreements of any kind presently existing, or reasonably anticipated
        by the Company to arise, between the accountants and lawyers formerly or
        presently employed by the Company and the Company is current with respect
        to any
        fees owed to its accountants and lawyers.

      

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

      

      
        
          
          

        

        
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      (jj)Acknowledgement
        Regarding Purchasers’ Trading Activity.
        Anything in this Agreement or elsewhere herein to the contrary notwithstanding
        (except for Section 4.16 hereof), it is understood and agreed by the Company
        (i)
        that none of the Purchasers have been asked to agree, nor has any Purchaser
        agreed, to desist from purchasing or selling, long and/or short, securities
        of
        the Company, or “derivative” securities based on securities issued by the
        Company or to hold the Securities for any specified term; (ii) that past
        or
        future open market or other transactions by any Purchaser, including Short
        Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
        placement transactions, may negatively impact the market price of the Company’s
        publicly-traded securities; (iii) that any Purchaser, and counter parties
        in
“derivative” transactions to which any such Purchaser is a party, directly or
        indirectly, presently may have a “short” position in the Common Stock, and (iv)
        that each Purchaser shall not be deemed to have any affiliation with or control
        over any arm’s length counter-party in any “derivative” transaction.
The
        Company further understands and acknowledges that (a) one or more Purchasers
        may
        engage in hedging activities at various times during the period that the
        Securities are outstanding, including, without limitation, during the periods
        that the value of the Underlying Shares deliverable with respect to Securities
        are being determined and (b) such hedging activities (if any) could reduce
        the
        value of the existing shareholders’ equity interests in the Company at and after
        the time that the hedging activities are being conducted.  The Company
        acknowledges that such aforementioned hedging activities do not constitute
        a
        breach of any of the Transaction Documents.

      

      (kk)Manipulation
        of Price. 
        The Company has not, and to its knowledge no one acting on its behalf has,
        (i)
        taken, directly or indirectly, any action designed to cause or to result
        in the
        stabilization or manipulation of the price of any security of the Company
        to
        facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
        purchased, or, paid any compensation for soliciting purchases of, any of
        the
        Securities (other than for the placement agent’s placement of the Securities),
        or (iii) paid or agreed to pay to any person any compensation for soliciting
        another to purchase any other securities of the Company.

      

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

      

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

      

      
        
          
          

        

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

      

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

      

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

      

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

       

      
        
          
          

        

        
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      (f) Short
        Sales and Confidentiality Prior To The Date Hereof.
        Other
        than the transaction contemplated hereunder, such Purchaser has not directly
        or
        indirectly, nor has any Person acting on behalf of or pursuant to any
        understanding with such Purchaser, executed any disposition, including Short
        Sales (but not including the location and/or reservation of borrowable shares
        of
        Common Stock), in the securities of the Company during the period
        commencing from
        the time
        that such Purchaser first received a term sheet from the Company or any other
        Person setting forth the material terms of the transactions contemplated
        hereunder until the date hereof (“Discussion
        Time”).
        Notwithstanding the foregoing, in the case of a Purchaser that is a
        multi-managed investment vehicle whereby separate portfolio managers manage
        separate portions of such Purchaser's assets and the portfolio managers have
        no
        direct knowledge of the investment decisions made by the portfolio managers
        managing other portions of such Purchaser's assets, the representation set
        forth
        above shall only apply with respect to the portion of assets managed by the
        portfolio manager that made the investment decision to purchase the Securities
        covered by this Agreement. Other than to other Persons party to this Agreement,
        such Purchaser has maintained the confidentiality of all disclosures made
        to it
        in connection with this transaction (including the existence and terms of
        this
        transaction).

      

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

      

      ARTICLE
        IV

      OTHER
        AGREEMENTS OF THE PARTIES

      

      4.1 Transfer
        Restrictions.

      

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

      

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

      

      
        
          
          

        

        
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      [NEITHER]
        THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
        [EXERCISABLE] [CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE SECURITIES AND
        EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
        UPON
        AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
        (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
        TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
        TO
        AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
        REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
        APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
        TO
        THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
        ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
        EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
        MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

      

      The
        Company acknowledges and agrees that a Purchaser may from time to time pledge
        pursuant to a bona fide margin agreement with a registered broker-dealer
        or
        grant a security interest in some or all of the Securities to a financial
        institution that is an “accredited investor” as defined in Rule 501(a) under the
        Securities Act and who agrees to be bound by the provisions of this Agreement
        and the Registration Rights Agreement and, if required under the terms of
        such
        arrangement, such Purchaser may transfer pledged or secured Securities to
        the
        pledgees or secured parties. Such a pledge or transfer would not be subject
        to
        approval of the Company and no legal opinion of legal counsel of the pledgee,
        secured party or pledgor shall be required in connection therewith. Further,
        no
        notice shall be required of such pledge. At the appropriate Purchaser’s expense,
        the Company will execute and deliver such reasonable documentation as a pledgee
        or secured party of Securities may reasonably request in connection with
        a
        pledge or transfer of the Securities, including, if the Securities are subject
        to registration pursuant to the Registration Rights Agreement, the preparation
        and filing of any required prospectus supplement under Rule 424(b)(3) under
        the
        Securities Act or other applicable provision of the Securities Act to
        appropriately amend the list of Selling Shareholders thereunder.

      

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

      

      
        
          
          

        

        
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      (d) In
        addition to such Purchaser’s other available remedies, the Company shall pay to
        a Purchaser, in cash, as partial liquidated damages and not as a penalty,
        for
        each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on
        the
        date such Securities are submitted to the Company’s transfer agent) delivered
        for removal of the restrictive legend and subject to Section 4.1(c), $10
        per
        Trading Day (increasing to $20 per Trading Day 5 Trading Days after such
        damages
        have begun to accrue) for each Trading Day after the Legend Removal Date
        until
        such certificate is delivered without a legend. Nothing herein shall limit
        such
        Purchaser’s right to pursue actual damages for the Company’s failure to deliver
        certificates representing any Securities as required by the Transaction
        Documents, and such Purchaser shall have the right to pursue all remedies
        available to it at law or in equity including, without limitation, a decree
        of
        specific performance and/or injunctive relief.

      

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

      

      (f) Until
        the
        one year anniversary of the Effective Date, the Company shall not undertake
        a
        reverse or forward stock split or reclassification of the Common Stock without
        the prior written consent of the Purchasers holding a majority in interest
        of
        the shares of Preferred Stock.

      

      4.2
        Acknowledgment
        of Dilution.
        The
        Company acknowledges that the issuance of the Securities may result in dilution
        of the outstanding shares of Common Stock, which dilution may be substantial
        under certain market conditions. The Company further acknowledges that its
        obligations under the Transaction Documents, including without limitation
        its
        obligation to issue the Underlying Shares pursuant to the Transaction Documents,
        are unconditional and absolute and not subject to any right of set off,
        counterclaim, delay or reduction, regardless of the effect of any such dilution
        or any claim the Company may have against any Purchaser and regardless of
        the
        dilutive effect that such issuance may have on the ownership of the other
        shareholders of the Company.

      

      
        
          
          

        

        
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      4.3
        Furnishing
        of Information.
        As long
        as any Purchaser owns Securities, the Company covenants to timely file (or
        obtain extensions in respect thereof and file within the applicable grace
        period) all reports required to be filed by the Company after the date hereof
        pursuant to the Exchange Act. As long as any Purchaser owns Securities, if
        the
        Company is not required to file reports pursuant to the Exchange Act, it
        will
        prepare and furnish to the Purchasers and make publicly available in accordance
        with Rule 144(c) such information as is required for the Purchasers to sell
        the
        Securities under Rule 144. The Company further covenants that it will take
        such
        further action as any holder of Securities may reasonably request, all to
        the
        extent required from time to time to enable such Person to sell such Securities
        without registration under the Securities Act within the limitation of the
        exemptions provided by Rule 144.

      

      4.4
        Integration.
        The
        Company shall not sell, offer for sale or solicit offers to buy or otherwise
        negotiate in respect of any security (as defined in Section 2 of the Securities
        Act) that would be integrated with the offer or sale of the Securities in
        a
        manner that would require the registration under the Securities Act of the
        sale
        of the Securities to the Purchasers or that would be integrated with the
        offer
        or sale of the Securities for purposes of the rules and regulations of any
        Trading Market.

      

      4.5
        Conversion
        and Exercise Procedures.
        The
        form of Notice of Exercise included in the Warrants and the form of Notice
        of
        Conversion included in the Certificate of Designation set forth the totality
        of
        the procedures required of the Purchasers in order to exercise the Warrants
        or
        convert the Preferred Stock. No additional legal opinion or other information
        or
        instructions shall be required of the Purchasers to exercise their Warrants
        or
        convert their Preferred Stock. The Company shall honor exercises of the Warrants
        and conversions of the Preferred Stock and shall deliver Underlying Shares
        in
        accordance with the terms, conditions and time periods set forth in the
        Transaction Documents. Any exercise of Warrants and conversion of Preferred
        Stock resulting in an issuance of greater than 19.999% of the outstanding
        shares
        of the Company’s Common Stock on the Trading Day immediately preceding the
        Closing Date (calculated as 9,456,118 as of the Closing Date) at a price
        below
        the Market Price, will not be permitted until the effectiveness of the
        Shareholder Approval.

      

      4.6
        Securities
        Laws Disclosure;
        Publicity.
        The
        Company shall, (A) by 8:30 a.m. Eastern time on the Trading Day following
        the
        date hereof, issue a press release, reasonably acceptable to each Purchaser
        disclosing the material terms of the transactions contemplated hereby, and
        (B)
        no later than four (4) days following the date hereof, issue a Current Report
        on
        Form 8-K, reasonably acceptable to each Purchaser disclosing the material
        terms
        of the transactions contemplated hereby, and shall attach the Transaction
        Documents thereto. The Company and each Purchaser shall consult with each
        other
        in issuing any other press releases with respect to the transactions
        contemplated hereby, and neither the Company nor any Purchaser shall issue
        any
        such press release or otherwise make any such public statement without the
        prior
        consent of the Company, with respect to any press release of any Purchaser,
        or
        without the prior consent of each Purchaser, with respect to any press release
        of the Company, which consent shall not unreasonably be withheld, except
        if such
        disclosure is required by law, in which case the disclosing party shall promptly
        provide the other party with prior notice of such public statement or
        communication. Notwithstanding the foregoing, the Company shall not publicly
        disclose the name of any Purchaser, or include the name of any Purchaser
        in any
        filing with the Commission or any regulatory agency or Trading Market, without
        the prior written consent of such Purchaser, except (i) as required by federal
        securities law in connection with the registration statement contemplated
        by the
        Registration Rights Agreement and (ii) to the extent such disclosure is required
        by law or Trading Market regulations, in which case the Company shall provide
        the Purchasers with prior notice of such disclosure permitted under subclause
        (i) or (ii).

      

      
        
          
          

        

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

      

      4.8
         Non-Public
        Information.
        The
        Company covenants and agrees that neither it nor any other Person acting
        on its
        behalf will provide any Purchaser or its agents or counsel with any information
        that the Company believes constitutes material non-public information, unless
        prior thereto such Purchaser shall have executed a written agreement regarding
        the confidentiality and use of such information. The Company understands
        and
        confirms that each Purchaser shall be relying on the foregoing representations
        in effecting transactions in securities of the Company.

      

      4.9 Use
        of
        Proceeds.
        Except
        as set forth on Schedule
        4.9
        attached
        hereto, the Company shall use the net proceeds from the sale of the Securities
        hereunder for working capital purposes and not for the satisfaction of any
        portion of the Company’s debt (other than payment of trade payables in the
        ordinary course of the Company’s business and prior practices), to redeem Common
        Stock or Common Stock Equivalents or to settle any outstanding litigation.
        

      

      4.10 Reimbursement.
        If any
        Purchaser becomes involved in any capacity in any Proceeding by or against
        any
        Person who is a shareholder of the Company (except as a result of sales,
        pledges, margin sales and similar transactions by such Purchaser to or with
        any
        current shareholder), solely as a result of such Purchaser’s acquisition of the
        Securities under this Agreement, the Company will reimburse such Purchaser
        for
        its reasonable legal and other expenses (including the cost of any investigation
        preparation and travel in connection therewith) incurred in connection
        therewith, as such expenses are incurred. The reimbursement obligations of
        the
        Company under this paragraph shall be in addition to any liability which
        the
        Company may otherwise have, shall extend upon the same terms and conditions
        to
        any Affiliates of the Purchasers who are actually named in such action,
        proceeding or investigation, and partners, directors, agents, employees and
        controlling persons (if any), as the case may be, of the Purchasers and any
        such
        Affiliate, and shall be binding upon and inure to the benefit of any successors,
        assigns, heirs and personal representatives of the Company, the Purchasers
        and
        any such Affiliate and any such Person. Such reimbursement obligations of
        the
        Company do not include any action, proceeding or investigation arising from
        statements provided by or on behalf of the Purchasers for use in the
        Registration Statement. The Company also agrees that neither the Purchasers
        nor
        any such Affiliates, partners, directors, agents, employees or controlling
        persons shall have any liability to the Company or any Person asserting claims
        on behalf of or in right of the Company solely as a result of acquiring the
        Securities under this Agreement.

      

      
        
          
          

        

        
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      4.11 Indemnification
        of Purchasers.
        Subject
        to the provisions of this Section 4.11, the Company will indemnify and hold
        the
        Purchasers and their directors, officers, shareholders, members, partners,
        employees and agents (each, a “Purchaser
        Party”)
        harmless from any and all losses, liabilities, obligations, claims,
        contingencies, damages, costs and expenses, including all judgments, amounts
        paid in settlements, court costs and reasonable attorneys’ fees and costs of
        investigation that any such Purchaser Party may suffer or incur as a result
        of
        or relating to (a) any breach of any of the representations, warranties,
        covenants or agreements made by the Company in this Agreement or in the other
        Transaction Documents or (b) any action instituted against a Purchaser, or
        any
        of them or their respective Affiliates, by any shareholder of the Company
        who is
        not an Affiliate of such Purchaser, with respect to any of the transactions
        contemplated by the Transaction Documents (unless such action is based upon
        a
        breach of such Purchaser’s representations, warranties or covenants under the
        Transaction Documents or any agreements or understandings such Purchaser
        may
        have with any such shareholder or any violations by the Purchaser of state
        or
        federal securities laws or any conduct by such Purchaser which constitutes
        fraud, gross negligence, willful misconduct or malfeasance). If any action
        shall
        be brought against any Purchaser Party in respect of which indemnity may
        be
        sought pursuant to this Agreement, such Purchaser Party shall promptly notify
        the Company in writing, and the Company shall have the right to assume the
        defense thereof with counsel of its own choosing. Any Purchaser Party shall
        have
        the right to employ separate counsel in any such action and participate in
        the
        defense thereof, but the fees and expenses of such counsel shall be at the
        expense of such Purchaser Party except to the extent that (i) the employment
        thereof has been specifically authorized by the Company in writing, (ii)
        the
        Company has failed after a reasonable period of time to assume such defense
        and
        to employ counsel or (iii) in such action there is, in the reasonable opinion
        of
        such separate counsel, a material conflict on any material issue between
        the
        position of the Company and the position of such Purchaser Party. The Company
        will not be liable to any Purchaser Party under this Agreement (i) for any
        settlement by a Purchaser Party effected without the Company’s prior written
        consent, which shall not be unreasonably withheld or delayed; or (ii) to
        the
        extent, but only to the extent that a loss, claim, damage or liability is
        attributable to any Purchaser Party’s breach of any of the representations,
        warranties, covenants or agreements made by the Purchasers in this Agreement
        or
        in the other Transaction Documents.

      

      4.12 Reservation
        and Listing of Securities.

      

      (a) The
        Company shall maintain a reserve from its duly authorized shares of Common
        Stock
        for issuance pursuant to the Transaction Documents in such amount as may
        be
        required to fulfill its obligations in full under the Transaction Documents.
        

      

      
        
          
          

        

        
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      (b) If,
        on
        any date, the number of authorized but unissued (and otherwise unreserved)
        shares of Common Stock is less than 130% of (i) the Actual Minimum
        on such
        date, minus (ii) the number of shares of Common Stock previously issued pursuant
        to the Transaction Documents, then the Board of Directors of the Company
        shall
        use commercially reasonable efforts to amend the Company’s certificate or
        articles of incorporation to increase the number of authorized but unissued
        shares of Common Stock to at least the Actual Minimum at such time (minus
        the
        number of shares of Common Stock previously issued pursuant to the Transaction
        Documents), as soon as possible and in any event not later than the 75th
        day
        after such date; provided that the Company will not be required at any time
        to
        authorize a number of shares of Common Stock greater than the maximum remaining
        number of shares of Common Stock that could possibly be issued after such
        time
        pursuant to the Transaction Documents.

      

      (c) The
        Company shall, if applicable: (i) in the time and manner required by the
        Trading
        Market, prepare and file with such Trading Market an additional shares listing
        application covering a number of shares of Common Stock at least equal to
        the
        Actual Minimum on the date of such application, (ii) take all steps necessary
        to
        cause such shares of Common Stock to be approved for listing on the Trading
        Market as soon as possible thereafter, (iii) provide to the Purchasers evidence
        of such listing, and (iv) maintain the listing of such Common Stock on any
        date
        at least equal to the Actual Minimum on such date on such Trading Market
        or
        another Trading Market. Prior to the Closing Date, the Company shall obtain
        the
        Shareholder Approval, and the Company shall, within ten (10) calendar days
        after
        the Closing Date, file a Preliminary Information Statement on Schedule 14C
        with
        the Commission, and, if such Preliminary Information Statement is not reviewed
        by the Commission, 10 calendar days thereafter, shall mail a Definitive
        Information Statement on Schedule 14C to the non-consenting shareholders
        in
        connection therewith (if such Preliminary Information Statement is reviewed
        by
        the Commission, the Company shall use their best efforts to respond to any
        comments the Commission may have to such Preliminary Information Statement
        and
        shall mail a Definitive Information
        Statement to the non-consenting shareholders as soon as practicable following
        the date such Preliminary Information Statement is cleared by the
        Commission).

      

      4.13 Participation
        in Future Financing.
        

      

      (a) From
        the
        date hereof until the date that the Preferred Stock is no longer outstanding,
        upon any financing by the Company or any of its Subsidiaries of Common Stock
        or
        Common Stock Equivalents (a “Subsequent
        Financing”),
        each
        Purchaser shall have the right to participate in up to an amount of the
        Subsequent Financing equal to the lesser of (i) the amount of the Subsequent
        Financing and (ii) the aggregate Stated Value of the Preferred Stock then
        outstanding and held by the Purchasers (the “Participation
        Maximum”).

       

      (b) At
        least
        five (5) Trading Days prior to the closing of the Subsequent Financing, the
        Company shall deliver to each Purchaser a written notice of its intention
        to
        effect a Subsequent Financing (“Pre-Notice”),
        which
        Pre-Notice shall ask such Purchaser if it wants to review the details of
        such
        financing (such additional notice, a “Subsequent
        Financing Notice”).
        Upon
        the request of a Purchaser, and only upon a request by such Purchaser, for
        a
        Subsequent Financing Notice, the Company shall promptly, but no later than
        1
        Trading Day after such request, deliver a Subsequent Financing Notice to
        such
        Purchaser. The Subsequent Financing Notice shall describe in reasonable detail
        the proposed terms of such Subsequent Financing, the amount of proceeds intended
        to be raised thereunder, the Person with whom such Subsequent Financing is
        proposed to be effected, and attached to which shall be a term sheet or similar
        document relating thereto. 

      

      
        
          
          

        

        
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      (c) Any
        Purchaser desiring to participate in such Subsequent Financing must provide
        written notice to the Company by not later than 5:30 p.m. (New York City
        time)
        on the 5th
        Trading
        Day after all of the Purchasers have received the Pre-Notice that the Purchaser
        is willing to participate in the Subsequent Financing, the amount of the
        Purchaser’s participation, and that the Purchaser has such funds ready, willing,
        and available for investment on the terms set forth in the Subsequent Financing
        Notice. If the Company receives no notice from a Purchaser as of such
        5th
        Trading
        Day, such Purchaser shall be deemed to have notified the Company that it
        does
        not elect to participate. 

      

      (d) If
        by
        5:30 p.m. (New York City time) on the 5th
        Trading
        Day after all of the Purchasers have received the Pre-Notice, notifications
        by
        the Purchasers of their willingness to participate in the Subsequent Financing
        (or to cause their designees to participate) is, in the aggregate, less than
        the
        total amount of the Subsequent Financing, then the Company may effect the
        remaining portion of such Subsequent Financing on the terms and to the Persons
        set forth in the Subsequent Financing Notice. 

      

      (e) If
        by
        5:30 p.m. (New York City time) on the 5th
        Trading
        Day after all of the Purchasers have received the Pre-Notice, the Company
        receives responses to a Subsequent Financing Notice from Purchasers seeking
        to
        purchase more than the aggregate amount of the Participation Maximum, each
        such
        Purchaser shall have the right to purchase the greater of (a) their Pro Rata
        Portion (as defined below) of the Participation Maximum and (b) the difference
        between the Participation Maximum and the aggregate amount of participation
        by
        all other Purchasers. “Pro
        Rata Portion”
        is the
        ratio of (x) the Subscription Amount of Securities purchased on the Closing
        Date
        by a Purchaser participating under this Section 4.13 and (y) the sum of the
        aggregate Subscription Amounts of Securities purchased on the Closing Date
        by
        all Purchasers participating under this Section 4.13.

      

      (f) The
        Company must provide the Purchasers with a second Subsequent Financing Notice,
        and the Purchasers will again have the right of participation set forth above
        in
        this Section 4.13, if the Subsequent Financing subject to the initial Subsequent
        Financing Notice is not consummated for any reason on the terms set forth
        in
        such Subsequent Financing Notice within 60 Trading Days after the date of
        the
        initial Subsequent Financing Notice. 

      

      (g) Notwithstanding
        the foregoing, this Section 4.13 shall not apply in respect of an Exempt
        Issuance and an underwritten public offering of the Company’s
        securities. 

      

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      4.14 Subsequent
        Equity Sales.
        

      

      (a) From
        the
        date hereof until 90 days after the Effective Date, neither the Company nor
        any
        Subsidiary shall issue shares of Common Stock or Common Stock Equivalents;
        provided, however, the 90 day period set forth in this Section 4.14 shall
        be
        extended for the number of Trading Days during such period in which (i) trading
        in the Common Stock is suspended by any Trading Market, or (ii) following
        the
        Effective Date, the Registration Statement is not effective or the prospectus
        included in the Registration Statement may not be used by the Purchasers
        for the
        resale of the Underlying Shares. 

      

      (b) From
        the
        date hereof until such time as no Purchaser holds any of the Securities,
        the
        Company shall be prohibited from effecting or entering into an agreement
        to
        effect any Subsequent Financing involving a “Variable Rate Transaction”. The
        term “Variable
        Rate Transaction”
        shall
        mean a transaction in which the Company issues or sells (i) any debt or equity
        securities that are convertible into, exchangeable or exercisable for, or
        include the right to receive additional shares of Common Stock either (A)
        at a
        conversion, exercise or exchange rate or other price that is based upon and/or
        varies with the trading prices of or quotations for the shares of Common
        Stock
        at any time after the initial issuance of such debt or equity securities,
        or (B)
        with a conversion, exercise or exchange price that is subject to being reset
        at
        some future date after the initial issuance of such debt or equity security
        or
        upon the occurrence of specified or contingent events directly or indirectly
        related to the business of the Company or the market for the Common Stock
        or
        (ii) enters into any agreement, including, but not limited to, an equity
        line of
        credit, whereby the Company may sell securities at a future determined price.
        

      

      (c) Unless
        Shareholder Approval has been obtained and deemed effective, the Company
        shall
        not make any issuance, unless already declared, of Common Stock or Common
        Stock
        Equivalents for an effective price per share less than $1.52, subject to
        adjustment for reverse and forward stock splits, stock dividends, stock
        combinations and other similar transactions of the Common Stock that occur
        after
        the date of this Agreement. Any Purchaser shall be entitled to obtain injunctive
        relief against the Company to preclude any such issuance, which remedy shall
        be
        in addition to any right to collect damages.

      

      (d) Notwithstanding
        the foregoing, this Section 4.14 shall not apply in respect of an Exempt
        Issuance, except that no Variable Rate Transaction shall be an Exempt
        Issuance.

      

      4.15 Equal
        Treatment of Purchasers.
        No
        consideration shall be offered or paid to any person to amend or consent
        to a
        waiver or modification of any provision of any of the Transaction Documents
        unless the same consideration is also offered to all of the parties to the
        Transaction Documents. For clarification purposes, this provision constitutes
        a
        separate right granted to each Purchaser by the Company and negotiated
        separately by each Purchaser, and is intended for the Company to treat the
        Purchasers as a class and shall not in any way be construed as the Purchasers
        acting in concert or as a group with respect to the purchase, disposition
        or
        voting of Securities or otherwise.

      

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      4.16 Short
        Sales and Confidentiality After The Date Hereof.
        Each
        Purchaser severally and not jointly with the other Purchasers covenants that
        neither it nor any affiliates acting on its behalf or pursuant to any
        understanding with it will execute any Short Sales during the period after
        the
        Discussion Time and ending at the time that the transactions contemplated
        by
        this Agreement are first publicly announced as described in Section
        4.6. Each
        Purchaser, severally and not jointly with the other Purchasers, covenants
        that
        until such time as the transactions contemplated by this Agreement are publicly
        disclosed by the Company as described in Section 4.6, such Purchaser will
        maintain, the confidentiality of all disclosures made to it in connection
        with
        this transaction (including the existence and terms of this transaction).
        Each
        Purchaser understands and acknowledges, severally and not jointly with any
        other
        Purchaser, that the Commission currently takes the position that coverage
        of
        short sales of shares of the Common Stock “against the box” prior to the
        Effective Date of the Registration Statement with the Securities is a violation
        of Section 5 of the Securities Act, as set forth in Item 65, Section 5 under
        Section A, of the Manual of Publicly Available Telephone Interpretations,
        dated
        July 1997, compiled by the Office of Chief Counsel, Division of Corporation
        Finance. Notwithstanding
        the foregoing, no Purchaser makes any representation, warranty or covenant
        hereby that it will not engage in Short Sales in the securities of the Company
        after the time that the transactions contemplated by this Agreement are first
        publicly announced as described in Section 4.6. Notwithstanding
        the foregoing, in the case of a Purchaser that is a multi-managed investment
        vehicle whereby separate portfolio managers manage separate portions of such
        Purchaser's assets and the portfolio managers have no direct knowledge of
        the
        investment decisions made by the portfolio managers managing other portions
        of
        such Purchaser's assets, the covenant set forth above shall only apply with
        respect to the portion of assets managed by the portfolio manager that made
        the
        investment decision to purchase the Securities covered by this
        Agreement.

      

      ARTICLE
        V

      MISCELLANEOUS

      

      5.1
        Termination. 
        This Agreement may be terminated by any Purchaser, as to such Purchaser’s
        obligations hereunder only and without any effect whatsoever on the obligations
        between the Company and the other Purchasers, by written notice to the other
        parties, if the Closing has not been consummated on or before December 31,
        2005;
provided,
        however,
        that no
        such termination will affect the right of any party to sue for any breach
        by the
        other party (or parties).

      

      5.2
        Fees
        and Expenses.
        Except
        as expressly set forth in the Transaction Documents to the contrary, each
        party
        shall pay the fees and expenses of its advisers, counsel, accountants and
        other
        experts, if any, and all other expenses incurred by such party incident to
        the
        negotiation, preparation, execution, delivery and performance of this Agreement.
        The Company shall pay all transfer agent fees, stamp taxes and other taxes
        and
        duties levied in connection with the delivery of any Securities.

      

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

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

      

      5.4 Notices.
        Any and
        all notices or other communications or deliveries required or permitted to
        be
        provided hereunder shall be in writing and shall be deemed given and effective
        on the earliest of (a) the date of transmission, if such notice or communication
        is delivered via facsimile at the facsimile number set forth on the signature
        pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading
        Day,
        (b) the next Trading Day after the date of transmission, if such notice or
        communication is delivered via facsimile at the facsimile number set forth
        on
        the signature pages attached hereto on a day that is not a Trading Day or
        later
        than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd
        Trading
        Day following the date of mailing, if sent by U.S. nationally recognized
        overnight courier service, or (d) upon actual receipt by the party to whom
        such
        notice is required to be given. The address for such notices and communications
        shall be as set forth on the signature pages attached hereto.

      

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

      

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

      

      5.7 Successors
        and Assigns

      

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

      

      5.8 No
        Third-Party Beneficiaries.
        This
        Agreement is intended for the benefit of the parties hereto and their respective
        successors and permitted assigns and is not for the benefit of, nor may any
        provision hereof be enforced by, any other Person, except as otherwise set
        forth
        in Section 4.11.

      

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      5.9 Governing
        Law.
        All
        questions concerning the construction, validity, enforcement and interpretation
        of the Transaction Documents shall be governed by and construed and enforced
        in
        accordance with the internal laws of the State of New York, without regard
        to
        the principles of conflicts of law thereof. Each party agrees that all legal
        proceedings concerning the interpretations, enforcement and defense of the
        transactions contemplated by this Agreement and any other Transaction Documents
        (whether brought against a party hereto or its respective affiliates, directors,
        officers, shareholders, employees or agents) shall be commenced exclusively
        in
        the state and federal courts sitting in the City of New York. Each party
        hereby
        irrevocably submits to the exclusive jurisdiction of the state and federal
        courts sitting in the City of New York, borough of Manhattan for the
        adjudication of any dispute hereunder or in connection herewith or with any
        transaction contemplated hereby or discussed herein (including with respect
        to
        the enforcement of any of the Transaction Documents), and hereby irrevocably
        waives, and agrees not to assert in any suit, action or proceeding, any claim
        that it is not personally subject to the jurisdiction of any such court,
        that
        such suit, action or proceeding is improper or inconvenient venue for such
        proceeding. Each party hereby irrevocably waives personal service of process
        and
        consents to process being served in any such suit, action or proceeding by
        mailing a copy thereof via registered or certified mail or overnight delivery
        (with evidence of delivery) to such party at the address in effect for notices
        to it under this Agreement and agrees that such service shall constitute
        good
        and sufficient service of process and notice thereof. Nothing contained herein
        shall be deemed to limit in any way any right to serve process in any manner
        permitted by law. The parties hereby waive all rights to a trial by jury.
        If
        either party shall commence an action or proceeding to enforce any provisions
        of
        the Transaction Documents, then the prevailing party in such action or
        proceeding shall be reimbursed by the other party for its attorneys’ fees and
        other costs and expenses incurred with the investigation, preparation and
        prosecution of such action or proceeding.

      

      5.10 Survival.
        The
        representations and warranties contained herein shall survive the Closing
        and
        the delivery, exercise and/or conversion of the Securities, as applicable
        for
        the applicable statue of limitations.

      

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

      

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

      

      5.13 Rescission
        and Withdrawal Right.
        Notwithstanding anything to the contrary contained in (and without limiting
        any
        similar provisions of) the Transaction Documents, whenever any Purchaser
        exercises a right, election, demand or option under a Transaction Document
        and
        the Company does not timely perform its related obligations within the periods
        therein provided, then such Purchaser may rescind or withdraw, in its sole
        discretion from time to time upon written notice to the Company, any relevant
        notice, demand or election in whole or in part without prejudice to its future
        actions and rights; provided,
        however,
        in the
        case of a rescission of a conversion of the Preferred Stock or exercise of
        a
        Warrant, the Purchaser shall be required to return any shares of Common Stock
        subject to any such rescinded conversion or exercise notice.

      

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

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

      

      5.15 Remedies.
        In
        addition to being entitled to exercise all rights provided herein or granted
        by
        law, including recovery of damages, each of the Purchasers and the Company
        will
        be entitled to specific performance under the Transaction Documents. The
        parties
        agree that monetary damages may not be adequate compensation for any loss
        incurred by reason of any breach of obligations described in the foregoing
        sentence and hereby agrees to waive in any action for specific performance
        of
        any such obligation the defense that a remedy at law would be
        adequate.

      

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

      

      5.17
        Usury.
        To the
        extent it may lawfully do so, the Company hereby agrees not to insist upon
        or
        plead or in any manner whatsoever claim, and will resist any and all efforts
        to
        be compelled to take the benefit or advantage of, usury laws wherever enacted,
        now or at any time hereafter in force, in connection with any claim, action
        or
        proceeding that may be brought by any Purchaser in order to enforce any right
        or
        remedy under any Transaction Document. Notwithstanding any provision to the
        contrary contained in any Transaction Document, it is expressly agreed and
        provided that the total liability of the Company under the Transaction Documents
        for payments in the nature of interest shall not exceed the maximum lawful
        rate
        authorized under applicable law (the “Maximum
        Rate”),
        and,
        without limiting the foregoing, in no event shall any rate of interest or
        default interest, or both of them, when aggregated with any other sums in
        the
        nature of interest that the Company may be obligated to pay under the
        Transaction Documents exceed such Maximum Rate. It is agreed that if the
        maximum
        contract rate of interest allowed by law and applicable to the Transaction
        Documents is increased or decreased by statute or any official governmental
        action subsequent to the date hereof, the new maximum contract rate of interest
        allowed by law will be the Maximum Rate applicable to the Transaction Documents
        from the effective date forward, unless such application is precluded by
        applicable law. If under any circumstances whatsoever, interest in excess
        of the
        Maximum Rate is paid by the Company to any Purchaser with respect to
        indebtedness evidenced by the Transaction Documents, such excess shall be
        applied by such Purchaser to the unpaid principal balance of any such
        indebtedness or be refunded to the Company, the manner of handling such excess
        to be at such Purchaser’s election.

      

      
        
          
          

        

        
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      5.18 Independent
        Nature of Purchasers’ Obligations and Rights.
        The
        obligations of each Purchaser under any Transaction Document are several
        and not
        joint with the obligations of any other Purchaser, and no Purchaser shall
        be
        responsible in any way for the performance of the obligations of any other
        Purchaser under any Transaction Document. Nothing contained herein or in
        any
        Transaction Document, and no action taken by any Purchaser pursuant thereto,
        shall be deemed to constitute the Purchasers as a partnership, an association,
        a
        joint venture or any other kind of entity, or create a presumption that the
        Purchasers are in any way acting in concert or as a group with respect to
        such
        obligations or the transactions contemplated by the Transaction Documents.
        Each
        Purchaser shall be entitled to independently protect and enforce its rights,
        including without limitation, the rights arising out of this Agreement or
        out of
        the other Transaction Documents, and it shall not be necessary for any other
        Purchaser to be joined as an additional party in any proceeding for such
        purpose. Each Purchaser has been represented by its own separate legal counsel
        in their review and negotiation of the Transaction Documents. For reasons
        of
        administrative convenience only, Purchasers and their respective counsel
        have
        chosen to communicate with the Company through FW. FW does not represent
        all of
        the Purchasers but only Midsummer. The Company has elected to provide all
        Purchasers with the same terms and Transaction Documents for the convenience
        of
        the Company and not because it was required or requested to do so by the
        Purchasers.

      

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

      

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

      

      
        
          
          

        

        
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      [SIGNATURE
        PAGE FOLLOWS]

      
        
          
          

        

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

      

      

      
        	
                NEW
                  DRAGON ASIA CORP.

              	
                Address
                  for Notice:

              
	 	 
	
                By:
                  /s/
                  Peter
                  Mak                                             
                  

                Name:
                  Peter Mak

                Title:
                  Chief Financial Officer

              	
                New
                  Dragon Asia Corp.

                Suite
                  2808

                International
                  Chamber of Commerce Tower 

                Fuhua
                  Three Road

                Shenzhen,
                  China

                Facsimile
                  number: (86 755) 2595-1101

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

                 

                 

              	
                Loeb
                  & Loeb LLP

                345
                  Park Avenue

                New
                  York, NY 10154

                Attn:
                  Mitchell S. Nussbaum, Esq.

              

      

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK

      SIGNATURE
        PAGE FOR PURCHASER FOLLOWS]

      
        
          
          

        

        
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      [PURCHASER
        SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT WITH NWD]

      

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

      

      Name
        of
        Purchaser: Enable
        Opportunity Partners, L.P.

      Signature
        of Authorized Signatory of Purchaser:
        /s/
        Adam Epstein       

      Name
        of
        Authorized Signatory: Adam
        Epstein                                            

      Title
        of
        Authorized Signatory: Principal                                                        
        

      Email
        Address of Purchaser:________________________________

      

      Address
        for Notice of Purchaser:

      

      

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

      

      

      

      Subscription
        Amount: $200,000

      Shares
        of
        Preferred Stock: 200

      Warrant
        Shares: 62,500

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

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      [PURCHASER
        SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT WITH NWD]

      

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

      

      Name
        of
        Purchaser: Enable
        Growth Partners, L.P.

      Signature
        of Authorized Signatory of Purchaser:
        /s/
        Adam Epstein      

      Name
        of
        Authorized Signatory: Adam
        Epstein                                           
        

      Title
        of
        Authorized Signatory: Principal                                                       
        

      Email
        Address of Purchaser:________________________________

      

      Address
        for Notice of Purchaser:

      

      

      

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

      

      

      

      Subscription
        Amount: $800,000 

      Shares
        of
        Preferred Stock: 800

      Warrant
        Shares: 250,000

      EIN
        Number:   [PROVIDE
        THIS UNDER SEPARATE COVER]

      

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      [PURCHASER
        SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT WITH NWD]

      

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

      

      

      Name
        of
        Purchaser: GSSF
        Master Fund, L.P.  

      Signature
        of Authorized Signatory of Purchaser:
        /s/
        E.B. Lyon IV         
        

      Name
        of
        Authorized Signatory:
        E.B.
        Lyon
        IV                                               
        

      Title
        of
        Authorized Signatory: Authorized
        Agent                                       
        

      Email
        Address of Purchaser:________________________________

      

      Address
        for Notice of Purchaser:

      

      

      

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

      

      

      

      Subscription
        Amount: $750,000

      Shares
        of
        Preferred Stock: 750

      Warrant
        Shares: 234,375

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

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      [PURCHASER
        SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT WITH NWD]

      

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

      

      

      Name
        of
        Purchaser: Gryphon
        Master Fund, L.P. 

      Signature
        of Authorized Signatory of Purchaser:
        /s/
        E.B Lyon IV         
        

      Name
        of
        Authorized Signatory: E.B
        Lyon
        IV                                               

      Title
        of
        Authorized Signatory: Authorized
        Purchaser                                
        

      Email
        Address of Purchaser:________________________________

      

      Address
        for Notice of Purchaser:

      

      

      

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

      

      

      

      Subscription
        Amount: $1,250,000

      Shares
        of
        Preferred Stock: 1,250

      Warrant
        Shares: 390,625

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

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      [PURCHASER
        SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT WITH NWD]

      

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

      

      Name
        of
        Purchaser: Bushido
        Capital Master Fund, L.P.

      Signature
        of Authorized Signatory of Purchaser:
        /s/
        Christopher Rossman          
        

      Name
        of
        Authorized Signatory:
        Christopher
        Rossman                                               
        

      Title
        of
        Authorized Signatory: Managing
        Director, Bushido Capital Partners, L.P.

      Email
        Address of Purchaser:________________________________

      

      Address
        for Notice of Purchaser:

       

       

      

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

      

      

      

      Subscription
        Amount: $500,000

      Shares
        of
        Preferred Stock: 500

      Warrant
        Shares: 156,250

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

      [SIGNATURE
        PAGES CONTINUE]

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

      [PURCHASER
        SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT WITH NWD]

      

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

      

      Name
        of
        Purchaser: Midsummer
        Investment, Ltd.

      Signature
        of Authorized Signatory of Purchaser:
        /s/
        Scott D. Kaufman

      Name
        of
        Authorized Signatory: Scott
        D. Kaufman

      Title
        of
        Authorized Signatory: Managing
        Director, Midsummer Capital, LLC

      Email
        Address of Purchaser:________________________________

      

      Address
        for Notice of Purchaser:

      

      

      

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

      

      

      

      Subscription
        Amount: $4,000,000

      Shares
        of
        Preferred Stock: 4,000

      Warrant
        Shares: 1,250,000

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

      [SIGNATURE
        PAGES CONTINUE]

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

      [PURCHASER
        SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT WITH NWD]

      

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

      

      Name
        of
        Purchaser: Islandia,
        L.P

      Signature
        of Authorized Signatory of Purchaser:
        /s/
        Richard D. Berner

      Name
        of
        Authorized Signatory: Richard
        D. Berner

      Title
        of
        Authorized Signatory: President,
        John Lang, Inc., General Partner of Islandia, L.P.

      Email
        Address of Purchaser:________________________________

      

      Address
        for Notice of Purchaser:

      

      

      

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

      

      

      

      Subscription
        Amount: $2,000,000

      Shares
        of
        Preferred Stock: 2,000

      Warrant
        Shares: 625,000

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

      [-
        Schedules
        intentionally omitted -]

       

      
        
          
          

        

        
          43EXHIBIT 10.2

      REGISTRATION
        RIGHTS AGREEMENT

      

      This
        Registration Rights Agreement (this “Agreement”)
        is
        made and entered into as of December 22, 2005 among New Dragon Asia Corp.,
        a
        Florida corporation (the “Company”),
        and
        the purchasers signatory hereto (each such purchaser is a “Purchaser”
        and
        collectively, the “Purchasers”).

      

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

      

      The
        Company and the Purchasers hereby agree as follows:

      

      1.
        Definitions

      

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

      

      “Advice”
        shall
        have the meaning set forth in Section 6(d).

      

      “Effectiveness
        Date”
        means,
        with respect to the initial Registration Statement required to be filed
        hereunder, the 90th
        calendar
        day following the date hereof (the 120th
        calendar
        day in the case of a “full review” by the Commission) and, with respect to any
        additional Registration Statements which may be required pursuant to Section
        3(c), the 90th
        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.

      

      “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, the
        30th
        calendar
        day following the date hereof 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.
        In the
        event that the holders of a majority of the Registrable Securities timely
        object
        to the filing of a Registration Statement pursuant to Section 3(a) hereof,
        the
“Filing Date” will be extended until 5 Trading Days after the Company receives
        notice from all of the objecting Purchasers that such Purchasers no longer
        object to the Registration Statement being filed. 

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      “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,
        as of the date in question, (i) all of the shares of Common Stock issuable
        upon
        conversion in full of the shares of Preferred Stock, (ii) all shares issuable
        as
        dividends on the Preferred Stock assuming all dividend payments are made
        in
        shares of Common Stock and the Preferred Stock is held for at least 3 years,
        (iii) all Warrant Shares, (iv) any securities issued or issuable upon any
        stock
        split, dividend or other distribution, recapitalization or similar event
        with
        respect to the foregoing, (v) any additional shares issuable in connection
        with
        any anti-dilution provisions associated with the Preferred Stock and Warrants
        (in each case, without giving effect to any limitations on conversion set
        forth
        in the Certificate of Designation or limitations on exercise set forth in
        the
        Warrant) and (vi) shares issuable to the placement agent pursuant to the
        warrant
        issuable to such placement agent. Notwithstanding the foregoing, the term
        “Registrable Securities” excludes any securities of the Company which are
        saleable by the holder of such securities pursuant to the provisions of
        paragraph (k) of Rule 144 promulgated under the Securities Act (as defined
        below).

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      “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.
        Shelf
        Registration

      

      (a)
        On or
        prior to each Filing Date, the Company shall prepare and file with the
        Commission a “Shelf” Registration Statement covering the resale of 130% of the
        Registrable Securities on such Filing Date for an offering to be made on
        a
        continuous basis pursuant to Rule 415. The Registration Statement shall be
        on
        Form S-3 (except if the Company is not then eligible to register for resale
        the
        Registrable Securities on Form S-3, in which case such registration shall
        be on
        another appropriate form in accordance herewith) and shall 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).

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      (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 10 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) 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 (B) the Holders are not permitted to utilize the Prospectus
        therein to resell such Registrable Securities, in either case, 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 10 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
        2.0% of the aggregate purchase price paid by such Holder pursuant to the
        Purchase Agreement for any Registrable Securities then held by such Holder.
        If
        the Company fails to pay any partial liquidated damages pursuant to this
        Section
        in full within seven days after the date payable, the Company will pay interest
        thereon at a rate of 18% per annum (or such lesser maximum amount that is
        permitted to be paid by applicable law) to the Holder, accruing daily from
        the
        date such partial liquidated damages are due until such amounts, plus all
        such
        interest thereon, are paid in full. The partial liquidated damages pursuant
        to
        the terms hereof shall apply on a daily pro-rata basis for any portion of
        a
        month prior to the cure of an Event.

      

      (c)
        Notwithstanding anything else herein to the contrary, upon the happening
        of any
        corporate development, public filing with the Commission or similar event,
        that,
        in the judgment of Company’s Board of Directors, renders it advisable to suspend
        use of the Registration Statement or upon the request by an underwriter in
        connection with an underwritten public offering of the Company’s securities, the
        Company may, on not more than one (1) non-consecutive occasion for not more
        than
        sixty (60) days, suspend use of the Registration Statement on written notice
        to
        the Purchasers (which notice will not disclose the content of any material
        non-public information and will indicate the date of the beginning and end
        of
        the intended period of suspension, if known), in which case the Purchaser
        shall
        discontinue disposition of the securities covered by the Registration Statement
        until copies of a supplemented or amended Prospectus are distributed to the
        Purchaser or until the Purchaser is advised in writing by the Company that
        sales
        of Registrable Securities under the applicable Prospectus may be resumed
        and has
        received copies of any additional or supplemental filings that are incorporated
        or deemed incorporated by reference in any such Prospectus. The suspension
        and
        notice thereof described in this Section 2(c) shall be held in strictest
        confidence and shall not be disclosed by the Purchasers. Any suspension by
        the
        Company pursuant to this Section 2(c) will not be considered an “Event” for
        purposes of Section 2(b) of this Agreement.

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      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.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      (c) If
        during
        the Effectiveness Period, the number of Registrable Securities at any time
        exceeds 90% of the number of shares of Common Stock 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.

      

      (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. 

       

      (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.

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      (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 will (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.

      

      (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. 

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

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

      

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

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      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.

      

      (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.

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      (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.

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      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.

      

      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.

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      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.
        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.

      

      (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.

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

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

      

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

      

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

      

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

      

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

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

      

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

      

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

      

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

      

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

      

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

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      

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

      
        	 	 	 
	 	NEW
                DRAGON ASIA CORP.
	 
 	 
 	 
 
	 	By:  	/s/
                Peter Mak
	 	
                
Name:
                Peter Mak
	 	
                Title:
                  Chief Financial Officer

              

  

      [SIGNATURE
        PAGE OF HOLDERS FOLLOWS]

      

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      [SIGNATURE
        PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT WITH NWD]

      

      Name
        of
        Holder: Enable
        Opportunity Partners, L.P.

      Signature
        of Authorized Signatory of Holder:
        /s/
        Adam Epstein

      Name
        of
        Authorized Signatory: Adam
        Epstein

      Title
        of
        Authorized Signatory: Principal

      

      

      [SIGNATURE
        PAGES CONTINUE]

      

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      [SIGNATURE
        PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT WITH NWD]

      

      Name
        of
        Holder: Enable
        Growth Partners, L.P.

      Signature
        of Authorized Signatory of Holder:
        /s/
        Adam Epstein

      Name
        of
        Authorized Signatory: Adam
        Epstein

      Title
        of
        Authorized Signatory: Principal  

      

      

      [SIGNATURE
        PAGES CONTINUE]

      

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      [SIGNATURE
        PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT WITH NWD]

      

      Name
        of
        Holder: GSSF
        Master Fund, L.P.

      Signature
        of Authorized Signatory of Holder:
        /s/
        E.B. Lyon IV

      Name
        of
        Authorized Signatory:
        E.B.
        Lyon IV

      Title
        of
        Authorized Signatory: Authorized
        Agent

      

      

      

      [SIGNATURE
        PAGES CONTINUE]

      

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      [SIGNATURE
        PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT WITH NWD]

      

      Name
        of
        Holder: Gryphon
        Master Fund, L.P.

      Signature
        of Authorized Signatory of Holder:
        /s/
        E.B Lyon IV

      Name
        of
        Authorized Signatory: E.B
        Lyon IV

      Title
        of
        Authorized Signatory: Authorized
        Purchaser

      

      

      [SIGNATURE
        PAGES CONTINUE]

      

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      [SIGNATURE
        PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT WITH NWD]

      

      Name
        of
        Holder: Bushido
        Capital Master Fund, L.P.

      Signature
        of Authorized Signatory of Holder:
        /s/
        Christopher Rossman

      Name
        of
        Authorized Signatory:
        Christopher Rossman

      Title
        of
        Authorized Signatory: Managing
        Director, Bushido Capital Partners, L.P.

      

      

      [SIGNATURE
        PAGES CONTINUE]

      

      
        
           

        

        
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      [SIGNATURE
        PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT WITH NWD]

      

      Name
        of
        Holder: Midsummer
        Investment, Ltd.

      Signature
        of Authorized Signatory of Holder:
        /s/
        Scott D. Kaufman

      Name
        of
        Authorized Signatory: Scott
        D. Kaufman

      Title
        of
        Authorized Signatory: Managing
        Director, Midsummer Capital, LLC

      

      

      [SIGNATURE
        PAGES CONTINUE]

      

      
        
           

        

        
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      [SIGNATURE
        PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT WITH NWD]

      

      Name
        of
        Holder: Islandia,
        L.P

      Signature
        of Authorized Signatory of Holder:
        /s/
        Richard D. Berner

      Name
        of
        Authorized Signatory: Richard
        D. Berner

      Title
        of
        Authorized Signatory: President,
        John Lang, Inc., General Partner of Islandia, L.P.

      
 

      
        
           

        

        
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      ANNEX
        A

      

      Plan
        of Distribution

      

      Each
        Selling Stockholder (the “Selling
        Stockholders”)
        of the
        Class A Common Stock (“Common
        Stock”)
        of New
        Dragon Asia Corp., a Florida 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:

      

      
        	 	
                ·

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

              

      

      

      
        	 	
                ·

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

              

      

      

      
        	 	
                ·

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

              

      

      

      
        	 	
                ·

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

              

      

      

      
        	 	
                ·

              	
                privately
                  negotiated transactions;

              

      

      

      
        	 	
                ·

              	
                settlement
                  of short sales entered into after the effective date of the registration
                  statement of which this prospectus is a
                  part;

              

      

      

      
        	 	
                ·

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

              

      

      

      
        	 	
                ·

              	
                a
                  combination of any such methods of
                  sale;

              

      

      

      
        	 	
                ·

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

              

      

      

      
        	 	
                ·

              	
                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. 

      

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

      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.

      

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

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

      

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      Annex
        B

      

      NEW
        DRAGON ASIA CORP.

      

      Selling
        Securityholder Notice and Questionnaire

      

      The
        undersigned beneficial owner of Class A Common Stock, par value $0.0001 per
        share (the “Common
        Stock”),
        of
        New Dragon Asia Corp., a Florida corporation (the “Company”),
        (the
“Registrable
        Securities”)
        understands that the Company has filed or intends to file with the Securities
        and Exchange Commission (the “Commission”)
        a
        registration statement on Form S-3 (the “Registration
        Statement”)
        for
        the registration and resale under Rule 415 of the Securities Act of 1933,
        as
        amended (the “Securities
        Act”),
        of
        the Registrable Securities, in accordance with the terms of the Registration
        Rights Agreement, dated as of July 11, 2005 (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.

      

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

      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:

              

        	 	 	
                 

                
                  

                

                
                  

                

                
                  

                     

              

      

      

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

      
        	4.	
                Broker-Dealer
                  Status:

              

      

      

      
        	 	
                (a)

              	
                Are
                  you a broker-dealer?

              

      

      

      Yes
o           
         No
o

      

      
        	 	
                (b)

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

              

      

      

      
        Yes
o           
           No
o

         

      

      
        	 	
                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
o           
           No
o

      

       

      
        	 	
                (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
o           
           No
o

      

      

      
        	 	
                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:

              

        	 	 	 

                

                

              

      

       

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

      
        	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:

      

      
        
           

        

        
          29

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