Document:

Exhibit
      10.2

     

    SECURITY
      AGREEMENT

     

    This
      Security Agreement (“Agreement”)
      is
      made and entered into as of the 15th day of July, 2008 by and between ZVUE
      CORPORATION (“Debtor”),
      a
      Delaware corporation, in favor of CARL PAGE (“Secured
      Party”).
      The
      parties hereby agree as follows:

     

    1. Definitions.
      All
      capitalized terms used herein shall, unless otherwise defined herein, have
      the
      meanings set forth below or set forth in the Loan Agreement defined
      below.

     

    (a) “Collateral”
means
      all of the following: 

     

    (i) Debtor’s
      inventory of Products (defined below) in all its forms, wherever located,
      whether now owned or hereafter acquired, including, but not limited to, all
      goods, wares, merchandise, parts, supplies, finished products, other tangible
      personal property, including such inventory as is temporarily out of Company’s
      custody or possession and including any returns upon any accounts or other
      proceeds, and all accessions thereto and products thereof and documents therefor
      (any and all such inventory, accessions, products and documents being the
“Product
      Inventory”);

     

    (ii) All
      accounts and other receivables of Debtor arising from the sale of the Products,
      and other receivables, instruments or other forms of obligations and rights
      to
      payment of the Company and all other obligations due or to become due to Debtor
      in connection with the sale of the Products (the “Product
      Receivables”),
      together with the proceeds thereof, all goods represented by such Product
      Receivables and all such goods that may be returned by Debtor’s customers, and
      all proceeds of any insurance thereon, and all guarantees, securities and lines
      which the Company may hold for the payment of such Product Receivables
      including, without limitation, all rights of stoppage in transit, replevin
      and
      reclamation and as an unpaid vendor and/or lienor; and

     

    (iii) All
      proceeds and products of any and all of the foregoing Collateral and, including
      but not limited to, all payments under insurance or in connection with any
      indemnity, warranty or guarantee payable by reason of loss or damage to or
      otherwise with respect to any of the foregoing Collateral.

     

    (b) “Event
      of Default”
means
      an event described in Section 5.

     

    (c) “Obligations”
shall
      have the meaning ascribed to that term in the Loan Agreement.

     

    (d) “Loan
      Agreement”
shall
      mean that certain Loan Agreement entered into between Debtor and Secured Party
      dated as of the date hereof. “Loan
      Documents”
mean
      the Loan Documents defined in the Loan Agreement.

     

    (e) “Lien”
means
      any voluntary or involuntary security interest, mortgage, pledge, claim, charge,
      encumbrance, title retention agreement, or third party interest covering all
      or
      any part of the property of Debtor or any other Person.

     

    (f) “Products”
mean
      the Products defined in the Loan Agreement and specifically identified in
Schedule
      1
      thereof,
      and any other Products that are the subject of an Approved Purchase
      Order.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g) “Secured
      Promissory Note”
shall
      have the meaning ascribed to it in the Loan Agreement.

     

    (h) “Person”
means
      any individual or entity.

     

    (i) “Remittance
      Account”
shall
      have the meaning ascribed to it in Section 3, below.

     

    (j) “Senior
      Lender”
means
      YA Global Investments, L.P., its successors and assigns.

     

    2. Grant
      of Security Interest.
      Debtor
      hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to
      Secured Party, and hereby grants to Secured Party a first-priority security
      interest in all of Debtor’s right, title and interest in, to and under the
      Collateral, whether now owned or hereafter acquired, to secure the full, prompt,
      complete and final performance and payment of the Obligations when due (whether
      at stated maturity, by acceleration or otherwise).

     

    3. Remittance
      Account.
      Debtor
      shall instruct Retailer to deposit and Debtor shall deposit all proceeds from
      the sale of the Products to a remittance account (the “Remittance
      Account”)
      identified in writing by Secured Party and controlled by Secured Party. Funds
      deposited into the Remittance Account shall be applied by Secured Party as
      follows:

     

    First,
      to
      Secured Party in an amount sufficient to pay in full Secured Party’s costs and
      professionals’ and advisors’ fees and expenses as described in Section 8.3(a) of
      the Loan Agreement;

     

    Second,
      to
      Secured Party in an amount equal to the then unpaid amount of the Obligations
      (including principal, interest, and the Transaction Fees), in such order and
      priority as Secured Party may choose in its sole discretion; and

     

    Finally,
      after
      the full, final, and indefeasible payment in cash of all of the Obligations,
      to
      Debtor or its representatives or as a court of competent jurisdiction may
      direct.

     

    Secured
      Party shall utilize its commercially reasonable best efforts to distribute
      all
      funds from the Remittance Account that are payable to Debtor within one (1)
      business day after deposit.

     

    4. Representations,
      Warranties and Covenants.
      Debtor
      hereby represents, warrants, covenants and agrees as follows:

     

    (a) Except
      for the security interest granted hereby, Debtor is or will be the only owner
      of
      all of the Collateral free from any adverse lien, security interest or
      encumbrance and Debtor will defend the Collateral against all claims and demands
      of all persons other than Secured Party. Debtor has obtained necessary
      authorization and all consents required to permit granting and perfecting of
      Secured Party’s first-priority security interest in the Collateral. Upon filing
      of the amendment to Senior Lender’s UCC-1 filing referred to in Section 3.6 of
      the Loan Agreement, or upon execution of the intercreditor or subordination
      agreement referred to therein, no effective security agreement, financing
      statement, equivalent security or lien instrument or continuation statement
      covering all or any part of the Collateral shall exist. Debtor shall not,
      directly or indirectly, create, permit or suffer to exist, and shall defend
      the
      Collateral against and take such other action as is necessary to remove, any
      Lien on the Collateral.

     

    
      
        
        

      

      
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    (b) Except
      for the sale of Products by Debtor to Retailer, Debtor, its agents, servants
      or
      employees will not sell, assign, encumber or offer to sell, assign, encumber
      or
      otherwise transfer any Collateral either in whole or in part.

     

    (c) Debtor
      will maintain the Product Inventory in good condition and repair, reasonable
      wear and tear excepted, and will pay and discharge prior to delinquency all
      taxes, levies and other impositions levied on or against the Product Inventory.
      Prior to the transfer of the Product Inventory to Retailer, Secured Party may
      examine and inspect the Product Inventory at any time wherever
      located.

     

    (d) Debtor
      will insure the Collateral against such risks and casualties and in such amounts
      as may be required to satisfy in full all Obligations to Secured Party. Each
      such policy shall name Secured Party as an additional insured. Policies or
      certificates evidencing such insurance shall be furnished to Secured Party.
      

     

    (e) Debtor
      agrees to execute and deliver to Secured Party, at Debtor’s expense, such UCC 1
      Financing Statements and other documents in forms reasonably acceptable to
      Secured Party as Secured Party may from time to time reasonably request or
      as
      are necessary in the opinion of Secured Party to establish and maintain a valid,
      perfected first-priority security interest in the Collateral. Debtor authorizes
      Secured Party to file or record, as the case may be, any such UCC-1 Financing
      Statements or other documents without signature of Debtor.

     

    (f) Debtor
      will at all times keep accurate and complete records of any proceeds received
      from the Collateral and the payment and performance of the respective account
      debtors and all other parties obligated on the Product Receivables.

     

    (g) This
      Security Agreement creates a legal and valid security interest on and in all
      of
      the Collateral in which Debtor now has rights and will create a legal and valid
      security interest in the Collateral in which Debtor later acquires
      rights.

     

    (h) Debtor
      shall not change its jurisdiction of organization, relocate its chief executive
      office, principal place of business or its records without 30 days prior written
      notice to Secured Party.

     

    (i) At
      any
      time and from time to time, upon the written request of Secured Party, and
      at
      the sole expense of Debtor, Debtor shall promptly and duly execute and deliver
      any and all such further instruments and documents and take such further action
      as Secured Party may reasonably deem necessary or desirable to obtain the full
      benefits of this Security Agreement, including, without limitation, (a) using
      its best efforts to secure all consents and approvals necessary or appropriate
      for the grant of a security interest to Secured Party in any item of Collateral
      held by Debtor or in which Debtor has any right or interest, (b) transferring
      the Collateral to Secured Party’s possession (if a security interest in such
      Collateral can be perfected only by possession), (c) at Secured Party’s
      reasonable request, executing and delivering or causing to be delivered written
      notice to insurers of Secured Party’s security interest in, or claim in or
      under, any policy of insurance (including unearned premiums) and (d) at Secured
      Party’s reasonable request, using its best efforts to obtain acknowledgments
      from bailees having possession of any Collateral and waivers of liens from
      landlords and mortgagees of any location where any of the Collateral may from
      time to time be stored or located. If any amount payable under or in connection
      with any of the Collateral is or shall become evidenced by any Instrument,
      such
      Instrument, other than checks and notes received in the ordinary course of
      business and any Instrument in the outstanding or stated amount of less than
      $10,000, shall be duly endorsed in a manner reasonably satisfactory to Secured
      Party and delivered to Secured Party promptly and in any event within five
      (5)
      business days of Debtor’s receipt thereof.

     

    
      
        
        

      

      
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    5. Default.
      Debtor
      shall be in default under this Agreement upon the happening of any of the
      following events or conditions (“Events
      of Default”):

     

    (a) The
      occurrence of any Event of Default defined in the Loan Agreement; 

     

    (b) The
      material breach of any covenant, representation or warranty made by the Debtor
      herein, or the determination by the Secured Party that any representation or
      warranty made by the Debtor herein was incorrect in any material respect when
      given; and

     

    (c) Loss,
      theft, damage or destruction to or of a material portion of the
      Collateral.

     

    6. Rights
      and Remedies Upon Default.
      

     

    (a) Upon
      occurrence and during the continuance of an Event of Default, Secured Party
      may
      at its option accelerate Debtor’s payment obligations under the Secured
      Promissory Note and shall have, in addition to all other rights and remedies
      under the Loan Documents and applicable law, the rights and remedies of a
      secured party under the California Commercial Code, including, without
      limitation, the right to take possession of and/or sell the Collateral. Without
      limiting the generality of the foregoing, Debtor expressly agrees that in any
      such event Secured Party, without demand of performance or other demand,
      advertisement or notice of any kind (except the notice specified below of time
      and place of public or private sale) to or upon Debtor or any other person
      (all
      and each of which demands, advertisements and notices are hereby expressly
      waived to the maximum extent permitted by the UCC and other applicable law),
      may
      (i) reclaim, take possession, recover, store, maintain, finish, repair, prepare
      for sale or lease, shop, advertise for sale or lease and sell or lease (in
      the
      manner provided herein) the Collateral, and in connection with the liquidation
      of the Collateral and collection of the accounts receivable pledged as
      Collateral, use any trademark, copyright, or process used or owned by Debtor
      and
      (ii) forthwith collect, receive, appropriate and realize upon the Collateral,
      or
      any part thereof, and may forthwith sell, lease, assign, give an option or
      options to purchase or sell or otherwise dispose of and deliver said Collateral
      (or contract to do so), or any part thereof, in one or more parcels at public
      or
      private sale or sales, at any exchange or broker’s board or at any of Secured
      Party’s offices or elsewhere at such prices as it may deem best, for cash or on
      credit or for future delivery without assumption of any credit risk. For that
      purpose, Secured Party may, so far as Debtor can give authority therefor, enter
      upon any premises on which the Collateral may be located or situated in and
      remove the same therefrom without liability for rent, storage or other costs.
      Upon request, Debtor shall assemble and make the Collateral available to Secured
      Party at a place to be designated by Secured Party, which is reasonably
      convenient to Secured Party. 

     

    (b) Upon
      the
      occurrence and during the continuance of an Event of Default, Secured Party
      may
      sell all or any part of the Collateral, at public or private sales, at such
      price or prices as Secured Party may deem commercially reasonable. To the extent
      permitted by law, Debtor specifically waives all rights of redemption and any
      rights of stay or appraisal which it has or may have under any applicable law
      in
      effect from time to time. Any such public or private sales shall be held at
      such
      times and at such place(s) as Secured Party may determine. Secured Party may,
      instead of exercising its power of sale, proceed to enforce its security
      interest in the Collateral by seeking a judgment or decree of a court of
      competent jurisdiction. To the maximum extent permitted by applicable law,
      Debtor waives all claims, damages, and demands against Secured Party arising
      out
      of the repossession, retention or sale of the Collateral. Debtor agrees that
      Secured Party need not give more than ten (10) days’ notice of the time and
      place of any public sale or of the time after which a private sale may take
      place and that such notice is reasonable notification of such matters. Debtor
      shall remain liable for any deficiency if the proceeds of any sale or
      disposition of the Collateral are insufficient to pay all amounts to which
      Secured Party is entitled from Debtor, Debtor also being liable for the attorney
      costs of any attorneys employed by Secured Party to collect such deficiency.
      Debtor agrees that in any sale of any of such Collateral, whether at a
      foreclosure sale or otherwise, Secured Party is hereby authorized to comply
      with
      any limitation or restriction in connection with such sale as it may be advised
      by counsel is necessary in order to avoid any violation of applicable law
      (including compliance with such procedures as may restrict the number of
      prospective bidders and purchasers, require that such prospective bidders and
      purchasers have certain qualifications and restrict such prospective bidders
      and
      purchasers to persons who will represent and agree that they are purchasing
      for
      their own account for investment and not with a view to the distribution or
      resale of such Collateral), or in order to obtain any required approval of
      the
      sale or of the purchaser by any governmental authority, and Debtor further
      agrees that such compliance shall not result in such sale being considered
      or
      deemed not to have been made in a commercially reasonable manner, nor shall
      Secured Party be liable nor accountable to Debtor for any discount allowed
      by
      the reason of the fact that such Collateral is sold in compliance with any
      such
      limitation or restriction.

     

    
      
        
        

      

      
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    (c) In
      addition to the remedies described above, Debtor shall, upon request of Secured
      Party, and Secured Party itself may, in the name of Secured Party or Debtor,
      at
      any time after an Event of Default notify the account debtor or other obligor
      on
      any Product Receivable of Secured Party’s security interest. Secured Party may,
      in its own name or the name of the Debtor, at any time after the occurrence
      and
      during the continuation of an Event of Default hereunder, demand, sue for,
      collect or receive any money or property payable or receivable on any Product
      Receivable and settle, release, compromise, adjust, sue upon, foreclose, realize
      upon or otherwise enforce any Product Receivable as Secured Party may determine.
      

     

    (d) For
      the
      purpose of protecting and preserving the Collateral and Secured Party’s rights
      under this Agreement, Debtor hereby irrevocably appoints Secured Party, with
      full power of substitution, as its attorney-in-fact with full power of
      authority, after the occurrence and during the continuance of any Event of
      Default, to do any act which Debtor is obligated to do hereunder. Debtor hereby
      ratifies all that Secured Party shall lawfully do or cause to be done by virtue
      of this appointment.

     

    (e) Debtor
      also agrees to pay all fees, costs and expenses of Secured Party, including,
      without limitation, attorneys’ fees, incurred in connection with the enforcement
      of any of its rights and remedies hereunder.

     

    (f) Debtor
      hereby waives presentment, demand, protest or any notice (to the maximum extent
      permitted by applicable law) of any kind in connection with this Security
      Agreement or any Collateral.

     

    
      
        
        

      

      
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    (g) The
      proceeds of any sale, disposition or other realization upon all or any part
      of
      the Collateral shall be distributed by Secured Party in the following order
      of
      priorities:

     

    First,
      to
      Secured Party in an amount sufficient to pay in full Secured Party’s costs and
      professionals’ and advisors’ fees and expenses as described in Section 8.3(a) of
      the Loan Agreement;

     

    Second,
      to
      Secured Party in an amount equal to the then unpaid amount of the Obligations
      (including principal, interest, and the Transaction Fees), in such order and
      priority as Secured Party may choose in its sole discretion; and

     

    Finally,
      after
      the full, final, and indefeasible payment in cash of all of the Obligations,
      to
      any creditor holding a junior lien on the Collateral, or to Debtor or its
      representatives or as a court of competent jurisdiction may direct.

     

    (h) Secured
      Party shall be deemed to have acted reasonably in the custody, preservation
      and
      disposition of any of the Collateral if it takes such action as Debtor requests
      in writing except during an Event of Default, but failure of Secured Party
      to
      comply with any such request shall not in itself be deemed a failure to act
      reasonably, and no failure of Secured Party to do any act not so requested
      shall
      be deemed a failure to act reasonably.

     

    7. Indemnity.
      Debtor
      agrees to defend, indemnify and hold harmless Secured Party and its officers,
      employees, and agents against (a) all obligations, demands, claims, and
      liabilities claimed or asserted by any other party in connection with the
      transactions contemplated by this Security Agreement and (b) all losses or
      expenses in any way suffered, incurred, or paid by Secured Party as a result
      of
      or in any way arising out of, following or consequential to transactions between
      Secured Party and Debtor, whether under this Security Agreement or otherwise
      (including without limitation, reasonable attorneys fees and expenses), except
      for losses arising from or out of Secured Party’s gross negligence or willful
      misconduct.

     

    8. Notices.
      Any
      notice to any party hereto shall be given in accordance with the terms of
      Section 8.12 of the Loan Agreement.

     

    9. Governing
      Law.
      This
      Agreement shall be governed and interpreted in accordance with the laws of
      the
      State of California, including without limitation the California Commercial
      Code.

     

    10. Counterparts.
      This
      Agreement may be signed in one or more counterparts, each of which shall be
      deemed an original but all of which together shall constitute one and the same
      instrument.

     

    11. Binding
      Effect.
      This
      Agreement shall be binding upon Debtor, its successors, representatives and
      assigns, and shall inure to the benefit of Secured Party and its successors
      and
      assigns.

     

    12. Rights
      Cumulative.
      All
      rights and remedies existing under this Agreement are cumulative to, and not
      exclusive of, any other rights and remedies available under contract or
      applicable law.

    
      
        
        

      

      
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    13. Unenforceable
      Provisions.
      Any
      provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall be so only as to such jurisdiction and only to the extent
      of
      such prohibition or unenforceability, but all of the remaining provisions of
      this Agreement shall remain valid and enforceable.

     

    14. Termination.
      After
      expiration of the Maturity Date (as defined in the Loan Documents) and upon
      the
      payment in full and satisfaction of all of the Obligations, the security
      interest granted hereby shall terminate and all rights to the Collateral shall
      revert to Debtor. Upon any such termination, Secured Party shall, at Debtor’s
      expense, execute and deliver to Debtor such documents as Debtor shall reasonably
      request to evidence such termination.

     

    15. Non-Waiver.
      Waiver
      of or acquiescence in any default by Debtor, or failure of Secured Party to
      insist upon strict performance by Debtor of any representation, warranty or
      covenant set forth in this Agreement or any of the Loan Documents shall not
      constitute a waiver of any subsequent or other default or failure.

     

    16. Entire
      Agreement.
      This
      Agreement is intended by Debtor and Secured Party as the final expression of
      Debtor’s obligations to Secured Party in connection with the Collateral and
      supersedes all prior understandings and agreements concerning the subject matter
      hereof. This Agreement may be amended only by a writing signed by Debtor and
      Secured Party.

     

    17. Reinstatement.
      This
      Security Agreement shall remain in full force and effect and continue to be
      effective should any petition be filed by or against Debtor for liquidation
      or
      reorganization, should Debtor become insolvent or make an assignment for the
      benefit of creditors or should a receiver or trustee be appointed for all or
      any
      significant part of Debtor’s property and assets, and shall continue to be
      effective or be reinstated, as the case may be, if at any time payment and
      performance of the Obligations, or any part thereof, is, pursuant to applicable
      law, rescinded or reduced in amount, or must otherwise be restored or returned
      by any obligee of the Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or performance
      had not been made. In the event that any payment, or any part thereof, is
      rescinded, reduced, restored or returned, the Obligations shall be reinstated
      and deemed reduced only by such amount paid and not so rescinded, reduced,
      restored or returned.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

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

     

    
      	
              Secured
                Party:

            	 	
              Debtor:

              ZVUE
                CORPORATION

            
	 	 	 
	 	
              By:

            	
              /s/
                Jeff Oscodar 

            
	
              /s/
                Carl Page 

            	
            	 	
              Its:
                President
                & CEO

            
	
              CARL
                PAGE

            	 	 

    

     

    
      
        
        

      

      
        -
          8 -PREFERRED
      STOCK PURCHASE AGREEMENT

    

    BETWEEN

    

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.

    

    AND

    

    T
      SQUARED INVESTMENTS LLC 

    

    DATED

    

    JULY
      16, 2008

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    PREFERRED
      STOCK PURCHASE AGREEMENT

    

    This
      PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement")
      is
      made and entered into as of the 16th day of July, 2008 between China
      Kangtai Cactus Bio-Tech, Inc., a
      corporation organized and existing under the laws of the State of Nevada (“CKGT”
or the “Company”)
      and
T
      Squared Investments LLC, a
      Delaware limited liability company, (“T
      Squared Investments”
or
      “Investor”).

    

    PRELIMINARY
      STATEMENT:

     

    WHEREAS,
      the
      Investor wishes to purchase from the Company, upon the terms and subject to
      the
      conditions of this Agreement, Four Houndred and Sixteen Thousand Six Hundred
      and
      Sixty Seven (416,667) shares of preferred stock of the Company, with such
      preferred stock being as described in the First Amended and Restated Certificate
      of Designations, Rights and Preferences (the “Certificate
      of Designations”)
      in
      substantially the form attached hereto as Exhibit
      A
      (the
“Preferred
      Stock”)
      for the
      Initial Purchase Price set forth in Section 1.3.13 hereof. Subject to the
      limitations set forth herein and in the Certificate of Designation, the
      Preferred Stock shall be initially convertible into shares of common stock
      of
      the Company at any time at a conversion ratio of One (1) share of Common Stock
      for One (1) share of Preferred Stock (the “Conversion
      Value”).
      In
      addition, the Company will issue to the Investor Common Stock Purchase Warrants
      (the “Warrants”)
      to
      purchase up to an additional 1,100,000 shares of common stock of the Company
      at
      exercise prices as stated in the Warrants; and 

     

    WHEREAS,
      the
      parties intend to memorialize the purchase and sale of such Preferred Stock
      and
      the Warrants.

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and premises contained herein, and for
      other good and valuable consideration, the receipt and adequacy of which are
      hereby conclusively acknowledged, the parties hereto, intending to be legally
      bound, agree as follows:

     

    ARTICLE
      I

     

    INCORPORATION
      BY REFERENCE, SUPERSEDER AND DEFINITIONS

     

    1.1 Incorporation
      by Reference.
      The
      foregoing recitals and the Exhibits and Schedules attached hereto and referred
      to herein, are hereby acknowledged to be true and accurate, and are incorporated
      herein by this reference.

     

    1.2 Superseder.
      This
      Agreement, to the extent that it is inconsistent with any other instrument
      or
      understanding among the parties governing the affairs of the Company, shall
      supersede such instrument or understanding to the fullest extent permitted
      by
      law. A copy of this Agreement shall be filed at the Company’s principal
      office.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.3 Certain
      Definitions.
      For
      purposes of this Agreement, the following capitalized terms shall have the
      following meanings (all capitalized terms used in this Agreement that are not
      defined in this Article 1 shall have the meanings set forth elsewhere in this
      Agreement):

     

    1.3.1 “1933
      Act”
means
      the Securities Act of 1933, as amended.

     

    1.3.2 “1934
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    1.3.3 “Affiliate”
means
      a
      Person or Persons directly or indirectly, through one or more intermediaries,
      controlling, controlled by or under common control with the Person(s) in
      question. The term “control,” as used in the immediately preceding sentence,
      means, with respect to a Person that is a corporation, the right to the
      exercise, directly or indirectly, of more than 50 percent of the voting rights
      attributable to the shares of such controlled corporation and, with respect
      to a
      Person that is not a corporation, the possession, directly or indirectly, of
      the
      power to direct or cause the direction of the management or policies of such
      controlled Person.

     

    1.3.4 “Articles”
means
      the Articles of Incorporation of the Company, as the same may be amended from
      time to time. 

     

    1.3.5 “Closing”
      shall
      mean the Closing of the transactions contemplated by this Agreement on the
      Closing Date.

     

    1.3.6 “Closing
      Date”
means
      the date on which the payment of the Purchase Price (as defined herein) by
      the
      Investor to the company is completed pursuant to this Agreement to purchase
      the
      Preferred Stock and Warrants, which shall occur on or before July 16,
      2008.

     

    1.3.7 “Common
      Stock”
means
      shares of common stock of the Company, par value $0.001 per share. 

     

    1.3.8 [Reserved].

     

    1.3.9 "Exempt
      Issuance"
      means
      the issuance of (a) shares of Common Stock or options to employees, officers,
      or
      directors of the Company pursuant to any stock or option plan duly adopted
      by a
      majority of the non-employee members of the Board of Directors of the Company
      or
      a majority of the members of a committee of non-employee directors established
      for such purpose, (b) securities upon the exercise of or conversion of any
      securities issued hereunder, 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.3.10 "Material
      Adverse Effect"
      shall
      mean any adverse effect on the business, operations, properties or financial
      condition of the Company that is material and adverse to the Company and its
      subsidiaries and affiliates, taken as a whole and/or any condition,
      circumstance, or situation that would prohibit or otherwise materially interfere
      with the ability of the Company to perform any of its material obligations
      under
      this Agreement or the Registration Rights Agreement or to perform its
      obligations under any other material agreement.

     

    1.3.11 “Nevada
      Act”
means
      the Nevada General Corporation Law, as amended.

     

    1.3.12 “Person”
means
      an individual, partnership, firm, limited liability company, trust, joint
      venture, association, corporation, or any other legal entity.

     

    1.3.13 “Initial Purchase
      Price”
means
      the Two Hundred Fifty Thousand Dollars ($250,000.00) paid by the Investor to
      the
      Company for the Preferred Stock and the Warrants.

     

    1.3.14 Reserved.

     

    1.3.15 "Registration
      Statement"
      shall
      mean the registration statement under the 1933 Act to be filed with the
      Securities and Exchange Commission for the registration of the Shares pursuant
      to Section 6.1 below.

     

    1.3.16 “SEC”
means
      the Securities and Exchange Commission.

     

    1.3.17 “SEC
      Documents”
shall
      mean the Company's latest Form 10-K or 10-KSB as of the time in question, all
      Forms 10-Q or 10-QSB and 8-K filed thereafter, and the Proxy Statement for
      its
      latest fiscal year as of the time in question until such time as the Company
      no
      longer has an obligation to maintain the effectiveness of a Registration
      Statement as set forth in the Registration Rights Agreement.

     

    1.3.18
      “Shares”
shall
      mean, collectively, the shares of Common Stock of the Company issued upon
      conversion of the Preferred Stock subscribed for hereunder and those shares
      of
      Common Stock issuable to the Investor upon exercise of the
      Warrants.

     

    1.3.19
      “Subsequent
      Financing”
shall
      mean any offer and sale of shares of Preferred Stock or debt that is initially
      convertible into shares of Common Stock or otherwise senior or superior to
      the
      Preferred Stock.

     

    1.3.20
      “Transaction
      Documents”
shall
      mean this Agreement, all Schedules and Exhibits attached hereto and all other
      documents and instruments to be executed and delivered by the parties in order
      to consummate the transactions contemplated hereby, including, but not limited
      to the documents listed in Sections 3.2 and 3.3 hereof.

     

    1.3.21 “Warrants”
shall
      mean the Common Stock Purchase Warrants in the form attached hereto Exhibit
      B.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II

    

    SALE
      AND PURCHASE OF COMPANY PREFERRED STOCK AND WARRANTS PURCHASE
      PRICE

    

    2.1 Sale
      of Preferred Stock and Issuance of Warrants. 

    

    (a) Upon
      the
      terms and subject to the conditions set forth herein, and in accordance with
      applicable law, the Company agrees to sell to the Investor, and the Investor
      agrees to purchase from the Company, on the Closing Date 416,667 shares of
      Preferred Stock and the Warrants for the (the “Initial Purchase
      Price”)
      of
      Five Hundred Thousand Dollars ($250,000.00). The Purchase Price shall be paid
      by
      the Investor to the Company on the Closing Date by a wire transfer or check
      of
      the Purchase Price in immediately available funds payable to an account at
      the
      direction of the Company. The Company shall cause the Preferred Stock and the
      Warrants to be issued to the Investor upon the receipt of the Initial Purchase
      Price. The Company shall register the shares of Common Stock into which the
      Preferred Stock is convertible pursuant to the terms and conditions set forth
      in
      Section 6.1 below.

     

    (b) Each
      share of Preferred stock shall initially be convertible by the Investor into
      One
      (1.0) share of Common Stock; provided, however, that the Investor shall not
      be
      entitled to convert the Preferred Stock into shares of Common Stock that would
      result in beneficial ownership by the Investor and its affiliates of more than
      4.9% of the then outstanding number of shares of Common Stock on such date.
      For
      the purposes of the immediately preceding sentence, beneficial ownership shall
      be determined in accordance with Section 13(d) of the Securities Exchange Act
      of
      1934, as amended, and Regulation 13d-3 thereunder.

     

    (c) Upon
      execution and delivery of this Agreement and the Company’s receipt of the
      Initial Purchase Price from the Investor, the Company shall issue to the
      Investor the Warrant to purchase an aggregate of 1,100,000 shares of Common
      Stock at exercise prices as stated in the Warrants, all pursuant to the terms
      and conditions of the form of Warrants attached hereto as Exhibit
      B;
      provided, however, that the Investor shall not be entitled to exercise the
      Warrants and receive shares of Common Stock that would result in beneficial
      ownership by the Investor and its affiliates of more than 4.9% of the then
      outstanding number of shares of Common Stock on such date. For the purposes
      of
      the immediately preceding sentence, beneficial ownership shall be determined
      in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulation 13d-3 thereunder. 

     

    2.2 Purchase
      Price.
      The
      Initial Purchase Price shall be delivered by the Investor in the form of a
      check
      or wire transfer of immediately available funds made payable to the Company
      in
      United States Dollars from the Investor on the Closing Date.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      III

    

    CLOSING
      DATE AND DELIVERIES AT CLOSING

    

    3.1 Closing
      Date. The
      closing of the transactions contemplated by this Agreement (the “Closing”),
      unless expressly determined herein, shall be held at the offices of the Company,
      at 5:00 P.M. local time, on the Closing Date or on such other date and at such
      other place as may be mutually agreed by the parties, including closing by
      facsimile with originals to follow. 

    

    3.2 Deliveries
      by the Company.
      In
      addition to and without limiting any other provision of this Agreement, the
      Company agrees to deliver, or cause to be delivered, to the escrow agent under
      the Escrow Agreement, the following: 

     

    
      	
            	(a)	
              At
                or prior to Closing, an executed Agreement with all exhibits and
                schedules
                attached hereto;

            

    

    
      	
            	(b)	
              At
                or prior to Closing, an executed Warrant in the name of the Investor
                in
                the form attached hereto as Exhibit
                B;

            

    

    
      	
            	(c)	
              Stock
                Certificate in the name of Investor evidencing the Preferred Stock;
                

            

    

    
      	
            	(d)	
              Such
                other documents or certificates as shall be reasonably requested
                by
                Investor or its counsel; and

            

    

     

    
      	
            	(e)	
              Good
                Standing Certificate from the State of
                Nevada.

            

    

     

    3.3 Deliveries
      by Investor.
      In
      addition to and without limiting any other provision of this Agreement, the
      Investor agrees to deliver, or cause to be delivered, to the Company, the
      following: 

     

    
      	 	
              (a)

            	
              A
                deposit in the amount of the Investor Funds in immediately available
                funds;

            

    

    
      	 	
              (b)

            	
              The
                executed Agreement with all Exhibits and Schedules attached
                hereto;

            

    

    
      	 	
              (c)

            	
              Such
                other documents or certificates as shall be reasonably requested
                by the
                Company or its counsel.

            

    

     

    In
      the
      event any document provided to the other party in Paragraphs 3.2 and 3.3 herein
      are provided by facsimile, the party shall forward an original document to
      the
      other party within seven (7) business days.

     

    3.4 Further
      Assurances.
      The
      Company and the Investor shall, upon request, on or after the Closing Date,
      cooperate with each other (specifically, the Company shall cooperate with the
      Investor, and the Investor shall cooperate with the Company) by furnishing
      any
      additional information, executing and delivering any additional documents and/or
      other instruments and doing any and all such things as may be reasonably
      required by the parties or their counsel to consummate or otherwise implement
      the transactions contemplated by this Agreement. 

     

    3.5 Waiver.
      The
      Investor may waive any of the requirements of Section 3.2 of this Agreement,
      and
      the Company at its discretion may waive any of the provisions of Section 3.3
      of
      this Agreement. The Investor may also waive any of the requirements of the
      Company under the Escrow Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      IV

    

    REPRESENTATIONS
      AND WARRANTIES OF 

    THE
      COMPANY

    

    Except
      as
      set forth in the Company’s SEC Documents and the Disclosure Schedules which
      Disclosure Schedules shall be deemed a part hereof and shall qualify any
      representation or otherwise made herein to the extent of the disclosure
      contained in the corresponding section of the Disclosure Schedules, the Company
      represents and warrants to the Investor as of the date hereof and as of Closing
      (which warranties and representations shall survive the Closing regardless
      of
      what examinations, inspections, audits and other investigations the Investor
      has
      heretofore made or may hereinafter make with respect to such warranties and
      representations) as follows: 

     

    4.1 Organization
      and Qualification.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Nevada, and has the requisite corporate power
      and
      authority to own, lease and operate its properties and to carry on its business
      as it is now being conducted and is duly qualified to do business in any other
      jurisdiction by virtue of the nature of the businesses conducted by it or the
      ownership or leasing of its properties, except where the failure to be so
      qualified will not, when taken together with all other such failures, have
      a
      Material Adverse Effect on the business, operations, properties, assets,
      financial condition or results of operation of the Company and its subsidiaries
      taken as a whole.

     

    4.2 Articles
      of Incorporation and By-Laws.
      The
      complete and correct copies of the Company’s Articles and By-Laws, as amended or
      restated to date which have been filed with the Securities and Exchange
      Commission are a complete and correct copy of such document as in effect on
      the
      date hereof and as of the Closing Date.

     

    4.3 Capitalization.

     

    4.3.1
      The
      authorized and outstanding capital stock of the Company is set forth in The
      Company’s Annual Report on Form 10-KSB, filed on April 15, 2008 with the
      Securities and Exchange Commission and updated on all subsequent SEC Documents.
      All shares of capital stock have been duly authorized and are validly issued,
      and are fully paid and no assessable, and free of preemptive
      rights.

     

    4.3.2 As
      of the
      date of this Agreement, the authorized capital stock of the Company consists
      of
      200,000,000 shares of common Stock ($.001 par value) and 200,000,000 shares
      of
      preferred stock ($.001 par value), of which approximately 17,739,625 share
      of
      common Stock are issued and outstanding as of July 16, 2008. As of Closing,
      following the issuance by the Company of the Preferred Stock to the Investor,
      the authorized capital stock of the Company will consist of 200,000,000 shares
      of Common Stock ($.001 par value) and 200,000,000 shares of preferred stock
      ($.001 par value), of which approximately 17,739,625 share of Common Stock
      and
      833,333 shares of preferred stock shall be issued and outstanding. All
      outstanding shares of capital stock have been duly authorized and are validly
      issued, and are fully paid and nonassessable and free of preemptive rights.
      All
      shares of capital stock described above to be issued have been duly authorized
      and when issued, will be validly issued, fully paid and nonassessable and free
      of preemptive rights. Schedule 4.3 hereby contains all shares and derivatives
      currently and potentially outstanding. The company hereby represents that any
      and all shares and current potentially dilutive events have been included in
      Schedule 4.3, including employment agreements, acquisition, consulting
      agreements, debts, payments, financing or business relationships that could
      be
      paid in equity, derivatives or resulting in additional equity issuances that
      could potentially occur. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.3.3
      Except pursuant to this Agreement and as set forth in Schedule 4.3 hereto,
      and
      as set forth in the Company’s SEC Documents, filed with the SEC, as of the date
      hereof and as of the Closing Date, there are no now outstanding options,
      warrants, rights to subscribe for, calls or commitments of any character
      whatsoever relating to, or securities or rights convertible into or exchangeable
      for, shares of any class of capital stock of the Company, or agreements,
      understandings or arrangements to which the Company is a party, or by which
      the
      Company is or may be bound, to issue additional shares of its capital stock
      or
      options, warrants, scrip or rights to subscribe for, calls or commitment of
      any
      character whatsoever relating to, or securities or rights convertible into
      or
      exchangeable for, any shares of any class of its capital stock. The Company
      agrees to inform the Investors in writing of any additional warrants granted
      prior to the Closing Date.

     

    4.3.4
      The
      Company on the Closing Date (i) will have full right, power, and authority
      to
      sell, assign, transfer, and deliver, by reason of record and beneficial
      ownership, to the Investor, the Company Shares hereunder, free and clear of
      all
      liens, charges, claims, options, pledges, restrictions, and encumbrances
      whatsoever; and (ii) upon conversion of the Preferred Stock or exercise of
      the
      Warrants, the Investor will acquire good and marketable title to such Shares,
      free and clear of all liens, charges, claims, options, pledges, restrictions,
      and encumbrances whatsoever, except as otherwise provided in this Agreement
      as
      to the limitation on the voting rights of such Shares in certain
      circumstances.

     

    4.4 Authority.
      The
      Company has all requisite corporate power and authority to execute and deliver
      this Agreement, the Preferred Stock, and the Warrants, to perform its
      obligations hereunder and thereunder and to consummate the transactions
      contemplated hereby and thereby. The execution and delivery of this Agreement
      by
      the Company and the consummation of the transactions contemplated hereby have
      been duly authorized by all necessary corporate action and no other corporate
      proceedings on the part of the Company is necessary to authorize this Agreement
      or to consummate the transactions contemplated hereby except as disclosed in
      this Agreement. This Agreement has been duly executed and delivered by the
      Company and constitutes the legal, valid and binding obligation of the Company,
      enforceable against the Company in accordance with its terms.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.5 No
      Conflict; Required Filings and Consents.
      The
      execution and delivery of this Agreement by the Company does not, and the
      performance by the Company of their respective obligations hereunder will not:
      (i) conflict with or violate the Articles or By-Laws of the Company; (ii)
      conflict with, breach or violate any federal, state, foreign or local law,
      statute, ordinance, rule, regulation, order, judgment or decree (collectively,
      "Laws")
      in
      effect as of the date of this Agreement and applicable to the Company; or (iii)
      result in any breach of, constitute a default (or an event that with notice
      or
      lapse of time or both would become a default) under, give to any other entity
      any right of termination, amendment, acceleration or cancellation of, require
      payment under, or result in the creation of a lien or encumbrance on any of
      the
      properties or assets of the Company pursuant to, any note, bond, mortgage,
      indenture, contract, agreement, lease, license, permit, franchise or other
      instrument or obligation to which the Company is a party or by the Company
      or
      any of its properties or assets is bound. Excluding from the foregoing are
      such
      violations, conflicts, breaches, defaults, terminations, accelerations,
      creations of liens, or incumbency that would not, in the aggregate, have a
      Material Adverse Effect.

     

    4.6 Report
      and Financial Statements.
      The
      Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31,
      2007, filed on April 15, 2008 with the SEC contains the audited financial
      statements of the Company and quarterly reports on Form 10-QSB for subsequent
      quarters filed with the SEC contains the unaudited interim financial statements
      of the Company (the “Financial
      Statements”).
      Each
      of the balance sheets contained in or incorporated by reference into any such
      Financial Statements (including the related notes and schedules thereto) fairly
      presented the financial position of the Company, as of its date, and each of
      the
      statements of income and changes in stockholders’ equity and cash flows or
      equivalent statements in such Financial Statements (including any related notes
      and schedules thereto) fairly presents, changes in stockholders’ equity and
      changes in cash flows, as the case may be, of the Company, for the periods
      to
      which they relate, in each case in accordance with United States generally
      accepted accounting principles (“U.S.
      GAAP”)
      consistently applied during the periods involved, except in each case as may
      be
      noted therein, subject to normal year-end audit adjustments in the case of
      unaudited statements. The books and records of the Company have been, and are
      being, maintained in all material respects in accordance with U.S. GAAP and
      any
      other applicable legal and accounting requirements and reflect only actual
      transaction.

     

    4.7 Compliance
      with Applicable Laws.
      The
      Company is not in violation of, or, to the knowledge of the Company is under
      investigation with respect to or has been given notice or has been charged
      with
      the violation of any Law of a governmental agency, except for violations which
      individually or in the aggregate do not have a Material Adverse Effect.

     

    4.8 Brokers.
      Except
      as set forth on Schedule 4.8, no broker, finder or investment banker is entitled
      to any brokerage, finder's or other fee or Commission in connection with the
      transactions contemplated by this Agreement based upon arrangements made by
      or
      on behalf of the Company.

     

    4.9 SEC
      Documents.
      The
      Company acknowledges that the Company is a publicly held company and has made
      available to the Investor after demand true and complete copies of any requested
      SEC Documents. The Company has registered its Common Stock pursuant to Section
      12(d) of the 1934 Act, and the Common Stock is quoted and traded on the OTC
      Bulletin Board of the National Association of Securities Dealers, Inc. The
      Company has received no notice, either oral or written, with respect to the
      continued quotation or trading of the Common Stock on the OTC Bulletin Board.
      The Company has not provided to the Investor any information that, according
      to
      applicable law, rule or regulation, should have been disclosed publicly prior
      to
      the date hereof by the Company, but which has not been so disclosed. As of
      their
      respective dates, the SEC Documents complied in all material respects with
      the
      requirements of the 1934 Act, and rules and regulations of the SEC promulgated
      thereunder and the SEC Documents did not contain any untrue statement of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary in order to make the statements therein, in light of the circumstances
      under which they were made, not misleading.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.10 Litigation.
      To the
      knowledge of the Company, no litigation, claim, or other proceeding before
      any
      court or governmental agency is pending or to the knowledge of the Company,
      threatened against the Company, the prosecution or outcome of which may have
      a
      Material Adverse Effect.

     

    4.11 Exemption
      from Registration.
      Subject
      to the accuracy of the Investor’s representations in Article V, except as
      required pursuant to the Registration Rights Agreement, the sale of the Common
      Stock and Warrants by the Company to the Investor will not require registration
      under the 1933 Act, but may require registration under New York state securities
      law if applicable to the Investor. When validly converted in accordance with
      the
      terms of the Preferred Stock, and upon exercise of the Warrants in accordance
      with their terms, the Shares underlying the Preferred Stock and the Warrants
      will be duly and validly issued, fully paid, and non-assessable. The Company
      is
      issuing the Preferred Stock and the Warrants in accordance with and in reliance
      upon the exemption from securities registration afforded, inter alia, by Rule
      506 under Regulation D as promulgated by the SEC under the 1933 Act, and/or
      Section 4(2) of the 1933 Act; provided, however, that certain filings and
      registrations may be required under state securities “blue sky” laws depending
      upon the residency of the Investor.

     

    4.12 No
      General Solicitation or Advertising in Regard to this
      Transaction.
      Neither
      the Company nor any of its Affiliates nor, to the knowledge of the Company,
      any
      Person acting on its or their behalf (i) has conducted or will conduct any
      general solicitation (as that term is used in Rule 502(c) of Regulation D as
      promulgated by the SEC under the 1933 Act) or general advertising with respect
      to the sale of the Preferred Stock or Warrants, or (ii) made any offers or
      sales
      of any security or solicited any offers to buy any security under any
      circumstances that would require registration of the Preferred Stock or
      Warrants, under the 1933 Act, except as required herein.

     

    4.13 No
      Material Adverse Effect.
      Except
      as set forth in Schedule 4.13 attached hereto and in the Company’s SEC
      Documents, since June 30, 2007, no event or circumstance resulting in a Material
      Adverse Effect has occurred or exists with respect to the Company. No material
      supplier or customer has given notice, oral or written, that it intends to
      cease
      or reduce the volume of its business with the Company from historical levels.
      Since June 30, 2004, no event or circumstance has occurred or exists with
      respect to the Company or its businesses, properties, prospects, operations
      or
      financial condition, that, under any applicable law, rule or regulation,
      requires public disclosure or announcement prior to the date hereof by the
      Company but which has not been so publicly announced or disclosed in writing
      to
      the Investor. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.14 Material
      Non-Public Information.
      The
      Company has not disclosed to the Investors any material non-public information
      that (i) if disclosed, would reasonably be expected to have a material effect
      on
      the price of the Common Stock or (ii) according to applicable law, rule or
      regulation, should have been disclosed publicly by the Company prior to the
      date
      hereof but which has not been so disclosed.

     

    4.15 Internal
      Controls And Procedures.
      The
      Company maintains books and records and internal accounting controls which
      provide reasonable assurance that (i) all transactions to which the Company
      or
      any subsidiary is a party or by which its properties are bound are executed
      with
      management's authorization; (ii) the recorded accounting of the Company's
      consolidated assets is compared with existing assets at regular intervals;
      (iii)
      access to the Company's consolidated assets is permitted only in accordance
      with
      management's authorization; and (iv) all transactions to which the Company
      or
      any subsidiary is a party or by which its properties are bound are recorded
      as
      necessary to permit preparation of the financial statements of the Company
      in
      accordance with U.S. generally accepted accounting principles.

     

    4.16 Full
      Disclosure.
      No
      representation or warranty made by the
      Company in
      this
      Agreement and no certificate or document furnished or to be furnished to the
      Investor pursuant to this Agreement contains or will contain any untrue
      statement of a material fact, or omits or will omit to state a material fact
      necessary to make the statements contained herein or therein not
      misleading.

     

    ARTICLE
      V

    

    REPRESENTATIONS
      AND WARRANTIES OF THE INVESTOR

     

    The
      Investor represents and warrants to the Company that:

    

    5.1 Organization
      and Standing of the Investor.
      The
      Investor is a limited liability company duly formed, validly existing and in
      good standing under the laws of the State of Delaware. The state in which any
      offer to purchase shares hereunder was made or accepted by such Investor is
      the
      state shown as such Investor’s address. The Investor was not formed for the
      purpose of investing solely in the Preferred Stock, the Warrants or the shares
      of Common Stock which are the subject of this Agreement.

     

    5.2 Authorization
      and Power.
      The
      Investor has the requisite power and authority to enter into and perform this
      Agreement and to purchase the securities being sold to it hereunder. The
      execution, delivery and performance of this Agreement by the Investor and the
      consummation by the Investor of the transactions contemplated hereby have been
      duly authorized by all necessary limited liability company action where
      appropriate. This Agreement and the Registration Rights Agreement have been
      duly
      executed and delivered by the Investor and at the Closing shall constitute
      valid
      and binding obligations of the Investor enforceable against the Investor in
      accordance with their terms, except as such enforceability may be limited by
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
      conservatorship, receivership or similar laws relating to, or affecting
      generally the enforcement of, creditors' rights and remedies or by other
      equitable principles of general application.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.3 No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the consummation
      by
      the Investor of the transactions contemplated hereby or relating hereto do
      not
      and will not (i) result in a violation of such Investor's charter documents
      or
      bylaws where appropriate or (ii) conflict with, or constitute a default (or
      an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of any agreement, indenture or instrument to which the Investor
      is
      a party, or result in a violation of any law, rule, or regulation, or any order,
      judgment or decree of any court or governmental agency applicable to the
      Investor or its properties (except for such conflicts, defaults and violations
      as would not, individually or in the aggregate, have a Material Adverse Effect
      on such Investor). The Investor is not required to obtain any consent,
      authorization or order of, or make any filing or registration with, any court
      or
      governmental agency in order for it to execute, deliver or perform any of such
      Investor’s obligations under this Agreement or to purchase the securities from
      the Company in accordance with the terms hereof, provided that for purposes
      of
      the representation made in this sentence, the Investor is assuming and relying
      upon the accuracy of the relevant representations and agreements of the Company
      herein.

     

    5.4 Financial
      Risks.
      The
      Investor acknowledges that such Investor is able to bear the financial risks
      associated with an investment in the securities being purchased by the Investor
      from the Company and that it has been given full access to such records of
      the
      Company and the subsidiaries and to the officers of the Company and the
      subsidiaries as it has deemed necessary or appropriate to conduct its due
      diligence investigation. The Investor is capable of evaluating the risks and
      merits of an investment in the securities being purchased by the Investor from
      the Company by virtue of its experience as an investor and its knowledge,
      experience, and sophistication in financial and business matters and the
      Investor is capable of bearing the entire loss of its investment in the
      securities being purchased by the Investor from the Company.

     

    5.5 Accredited
      Investor.
      The
      Investor is (i) an “accredited investor” as that term is defined in Rule 501 of
      Regulation D promulgated under the 1933 Act by reason of Rule 501(a)(3) and
      (6),
      (ii) experienced in making investments of the kind described in this Agreement
      and the related documents, (iii) able, by reason of the business and financial
      experience of its officers (if an entity) and professional advisors (who are
      not
      affiliated with or compensated in any way by the Company or any of its
      affiliates or selling agents), to protect its own interests in connection with
      the transactions described in this Agreement, and the related documents, and
      (iv) able to afford the entire loss of its investment in the securities being
      purchased by the Investor from the Company. 

     

    5.6 Brokers.
      Except
      as set forth in Schedule 4.8, no broker, finder or investment banker is entitled
      to any brokerage, finder's or other fee or Commission in connection with the
      transactions contemplated by this Agreement based upon arrangements made by
      or
      on behalf of the Investor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.7 Knowledge
      of Company.
      The
      Investor and such Investor’s advisors, if any, have been, upon request,
      furnished with all materials relating to the business, finances and operations
      of the Company and materials relating to the offer and sale of the securities
      being purchased by the Investor from the Company. The Investor and such
      Investor’s advisors, if any, have been afforded the opportunity to ask questions
      of the Company and have received complete and satisfactory answers to any such
      inquiries.

     

    5.8 Risk
      Factors.
      The
      Investor understands that such Investor’s investment in the securities being
      purchased by the Investor from the Company involves a high degree of risk.
      The
      Investor understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the securities being purchased by the Investor from the Company.
      The Investor warrants that such Investor is able to bear the complete loss
      of
      such Investor’s investment in the securities being purchased by the Investor
      from the Company.

     

    5.9 Full
      Disclosure.
      No
      representation or warranty made by the Investor in this Agreement and no
      certificate or document furnished or to be furnished to the Company pursuant
      to
      this Agreement contains or will contain any untrue statement of a material
      fact,
      or omits or will omit to state a material fact necessary to make the statements
      contained herein or therein not misleading. Except as set forth or referred
      to
      in this Agreement, Investor does not have any agreement or understanding with
      any person relating to acquiring, holding, voting or disposing of any equity
      securities of the Company.

     

    5.10 Payment
      of Due Diligence Expenses.
      At
      Closing the Company shall disperse to the Investor Six Thousand Two Hundred
      and
      Fifty Dollars ($6,250.00) as partial payment for due diligence expenses as
      set
      forth in Section 5.10 of the Preferred Stock Purchase Agreement by and between
      the parties herein dated March 21, 2008. 

     

    ARTICLE
      VI

    

    COVENANTS
      OF THE COMPANY

    

    6.1 Registration
      Rights.
      Provided that the Registrable Securities have not been registered, if at any
      time after the date hereof, the Company proposes to register any of its
      securities under the 1933 Act (other than by a registration in connection with
      an acquisition in a manner which would not permit registration of the Shares
      for
      sale to the public, on Form S-8, or any successor form thereto, on Form S-4,
      or
      any successor form thereto), the Company will each such time give prompt written
      notice to all holders of the Shares of its intention to do so and of such
      holders of the Shares' rights under this Section 6.1. Upon the written request
      of any such holders of the Shares made within ten (10) days after the receipt
      of
      any such notice (which request shall specify the Shares intended to be disposed
      of by such holders of the Shares and the intended method of disposition
      thereof), the Company will, subject to the terms of this Agreement, use its
      commercially reasonable best efforts to effect the registration under the 1933
      Act of the Shares, to the extent requisite to permit the disposition (in
      accordance with the intended methods thereof as aforesaid) of such Shares so
      to
      be registered, by inclusion of such Shares in the registration statement which
      covers the securities which the Company proposes to register, provided that
      if,
      at any time after written notice of its intention to register any securities
      and
      prior to the effective date of the registration statement filed in connection
      with such registration, the Company shall determine for any reason either not
      to
      register or to delay registration of such securities, the Company may, at its
      election, give written notice of such determination to each holders of the
      Shares and, thereupon, (i) in the case of a determination not to register,
      shall
      be relieved of this obligation to register any Shares in connection with such
      registration (but not from its obligation to pay the registration expenses
      in
      connection therewith), and (ii) in the case of a determination to delay
      registering, shall be permitted to delay registering any of the Shares, for
      the
      same period as the delay in registering such other securities. The Company
      will
      pay all registration expenses in connection with each registration of the Shares
      requested pursuant to this Section 6.1. The right provided the holders of the
      Shares pursuant to this Section shall be exercisable at their sole discretion
      and will in no way limit any of the Company's obligations to pay the Shares
      according to their terms.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.2 Reservation
      of Common Stock.
      As of
      the date hereof, the Company has reserved and the Company shall continue to
      reserve and keep available at all times, free of preemptive rights, shares
      of
      Common Stock for the purpose of enabling the Company to issue the shares of
      Common Stock underlying the Preferred Stock and Warrants. 

     

    6.3 Compliance
      with Laws.
      The
      Company hereby agrees to comply in all respects with the Company's reporting,
      filing and other obligations under the Laws.

     

    6.4 Exchange
      Act Registration.
      The
      Company (a) will continue its obligation to report to the SEC under the 1934
      Act
      and thereafter shall continue to be registered thereunder and will use its
      best
      efforts to comply in all respects with its reporting and filing obligations
      under the 1934 Act, and will not take any action or file any document (whether
      or not permitted by the 1934 Act or the rules thereunder) to terminate or
      suspend any such registration or to terminate or suspend its reporting and
      filing obligations under the 1934 until the Investors have disposed of all
      of
      their Shares.

     

    6.5 Corporate
      Existence; Conflicting Agreements.
      The
      Company will take all steps necessary to preserve and continue the corporate
      existence of the Company. The Company shall not enter into any agreement, the
      terms of which agreement would restrict or impair the right or ability of the
      Company to perform any of its obligations under this Agreement or any of the
      other agreements attached as exhibits hereto.

     

    6.6 Listing,
      Securities Exchange Act of 1934 and Rule 144
      Requirements.
      The
      Company is required to maintain their current listing on OTC Bulletin Board
      or a
      listing on a national exchange and maintain their status as a Company regulated
      by Securities Exchange Act of 1934 and if the Company is current currently
      listed on the Pink Sheets the Company must be fully reporting per Rule 144
      until
      such time as they are regulated by the Securities Exchange Act of 1934. If
      for
      any time post Closing the Company is no longer regulated by the Securities
      Exchange Act of 1934 and is not a fully reporting Company, then the Company
      shall pay to the Investors as liquidated damages and not as a penalty, one
      percent
      (1%)
      a month
      of the Initial Purchase Price plus the Additional Investment Right as described
      in Section 6.16, should such investment right be exercised, in cash or PIK
      at
      the option of the Investor. Such damages shall cease at the time the Company
      begins complying with the standards as mentioned above in Section
      6.6.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.7 Convertible
      Debt.
      On
      or
      prior to the Closing Date, the Company will cause to be cancelled all
      convertible debt in the Company. For a period of two years from the closing
      the
      Company will not issue any convertible debt below $0.90 per share.

     

    6.8 Reset
      Equity Deals.
      On
      or
      prior to the Closing Date, the Company will cause to be cancelled any and all
      reset features related to any shares outstanding that could result in additional
      shares being issued. For a period of five years from the closing the Company
      will not enter into any transactions that have any reset features that could
      result in additional shares being issued. 

     

    6.9 Use
      of Proceeds.
      The
      Company will use the proceeds from the sale of the Preferred Stock and the
      Warrants (excluding amounts paid by the Company for legal and administrative
      fees in connection with the sale of such securities) for sales and marketing,
      working capital and acquisitions.

     

    6.10 Right
      of First Refusal.
      Each
      Investor shall have the right to participate in any subsequent funding by the
      Company on a pro rata basis at one hundred percent (100%) of the offering price
      for a three month period following the Closing. 

     

    6.11 Price
      Adjustment.
      From
      the
      date hereof until such time as no Purchaser holds any of the Securities, the
      Company closes on the sale of a note or notes, shares of Common Stock, or shares
      of any class of Preferred Stock at a price per share of Common Stock, or with
      a
      conversion right to acquire Common Stock at a price per share of Common Stock,
      that is less than the Conversion Price (as adjusted to the capitalization per
      share as of the Closing Date, following any stock splits, stock dividends,
      or
      the like) (collectively, the “Subsequent Conversion Price”), the Company shall
      make a post-Closing adjustment in the Conversion Price so that the effective
      price per share paid by the Investor is adjusted to a price determined by
      multiplying such Conversion Price by a fraction, the numerator of which shall
      be
      the number of shares of Common Stock Outstanding (defined below) immediately
      prior to such issuance plus the number of shares of Common Stock that the
      aggregate consideration received by the Company for such issuance would purchase
      at such Conversion Price; and the denominator of which shall be the number
      of
      shares of Common Stock Outstanding (as defined below) immediately prior to
      such
      issuance plus the number of shares issued at such issuance. For purposes of
      this
Section
      6.11,
      the
      term “Common Stock Outstanding” shall mean and include the following: (1)
      outstanding Common Stock, (2) Common Stock issuable upon conversion of
      outstanding Preferred Stock, (3) Common Stock issuable upon exercise of
      outstanding warrants. Shares described in (1) through (4) above shall be
      included whether vested or unvested, whether contingent or non-contingent and
      whether exercisable or not yet exercisable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.12 Price
      Adjustment
      Based on Earnings Per Share.
      In
      the
      event the Company earns between $0.0670 and $0.0335 (50% Decline) per share
      (where such earnings in this paragraph shall always be defined as earnings
      on a
      pre tax fully diluted basis (including dilution from any options, warrants
      and
      convertible securities) as reported for the audited sixth months ended
June
      30,
2008
      from
continuing
      operations before any non-cash
      items the then current Conversion Price to the Investor at the time the audited
      numbers are reported to the SEC shall be decrease
      proportionately by 0% if the pre tax earnings (for first six months ended June
      30, 2008) are $0.0670
      per
      share or greater and by 50% if the pre tax earnings (for first six months ended
      June 30, 2008) are $0.0335
      per
      share (50%
      decrease). For example if the earnings are $ 0.0536 per share or less (20%
      Decline) then the then current Conversion Price to the investor shall be reduced
      by 20%. Such adjustment shall be made automatically within five business days
      of
      the audited numbers being reported to the SEC. 

     

    In
      the
      event the Company earns between $0.1559 and $0.0780 (50% Decline) per share
      (where such earnings in this paragraph shall always be defined as earnings
      on a
      pre tax fully diluted basis (including dilution from any options, warrants
      and
      convertible securities) as reported for the audited fiscal year ending 2008
      from
      continuing operations before any non-cash items the then current Conversion
      Price to the Investor at the time the audited numbers are reported to the SEC
      shall be decrease proportionately by 0% if the pre tax earnings are $0.1559
      per
      share or greater and by 50% if the pre tax earnings are $0.0780 per share (50%
      decrease). For example if the earnings are $ 0.1247 per share or less (20%
      Decline) then the then current Conversion Price to the investor shall be reduced
      by 20%. Such adjustment shall be made automatically within five business days
      of
      the audited numbers being reported to the SEC. 

     

    6.13 Insider
      Selling.
      The
      earliest any “Insiders” can start selling their shares shall be six months from
      registration effectiveness. Insiders shall include all officers, consultants
      and
      directors of the Company. The managing members of the Investor and the Investor
      shall not be considered “Insiders”.

     

    6.14 Subsequent
      Equity Sales.
      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”
or
      an
“MFN
      Transaction”
(each
      as defined below). 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.
      The
      term “MFN
      Transaction”
shall
      mean a transaction in which the Company issues or sells any securities in a
      capital raising transaction or series of related transactions which grants
      to an
      investor the right to receive additional shares based upon future transactions
      of the Company on terms more favorable than those granted to such investor
      in
      such offering. 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. Notwithstanding the foregoing, this
      Section 6.14 shall not apply in respect of an Exempt Issuance, except that
      no
      Variable Rate Transaction or MFN Transaction shall be an Exempt Issuance, nor
      shall this Section 6.14 prevent the Company from potentially granting
      anti-dilution protection to any potential future investors in the Company.
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.15 Stock
      Splits.
      All
      forward and reverse stock splits shall effect all equity and derivative holders
      proportionately.

    

    ARTICLE
      VII

    

    COVENANTS
      OF THE INVESTOR

    

    7.1 Compliance
      with Law.
      The
      Investor's trading activities with respect to shares of the Company's Common
      Stock will be in compliance with all applicable state and federal securities
      laws, rules and regulations and rules and regulations of any public market
      on
      which the Company's Common Stock is listed. 

     

    7.2 Transfer
      Restrictions. The
      Investor’s acknowledge that (1) the Preferred Stock, Warrants and shares
      underlying the Preferred Stock and Warrants have not been registered under
      the
      provisions of the 1933 Act, and may not be transferred unless (A) subsequently
      registered thereunder or (B) the Investor shall have delivered to the Company
      an
      opinion of counsel, reasonably satisfactory in form, scope and substance to
      the
      Company, to the effect that the Preferred Stock, Warrants and shares underlying
      the Notes and Warrants to be sold or transferred may be sold or transferred
      pursuant to an exemption from such registration; and (2) any sale of the
      Preferred Stock, Warrants and shares underlying the Preferred Stock and Warrants
      made in reliance on Rule 144 promulgated under the 1933 Act may be made only
      in
      accordance with the terms of said Rule and further, if said Rule is not
      applicable, any resale of such securities under circumstances in which the
      seller, or the person through whom the sale is made, may be deemed to be an
      underwriter, as that term is used in the 1933 Act, may require compliance with
      some other exemption under the 1933 Act or the rules and regulations of the
      SEC
      thereunder.

     

    7.3 Restrictive
      Legend. The
      Investor acknowledges and agrees that the Preferred Stock, the Warrants and
      the
      Shares underlying the Preferred Stock and Warrants, and, until such time as
      the
      Shares underlying the Preferred Stock and Warrants have been registered under
      the 1933 Act and sold in accordance with an effective Registration Statement,
      certificates and other instruments representing any of the Shares, shall bear
      a
      restrictive legend in substantially the following form (and a stop-transfer
      order may be placed against transfer of any such securities):

     

    "THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
      SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED,
      SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
      STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY
      APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE PROVISIONS
      OF
      REGULATION S, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
      SECURITIES ACT."

    7.4 Amendment
      to Articles of Incorporation.
      Investor
      hereby agrees to vote any shares of capital stock that it may own directly
      or
      beneficially, for the amendment to the Articles. Pending adoption of such
      amendment, Investor hereby agrees for itself and its successors and assigns
      that
      neither this Section 7.4 or any restriction on exercise of the Warrant shall
      be
      amended, modified or waived without the consent of the holders of a majority
      of
      the shares of Common Stock held by Persons who are not Affiliates of the
      Company, or the Investor or Affiliates of the Investor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VIII

     

    

    CONDITIONS
      PRECEDENT TO THE COMPANY’S OBLIGATIONS

    

    The
      obligation of the Company to consummate the transactions contemplated hereby
      shall be subject to the fulfillment, on or prior to Closing Date, of the
      following conditions:

    

    8.1 No
      Termination.
      This
      Agreement shall not have been terminated pursuant to Article X
      hereof.

    

    8.2 Representations
      True and Correct.
      The
      representations and warranties of the Investor contained in this Agreement
      shall
      be true and correct in all material respects on and as of the Closing Date
      with
      the same force and effect as if made on as of the Closing Date.

    

    8.3 Compliance
      with Covenants.
      The
      Investor shall have performed and complied in all material respects with all
      covenants, agreements, and conditions required by this Agreement to be performed
      or complied by it prior to or at the Closing Date.

    

    8.4 No
      Adverse Proceedings.
      On the
      Closing Date, no action or proceeding shall be pending by any public authority
      or individual or entity before any court or administrative body to restrain,
      enjoin, or otherwise prevent the consummation of this Agreement or the
      transactions contemplated hereby or to recover any damages or obtain other
      relief as a result of the transactions proposed hereby. 

    

    ARTICLE
      IX

    

    CONDITIONS
      PRECEDENT TO INVESTOR’S OBLIGATIONS

    

    The
      obligation of the Investors to consummate the transactions contemplated hereby
      shall be subject to the fulfillment, on or prior to Closing Date unless
      specified otherwise, of the following conditions:

    

    9.1 No
      Termination.
      This
      Agreement shall not have been terminated pursuant to Article X
      hereof.

     

    9.2 Representations
      True and Correct.
      The
      representations and warranties of the Company contained in this Agreement shall
      be true and correct in all material respects on and as of the Closing Date
      with
      the same force and effect as if made on as of the Closing Date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    9.3 Compliance
      with Covenants .
      The
      Company shall have performed and complied in all material respects with all
      covenants, agreements, and conditions required by this Agreement to be performed
      or complied by it prior to or at the Closing Date.

     

    9.4 No
      Adverse Proceedings.
      On the
      Closing Date, no action or proceeding shall be pending by any public authority
      or individual or entity before any court or administrative body to restrain,
      enjoin, or otherwise prevent the consummation of this Agreement or the
      transactions contemplated hereby or to recover any damages or obtain other
      relief as a result of the transactions proposed hereby. 

     

    ARTICLE
      X

    

    TERMINATION,
      AMENDMENT AND WAIVER

    

    10.1 Termination.
      This
      Agreement may be terminated at any time prior to the Closing Date

     

    10.1.1 by
      mutual
      written consent of the Investor and the Company;

     

    10.1.2 by
      the
      Company upon a material breach of any representation, warranty, covenant or
      agreement on the part of the Investor set forth in this Agreement, or the
      Investor upon a material breach of any representation, warranty, covenant or
      agreement on the part of the Company set forth in this Agreement, or if any
      representation or warranty of the Company or the Investor, respectively, shall
      have become untrue, in either case such that any of the conditions set forth
      in
      Article VIII or Article IX hereof would not be satisfied (a "Terminating
      Breach"),
      and
      such breach shall, if capable of cure, not have been cured within five (5)
      business days after receipt by the party in breach of a notice from the
      non-breaching party setting forth in detail the nature of such
      breach.

     

    10.2 Effect
      of Termination.
      Except
      as otherwise provided herein, in the event of the termination of this Agreement
      pursuant to Section 10.1 hereof, there shall be no liability on the part of
      the
      Company or the Investor or any of their respective officers, directors, agents
      or other representatives and all rights and obligations of any party hereto
      shall cease; provided that in the event of a Terminating Breach, the breaching
      party shall be liable to the non-breaching party for all costs and expenses
      incurred by the non-breaching party not to exceed $50,000.00.

     

    10.3 Amendment.
      This
      Agreement may be amended by the parties hereto any time prior to the Closing
      Date by an instrument in writing signed by the parties hereto.

     

    10.4 Waiver.
      At any
      time prior to the Closing Date, the Company or the Investor, as appropriate,
      may: (a) extend the time for the performance of any of the obligations or other
      acts of other party or; (b) waive any inaccuracies in the representations and
      warranties contained herein or in any document delivered pursuant hereto which
      have been made to it or them; or (c) waive compliance with any of the agreements
      or conditions contained herein for its or their benefit. Any such extension
      or
      waiver shall be valid only if set forth in an instrument in writing signed
      by
      the party or parties to be bound hereby.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      XI

    

    GENERAL
      PROVISIONS

    11.1 Transaction
      Costs.
      Except
      as otherwise provided herein, each of the parties shall pay all of his or its
      costs and expenses (including attorney fees and other legal costs and expenses
      and accountants’ fees and other accounting costs and expenses) incurred by that
      party in connection with this Agreement; provided, the Company shall pay
      Investor such due diligence expenses as described in section 5.10.

     

    11.2 Indemnification.
      The
      Investor agrees to indemnify, defend and hold the Company (following the Closing
      Date) and its officers and directors harmless against and in respect of any
      and
      all claims, demands, losses, costs, expenses, obligations, liabilities or
      damages, including interest, penalties and reasonable attorney’s fees, that it
      shall incur or suffer, which arise out of or result from any breach of this
      Agreement by such Investor or failure by such Investor to perform with respect
      to any of its representations, warranties or covenants contained in this
      Agreement or in any exhibit or other instrument furnished or to be furnished
      under this Agreement. The Company agrees to indemnify, defend and hold the
      Investor harmless against and in respect of any and all claims, demands, losses,
      costs, expenses, obligations, liabilities or damages, including interest,
      penalties and reasonable attorney’s fees, that it shall incur or suffer, which
      arise out of, result from or relate to any breach of this Agreement or failure
      by the Company to perform with respect to any of its representations, warranties
      or covenants contained in this Agreement or in any exhibit or other instrument
      furnished or to be furnished under this Agreement. In no event shall the Company
      or the Investors be entitled to recover consequential or punitive damages
      resulting from a breach or violation of this Agreement nor shall any party
      have
      any liability hereunder in the event of gross negligence or willful misconduct
      of the indemnified party. In the event of a breach of this Agreement by the
      Company, the Investor shall be entitled to pursue a remedy of specific
      performance upon tender into the Court an amount equal to the Initial Purchase
      Price hereunder. The indemnification by the Investor shall be limited to the
      Initial Purchase Price.

     

    11.3 Headings.
      The
      table of contents and headings contained in this Agreement are for reference
      purposes only and shall not affect in any way the meaning or interpretation
      of
      this Agreement.

     

    11.4 Entire
      Agreement.
      This
      Agreement (together with the Schedule, Exhibits, Warrants and documents referred
      to herein) constitute the entire agreement of the parties and supersede all
      prior agreements and undertakings, both written and oral, between the parties,
      or any of them, with respect to the subject matter hereof. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11.5 Notices.
      All
      notices and other communications hereunder shall be in writing and shall be
      deemed to have been given (i) on the date they are delivered if delivered in
      person; (ii) on the date initially received if delivered by facsimile
      transmission followed by registered or certified mail confirmation; (iii) on
      the
      date delivered by an overnight courier service; or (iv) on the third business
      day after it is mailed by registered or certified mail, return receipt requested
      with postage and other fees prepaid as follows:

    

    If
      to
      the Company:

    

    99
      Taibei
      Road

    Limin
      Economic and Technological Development Zone

    Harbin,
      China 150025

    Facsimile
      No.: +86 451 57351551

    Attention:
      Jinjiang Wang

    

    With
      a
      copy to:

     

    Crone
      Rozynko, LLP

    101
      Montgomery Street, Suite 1950

    San
      Francisco, CA 94104

    Facsimile
      No.: (415) 955-8910

    Attn:
      Alisande M. Rozynko, Esq.

     

    If
      to
      the Investor:

    

    T
      Squared
      Investments LLC

    c/o
      T
      Squared Capital LLC

    1325
      Sixth Avenue, Floor 28

    New
      York,
      New York 10019

    Attn:
      Thomas M. Sauve

    

    11.6 Severability.
      If any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced by any rule of law or public policy, all other conditions and
      provisions of this Agreement shall nevertheless remain in full force and effect
      so long as the economic or legal substance of the transactions contemplated
      hereby is not affected in any manner materially adverse to any party. Upon
      such
      determination that any such term or other provision is invalid, illegal or
      incapable of being enforced, the parties hereto shall negotiate in good faith
      to
      modify this Agreement so as to effect the original intent of the parties as
      closely as possible in an acceptable manner to the end that the transactions
      contemplated hereby are fulfilled to the extent possible.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11.7 Binding
      Effect.
      All the
      terms and provisions of this Agreement whether so expressed or not, shall be
      binding upon, inure to the benefit of, and be enforceable by the parties and
      their respective administrators, executors, legal representatives, heirs,
      successors and assignees. 

     

    11.8 Preparation
      of Agreement.
      This
      Agreement shall not be construed more strongly against any party regardless
      of
      who is responsible for its preparation. The parties acknowledge each contributed
      and is equally responsible for its preparation.

     

    11.9 Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of New York, without giving effect to applicable principles of
      conflicts of law.

     

    11.10
      Jurisdiction.
      This
      Agreement shall be exclusively governed by and construed in accordance with
      the
      laws of the State of New York. If any action is brought among the parties with
      respect to this Agreement or otherwise, by way of a claim or counterclaim,
      the
      parties agree that in any such action, and on all issues, the parties
      irrevocably waive their right to a trial by jury. Exclusive jurisdiction and
      venue for any such action shall be the Federal Courts serving the State of
      New
      York. In the event suit or action is brought by any party under this Agreement
      to enforce any of its terms, or in any appeal therefrom, it is agreed that
      the
      prevailing party shall be entitled to reasonable attorneys fees to be fixed
      by
      the arbitrator, trial court, and/or appellate court.

     

    11.11
      Preparation
      and Filing of Securities and Exchange Commission
      filings.
      The
      Investor shall reasonably assist and cooperate with the Company in the
      preparation of all filings with the SEC after the Closing Date due after the
      Closing Date. 

     

    11.12 Further
      Assurances, Cooperation.
      Each
      party shall, upon reasonable request by the other party, execute and deliver
      any
      additional documents necessary or desirable to complete the transactions herein
      pursuant to and in the manner contemplated by this Agreement. The parties hereto
      agree to cooperate and use their respective best efforts to consummate the
      transactions contemplated by this Agreement.

     

    11.13 Survival.
      The
      representations, warranties, covenants and agreements made herein shall survive
      the Closing of the transaction contemplated hereby. 

     

    11.14 Third
      Parties.
      Except
      as disclosed in this Agreement, nothing in this Agreement, whether express
      or
      implied, is intended to confer any rights or remedies under or by reason of
      this
      Agreement on any persons other than the parties hereto and their respective
      administrators, executors, legal representatives, heirs, successors and
      assignees. Nothing in this Agreement is intended to relieve or discharge the
      obligation or liability of any third persons to any party to this Agreement,
      nor
      shall any provision give any third persons any right of subrogation or action
      over or against any party to this Agreement.

     

    11.15 Failure
      or Indulgence Not Waiver; Remedies Cumulative.
      No
      failure or delay on the part of any party hereto in the exercise of any right
      hereunder shall impair such right or be construed to be a waiver of, or
      acquiescence in, any breach of any representation, warranty, covenant or
      agreement herein, nor shall nay single or partial exercise of any such right
      preclude other or further exercise thereof or of any other right. All rights
      and
      remedies existing under this Agreement are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11.16 Counterparts.
      This
      Agreement may be executed in one or more counterparts, and by the different
      parties hereto in separate counterparts, each of which when executed shall
      be
      deemed to be an original, but all of which taken together shall constitute
      one
      and the same agreement. A facsimile transmission of this signed Agreement shall
      be legal and binding on all parties hereto. 

    [SIGNATURES
      ON FOLLOWING PAGE]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Investors and the Company have as of the date first written above executed
      this
      Agreement.

    

    
      	
              THE
                COMPANY:

            
	 
	
              CHINA
                KANGTAI CACTUS BIO-TECH, INC.

            
	 	 
	
              By:
                

            	
              /s/
                Jinjiang Wang

            
	
              Jinjiang
                Wang

            
	
              President
                and CEO

            
	 
	
              INVESTOR:

            
	 
	
              T
                Squared Investments LLC

            
	
              By:
                T Squared Capital LLC, Managing Member

            
	 	 
	
              By:
                

            	
              /s/
                Thomas Sauve

            
	
              Thomas
                Sauve

            
	
              Managing
                Member

            
	
              1325
                Sixth Avenue, Floor 28

            
	
              New
                York NY 10019

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      A

    

    
      	
              NAME
                AND ADDRESS

            	 	
              AMOUNT OF 

              INVESTMENT

            	 	
              NUMBER OF SHARES 

              OF COMMON STOCK 

              INTO WHICH PREFERRED

              STOCK IS CONVERTIBLE

            	 	
              NUMBER OF SHARES 

              UNDERLYING 

              WARRANTS

            	 
	 	 	 	 	 	 	 	 
	
              T
                Squared Investments LLC

              1325
                Sixth Avenue, Floor 28

              New
                York, New York 10019

              Attn:
                Thomas M. Sauve

            	 	
              $

            	
              250,000

            	 	 	
              
              

              
              

              
              

              416,667

            	 	 	
              
              

              
              

              
              

              1,100,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}]]