Document:

Unassociated Document

     

    

    

    
      
        

      

    

    

    

    

    MEMBERSHIP
      INTEREST PURCHASE AGREEMENT

    

    by
      and among

    

    SUB-URBAN
      BRANDS, INC.,

    

    THE
      APPAREL AGENT, LLC

     

    

     

    JIUN
      KU

     

    AND

     

    SHIRLEY
      FONG

    

    

    
      
        

      

    

    Dated
      May
      8, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    MEMBERSHIP
      INTEREST PURCHASE AGREEMENT

    

    

    MEMBERSHIP
      INTEREST PURCHASE AGREEMENT (this
      "Agreement")
      dated

    May
      8,
      2007, by
      and
      among SUB-URBAN
      BRANDS, INC.,
      a Nevada
      corporation (sometimes referred to herein as the "Purchaser"),
      THE
      APPAREL AGENT, LLC, a
      California limited liability company ("TAA"),
      and
JIUN
      KU and SHIRLEY
      FONG (each
      individually, a “Seller”
and
      collectively, the "Sellers").

    

    

    WITNESSETH
      :

    

    WHEREAS,
      the
      Sellers own an aggregate of 45% of the Membership Interests of TAA (the
      "Seller
      Membership Interests")
      as
      follows:

    

    (a) Seller
      Jiun Ku owns an aggregate of 22.5% of the Membership Interests of TAA; and
      

    

    (b) Seller
      Shirley Fong owns an aggregate of 22.5% of the Membership Interests of TAA;
      

    

    WHEREAS,
      TAA
      holds an aggregate of 22.5% of the Membership Interests of TAA (the
“Block
      Membership Interests”
and
      together with the Seller Membership Interests, the “Membership
      Interests”)
      acquired from former member Larry Block pursuant to that certain Membership
      Interest Redemption Agreement, dated September 11, 2006, between Larry Block
      and
      TAA (the “Block
      Redemption Agreement”),
      which
      membership interests are subject to the promissory note dated September 11,
      2006, issued by TAA to Larry Block (the “Block
      Note”)
      and
      that certain Membership Interests Pledge Agreement, dated September 11, 2006,
      between Larry Block and TAA (the “Block
      Pledge Agreement”):

    

    WHEREAS,
      TAA
      is
      engaged in the design, production and distribution of apparel (the “Business”);

     

    WHEREAS,
      each of
      the Sellers desires to sell, and Purchaser desires to purchase, the Seller
      Membership Interests, pursuant to the provisions of this Agreement and TAA
      desires to sell, and Purchaser desires to purchase, the Block Membership
      Interests, pursuant to the provisions of this Agreement;

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and agreements set forth in this
      Agreement, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties do hereby agree as
      follows:

    

    
      
        
        

      

      
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    ARTICLE
      I

    

    SALE
      OF THE MEMBERSHIP INTERESTS

    

    Section
      1.1 Sale
      of the Membership Interests from the Sellers.
      Subject
      to the terms and conditions herein stated, each of the Sellers agrees
      to
      sell, assign, transfer and deliver to Purchaser on the Closing Date (as defined
      in Section
      1.4),
      and
      Purchaser agrees to purchase from each of the Sellers on the Closing Date,
      all
      of his or her Membership Interests.

    

    Section
      1.2 Purchase
      Price.
      In full
      consideration for the purchase by Purchaser of the Membership Interests, the
      purchase price (the "Purchase
      Price"),
      shall
      be calculated and paid by Purchaser to the Sellers as set forth in subsections
      (a) and (b) below:

    

    (a) Purchaser
      shall pay Seller Jiun Ku an aggregate amount equal to One Hundred Eighty
      Thousand Dollars ($180,000), payable as follows:

    

    (i) at
      least
      One Hundred Thousand Dollars ($100,000) shall be paid in cash at the Closing
      by
      direct
      wire transfer;
      and

    

    (ii) a
      secured
      promissory note in the maximum principal amount of Eighty Thousand Dollars
      ($80,000) in form and content reasonably acceptable to Purchaser and Seller
      Ku
      (the “Ku
      Note”)
      shall
      be delivered by the Company at Closing provided, that the Ku Note shall (i)
      bear
      interest at eight percent (8%) per annum; (ii) be due and payable not earlier
      than 12 months following the Closing Date; be secured by the assets of the
      Company (and shall be pari passu with the Fong Note (defined below)), subject
      to
      all currently existing secured debt and Seller shall agree, at the request
      of
      the Company, to subordinate her security interest to any security interests
      granted or to be granted by the Company in connection with any acquisition,
      merger or fundraising activities of the Company; and shall be subject to
      reduction pursuant the Purchaser’s right of set-off set forth in Sections 6.4
      and 6.5 hereof. 

    

    (b) Purchaser
      shall pay Seller Shirley Fong an aggregate amount equal to One Hundred
      Ninety-Five Thousand Dollars ($195,000), payable as follows:

    

    (i) at
      least
      One Hundred Thousand Dollars ($100,000) shall be paid in cash at the Closing
      by
      direct
      wire transfer;
      and

    

    (ii) a
      secured
      promissory note in the maximum principal amount of Ninety-Five Thousand Dollars
      ($95,000) in form and content reasonably acceptable to Purchaser and Seller
      Fong
      (the “Fong
      Note”)
      shall
      be delivered by the Company at Closing; provided, that the Fong Note shall
      (i)
      bear interest at eight percent (8%) per annum; (ii) be due and payable not
      earlier than 12 months following the Closing Date; be secured by the assets
      of
      the Company (and shall be pari passu with the Fong Note (defined below)),
      subject to all currently existing secured debt and Seller shall agree, at the
      request of the Company, to subordinate her security interest to any security
      interests granted or to be granted by the Company in connection with any
      acquisition, merger or fundraising activities of the Company; and shall be
      subject to reduction pursuant the Purchaser’s right of set-off set forth in
      Sections 6.4 and 6.5 hereof.

     

    
      
        
        

      

      
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    Section
      1.3 Sale
      of the Membership Interests from TAA.
      Subject
      to the terms and conditions herein stated, TAA agrees to sell, assign, transfer
      and deliver to Purchaser on the Closing Date (as defined in Section
      1.4),
      and
      Purchaser agrees to purchase from TAA on the Closing Date, the Block Membership
      Interests of TAA that were acquired from Larry Block pursuant to the Block
      Redemption Agreement. In consideration of the transfer of such Membership
      Interests, Purchaser
      shall pay the Block Note in full at the Closing.

    

    Section
      1.4 Closing.
      Subject
      to the satisfaction of the conditions set forth in Sections
      4.1 and 4.2
      hereof
      (or the waiver thereof by the party entitled to waive that condition), the
      closing
      of the transactions contemplated by this Agreement (the
      “Closing”)
      shall
      take place at the offices of the Company (or at such other place as the parties
      may mutually agree upon) or
      by the
      exchange of documents and instruments by mail, courier, telecopy and wire
      transfer to the extent mutually acceptable to the parties hereto, on
      June
      15, 2007
      (such
      date is herein referred to as the "Closing
      Date").

    

    Section
      1.5  Termination
      of Agreement. 

    

    (a) Events
      of Termination.
      This
      Agreement may be terminated prior to the Closing as follows:

    

    (1) at
      the
      election of the Purchaser, on one hand, or TAA and the Sellers, on the other
      hand, on or after June 30, 2007, if the Closing shall not have occurred by
      the
      close of business on such date, provided that the terminating party is not
      in
      default of any of its obligations hereunder; 

    

    (2) by
      mutual
      written consent of the Sellers, TAA and Purchaser; or

    

    (3) by
      Purchaser, TAA or any Seller if there shall be in effect a final nonappealable
      order of a Governmental or Regulatory Authority (as defined below) of competent
      jurisdiction restraining, enjoining or otherwise prohibiting the consummation
      of
      the transactions contemplated hereby; it being agreed that the parties hereto
      shall promptly appeal any adverse determination which is not nonappealable
      (and
      pursue such appeal with reasonable diligence).

    

    (b) Procedures.
      In the
      event of termination and abandonment by Purchaser or TAA and Sellers, or both,
      pursuant to Section
      1.5(a)
      hereof,
      written notice thereof shall forthwith be given to the other party or parties,
      and this Agreement shall terminate, and the purchase of the Membership Interests
      hereunder shall be abandoned, without further action by the Purchaser or the
      Sellers. If this Agreement is terminated as provided herein each party shall
      redeliver all documents, work papers and other material of any other party
      relating to the transactions contemplated hereby, whether so obtained before
      or
      after the execution hereof, to the party furnishing the same.

     

    
      
        
        

      

      
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    (c) Effect
      of Termination.
      In the
      event that this Agreement is validly terminated as provided herein, then each
      of
      the parties shall be relieved of their duties and obligations arising under
      this
      Agreement after the date of such termination and such termination shall be
      without liability to Purchaser or the Sellers; provided, however, that nothing
      in this Section
      1.5
      shall
      relieve Purchaser, TAA or the Sellers of any liability for a breach of this
      Agreement.
      

    

    ARTICLE
      II

    

    REPRESENTATIONS
      OF TAA AND THE SELLERS

    

    Except
      as
      set forth on the Schedules hereto, TAA and
      each
      of the Sellers,
      jointly
      and severally, represent, warrant and agree to and with Purchaser as
      follows:

    

    Section
      2.1 Execution
      and Validity of Agreements; Restrictive Documents; Approvals and
      Consents. 

    

    (a) Execution
      and Validity - Sellers.
      The
      Seller has the full legal right and capacity to enter into this Agreement,
      the
      other agreements contemplated hereby (the “Transaction
      Documents”),
      and
      to perform his obligations hereunder and thereunder. This Agreement, and the
      other agreements contemplated hereby have been duly and validly executed and
      delivered by the Seller and, assuming due authorization, execution and delivery
      by the other parties hereto, constitutes legal, valid and binding obligations
      of
      the Seller, enforceable against the Seller in accordance with their terms.
      

    

    (b) Execution
      and Validity - TAA.
      TAA has
      the
      full power and authority to enter into this Agreement and the Transaction
      Documents and to perform its obligations hereunder and thereunder. The
      execution and delivery of this Agreement and the Transaction Documents by TAA
      and the consummation by it of the transactions contemplated hereby and thereby
      have been duly authorized by all required action on behalf of TAA. Each of
      this
      Agreement and the other Transaction Documents has
      been
      duly and validly executed and delivered by TAA and,
      assuming due authorization, execution and delivery by the other parties thereto,
      constitutes a valid and binding obligation of TAA, enforceable against it in
      accordance with its terms,
      except
      to the extent that enforceability may be limited by the effect of (i) any
      applicable bankruptcy, reorganization, insolvency, moratorium or other laws
      affecting the enforcement of creditors’ rights generally and (ii) general
      principles of equity, regardless of whether such enforceability is considered
      in
      a proceeding at law or in equity.
      Each of
      the Block Redemption Agreement and Block Pledge Agreement has
      been
      duly and validly executed and delivered by the parties thereto and constitutes
      a
      valid and binding obligation of the parties thereto.

    

    (c) No
      Restrictions.
      To
      TAA’s and the Seller’s knowledge, there is no suit, action, claim, investigation
      or inquiry by any court,
      tribunal, arbitrator, authority, agency, commission, official or other
      instrumentality of the United States, any foreign country or any domestic or
      foreign state, county, city or other political subdivision
      ("Governmental
      or Regulatory Authority"),
      and
      no legal, administrative or arbitration proceeding pending or threatened against
      him or any of the Membership Interests to be sold hereby or the Assets (as
      defined in Section
      2.7)
      with
      respect to the execution, delivery and performance of this Agreement, the other
      Transaction Documents or the transactions contemplated hereby or
      thereby.

     

    
      
        
        

      

      
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    (d) Non-Contravention.
      The
      execution, delivery and performance by each of the Sellers
      and TAA
      of its obligations hereunder and the consummation of the transactions
      contemplated hereby, will not (a) violate, conflict with or result in the breach
      of any provision of the Articles of Organization or Operating Agreement of
      TAA;
      (b) to
      TAA’s
      and the Seller’s knowledge,
      result
      in the violation by the Seller
      or TAA
      of any statute, law, rule, regulation or ordinance (collectively, "Laws"),
      or
      any judgment, decree, order, writ, permit or license (collectively,
      "Orders"),
      of
      any Governmental or Regulatory Authority, applicable to the Seller
      or
      any of the Membership Interests to be sold hereby, TAA or any of the
      Assets,
      or (c)
      if the consents and notices set forth in Schedule
      2.1(e) are
      obtained, conflict with, result in a violation or breach of, constitute (with
      or
      without notice or lapse of time or both) a default under, or require TAA or
      the
Seller
      to
      obtain any consent, approval or action of, make any filing with or give any
      notice to, or result in or give to any Person (as defined in Section
      7.3)
      any
      right of payment or reimbursement, termination, cancellation, modification
      or
      acceleration of, or result in the creation or imposition of any Lien upon any
      of
      the Membership Interests to be transferred hereby or any of the Assets, under
      any of the terms, conditions or provisions of any agreement
      (including the Block Pledge Agreement and Block Redemption Agreement),
      commitment, lease, license, evidence of indebtedness, mortgage, indenture,
      security agreement, instrument, note,
      bond, franchise, permit, concession, or other instrument, obligation or
      agreement of any kind, written or oral (collectively, "Contracts"),
      to
      which TAA or the Seller is a party or by which the Seller or to which
any
      of
      the Membership Interests to be sold hereby or any of the Assets were or are
      bound.
      With
      respect to any asset, a "Lien"
      shall
      mean (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance,
      charge or security interest in, on or of such asset, (b) the interest of a
      vendor or a lessor under any conditional sale agreement, capital lease or title
      retention agreement (other than an operating lease) (or any financial lease
      having substantially the same economic effect as any of the foregoing) relating
      to such asset and (c) in the case of securities, any purchase option, call
      or
      similar right of a third party with respect to such securities.

    

    (e) Approvals
      and Consents.
      Except
      as set forth on Schedule
      2.1(e),
      no
      consent, approval or action of, filing with or notice to any Governmental or
      Regulatory Authority or other Person is necessary or required under any of
      the
      terms, conditions or provisions of any Law or Order of any Governmental or
      Regulatory Authority or any Contract to which TAA
      or the
      Seller is
      a
      party, or by which the Membership Interests or Assets were or are bound for
      the
      execution and delivery of this Agreement or the Transaction Documents by
      TAA
      or the
      Sellers,
      the
      performance by TAA
      or the
      Sellers of
      their
      respective obligations hereunder or thereunder, or the consummation of the
      transactions contemplated hereby or thereby.

    

    Section
      2.2 Existence
      and Good Standing. TAA
      is
      validly existing and in good standing under the laws of the State of California,
      with the full power and authority to own its property and to carry on its
      business all as and in the places where such properties are now owned or
      operated or such business is now being conducted. TAA is duly qualified,
      licensed or admitted to do business and are in good corporate/company and tax
      standing in the jurisdictions set forth on Schedule
      2.2,
      which
      are the only jurisdictions in which the ownership, use or leasing of their
      assets and properties, or the conduct or nature of their business, makes such
      qualification, licensing or admission necessary.

     

    
      
        
        

      

      
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    Section
      2.3 Equity
      Sellership; No Options or Restrictions; Subsidiaries and
      Investments.
      Seller
      Jiun Ku owns
      of
      record and beneficially has valid title to
      22.5% of
      the Membership Interests of TAA, Seller Shirely Fong owns
      of
      record and beneficially has valid title to
      22.5% of
      the Membership Interests of TAA, and such ownership is free and clear of all
      Liens. The Sellers, collectively, own
      of
      record and beneficially have valid title to
      45% of
      the Membership Interests of TAA. TAA also holds 22.5% of the Membership
      Interests that were acquired pursuant to the Block Redemption Agreement and
      such
      Membership Interests are free and clear of all Liens. There are no outstanding
      subscriptions, options, warrants, rights, calls, commitments, understandings,
      conversion rights, rights of exchange, plans or other agreements of any kind
      providing for the purchase, issuance or sale of any equity, ownership or
      proprietary interest of TAA, or which grants any Person other than the
      Sellers
      and
      members Kevin Kelly and Noa Mikkelsen the right to share in the earnings or
      profits of TAA. There are no voting or other similar agreements to which any
      of
      the Sellers or TAA is a party. There are no outstanding subscriptions, options,
      rights, warrants, calls, commitments or arrangements of any kind to acquire
      any
      of the Membership Interests owned by the Seller and there are no agreements
      or
      understandings with respect to the sale or transfer of any of the Membership
      Interests owned by the Seller (other than this Agreement). TAA owns no capital
      stock or other equity or ownership or proprietary interest in any
      Person.

    

    Section
      2.4 Financial
      Statements and No Material Changes.
      Schedule
      2.4
      sets
      forth (a) the unaudited balance sheet of TAA at December 31, 2006, and the
      related unaudited statement of income and statement of operations for the fiscal
      year ended December 31, 2006, and (b) the unaudited balance sheet of TAA as
      at
      March 31, 2007 and the related unaudited statement of income and statement
      of
      operation for the three months then ended (the unaudited balance sheet of TAA
      as
      at March 31, 2007 being referred to herein as the "Balance
      Sheet").
      Such
      financial statements have been prepared in accordance with GAAP throughout
      the
      periods indicated. Except for the absence of footnotes and normal year-end
      adjustments, the balance sheet fairly presents the financial condition of TAA,
      at the respective date thereof, and reflects all claims against and all debts
      and liabilities of TAA, fixed or contingent, as at the respective date thereof,
      required to be shown thereon under GAAP and the related statements of income
      and
      statements of operations fairly present the results of income for the respective
      period indicated. Since March 31, 2007 (the "Balance
      Sheet Date"),
      there
      has been no material adverse change in the assets or liabilities, or in the
      business or condition, financial or otherwise, or in the results of operations
      of TAA.

    

    Section
      2.5 Liabilities.
      TAA
      has no
      indebtedness, obligations or liabilities of any kind (whether accrued, absolute,
      contingent or otherwise, and whether due or to become due) that would have
      been
      required to be reflected in, reserved against or otherwise described on the
      Balance Sheet or in the notes thereto in accordance with GAAP which was not
      fully reflected in, reserved against or otherwise described in the Balance
      Sheet
      or the notes thereto or was not incurred in the ordinary course of business
      consistent with past practice since the Balance Sheet Date. 

     

    
      
        
        

      

      
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    Section
      2.6 Books
      and Records.
      TAA
      does not have
      any
      of its records, systems, controls, data or information recorded, stored,
      maintained, operated or otherwise wholly or partly dependent on or held by
      any
      means (including any electronic, mechanical or photographic process, whether
      computerized or not) which (including all means of access thereto and therefrom)
      were not prior to the date hereof and are not now under the exclusive ownership
      and possession of TAA. The Sellers and TAA have delivered to Purchaser complete
      and correct copies of the Articles
      of Organization dated as of ____________ and the Operating Agreement dated
      as of
      _______________ of TAA.

    

    Section
      2.7 Title
      to Properties; Encumbrances.
      TAA has
      good and valid title to, or enforceable leasehold interests in or valid rights
      under contract to use, all the material properties and assets owned or used
      by
      TAA (real,
      personal, tangible and intangible) (the “Assets”),
      including, without limitation (a) all the properties and assets reflected in
      the
      Balance Sheet, and (b) all the material properties and assets purchased or
      otherwise contracted for by TAA since
      the
      Balance Sheet Date (except for properties and assets reflected in the Balance
      Sheet or acquired or otherwise contracted for since the Balance Sheet Date
      that
      have been sold or otherwise disposed of in the ordinary course of business),
      in
      each case free and clear of all Liens, except for Liens set forth on
Schedule
      2.7.
      The
      Assets constitute all of the material property and assets which TAA utilized
      to
      conduct its Business immediately prior to the Closing. The Assets, whether
      owned
      or otherwise contracted for, are in a state of good maintenance and repair
      (ordinary wear and tear excepted) and is adequate and suitable for the purposes
      for which they are presently being used.

    

    Section
      2.8 Real
      Property.

    

    (a) Owned
      Real Property. TAA
      does
      not own any real property (including ground leases) or hold a freehold interest
      in any real property or any option or right of first refusal or first offer
      to
      acquire any real property.

    

    (b) Leased
      Real Property.
      Schedule
      2.8(b) contains
      an accurate and complete list of all real property leases, subleases, licenses
      and other occupancy agreements, including without limitation, any modification,
      amendment or supplement thereto and any other related document or agreement
      executed or entered into by TAA (each
      individually, a "Real
      Property Lease"
      and
      collectively, the "Real
      Property Leases").
      Each
      Real Property Lease is valid, binding and in full force and effect; all rents
      and additional rents and other sums, expenses and charges due thereunder to
      date
      on each such Real Property Lease have been paid; and the lessee has been in
      peaceable possession since the commencement of the original term of such Real
      Property Lease and no waiver, indulgence or postponement of the lessee's
      obligations thereunder has been granted by the lessor. There exists no default
      or event of default by TAA to
      the
      knowledge of the Seller and TAA, by any other party to any Real Property Lease;
      and there exists no occurrence, condition or act (including the purchase of
      100%
      of the Membership Interests of TAA hereunder) which, with the giving of notice,
      the lapse of time or the happening of any further event or condition, would
      become a default or event of default by TAA under
      any
      Real Property Lease, and there are no outstanding claims of breach or
      indemnification or notice of default or termination of any Real Property Lease.
      TAA holds the leasehold estate on all the Real Property Leases free and clear
      of
      all Liens except as set forth on Schedule
      2.8(b)
      and any
      mortgagees' liens on the real property in which such leasehold estate is
      located. The real property leased by TAA is
      in a
      state of good maintenance and repair, is adequate and suitable for the purposes
      for which it is presently being used, and there are no material repair or
      restoration works currently required in connection with any of the leased real
      properties which are the responsibility of the Company. TAA is
      in
      physical possession and actual and exclusive occupation of the whole of each
      of
      its leased properties. TAA owes no brokerage commission with respect to any
      of
      the Real Property Leases.

     

    
      
        
        

      

      
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    Section
      2.9 Contracts.
      Schedule 2.9
      hereto
      contains an accurate and complete list of the following Contracts to
      which
      TAA is
      currently a party or by which any of the Assets are bound: (a) all Plans (as
      such term is defined in Section
      2.18),
      (b)
      any personal property lease with a fixed annual rental of $10,000 or more,
      (c)
      any Contract relating to capital expenditures which involves payments of $10,000
      or more in any single transaction or series of related transactions,
      (d) any Contract relating to the making of a loan or advance to or
      investment in, any other Person, (e) any agreement, instrument or
      arrangement evidencing or relating in any way to indebtedness for money borrowed
      or to be borrowed, whether directly or indirectly, by way of loan, purchase
      money obligation, guarantee (other than the endorsement of negotiable
      instruments for collection in the ordinary course of business), conditional
      sale, purchase or otherwise, (f) any management service, employment,
      consulting or similar type of Contract which is not cancelable by TAA without
      penalty or other financial obligation within 30 days, (g) any Contract
      limiting TAA's
      freedom
      to engage in any line of business or to compete with any other
      Person,
      including, without limitation, any agreement limiting the ability of
TAA
      or any
      affiliate to take on competitive accounts during or after the term
      thereof,
      (h) any collective bargaining or union agreement, (i) any Contract
      between TAA and
      any
      officer or director of TAA not
      covered by subsection (f) above (including indemnification agreements),
      (j) any secrecy or confidentiality agreement (other than standard
      confidentiality agreements in computer software license agreements or agreements
      with clients entered into in the ordinary course of business), (k) any
      agreement with respect to any Intellectual Property (as defined in Section
      2.13)
      other
      than "shrink-wrap" and similar end-user licenses, (l) any agreement with a
      client required to be listed on Schedule
      2.15,
      (m) any agreement, indenture or other instrument which contains
      restrictions with respect to the payment of distributions in respect of the
      Membership Interests, (n) any joint venture agreement involving a sharing
      of profits not covered by clauses (a) through (m) above, (o) any
      Contract (not covered by another subsection of this Section
      2.9)
      which
      involves $10,000 or more over the unexpired term thereof and is not cancelable
      by TAA without penalty or other financial obligation within 30 days; provided,
      however, Contracts of a similar nature with related parties which individually
      do not involve $10,000 but in the aggregate involve $10,000 or more over the
      unexpired terms shall also be set forth on Schedule
      2.9,
      and (p)
      any agreement between TAA, on the one hand, and any Seller, on the other hand.
      Notwithstanding anything to the contrary contained above, estimates or purchase
      orders given in the ordinary course of business relating to the execution of
      projects, do not have to be set forth on Schedule
      2.9.
      Each
      Contract, including without limitation, those required to be set forth on
Schedule 2.9,
      is in
      full force and effect, and there exists no material default or event of material
      default by TAA or
      to the
      knowledge of the Seller and TAA, by any other party, or occurrence, condition,
      or act (including the purchase of 100% of the Membership Interests of TAA
      hereunder) which, with the giving of notice, the lapse of time or the happening
      of any other event or condition, would become a default or event of default
      thereunder by TAA, and there are no outstanding claims of breach or
      indemnification or notice of default or termination of any such
      Contract.

     

    
      
        
        

      

      
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    Section
      2.10 Litigation.
      Except
      as set forth on Schedule 2.10,
      there
      is no action, suit, proceeding at law or in equity by any Person, or any
      arbitration or any administrative or other proceeding by or before (or to the
      knowledge of the Seller and TAA, any investigation by) any Governmental or
      Regulatory Authority, pending or, to the knowledge of the Seller and TAA,
      threatened, against TAA
      or the
      Seller with
      respect to this Agreement, the other Transaction Documents or the transactions
      contemplated hereby or thereby, or against or affecting TAA, the Assets or
      the
      Membership Interests; and, to the knowledge of the Seller, no acts, facts,
      circumstances, events or conditions occurred or exist which are a basis for
      any
      such action, proceeding or investigation. TAA is not subject to any Order
      entered in any lawsuit or proceeding. Schedule
      2.10
      also
      sets forth with respect to each pending or threatened action, suit or proceeding
      listed thereon, the amount of costs, expenses or damages TAA
      has
      incurred to date and reasonably expects to incur through the conclusion
      thereof.

    

    Section
      2.11 Taxes.
      TAA
      has
      timely
      completed and filed, or caused to be filed, taking into account any valid
      extensions of due dates, completely and accurately, all federal, state, local
      and foreign (if any) tax or information returns (including estimated tax
      returns) required under the statutes, rules or regulations of such jurisdictions
      to be filed by them during the three (3) years prior to the Closing Date. The
      term "Taxes"
      means
      taxes, duties, charges or levies of any nature imposed by any taxing or other
      Governmental or Regulatory Authority, including without limitation income,
      gains, capital gains, surtax, capital, franchise, capital stock, value-added
      taxes, taxes required to be deducted from payments made by the payor and
      accounted for to any tax authority, employees' income withholding, back-up
      withholding, withholding on payments to foreign Persons, social security,
      national insurance, unemployment, worker’s compensation, payroll, disability,
      real property, personal property, sales, use, goods and services or other
      commodity taxes, business, occupancy, excise, customs and import duties,
      transfer, stamp, and other taxes (including interest, penalties or additions
      to
      tax in respect of the foregoing), and includes all taxes payable by TAA
      pursuant
      to Treasury Regulations §1.1502-6 or any similar provision of state, local or
      foreign law. All Taxes shown on said returns to be due and all other Taxes
      due
      and owing (whether or not shown on any Tax return) have been paid and all
      additional assessments received prior to the date hereof have been paid or
      are
      being contested in good faith, in which case, such contested assessments are
      set
      forth on Schedule
      2.11. TAA
      has
      collected all sales, use, goods and services or other commodity Taxes required
      to be collected and remitted or will remit the same to the appropriate taxing
      authority within the prescribed time periods. TAA
      has
      withheld all amounts required to be withheld on account of Taxes from amounts
      paid to employees, former employees, directors, officers, members, residents
      and
      non-residents and remitted or will remit the same to the appropriate taxing
      authorities within the prescribed time periods. The
      amount set up as an accrual for Taxes (aside from any reserved for deferred
      Taxes established to reflect timing differences between book and Tax accrual)
      on
      the Balance Sheet (as opposed to the notes thereto) is sufficient for the
      payment of all unpaid Taxes of TAA,
      whether
      or not disputed, for all periods ended on and prior to the date thereof. Since
      the Balance Sheet Date, TAA has
      not
      incurred any liabilities for Taxes other than in the ordinary course of the
      business of TAA
      consistent
      with past custom and practice. No member, manager, director or officer (or
      employee responsible for Tax matters) of TAA expects
      any authorities to assess any additional Taxes for any period for which Tax
      returns have been filed. TAA
      has
      delivered to Purchaser correct and complete copies of all federal, state and
      local income tax returns filed with respect to TAA for
      all
      taxable periods beginning on or after January 1, 2004. Except as set forth
      on
Schedule
      2.11,
      none of
      the federal, state or local income tax returns of TAA have
      ever
      been audited by the Internal Revenue Service or any other Governmental or
      Regulatory Authority. No examination of any return of TAA is
      currently in progress, and TAA has
      not
      received notice of any proposed audit or examination. No deficiency in the
      payment of Taxes by TAA for
      any
      period during the three (3) years preceding the Closing Date has been asserted
      in writing by any taxing authority and remains unsettled at the date of this
      Agreement. TAA
      has made
      no agreement,
      waiver or other arrangement providing for an extension of time with respect
      to
      the assessment or collection of any Taxes against it. TAA has
      not
      been a member of an affiliated group filing consolidated federal income tax
      returns nor has it been included in any combined, consolidated or unitary state
      or local income tax return. TAA will
      not
      be required as a result of a change in accounting method for any period ending
      on or before the Closing Date to include any adjustment under Section 481 of
      the
Internal
      Revenue Code of 1986, as amended (the "Code")
      (or
      any
      similar provision of state, local or foreign income tax law) in income for
      any
      period ending after the Closing Date, including any change which may be required
      by law in connection with this transaction.
      TAA
      is
      not obligated to make any payments or is a party to any agreement that under
      certain circumstances could obligate it to make any payments that will not
      be
      deductible under Section 280G of the Code. TAA
      has
      not entered into any Tax sharing or indemnification agreement with any party.
      Purchaser will not be required to include any item of income in, or exclude
      any
      item of deduction from, taxable income for any taxable period (or portion
      thereof) ending after the Closing Date as a result of any: (i) change in method
      of accounting for a taxable period ending on or within three (3) years prior
      to
      the Closing Date; (ii) "closing agreement" as described in Code Section 7121
      (or
      any corresponding or similar provision of state, local, or foreign income tax
      law); (iii) installment sale or open transaction disposition made on or prior
      to
      the Closing Date; or (iv) prepaid amount received on or prior to the Closing
      Date.

     

    
      
        
        

      

      
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    Section
      2.12 Insurance.
      Schedule
      2.12
      contains
      a true and complete list (including the names and addresses of the insurers,
      the
      names of the Persons to whom such insurance policies have been issued, the
      expiration dates thereof, the annual premiums and payment terms thereof, whether
      it is a "claims made" or an "occurrence" policy and a brief description of
      the
      interests insured thereby) of all liability, property, workers' compensation
      and
      other insurance policies currently in effect that insure the property, assets
      or
      business of TAA
      or
      the
      employees of TAA
      (other
      than self-obtained insurance policies by such employees). Each such insurance
      policy is valid and binding and in full force and effect, all premiums due
      thereunder have been paid and TAA has
      not
      received any notice of cancellation or termination in respect of any such policy
      or default thereunder. To the knowledge of the Seller and TAA,
      such
      insurance policies are placed with financially sound and reputable insurers,
      and
      in light of the nature of the business, assets and properties of TAA
      and
      the
      Seller
      believes
      they are in amounts and have coverage that are reasonable and customary for
      Persons engaged in the Business. Neither
      TAA
      nor
      to
      the knowledge of the Seller and TAA,
      the
      Person to whom such policy has been issued has received notice that any insurer
      under any policy referred to in this Section
      2.12
      is
      denying liability with respect to a claim thereunder or defending under a
      reservation of rights clause. Within
      the last two years TAA has
      not
      filed for any claims exceeding $10,000 against any of its insurance policies,
      exclusive of automobile and health insurance policies. None
      of
      such policies shall lapse or terminate by reason of the transactions
      contemplated by this Agreement or the Transaction Document and all such policies
      shall continue in effect after the Closing Date for the benefit of TAA. TAA
      has
      not
received
      any notice of cancellation of any such policy. TAA
      has not
received
      written notice from any of its insurance carriers that any premiums will be
      materially increased in the future or that any insurance coverage listed on
      Schedule
      2.12
      will not
      be available in the future on substantially the same terms now in
      effect.

     

    
      
        
        

      

      
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    Section
      2.13 Intellectual
      Properties.

    

    (a) Definitions.
       For
      purposes of this Agreement, the following terms have the following
      definitions:

    

    "Intellectual
      Property"
      shall
      include, without limitation, any or all of the following and all rights
      associated therewith: (a) all domestic and foreign patents, and applications
      therefor, and all reissues, reexaminations, divisions, renewals, extensions,
      continuations and continuations-in-part thereof; (b) all inventions (whether
      patentable or not), invention disclosures, improvements; (c) trade secrets,
      confidential and proprietary information, know how, technology, technical data
      and customer lists, financial and marketing data, pricing and cost information,
      business and marketing plans, databases and compilations of data, rights of
      privacy and publicity, and all documentation relating to any of the foregoing;
      (d) all copyrights, copyright registrations and applications therefor,
      unregistered copyrights, the content of all World Wide Web sites of TAA and
      all
      other rights corresponding thereto throughout the world; (e) all mask works,
      mask work registrations and applications therefor; (f) all industrial designs
      and any registrations and applications therefor; (g) all trade names, corporate
      names, logos, trade dress, common law trademarks and service marks, trademark
      and service mark registrations and applications therefor and all goodwill
      associated therewith; (h) any and all Internet domain names and Web sites
      (including all software and applications, and all components and/or modules
      thereof), used in connection therewith; and (i) all computer software including
      all source code, object code, firmware, development tools, files, records and
      data, all media on which any of the foregoing is recorded, and all documentation
      related to any of the foregoing.

    

    "Intellectual
      Property of the Company"
      shall
      mean any Intellectual Property that: (a) is owned by or exclusively licensed
      to
TAA,
      or (b)
      which is used in the operation of the Business, including the design,
      manufacture and use of the products of TAA
      as it
      currently is operated, but shall specifically not include any rights in or
      to
      materials created for clients as "work-made-for-hire" or which are subject
      to an
      assignment in favor of clients of TAA.

    

    (b) Representations.
      

    

    (1) Schedule
      2.13
      hereto
      contains an accurate and complete list of all patents, patent applications,
      registered trademarks, applications for registered trademarks, registered
      service marks, applications for registered service marks, logos, registered
      copyrights, applications for registered copyrights and Internet domain names
      which are used in connection with the operation of the Business (the
      "Registered
      IP").
      Except as set forth on Schedule
      2.13,
      the
      registrations and applications of the Registered IP listed on Schedule
      2.13
      owned by
      TAA are in the name of TAA and are valid, in proper form, enforceable and
      subsisting, all necessary registration and renewal fees in connection with
      such
      registrations have been made and all necessary documents and certificates in
      connection with such registrations have been filed with the relevant patent,
      Internet domain names, copyrights and trademark authorities in the United States
      or other jurisdiction for the purposes of maintaining such Intellectual Property
      registrations, and applications therefor. No registration, or application
      therefor, for any of the Registered IP has lapsed, expired, or been abandoned,
      and no such registrations, or applications therefor, are the subject of any
      opposition, interference, cancellation, or other legal, quasi-legal, or
      governmental proceeding pending before any governmental, registration, or other
      authority in any jurisdiction. 

     

    
      
        
        

      

      
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    (2) Except
      as
      set forth on Schedule
      2.13,
      (i) no
      Person has any rights to use any of the Intellectual Property of TAA, (ii)
      TAA
      has not granted to any Person, nor authorized any Person to retain, any rights
      in the Intellectual Property of TAA, and (iii) TAA owns all rights, title and
      interest in, or has the right to use pursuant to valid license agreements,
      all
      Intellectual Property used in, or necessary for, the conduct of the Business,
      free and clear of all Liens. TAA is not in material default in the payment
      of
      any fees or other amounts payable under any Contract to use Intellectual
      Property. Except as set forth on Schedule
      2.13, the
      consummation of the transactions contemplated hereby will not result in any
      material loss or impairment of Company's rights to own or use any Intellectual
      Property, nor will such consummation require the consent of any third party
      in
      respect of any Intellectual Property. 

    

    (3) To
      the
      knowledge of Seller, neither TAA, nor the operation of the Business infringes
      the Intellectual Property of any other Person. There are no proceedings pending
      or, to the knowledge of the Seller and TAA, threatened against TAA with respect
      to the Intellectual Property, or with respect to any other Intellectual
      Property, alleging the infringement or misappropriation by TAA of any
      Intellectual Property of any Person, and TAA has not received notice from any
      Person that the operation of the Business infringes the Intellectual Property
      of
      any Person. There are no claims pending or, to the knowledge of the Seller
      and
      TAA, threatened challenging the validity of any Intellectual Property of the
      Company or any Intellectual Property used by TAA in the conduct of the Business.
      TAA has not entered into or is otherwise bound by any consent, forbearance
      or
      any settlement agreement which limits the rights of TAA to use the Intellectual
      Property of TAA. 

    

    (4) To
      the
knowledge
      of the Seller and TAA,
      no
      Person is infringing or misappropriating any of the Intellectual Property of
      TAA. All computer software and applications, other than off-the-shelf
      applications subject to shrink-wrap and similar end-user licenses, included
      in
      the Intellectual Property of the Company ("Software")
      was
      either developed (a) by employees of TAA within the scope of such employee's
      employment duties; (b) by independent contractors as "works-made-for-hire,"
      as
      that term is defined under Section 101 of the United States Copyright Act,
      17
      U.S.C. § 101, pursuant to written agreement; or (c) by third parties who have
      assigned all of their rights therein to TAA pursuant to a written agreement.
      Except as set forth on Schedule
      2.13,
      no
      former or present employees, officers or directors of TAA retain any rights
      of
      ownership or use of any Software, and no employees or third parties who have
      developed or participated in the development of Software have any claims to
      any
      rights therein.

     

    
      
        
        

      

      
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    Section
      2.14 Compliance
      with Laws; Permits.

    

    (a) Compliance.
      TAA
      is, and
      the Business has been conducted, in compliance with all applicable Laws and
      Orders, except in each case (other than with respect to compliance with
      environmental Laws and Orders relating to the regulation or protection of the
      environment ("Environmental
      Laws and Orders"))
      where
      the failure to so comply would not reasonably be expected to have a Material
      Adverse Effect (as defined below), including without limitation: (a) all Laws
      and Orders promulgated by the Federal Trade Commission or any other Governmental
      or Regulatory Authority; (b) all Environmental Laws and Orders; and (c) all
      Laws
      and Orders relating to labor, civil rights, and occupational safety and health
      laws, worker's compensation, employment and wages, hours and vacations, or
      pay
      equity. TAA
      has
      not been
      charged
      with, or, to the knowledge of the Seller and TAA,
      threatened with or under any investigation with respect to, any charge
      concerning any violation of any Laws or Orders. The term "Material
      Adverse Effect"
      as it
      applies to TAA,
      shall
      mean a material adverse effect on the operations, business, prospects, assets
      or
      financial condition of TAA.

    

    (b) Permits.
      TAA
has
      all
      permits, licenses, and other government certificates, authorizations and
      approvals ("Permits")
      required by any Governmental or Regulatory Authority for the operation of
the
      Business and
      the
      use of the Assets tra, except where the failure to have such Permits would
      not
      reasonably be expected to have a Material
      Adverse Effect.
      All of
      the Permits are in full force and effect and no action or claim is pending,
      nor
      to the knowledge of the Seller and TAA
      is
      threatened, to revoke or terminate any such Permit or declare any such Permit
      invalid in any material respect. 

    

    Section
      2.15 Client
      Relations.
      Schedule 2.15
      sets
      forth (a) the 20 largest clients of TAA
      taken as
      a whole (measured by revenues), and the revenues from each such client and
      from
      all clients (in the aggregate) for the calendar years ended December 31, 2005
      and December 31, 2006 and (b) the clients projected to be the 20 largest clients
      (measured by revenues) of the Company based on TAA's
      current profit plan for the twelve months ending December 31, 2007, together
      with the estimated revenues from each such client and all clients (in the
      aggregate) for such period. The Seller and TAA
      do
      not
      warrant that the estimated revenues set forth on Schedule
      2.15
      will
      prove to be accurate; provided, however, they do represent that they were made
      in good faith. Except as set forth on Schedule
      2.15,
      no
      client of TAA
      has
      advised TAA
      or the
      Seller in writing that it is (x) terminating or considering terminating the
      handling of its business by TAA
      or in
      respect of any particular product, project or service or (y) planning to reduce
      its future spending with TAA
      in any
      material manner.

    

    Section
      2.16 Accounts
      Receivable; Work-in-Process.
      The
      amount of all work-in-process, accounts receivable, unbilled invoices (including
      without limitation unbilled invoices for services and out-of-pocket expenses)
      and other debts due or recorded in the records and books of account of
TAA
      represent or will represent valid obligations arising from sales actually made
      or services actually performed in the ordinary course of business and will
      be
      good and collectible in full (less the amount of any provision, reserve or
      similar adjustment therefor reflected on the Balance Sheet and the Closing
      Balance Sheet) in the ordinary course of business, and none of the accounts
      receivable or other debts (or accounts receivable arising from any such
      work-in-process or unbilled invoices) is or will be subject to any counterclaim
      or set-off except to the extent of any such provision, reserve or adjustment.
      The accounts payable set forth on the Balance Sheet represent trade payables
      resulting from bona fide transactions incurred in the ordinary course of
      business. There has been no change since the Balance Sheet Date in the amount
      or
      aging of the work-in-process, accounts receivable, accounts payable, unbilled
      invoices, or other debts due to TAA, or the reserves with respect thereto,
      or
      accounts payable of TAA
      which
      would have a Material Adverse Effect. 

     

    
      
        
        

      

      
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    Section
      2.17 Employment
      Relations.
      (a) No
      unfair labor practice complaint against
      TAA is pending before any Governmental or Regulatory Authority; (b) there is
      no
      organized labor strike, dispute, slowdown or stoppage actually pending or to
      the
      knowledge of the Seller and TAA threatened against or involving TAA
      or
      the Assets;
      (c)
      there are no labor unions representing or, to the knowledge of the Seller and
      TAA, attempting to represent the employees of TAA; (d) no claim or grievance
      nor
      any arbitration proceeding arising out of or under any collective bargaining
      agreement is pending against any of TAA or the Sellers and to the knowledge
      of
      the Seller and TAA, no such claim or grievance has been threatened; (e) no
      collective bargaining agreement is currently being negotiated by TAA; and (f)
      TAA did not experience any work stoppage or similar organized labor dispute
      during the last three years. Except as set forth on Schedule
      2.10,
      there
      is no legal action, suit, proceeding or claim pending or, to the knowledge
      of
      TAA, threatened between TAA and any employees or former employees of TAA, agents
      or former agents of TAA, job applicants or any association or group of any
      employees of TAA.

    

    Section
      2.18 Employee
      Benefit Matters.
      

    

    (a)
       List
      of Plans.
      Schedule
      2.18
      to this
      Agreement lists all employee benefit plans (as defined in Section 3(3) of the
      Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
      and
      all bonus, incentive, deferred compensation, stock option, restricted stock,
      stock appreciation rights, phantom stock rights, retiree medical or life
      insurance, supplemental retirement, severance or other benefit plans, programs
      or arrangements, and all termination, severance or other Contracts, whether
      covering one Person or more than one Person, and whether or not subject to
      any
      of the provisions of ERISA, which are or have been maintained, contributed
      to or
      sponsored by TAA,
      or any
      ERISA Affiliate (as defined in Section 2.18(c)) for the benefit of any employee
      (each item listed on Schedule 2.18
      being
      referred to herein individually, as a "Plan"
      and
      collectively, as the "Plans").
      TAA
      has delivered to Purchaser, to the extent applicable, a complete and accurate
      copy of: (a) each written Plan and descriptions of any unwritten Plan (including
      all amendments thereto whether or not such amendments are currently effective);
      (b) each summary plan description and all summaries of material modifications
      relating to a Plan; (c) each trust agreement or other funding arrangement with
      respect to each Plan, including insurance contracts; (d) the most recently
      filed
      IRS Form 5500 relating to each Plan; (e) the most recently received IRS
      determination letter for each Plan; and (f) the three most recently prepared
      actuarial reports and financial statements in connection with each Plan.
TAA
      has made
      no commitment, (i) to create or cause to exist any Plan not set forth on
Schedule
      2.18
      or (ii)
      to modify, change or terminate any Plan.

    

    (b) Severance.
      None of
      the Plans, nor any employment agreement or other Contract to which TAA
      is a
      party or bound, (a) provides for the payment of or obligates TAA
      to pay
      separation, severance, termination or similar-type benefits to any Person;
      or
      (b) obligates TAA
      to pay
      separation, severance, termination or similar-type benefits as a result of
      any
      transaction contemplated by this Agreement or as a result of a "change in
      control," within the meaning of such term under Section 280G of the Code, either
      alone or in conjunction with any subsequent occurrence.

     

    
      
        
        

      

      
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    (c) Multi-Employer
      Plans.
      None of
TAA
      or
      any
      ERISA Affiliate has maintained, contributed to or participated in a
      multi-employer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
      or a multiple employer plan subject to Sections 4063 and 4064 of ERISA, nor
      has
      any obligations or liabilities, including withdrawal, reorganization or
      successor liabilities, regarding any such plan. As used herein, the term
      "ERISA
      Affiliate"
      means
      any Person that is or has been a member of a controlled group of organizations
      (within the meaning of Sections 414(b), (c), (m) or (o) of the Code) of which
      TAA
      is a
      member.

    

    (d) Welfare
      Benefit Plans.
      TAA
      has
      expressly reserved the right, in all Plan documents relating to welfare benefits
      provided to employees, former employees, officers, directors and other
      participants and beneficiaries, to amend, modify or terminate at any time the
      Plans which provide for welfare benefits, and the Stockholder is not aware
      of
      any fact, event or condition that could reasonably be expected to restrict
      or
      impair such right. Except as required under Section 601 of ERISA, none of TAA
      or
      any ERISA Affiliate has made any promises or commitments to provide, and is
      not
      obligated to provide (i) medical benefits (including without limitation through
      insurance) to retirees or former employees of TAA or any ERISA Affiliate or
      their respective dependants, or (ii) life insurance or other death benefits
      to
      retired employees or former employees of TAA or any ERISA Affiliate or their
      respective dependants.

    

    (e) Administrative
      Compliance.
      Each
      Plan is now and has been operated in all material respects in accordance with
      the requirements of all applicable Laws, including, without limitation, ERISA,
      the Health Insurance Portability and Accountability Act of 1996 and the Code,
      the Age Discrimination in Employment Act, Family and Medical Leave Act, the
      Americans with Disabilities Act, the Equal Pay Act, and Title VII of the Civil
      Rights Act of 1964, and the regulations and authorities published thereunder.
      TAA has performed all material obligations required to be performed by them
      under, are not in any respect in default under or in violation of, and neither
      TAA nor the Sellers has any knowledge of any default or violation by any Person
      under, any Plan. Except as set forth on Schedule
      2.10,
      no
      legal action, suit, audit, investigation or claim is pending or, to the
      knowledge of the Seller, and TAA, threatened with respect to any Plan (other
      than claims for benefits in the ordinary course), and no fact, event or
      condition exists that would be reasonably likely to provide a legal basis for
      any such action, suit, audit, investigation or claim. All reports, disclosures,
      notices and filings with respect to such Plans required to be made to employees,
      participants, beneficiaries, alternate payees and any Governmental or Regulatory
      Authority have been timely made or an extension has been timely obtained. With
      respect to any insurance policy providing funding for benefits or an investment
      alternative under any Plan, (i) no liability or loss shall be incurred by the
      Company or any such Plan in the nature of a retroactive rate adjustment, loss
      sharing arrangement or other liability or loss, and (ii) no insurance company
      issuing any such policy is in receivership, conservatorship, liquidation or
      similar proceeding and, to the knowledge of the Seller, and TAA, no such
      proceedings with respect to any insurer are imminent.

     

    
      
        
        

      

      
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    (f) Tax-Qualification.
      Each
      Plan which is intended to be qualified under Section 401(a) of the Code is
      qualified under Sections 401(a) or 408(k) of the Code (and, if applicable,
      complies with the requirements of Section 401(k) and 408(k) of the Code), and
      has received a favorable determination letter from the IRS that it is so
      qualified. Each trust established in connection with any Plan which is intended
      to be exempt from federal income taxation under Section 501(a) of the Code
      is
      exempt under Section 501(a) of the Code and has received a determination letter
      from the IRS that it is so exempt; and no fact or event has occurred or
      condition exists since the date of such determination letter from the IRS which
      would be reasonably likely to adversely affect the qualified status of any
      such
      Plan or the exempt status of any such trust.

     

    (g)
       Funding;
      Excise Taxes.
      There
      has been no prohibited transaction (within the meaning of Section 406 of ERISA
      or Section 4975 of the Code) with respect to any Plan subject to ERISA. Neither
      TAA nor any ERISA Affiliate has incurred any liability for any excise tax
      arising under Sections 4971, 4972, 4973, 4974, 4975, 4976, 4977, 4978, 4978B,
      4979, 4979A, 4980, 4980B, 4980D or 4980E of the Code or any civil penalty
      arising under Sections 409, 502(i) or 502(l) of ERISA, and no fact, event or
      condition exists which could give rise to any such liability. Neither TAA nor
      any ERISA Affiliate has incurred any liability under, arising out of or by
      operation of Section 302(c)(11) or Title IV of ERISA (other than liability
      for
      premiums to the Pension Benefit Guaranty Corporation ("PBGC")
      arising in the ordinary course), including, without limitation, any liability
      in
      connection with the termination of any employee benefit plan subject to Title
      IV
      of ERISA (a "Title
      IV Plan");
      and,
      no fact, event or condition exists which could give rise to any such liability.
      No complete or partial termination has occurred within the five years preceding
      the date hereof with respect to any Plan maintained by TAA,
      the
      Company
      or any
      ERISA Affiliate, and no reportable event (within the meaning of Section 4043
      of
      ERISA), notice of which has not been waived by the PBGC, has occurred or is
      expected to occur with respect to any Plan maintained by TAA
      or any
      ERISA Affiliate. The transactions contemplated by this Agreement and the
      Transaction Document will not result in liability to TAA or Purchaser under
      Section 4069 of ERISA. No Title IV Plan or Plan subject to Section 302 of ERISA
      maintained by TAA,
      the
      Company
      or any
      ERISA Affiliate had an accumulated funding deficiency (within the meaning of
      Section 302 of ERISA or Section 412 of the Code), whether or not waived, as
      of
      the most recently ended plan year of such Plan. None of the assets of
TAA
      or any
      ERISA Affiliate is the subject of any Lien arising under Section 302(f) of
      ERISA
      or Section 412(n) of the Code; neither TAA
      nor any
      ERISA Affiliate has been required to post any security under Section 307 of
      ERISA or Section 401(a) (29) of the Code relating to any Plan; and no fact
      or
      event exists which could give rise to any such Lien or requirement to post
      any
      such security. As of the Closing Date, no Plan which is a Title IV Plan will
      have an "unfunded benefit liability" (within the meaning of Section 4001(a)(18)
      of ERISA) and no Plan which is subject to Section 302 of ERISA will have in
      "accumulated funding deficiency" (within the meaning of Section 302(a)(2) of
      ERISA).

    

    (h) Tax
      Deductions.
      All
      contributions, premiums or payments (including
      all employer contributions and, if applicable, employee salary reduction
      contributions) required
      to be made, paid or accrued with respect to any Plan have been made, paid or
      accrued on or before their due dates, including extensions thereof. All such
      contributions have been fully deducted or in the case of the current year will
      be deducted for income tax purposes and no such deduction has been challenged
      or
      disallowed by any Governmental or Regulatory Authority, and no fact or event
      exists which could give rise to any such challenge or disallowance.

     

    
      
        
        

      

      
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    Section
      2.19 Interests
      in Customers, Suppliers, Etc.
      Except
      as set forth on Schedule 2.19,
      neither
the
      Seller nor
      TAA,
      nor
      to the knowledge of the Seller or TAA,
      any
      officer, director, manager or employee of TAA
      immediately prior to the Closing Date, nor any parent, brother, sister, child
      or
      spouse of any such officer, director, key executive or employee of TAA
      or
the
      Seller
      (collectively, the "Related
      Group"),
      or
      any Person controlled by anyone in the Related Group:

    

    (i) owns,
      directly or indirectly, any interest in (excepting for ownership, directly
      or
      indirectly, of less than 1% of the issued and outstanding shares of any class
      of
      securities of a publicly held and traded company), or received or has any right
      to receive payments from, or is an officer, director, employee, agent or
      consultant of, any Person which is, or is engaged in business as, a competitor,
      lessor, lessee, supplier, distributor, sales agent, customer or client of
TAA;

    

    (ii) owns,
      directly or indirectly, in whole or in part, any tangible or intangible property
      (including, but not limited to Intellectual Property), that TAA
      used
      in
      the conduct of the Business, other than immaterial personal items owned and
      used
      by employees at their work stations; or

    

    (iii) has
      any
      cause of action or other claim whatsoever against, or owes any amount to,
TAA,
      except
      for claims in the ordinary course of business such as for accrued vacation
      pay,
      accrued benefits under employee benefit plans, and similar matters and
      agreements existing on the date hereof.

    

    Section
      2.20 Bank
      Accounts and Powers of Attorney.
      Set
      forth in Schedule 2.20
      is an
      accurate and complete list showing (a) the name and address of, and account
      information for, each bank in which immediately prior to the transfer of the
      Business, TAA
      had an
      account, credit line or safe deposit box and the names of all Persons authorized
      to draw thereon or to have access thereto, and (b) the names of all Persons,
      if
      any, holding powers of attorney from TAA
      and a
      summary statement of the terms thereof, in each case in connection with the
      Business.

    

    Section
      2.21 Compensation
      of Employees.
      Schedule 2.21
      is an
      accurate and complete list showing: (a) the names and positions of all employees
      and exclusive consultants who immediately prior to the transfer of the
      Business were
      being compensated by TAA
      at an
      annualized rate of $30,000 or more, together with a statement of the current
      annual salary, and the annual salary, bonus and incentive compensation paid
      or
      payable with respect to calendar years 2005 and 2006, and a statement of the
      projected annual salary, bonus and incentive compensation payable with respect
      to the calendar year ending December 31, 2007, and the material fringe benefits
      of such employees and exclusive consultants not generally available to all
      employees of TAA;
      (b) all
      bonus and incentive compensation paid or payable (whether by agreement, custom
      or understanding) to any employee of TAA
      not
      listed in clause (a) above for services rendered or to be rendered during the
      calendar years 2004, 2005 and 2006; (c) the names of all retired employees,
      if
      any, of TAA
      who are
      receiving or entitled to receive any healthcare or life insurance benefits
      or
      any payments from TAA
      not
      covered by any pension plan to which TAA
      is a
      party, their ages and current unfunded pension rate, if any; and (d) a
      description of the current severance and vacation policy of TAA.
      TAA
      has not,
      because of past practices or previous commitments with respect to its employees,
      established any rights on the part of any of its employees to additional
      compensation with respect to any period after the Closing Date (other than
      wage
      increases in the ordinary course of business). No employee of TAA has terminated
      their employment, or to the knowledge of TAA or the Seller, threatened to
      terminate their employment with TAA, as a result of the transactions
      contemplated by this Agreement. 

     

    
      
        
        

      

      
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    Section
      2.22 No
      Changes Since the Balance Sheet Date.
      From
      the Balance Sheet Date through the date hereof, except as specifically stated
      on
Schedule 2.22,
      TAA
      has not
      (i) incurred any liability or obligation of any nature (whether accrued,
      absolute, contingent or otherwise), except in the ordinary course of business,
      (ii) permitted any of its material assets to be subjected to any Lien
other
      than in the ordinary course of business consistent with past
      practices,
      (iii) sold, transferred or otherwise disposed of any assets except in the
      ordinary course of business, (iv) made any capital expenditure or
      commitment therefor which individually or in the aggregate exceeded $10,000;
      (v)
      made any distributions or dividend payments on any shares of its capital stock
      or equity participation rights, or redeemed, purchased or otherwise acquired
      any
      shares of its capital stock, or any option, warrant or other right to purchase
      or acquire any shares of capital stock or equity participation rights of
TAA,
      (vi) made any bonus or profit sharing distribution, (vii) increased or
      prepaid its indebtedness for borrowed money, except current borrowings under
      credit lines listed on Schedule 2.9,
      or made
      any loan to any Person other than to any employee for normal travel and expense
      advances, (viii) wrote down the value of any work-in-process, or wrote off
      as
      uncollectible any notes or accounts receivable, except write-downs and
      write-offs in the ordinary course of business, none of which individually or
      in
      the aggregate, were material to TAA,
      (ix)
      granted any increase in the rate of wages, salaries, bonuses or other
      remuneration of any employee who, whether as a result of such increase or prior
      thereto, received aggregate compensation from TAA
      at an
      annual rate of $30,000 or more, or except in the ordinary course of business
      to
      any other employees, (x) entered into any employment or exclusive consulting
      agreement which is not cancelable by TAA
      without
      penalty or other financial obligation within 30 days, (xi) canceled or waived
      any claims or rights of material value, (xii) made any material change in any
      method of accounting procedures, (xiii) otherwise conducted its
business
      or
      entered into any material transaction, except in the usual and ordinary manner
      and in the ordinary course of its business, (xiv) amended or terminated any
      agreement which is material to their businesses, (xv) renewed, extended or
      modified any lease of real property or any lease of personal property, except
      in
      the ordinary course of business, or (xvi)  adopted, amended or terminated
      any Plan or (xvii) agreed, whether or not in writing, to do any of the actions
      set forth in any of the above clauses. 

    

    Section
      2.23 Corporate
      Controls.
      To the
      knowledge of the Seller and TAA,
      no
      officer, authorized agent, employee, consultant or any other Person while acting
      on behalf of TAA,
      has,
      directly or indirectly: used any corporate fund for unlawful contributions,
      gifts, or other unlawful expenses relating to political activity; made any
      unlawful payment to foreign or domestic government officials or employees or
      to
      foreign or domestic political parties or campaigns from corporate funds;
      established or maintained any unlawful or unrecorded fund of corporate monies
      or
      other assets; made any false or fictitious entry on its books or records;
      participated in any racketeering activity; or made any bribe, rebate, payoff,
      influence payment, kickback, or other unlawful payment, or other payment of
      a
      similar or comparable nature, to any Person, private or public, regardless
      of
      form, whether in money, property, or services, to obtain favorable treatment
      in
      securing business or to obtain special concessions, or to pay for favorable
      treatment for business secured or for special concessions already obtained,
      and
TAA
      has
      not
      participated in any illegal boycott or other similar illegal practices affecting
      any of its actual or potential customers.

     

    
      
        
        

      

      
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    Section
      2.24 Brokers.
      Except
      as set forth on Schedule
      2.24,
      no
      broker, finder, agent or similar intermediary has acted on behalf of
the
      Seller or TAA
      in
      connection with this Agreement or the transactions contemplated hereby, and
      no
      brokerage commissions, finder's fees, consulting fees or similar fees or
      commissions are payable by TAA
      or
      the
      Seller in
      connection therewith based on any agreement, arrangement or understanding with
      any of them.

    

    Section
      2.25 Forecasts
      and Projections.
      All
      of
      the forecasts and projections delivered
      by TAA to Purchaser or any of its affiliates pursuant to this Article II or
      otherwise in connection with transactions contemplated hereby were made in
      good
      faith; provided, however, TAA and the Seller
      do
      not
      represent that any forecasted or projected results will be
      achieved.

    

    

    ARTICLE
      III

    

    REPRESENTATIONS
      OF THE PURCHASER

    

    Purchaser
      represents, warrants and agrees to and with the
      Sellers as
      follows:

    

    Section
      3.1 Existence
      and Good Standing.
      Purchaser is a corporation validly existing and in good standing under the
      laws
      of the State of Nevada, with full corporate power and authority to own its
      property and to carry on its business all as and in the places where such
      properties are now owned or operated or such business is now being
      conducted.

    

    Section
      3.2 Execution
      and Validity of Agreement.
      Purchaser has the full corporate power and authority to make, execute, deliver
      and perform this Agreement and the transactions contemplated hereby. The
      execution and delivery of this Agreement and the other Transaction Documents
      by
      Purchaser and the consummation of the transactions contemplated hereby and
      thereby have been duly authorized by all required corporate action on behalf
      of
      Purchaser, and this Agreement and the other Transaction Documents have been
      duly
      and validly executed and delivered by Purchaser and, assuming due authorization,
      execution and delivery by other
      parties thereto,
      constitute legal, valid and binding obligations of Purchaser, enforceable
      against it in accordance with their respective terms,
      except
      to the extent that enforceability may be limited by the effect of (i) any
      applicable bankruptcy, reorganization, insolvency, moratorium or other laws
      affecting the enforcement of creditors’ rights generally and (ii) general
      principles of equity, regardless of whether such enforceability is considered
      in
      a proceeding at law or in equity.

    

    Section
      3.3 Litigation.
      There
      is no action, suit, proceeding at law or in equity by any Person, or any
      arbitration or any administrative or other proceeding by or before (or to the
      knowledge of Purchaser, any investigation by), any Governmental or Regulatory
      Authority (“Legal
      Proceedings”)
      pending or, to the knowledge of Purchaser, threatened against Purchaser or
      any
      of its properties or rights with respect to this Agreement and the other
      Transaction Documents or the transactions contemplated hereby and
      thereby.

     

    
      
        
        

      

      
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    Section
      3.4 Non-Contravention;
      Approvals and Consents.
      

    

    (a) Non-Contravention.
      The
      execution, delivery and performance by Purchaser of its obligations under this
      Agreement and
      the
      other Transaction Documents and
      the
      consummation of the transactions contemplated hereby and thereby will not
      (a) violate, conflict with or result in the breach of any provision of the
      Certificate of Incorporation or By-laws of Purchaser, or (b) result in the
      violation by Purchaser of any Laws or Orders of any Governmental or Regulatory
      Authority applicable to Purchaser or any of its assets or properties, or
      (c) result in a violation or breach of, constitute (with or without notice
      or lapse of time or both) a default under, or require Purchaser to obtain any
      consent, approval or action of, make any filing with or give any notice to,
      or
      result in or give to any Person any right of payment or reimbursement,
      termination, cancellation, modification or acceleration of, or result in the
      creation or imposition of any Lien upon any of the assets or properties of
      Purchaser, under any of the terms, conditions or provisions of any Contract
      to
      which Purchaser is a party or by which Purchaser or any of its assets or
      properties are bound.

    

    (b) Approvals
      and Consents.
      Other
      than consents which have been obtained, no consent, approval or action of,
      filing with or notice to any Governmental or Regulatory Authority or other
      public or private third party is necessary or required under any of the terms,
      conditions or provisions of any Law or Order of any Governmental or Regulatory
      Authority or any Contract to which Purchaser is a party or by which Purchaser
      or
      any of its assets or properties are bound for Purchaser's execution and delivery
      of this Agreement and the other Transaction Documents, the performance by
      Purchaser of its obligations hereunder and thereunder or Purchaser's
      consummation of the transactions contemplated hereby and thereby. 

    

    Section
      3.5 Brokers.
      No
      broker, finder, agent or similar intermediary has acted on behalf of Purchaser
      in connection with this Agreement or the transactions contemplated hereby,
      and
      no brokerage commissions, finder's fees or similar fees or commissions are
      payable by Purchaser in connection therewith based on any agreement, arrangement
      or understanding with any of them.

    

    Section
      3.6 Cash
      Reserves and Payment of TAA Liabilities.
      Purchaser shall, at the Closing, have at least Three Hundred Thousand Dollars
      ($300,000) in cash or cash equivalents deposited in one or more accounts
      maintained for the Company or TAA (the “Current
      Deposit”).
      In
      addition Purchaser shall directly invest into TAA an
      aggregate amount of at least One
      Million Fifty Thousand Dollars ($1,050,000) during the twelve (12) months
      following the Closing (the “Capital
      Commitment”).
      The
      Current Deposit and the Capital Commitment shall be exclusively used for TAA
      operations and capital expenditures in order to support the development and
      growth of the Business and for no other purposes. The parties acknowledge that
      Seventy-Five Thousand Dollars ($75,000) will be deemed to have been invested
      by
      Purchaser in TAA at Closing pursuant to the terms of the promissory note issued
      by TAA to Purchaser dated February 23, 2007.

     

    
      
        
        

      

      
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    ARTICLE
      IV

    

    CONDITIONS
      TO CLOSING 

    

    Section
      4.1 Conditions
      Precedent to Obligations of Purchaser.
      The
      obligation of Purchaser to consummate the transactions contemplated by this
      Agreement is subject to the fulfillment, on or prior to the Closing Date, of
      each of the following conditions (any or all of which may be waived by Purchaser
      in whole or in part to the extent permitted by applicable Law):

    

    (a) all
      representations and warranties of TAA and the Sellers contained herein shall
      be
      true and correct as of the date hereof; all representations and warranties
      of
      TAA and the Sellers contained herein qualified as to materiality shall be true
      and correct, and the representations and warranties of TAA and the Sellers
      contained herein not qualified as to materiality shall be true and correct
      in
      all material respects, at and as of the Closing Date with the same effect as
      though those representations and warranties had been made again at and as of
      that time;

    

    (b) TAA
      and
      the Sellers shall have performed and complied in all material respects with
      all
      obligations and covenants required by this Agreement to be performed or complied
      with by it on or prior to the Closing Date;

    

    (c) Purchaser
      shall have been furnished with certificates (dated the Closing date and in
      form
      and substance reasonably satisfactory to Purchaser) executed by TAA certifying
      as to the fulfillment of the conditions specified in subsection (a) and (b)
      hereof;

    

    (d) there
      shall not have been or occurred any event which will have a Material Adverse
      Effect;

    

    (e) TAA
      and
      the Sellers shall
      have obtained or given, at no expense to Purchaser, and there shall not have
      been withdrawn or modified, any consents or approvals or other actions listed
      on
Schedule
      2.1(e)
      hereof
      (including without limitation, obtaining all such consents, approvals and/or
      waivers required under the Contracts listed on Schedule 2.9
      in order
      to permit the consummation of the transactions contemplated by this Agreement
      and the other Transaction Documents without causing or resulting in a default,
      event of default, acceleration event or termination event under any of such
      documents and without entitling any party to any of such documents to exercise
      any other right or remedy adverse to the interests of Purchaser or TAA
      thereunder); each such consent or approval shall be in form reasonably
      satisfactory to counsel for Purchaser;

    

    (f) no
      legal
      proceedings shall have been instituted or threatened or claim or demand made
      against TAA, the Sellers or Purchaser seeking to restrain or prohibit or to
      obtain substantial damages with respect to the consummation of the transactions
      contemplated hereby, and there shall not be in effect any order by a
      Governmental or Regulatory Authority of competent jurisdiction restraining,
      enjoining or otherwise prohibiting the consummation of the transactions
      contemplated hereby;

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (g) Purchaser
      shall have received disclosure schedules required pursuant to Article II hereof,
      which shall be reasonably satisfactory to Purchaser;

    

    (h)
       TAA
      shall
      have delivered to Purchaser
      a copy
      of the resolutions of its Managers and/or Members, authorizing the execution,
      delivery and performance of this Agreement and the Transaction Document and
      the
      transactions contemplated hereby and thereby, certified by one of its
      officers.
      TAA and
      the Sellers shall
      have delivered to Purchaser: (1) a copy of the Company's Certificate of
      Formation, including all amendments, certified by the California Secretary
      of
      State; (2) a certificate from the California Secretary of State that the Company
      is in good standing in such state; and (3) a certificate from the appropriate
      authority of each state in which the Company is qualified as a foreign
      corporation to do business to the effect that the Company is in good standing
      in
      such state;

    

    (i)
       the
      Sellers shall
      sell and deliver to the Purchaser an aggregate of 45% of the Membership
      Interests of TAA and TAA shall sell and deliver to the Purchaser an aggregate
      of
      22.5% of the Membership Interests of TAA;

    

    (j)
       TAA
      shall,
      if requested by Purchaser, shall have executed and delivered an Amended and
      Restated Operating Agreement (the "Amended
      and Restated Operating Agreement")
      with
      Purchaser dated the Closing Date in form and content reasonably acceptable
      to
      Purchaser; 

    

    (k) TAA
      and
      former member Larry Block
      shall
      have executed and delivered such documents as Purchaser may reasonably request
      evidencing termination of the Block Pledge Agreement and payment in full of
      the
      Block Note; and 

    

    (k all
      proceedings to be taken in connection with the transactions contemplated by
      this
      Agreement and the other Transaction Documents must be reasonably satisfactory
      in
      form and substance to Purchaser and its counsel, and Purchaser shall have
      received copies of all such documents and other evidences as it or its counsel
      reasonably requested in order to establish the consummation of such transactions
      and the taking of all proceedings in connection therewith.

    

    Section
      4.2  Conditions
      Precedent to Obligations of TAA and the Sellers.
      The
      obligations of TAA and the Sellers to consummate the transactions contemplated
      by this Agreement are subject to the fulfillment, prior to or on the Closing
      Date, of each of the following conditions (any or all of which may be waived
      by
      TAA and the Sellers in whole or in part to the extent permitted by applicable
      Law):

    

    (a) all
      representations and warranties of Purchaser contained herein shall be true
      and
      correct as of the date hereof; all representations and warranties of Purchaser
      contained herein qualified as to materiality shall be true and correct, and
      all
      representations and warranties of Purchaser contained herein not qualified
      as to
      materiality shall be true and correct in all material respects, at and as of
      the
      Closing Date with the same effect as though those representations and warranties
      had been made again at and as of that date;

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (c) Purchaser
      shall have performed and complied in all material respects with all obligations
      and covenants required by this Agreement to be performed or complied with by
      Purchaser on or prior to the Closing Date;

    

    (d) the
      Sellers shall have been furnished with certificates (dated the Closing Date
      and
      in form and substance reasonably satisfactory to the Sellers) executed by the
      Chief Executive Officer of Purchaser certifying as to the fulfillment of the
      conditions specified in subsections (a) and (b), and resolutions of the Board
      of
      Directors of Purchaser authorizing the acquisition of the Membership Interests
      of TAA;

    

    (e) there
      shall not be in effect any order by a Governmental or Regulatory Authority
      of
      competent jurisdiction restraining, enjoining or otherwise prohibiting the
      consummation of the transactions contemplated hereby; 

     

    (f) Purchaser
      shall, at the Closing, have deposited at least Three Hundred Thousand Dollars
      in
      ($300,000) in cash or cash equivalents;

    

    (g) Purchaser
      shall have delivered the Ku Note and the Fong Note; 

    

    (h) Purchaser
      shall have paid all accrued and unpaid principal and interests on the Block
      Note
      in full;
      and

    

    (i) all
      proceedings to be taken in connection with the transactions contemplated by
      this
      Agreement, and all documents incident thereto must be reasonably satisfactory
      in
      form and substance to the
      Sellers
      and
TAA
      and
      their counsel and the
      Sellers shall have
      received
      copies of all such documents and other evidences as they or their counsel may
      reasonably request in order to establish the consummation of such transactions
      and the taking of all proceedings in connection therewith.

    

    

    ARTICLE
      V

    

    OTHER
      AGREEMENTS

    

    Section
      5.1 Tax
      Matters.

    

    (a)Company
      Tax Returns.
      Purchaser shall prepare or cause to be prepared and file or cause to be filed
      all Tax returns for TAA that are filed after the Closing Date for any period
      ending on the Closing Date except as otherwise specifically provided in the
      Amended and Restated Limited Liability Company Agreement. Purchaser shall permit
      the Sellers to review and comment on each such Tax return described in the
      preceding sentence prior to filing.

    

    (b) Tax
      Cooperation.
      Purchaser, TAA and the Sellers shall cooperate fully, as and to the extent
      reasonably requested by the other party, in connection with the filing of Tax
      returns pursuant to this Section
      5.1
      or any
      other Tax returns relating to the operations of TAA, and any audit, litigation
      or other proceeding with respect to Taxes. Such cooperation shall include the
      retention and (upon the other party's request) the provision of records pursuant
      to Section
      5.16.

     

    
      
        
        

      

      
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    (c)
       Sales
      Taxes.
      To
      the
      extent that any of the transactions contemplated by the
      Transaction Document or this Agreement gives rise to sales and/or use tax
      liability or other transfer, purchase, stamp or recordation documentary tax
      and
      fees (collectively, "Sales
      Taxes"),
      TAA
      shall promptly pay such Sales Taxes to the appropriate tax
      authorities.

    

    Section
      5.2 Access
      to Information.
      TAA and
      the Sellers agree that, prior to the Closing Date, Purchaser shall be entitled,
      through its officers, employees and representatives (including, without
      limitation, its legal advisors and accountants), to make such investigation
      of
      the properties, businesses and operations of TAA and such examination of the
      books, records and financial condition of TAA as it reasonably requests and
      to
      make extracts and copies of such books and records. Any such investigation
      and
      examination shall be conducted during regular business hours and under
      reasonable circumstances, and TAA and the Sellers shall cooperate fully therein.
      No investigation by Purchaser prior to or after the date of this Agreement
      shall
      diminish or obviate any of the representations, warranties, covenants or
      agreements of TAA contained in the Transaction Documents.
      TAA
shall
      cause its officers, employees, consultants, agents, accountants, attorneys
      and
      other representatives to cooperate fully with such representatives in connection
      with such review and examination.

    

    Section
      5.3 Conduct
      of the Business Pending the Closing. 

    

    (a) Except
      as
      otherwise expressly contemplated by this Agreement or with the prior written
      consent of Purchaser, TAA shall:

    

    (1) conduct
      its business only in the ordinary course consistent with past
      practice;

    

    (2) use
      its
      best efforts to (A) preserve its present business operations, organization
      (including, without limitation, management and the sales force) and goodwill
      and
      (B) preserve its present relationship with Persons having business dealings
      with
      it;

    

    (3) maintain
      (A) all of its assets and properties in their current condition, ordinary wear
      and tear excepted and (B) insurance upon all of its properties and assets in
      such amounts and of such kinds comparable to that in effect on the date of
      this
      Agreement;

    

    (4) (A)
      maintain its books, accounts and records in the ordinary course of business
      consistent with past practices, (B) continue to collect accounts receivable
      and
      pay accounts payable utilizing normal procedures and without discounting or
      accelerating payment of such accounts, and (C) comply with all contractual
      and
      other obligations applicable to its operation; and

    

    (5) comply
      in
      all material respects with applicable Laws.

    

    (b) Except
      as
      otherwise expressly contemplated by this Agreement or with the prior written
      consent of Purchaser, TAA shall not:

     

    
      
        
        

      

      
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    (1) except
      for trade payables and for indebtedness for borrowed money incurred in the
      ordinary course of business and consistent with past practice, borrow monies
      for
      any reason or draw down on any line of credit or debt obligation, or become
      the
      guarantor, surety, endorser or otherwise liable for any debt, obligation or
      liability (contingent or otherwise) of any other Person; 

    

    (2) subject
      to any Lien (except for liens that do not materially impair the use of the
      property subject thereto in their respective businesses as presently conducted),
      any of its properties or assets (whether tangible or intangible);

    

    (3) acquire
      any material properties or assets or sell, assign, transfer, convey, lease
      or
      otherwise dispose of any of its material properties or assets (except for fair
      consideration in the ordinary course of business consistent with past
      practice);

    

    (4) cancel
      or
      compromise any debt or claim or waive or release any material right except
      in
      the ordinary course of business consistent with past practice;

    

    (5) enter
      into any commitment for capital expenditures in excess of $10,000 for any
      individual commitment and $15,000 for all commitments in the
      aggregate;

    

    (6) introduce
      any material change with respect to its operation, including any material change
      in the types, nature, composition or quality of its products or services,
      experience any material change in any contribution of its product lines to
      its
      revenues or net income, or, other than in the ordinary course of business,
      make
      any change in product specifications or prices or terms of distributions of
      such
      products; 

    

    (7) enter
      into any transaction or make or enter into any Contract which by reason of
      its
      size or otherwise is not in the ordinary course of business consistent with
      past
      practice;

    

    (8) enter
      into or agree to enter into any merger or consolidation with, any corporation
      or
      other entity, and not engage in any new business or invest in, make a loan,
      advance or capital contribution to, or otherwise acquire the securities of
      any
      other Person;

    

    (9) except
      for transfers of cash pursuant to normal cash management practices, make any
      investments in or loans to, or pay any fees or expenses to, or enter into or
      modify any Contract with any Affiliate; or

    

    (10) agree
      to
      do anything prohibited by this Section
      5.3
      or
      anything which would make any of the representations and warranties of TAA
      in
      this Agreement or Transaction Documents untrue or incorrect in any material
      respect as of any time through and including the Effective Time.

     

    
      
        
        

      

      
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    Section
      5.4 Consents. TAA
      shall
      use its best efforts, and Purchaser shall cooperate with TAA, to obtain at
      the
      earliest practicable date all consents and approvals required to consummate
      the
      transactions contemplated by this Agreement, including, without limitation,
      the
      consents and approvals referred to in Section
      2.1(b)
      hereof;
      provided, however, that neither TAA nor Purchaser shall be obligated to pay
      any
      consideration therefore to any third party from whom consent or approval is
      requested.

    

    Section
      5.5 Other
      Actions. Each
      of
      TAA, the Sellers and Purchaser shall use its best efforts to (i) take all
      actions necessary or appropriate to consummate the transactions contemplated
      by
      this Agreement and (ii) cause the fulfillment at the earliest practicable date
      of all of the conditions to their respective obligations to consummate the
      transactions contemplated by this Agreement and
      the
      other Transaction Documents.
      The
      parties acknowledge that the Sellers have provided personal guarantees of
      certain obligations of TAA, including the current factoring line of credit
      (the
“Guarantees”).
      Purchaser shall take any and all action necessary or appropriate to cause any
      and all applicable creditors of TAA to cancel or terminate such Guarantees
      within 120 days after the Closing. Purchaser shall also indemnify each of the
      Sellers, pursuant to the terms of Section 6.3 below, for any Losses related
      to
      demand by any lender or creditor to make any payment related to any Guarantee
      after the Closing Date. 

    

    Section
      5.6 No
      Solicitation. TAA and
      the
      Sellers will not, and will not cause or permit any of its partners, officers,
      employees, representatives or agents (collectively, the “Representatives”)
      to,
      directly or indirectly, (i) discuss, negotiate, undertake, authorize, recommend,
      propose or enter into, either as the proposed surviving, merged, acquiring
      or
      acquired corporation, any transaction involving a merger, consolidation,
      business combination, purchase or disposition of any amount of the Assets or
      Membership Interests or other equity interest in it other than the transactions
      contemplated by this Agreement (an “Acquisition
      Transaction”),
      (ii)
      facilitate, encourage, solicit or initiate discussions, negotiations or
      submissions of proposals or offers in respect of an Acquisition Transaction,
      (iii) furnish or cause to be furnished, to any Person, any information
      concerning its business, operations, properties or assets in connection with
      an
      Acquisition Transaction, or (iv) otherwise cooperate in any way with, or assist
      or participate in, facilitate or encourage, any effort or attempt by any other
      Person to do or seek any of the foregoing. TAA will inform Purchaser in writing
      immediately following the receipt by TAA or any Representative of any proposal
      or inquiry in respect of any Acquisition Transaction.

    

    Section
      5.7 Preservation
      of Records. TAA,
      the
      Sellers and Purchaser agree that each of them shall preserve and keep the
      records held by it relating to the business of TAA for a period of three years
      from the Closing Date (six years with respect to tax related records) and shall
      make such records and personnel available to the other as may be reasonably
      required by such party in connection with, among other things, preparation
      of
      financial statements, disclosure of information to the Securities and Exchange
      Commission, stock exchange or similar entity, any insurance claims by, legal
      proceedings against or governmental investigations of TAA, Purchaser or any
      of
      their Affiliates or in order to enable TAA and Purchaser to comply with their
      respective obligations under this Agreement and each other agreement, document
      or instrument contemplated hereby or thereby. In the event TAA, Purchaser or
      a
      Seller wishes to destroy such records after that time, such party shall first
      give ninety (90) days prior written notice to the other and such other party
      shall have the right at its option and expense, upon prior written notice given
      to such party within that ninety (90) day period, to take possession of the
      records within one hundred and eighty (180) days after the date of such
      notice.

     

    
      
        
        

      

      
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    Section
      5.8 Publicity. Neither
      TAA, the Sellers nor Purchaser shall issue any press release or public
      announcement concerning this Agreement or the transactions contemplated hereby
      without obtaining the prior written approval of the other party hereto, which
      approval will not be unreasonably withheld or delayed, unless, in the sole
      judgment of Purchaser or TAA, disclosure is otherwise required by applicable
      Law
      or by the applicable rules of any stock exchange on which Purchaser or TAA
      lists
      securities, provided that, to the extent required by applicable Law, the party
      intending to make such release shall use its best efforts consistent with such
      applicable Law to consult with the other party with respect to the text thereof.
      

    

    Section
      5.9 Use
      of Name. TAA and
      the
      Sellers hereby agrees that upon the consummation of the transactions
      contemplated hereby, Purchaser shall have the sole right to the use of the
      name
“The Apparel Agent”, “Motive”, “Ammo” and variations thereof. 

    

    Section
      5.10 Agreement
      To Refrain From Competition.
      Each of
      the Sellers hereby acknowledges that this agreement to refrain from competition
      is executed by him as a part of the inducement to Seller to enter into this
      Agreement and to consummate the transactions contemplated herein. In connection
      herewith, Seller acknowledges its obligation to refrain from competition for
      a
      twelve (12) month period following the Closing of this Agreement. Seller each
      further acknowledges that the Purchase Price given in consideration of the
      Membership Interests is part of the consideration for them entering into this
      Agreement to refrain from competition and that they are receiving full and
      adequate consideration for their covenants and agreements contained in each
      of
      subsection (a) through (e) of this Section
      5.10.
      

     

    (a) Non-solicitation
      of Employees.
      For a
      period of twelve (12) months following the Closing, Seller shall not in any
      way
      or in any capacity entice, or try to entice, away from Purchaser or TAA any
      person who, in the twelve months preceding the Closing was an employee of
      Purchaser or TAA. 

     

    (b) Non-solicitation
      of Clients or Customers.
      For a
      period of twelve (12) months following the Closing, Seller shall not, whether
      on
      their own behalf or on behalf of any other person or organization, canvass
      or
      approach or procure another person to canvass or approach any person or
      organization who or which was a client or customer of Purchaser or TAA with
      a
      view to providing to them services which compete directly with the Business
      of
      Purchaser or TAA.

     

    (c)
       Non-competition.
      For a
      period of twelve (12) months following the Closing, Seller shall not, whether
      on
      its own behalf or on behalf of any other person or organization, be involved
      in
      the provision of any services which compete with the business of Purchaser
      or
      TAA within Los Angeles County, California. 

     

    
      
        
        

      

      
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    (d) Reasonableness
      of restrictions.
      Each of
      subsections (a) through (e) of Section 5.10 set out above is acknowledged by
      Seller to be reasonable in duration, extent and application and is the minimum
      protection necessary for Purchaser and TAA in respect of its goodwill, trade
      connections and business. Each of the covenants and obligations on Seller’s part
      set out in this Section 5.10 is deemed to be separate and severable and
      enforceable by Purchaser and TAA accordingly. If any of the restrictions set
      out
      above are held to be void but would be valid if part of the wording was deleted
      by a court of competent jurisdiction such restriction shall apply with such
      deletion as may be necessary to make it valid and effective. Therefore, in
      furtherance of and not in derogation of the provisions of this Agreement, Seller
      agrees that in the event any court of competent jurisdiction should decline
      to
      enforce any provision, in whole or in part, of subsections (a) through (e)
      of
      this Section 5.10, then the obligations of Seller under such subsections shall
      be deemed to be modified to the extent which the court shall find enforceable.
      If any court of competent jurisdiction shall at any time deem the time period
      too lengthy under subsection (a) through (e) of this Section 5.10, the other
      subsections of this Section
      5.10
      shall
      nevertheless stand, and the time period shall be deemed to be the longest period
      permissible by law under the circumstances. In such case, the parties agree
      that
      the court may reduce the duration of the time period. Seller acknowledges that
      Purchaser and TAA will be irreparably harmed if Seller’s obligations under this
Section
      5.10
      hereunder are not specifically enforced and that Purchaser and TAA would not
      have an adequate remedy at law in the event of an actual or threatened violation
      by Seller of these obligations hereunder. Therefore, Seller agrees and consents
      that Purchaser and TAA shall be entitled to an injunction or any appropriate
      decree of specific performance for any actual or threatened violations or
      breaches by Seller and such other relief as may be just and proper, including
      the right to recover all losses or damages suffered by Purchaser or TAA
      resulting from any such breach or threatened breach. 

    

    (e)
       Exceptions.
      Notwithstanding anything to the contrary herein, this Section 5.10 shall not
      restrict Seller Jiun Ku from continuing to own and operate his company Perfect
      Cotton, subject only to the restrictions set forth in subsections (a) and (b)
      above.

    

    (f) Survival.
      The
      provisions of this Section 5.10 shall survive the Closing of this Agreement
      and
      shall remain in full force and effect for a period of twelve (12) months from
      the date of the Closing.

    

    

    ARTICLE
      VI

    

    SURVIVAL;
      INDEMNITY

    

    Section
      6.1 Survival.
      Notwithstanding any right of any party hereto fully to investigate the affairs
      of any other party, and notwithstanding any knowledge of facts determined or
      determinable pursuant to such investigation or right of investigation, each
      party hereto shall have the right to rely fully upon the representations,
      warranties, covenants and agreements of the other parties contained in this
      Agreement and the Schedules, if any, furnished by any other party pursuant
      to
      this Agreement, or in any certificate or document delivered at the Closing
      by
      any other party. Subject to the limitations set forth in Sections
      6.4 and 6.6,
      the
      respective representations, warranties, covenants and agreements of the
      Sellers, TAA
      and
      Purchaser contained in this Agreement shall survive the Closing until the first
      anniversary of the Closing Date (the “Termination
      Date”).

     

    
      
        
        

      

      
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    Section
      6.2 Obligation
      of the Sellers to Indemnify.
      Subject
      to the limitations contained in Sections
      6.4 and 6.6,
      the
      Sellers, hereby agree, jointly and severally, to indemnify Purchaser and its
      affiliates, stockholders, officers, directors, employees, agents,
      representatives and successors, permitted assignees of Purchaser and their
      affiliates (individually, a "Purchaser
      Indemnified Party"
      and
      collectively, the "Purchaser
      Indemnified Parties")
      against, and to protect, save and keep harmless Purchaser Indemnified Parties
      from, and to pay on behalf of or reimburse Purchaser Indemnified Parties as
      and
      when incurred for, any and all Losses that may be imposed on or incurred by
      any
      Purchaser Indemnified Party as a consequence of, in connection with, incident
      to, resulting from or arising out of or in any way related to or by virtue
      of:
      (a) any material misrepresentation, inaccuracy or breach of any warranty or
      representation contained in this Agreement or in any certificate delivered
      by
      TAA or the Sellers at the Closing; (b) any breach or failure by TAA or the
      Sellers to comply with, perform or discharge any obligation, agreement or
      covenant by TAA or the Sellers contained in this Agreement; and (c) any action,
      demand, proceeding, investigation or claim by any third party (including any
      Governmental or Regulatory Authority) against or affecting any Purchaser
      Indemnified Party which
      may
      give rise to or evidence the existence of or relate to a misrepresentation
      or
      breach of any of the representations and warranties of TAA or Sellers contained
      in Article II hereof or in any certificate delivered by Sellers at the Closing,
      provided that Purchaser Indemnified Parties’ claim therefor is instituted by
      written notice to the Sellers within the time period specified in Sections
      6.5.
      

     

    Section
      6.3 Obligation
      of Purchaser to Indemnify.
      Subject
      to the limitations contained in Sections
      6.4 and 6.6 hereof,
      Purchaser hereby agrees to indemnify the
      Sellers their agents, representatives and successors, permitted assignees and
      affiliates (individually
      an "TAA
      Indemnified Party"
      and
      collectively, the "TAA
      Indemnified Parties")
      against, and to protect, save and keep harmless the
      TAA
      Indemnified Parties
      from,
      and to pay on behalf of or reimburse the
      TAA
      Indemnified Parties
      as and
      when incurred for, any and all Losses that may be imposed on or incurred by
      any
      TAA
      Indemnified Party
      as a
      consequence of, in connection with, incident to, resulting from or arising
      out
      of or in any way related to or by virtue of: (a) any material misrepresentation,
      inaccuracy or breach of any warranty or representation of Purchaser contained
      in
      this Agreement or
      in any
      certificate delivered by Purchaser at the Closing;
      (b)
any
      breach or failure by Purchaser to comply with, perform or discharge any
      obligation, agreement or covenant by Purchaser contained in this
      Agreement;
      or
      (c)
      any
      action, demand, proceeding, investigation or claim by any third party (including
      any Governmental or Regulatory Authority) against or affecting any TAA
      Indemnified Party which
      may
      give rise to or evidence the existence of or relate to a misrepresentation
      or
      breach of any of the representations and warranties of Purchaser contained
      in
      Article III hereof or in any certificate delivered by Purchaser at the Closing,
      provided that TAA Indemnified Parties’ claim therefor is instituted by written
      notice to Purchaser within the time period specified in Section
      6.5.

    

    Section
      6.4 Limitations
      on Indemnification.
      An
      indemnifying party shall not have any liability under Section
      6.2 or Section 6.3
      hereof
      unless the aggregate amount of Losses to the indemnified parties finally
      determined to arise thereunder based upon, attributable to or resulting from
      the
      failure of any representation or warranty to be true and correct, exceeds
      $150,000 (the “Basket”)
      and,
      in such event, the indemnifying party shall be required to pay the entire amount
      of such Losses in excess of $150,000 (the “Deductible”).
      Notwithstanding anything herein to the contrary, no Seller shall be responsible
      to the Purchaser Indemnified Parties hereunder for Losses in excess of the
      value
      of the portion of the Purchaser Price received by such Seller
      hereunder.

     

    
      
        
        

      

      
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    Section
      6.5  Indemnification
      Procedures.

    

    (a) In
      the
      event that any claim or demand (“Claim”)
      shall
      be asserted by any Person in respect of which payment may be sought under
Sections
      6.2 and 6.3
      hereof
      (regardless of the Basket and Deductible referred to above), the indemnified
      party shall reasonably and promptly cause written notice of the assertion of
      any
      Claim of which it has knowledge which is covered by this indemnity to be
      forwarded to the indemnifying party. The indemnifying party shall have the
      right, at its sole option and expense, to be represented by counsel of its
      choice, which must be reasonably satisfactory to the indemnified party, and
      to
      defend against, negotiate, settle or otherwise deal with any Claim which relates
      to any Losses indemnified against hereunder. If the indemnifying party elects
      to
      defend against, negotiate, settle or otherwise deal with any Claim which relates
      to any Losses indemnified against hereunder, it shall within five (5) days
      (or
      sooner, if the nature of the Claim so requires) notify the indemnified party
      of
      its intent to do so. If the indemnifying party elects not to defend against,
      negotiate, settle or otherwise deal with any Claim which relates to any Losses
      indemnified against hereunder, fails to notify the indemnified party of its
      election as herein provided or contests its obligation to indemnify the
      indemnified party for such Losses under this Agreement, the indemnified party
      may defend against, negotiate, settle or otherwise deal with such Claim. If
      the
      indemnified party defends any Claim, then the indemnifying party shall reimburse
      the indemnified party for the Losses of defending such Claim upon submission
      of
      periodic bills. If the indemnifying party shall assume the defense of any Claim,
      the indemnified party may participate, at his or its own expense, in the defense
      of such Claim; provided, however, that such indemnified party shall be entitled
      to participate in any such defense with separate counsel at the expense of
      the
      indemnifying party if, (i) so requested by the indemnifying party to participate
      or (ii) in the reasonable opinion of counsel to the indemnified party, a
      conflict or potential conflict exists between the indemnified party and the
      indemnifying party that would make such separate representation advisable;
      and
      provided, further, that the indemnifying party shall not be required to pay
      for
      more than one such counsel for all indemnified parties in connection with any
      Claim. The parties hereto agree to cooperate fully with each other in connection
      with the defense, negotiation or settlement of any such Claim.

    

    (b) After
      any
      final judgment or award shall have been rendered by a court, arbitration board
      or administrative agency of competent jurisdiction and the expiration of the
      time in which to appeal therefrom, or a settlement shall have been consummated,
      or the indemnified party and the indemnifying party shall have arrived at a
      mutually binding agreement with respect to a Claim hereunder, the indemnified
      party shall forward to the indemnifying party notice of any sums due and owing
      by the indemnifying party pursuant to this Agreement with respect to such matter
      and the indemnifying party shall be required to pay all of the sums so due
      and
      owing to the indemnified party by wire transfer of immediately available funds
      within 10 business days after the date of such notice.

    

    (c) The
      failure of the indemnified party to give reasonably prompt notice of any Claim
      shall not release, waive or otherwise affect the indemnifying party’s
      obligations with respect thereto except to the extent that the indemnifying
      party can demonstrate actual loss and prejudice as a result of such
      failure.

    

    (d) Notwithstanding
      the foregoing, in order to satisfy the indemnification obligations of the
      Sellers, or any of them, Purchaser shall have the right, in its sole discretion
      (in addition to collecting directly from a Seller) to set off any portion of
      its
      indemnification claims for which payment is due under Section
      6.5(b)
      above
      against any unpaid principal and accrued and unpaid interest under the Ku Note
      and the Fong Note. 

     

    
      
        
        

      

      
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    Section
      6.6 Termination
      of Indemnification Obligations of the Sellers and
      Purchaser.
      The
      obligation of the Sellers and Purchaser to indemnify under Article
      VI
      hereof
      shall terminate on the Termination Date, except as to matters as to which an
      Indemnified Party has made a claim for indemnification on or prior to such
      date,
      in which case the right to indemnification with respect thereto shall survive
      the expiration of such period until such claim for indemnification is finally
      resolved and any obligations with respect thereto are fully satisfied. Any
      indemnity payments by an Indemnifying Party to an Indemnified Party under this
      Article VI shall be treated by the parties as an adjustment to the Purchase
      Price. Each of the limitations set forth above in this Section
      6.6
      shall in
      no event (a) apply to any Losses incurred by an indemnified party which relate,
      directly or indirectly, to (i) any fraudulent acts committed by TAA, Sellers
      or
      Purchaser, as the case may be, and (ii) the obligations of the
      parties set
      forth
      in Section
      7.1
      to pay
      certain expenses.

    

    Section
      6.7 Definition
      of “Losses”.
      The
      term
“Losses” as used in this Agreement means any and all liabilities (including
      liabilities for Taxes), obligations, losses, damages, penalties, demands,
      claims, actions, suits, judgments, settlements, penalties, interest,
      out-of-pocket costs, expenses and disbursements (including reasonable costs
      of
      investigation, and reasonable attorneys', accountants' and expert witnesses'
      fees) of whatever kind and nature. The term "Losses" as used in this Agreement
      is not limited to matters asserted by third parties against an indemnified
      party
      but includes actual damages incurred or sustained by an indemnified party in
      the
      absence of third party claims. Notwithstanding anything herein to the contrary,
      there shall not be included in the definition of Losses, and an indemnified
      party shall not be entitled to recover under any action hereunder, any indirect,
      punitive, special, exemplary or consequential damages (other than indirect,
      punitive, special, exemplary or consequential damages which are paid to third
      parties). Losses shall be determined net of any insurance benefits or actual
      tax
      savings, realized by an indemnified party that is specifically related to the
      Losses. In the event an indemnified party and an indemnifying party cannot
      agree
      to the amount of the actual tax savings (or whether such tax savings exists),
      the parties shall jointly retain an independent accountant, which is among
      the
      top four nationally recognized firms, to calculate such tax savings, if any,
      which calculation shall be binding on all parties. The cost of such accountant
      shall be paid one-half by Purchaser and one-half by the Sellers.

     

    

    ARTICLE
      VII

    

    MISCELLANEOUS

    

    Section
      7.1 Expenses.
      Except
      as otherwise provided in this Agreement, each of Purchaser, on the one hand,
      and
      the Seller and TAA,
      on the
      other hand, shall pay its, his or her own expenses relating to the transactions
      contemplated by this Agreement, including, without limitation, the fees and
      expenses of their respective counsel, financial advisors and
      accountants.

     

    
      
        
        

      

      
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    Section
      7.2 Governing
      Law.
      The
      interpretation and construction of this Agreement, and all matters relating
      hereto (including, without limitation, the validity or enforcement of this
      Agreement), shall be governed by the laws of California without regard to any
      conflicts or choice of laws provisions of the State of California that would
      result in the application of the law of any other jurisdiction. Each party
      hereto irrevocably submits to the jurisdiction of the state courts sitting
      in
      Los Angeles, California, in any action or proceeding arising out of or relating
      to this Agreement or any of the exhibits or schedules referenced herein, and
      each party hereby irrevocably agrees that all claims in respect of any such
      action or proceeding must be brought and/or defended in such court; provided,
      however, that matters which are under the exclusive jurisdiction of the Federal
      courts shall be brought in the Federal District Court for the Central District
      of California. Each party hereto consents to service of process by any means
      authorized by the applicable law of the forum in any action brought under or
      arising out of this Agreement or any of the exhibits or schedules referenced
      herein, and each party irrevocably waives, to the fullest extent each may
      effectively do so, the defense of an inconvenient forum to the maintenance
      of
      such action or proceeding in any such court.

    

    Section
      7.3 "Person"
      Defined.
      "Person"
      shall
      mean and include an individual, a company, a joint venture, a corporation
      (including any non-profit corporation), an estate, an association, a trust,
      a
      general or limited partnership, a limited liability company, a limited liability
      partnership, an unincorporated organization and a government or other department
      or agency thereof.

    

    Section
      7.4 "Knowledge"
      Defined.
      Where
      any representation and warranty contained in this Agreement is expressly
      qualified by reference to the knowledge of the Seller, such term shall be
      limited to the actual knowledge of the Seller . Where any representation and
      warranty contained in this Agreement is expressly specified by reference to
      the
      knowledge of TAA, such term shall be limited to the actual knowledge of the
      executive officers of TAA.

    

    Section
      7.5 "Affiliate"
      Defined.
      As used
      in this Agreement, an "affiliate"
      of any
      Person, shall mean any Person that directly, or indirectly through one or more
      intermediaries, controls, or is controlled by, or is under common control with
      such Person. 

    

    Section
      7.6 Captions.
      The
      Article and Section captions used herein are for reference purposes only, and
      shall not in any way affect the meaning or interpretation of this
      Agreement.

    

    Section
      7.7 Notices.
      Unless
      otherwise provided herein, any notice, request, instruction or other document
      to
      be given hereunder by any party to any other party shall be in writing and
      shall
      be deemed to have been given (a) upon personal delivery, if delivered by hand
      or
      courier, (b) three days after the date of deposit in the mails, postage prepaid,
      or (c) the next business day if sent by facsimile transmission (if receipt
      is
      electronically confirmed) or by a prepaid overnight courier service, and in
      each
      case at the respective addresses or numbers set forth below or such other
      address or number as such party may have fixed by notice:

    

    If
      to
      Purchaser, addressed to:

     

    Sub-Urban
      Brands, Inc. 

    8723
      Bellanca Avenue, Building A, 

    Los
      Angeles, CA 90045 

    Attn: Joseph
      E.
      Shortal, CEO

    Phone:310-670-0132

    Fax:310-670-0765

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    If
      to
      Sellers to:

    

    Jiun
      Ku

    ________________________

    ________________________

    ________________________

    Phone:
      ___________________

    Fax:
      _________________

    

    Shirley
      Fong

    220
      El
      Dorado St. 

    Arcadia
      Ca. 91006

    Phone:
      ___________________

    Fax:
      _________________

    

    If
      to TAA
      to:

    

    Kevin
      Kelly

    The
      Apparel Agent, LLC

    2860
      E.
      Pico Blvd

    Los
      Angeles, CA 90023

    Attn:
      Kevin Kelly

    Phone:
      _______________

    Fax:
      _________________

     

    Any
      party
      may change the address to which notices are to be sent by giving notice of
      such
      change of address to the other parties in the manner herein provided for giving
      notice.

    

    Section
      7.8 Parties
      in Interest.
      This
      Agreement may not be transferred, assigned, pledged or hypothecated by any
      party
      hereto, other than by operation of law. Any purported such transfer, assignment,
      pledge, or hypothecation (other than by operation of law) shall be void and
      ineffective. This Agreement shall be binding upon and shall inure to the benefit
      of the parties hereto and their respective heirs, executors, administrators,
      successors and permitted assigns.

    

    Section
      7.9 Severability.
      In the
      event any provision of this Agreement is found to be void and unenforceable
      by a
      court of competent jurisdiction, the remaining provisions of this Agreement
      shall nevertheless be binding upon the parties with the same effect as though
      the void or unenforceable part had been severed and deleted.

    

    Section
      7.10 Counterparts.
      This
      Agreement may be executed in two or more counterparts, or by facsimile
      transmission, each of which shall be deemed to be an original and all of which
      taken together shall constitute one and the same instrument.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    Section
      7.11 Entire
      Agreement.
      This
      Agreement, including the other documents referred to herein and the Exhibits
      and
      Schedules hereto that form a part hereof, contains the entire understanding
      of
      the parties hereto with respect to the subject matter contained herein and
      therein. This Agreement supersedes all prior agreements and understandings
      between the parties with respect to such subject matter.

    

    Section
      7.12 Amendments.
      This
      Agreement may not be amended, supplemented or modified orally, but only by
      an
      agreement in writing signed by each of the parties hereto.

    

    Section
      7.13 Third
      Party Beneficiaries.
      Each
      party hereto intends that this Agreement shall not benefit or create any right
      or cause of action in or on behalf of any Person other than the parties hereto
      and their respective successors and assigns as permitted hereunder.

    

    Section
      7.14 No
      Strict Construction; Representation by Counsel.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties hereto to express their mutual intent, and no
      rule
      of law or contract interpretation that provides that in the case of ambiguity
      or
      uncertainty a provision should be construed against the draftsman will be
      applied against any party hereto. The provisions of this Agreement shall be
      construed according to their fair meaning and neither for nor against any party
      hereto irrespective of which party caused such provisions to be drafted. Each
      of
      the parties acknowledge that it has been represented by an attorney in
      connection with the preparation and execution of this Agreement. 

    

    Section
      7.15 Remedies.
      The
      rights and remedies provided by this Agreement are cumulative, and the use
      of
      any one right or remedy by any party hereto shall not preclude or constitute
      a
      waiver of its right to use any or all other remedies. Such rights and remedies
      are given in addition to any other rights and remedies a party may have by
      law,
      statute or otherwise. 

    

    Section
      7.16 Attorneys'
      Fees.
      In the
      event any suit or other legal proceeding is brought for the enforcement of
      any
      of the provisions of this Agreement, the parties hereto agree that the
      substantially prevailing party or parties shall be entitled to recover from
      the
      other party or parties upon final judgment on the merits reasonable attorneys'
      fees (and sales taxes thereon, if any), including attorneys' fees for any
      appeal, and costs incurred in bringing such suit or proceeding.

    

    Section
      7.17 Confidentiality.
      TAA and
      the Sellers shall, and shall cause each of their affiliates, employees, agents,
      accountants, legal counsel and other representatives and advisers to, hold
      in
      strict confidence all, and not divulge or disclose any, information of any
      kind
      concerning Purchaser and the transactions contemplated by this Agreement;
      provided, however, that the foregoing obligation of confidence shall not apply
      to (i) information that is or becomes generally available to the public other
      than as a result of a disclosure by the Seller or TAA, or their affiliates
      or
      any of their respective employees, agents, accountants, legal counsel or other
      representatives or advisers and (ii) information that is required to be
      disclosed by the Seller or TAA, or their affiliates or any of their respective
      employees, agents, accountants, legal counsel or other representatives or
      advisers as a result of any applicable law, rule or regulation of any
      Governmental or Regulatory Authority. 

    

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Membership Interest Purchase Agreement under
      seal, on the day and year first above written.

    

    PURCHASER:

    

    Sub-Urban
      Brands, Inc. 

    

    

    By: /s/
      Joseph E. Shortal    _______________

    Name: Joseph
      E. Shortal  ________________

    Title: CEO
      and President________________ 

    

    

    TAA:

    

    The
      Apparel Agent, LLC

    

     

    By: /s/ Kevin
      Kelly                              

     

    Name: Kevin
      Kelly                          

     

    Title: CEO                                  
      

    

    THE
      SELLERS:

    

    

    /s/
      Jiun
      Ku

    _____________________________________

    Jiun
      Ku

    

    /s/
      Shirley Fong

    _____________________________________

    Shirley
      Fong

    
       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

    

     

    SECURITY
      AGREEMENT

    

    This
      Security
      Agreement
      (as
      amended, modified or otherwise supplemented from time to time, this
“Security
      Agreement”),
      dated
      as of June 15, 2007, is executed by Sub-Urban
      Brands, Inc.,
      a
      Nevada corporation (together with its successors and assigns, “Debtor”),
      in
      favor of Jiun
      Ku and Shirley Fong
      (the
“Secured
      Parties”).

     

     

    RECITALS

    

    A. Debtor
      and the Secured Parties are parties to a Membership Interest Purchase Agreement,
      dated as of May 8, 2007 (the “Purchase
      Agreement”);

    

    B. Pursuant
      to the Purchase Agreement, Debtor
      has executed secured convertible promissory notes (each a “Note”
and
      collectively, the “Notes”)
      in an
      aggregate principal amount of $175,000 in favor of Secured Parties.

    

    C. As
      a
      condition to closing under the Purchase Agreement, the Secured Parties have
      required Debtor to execute this Security Agreement for the purpose of securing
      repayment of the Notes:

     

    AGREEMENT

    

    NOW,
      THEREFORE, for and in consideration of the premises, the mutual covenants and
      undertakings hereinafter set forth, and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties agree as follows:

    

    1.
      Definitions.
      All
      terms used herein which are defined in the California Uniform Commercial Code
      (the “Code”) shall have the same meaning herein as in the Code unless the
      context in which used indicates otherwise.

    

    2.
      Incorporation
      by Reference.
      All of
      the terms, provisions, and definitions of the Purchase Agreement and any
      agreements, notes or obligations from Debtor to the Secured Parties arising
      under or in connection with such Purchase Agreement (as such agreements or
      notes
      may be amended or entered into from time to time) are hereby incorporated herein
      by reference as though set forth in full herein unless expressly stated
      otherwise in such agreements or notes.

    

    3.
      Security
      Interests.
      Debtor
      hereby grants to the Secured Parties a security interest in the Collateral
      described in paragraph 4 to secure the performance and payment of Liabilities
      described in paragraph 5. The Secured Parties acknowledge and agree that they
      are not granted a first priority security interest hereby and that the security
      interest granted hereby shall subject to any and all currently existing and
      perfected security interests previously granted by Debtor with respect to the
      Collateral. The Secured Parties further agree to subordinate the security
      interests and liens granted hereby or pursuant to any Financing Statement filed
      pursuant hereto, as requested by Debtor in connection with any merger,
      acquisition or other reorganization transaction by Debtor or any financing
      transaction by Debtor, pursuant to which Debtor may grant security interests
      prior and superior to the lien or charge of the Secured Parties. The Secured
      Parties shall executed and deliver any and all instruments or agreements
      requested by Debtor evidencing such subordination. In addition, in the event
      that Debtor elects to refinance existing Collateral, the Secured Parties shall
      cooperate promptly and fully in subordinating its interest to the security
      interest of any person or entity refinancing the existing the
      Collateral.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.
      Collateral.
      The
      Collateral in which the Secured Parties are granted a security interest by
      this
      Agreement (the “Collateral”)
      is all
      assets of any kind of Debtor, whether now owned or hereafter acquired,
      including, without limitation:

    

    (a)
      all
      Debtor's inventory presently owned, acquired contemporaneously herewith, or
      pursuant to this Agreement, or acquired at any time subsequent to this
      Agreement, wherever located, and all replacements, additions, and accessions
      thereto;

    

    (b)
      all
      equipment of Debtor now owned or hereafter acquired, including, without
      limitation, vehicles, machinery, and office equipment;

    

    (c)
      all
      Debtor's accounts, instruments, or chattel paper of any kind and description
      presently existing or hereafter arising, now owned, or hereafter acquired,
      and
      all goods or inventory repossessed or returned in connection
      therewith;

    

    (d)
      all
      goods, contract rights, documents, deposit accounts, money, general intangibles,
      and other property of Debtor now owned or hereafter acquired, including, without
      limitation, rights in real property leased by Debtor as lessee, customer and
      vendor lists, books and records, loan agreements between Debtor and other
      persons, insurance policies, royalty contracts, copyrights, trademarks,
      tradenames, patents, contracts for the purchase of real property, and all right
      of the Debtor to the payment of money, no matter how evidenced; and

    

    (e)
      proceeds and products of all of the foregoing Collateral, including, without
      limitation, whatever is received or receivable when Collateral or proceeds
      are
      sold, collected, exchanged, or otherwise disposed of, whether such disposition
      is voluntary or involuntary, including rights to payment and return premiums
      and
      insurance proceeds under insurance with respect to any Collateral, tort claims,
      and all rights to payment with respect to any cause of action affecting or
      relating to the Collateral.

    

    5.
      Liabilities.
      Liabilities secured by this Agreement (“Liabilities”)
      are
      the obligation to repay the Notes and any other amounts owing from Debtor to
      the
      Secured Parties under the Purchase Agreement. 

     

    6.
      Representations,
      Warranties and Covenants.
      Debtor
      hereby represents, warrants and covenants as follows:

    

    6.1
      Financing
      Statements and Related Documents.
      Debtor
      consents to the Secured Parties filing one or more Financing Statements pursuant
      to the Code in form satisfactory to the Secured Parties in all public offices
      wherever filing is deemed by the Secured Parties to be necessary or desirable.
      Debtor shall duly endorse to the Secured Parties all instruments or documents,
      the possession of which is necessary to perfect the Secured Parties' interest
      hereunder, and shall take all other steps necessary, including, without
      limitation, causing Secured Parties' name to be shown as a secured party on
      any
      certificates or other documents evidencing title as shall be necessary to
      perfect the Secured Parties' interest hereunder.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.2
      Transfers.
      Except
      for transactions in the ordinary course of Debtor's business, neither Debtor
      nor
      its agents, servants or employees will sell, assign or offer to sell or assign
      or otherwise transfer the Collateral, either in whole or in part, or any
      interest therein without the written consent of the Secured Parties, which
      shall
      not be unreasonably withheld. The Secured Parties shall cooperate in the release
      of any Collateral sold in the ordinary course of business. Debtor shall take
      all
      steps to ensure that the Secured Parties obtain a perfected security interest
      in
      all new or replacement Collateral junior only to the security interest of any
      person or entity financing the purchase of new or replacement Collateral.

    

    6.3
      Maintenance
      of Collateral, Taxes.
      In the
      event Debtor fails to do so, Debtor hereby authorizes the Secured Parties to
      discharge taxes, assessments, liens, security interests or other encumbrances
      at
      any time levied or placed on the Collateral, and pay for, make or provide for
      any maintenance, repair or preservation of the Collateral as herein required,
      provided, however, that the Secured Parties shall be under no obligation to
      do
      so; Debtor agrees to reimburse the Secured Parties on demand with interest,
      at a
      rate equal to the lower of ten percent (10%) per annum (calculated on the basis
      of the actual number of days in the year) or the maximum rate permitted by
      applicable law, for any payment made or any expense incurred by the Secured
      Parties pursuant to this paragraph, and any payment made or expense incurred
      by
      the Secured Parties pursuant to the foregoing authorization shall be a Liability
      secured hereunder.

    

    6.4
      Additional
      Covenants of Debtor.
      In
      addition the covenants set forth above, Debtor hereby agrees:

    

    (a)
      to do
      all acts that may be necessary to maintain, preserve, protect and perfect the
      Collateral, the security interest granted to Secured Parties herein, and the
      priority of such security interest;

    

    (b)
      not
      to use or permit any Collateral to be used: (i) in violation of any provision
      of
      this Security Agreement; (ii) unlawfully or in violation of any applicable
      statute, regulation or ordinance (including, without limitation, applicable
      environmental protection statues and regulations) where such use might
      materially adversely affect the business or condition (financial or otherwise)
      of Debtor; or (iii) in violation of any policy of insurance covering the
      Collateral;

    

    (c)
      to
      appear in and defend any action or proceeding which may affect its title to
      or
      the Secured Parties' interest in the Collateral;

    

    (d)
      to
      keep separate, accurate and complete records of the Collateral and to provide
      the Secured Parties with existing reports and information relating to the
      Collateral as the Secured Parties may request from time to time;

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)
      to
      keep the Collateral free of all levies and security interests or other liens
      or
      charges except for those approved in writing by the Secured Parties, junior
      to
      that of Secured Parties, or otherwise permitted pursuant hereto;

    

    (f)
      to
      keep the Collateral in good condition and repair;

    

    (g)
      not
      to cause or permit any waste or unusual or unreasonable depreciation of the
      Collateral;

    

    (h)
      at
      any reasonable time, upon demand by the Secured Parties, to exhibit to and
      allow
      inspection by the Secured Parties (or persons designated by Secured Parties)
      of
      the Collateral, so long as such inspection does not unreasonably cause a delay
      or disruption of Debtor's business; and

    

    (i)
      to
      comply with all laws, regulations and ordinances relating to the possession,
      operation, maintenance and control of the Collateral.

    

    7.
      Events
      of 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
      default of Debtor or any endorser, guarantor, accommodation party or surety
      for
      Debtor in the payment or material performance when due of any indebtedness,
      obligations, liability or covenant contained or referred to herein or in any
      of
      the Liabilities secured hereby or in any agreement, undertaking or writing
      evidencing, securing, referring or appertaining to said
      Liabilities;

    

    (b)
      The
      loss, theft, damage, destruction, sale, assignment, transfer or encumbrance
      to
      or of any material part of the Collateral, except in the ordinary course of
      Debtor's business, or any levy, seizure or attachment thereof or thereon, except
      in the event that Debtor delivers written notice of such event to the Secured
      Parties within five (5) days from the date of discovery thereof;
      and

    

    (c)
      The
      entry
      of a decree or order by a court hav-ing jurisdiction in the premises for relief
      in respect of Debtor under Title 11 of the United States Code, as now
      constituted or hereafter amended, or any other applicable Federal or state
      bankruptcy, insolvency or similar law, or appointing a receiver, trustee, or
      custodian of Debtor or for any substan-tial part of Debtor’s property, which
      decree or order is not stayed or set aside within sixty (60) days thereafter;
      or

    

    (d) The
      filing by Debtor of a petition, answer or consent seeking relief under Title
      11
      of the United States Code, as now constituted or hereafter amended, or the
      consent by Debtor to the institution of proceedings thereunder or to the
      appointment of a receiver, trustee or custodian.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8. Rights
      and Remedies Upon Default.
      Upon
      occurrence of any of the above Events of Default and at any time thereafter
      (such default not having previously been cured), the Secured Parties may
      accelerate all the Liabilities secured hereby and shall have, in addition to
      all
      other rights and remedies, the rights and remedies of a Secured Parties under
      the Code or at law, including, but not limited to, the right to take possession
      of the Collateral in accordance with the Code and the provisions hereof, and
      sell the same in accordance with the Code and the provisions hereof, and for
      that purpose the Secured Parties may, so far as Debtor can give authority
      therefor, enter upon any premises on which Collateral may be located or situated
      and remove the same therefrom or without removal render same unusable and may
      use or dispose of the Collateral on such premises without any liability for
      rent, storage, utilities or other sums, and upon request Debtor shall, to the
      extent practicable, assemble and make the Collateral available to the Secured
      Parties at a place to be designated by the Secured Parties, which is reasonably
      convenient to Debtor and the Secured Parties. The Secured Parties shall give
      Debtor at least five (5) days' prior written notice of the time and place of
      any
      public sale or the time after which any private sale or any other intended
      disposition is to be made. Debtor shall remain liable for any deficiency on
      the
      Liabilities. The Secured Parties shall also have the right to apply for and
      have
      a receiver appointed by a court of competent jurisdiction in any action taken
      by
      the Secured Parties to enforce their rights and remedies hereunder in order
      to
      manage, protect and preserve the Collateral and continue the operation of the
      business of Debtor and to collect all revenues and profits thereof and apply
      the
      same to the payment of all expenses and other charges of such receivership,
      including the compensation of the receiver, and to the payment of Liabilities
      secured hereby until a sale or other disposition of such Collateral shall be
      finally made 

    and
      consummated. In the event of any disposition of any or all of the Collateral
      by
      Secured Parties after default, the proceeds of disposition shall be applied
      in
      the order following to:

    

    (a)
      the
      reasonable expenses of retaking, holding, preparing for sale or lease, selling,
      leasing and the like, and the reasonable attorneys' fees and legal expenses
      incurred by Secured Parties in the enforcement hereof;

    

    (b)
      the
      satisfaction of all of the Liabilities other than the Notes; and

    

    (c)
      the
      satisfaction of the Notes.

    

    9.
      Further
      Assurances and Power of Attorney.
      Debtor
      will execute and deliver to the Secured Parties, at the Secured Parties'
      request, at any time and from time to time, such replacement or update Financing
      Statements and other instruments (and pay the cost of filing or recording the
      same in all public offices deemed necessary or desirable by the Secured
      Parties), and do such other acts and things as the Secured Parties may
      reasonably deem necessary or desirable in order to establish and maintain a
      valid security interest in the Collateral in favor of the Secured Parties (free
      and clear of all other liens, claims and rights of third parties whatsoever,
      whether voluntarily or involuntarily created, other than those permitted herein)
      to secure payment of the Liabilities, and in order to facilitate the collection
      of the Collateral. To effectuate the rights and remedies of the Secured Parties
      hereunder, in the event of an Event of Default hereunder which is not cured
      within the applicable cure period, Debtor hereby irrevocably appoints the
      Secured Parties attorney-in-fact for Debtor in the name of Debtor or the Secured
      Parties, with full power of substitution, to sign, execute and deliver any
      and
      all instruments and documents and do all acts and things to the same extent
      as
      Debtor could do, to sell, assign and transfer any Collateral, including, but
      not
      limited to, taking all action necessary or desirable to obtain the approval
      of
      any governmental body to the transfer or issuance to the Secured Parties or
      any
      other person, firm, or corporation of any intangible Collateral.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.
      Waivers.
      The
      Secured Parties shall have no duty as to the collection or protection of the
      Collateral or any income thereon, nor as to the preservation of rights against
      prior parties, or as to the preservation of any rights pertaining to the
      Collateral beyond reasonable care in the custody or preservation thereof. The
      Secured Parties may exercise their rights and remedies with respect to the
      Collateral without resorting or regard to other security or sources for payment.
      All rights and remedies of the Secured Parties hereunder or on the Liabilities
      or the Collateral shall be cumulative and may be exercised singularly or
      concurrently. Any forbearance, failure or delay by Secured Parties in exercising
      any right, power or remedy shall not preclude the further exercise thereof,
      and
      every right, power or remedy of Secured Parties shall continue in full force
      and
      effect until such right, power or remedy is specifically waived in a writing
      executed by Secured Parties. Debtor waives any right to require the Secured
      Parties to proceed against any person or to exhaust any Collateral or to pursue
      any remedy in the Secured Parties' power.

    

    11.
      Notices.
      All
      notices, requests, demands, consents, instructions or other communications
      required or permitted hereunder shall in writing and faxed, mailed or delivered
      to each party at the respective addresses of the parties as set forth in the
      Purchase Agreement, or at such other address or facsimile number as Debtor
      shall
      have furnished to the Secured Parties in writing. All such notices and
      communications will be deemed effectively given the earlier of (i) when
      received, (ii) when delivered personally, (iii) one business day after
      being delivered by facsimile (with receipt of appropriate confirmation),
      (iv) one business day after being deposited with an overnight courier
      service of recognized standing or (v) four days after being deposited in
      the U.S. mail, first class with postage prepaid.

    

    12.
      Miscellaneous.
      Neither
      this Agreement nor any provision hereof may be changed, waived, discharged
      or
      terminated orally, but only by an instrument in writing signed by the party
      against which enforcement of the change, waiver, discharge or termination is
      sought. This Agreement shall be binding upon the Debtor and its successors
      and
      assigns, and all persons claiming under or through Debtor or any such successor
      or assign, and shall inure to the benefit of and be enforceable by the Secured
      Parties and their successors and assigns. The
      rights or obligations of Secured Parties under this Agreement may not be
      assigned. Any assignment in violation of the foregoing shall be null and
      void.

    

    

    Signature
      Page Follows

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, Debtor has caused this Agreement to be duly executed and
      delivered as of the day and year first above written.

    

    DEBTOR:

    

    SUB-URBAN
      BRANDS, INC.

    a
      Nevada
      corporation

    

    

    

    By:_____________________    

    Name:
      Joe
      Shortal

    Title:
      President

    

    SECURED
      PARTIES:

     

    __________________________

    Jiun
      Ku

    

    __________________________

    Shirley
      Fong

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SUB-URBAN
      BRANDS, INC.

     

    SECURED
      PROMISSORY NOTE

     

    
      	$75,000 	 	
              June
                15, 2007 

            
	 	 	
              Los
                Angeles,
                California

            

    

        

    FOR
      VALUE
      RECEIVED, Sub-Urban
      Brands, Inc.,
      a
      Nevada corporation (the “Company”)
      promises to pay to Jiun
      Ku
      (“Holder”),
      or
      its registered assigns, in lawful money of the United States of America, the
      principal sum of Seventy-Five Thousand Dollars ($75,000), or such lesser amount
      as shall equal the outstanding principal amount hereof, together with interest
      from the date of this Note on the unpaid principal balance at a rate equal
      to
      8.00% per annum, computed on the basis of the actual number of days elapsed
      and
      a year of 365 days. Subject to the terms hereof, all unpaid principal, together
      with any then unpaid and accrued interest and other amounts payable hereunder,
      shall be due and payable on the earlier of (i) June
      15, 2008
      (the
“Maturity
      Date”),
      or
      (ii) when, upon or after the occurrence of an Event of Default (as defined
      below), such amounts are declared due and payable by Holder or made
      automatically due and payable in accordance with the terms hereof. 

     

    THE
      OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT (THE
“SECURITY
      AGREEMENT”)
      DATED
      AS OF THE DATE HEREOF AND EXECUTED BY COMPANY FOR THE BENEFIT OF THE HOLDER.
      ADDITIONAL RIGHTS OF HOLDER ARE SET FORTH IN THE SECURITY AGREEMENT.

     

    ALL
      UNPAID PRINCIPAL AND ACCRUED AND UNPAID INTEREST UNDER THIS NOTE IS ALSO SUBJECT
      TO SET-OFF AND REDUCTION PURSUANT TO THE TERMS OF A MEMBERSHIP INTEREST PURCHASE
      AGREEMENT DATED MAY 2, 2007 AND EXECUTED BY THE COMPANY AND HOLDER (THE
“PURCHASE
      AGREEMENT”).
      THIS
      NOTE IS ONE OF TWO SIMILAR NOTES ISSUED TO SELLERS UNDER THE PURCHASE
      AGREEMENT.

     

    The
      following is a statement of the rights of Holder and the conditions to which
      this Note is subject, and to which Holder, by the acceptance of this Note,
      agrees:

     

    1.  Interest.
      Accrued
      interest on this Note shall be payable at maturity.

     

    2.  Prepayment.
      The
      Company may prepay this Note at any time in whole or in part; provided that
      any
      such prepayment will be applied first to the payment of expenses due under
      this
      Note, second to interest accrued on this Note and third, if the amount of
      prepayment exceeds the amount of all such expenses and accrued interest, to
      the
      payment of principal of this Note. All unpaid principal and accrued and unpaid
      interest under this Note is also subject to set-off and reduction pursuant
      to
      the terms of the Purchase Agreement. 

     

    3.  Events
      of Default.
      The
      occurrence of any of the following shall constitute an “Event
      of Default”
under
      this Note and the Security Agreement:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a)  Failure
      to Pay.
      The
      Company shall fail to pay (i) when due any principal or interest payment on
      the due date hereunder or (ii) any other payment required under the terms
      of this Note or Security Agreement on the date due and such payment shall not
      have been made within five days of the Company’s receipt of Holder’s written
      notice to the Company of such failure to pay; or

     

    (b)  Breaches
      of Covenants. The
      Company shall fail to observe or perform any other covenant, obligation,
      condition or agreement contained in this Note or the Security Agreement (other
      than those specified in Sections 3(a))
      and
      (i) such failure shall continue for 15 days, or (ii) if such failure
      is not curable within such 15-day period, but is reasonably capable of cure
      within 30 days, either (A) such failure shall continue for 30 days or
      (B) the Company shall not have commenced a cure in a manner reasonably
      satisfactory to Holder within the initial 15-day period; or

     

    (c)  Voluntary
      Bankruptcy or Insolvency Proceedings. The
      Company shall (i) apply for or consent to the appointment of a receiver,
      trustee, liquidator or custodian of itself or of all or a substantial part
      of
      its property, (ii) be unable, or admit in writing its inability, to pay its
      debts generally as they mature, (iii) make a general assignment for the
      benefit of its or any of its creditors, (iv) be dissolved or liquidated,
      (v) become insolvent (as such term may be defined or interpreted under any
      applicable statute), (vi) commence a voluntary case or other proceeding
      seeking liquidation, reorganization or other relief with respect to itself
      or
      its debts under any bankruptcy, insolvency or other similar law now or hereafter
      in effect or consent to any such relief or to the appointment of or taking
      possession of its property by any official in an involuntary case or other
      proceeding commenced against it, or (vii) take any action for the purpose
      of effecting any of the foregoing; or

     

    (d)  Involuntary
      Bankruptcy or Insolvency Proceedings. Proceedings
      for the appointment of a receiver, trustee, liquidator or custodian of the
      Company or of all or a substantial part of the property thereof, or an
      involuntary case or other proceedings seeking liquidation, reorganization or
      other relief with respect to the Company or the debts thereof under any
      bankruptcy, insolvency or other similar law now or hereafter in effect shall
      be
      commenced and an order for relief entered or such proceeding shall not be
      dismissed or discharged within 30 days of commencement.

     

    4.  Rights
      of Holder upon Default.
      Upon
      the occurrence or existence of any Event of Default (other than an Event of
      Default described in Sections 3(c)
      or
3(d))
      and at
      any time thereafter during the continuance of such Event of Default, Holder
      may,
      by written notice to the Company, declare all outstanding obligations payable
      by
      the Company hereunder to be immediately due and payable without presentment,
      demand, protest or any other notice of any kind, all of which are hereby
      expressly waived, anything contained herein or in the Security Agreement to
      the
      contrary notwithstanding. Upon the occurrence or existence of any Event of
      Default described in Sections 3(c)
      and
3(d),
      immediately and without notice, all outstanding obligations payable by the
      Company hereunder shall automatically become immediately due and payable,
      without presentment, demand, protest or any other notice of any kind, all of
      which are hereby expressly waived, anything contained herein or in the Security
      Agreement to the contrary notwithstanding. In addition to the foregoing
      remedies, upon the occurrence or existence of any Event of Default, Holder
      may
      exercise any other right power or remedy granted to it by the Security Agreement
      or otherwise permitted to it by law, either by suit in equity or by action
      at
      law, or both.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    5.  Successors
      and Assigns.
      The
      rights and obligations of the Company and Holder shall be binding upon and
      benefit the successors, assigns, heirs, administrators and transferees of the
      parties. Neither this Note nor any of the rights, interests or obligations
      hereunder may be assigned, by operation of law or otherwise, in whole or in
      part, by the Company without the prior written consent of Holder.

     

    6.  Waiver
      and Amendment.
      Any
      provision of this Note may be amended, waived or modified upon the written
      consent of the Company and Holder.

     

    7.  Notices.
      All
      notices, requests, demands, consents, instructions or other communications
      required or permitted hereunder shall in writing and faxed, mailed or delivered
      to each party at the respective addresses of the parties as set forth in the
      Purchase Agreement, or at such other address or facsimile number as the Company
      shall have furnished to Holder in writing. All such notices and communications
      will be deemed effectively given the earlier of (i) when received,
      (ii) when delivered personally, (iii) one business day after being
      delivered by facsimile (with receipt of appropriate confirmation), (iv) one
      business day after being deposited with an overnight courier service of
      recognized standing or (v) four days after being deposited in the U.S.
      mail, first class with postage prepaid.

     

    8.  Default
      Rate; Usury.
      During
      any period in which an Event of Default has occurred and is continuing, the
      Company shall pay interest on the unpaid principal balance hereof at a rate
      per
      annum equal to the rate otherwise applicable hereunder plus five
      percent (5%). In the event any interest is paid on this Note which is
      deemed to be in excess of the then legal maximum rate, then that portion of
      the
      interest payment representing an amount in excess of the then legal maximum
      rate
      shall be deemed a payment of principal and applied against the principal of
      this
      Note.

     

    9.  Expenses;
      Waivers.
      If
      action is instituted to collect this Note, the Company promises to pay all
      costs
      and expenses, including, without limitation, reasonable attorneys’ fees and
      costs, incurred in connection with such action. The Company hereby waives notice
      of default, presentment or demand for payment, protest or notice of nonpayment
      or dishonor and all other notices or demands relative to this
      instrument.

     

    10.  Governing
      Law.
      This
      Note and all actions arising out of or in connection with this Note shall be
      governed by and construed in accordance with the laws of the State of
      California, without regard to the conflicts of law provisions of the State
      of
      California, or of any other state.

     

    Signature
      Page Follows

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    The
      Company has caused this Note to be issued as of the date first written
      above.

     

    SUB-URBAN
      BRANDS, INC.

    a
      Nevada
      corporation

     

    

     

    

    By:
      __________________________

    Name:
      Joe
      Shortal

    Title:
      President

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    SUB-URBAN
      BRANDS, INC.

     

    SECURED
      PROMISSORY NOTE

     

    
      	
              $100,000

            	
               

            	
              June
                15, 2007 

            
	 	 	
              Los
                Angeles,
                California 

            

    

        

    FOR
      VALUE
      RECEIVED, Sub-Urban
      Brands, Inc.,
      a
      Nevada corporation (the “Company”)
      promises to pay to Shirley
      Fong
      (“Holder”),
      or
      its registered assigns, in lawful money of the United States of America, the
      principal sum of One Hundred Thousand Dollars ($100,000), or such lesser amount
      as shall equal the outstanding principal amount hereof, together with interest
      from the date of this Note on the unpaid principal balance at a rate equal
      to
      8.00% per annum, computed on the basis of the actual number of days elapsed
      and
      a year of 365 days. Subject to the terms hereof, all unpaid principal, together
      with any then unpaid and accrued interest and other amounts payable hereunder,
      shall be due and payable on the earlier of (i) June
      15, 2008
      (the
“Maturity
      Date”),
      or
      (ii) when, upon or after the occurrence of an Event of Default (as defined
      below), such amounts are declared due and payable by Holder or made
      automatically due and payable in accordance with the terms hereof. 

     

    THE
      OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT (THE
“SECURITY
      AGREEMENT”)
      DATED
      AS OF THE DATE HEREOF AND EXECUTED BY COMPANY FOR THE BENEFIT OF THE HOLDER.
      ADDITIONAL RIGHTS OF HOLDER ARE SET FORTH IN THE SECURITY AGREEMENT.

     

    ALL
      UNPAID PRINCIPAL AND ACCRUED AND UNPAID INTEREST UNDER THIS NOTE IS ALSO SUBJECT
      TO SET-OFF AND REDUCTION PURSUANT TO THE TERMS OF A MEMBERSHIP INTEREST PURCHASE
      AGREEMENT DATED MAY 2, 2007 AND EXECUTED BY THE COMPANY AND HOLDER (THE
“PURCHASE
      AGREEMENT”).
      THIS
      NOTE IS ONE OF TWO SIMILAR NOTES ISSUED TO SELLERS UNDER THE PURCHASE
      AGREEMENT.

     

    The
      following is a statement of the rights of Holder and the conditions to which
      this Note is subject, and to which Holder, by the acceptance of this Note,
      agrees:

     

    1.  Interest.
      Accrued
      interest on this Note shall be payable at maturity.

     

    2.  Prepayment.
      The
      Company may prepay this Note at any time in whole or in part; provided that
      any
      such prepayment will be applied first to the payment of expenses due under
      this
      Note, second to interest accrued on this Note and third, if the amount of
      prepayment exceeds the amount of all such expenses and accrued interest, to
      the
      payment of principal of this Note. All unpaid principal and accrued and unpaid
      interest under this Note is also subject to set-off and reduction pursuant
      to
      the terms of the Purchase Agreement. 

     

    3.  Events
      of Default.
      The
      occurrence of any of the following shall constitute an “Event
      of Default”
under
      this Note and the Security Agreement:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a)  Failure
      to Pay.
      The
      Company shall fail to pay (i) when due any principal or interest payment on
      the due date hereunder or (ii) any other payment required under the terms
      of this Note or Security Agreement on the date due and such payment shall not
      have been made within five days of the Company’s receipt of Holder’s written
      notice to the Company of such failure to pay; or

     

    (b)  Breaches
      of Covenants. The
      Company shall fail to observe or perform any other covenant, obligation,
      condition or agreement contained in this Note or the Security Agreement (other
      than those specified in Sections 3(a))
      and
      (i) such failure shall continue for 15 days, or (ii) if such failure
      is not curable within such 15-day period, but is reasonably capable of cure
      within 30 days, either (A) such failure shall continue for 30 days or
      (B) the Company shall not have commenced a cure in a manner reasonably
      satisfactory to Holder within the initial 15-day period; or

     

    (c)  Voluntary
      Bankruptcy or Insolvency Proceedings. The
      Company shall (i) apply for or consent to the appointment of a receiver,
      trustee, liquidator or custodian of itself or of all or a substantial part
      of
      its property, (ii) be unable, or admit in writing its inability, to pay its
      debts generally as they mature, (iii) make a general assignment for the
      benefit of its or any of its creditors, (iv) be dissolved or liquidated,
      (v) become insolvent (as such term may be defined or interpreted under any
      applicable statute), (vi) commence a voluntary case or other proceeding
      seeking liquidation, reorganization or other relief with respect to itself
      or
      its debts under any bankruptcy, insolvency or other similar law now or hereafter
      in effect or consent to any such relief or to the appointment of or taking
      possession of its property by any official in an involuntary case or other
      proceeding commenced against it, or (vii) take any action for the purpose
      of effecting any of the foregoing; or

     

    (d)  Involuntary
      Bankruptcy or Insolvency Proceedings. Proceedings
      for the appointment of a receiver, trustee, liquidator or custodian of the
      Company or of all or a substantial part of the property thereof, or an
      involuntary case or other proceedings seeking liquidation, reorganization or
      other relief with respect to the Company or the debts thereof under any
      bankruptcy, insolvency or other similar law now or hereafter in effect shall
      be
      commenced and an order for relief entered or such proceeding shall not be
      dismissed or discharged within 30 days of commencement.

     

    4.  Rights
      of Holder upon Default.
      Upon
      the occurrence or existence of any Event of Default (other than an Event of
      Default described in Sections 3(c)
      or
3(d))
      and at
      any time thereafter during the continuance of such Event of Default, Holder
      may,
      by written notice to the Company, declare all outstanding obligations payable
      by
      the Company hereunder to be immediately due and payable without presentment,
      demand, protest or any other notice of any kind, all of which are hereby
      expressly waived, anything contained herein or in the Security Agreement to
      the
      contrary notwithstanding. Upon the occurrence or existence of any Event of
      Default described in Sections 3(c)
      and
3(d),
      immediately and without notice, all outstanding obligations payable by the
      Company hereunder shall automatically become immediately due and payable,
      without presentment, demand, protest or any other notice of any kind, all of
      which are hereby expressly waived, anything contained herein or in the Security
      Agreement to the contrary notwithstanding. In addition to the foregoing
      remedies, upon the occurrence or existence of any Event of Default, Holder
      may
      exercise any other right power or remedy granted to it by the Security Agreement
      or otherwise permitted to it by law, either by suit in equity or by action
      at
      law, or both.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    5.  Successors
      and Assigns.
      The
      rights and obligations of the Company and Holder shall be binding upon and
      benefit the successors, assigns, heirs, administrators and transferees of the
      parties. Neither this Note nor any of the rights, interests or obligations
      hereunder may be assigned, by operation of law or otherwise, in whole or in
      part, by the Company without the prior written consent of Holder.

     

    6.  Waiver
      and Amendment.
      Any
      provision of this Note may be amended, waived or modified upon the written
      consent of the Company and Holder.

     

    7.  Notices.
      All
      notices, requests, demands, consents, instructions or other communications
      required or permitted hereunder shall in writing and faxed, mailed or delivered
      to each party at the respective addresses of the parties as set forth in the
      Purchase Agreement, or at such other address or facsimile number as the Company
      shall have furnished to Holder in writing. All such notices and communications
      will be deemed effectively given the earlier of (i) when received,
      (ii) when delivered personally, (iii) one business day after being
      delivered by facsimile (with receipt of appropriate confirmation), (iv) one
      business day after being deposited with an overnight courier service of
      recognized standing or (v) four days after being deposited in the U.S.
      mail, first class with postage prepaid.

     

    8.  Default
      Rate; Usury.
      During
      any period in which an Event of Default has occurred and is continuing, the
      Company shall pay interest on the unpaid principal balance hereof at a rate
      per
      annum equal to the rate otherwise applicable hereunder plus five
      percent (5%). In the event any interest is paid on this Note which is
      deemed to be in excess of the then legal maximum rate, then that portion of
      the
      interest payment representing an amount in excess of the then legal maximum
      rate
      shall be deemed a payment of principal and applied against the principal of
      this
      Note.

     

    9.  Expenses;
      Waivers.
      If
      action is instituted to collect this Note, the Company promises to pay all
      costs
      and expenses, including, without limitation, reasonable attorneys’ fees and
      costs, incurred in connection with such action. The Company hereby waives notice
      of default, presentment or demand for payment, protest or notice of nonpayment
      or dishonor and all other notices or demands relative to this
      instrument.

     

    10.  Governing
      Law.
      This
      Note and all actions arising out of or in connection with this Note shall be
      governed by and construed in accordance with the laws of the State of
      California, without regard to the conflicts of law provisions of the State
      of
      California, or of any other state.

     

    Signature
      Page Follows

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    The
      Company has caused this Note to be issued as of the date first written
      above.

     

    SUB-URBAN
      BRANDS, INC.

    a
      Nevada
      corporation

     

    

     

    

    By:
      _______________________

    Name:
      Joe
      Shortal

    Title:
      President

     

    
      
        
        

      

      
        4NEITHER
      THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HAVE BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
      ANY STATE SECURITIES LAW. THE COMPANY WILL NOT TRANSFER THIS WARRANT, OR ANY
      SHARES OF COMMON SHARES ISSUABLE UPON EXERCISE, UNLESS (i) THERE IS AN EFFECTIVE
      REGISTRATION COVERING THIS WARRANT OR SHARES UNDER THE ACT AND APPLICABLE STATE
      SECURITIES LAWS, (ii) IT FIRST RECEIVES AN OPINION FROM COUNSEL TO THE COMPANY,
      STATING THAT THE PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT
      AND
      UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR (iii) THE TRANSFER IS MADE
      PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.

    

    

      
        	
                Warrant
                  Holder:_________________

              	
                Dated:
                  February __, 2007

              
	 	 
	
                For
                  the Purchase of ________ Shares of Common Stock

              	
                No.___________

              

      

    

    

    WARRANT
      FOR THE PURCHASE OF 

    SHARES
      OF COMMON STOCK OF 

    

    AGFEED
      INDUSTRIES, INC.

    

    Expiring
      Three Years from the Date Hereof

    

    

    FOR
      VALUE
      RECEIVED, AgFeed Industries, Inc. ("Company"), hereby certifies that the Warrant
      Holder specified above, or his registered assigns ("Registered Holder"), is
      entitled, subject to the terms set forth below, to purchase from the Company
      on
      or before the third anniversary of the date hereof, that number of shares of
      Common Stock, $.001 par value, of the Company ("Common Stock") set forth above,
      at a purchase price equal to $4.50 per share (as may be adjusted as provided
      below) upon the terms and conditions set forth herein. The number of shares
      of
      Common Stock purchasable upon exercise of this Warrant, and the purchase
      price(s) per share, each as adjusted from time to time pursuant to the
      provisions of this Warrant, are hereinafter referred to as the "Warrant Shares"
      and the "Exercise Price(s)," respectively.

    

    1.  Registration
      of Transfers and Exchanges.

    

    (i)  The
      Company shall register the transfer of any portion of this Warrant in the
      Warrant Register, upon surrender of this Warrant, with the Form of Assignment
      attached hereto duly completed and signed, to the Transfer Agent or to the
      Company, provided, however, that the Holder shall not make any transfers to
      any
      transferee pursuant to this Section for the right to acquire less than 1,000
      Warrant Shares (or the balance of the Warrant Shares to which this Warrant
      relates). Upon any such registration or transfer, a new warrant to purchase
      Common Stock, in substantially the form of this Warrant (any such new warrant,
      a
      "New Warrant"), evidencing the portion of this Warrant so transferred shall
      be
      issued to the transferee and a New Warrant evidencing the remaining portion
      of
      this Warrant not so transferred, if any, shall be issued to the transferring
      Holder. The acceptance of the New Warrant by the transferee thereof shall be
      deemed the acceptance of such transferee of all of the rights and obligations
      of
      a holder of a Warrant.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (ii)  This
      Warrant is exchangeable, upon the surrender hereof by the Holder to the office
      of the Company for one or more New Warrants, evidencing in the aggregate the
      right to purchase the number of Warrant Shares which may then be purchased
      hereunder. Any such New Warrant will be dated the date of such
      exchange.

    

    2.  Exercise.
      

    

    (i)  Procedure
      for Cash Exercise.
      Subject
      to the conditions and terms set forth herein, this Warrant may be exercised
      by
      the Registered Holder (“Conversion Right”), in whole or in part, by the
      surrender of this Warrant (with the Notice of Exercise Form attached hereto
      as
      Exhibit 1 duly executed by such Registered Holder) at the principal office
      of
      the Company, or at such other office or agency as the Company may designate,
      accompanied by payment in full, in lawful money of the United States, of an
      amount equal to the then applicable Exercise Price(s) multiplied by the number
      of Warrant Shares then being purchased upon such exercise.

    

    (ii)  Procedure
      for Cashless Exercise.
      

    

    (a)  Subject
      to the conditions and terms set forth herein, in lieu of the payment of the
      Exercise Price(s) in the manner set forth in Section 2(i), the Registered Holder
      shall have the right (but not the obligation) to convert this Warrant, in whole
      or part, into Common Stock (also “Conversion Right”) as follows: Upon exercise
      of the Conversion Right as provided below with delivery of notice, the Company
      shall deliver to the Registered Holder (without payment by the Registered Holder
      of any of the Exercise Price(s)) that number of shares of Common Stock equal
      to
      the quotient obtained by dividing (x) the "Value" (as defined below) of the
      portion of the Warrant being converted on the second trading day immediately
      preceding the date the Warrant is delivered to the Company pursuant to Section
      2(i) if the Conversion Right is exercised ("Valuation Date") by (y) the "Market
      Price" (as defined below) on the Valuation Date.

    

    (b)  The
      "Value" of the portion of the Warrant being converted shall equal the remainder
      derived from subtracting (a) the Exercise Price(s) multiplied by the number
      of
      shares of Common Stock underlying the portion of the Warrant being converted
      from (b) the Market Price of the Common Stock multiplied by the number of shares
      of Common Stock underlying the portion of the Warrant being converted. As used
      herein, the term "Market Price" at any date shall be deemed to be the average
      of
      the reported closing price of the Common Stock on the twenty (20) consecutive
      business days prior to the exercise date, as reported by the national securities
      exchange on which the Common Stock is listed or admitted to trading, or, if
      the
      Common Stock is not listed or admitted to trading on any national securities
      exchange or if any such exchange on which the Common Stock is listed or admitted
      to trading is not its principal trading market, the last sale price as reported
      by the Nasdaq Stock Market if the Common Stock is quoted on the Nasdaq National
      Market or Nasdaq SmallCap Market. If the Common Stock is not listed on a
      national securities exchange or quoted on the Nasdaq National Market or Nasdaq
      SmallCap Market, but is traded in the residual over-the-counter market, the
      Market Price shall mean the last sale price for the Common Stock, as reported
      by
      the NASD OTC Bulletin Board if quoted on the NASD OTC Bulletin Board. If the
      Market Price cannot be determined pursuant to the above, the Market Price shall
      be such price as the Board of Directors of the Company shall determine in good
      faith.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (iii)  Exercise
      of Conversion Right.
      Subject
      to the terms and conditions set forth herein, the Conversion Right may be
      exercised by the Holder on any business day by delivering to the Company the
      Warrant with a duly executed Notice of Exercise Form attached hereto as Exhibit
      1 with the conversion section completed by specifying the total number of shares
      of Common Stock the Registered Holder will purchase pursuant to such
      conversion.

    

    (iv)  Date
      of Exercise.
      Each
      exercise of this Warrant shall be deemed to have been effected immediately
      prior
      to the close of business on the day on which this Warrant shall have been
      surrendered to the Company. At such time, the person or persons in whose name
      or
      names any certificates for Warrant Shares shall be issuable upon such exercise
      shall be deemed to have become the holder or holders of record of the Warrant
      Shares represented by such certificates.

    

    (v)  Issuance
      of Certificate.
      As soon
      as practicable after the exercise of the purchase right represented by this
      Warrant, the Company at its expense will cause to be issued in the name of,
      and
      delivered to, the Registered Holder, or, subject to the terms and conditions
      hereof, to such other individual or entity as such Holder (upon payment by
      such
      Holder of any applicable transfer taxes) may direct:

    

    (a)  a
      certificate or certificates for the number of full shares of Warrant Shares
      to
      which such Registered Holder shall be entitled upon such exercise plus, in
      lieu
      of any fractional share to which such Registered Holder would otherwise be
      entitled, cash in an amount determined pursuant to Section 4 hereof,
      and

    

    (b)  in
      case
      such exercise is in part only, a new warrant or warrants (dated the date hereof)
      of like tenor, stating on the face or faces thereof the number of shares
      currently stated on the face of this Warrant minus the number of such shares
      purchased by the Registered Holder upon such exercise as provided in subsections
      2(i) and 2(ii) above.

    

    (vi)  Exercise
      of Warrant.
      The
      Warrant may be exercised in whole or from time to time in part on or prior
      to
      the third anniversary of the date hereof, as first set forth above.

    

    3.  Adjustments.

    

    (i)  Split,
      Subdivision or Combination of Shares.
      If the
      outstanding shares of the Company's Common Stock at any time while this Warrant
      remains outstanding and unexpired shall be subdivided or split into a greater
      number of shares, or a dividend in Common Stock shall be paid in respect of
      Common Stock, the Exercise Price(s) in effect immediately prior to such
      subdivision or at the record date of such dividend shall, simultaneously with
      the effectiveness of such subdivision or split or immediately after the record
      date of such dividend (as the case may be), shall be proportionately decreased.
      If the outstanding shares of Common Stock shall be combined or reverse-split
      into a smaller number of shares, the Exercise Price(s) in effect immediately
      prior to such combination or reverse split shall, simultaneously with the
      effectiveness of such combination or reverse split, be proportionately
      increased. When any adjustment is required to be made in the Exercise Price(s),
      the number of shares of Warrant Shares purchasable upon the exercise of this
      Warrant shall be changed to the number determined by dividing (i) an amount
      equal to the number of shares issuable upon the exercise of this Warrant
      immediately prior to such adjustment, multiplied by the Exercise Price(s) in
      effect immediately prior to such adjustment, by (ii) the Exercise Price(s)
      in
      effect immediately after such adjustment.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    (ii)  Reclassification,
      Reorganization, Consolidation or Merger.
      In the
      case of any reclassification of the Common Stock (other than a change in par
      value or a subdivision or combination as provided for in subsection 3.1 above),
      or any reorganization, consolidation or merger of the Company with or into
      another corporation (other than a merger or reorganization with respect to
      which
      the Company is the continuing corporation and which does not result in any
      reclassification of the Common Stock), or a transfer of all or substantially
      all
      of the assets of the Company, or the payment of a liquidating distribution
      then,
      as part of any such reorganization, reclassification, consolidation, merger,
      sale or liquidating distribution, lawful provision shall be made so that the
      Registered Holder of this Warrant shall have the right thereafter to receive
      upon the exercise hereof, the kind and amount of shares of stock or other
      securities or property which such Registered Holder would have been entitled
      to
      receive if, immediately prior to any such reorganization, reclassification,
      consolidation, merger, sale or liquidating distribution, as the case may be,
      such Registered Holder had held the number of shares of Common Stock which
      were
      then purchasable upon the exercise of this Warrant. In any such case,
      appropriate adjustment (as reasonably determined by the Board of Directors
      of
      the Company) shall be made in the application of the provisions set forth herein
      with respect to the rights and interests thereafter of the Registered Holder
      of
      this Warrant such that the provisions set forth in this Section 3 (including
      provisions with respect to the Exercise Price(s)) shall thereafter be
      applicable, as nearly as is reasonably practicable, in relation to any shares
      of
      stock or other securities or property thereafter deliverable upon the exercise
      of this Warrant.

    

    (iii)  Price
      Adjustment.
      No
      adjustment in the per share Exercise Price(s) shall be required unless such
      adjustment would require an increase or decrease in the Exercise Price(s) of
      at
      least $0.01; provided, however, that any adjustments which by reason of this
      paragraph are not required to be made shall be carried forward and taken into
      account in any subsequent adjustment. All calculations under this Section 3
      shall be made to the nearest cent or to the nearest 1/100th of a share, as
      the
      case may be.

    

    (iv)  No
      Impairment.
      The
      Company will not, by amendment of its Articles of Incorporation or through
      any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms to be observed or performed
      hereunder by the Company but will at all times in good faith assist in the
      carrying out of all the provisions of this Section 3 and in the taking of all
      such actions as may be necessary or appropriate in order to protect against
      impairment of the rights of the Registered Holder of this Warrant to adjustments
      in the Exercise Price(s).

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (v)  Notice
      of Adjustment.
      Upon
      any adjustment of the Exercise Price(s) or extension of the Warrant exercise
      period, the Company shall forthwith give written notice thereto to the
      Registered Holder of this Warrant describing the event requiring the adjustment,
      stating the adjusted Exercise Price(s) and the adjusted number of shares
      purchasable upon the exercise hereof resulting from such event, and setting
      forth in reasonable detail the method of calculation and the facts upon which
      such calculation is based.

    

    4.  Fractional
      Shares.
      The
      Company shall not be required to issue fractions of shares of Common Stock
      upon
      exercise. If any fractions of a share would, but for this Section 4, be issuable
      upon any exercise, in lieu of such fractional share the Company shall round
      up
      or down to the nearest whole number.

    

    5.  Limitation
      on Sales.
      Each
      holder of this Warrant acknowledges that this Warrant and the Warrant Shares,
      as
      of the date of original issuance of this Warrant, have not been registered
      under
      the Securities Act of 1933, as amended ("Act"), and agrees not to sell, pledge,
      distribute, offer for sale, transfer or otherwise dispose of this Warrant or
      any
      Warrant Shares issued upon its exercise in the absence of (i) an effective
      registration statement under the Act as to this Warrant or such Warrant Shares
      or (ii) an opinion of counsel, reasonably acceptable to the Company and its
      counsel, that such registration and qualification are not required. The Warrant
      Shares issued upon exercise thereof shall be imprinted with a legend in
      substantially the following form:

    

    "THE
      ISSUANCE OF THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
      PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF
      UNDER
      SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
      SAID
      ACT OR APPLICABLE STATE SECURITIES LAWS, SUPPORTED BY AN OPINION OF COUNSEL,
      REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
      IS NOT REQUIRED."

    6.  Certain
      Dividends.
      If the
      Company pays a dividend or makes a distribution on the Common Stock
      ("Dividend"), other than (i) a stock dividend payable in shares of Common Stock,
      or (ii) a cash dividend paid from Retained Earnings, then the Company will
      pay
      or distribute to the Registered Holder of this Warrant, upon the exercise
      hereof, in addition to the Warrant Shares purchased upon such exercise, the
      Dividend which would have been paid to such Registered Holder if it had been
      the
      owner of record of such Warrant Shares immediately prior to the date on which
      a
      record is taken for such Dividend or, if no record is taken, the date as of
      which the records holders of Common Stock entitled to such Dividend are
      determined.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    7.  Notices
      of Record Date.
      In
      case: (i) the Company shall take a record of the holders of its Common Stock
      (or
      other stock or securities at the time deliverable upon the exercise of this
      Warrant) for the purpose of entitling or enabling them to receive any dividend
      or other distribution, or to receive any right to subscribe for or purchase
      any
      shares of any class or any other securities, or to receive any other right,
      or
      (ii) of any capital reorganization of the Company, any reclassification of
      the
      capital stock of the Company, any consolidation or merger of the Company with
      or
      into another corporation (other than a consolidation or merger in which the
      Company is the surviving entity), or any transfer of all or substantially all
      of
      the assets of the Company, or (iii) of the voluntary or involuntary dissolution,
      liquidation or winding-up of the Company, then, and in each such case, the
      Company will mail or cause to be mailed to the Registered Holder of this Warrant
      a notice specifying, as the case may be, (i) the date on which a record is
      to be
      taken for the purpose of such dividend, distribution or right, and stating
      the
      amount and character of such dividend, distribution or right, or (ii) the
      effective date on which such reorganization, reclassification, consolidation,
      merger, transfer, dissolution, liquidation or winding-up is to take place,
      and
      the time, if any is to be fixed, as of which the holders of record of Common
      Stock (or such other stock or securities at the time deliverable upon the
      exercise of this Warrant) shall be entitled to exchange their shares of Common
      Stock (or such other stock or securities) for securities or other property
      deliverable upon such reorganization, reclassification, consolidation, merger,
      transfer, dissolution, liquidation or winding-up. Such notice shall be mailed
      at
      least ten (10) days prior to the record date or effective date for the event
      specified in such notice, provided that the failure to mail such notice shall
      not affect the legality or validity of any such action.

    

    8.  Reservation
      of Stock.
      The
      Company will at all times reserve and keep available, solely for issuance and
      delivery upon the exercise of this Warrant, such shares of Common Stock and
      other stock, securities and property, as from time to time shall be issuable
      upon the exercise of this Warrant. So long as this Warrant remains outstanding,
      the Company shall maintain the listing of the shares of Common Stock to be
      issued upon exercise on each national securities exchange on which Common Stock
      is listed (on the Nasdaq Stock Market if the Common Stock is then quoted on
      the
      Nasdaq Stock Market or on the Nasdaq Over-The-Counter service if the Common
      Stock is then quoted on such service/bulletin board).

    

    9.  Replacement
      of Warrants.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and (in the case of loss, theft or
      destruction) upon delivery of an indemnity agreement (with surety if reasonably
      required) in an amount reasonably satisfactory to the Company, or (in the case
      of mutilation) upon surrender and cancellation of this Warrant, the Company
      will
      issue, in lieu thereof, a new Warrant of like tenor.

     

    10.  Transfers,
      etc.

    

    (i)  Warrant
      Register.
      The
      Company will maintain a register containing the names and addresses of the
      Registered Holders of this Warrant. Any Registered Holder may change its, his
      or
      her address as shown on the warrant register by written notice to the Company
      requesting such change.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    (ii)  Registered
      Holder.
      Until
      any transfer of this Warrant is made in the warrant register, the Company may
      treat the Registered Holder of this Warrant as the absolute owner hereof for
      all
      purposes; provided, however, that if and when this Warrant is properly assigned
      in blank, the Company may (but shall not be obligated to) treat the bearer
      hereof as the absolute owner hereof for all purposes, notwithstanding any notice
      to the contrary.

    

    11.  No
      Rights as Stockholder.
      Except
      as set forth in Section 6, until the exercise of this Warrant, the Registered
      Holder of this Warrant shall not have or exercise any rights by virtue hereof
      as
      a stockholder of the Company.

    

    12.  Successors.
      The
      rights and obligations of the parties to this Warrant will inure to the benefit
      of and be binding upon the Company and any transferees of Warrant
      Holder.

    

    13.  Change
      or Waiver.
      Any
      term of this Warrant may be changed or waived only by an instrument in writing
      signed by the party against which enforcement of the change or waiver is
      sought.

    

    14.  Headings.
      The
      headings in this Warrant are for purposes of reference only and shall not limit
      or otherwise affect the meaning of any provision of this Warrant.

    

    15.  Governing
      Law.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of New York as such laws are applied to contracts made and to be fully
      performed entirely within that state between residents of that
      state.

    

    16.  Jurisdiction
      and Venue.
      The
      Company (i) agrees that any legal suit, action or proceeding arising out of
      or
      relating to this Warrant shall be instituted exclusively in New York State
      Supreme Court, County of New York or in the United States District Court for
      the
      Southern District of New York, (ii) waives any objection to the venue of any
      such suit, action or proceeding and the right to assert that such forum is
      not a
      convenient forum for such suit, action or proceeding, and (iii) irrevocably
      consents to the jurisdiction of the New York State Supreme Court, County of
      New
      York, and the United States District Court for the Southern District of New
      York
      in any such suit, action or proceeding, and the Company further agrees to accept
      and acknowledge service or any and all process which may be served in any such
      suit, action or proceeding in New York State Supreme Court, County of New York
      or in the United States District Court for the Southern District of New York
      and
      agrees that service of process upon it mailed by certified mail to its address
      shall be deemed in every respect effective service of process upon it in any
      suit, action or proceeding.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    17.  Mailing
      of Notices, etc.
      All
      notices and other communications under this Warrant (except payment) shall
      be in
      writing and shall be sufficiently given if sent to the Registered Holder or
      the
      Company, as the case may be, by hand delivery, private overnight courier, with
      acknowledgment of receipt, or by registered or certified mail, return receipt
      requested, as follows:

    

    

    Registered
      Holder:  To
      Registered Holder's address as provided on the Subscription Agreement or
      otherwise in the Company’s Records.

     

    The
      Company: To
      the
      Company's Principal Executive Offices Attention: President

    

    or
      to
      such other address as any of them, by notice to the others may designate from
      time to time. Time shall be counted to, or from, as the case may be, the date
      of
      delivery in person or by overnight courier or five (5) business days after
      mailing.

    

    

    AGFEED
      INDUSTRIES, INC.

    

    By:_________________________________

    Name:

    Title:

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      1

    

    NOTICE
      OF EXERCISE

    

    Date:
      __________________

    

    TO:         
      AgFeed
      Industries, Inc.

    1095
      Qing
      Lan Avenue

    Economic
      and Technical Development Zone

    Nan
      Chang
      City, Jiangxi Province

    China
      330013

    Attn:
      Attn: Mr. Junhong
      Xiong, CEO

    

    

    1.
      The
      undersigned hereby elects to purchase _______ shares of the Common Stock of
      AgFeed Industries, Inc., pursuant to terms of the attached Warrant, and tenders
      herewith payment of $_______ (at the rate of $__ per share of Common Stock)
      in
      payment of the Exercise Price(s) pursuant thereto, together with all applicable
      transfer taxes, if any.

    

    The
      undersigned hereby elects to purchase ____ shares of Common Stock of AgFeed
      Industries, Inc. by surrender of the unexercised portion of the attached Warrant
      (with a "Value" of $ based on a "Market Price" of $_______).

    

    2.
      Please
      issue a certificate or certificates representing said shares of the Common
      Stock
      in the name of the undersigned or in such other name as is specified
      below.

    

    

    ___________________________________

    Signature
      of Registered Holder

    

    Print
      Name: _________________________

    Notice:
      The signature to this form must correspond with the name as written upon the
      face of the within Warrant in every particular without alteration or enlargement
      or any change whatsoever.

    

    INSTRUCTIONS
      FOR REGISTRATION OF SECURITIES

    

    
      	Name:________________________________________________________________________	 
	
              (Print
                in Block Letters

            	 

    

     

    

    Address:
      ______________________________________________________________________

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
      2

    

    [To
      be
      completed and signed only upon transfer of Warrant]

    

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns and transfers unto
      ________________________________ the right represented by the within Warrant
      to
      purchase ____________ shares of Common Stock of AgFeed Industries, Inc. to
      which
      the within Warrant relates and appoints ________________ attorney to transfer
      said right on the books of AgFeed Industries, Inc. with full power of
      substitution in the premises.

    

    Dated:

    

    _______________,
      ____

    

    

    _______________________________________

    (Signature
      must conform in all respects to name

    of
      holder
      as specified on the face of the Warrant)

    

    

    _______________________________________

    Address
      of Transferee

    

    _______________________________________

    

    _______________________________________

    

    

    

    In
      the
      presence of:

    

    

    __________________________

     

     

    
      
        
        

      

      
        10

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