Document:

SECURITIES
      PURCHASE AGREEMENT

     

    SECURITIES
      PURCHASE AGREEMENT
      (the
“Agreement”),
      dated
      as of August 31, 2007, by and among Golden Autumn Holdings Inc., a Nevada
      corporation, with its principal office located at 15455 Dallas Pkwy,
      6th
      Floor
      Dallas, TX 75001 (the “Company”),
      and
      the investors listed on the Schedule of Buyers attached hereto
      (individually, a “Buyer”
and
      collectively, the “Buyers”).

     

    WHEREAS:

    

    A.
      The
      Company and each Buyer is executing and delivering this Agreement in reliance
      upon the exemptions from securities registration afforded by Section 4(2)
      of the Securities Act of 1933, as amended (the “1933
      Act”)
      and
      Rule 506 of Regulation D (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“SEC”)
      under
      the 1933 Act. 

     

    B.
      The
      Buyers, severally, and not jointly, wish to purchase, and the Company wishes
      to
      sell, upon the terms and conditions stated in this Agreement, (i) secured
      convertible notes, in the form attached hereto as Exhibit A,
      in an
      aggregate original Principal Amount of $1,000,000 (as amended, restated,
      supplemented and/or modified from time to time in accordance with the provisions
      thereof, collectively, the “Notes”)
      and
      (ii) warrants, in substantially the form attached hereto as Exhibit B
      (as
      amended, restated, supplemented and/or modified from time to time in accordance
      with the provisions thereof, the “Warrants”),
      to
      acquire up to that number of shares of Common Stock, par value $.001 per share,
      of the Company (“Conversion
      Shares”)
      equal to
      30% of the quotient obtained by dividing (a) the original aggregate Principal
      Amount of the Notes purchased by the Buyers at Closing, by (b) the Conversion
      Price (as defined in the Notes) (the Shares issuable upon exercise of the
      Warrants, the “Warrant
      Shares”).

     

    C.
      The
      Notes, the Conversion Shares, the Warrants and the Warrant Shares collectively
      are referred to herein as the “Securities”.

     

    D.
      The
      Note (i) will rank (A) pari
      passu
      with all
      Other Notes (as defined in the Notes), (B) senior to the Subordinated
      Indebtedness (as defined in the Notes), all Indebtedness (as defined in the
      Notes) not constituting Permitted Indebtedness (as defined in the Notes) and
      all
      Permitted Indebtedness expressly designated as ranking junior to the Notes,
      and
      (C) pari
      passu
      with all
      other Permitted Indebtedness and (ii) will be secured by the limited guaranty
      of
      any one of GAH-CDC Holdings LLC, BJP-GAH Holdings LLC or Li Guanglong (the
      “Guarantors”)
      and a
      pledge by the Guarantor of an aggregate of 3,00,000 Common Shares. At the
      closing, such limited guaranty shall be evidenced by a limited guaranty by
      GAH-CDC Holdings LLC with its 5,366,613 Common Shares in the form attached
      hereto as Exhibit C
      and a
      pledge agreement in the form attached hereto as Exhibit D
      (as the
      same may be amended, restated, supplemented and/or modified from time to time
      in
      accordance with the provisions thereof, such limited guaranty and pledge
      agreement, taken together, herein referred to as the “Security
      Documents”).
      However, the parties hereby agree that, after the closing, the limited warranty
      of GAH-CDC Holdings LLC shall be replaced by the limited guaranty of either
      BJP-GAH Holdings LLC or Li Guanglong secured by a pledge of 3,000,000 Common
      Shares held by either of them. 

     

    
      
        
        

      

      
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    E.
      Contemporaneously with the Closing, the Buyers and the Company will execute
      and
      deliver a Registration Rights Agreement in the form attached hereto as
Exhibit E
      (as
      amended, restated, supplemented and/or modified from time to time in accordance
      with the provisions thereof, the “Registration
      Rights Agreement”),
      pursuant to which the Company will agree to provide certain registration rights
      in respect of the Conversion Shares and the Warrant Shares under the 1933 Act
      and the rules and regulations promulgated thereunder, and applicable state
      securities laws.

     

    F.
      Capitalized terms used, but not otherwise defined, herein shall have the
      meanings ascribed to such terms in the Notes.

     

    NOW,
      THEREFORE,
      the
      Company and each Buyer hereby agree as follows:

     

    1.
      PURCHASE AND SALE OF NOTES AND WARRANTS.

     

    (a)
      Purchase
      of Notes and Warrants.
      Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections 6
      and 7 below, the Company shall issue and sell to each Buyer, and each Buyer
      severally, but not jointly, agrees to purchase from the Company on the Closing
      Date (as defined below), (x) the Principal Amount of Note set forth
      opposite such Buyer’s name in column (3) on the Schedule of Buyers and
      (y) the related Warrants to acquire up to that number of Warrant Shares
      equal to equal to 30% of the quotient obtained by dividing (1) the Principal
      Amount of the Note purchased by the Buyer at Closing, by (2) the Conversion
      Price (as defined in the Note) (the “Closing”).

     

    (b)
      Closing.
      The
      date and time of the Closing (the “Closing
      Date”)
      shall
      be 10:00 a.m., New York City time, on the first day other than Saturday, Sunday
      or other day on which commercial banks in the City of New York are authorized
      or
      required by law to remain closed (a “Business
      Day”)
      following the satisfaction (or waiver) and notification of the Company of
      satisfaction (or waiver) of the conditions to the Closing set forth in
      Sections 6 and 7 below (or such later or earlier date as is mutually agreed
      to by the Company and Buyers holding the right to purchase at least 50% of
      the
      aggregate Principal Amount of the Notes). The Closing shall occur on the Closing
      Date at the offices of Guzov Ofsink, LLC, 600 Madison Avenue, 14th
      Floor,
      New York, New York 10022, or such other place as the Company and the Buyers
      holding the right to purchase at least 50% of the aggregate Principal Amount
      of
      the Notes shall mutually agree.

     

    (c)
      Purchase
      Price.
      The
      aggregate purchase price for the Notes and the Warrants to be purchased by
      each
      such Buyer at the Closing (the “Purchase
      Price”)
      shall
      be the amount set forth opposite such Buyer’s name in column (4) of the
      Schedule of Buyers. Each Buyer shall pay $1.00 for each $1.00 of Principal
      Amount of Notes and related Warrants to be purchased by such Buyer at the
      Closing.

     

    (d)
      Form
      of Payment.
      On or
      before the Closing Date, (i) each Buyer shall deposit its respective
      Purchase Price for the Notes and Warrants to be issued and sold to such Buyer
      at
      the Closing to the escrow account by wire transfer of immediately available
      funds in accordance with the provisions of the Escrow Agreement dated the date
      hereof, by and among the Buyers, the Company, and Sichenzia Ross Friedman
      Ference LLP, as the Escrow Agent (the “Escrow Agreement”), and (ii) the
      Company shall deliver to its counsel the Notes (allocated in the Principal
      Amounts as such Buyer shall request) representing such Principal Amount of
      the
      Notes which such Buyer is then purchasing hereunder along with warrants
      representing the Warrants (allocated in the amounts as such Buyer shall request)
      which such Buyer is purchasing, in each case duly executed on behalf of the
      Company and registered in the name of such Buyer or, subject to compliance
      with
      applicable securities laws, its designee (as to such Buyer, the “Buyer’s
      Notes and Warrants”).
      

     

    
      
        
        

      

      
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    (e)
      Release
      of Purchase Price and Notes and Warrants.
      Subject
      to the satisfaction of the conditions set forth in Sections 6 and 7 of this
      Agreement, on the Closing Date the Company shall (i) cause the Escrow Agent
      to
      release the Purchase Price to the Company or its designees in accordance with
      the provisions of the Escrow Agreement, and (ii) cause the Company’s counsel to
      deliver to each Buyer the Buyer’s Notes and Warrants registered in the name of
      such Buyer,

     

    2.
      BUYER’S REPRESENTATIONS AND WARRANTIES. Each Buyer represents and
      warrants, severally and not jointly, as of the date of this Agreement and on
      the
      Closing Date, with respect to only itself that:

     

    (a)
      No
      Public Sale or Distribution.
      Such
      Buyer is acquiring the Note, and the Warrants, and upon conversion of the Note
      and exercise of the Warrants will acquire the Conversion Shares issuable upon
      conversion of the Note and the Warrant Shares issuable upon exercise thereof,
      for its own account and not with a view towards, or for resale in connection
      with, the public sale or distribution thereof, except pursuant to sales
      registered or exempted under the 1933 Act and such Buyer does not have a present
      arrangement to effect any distribution of the Securities to or through any
      person or entity; provided,
      however,
      that by
      making the representations herein, such Buyer does not agree to hold any of
      the
      Securities for any minimum or other specific term and reserves the right to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the 1933 Act and pursuant to the
      applicable terms of the Transaction Documents (as defined in Section 3(b)).
      Such Buyer does not presently have any agreement or understanding, directly
      or
      indirectly, with any Person (as defined in Section 3(p)) to distribute any
      of the Securities.

     

    (b)
      Accredited
      Investor Status.
      Such
      Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
      Regulation D.

     

    (c)
      Reliance
      on Exemptions.
      Such
      Buyer understands that the Securities are being offered and sold to it in
      reliance on specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying upon,
      among other things, the truth and accuracy of, and such Buyer’s compliance with,
      the representations, warranties, agreements, acknowledgments and understandings
      of such Buyer set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Buyer to acquire the
      Securities.

     

    (d)
      Information.
      Such
      Buyer and its advisors, if any, have been furnished with all materials relating
      to the business, finances and operations of the Company and the Acquisition
      and
      materials relating to the offer and sale of the Securities which have been
      requested by such Buyer. Such Buyer and its advisors, if any, have been afforded
      the opportunity to ask questions of the Company. Neither such inquiries nor
      any
      other due diligence investigations conducted by such Buyer or its advisors,
      if
      any, or its representatives shall modify, amend or affect such Buyer’s right to
      rely on the Company’s representations and warranties contained herein. Such
      Buyer understands that its investment in the Securities involves a high degree
      of risk and is able to afford a complete loss of such investment. Such Buyer
      has
      sought such accounting, legal and tax advice as it has considered necessary
      to
      make an informed investment decision in respect of its acquisition of the
      Securities.

     

    
      
        
        

      

      
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    (e)
      No
      Governmental Review.
      Such
      Buyer understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Securities or the fairness or suitability of the investment
      in the Securities nor have such authorities passed upon or endorsed the merits
      of the offering of the Securities.

     

    (f)
      Transfer
      or Resale.
      Such
      Buyer understands that except as provided in the Registration Rights Agreement:
      (i) the Securities have not been and are not being registered under the
      1933 Act or any state securities laws, and may not be offered for sale, sold,
      assigned or transferred unless (A) subsequently registered thereunder,
      (B) such Buyer shall have delivered to the Company an opinion of counsel,
      in a form reasonably acceptable to the Company, to the effect that such
      Securities to be sold, assigned or transferred may be sold, assigned or
      transferred pursuant to an exemption from such registration, or (C) such
      Buyer provides the Company with assurance reasonably acceptable to the Company
      that such Securities can be sold, assigned or transferred pursuant to Rule
      144
      or Rule 144A promulgated under the 1933 Act, as amended, (or a successor
      rule thereto) (collectively, “Rule
      144”);
      (ii) any sale of the Securities made in reliance on Rule 144 may be made
      only in accordance with the terms of Rule 144 and further, if Rule 144 is not
      applicable, any resale of the Securities under circumstances in which the seller
      (or the Person through whom the sale is made) may be deemed to be an underwriter
      (as that term is defined in the 1933 Act) may require compliance with some
      other
      exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
      and (iii) none of the Company or any other Person is under any obligation
      to register the Securities under the 1933 Act or any state securities laws
      or to
      comply with the terms and conditions of any exemption thereunder.
      Notwithstanding the foregoing, and subject to compliance with applicable
      securities laws, the Securities may be pledged in connection with a bona fide
      margin account or other loan or financing arrangement secured by the Securities
      and such pledge of Securities shall not be deemed to be a transfer, sale or
      assignment of the Securities hereunder, unless required by law, and no Buyer
      effecting a pledge of Securities shall be required to provide the Company with
      any notice thereof or otherwise make any delivery to the Company pursuant to
      this Agreement or any other Transaction Document, including without limitation,
      this Section 2(f).

     

    (g)
      Legends.
      Such
      Buyer understands that the certificates or other instruments representing the
      Notes and the Warrants and the stock certificates representing the Conversion
      Shares and the Warrant Shares, except as set forth below, shall bear any legend
      as required by the “blue sky” laws of any state and a restrictive legend in
      substantially the following form (and a stop-transfer order may be placed
      against transfer of such certificates):

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE]] HAVE
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
      STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
      TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
      STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      (B) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, IN A GENERALLY
      ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
      SOLD PURSUANT TO, AND IN ACCORDANCE WITH, RULE 144 OR RULE 144A UNDER SAID
      ACT.
      NOTWITHSTANDING THE FOREGOING, SUBJECT TO COMPLIANCE WITH APPLICABLE SECURITIES
      LAWS, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. THIS
      INSTRUMENT IS SUBJECT TO THE TERMS OF A SECURITIES PURCHASE AGREEMENT DATED
      AS
      OF AUGUST 31, 2007, BY AND AMONG GOLDEN AUTUMN HOLDINGS INC. AND THE BUYERS
      LISTED THEREIN.

     

    
      
        
        

      

      
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    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of the Securities upon which
      it is
      stamped or, in the case of Conversion Shares or Warrant Shares, issue to such
      holder by electronic delivery at the applicable balance account at The
      Depository Trust Company ("DTC"),
      if,
      unless otherwise required by state securities laws, (i) such Securities are
      registered for resale under the 1933 Act, provided that upon receipt of notice
      from the Company that the applicable registration statement is not, or no longer
      is effective in respect of the resale of such Securities, the Holder will not
      transfer such Securities (other than pursuant to clauses 2(g)(ii) or
      2(g)(iii) below) until the Company notifies the Holder that the applicable
      registration statement becomes effective (again), (ii) in connection with a
      sale, assignment or other transfer, such holder provides the Company with an
      opinion of counsel reasonably satisfactory to the Company, in a generally
      acceptable form, to the effect that such sale, assignment or transfer of the
      Securities may be made without registration under the applicable requirements
      of
      the 1933 Act and that such legend is no longer required, or (iii) such
      holder provides the Company with assurances reasonably acceptable to the Company
      that the Securities can be sold, assigned or transferred pursuant to Rule 144
      or
      Rule 144A, and such Holder delivers the legended Securities to the Company
      or
      the Company’s transfer agent.

     

    (h)
      Validity;
      Enforcement.
      This
      Agreement has been, and, when the other Transaction Documents (as defined below)
      to which such Buyer is a party are executed and delivered in accordance with
      the
      terms and conditions contemplated hereby and thereby, such documents shall
      have
      been duly and validly authorized, executed and delivered on behalf of such
      Buyer
      and shall constitute the legal, valid and binding obligations of such Buyer
      enforceable against such Buyer in accordance with their respective terms, except
      as such enforceability may be limited by general principles of equity or to
      applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
      transfer, moratorium, liquidation and other similar laws relating to, or
      affecting generally, the enforcement of applicable creditors’ rights and
      remedies.

     

    (i)
      No
      Conflicts.
      The
      execution, delivery and performance by such Buyer of this Agreement and the
      other Transaction Documents to which such Buyer is a party and the consummation
      by such Buyer of the transactions contemplated hereby and thereby will not
      (i) result in a violation of any organizational documents of such Buyer or
      (ii) conflict with, or constitute a default (or an event which with notice
      or lapse of time or both would become a default) under, or give to others any
      rights of termination, amendment, acceleration or cancellation of, any
      agreement, indenture or instrument to which such Buyer is a party, or
      (iii) result in a violation of any law, rule, regulation, order, judgment
      or decree (including federal and state securities laws) applicable to such
      Buyer
      or by which any property or asset of the Buyer is bound or affected, except
      in
      the case of clauses (ii) and (iii) above, for such conflicts,
      defaults, rights or violations which would not, individually or in the
      aggregate, reasonably be expected to have a material adverse effect on the
      ability of such Buyer to perform its obligations hereunder or under any of
      the
      other Transaction Documents. Each Buyer agrees that it has independently, based
      on such documents and information it deemed appropriate, made its decision
      to
      enter into this Agreement and purchase the Note and Warrants.

     

    
      
        
        

      

      
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    (j)
      Residency.
      Such
      Buyer is a resident of that jurisdiction specified below its address on the
      Schedule of Buyers.

     

    3.
      REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
      warrants to each of the Buyers on the date hereof and on the Closing Date
      that:

     

    (a)
      Organization
      and Qualification.
      Set
      forth on Schedule 3(a)
      is a
      true and correct list of the entities in which the Company or any Subsidiary,
      directly or indirectly, owns capital stock or holds an equity or similar
      interest, together with their respective jurisdictions of organization and
      the
      percentage of the outstanding capital stock or other equity interests of such
      entity that is held by the Company or such Subsidiary or any of their respective
      Subsidiaries. Schedule 3(a)
      also
      sets forth a true and correct corporate structure of the Company and its
      subsidiaries immediately following the Closing. Other than with respect to
      the
      entities listed on Schedule 3(a),
      the
      Company does not, directly or indirectly, own any securities or beneficial
      ownership interests in any other Person (including through joint ventures or
      partnership arrangements) or has any investment in any other Person. The Company
      and its “Subsidiaries”
(which
      for purposes of this Agreement means any entity in which the Company or any
      of
      its Subsidiaries, directly or indirectly, owns any of the capital stock, equity
      or similar interests or voting power of such entity at the date of this
      Agreement) are entities duly organized and
      validly existing and in good standing under the laws of the jurisdiction in
      which they are formed, and have the requisite power and authority to own their
      properties and to carry on their business as now being conducted. If applicable,
      each of the Company and the Subsidiaries is duly qualified as a foreign entity
      to do business and, to the extent legally applicable, is in good standing in
      every jurisdiction in which its ownership of property or the nature of the
      business conducted by it makes such qualification necessary, except to the
      extent that the failure to be so qualified or be in good standing would not
      have
      a Material Adverse Effect. As used in this Agreement, “Material
      Adverse Effect”
means
      any material adverse effect on the business, properties, assets, prospects,
      operations, results of operations or condition (financial or otherwise) of
      the
      Company and its Subsidiaries, taken as a whole, or on the transactions
      contemplated hereby and the other Transaction Documents or by the agreements
      and
      instruments to be entered into in connection herewith or therewith, or on the
      authority or ability of the Company or any Subsidiary to perform its obligations
      under the Transaction Documents (as defined below). Except as set forth in
      Schedule 3(a),
      the
      Company and each Subsidiary holds all right, title and interest in and to 100%
      of the capital stock, equity or similar interests of each of its respective
      Subsidiaries, in each case, free and clear of any Liens (as defined below)
      other
      than Permitted Liens (as defined in the Notes) including any restriction on
      the
      use, voting, transfer, receipt of income or other exercise of any attributes
      of
      free and clear ownership by a current holder, and no such Subsidiary owns
      capital stock or holds an equity or similar interest in any other Person. As
      used in this Agreement, “Lien”
means,
      with respect of any asset, any mortgage, lien, pledge, hypothecation, charge,
      security interest, encumbrance or adverse claim of any kind and any restrictive
      covenant, condition, restriction or exception of any kind that has the practical
      effect of creating a mortgage, lien, pledge, hypothecation, charge, security
      interest, encumbrance or adverse claim of any kind (including any of the
      foregoing created by, arising under or evidenced by any conditional sale or
      other title retention agreement, the interest of a lessor with respect to a
      "Capital Lease" (in accordance with generally accepted accounting principles),
      or any financing lease having substantially the same economic effect as any
      of
      the foregoing).

     

    
      
        
        

      

      
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    (b)
      Authorization;
      Enforcement; Validity.
      The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under this Agreement, the Registration Rights Agreement,
      the Security Documents, the Escrow Agreement (as defined below), the Warrants
      and each of the other agreements entered into by the parties hereto in
      connection with the transactions contemplated by this Agreement to which it
      is a
      party (such documents, and together with the Notes, the Warrants, the
      Registration Rights Agreement, the Security Documents, the Transfer Agent
      Instructions, and each of the other agreements to be entered into in connection
      with the transactions contemplated by this Agreement, as amended, restated,
      supplemented and/or modified from time to time in accordance with the provisions
      thereof, collectively, the “Transaction
      Documents”)
      and to
      consummate the transactions contemplated herein and therein in accordance with
      the terms hereof and thereof. The execution and delivery of the Transaction
      Documents by the Company and the consummation by the Company of the transactions
      contemplated hereby and thereby, have been duly authorized by the board of
      directors of the Company (the “Board
      of Directors”)
      and
      other than as set forth in Section 3(e) hereof, no further filing, consent
      or authorization is required by the Company, its stockholders or the Board
      of
      Directors. To the extent that a Person that is a Subsidiary is a party to or
      bound by a Transaction Document, such Subsidiary has the requisite power and
      authority to enter into and perform its obligations under such Transaction
      Document and the execution and delivery of such Transaction Document by such
      Subsidiary and the consummation by such Subsidiary of the transactions
      contemplated thereby have been duly authorized by the board of directors or
      equivalent body of such Subsidiary and no further consent or authorization
      is
      required by such Subsidiary, its equity holders or its board of directors or
      equivalent body. This Agreement, the other Transaction Documents have been
      duly
      executed and delivered by the Company or its Subsidiary, as applicable, and
      constitute the legal, valid and binding obligations of such parties enforceable
      against such parties in accordance with their respective terms, except as such
      enforceability may be limited by general principles of equity or applicable
      bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
      moratorium, liquidation or similar laws relating to, or affecting generally,
      the
      enforcement of applicable creditors’ rights and remedies. As of the Closing, the
      Transaction Documents dated after the date of this Agreement and on or prior
      to
      the date of the Closing shall have been duly executed and delivered by the
      Company or its Subsidiary, if applicable, and shall constitute the valid and
      binding obligations of such parties, enforceable against such parties in
      accordance with their terms, except as enforceability may be limited by general
      principles of equity or applicable bankruptcy, insolvency, reorganization,
      fraudulent conveyance or transfer, moratorium or similar laws relating to,
      or
      affecting generally, the enforcement of creditors’ rights and
      remedies.

     

    (c)
      Offer
      of Securities; Issuance of Securities.
      Subject
      to the accuracy of Buyer’s representations and warranties hereunder, the offer
      by the Company of the Securities is exempt from registration under the 1933
      Act.
      The issuance of the Notes and the Warrants are duly authorized and are free
      from
      all taxes, liens and charges in respect of the issue thereof other than
      Permitted Liens (as defined in the Notes). As of the Closing, 2,000,000 Shares
      shall have been duly authorized and reserved for issuance upon the conversion
      of
      the Notes and the exercise of the Warrants. Upon conversion of the Notes in
      accordance with the terms thereof the Conversion Shares, and upon exercise
      in
      accordance with the Warrants, the Warrant Shares, will be validly issued, fully
      paid, nonassessable and free from all preemptive or similar rights, taxes,
      liens
      and charges in respect of the issue thereof other than Permitted Liens, with
      the
      holders being entitled to all rights accorded to a holder of Shares.

    

    
      
        
        

      

      
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    (d)
      No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company,
      and, if applicable, its Subsidiaries, and the consummation by such parties
      of
      the transactions contemplated hereby and thereby and the granting of a security
      interest in the Collateral will not (i) result in a violation of any
      articles of association, certificate of incorporation, certificate of formation,
      any certificate of designations or other constituent documents of the Company
      or
      any of the Subsidiaries, any capital stock of the Company or any of the
      Subsidiaries or bylaws of the Company or any of the Subsidiaries or
      (ii) conflict with, or constitute a default (or an event which with notice
      or lapse of time or both would become a default) in any respect under, or give
      to others any rights of termination, amendment, acceleration or cancellation
      of,
      or other remedy in respect of, any agreement, indenture or instrument to which
      the Company or any of the Subsidiaries is a party, or (iii) result in a
      violation of any Requirements of Law, except (other than pursuant to clauses
      (i)
      and (iii) above) for such violations, conflicts, defaults or rights which would
      not, individually or in the aggregate, have a Material Adverse Effect. As used
      in this Agreement, (A) “Requirements
      of Law”
means,
      as to any Person, any United States or foreign law, statute, treaty, rule,
      regulation, right, privilege, qualification, license or franchise or
      determination of an arbitrator or a court or other Governmental Entity, in
      each
      case applicable or binding upon such Person or any of its property or to which
      such Person or any of its property is subject or pertaining to any or all of
      the
      transactions contemplated or referred to herein and (B) “Governmental
      Entity”
means
      the government of any nation, state, city, locality or other political
      subdivision thereof, any entity exercising executive, legislative, judicial,
      regulatory or administrative functions of or pertaining to government and any
      corporation or other entity owned or controlled, through stock or capital
      ownership or otherwise, by any of the foregoing.

     

    (e)
      Consents.
      Neither
      the Company nor any of the Subsidiaries is required to obtain any consent,
      authorization or order of, or make any filing or registration with, any court,
      governmental agency or any regulatory or self-regulatory agency or any other
      Person in order for it to execute, deliver or perform any of its obligations
      under or contemplated by the Transaction Documents to which it is a party,
      in
      each case in accordance with the terms hereof or thereof, except for the
      following consents, authorizations, orders, filings and registrations:
      (i) the filing of appropriate UCC financing statements (or the equivalent)
      with the appropriate states and other authorities pursuant to the Security
      Documents; (ii) filings required by applicable federal, state or foreign
      securities laws; (iii) the registration statement and related state
      securities law filings required by the Registration Rights Agreement; and (iv)
      the declaration of effectiveness by the Securities and Exchange Commission
      of
      any registration statement filed by the Company pursuant to the Registration
      Rights Agreement All consents, authorizations, orders, filings and registrations
      which the Company is required to have obtained prior to the date hereof pursuant
      to the preceding sentence have been obtained or effected. 

     

    (f)
      Acknowledgment
      Regarding Buyer’s Purchase of Securities.
      The
      Company acknowledges and agrees that each Buyer is acting solely in the capacity
      of an arm’s length purchaser in respect of the Transaction Documents and the
      transactions contemplated hereby and thereby and that, except as set forth
      on
Schedule 3(f),
      no
      Buyer is (i) an officer or director of the Company, (ii) an
“affiliate” of the Company (as defined in Rule 144) or (iii) to the
      knowledge of the Company, a “beneficial owner” of more than 10% of the shares of
      Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange
      Act of 1934, as amended (the “1934
      Act”)).
      The
      Company further acknowledges that, except as set forth on Schedule 3(f),
      to the
      knowledge of the Company, no Buyer is acting as a financial advisor or fiduciary
      of the Company or any of its Subsidiary (or in any similar capacity) in respect
      of the Transaction Documents and the transactions contemplated hereby and
      thereby, and any advice given by a Buyer or any of its representatives or agents
      in connection with the Transaction Documents and the transactions contemplated
      hereby and thereby is merely incidental to such Buyer’s purchase of the
      Securities. The Company further represents to each Buyer that the decision
      of
      the Company and each of the Subsidiaries to enter into the Transaction Documents
      to which such Person is a party has been based solely on the independent
      evaluation by the Company, such Subsidiaries and their respective
      representatives.

     

    
      
        
        

      

      
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    (g)
      No
      General Solicitation; No Placement Agent.
      None of
      the Company, any of its Subsidiaries, any of their respective Affiliates, nor
      any Person acting on its or their behalf, has engaged in any form of general
      solicitation or general advertising (within the meaning of Regulation D) in
      connection with the offer or sale of the Securities. The Company has not
      retained a placement agent in connection with the offer and sale of the
      Securities. The Company shall be responsible for the payment of any placement
      agent’s fees, financial advisory fees, or brokers’ commissions (other than for
      persons engaged by any Buyer or its investment advisor) relating to or arising
      out of the transactions contemplated hereby. The Company shall pay, and hold
      each Buyer harmless against, any liability, loss or expense (including, without
      limitation, attorneys’ fees and out-of-pocket expenses) arising in connection
      with any such claim. 

     

    (h)
      No
      Integrated Offering.
      None of
      the Company, any of its Subsidiaries and any of their respective Affiliates,
      nor
      any Person acting on its or their behalf has made, directly or indirectly,
      any
      offers or sales of any security or solicited any offers to buy any security,
      under circumstances that would require registration of any of the Securities
      under the 1933 Act or cause this offering of the Securities to be integrated
      with prior or concurrent offerings by the Company for purposes of the 1933
      Act.
      None of the Company, any of its Subsidiaries and their respective Affiliates
      or
      any Person acting on their behalf will take any action or steps referred to
      in
      the preceding sentence that would require registration of any of the Securities
      under the 1933 Act or cause the offering of the Securities to be integrated
      with
      other offerings. Except as otherwise stated, as used in this Agreement,
“Affiliate”
means
      any Person who is an “affiliate”
as
      defined in Rule 12b-2 of the General Rules and Regulations under the 1934
      Act.

     

    (i)
      Application
      of Takeover Protections; Rights Agreement.
      The
      Company and its board of directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s articles of
      association and memorandum of association (as amended and in effect on the
      date
      hereof) or the laws of the jurisdiction of its formation or otherwise which
      is
      or could become applicable to any Buyer as a result of the transactions
      contemplated by the Securities Purchase Agreement, including, without
      limitation, the Company’s issuance of the Securities and any Buyer's ownership
      of the Securities. The Company has not adopted a stockholder rights plan or
      similar arrangement relating to accumulations of beneficial ownership of Shares
      or a change in control of the Company. 

     

    
      
        
        

      

      
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    (j)
      Financial
      Statements.
      The
      consolidated financial statements of the Company and its Subsidiaries have
      been
      prepared in accordance with the generally accepted accounting principles of
      the
      jurisdiction of its organization (“GAAP”),
      during the periods involved (except (i) as may be otherwise indicated in
      such financial statements or the notes thereto, or (ii) in the case of
      unaudited interim statements, to the extent they may exclude footnotes or may
      be
      condensed or summary statements) and fairly present in all material respects
      the
      financial position of the Company as of the dates thereof and the results of
      its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments that, to the
      Company's knowledge, are not material, individually or in the aggregate. Except
      for liabilities and obligations incurred in the ordinary course of business
      and
      consistent with past practice, liabilities and obligations reflected on or
      reserved against in the June 30, 2007 consolidated balance sheet of the Company,
      prepared in accordance with GAAP (the “Balance
      Sheet”)
      and as
      otherwise contemplated hereby or disclosed herein or in the disclosure schedules
      to this Agreement (the "Disclosure
      Schedules"),
      since
      June 30, 2007, inclusive of such date, none of the Company nor any Subsidiary
      has incurred any liabilities or obligations that would be required to be
      reflected or reserved against in a balance sheet of the Company or such
      Subsidiary, as applicable, prepared in accordance with the principles used
      in
      the preparation of the Balance Sheets. None of the Company or, to the Company's
      knowledge, any stockholder, officer or director of the Company has issued any
      press release or made any other public statement or communication on behalf
      of
      the Company or otherwise relating to the Company or any of its Subsidiaries
      that
      contains any untrue statement of a material fact or omits any statement of
      material fact necessary in order to make the statements therein, in the light
      of
      the circumstances under which they were made, not misleading.

     

    (k)
      Absence
      of Certain Changes.
      Since
      June 30, 2007, there has been no change or development in the business,
      properties, operations, condition (financial or otherwise), results of
      operations of the Company or any Subsidiary that has had or would reasonably
      be
      expected to have a Material Adverse Effect. Except as set forth on Schedule
      3(k),
      since
      June 30, 2007 (and before giving effect to the transactions contemplated under
      the Transaction Documents) none of the Company or any of its Subsidiaries has
      (i) declared or paid any dividends, (ii) sold any assets, individually
      or in the aggregate, in excess of $10,000 outside of the ordinary course of
      business, (iii) had capital expenditures, individually or in the aggregate,
      in excess of $10,000 or (iv) waived any material rights in respect of any
      Indebtedness or other rights in excess of $1,000 owed to it. None of the Company
      or any of its Subsidiaries has taken any steps to seek protection pursuant
      to
      any bankruptcy law nor does the Company have any knowledge or reason to believe
      that its creditors or the creditors of any Subsidiary intend to initiate
      involuntary bankruptcy proceedings or any actual knowledge of any fact which
      would reasonably lead a creditor to do so. Neither the Company nor any
      Subsidiary of the Company is as of the date hereof, and after giving effect
      to
      the transactions contemplated hereby to occur at the Closing will be, Insolvent
      (as defined below). For purposes of this Section 3(k), “Insolvent”
means,
      in respect of any Person, (i) the present fair saleable value of such
      Person’s assets (and including as assets for this purpose at a fair valuation
      all rights of subrogation, contribution or indemnification arising pursuant
      to
      any guarantees given by such Person) is less than the amount required to pay
      such Person’s total Indebtedness (as defined in Section 3(p)),
      (ii) such Person is unable to pay its debts and liabilities, subordinated,
      contingent or otherwise, as such debts and liabilities become absolute and
      matured, (iii) such Person intends at any time to incur or believes that it
      will at any time incur debts that would be beyond its ability to pay as such
      debts mature or (iv) such Person has unreasonably small capital with which
      to conduct the business in which it is engaged as such business is now conducted
      and is proposed to be conducted.

     

    
      
        
        

      

      
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    (l)
      Conduct
      of Business; Regulatory Permits.
      None
      of
      the Company or any Subsidiary is in violation of any term of or in default
      under
      its articles of association, certificate of incorporation, certificate of
      formation, any certificate of designations of any outstanding series of
      preferred stock of such company or Bylaws or their organizational charter or
      other constituent documents or bylaws, respectively except for such violations
      or defaults which would not, individually or in the aggregate, reasonably be
      expected to have a Material Adverse Effect. None of the Company or any
      Subsidiary is in violation of any judgment, decree or order or any statute,
      ordinance, rule or regulation applicable to such entity, and none of the Company
      or any Subsidiary will conduct its respective business in violation of any
      of
      the foregoing, except for such violations and/or possible violations which
      would
      not, individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect. The Company and each Subsidiary possess all certificates,
      authorizations and permits issued by the appropriate regulatory authorities
      necessary to conduct their respective businesses, except where the failure
      to
      possess such certificates, authorizations or permits would not have,
      individually or in the aggregate, a Material Adverse Effect, and none of the
      Company or any Subsidiary has received any notice of proceedings relating to
      the
      revocation or modification of any such certificate, authorization or permit
      except where such proceedings, revocation or modification would not have a
      Material Adverse Effect.

     

    (m)
      Foreign
      Corrupt Practices.
      None of
      the Company or any Subsidiary, nor, any director, officer, agent, employee
      or
      other Person acting on behalf of any of them has, in the course of its actions
      for, or on behalf of, such entity (i) used any corporate funds for any
      unlawful contribution, gift, entertainment or other unlawful expenses relating
      to political activity; (ii) made any direct or indirect unlawful payment to
      any foreign or domestic government official or employee from corporate funds;
      (iii) violated or is in violation of any provision of the U.S. Foreign
      Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe,
      rebate, payoff, influence payment, kickback or other unlawful payment to any
      foreign or domestic government official or employee.

     

    (n)
      Transactions
      With Affiliates.
      Except
      as set forth in Schedule
      3(n) hereto,
      other than the arrangements disclosed on Schedule
      3(n),
      none of
      the officers, directors or employees of any of the Company or any Subsidiary
      is
      presently a party to any transaction with any of the Company or any Subsidiary
      (other than for ordinary course services as employees, officers or directors),
      including any contract, agreement or other arrangement providing for the
      furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any such
      officer, director or employee or, to the knowledge of the Company, any
      corporation, partnership, trust or other entity in which any such officer,
      director, or employee has a substantial interest or is an officer, director,
      trustee or partner.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (o)
      Equity
      Capitalization.
      As of
      the date hereof the authorized capital stock of the Company consists of
      75,000,000 shares of Common Stock, par value $.001 per share, of which as of
      the
      date hereof 20,142,003 shares are issued and outstanding. All of the outstanding
      Common Shares have been validly issued and are fully paid and nonassessable.
      Except as disclosed in Schedule 3(o):
      (i) none of the Company’s capital stock is subject to preemptive rights or
      any other similar rights or any Liens suffered or permitted by the Company;
      (ii) there are no outstanding options, warrants, scrip, rights to subscribe
      to, calls or commitments of any character whatsoever relating to, or securities
      or rights convertible into, or exercisable or exchangeable for, any capital
      stock of the Company or any of its Subsidiaries, or contracts, commitments,
      understandings or arrangements by which the Company or any of its Subsidiaries
      is or may become bound to issue additional capital stock of the Company or
      any
      of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls
      or commitments of any character whatsoever relating to, or securities or rights
      convertible into, or exercisable or exchangeable for, any capital stock of
      the
      Company or any of its Subsidiaries; (iii) there are no outstanding debt
      securities, notes, credit agreements, credit facilities or other agreements,
      documents or instruments evidencing Indebtedness of the Company or any of its
      Subsidiaries or by which the Company or any of its Subsidiaries is or may become
      bound, except for such Indebtedness which (x) will be paid or satisfied in
      full
      substantially concurrently with the Closing with the proceeds of the purchase
      of
      securities hereunder, or (y) constitutes Permitted Indebtedness (as defined
      in
      the Notes); (iv) there are no financing statements securing obligations in
      any material amounts, either singly or in the aggregate, filed in connection
      with the Company or any of its Subsidiaries other than financing statements
      evidencing Permitted Liens or filed pursuant to the Security Documents;
      (v) there are no agreements or arrangements under which the Company or any
      of its Subsidiaries is obligated to register the sale of any of their securities
      under the 1933 Act (except pursuant to the Registration Rights Agreement;
      (vi) there are no outstanding securities or instruments of the Company or
      any of its Subsidiaries which contain any redemption or similar provisions,
      and
      there are no contracts, commitments, understandings or arrangements by which
      the
      Company or any of its Subsidiaries is or may become bound to redeem a security
      of the Company or any of such Subsidiaries; (vii) there are no securities
      or instruments containing anti-dilution or similar provisions that will be
      triggered by the issuance of the Securities; (viii) the Company does not
      have any stock appreciation rights or “phantom stock” plans or agreements or any
      similar plan or agreement; (ix) the Company does not have any outstanding
      options, warrants or other securities which are exercisable for or convertible
      into its Common Shares; and (x) no securities of the Company or any
      Subsidiary are listed or quoted on any stock exchange or automated quotation
      system. The Company has made available to the Buyers true, correct and complete
      copies of the Company’s Certificate of Incorporation, as amended and as in
      effect on the date hereof, and all agreements relating to securities convertible
      into, or exercisable or exchangeable for, Shares and the material rights of
      the
      holders thereof in respect thereof.

     

    (p)
      Indebtedness
      and Other Contracts.
      Except
      as disclosed in Schedule
      3(p),
      none of
      the Company or any Subsidiary (i) has any outstanding Indebtedness (as defined
      below) except for Permitted Indebtedness and such Indebtedness which will be
      paid or satisfied in full substantially concurrently with Closing with the
      proceeds of the purchase of securities hereunder, (ii) is a party to any
      contract, agreement or instrument, the violation of which, or default under
      which, by the other party(ies) to such contract, agreement or instrument would
      reasonably be expected to result in a Material Adverse Effect, (iii) is in
      violation of any term of or in default under any contract, agreement or
      instrument relating to any Indebtedness, except where such violations and
      defaults would not result, individually or in the aggregate, in a Material
      Adverse Effect, or (iv) is a party to any contract, agreement or instrument
      relating to any Indebtedness, the performance of which, in the judgment of
      the
      Company’s officers, would be reasonably expected to have a Material Adverse
      Effect. After giving effect to the issuance of the Notes and Warrants as
      contemplated by the this Agreement, none of the Company or any Subsidiary will
      have any outstanding Indebtedness, except for Permitted Indebtedness. For
      purposes of this Agreement: (x) Indebtedness”
of
      any
      Person means, without duplication (A) all indebtedness for borrowed money,
      (B)
      all obligations issued, undertaken or assumed as the deferred purchase price
      of
      property or services, including (without limitation) “capital leases” in
      accordance with generally accepted accounting principles (other than trade
      payables entered into in the ordinary course of business), (C) all reimbursement
      or payment obligations in respect of letters of credit, surety bonds and other
      similar instruments, (D) all obligations evidenced by notes, bonds, debentures
      or similar instruments, including obligations so evidenced incurred in
      connection with the acquisition of property, assets or businesses, (E) all
      indebtedness created or arising under any conditional sale or other title
      retention agreement, or incurred as financing, in either case in respect of
      any
      property or assets acquired with the proceeds of such indebtedness (even though
      the rights and remedies of the seller or bank under such agreement in the event
      of default are limited to repossession or sale of such property), (F) all
      monetary obligations under any leasing or similar arrangement which, in
      connection with generally accepted accounting principles, consistently applied
      for the periods covered thereby, is classified as a capital lease, (G) all
      indebtedness referred to in clauses (A) through (F) above secured by (or for
      which the holder of such Indebtedness has an existing right, contingent or
      otherwise, to be secured by) any mortgage, lien, pledge, charge, security
      interest or other encumbrance upon or in any property or assets (including
      accounts and contract rights) owned by any Person, even though the Person which
      owns such assets or property has not assumed or become liable for the payment
      of
      such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
      or obligations of others of the kinds referred to in clauses (A) through (G)
      above; (y) “Contingent
      Obligation”
means,
      as to any Person, any direct or indirect liability, contingent or otherwise,
      of
      that Person in respect of any indebtedness, lease, dividend or other obligation
      of another Person if the primary purpose or intent of the Person incurring
      such
      liability, or the primary effect thereof, is to provide assurance to the obligee
      of such liability that such liability will be paid or discharged, or that any
      agreements relating thereto will be complied with, or that the holders of such
      liability will be protected (in whole or in part) against loss in respect
      thereof; and (z) “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization or a government or any
      department or agency thereof.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (q)
      Absence
      of Litigation.
      There
      is no action, suit, proceeding, inquiry or investigation that if adversely
      determined, individually or in the aggregate, would have a Material Adverse
      Effect before or by, any court, public board, government agency, self-regulatory
      organization or body pending or, to the knowledge of the Company, threatened
      against or affecting the Company, any Subsidiary, any of their respective
      officers or directors, or the Shares.

     

    (r)
      Insurance.
      The
      Company and each Subsidiary is insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as management
      of the Company believes to be prudent and customary in the businesses in which
      such entities are engaged. None of the Company or any Subsidiary has any reason
      to believe that it will not be able to renew its existing insurance coverage
      as
      and when such coverage expires or to obtain similar coverage from similar
      insurers as may be necessary to continue its business at a cost that would
      not
      have a Material Adverse Effect.

     

    (s)
      Employee
      Relations.

     

    (i)
      None
      of the Company or any Subsidiary is a party to any collective bargaining
      agreement or employs any member of a union. The Company and its Subsidiaries
      believe that the Company’s relations with its employees and the relations of its
      Subsidiaries with their respective Subsidiaries are good. No executive officer
      (as defined in Rule 3b-7 promulgated under the 1934 Act) of the Company or
      any
      Subsidiary has notified the Company or such Subsidiary that such officer intends
      to leave the Company or Subsidiary, as applicable, or otherwise intends to
      terminate such officer’s employment with the Company or Subsidiary. To the
      knowledge of the Company, no executive officer of the Company or any Subsidiary
      is, or is now expected to be, in violation of any material term of any
      employment contract, confidentiality, disclosure or proprietary information
      agreement, non-competition agreement, or any other contract or agreement or
      any
      restrictive covenant and the continued employment of each such executive officer
      does not subject the Company or any Subsidiary to any liability in respect
      of
      any of the foregoing matters except such violations and/or liabilities that
      would not individually or in the aggregate be reasonably expected to have a
      Material Adverse Effect.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (ii)
      The
      Company and the Subsidiaries are in compliance with all federal, state, local
      and foreign laws and regulations respecting labor, employment and employment
      practices and benefits, terms and conditions of employment and wages and hours,
      except where failure to be in compliance therewith would not result, either
      individually or in the aggregate, in a Material Adverse Effect.

     

    (t)
      Title.
      The
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property and good and valid title to all personal property owned by them
      which is material to the business of the Company or Subsidiary, as applicable,
      in each case free and clear of all Liens, except for Permitted Liens (as defined
      in the Notes), except where failure to have good and valid title, individually
      or in the aggregate, would not be reasonably expected to have a Material Adverse
      Effect. Except as set forth on Schedule
      3(t),
      any
      real property and facilities held under lease by the Company or any of the
      Subsidiaries are held by the applicable entity under valid, subsisting and
      enforceable leases with such exceptions as are not material and do not interfere
      with the use made and proposed to be made of such property and buildings by
      the
      Company and such Subsidiaries. Where failures to have such valid, subsisting
      and
      enforceable lease(s) exist, such failures, in the aggregate, would not have
      a
      Material Adverse Effect.

     

    (u)
      Intellectual
      Property Rights.
      The
      Company and the Subsidiaries own or possess, adequate rights or licenses to
      use
      all trademarks, trade names, service marks and all applications and
      registrations therefor, patents, patent rights, copyrights, original works
      of
      authorship, inventions, licenses, approvals, governmental authorizations, trade
      secrets and other intellectual property rights (“Intellectual
      Property Rights”)
      necessary to conduct their respective businesses as now conducted. Except as
      set
      forth on Schedule
      3(u),
      none of
      the Company’s or any Subsidiary’s registered, or applied for, Intellectual
      Property Rights have expired or terminated or have been abandoned, or are
      expected to expire or terminate or expected to be abandoned, within three years
      from the date of this Agreement. The terminations, expirations or abandonments
      of such registered, or applied for, Intellectual Property Rights would not,
      in
      the aggregate, have a Material Adverse Effect. The Company does not have any
      knowledge of any infringement by the Company or any of the Subsidiaries of
      Intellectual Property Rights of others except of such infringement that would
      not have a Material Adverse Effect. Except as set forth on Schedule
      3(u),
      there
      is no claim, action or proceeding being made or brought, or to the knowledge
      of
      the Company, being threatened, against the Company or any Subsidiary regarding
      their respective Intellectual Property Rights and any such claims, actions
      and
      proceedings being made, brought or threatened would not in the aggregate, have
      a
      Material Adverse Effect. The Company is unaware of any facts or circumstances
      which might give rise to any of the foregoing infringements or claims, actions
      or proceedings which would, individually or in the aggregate, have a Material
      Adverse Effect. The Company and the Subsidiaries have taken reasonable security
      measures to protect the secrecy, confidentiality and value of all of their
      Intellectual Property Rights.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (v)
      Environmental
      Laws.
      The
      Company and the Subsidiaries (i) are in compliance with any and all
      Environmental Laws (as hereinafter defined), (ii) have received all
      permits, licenses or other approvals required of them under applicable
      Environmental Laws to conduct their respective businesses, (iii) are in
      compliance with all terms and conditions of any such permit, license or approval
      and (iv) to the Company’s knowledge, there are no events, conditions or
      circumstances reasonably likely to result in liability of the Company or any
      Subsidiary pursuant to Environmental Laws, except where, in the foregoing
      clauses (i) through (iv) the failure to so comply with such Environmental Laws,
      permits, licenses or other approvals or to obtain such permits, licenses or
      approvals would not be reasonably expected to have, individually or in the
      aggregate, a Material Adverse Effect. The term “Environmental
      Laws”
means
      all federal, state, local or foreign laws relating to pollution or protection
      of
      human health or the environment (including, without limitation, ambient air,
      surface water, groundwater, land surface or subsurface strata), including,
      without limitation, laws relating to emissions, discharges, releases or
      threatened releases of chemicals, pollutants, contaminants, or toxic or
      hazardous substances or wastes (collectively, “Hazardous
      Materials”)
      into
      the environment, or otherwise relating to the manufacture, processing,
      distribution, use, treatment, storage, disposal, transport or handling of
      Hazardous Materials, as well as all authorizations, codes, decrees, demands
      or
      demand letters, injunctions, judgments, licenses, notices or notice letters,
      orders, permits, plans or regulations issued, entered, promulgated or approved
      thereunder.

     

    (w)
      Subsidiary
      Rights.
      The
      Company or one of its Subsidiaries has the unrestricted right to vote, and
      (subject to limitations imposed by applicable law) to receive dividends and
      distributions on, all capital securities of the Subsidiaries owned by the
      Company or such Subsidiary, respectively, subject to the Transaction Documents.
      

     

    (x)
      Tax
      Status.
      Except
      as set forth on Schedule 3(x),
      each of
      the Company and Subsidiaries (i) has made or filed all foreign, federal,
      state and local income and all other tax returns, reports and declarations
      required by any jurisdiction to which it is subject, (ii) has paid all
      taxes and other governmental assessments and charges that are material in
      amount, shown or determined to be due on such returns, reports and declarations,
      except those being contested in good faith and for which the Company has made
      appropriate reserves on its books and (iii) has set aside on its books
      provision reasonably adequate for the payment of all taxes for periods
      subsequent to the periods to which such returns, reports or declarations apply.
      Except as set forth on Schedule 3(x),
      there
      are no material unpaid taxes claimed to be due by the taxing authority of any
      jurisdiction, and the officers of the Company know of no basis for any such
      claim. Each of the claims set forth on Schedule
      3(x)
      is being
      contested in good faith or would not be expected, individually or in the
      aggregate, to have a Material Adverse Effect. Except as set forth on
Schedule 3(x),
      no
      liens have been filed securing taxes and other governmental assessments and
      charges and no claims are being asserted by or against the Company or any of
      the
      Subsidiaries in respect of any taxes (other than liens for taxes not yet due
      and
      payable) or other governmental assessments or charges. Except as set forth
      on
Schedule 3(x),
      none of
      the Company or any of the Subsidiaries has received notice of assessment or
      proposed assessment of any taxes claimed to be owed by it or any other Person
      on
      its behalf. Except as disclosed on Schedule 3(x),
      none of
      the Company or any of the Subsidiaries is a party to any tax sharing or tax
      indemnity agreement or any other agreement of a similar nature that remains
      in
      effect. None of the items set forth on Schedule 3(x)
      would,
      individually or in the aggregate, have a Material Adverse Effect. Each of the
      Company and the Subsidiaries has complied in all material respects with all
      applicable legal requirements relating to the payment and withholding of taxes
      and, within the time and in the manner prescribed by law, has withheld from
      wages, fees and other payments and paid over to the proper governmental or
      regulatory authorities all amounts required.

     

    
      
        
        

      

      
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    (y)
      Internal
      Accounting Controls.
      Each of
      the Company and the Subsidiaries maintains a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions
      are executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of
      consolidated financial statements in conformity with GAAP, and to maintain
      asset
      and liability accountability, (iii) access to assets or incurrence of
      liabilities is permitted only in accordance with management’s general or
      specific authorization and (iv) the recorded accountability for assets and
      liabilities is compared with the existing assets and liabilities at reasonable
      intervals and appropriate action is taken in respect of any
      difference.

     

    (z)
      Disclosure.
      Each of
      this Agreement (including the Schedules hereto), the other Transaction
      Documents, and that certain Private Placement Memorandum dated August 31, 2007
      (the “Private
      Placement Memorandum”),
      furnished by or on behalf of the Company regarding the Company or the
      Subsidiaries, and their respective businesses and the transactions contemplated
      hereby (other than any forward-looking statement or management opinion) is
      true
      and correct in all material respects and does not contain any untrue statement
      of a material fact or omit to state any material fact necessary in order to
      make
      the statements made therein, in the light of the circumstances under which
      they
      were made, not misleading. Each press release issued by the Company or its
      Subsidiaries during the six (6) months preceding the date of this Agreement
      did
      not at the time of release contain any untrue statement of a material fact
      or
      omit to state a material fact required to be stated therein or necessary in
      order to make the statements therein, in the light of the circumstances under
      which they were made, not misleading. No event or circumstance has occurred
      or
      information exists in respect of the Company or any of its Subsidiaries or
      its
      or their business, properties, operations or financial condition, which, under
      applicable law, rule or regulation, requires public disclosure or announcement
      by the Company but which has not been so publicly announced or disclosed, except
      where such failure would not reasonably be expected to have a Material Adverse
      Effect.

     

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

    

    (bb)
      U.S.
      Real Property Holding Corporation.
      The
      Company is not, nor has it ever been, a U.S. real property holding corporation
      within the meaning of Section 897 of the Internal Revenue Code of 1986, as
      amended, and the Company shall so certify upon any Buyer’s request.

     

    
      
        
        

      

      
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    (cc)
      No
      Other Agreements.
      As of
      the Closing Date, the Company has not, directly or indirectly, made any
      agreements with any Buyers relating to the terms or conditions of the
      transactions contemplated by the Transaction Documents, except as set forth
      in
      the Transaction Documents.

     

    (dd)
      Regulations
      T, U and X.
      Neither
      the Company nor any other Subsidiary is and will be engaged in the business
      of
      extending credit for the purpose of purchasing or carrying margin stock (within
      the meaning of Regulation T, U or X of the Board of Governors of the Federal
      Reserve System as now and from time to time hereafter in effect), and no
      proceeds of any Note will be used to purchase or carry any margin stock or
      to
      extend credit to others for the purpose of purchasing or carrying any margin
      stock. 

     

    (ee)
      ERISA.
      

     

    (i)
      Except as listed on Schedule
      (ff)
      hereto,
      none of the Company or any of its Subsidiaries or any of their ERISA Affiliates
      maintains or contributes to, or within the preceding six (6) years has
      maintained or contributed to, any Employee Benefit Plan. Neither the Company
      nor
      any of its Subsidiaries have any current labor problems or disputes that have
      resulted in, or which such Person reasonably believes would be expected to
      have,
      a Material Adverse Effect. No Employee Benefit Plan has an accumulated or waived
      funding deficiency or permitted decrease which would create a deficiency in
      its
      funding standard account or has applied for an extension of any amortization
      period within the meaning of Section 412 of the Internal Revenue Code of 1986,
      as amended (or any successor statute thereto) and the regulations thereunder
      (the “Code”)
      as of
      the date hereof, and no Lien imposed under the Code or ERISA exists or is likely
      to arise on account of any Employee Benefit Plan within the meaning of Section
      412 of the Code. 

     

    (ii)
      Liabilities under any Employee Benefit Plan of the Company or any of its
      Subsidiaries have been appropriately reflected on the financial statements
      of
      the Company and its Subsidiaries in accordance with GAAP.

     

    (iii)
      All
      of the Employee Benefit Plans are and have been established and administered
      in
      all respects in accordance with all applicable laws, regulations or orders
      with
      respect thereto, no such failure to comply therewith has, or would be reasonably
      expected to have, a Material Adverse Effect. To the extent that any Employee
      Benefit Plan maintained by the Company or any of its Subsidiaries is intended
      to
      qualify for favorable tax treatment under any applicable law, regulation or
      order, to the knowledge of the Company and the Subsidiaries, no fact or
      circumstance exists that would reasonably be expected to adversely affect the
      tax-exempt status of such Employee Benefit Plan. 

     

    (iv)
      All
      obligations regarding the Employee Benefit Plans have been satisfied to the
      extent due and owing on the date hereof, there are no outstanding defaults
      or
      violations by any party to any Employee Benefit Plan and no taxes, penalties
      or
      fees are owing under any of the Employee Benefit Plans where such obligations,
      defaults, violations, unpaid taxes, unpaid penalties or unpaid fees have or
      would reasonably be expected to have a Material Adverse Effect. Except as set
      forth on Schedule
      (ee),
      neither
      the Company or any ERISA Affiliate has incurred any withdrawal liability under
      ERISA with respect to any Multiemployer Plan, or is aware of any facts
      indicating that it or any of its ERISA Affiliates may in the future incur any
      such withdrawal liability, that has, or would reasonably be expected to have,
      a
      Material Adverse Effect.

     

    
      
        
        

      

      
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    (v)
      the
      Company and each of its Subsidiaries have made available to the Buyers true,
      correct and complete copies of all material Employee Benefit Plans as amended
      as
      of the date hereof, as requested by any Buyer. 

     

    (vi)
      Each
      Employee Benefit Plan is fully funded to the extent required by any applicable
      law, regulation or order.

     

    (vii)
      Except as disclosed in Schedule
      (ee)
      or as
      required by any applicable law, including, without limitation, the Consolidated
      Omnibus Budget Reconciliation Act of 1986 or any similar state law, regulation
      or order, none of the Employee Benefit Plans provides health and welfare
      benefits to retired employees or to the beneficiaries or dependents of retired
      employees.

     

    (viii)
      As
      used in this Agreement, “Employee
      Benefit Plan”
means
      an employee benefit plan (other than a Multiemployer Plan) covered by Title
      IV
      of ERISA and maintained (or that was maintained at any time during the six
      (6)
      calendar years preceding the date of this Agreement) for employees of the
      Company, any of its Subsidiaries or any of its ERISA Affiliates; “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and any
      successor statute of similar import, and regulations thereunder, in each case,
      as in effect from time to time. References to sections of ERISA shall be
      construed also to refer to any successor sections; and “ERISA
      Affiliate”
means
      (a) any Person subject to ERISA whose employees are treated as employed by
      the
      same employer as the employees of Parent or any of its Subsidiaries under Code
      Section 414(b), (b) any trade or business subject to ERISA whose employees
      are
      treated as employed by the same employer as the employees of Parent or any
      of
      its Subsidiaries under Code Section 414(c), (c) solely for purposes of Section
      302 of ERISA and Section 412 of the Code, any organization subject to ERISA
      that
      is a member of an affiliated service group of which Parent or any of its
      Subsidiaries is a member under Code Section 414(m), or (d) solely for purposes
      of Section 302 of ERISA and Section 412 of the Code, any Person subject to
      ERISA
      that is a party to an arrangement with Parent or any of its Subsidiaries and
      whose employees are aggregated with the employees of Parent or any of its
      Subsidiaries under Code Section 414(o).

     

    (ff)
      Anti-Terrorism
      Laws and Anti-Money Laundering Laws.

     

    (i)
      None
      of the Company or its Subsidiaries is, and to the knowledge of the Company,
      no
      Person who owns a controlling interest in or otherwise controls the Company
      or
      any of its Subsidiaries is or is anticipated to be, (i) listed on the Specially
      Designated Nationals and Blocked Persons List maintained by the Office of
      Foreign Assets Control ("OFAC"),
      Department of the Treasury, and/or on any other similar list (collectively,
      the
      "Lists")
      maintained by the OFAC pursuant to any authorizing statute, Executive Order
      or
      regulation (collectively, "OFAC
      Laws and Regulations");
      or
      (ii) a Person (a "Designated
      Person")
      either
      (A) included within the term "designated national" as defined in the Cuban
      Assets Control Regulations, 31 C.F.R. Part 515, or (B) designated under Sections
      1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079
      (published September 25, 2001) or similarly designated under any related
      enabling legislation or any other similar Executive Orders (collectively, the
      "Executive
      Orders").

     

    
      
        
        

      

      
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    (ii)
      None
      of the Company or its Subsidiaries (x) is a Person or entity with which any
      Buyer is prohibited from dealing or otherwise engaging in any transaction by
      any
      OFAC Laws and Regulations and the Executive Orders (collectively, the
      "Anti-Terrorism
      Law")
      or
      (ii) is a Person or entity that commits, threatens or conspires to commit or
      supports "terrorism" as defined in the Executive Orders or (y) is affiliated
      or
      associated with a Person or entity listed in the preceding clause (x) or clause
      (y). To the knowledge of the Company, none of the Company or its Subsidiaries
      or
      Affiliates, nor any brokers or other agents acting in any capacity in connection
      with the securities being offered in connection herewith (A) deals in, or
      otherwise engages in any transaction relating to, any property or interests
      in
      property blocked pursuant to the Executive Orders or (B) engages in or conspires
      to engage in any transaction that evades or avoids, or has the purpose of
      evading or avoiding, or attempts to violate, any of the prohibitions set forth
      in any Anti-Terrorism Law.

     

    (iii)
      To
      the knowledge of the Company, none of the Company or its Subsidiaries nor any
      holder of a direct or indirect interest in the Company or any of its
      Subsidiaries (x) is under investigation by any governmental authority for,
      or
      has been charged with, or convicted of, money laundering under 18 U.S.C. §§ 1956
      and 1957, drug trafficking, terrorist-related activities or other money
      laundering predicate crimes, or any violation of the Bank Secrecy Act (31 U.S.C.
      Section 5311 et. seq.), and its implementing regulations, Title 31 Part 103
      of
      the U.S. Code of Federal Regulations (the "BSA"),
      (y)
      has been assessed civil penalties under any all applicable laws, regulations
      and
      government guidance on the prevention and detection of money laundering,
      including 18 U.S.C. Section 1956 and 1957, (the "Anti-Money
      Laundering Laws"),
      or
      (z) has had any of its funds seized or forfeited in an action under any
      Anti-Money Laundering Laws.

     

    4.
      COVENANTS.

     

    (a)
      Best
      Efforts.
      Each
      party shall use its best efforts timely to satisfy each of the covenants and
      the
      conditions to be satisfied by it as provided in Sections 5, 6 and 7 of this
      Agreement.

     

    (b)
      Securities
      Law Filings.
      Until
      none of the Buyers hold any Securities, the Company agrees to timely make any
      securities law filings in respect of the Securities as required under any
      federal, state and foreign securities laws and to provide a copy thereof to
      each
      Buyer promptly upon request after such filing. The Company shall, on or before
      the Closing Date, take such action as the Company shall reasonably determine
      is
      necessary in order to obtain an exemption for or to qualify the Securities
      for
      sale to the Buyers at the Closing pursuant to this Agreement under applicable
      federal, state and foreign securities laws (or to obtain an exemption from
      such
      qualification), and shall upon request provide evidence of any such action
      so
      taken to the Buyers on or prior to the Closing Date.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (c)
      Reporting
      Status.
      Commencing at such time as it shall be required to file such reports, and until
      the later of the date on which (i) none of the Buyers hold any Securities,
      (the “Reporting
      Period”),
      the
      Company shall timely file all reports required to be filed with the SEC pursuant
      to the 1934 Act. Once so required to file reports, the Company shall not
      terminate its status as an issuer required to file reports under the 1934 Act,
      even if the 1934 Act or the rules and regulations thereunder would permit such
      termination.

     

    (d)
      Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Securities for general
      corporate purposes, including general and administrative expenses and for the
      purposes set forth on Schedule 4(d)
      (and not
      for the redemption or repurchase of any of its or its Subsidiaries’ equity
      securities or to settle any outstanding litigation). 

     

    (e)
      Financial
      Information.
      The
      Company agrees to send the following to each Buyer during the Reporting Period
      (i) unless the following are filed with the SEC through EDGAR and are promptly
      (and in any event, within two business hours) available to the public through
      the EDGAR system, within three (3) Business Days after the filing thereof with
      the SEC, a copy of any of the periodic report or any other interim reports
      or
      any consolidated balance sheets, income statements, stockholders’ equity
      statements and/or cash flow statements filed with the SEC, (ii) promptly and
      in
      any event, within one (1) Business Day after the release thereof (unless such
      press release is available on PR Newswire or Business Wire), facsimile or
      e-mailed copies of all press releases issued by the Company or any of its
      Subsidiaries, and (iii) copies of any notices and other information made
      available or given to the stockholders of the Company generally,
      contemporaneously with the making available or giving thereof to the
      stockholders.

     

    (f)
      Pledge
      of Securities.
      The
      Company acknowledges and agrees, subject to compliance with applicable
      securities laws, that the Securities may be pledged by a Buyer in connection
      with a bona fide margin agreement or other loan or financing arrangement that
      is
      secured by the Securities. Except as otherwise required by applicable securities
      laws, the pledge of Securities shall not be deemed to be a transfer, sale or
      assignment of the Securities hereunder, and no Buyer effecting a pledge of
      Securities shall be required to provide the Company with any notice thereof
      or
      otherwise make any delivery to the Company pursuant to this Agreement or any
      other Transaction Document, including, without limitation, Section 2(f);
      provided that a Buyer and its pledgee shall be required to comply with the
      provisions of Section 2(f) in order to effect a sale, transfer or
      assignment of Securities to such pledgee. The Company hereby agrees to execute
      and deliver such documentation as a pledgee of the Securities may reasonably
      request in connection with a pledge of the Securities to such pledgee by a
      Buyer
      at the expense of the Buyer or pledgee.

     

    (g)
      Participation
      Rights in Future Financings.
      The
      Company is contemplating consummating a financing in which it would issue equity
      (including securities convertible into equity) and/or debt securities of the
      Company for gross proceeds of not less than $5,100,000 (the “Financing”). Until
      the sooner of the time that the Buyer no longer owns any of the Securities
      or a
      consummation of a Financing, if the Company receives any indication of interest
      or an offer from a third party, other than Roth Capital or any party introduced
      to the Company by Roth Capital in connection with any proposed debt and/or
      equity financing of the Company, then the Company will promptly give written
      notice thereof to the Buyers, specifying all of the material terms and
      conditions of any such proposal or offer (the “Financing
      Notice”).
      In
      such event, the Buyers shall have the option to make an offer to provide all,
      but not less than all of such financing to the Buyers on substantially the
      same
      terms and conditions, such option to be exercised by written notice to the
      Company given not more than 5 days after the Financing Notice is given to the
      Buyers. If the Buyers decline to exercise the foregoing option, then the Company
      may consummate the financing described in the Financing Notice with the third
      party within 90 days after the Financing Notice is given on substantially the
      same terms and conditions as described in the Financing Notice. If such a
      financing is not consummated within such period, then another equity or debt
      financing may not be consummated with a third party unless all of the procedures
      set forth in the preceding three sentences are again performed.
      

     

    
      
        
        

      

      
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    (h)
      Transactions
      With Affiliates.
      From
      the date of this Agreement until the first date following the Closing Date
      on
      which no Notes or Warrants are outstanding, the Company shall not, and shall
      cause each of its Subsidiaries not to, without the prior written consent of
      the
      holders of Notes representing a majority of the aggregate amount of the Notes
      then outstanding (the "Required
      Holders");
      provided,
      however,
      that
      any Note that is held by an Affiliate of the Company shall not be deemed to
      be
      outstanding for the purposes of the determination of Required Holders) enter
      into, amend, modify or supplement any material transaction, contract, agreement,
      instrument, commitment, understanding or other arrangement with any of its
      or
      any Subsidiary’s officers, directors, Persons who were officers or directors at
      any time during the previous two years, stockholders, or Affiliates of the
      Company or any of its Subsidiaries, or with any individual related by blood,
      marriage or adoption to any such individual or with any entity in which any
      such
      entity or individual owns a beneficial interest, unless such agreement,
      amendment, modification or supplement is (A) entered into pursuant to arm's
      length negotiation, (B) customary employment arrangements and benefit programs
      on reasonable terms, or (C) otherwise permitted under the terms of the
      Notes.

     

    (i)
      Corporate
      Existence.
      So long
      as any Buyer beneficially owns any Notes or Warrants, as applicable, the Company
      shall not be party to any Fundamental Transaction (as defined in the Notes)
      unless the Company is in compliance with the applicable provisions governing
      Fundamental Transactions set forth in the Notes and the Warrants.

     

    (j)
      Reservation
      of Shares.
      For as
      long as any Buyer owns any Notes or Warrants, the Company shall take all actions
      necessary to at all times after the Closing Date have authorized, and reserved
      for the purpose of issuance, no less than the sum of (i) the number of
      Shares issuable upon conversion of all of the Notes issued at Closing, and
      (ii) the number of Shares issuable upon exercise of the Warrants issued at
      the Closing.

     

    (k)
      Conduct
      of Business.
      The
      business of the Company and its Subsidiaries shall not be conducted in violation
      of Requirements of Law, except where such violations would not result, either
      individually or in the aggregate, in a Material Adverse Effect.

     

    (l)
      Compliance
      with Notes Covenants.
      From
      the date of this Agreement until the first date following the Closing Date
      on
      which no Notes are outstanding, the Company shall comply with and not violate
      or
      breach, and shall cause the Subsidiaries, as applicable, to comply with and
      not
      violate or breach, the covenants and agreements set forth in Section 14 of
      the Notes as the same may hereafter be amended, being incorporated herein and
      made a part hereof.

     

    (m)
      No
      Additional Registered Securities.
      From
      the Closing Date until the earlier of the date that is ninety (90) Trading
      Days
      following the Effective Date (as defined in the Registration Rights Agreement)
      and the date the Buyers may sell pursuant to Rule 144(k) (as such Rule is
      amended, supplemented or superseded) of the Rules and Regulations promulgated
      under the Securities Act of 1933, as amended, all the Conversion Shares and
      Warrant Shares, the Company will not file a registration statement under the
      1933 Act, or allow any such registration statement to become effective, in
      respect of any securities other than the Registration Statement contemplated
      by
      the Registration Rights Agreement, a registration statement on Form S-8 or
      a
      registration statement on Form S-4. 

     

    
      
        
        

      

      
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    (n)
      Integration.
      None of
      the Company, any of its Subsidiaries, any of its or their affiliates (as defined
      in Rule 501(b) under the 1933 Act) nor any person acting on behalf the Company,
      its Subsidiaries or such affiliate will sell, offer for sale or solicit offers
      to buy or otherwise negotiate in respect of any security (as defined in the
      1933
      Act) which will be integrated with the sale of the Securities or the Conversion
      Shares in a manner which would require the registration under the 1933 Act
      of
      the Securities or require stockholder approval under the rules and regulations
      of the applicable Principal Market (as defined in the Notes) and the Company
      will take all action that is appropriate or necessary to assure that its
      offerings of other securities will not be integrated for purposes of the 1933
      Act or the rules and regulations of the applicable Principal Market (as defined
      in the Notes) with the issuance of Securities contemplated hereby.

     

    (o)
      No
      Inconsistent Agreement or Actions.
      From
      the date of this Agreement until the first date following the Closing Date
      on
      which no Notes are outstanding, the Company and its Subsidiaries shall not
      enter
      into any contract, agreement or understanding which limit or restrict the
      Company’s or any of its Subsidiaries’ ability to perform under, or take any
      other voluntary action to avoid or seek to avoid the observance or performance
      of any of the terms to be observed or performed by it under, this Agreement
      or
      any of the other Transaction Documents. 

     

    (p)
      Collateral
      Agent.

     

    (i)
      Each
      Buyer hereby (x) appoints Sichenzia Ross Friedman Ference LLP, as the
      collateral agent for such Buyer hereunder (the “Collateral
      Agent”),
      and
      (y) each Buyer hereby authorizes the Collateral Agent (and its officers,
      directors, employees and agents) in such capacity to take any and all such
      actions on its behalf with respect to the Collateral (as defined in the Security
      Documents) and the Obligations in accordance with the terms of this Agreement
      and the Security Documents. The Collateral Agent shall not have, by reason
      hereof or any of the other Transaction Documents, a fiduciary relationship
      in
      respect of any Buyer. Neither the Collateral Agent nor any of its officers,
      directors, employees and agents shall have any liability to any Buyer for any
      action taken or omitted to be taken in connection herewith or therewith, except
      to the extent caused by its own gross negligence or willful misconduct, and
      each
      Buyer agrees to defend, protect, indemnify and hold harmless the Collateral
      Agent and all of its officers, directors, employees and agents (collectively,
      the “CA
      Indemnitees”)
      from
      and against any losses, damages, liabilities, obligations, penalties, actions,
      judgments, suits, fees, costs and expenses (including, without limitation,
      reasonable attorneys’ fees, costs and expenses) incurred by such CA Indemnitee,
      whether direct, indirect or consequential, arising from or in connection with
      the performance by such CA Indemnitee of the duties and obligations of
      Collateral Agent pursuant hereto and/or to the Security Documents.

     

    
      
        
        

      

      
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    (ii)
      The
      Collateral Agent may resign from the performance of all its functions and duties
      hereunder at any time by giving at least five (5) Business Days’ prior written
      notice to the Company and each holder of the Notes. Such resignation shall
      take
      effect upon the acceptance by a successor Collateral Agent of appointment as
      provided below. Upon any such notice of resignation, the holders of a majority
      of the outstanding principal under the Notes shall appoint a successor
      Collateral Agent. Upon the acceptance of the appointment as Collateral Agent,
      such successor Collateral Agent shall succeed to and become vested with all
      the
      rights, powers, privileges and duties of the retiring Collateral Agent, and
      the
      retiring Collateral Agent shall be discharged from its duties and obligations
      under this Agreement. After any Collateral Agent’s resignation hereunder, the
      provisions of this Section 4(p) shall inure to its benefit. If a successor
      Collateral Agent shall not have been so appointed within said five (5) Business
      Day period, the retiring Collateral Agent shall then appoint a successor
      Collateral Agent who shall serve until such time, if any, as the holders of
      a
      majority of the outstanding principal under the Notes appoint a successor
      Collateral Agent as provided above.

     

    (iii)
      Without limiting the generality of the foregoing, each Buyer hereby irrevocably
      appoints and authorizes Collateral Agent to execute and deliver the Security
      Documents (on substantially the terms set forth in the forms of such documents
      attached as exhibits hereto) for and on behalf of such Buyer and to perform
      all
      of the obligations and duties of Collateral Agent provided for therein, and
      each
      Buyer shall be bound by the terms of the Security Documents as if such Buyer
      were an original signatory thereto. As to (x) any matters not expressly provided
      for by this Agreement and the other Transaction Documents (including, without
      limitation, enforcement of any security interests) and (y) any amendments,
      consents or waivers of any Transaction Document, the Collateral Agent shall
      not
      be required to exercise any discretion or take any action, but shall be required
      to act or to refrain from acting (and shall be fully protected in so acting
      or
      refraining from acting) upon the instructions of the Required Holders, and
      such
      instructions of the Required Holders shall be binding upon all
      holders.

     

    (iv)
      The
      Collateral Agent shall have no duties or responsibilities except those expressly
      set forth in this Agreement or in the other Transaction Documents. The duties
      of
      the Collateral Agent shall be mechanical and administrative in nature. The
      Collateral Agent shall not have by reason of this Agreement or any other
      Transaction Document a fiduciary relationship in respect of any holder. Nothing
      in this Agreement or any other Transaction Document, express or implied, is
      intended to or shall be construed to impose upon the Collateral Agent any
      obligations in respect of this Agreement or any other Transaction Document,
      except as expressly set forth herein or therein.

     

    (v)
      If
      the Company seeks the consent or approval of the Required Holders to the taking
      or refraining from taking any action hereunder, the Company shall send notice
      thereof to each holder. Any such consents shall be solicited and tabulated
      by
      the Company, or a solicitation and/or tabulation agent engaged by the Company,
      subject to the Collateral Agent’s right to receive all such consents and satisfy
      itself as to (x) the authenticity of such consents (y) receipt of such
      consents from holders representing a sufficient Principal Amount of Notes,
      and
      (z) any other matters that the Collateral Agent, in its sole discretion
      deems necessary or advisable. It shall not be necessary for such Holders to
      approve the particular form of any proposed amendment or waiver, but it shall
      be
      sufficient if the written consents of the Required Holders reflect the approval
      of the substance thereof. The Company shall provide the Collateral Agent with
      copies of any such written consent(s).

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (vi)
      The
      Collateral Agent shall promptly notify each holder any time that the Required
      Holders have instructed the Collateral Agent to act or refrain from acting
      pursuant hereto. the Company or
      the
      Collateral Agent may at any time request instructions from the holders in
      respect of any actions or approvals which by the terms of this Agreement or
      of
      any of the other Transaction Documents the Collateral Agent is permitted or
      required to take or to grant, and if such instructions are promptly requested,
      the Collateral Agent shall be absolutely entitled to refrain from taking any
      action or to withhold any approval under any of the Transaction Documents until
      it shall have received such instructions from the Required Holders. Without
      limiting the foregoing, no holder shall have any right of action whatsoever
      against the Collateral Agent as a result of the Collateral Agent acting or
      refraining from acting under this Agreement or any of the other Transaction
      Documents in accordance with the instructions of the Required Holders unless
      consent of all holders is required by the terms of such document.

     

    (q)
      General
      Solicitation.
      None of
      the Company, any of its Affiliates or any person acting within the scope of
      their delegated authority on behalf of the Company or such affiliate will
      solicit any offer to buy or offer or sell the Securities by means of any form
      of
      general solicitation or general advertising within the meaning of Regulation
      D,
      including: (i) any advertisement, article, notice or other communication
      published in any newspaper, magazine or similar medium or broadcast over
      television or radio; and (ii) any seminar or meeting whose attendees have
      been invited by any general solicitation or general advertising.

     

    (r)
      Financing.
      (i) The
      Company shall use its best efforts to effectuate the Financing not later than
      November 30, 2007. 

     

    (s)
      Nonpublic
      Information.
      The
      Company shall not, and shall cause each of its Subsidiaries and each of their
      respective officers, directors, employees and agents, not to, provide any Buyer
      with any material, nonpublic information regarding the Company or any of its
      Subsidiaries from and after the filing of the Registration Statement (as such
      term is defined in the Registration Rights Agreement) without the express
      written consent of such Buyer.

     

    5.
      REGISTERS; TRANSFER AGENT INSTRUCTIONS.

     

    (a)
      Registers.
      The
      Company shall maintain at its principal executive offices (or such other office
      or agency of the Company), a register for the Notes and a register for the
      Warrants, in which the Company shall record the name and address of the Person
      in whose name the Notes or the Warrants, respectively, have been issued
      (including the name and address of each transferee), the Principal Amount of
      Notes held by such Person, the number of Conversion Shares issuable upon
      conversion of the Notes, and Warrant Shares issuable upon exercise of the
      Warrants held by such Person. The Company shall keep the registers open and
      available at all times during business hours for inspection of any Buyer or
      its
      legal representatives.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (b)
      Transfer
      Agent Instructions.
      Until
      none of the Buyers hold any Securities, the Company shall cause its Shares
      to be
      eligible for transfer with its transfer agent pursuant to the Depository Trust
      Company Automated Securities Transfer Program. The Company shall issue
      instructions to its transfer agent in the form attached hereto as Exhibit F,
      and any
      subsequent transfer agent, to issue certificates or credit shares to the
      applicable balance accounts at DTC, registered in the name of each Buyer or
      its
      respective nominee(s), for the Conversion Shares and the Warrant Shares issued
      at the Closing or upon conversion of the Notes or exercise of the Warrants
      in
      such amounts as specified from time to time by each Buyer to the Company upon
      conversion of the Notes or exercise of the Warrants in the form of E
      attached
      hereto (the “Transfer
      Agent Instructions”).
      The
      Company warrants that no instruction other than the Irrevocable Transfer Agent
      Instructions referred to in this Section 5(b), and stop transfer
      instructions to give effect to Section 2(g) including in the event that the
      Registration Statement ceases to be effective under the Securities Act of 1933,
      will be given by the Company to its transfer agent, and that the Securities
      shall otherwise be freely transferable on the books and records of the Company,
      subject to compliance with applicable securities law, as and to the extent
      provided in this Agreement and the other Transaction Documents. If a Buyer
      effects a sale, assignment or transfer of the Securities in accordance with
      Section 2(f), the Company shall permit the transfer and shall promptly
      instruct its transfer agent to issue one or more certificates or credit shares
      to the applicable balance accounts at DTC in such name and in such denominations
      as specified by such Buyer to effect such sale, transfer or assignment. In
      the
      event that such sale, assignment or transfer involves Conversion Shares or
      Warrant Shares sold, assigned or transferred pursuant to an effective
      registration statement or pursuant to Rule 144, and Buyer provides evidence
      of
      compliance with Rule 144 reasonably acceptable to the Company, the transfer
      agent shall, subject to compliance with applicable securities laws, issue such
      Securities to the Buyer, assignee or transferee, as the case may be, without
      any
      restrictive legend. The Company acknowledges that a breach by it of its
      obligations hereunder will cause irreparable harm to affected Buyers.
      Accordingly, the Company acknowledges that the remedy at law for a breach of
      its
      obligations under this Section 5(b) will be inadequate and agrees, in the
      event of a breach by the Company of the provisions of this Section 5(b),
      that any affected Buyers shall be entitled, in addition to all other available
      remedies, to an order and/or injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

     

    6.
      CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. The obligation of the
      Company hereunder to issue and sell the Notes and the related Warrants to each
      Buyer at the Closing is subject to the satisfaction, at or before the Closing
      Date, of each of the following conditions, reasonably satisfactory to the
      Company, provided that these conditions are for the Company’s benefit and may be
      waived by the Company at any time in their sole discretion by providing each
      Buyer with prior written notice thereof:

     

    (a)
      Each
      Buyer and Collateral Agent shall have executed each of the Transaction Documents
      to which it is a party and delivered the same to the Company.

     

    (b)
      Each
      Buyer shall have delivered to the Escrow Agent the Purchase Price for the Notes
      and the related Warrants being purchased by such Buyer at the Closing by wire
      transfer of immediately available funds pursuant to the wire instructions
      provided under the Escrow Agreement.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (c)
      The
      representations and warranties of such Buyer shall be true and correct in all
      material respects (except for those representations and warranties that are
      qualified by materiality or Material Adverse Effect, which shall be true and
      correct in all respects) as of the date when made and as of the Closing Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date, each of which shall be true and correct as of such date),
      and such Buyer shall have performed, satisfied and complied in all material
      respects with the covenants, agreements and conditions required by this
      Agreement to be performed, satisfied or complied with by such Buyer at or prior
      to the Closing Date. For clarification purposes only, the conditions set forth
      in each of the subsections of this Section 6, including, but not limited to,
      Sections 6(a) and (b), must be satisfied in all respects, or waived as provided
      for in this Section 6.

     

    7.
      CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE. The obligation of each
      Buyer hereunder to purchase the Notes and the related Warrants at the Closing
      is
      subject to the satisfaction, at or before the Closing Date, of each of the
      following conditions, provided that these conditions are for each Buyer’s sole
      benefit and may be waived by such Buyer at any time in its sole discretion
      by
      providing the Company with prior written notice thereof:

     

    (a)
      Each
      of the Company and each of their Subsidiaries, to the extent each is a party
      thereto, shall have executed and delivered to such Buyer or to the Company’s
      counsel for delivery to such Buyer (i) each of the Transaction Documents,
      (ii) the Notes (in such Principal Amounts as such Buyer shall request)
      being purchased by such Buyer at the Closing pursuant to this Agreement and
      (iii) the Warrants (in such denominations as such Buyer shall request)
      being purchased by such Buyer at the Closing pursuant to this Agreement.

     

    (b)
      The
      Company shall have delivered to such Buyer a copy of the Transfer Agent
      Instructions, in the form of Exhibit F
      attached
      hereto, which instructions shall have been delivered to and acknowledged in
      writing by the Company’s transfer agent.

     

    (c)
      The
      Company shall have delivered to such Buyer a copy of a certificate evidencing
      incorporation, partnership or the formation, as applicable, and good standing
      of
      the Company, and each of the Subsidiaries in such entity’s jurisdiction of
      formation issued by the Secretary of State (or comparable office) of such
      jurisdiction, as of a date within the 30 days prior to the Closing
      Date.

     

    (d)
      If
      applicable, the Company shall have delivered to such Buyer a certificate
      evidencing the Company's and each Subsidiary’s qualification as a foreign entity
      (or the equivalent) and good standing issued by the Secretary of State of the
      State (or comparable office) of each jurisdiction in which the Company or such
      Subsidiary is required to qualify as a foreign entity, each as of a date within
      30 days prior to the Closing Date. 

     

    (e)
      The
      Board of Directors shall have adopted resolutions consistent with
      Section 3(b) above and in a form reasonably acceptable to such Buyer (the
“Resolutions”).

     

    (f)
      The
      Company, and each Subsidiary of the Company shall have delivered to such Buyer
      a
      secretary’s certificate in the form attached hereto as Exhibit
      G,
      executed by the secretary (or comparable office) of such Person and dated as
      of
      the Closing Date, certifying (A) that the attached resolutions adopted by
      the board of directors of such Person in connection with the Transaction
      Documents are true, complete and correct and remain unamended and in full force
      and effect, (B) that the attached articles of association, certificate of
      incorporation or certificate of formation of such Person, certified as of a
      date
      within 30 days of the Closing Date, by the secretary of state of the state
      of
      the jurisdiction of its organization, is true, complete and correct and remains
      unamended and in full force and effect, (C) that the attached memorandum of
      association, bylaws or limited liability company or operating agreement of
      such
      Person are true, complete and correct and remain unamended and in full force
      and
      effect and (D) as to the incumbency and specimen signature of each officer
      of
      such Person executing this Agreement, the other Transaction Documents and any
      other document delivered in connection herewith on behalf of such
      Person.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (g)
      The
      representations and warranties of the Company and any Subsidiary set forth
      in
      this Agreement or any other Transaction Document shall be true and correct
      in
      all material respects (except for those representations and warranties that
      are
      qualified by materiality or Material Adverse Effect, which shall be true and
      correct in all respects) as of the date when made and as of the Closing Date
      as
      though made at that time (except for representations and warranties which speak
      as of a specific date, each of which shall be true and correct as of such date)
      and the Company, or each Subsidiary, as applicable, shall have performed,
      satisfied and complied in all material respects with the covenants, agreements
      and conditions required by the Transaction Documents to be performed, satisfied
      or complied with by such entity at or prior to the Closing Date. Such Buyer
      shall have received a certificate delivered and executed by the President of
      each of the Company, dated as of the Closing Date, to the foregoing effect
      and
      as to such other matters as may be reasonably requested by such Buyer in the
      form attached hereto as Exhibit H.
      

     

    (h)
      The
      Company shall have (i) obtained all governmental, regulatory or third party
      consents and approvals, if any, and (ii) made all filings under all
      applicable federal, state or foreign securities laws (to the extent such filings
      must be made on or prior to the Closing Date in each case) necessary to
      consummate the issuance and the sale of the Securities.

     

    (i)
      The
      Guarantors shall have delivered to the Collateral Agent an aggregate of
      3,000,000 Common Shares together with executed stock powers, to be pledged
      pursuant to the Security Documents.

     

    (j)
      No
      Material Adverse Effect shall have occurred.

     

    (k)
      The
      Company shall have delivered a certificate of an officer of the Company and
      each
      Subsidiary certifying as to the solvency of the Company or such Subsidiary.
      

     

    (l)
      All
      proceedings in connection with the issuance of the Notes and the other
      transactions contemplated by this Agreement and the other Transaction Documents,
      and all documents incidental hereto and thereto, shall be reasonably
      satisfactory to the Buyers, and the Buyers shall have received all such
      information and such counterpart originals or certified or other copies of
      such
      documents as the Collateral Agent may reasonably request.

     

    (m)
      The
      Company shall have paid the Buyers $15,000 in cash to reimburse Buyers for
      due
      diligence and investment documentation expenses.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (n)
      The
      Company shall have delivered to such Buyer such other documents relating to
      the
      transactions contemplated by this Agreement as such Buyer or its counsel may
      reasonably request.

     

    8.
      TERMINATION. In the event that the Closing shall not have occurred in
      respect of a Buyer on or before the tenth (10th)
      Business Day from the date hereof due to the Company’s or such Buyer’s failure
      to satisfy the conditions set forth in Sections 6 and 7 above (and the
      nonbreaching party’s failure to waive such unsatisfied condition(s)), the
      nonbreaching party shall have the option to terminate this Agreement in respect
      of such breaching party at the close of business on such date without liability
      of any party to any other party. 

     

    9.
      MISCELLANEOUS.

     

    (a)
      Governing
      Law; Jurisdiction; Jury Trial.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdictions) that would
      cause the application of the laws of any jurisdictions other than the State
      of
      New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in The City of New York, Borough of
      Manhattan, for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein, and
      hereby irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such suit, action or proceeding is brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
      HEREBY.

     

    (b)
      Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party;
      provided that a facsimile signature shall be considered due execution and shall
      be binding upon the signatory thereto with the same force and effect as if
      the
      signature were an original, not a facsimile signature.

     

    (c)
      Headings.
      The
      headings of this Agreement are for convenience of reference only and shall
      not
      form part of, or affect the interpretation of, this Agreement.

     

    (d)
      Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (e)
      Entire
      Agreement; Amendments.
      This
      Agreement supersedes all other prior oral or written agreements between the
      Buyers, the Company, their affiliates and Persons acting on their behalf in
      respect of the matters discussed herein, and this Agreement, the Transaction
      Documents and the instruments referenced herein contain the entire understanding
      of the parties in respect of the matters covered herein and therein and, except
      as specifically set forth herein or therein, none of the Company and its
      Subsidiaries nor any Buyer makes any representation, warranty, covenant or
      undertaking in respect of such matters. No provision of this Agreement may
      be
      amended other than by an instrument in writing signed by the Company, and the
      Required Holders, and any amendment to this Agreement made in conformity with
      the provisions of this Section 9(e) shall be binding on all Buyers and
      holders of Securities as applicable. No provision hereof may be waived other
      than by an instrument in writing signed by the party against whom enforcement
      is
      sought. No such amendment shall be effective to the extent that it applies
      to
      less than all of the holders of the applicable Securities then outstanding.
      No
      consideration shall be offered or paid to any Person to amend or consent to
      a
      waiver or modification of any provision of any of the Transaction Documents
      unless the same consideration also is offered to all of the parties to the
      Transaction Documents, holders of Notes or holders of the Warrants, as the
      case
      may be. The Company has not, directly or indirectly, made any agreements with
      any Buyers relating to the terms or conditions of the transactions contemplated
      by the Transaction Documents except as set forth in the Transaction Documents.
      Without limiting the foregoing, the Company confirms that, except as set forth
      in this Agreement, no Buyer has made any commitment or promise or has any other
      obligation to provide any financing to the Company or otherwise.

     

    (f)
      Notices.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally provided
      same is on a Business Day and, if not, on the next Business Day; (ii) upon
      receipt, when sent by facsimile (provided that confirmation of transmission
      is
      mechanically or electronically generated and kept on file by the sending party)
      provided same is on a Business Day and, if not, on the next Business Day;
      (iii) one (1) Business Day after deposit with an overnight courier
      service, in each case properly addressed to the party to receive the same;
      or
      (iv) if sent by certified mail, return receipt requested, when received or
      three (3) days after deposited in the mails, whichever occurs first. The
      addresses and facsimile numbers for such communications shall be:

     

    If
      to the
      Company:

     

    Golden
      Autumn Holdings Inc.

    Attention:
      Mr. Charles Y. Fu Vice

    Chairman
      & President

    15455
      Dallas Pkwy, 6th
      Floor

    Dallas,
      TX 75001

    Email:
      Charles.Fu@GoldenAutumn.us

     

     

    With
      a
      copy to: 

    

    Gregory
      Sichenzia, Esq. 

    Sichenzia
      Ross Friedman Ference LLP

    61
      Broadway

    New
      York,
      New York 10006

    Fax
      (212)
      930-9725

    Email:
      gsichenzia@srff.com

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    If
      to a
      Buyer, to its address and facsimile number set forth on the Schedule of
      Buyers, with copies to such Buyer’s representatives as set forth on the
      Schedule of Buyers,

     

    or
      to
      such other address and/or facsimile number and/or to the attention of such
      other
      Person as the recipient party has specified by written notice given to each
      other party five (5) days prior to the effectiveness of such change. Written
      confirmation of receipt (A) given by the recipient of such notice, consent,
      waiver or other communication, (B) mechanically or electronically generated
      by the sender’s facsimile machine containing the time, date, recipient facsimile
      number and an image of the first page of such transmission or (C) provided
      by an overnight courier service shall be rebuttable evidence of personal
      service, receipt by facsimile or receipt from an overnight courier service
      in
      accordance with clause (i), (ii) or (iii) above,
      respectively.

     

    (g)
      Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and permitted assigns, including any purchasers
      of
      the Notes or the Warrants. The Company shall not assign this Agreement or any
      rights or obligations hereunder without the prior written consent of the
      Required Holders, including by way of a Fundamental Transaction (unless the
      Company is in compliance with the applicable provisions governing Fundamental
      Transactions set forth in the Notes and the Warrants). Subject to compliance
      with applicable securities laws, a Buyer may assign some or all of its rights
      hereunder and under the other Transaction Documents without the consent of
      the
      Company, in which event such assignee shall be deemed to be a Buyer hereunder
      and thereunder in respect of such assigned rights. A Buyer or the Collateral
      Agent making an assignment of this Agreement shall provide the Company (and
      in
      the case of an assignment by a Buyer, the Collateral Agent) with written notice
      of such assignment within ten (10) Business Days after such assignment is
      consummated; provided, however, that the failure by a Buyer or the Collateral
      Agent to provide or timely provide such notice shall not invalidate the
      assignment.

     

    (h)
      No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person except to the extent set
      forth
      in Section 9(k).

     

    (i)
      Survival.
      Unless
      this Agreement is terminated under Section 8, the representations and
      warranties of the Company and the Buyers contained in Sections 2 and 3, and
      the agreements and covenants set forth in Sections 4, 5, 8 and 9 shall
      survive the Closing and the delivery, conversion and exercise of the Securities,
      as applicable. Each Buyer shall be responsible only for its own representations,
      warranties, agreements and covenants hereunder.

     

    (j)
      Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as any other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (k)
      Indemnification.

     

    (ix)
      In
      consideration of each Buyer’s execution and delivery of the Transaction
      Documents and acquiring the Securities thereunder and in addition to all of
      the
      Company’s other obligations under the Transaction Documents, unless this
      Agreement is terminated under Section 8 hereof, the Company shall defend,
      protect, indemnify and hold harmless each Buyer and each other holder of the
      Securities and all of their stockholders, partners, members, officers,
      directors, employees and direct or indirect investors and any of the foregoing
      Persons’ agents or other representatives (including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement)
      (collectively, the “Indemnitees”)
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Indemnitee is a party to the action for which
      indemnification hereunder is sought), and including reasonable attorneys’ fees
      and disbursements (the “Indemnified
      Liabilities”),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      (a) any misrepresentation or breach of any representation or warranty made
      by the Company in any Transaction Document or any other certificate, instrument
      or document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in any Transaction Document
      or
      any other certificate, instrument or document contemplated hereby or thereby
      or
      (c) any cause of action, suit or claim brought or made against such
      Indemnitee by a third party (including for these purposes a derivative action
      brought on behalf of the Company) and arising out of or resulting from
      (i) the execution, delivery, performance or enforcement of any Transaction
      Document or any other certificate, instrument or document contemplated hereby
      or
      thereby, (ii) any transaction financed or to be financed in whole or in
      part, directly or indirectly, with the proceeds of the issuance of the
      Securities, or (iii) the status of such Buyer or holder of the Securities
      as an investor in the Company pursuant to the transactions contemplated by
      the
      Transaction Documents. To the extent that the foregoing undertaking by the
      Company may be unenforceable for any reason, the Company shall make the maximum
      contribution to the payment and satisfaction of each of the Indemnified
      Liabilities which is permissible under applicable law provided that the Company
      shall not be obligated to indemnify a Buyer or Collateral Agent for any
      Indemnified Liabilities caused by the gross negligence or willful misconduct
      of
      that Buyer and the Company shall not be obligated to indemnify the Collateral
      Agent for any Indemnified Liabilities caused by the gross negligence or willful
      misconduct of the Collateral Agent. 

     

    (x)
      Promptly after receipt by Indemnitee under this Section 9(k) of notice of the
      commencement of any action or proceeding (including any governmental action
      or
      proceeding) involving an Indemnified Liability, such Indemnitee shall, if a
      claim in respect thereof is to be made against any indemnifying party under
      this
      Section 9(k), deliver to the indemnifying party a written notice of the
      commencement thereof, and the indemnifying party shall have the right to
      participate in, and, to the extent the indemnifying party so desires, jointly
      with any other indemnifying party similarly noticed, to assume control of the
      defense thereof with counsel mutually satisfactory to the indemnifying party
      and
      the Indemnitee, as the case may be; provided,
      however,
      that an
      Indemnitee shall have the right to retain its own counsel with the fees and
      expenses of not more than one counsel for such Indemnitee to be paid by the
      indemnifying party, if, in the reasonable opinion of counsel retained by the
      indemnifying party, the representation by such counsel of the Indemnitee and
      the
      indemnifying party would be inappropriate due to actual or potential differing
      interests between such Indemnitee and any other party represented by such
      counsel in such proceeding. In the case of an Indemnitee, legal counsel referred
      to in the immediately preceding sentence shall be selected by Required
      Holders,
      to which
      the claim relates. The Indemnitee shall cooperate fully with the indemnifying
      party in connection with any negotiation or defense of any such action or claim
      by the indemnifying party and shall furnish to the indemnifying party all
      information reasonably available to the Indemnitee which relates to such action
      or claim. The indemnifying party shall keep the Indemnitee reasonably apprised
      at all times as to the status of the defense or any settlement negotiations
      in
      respect thereof. No indemnifying party shall be liable for any settlement of
      any
      action, claim or proceeding effected without its prior written consent;
provided,
      however,
      that
      the indemnifying party shall not unreasonably withhold, delay or condition
      its
      consent. No indemnifying party shall, without the prior written consent of
      the
      Indemnitee, consent to entry of any judgment or enter into any settlement or
      other compromise which does not include as an unconditional term thereof the
      giving by the claimant or plaintiff to such Indemnitee of a release from all
      liability in respect to such claim or litigation, and such settlement shall
      not
      include any admission as to fault on the part of the Indemnitee. Following
      indemnification as provided for hereunder, the indemnifying party shall be
      subrogated to all rights of the Indemnitee in respect of all third parties,
      firms or corporations relating to the matter for which indemnification has
      been
      made. The failure to deliver written notice to the indemnifying party within
      a
      reasonable time of the commencement of any such action shall not relieve such
      indemnifying party of any liability to the Indemnitee under this Section 9(k),
      except to the extent that the indemnifying party is materially prejudiced in
      its
      ability to defend such action.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    (xi)
      The
      indemnification required by this Section 9(k) shall be made by periodic payments
      of the amount thereof during the course of the investigation or defense, as
      and
      when bills are received or Indemnified Liabilities are incurred.

     

    (xii)
      (iii) The indemnity agreements contained herein shall be in addition to (A)
      any
      cause of action or similar right of the Indemnitee against the indemnifying
      party or others, and (B) any liabilities the indemnifying party may be subject
      to pursuant to the law.

     

    (l)
      No
      Strict Construction.
      The
      language used in the Transaction Documents will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.

     

    (m)
      Remedies.
      Each
      Buyer and each holder of the Securities shall have all rights and remedies
      set
      forth in the Transaction Documents and all rights and remedies which such
      holders have been granted at any time under any other agreement or contract
      and
      all of the rights which such holders have under any law. Any Person having
      any
      rights under any provision of this Agreement shall be entitled to enforce such
      rights specifically (without posting a bond or other security), to recover
      damages by reason of any breach of any provision of this Agreement and to
      exercise all other rights granted by law. Furthermore, the Company recognizes
      that in the event that it fails to perform, observe, or discharge any or all
      of
      its obligations under the Transaction Documents, any remedy at law may prove
      to
      be inadequate relief to the Buyers. The Company therefore agrees that the Buyers
      shall be entitled to seek temporary and permanent injunctive relief in any
      such
      case without the necessity of proving actual damages and without posting a
      bond
      or other security.

     

    (n)
      Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Buyer exercises
      a
      right, election, demand or option under a Transaction Document and the Company
      does not timely perform its related obligations within the periods therein
      provided, then such Buyer may rescind or withdraw, in its sole discretion from
      time to time upon written notice to the Company, any relevant notice, demand
      or
      election in whole or in part without prejudice to its future actions and
      rights

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

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

     

    (p)
      Independent
      Nature of Buyers’ Obligations and Rights.
      The
      obligations of each Buyer under any Transaction Document are several and not
      joint with the obligations of any other Buyer, and no Buyer shall be responsible
      in any way for the performance of the obligations of any other Buyer under
      any
      Transaction Document. Nothing contained herein or in any other Transaction
      Document, and no action taken by any Buyer pursuant hereto or thereto, shall
      be
      deemed to constitute the Buyers as a partnership, an association, a joint
      venture or any other kind of entity, or create a presumption that the Buyers
      are
      in any way acting in concert or as a group in respect of such obligations or
      the
      transactions contemplated by the Transaction Documents and the Company
      acknowledges that the Buyers are not acting in concert or as a group in respect
      of such obligations or the transactions contemplated by the Transaction
      Documents. Each Buyer confirms that it has independently participated in the
      negotiation of the transaction contemplated by this Agreement and the
      Transaction Documents with the advice of its own counsel and advisors, that
      it
      has independently determined to enter into the transactions contemplated hereby
      and thereby, that it is not relying on any advice from or evaluation by any
      other Buyer, and that it is not acting in concert with any other Buyer in making
      its purchase of Securities hereunder or in monitoring its investment in the
      Company. The Buyers and, to its knowledge, the Company agree that no action
      taken by any Buyer pursuant hereto or to the other Transaction Documents, shall
      be deemed to constitute the Buyers as a partnership, an association, a joint
      venture or any other kind of entity or group, or create a presumption that
      the
      Buyers are in any way acting in concert or would deem such Buyers to be members
      of a “group” for purposes of Section 13(d) of the 1934 Act. The Buyers each
      confirm that they have not agreed to act together for the purpose of acquiring,
      holding, voting or disposing of equity securities of the Company. The Company
      has elected to provide all Buyers with the same terms and Transaction Documents
      for the convenience of the Company and not because it was required or requested
      to do so by any of the Buyers. The Company acknowledges on behalf of itself
      and
      the Company that such procedure in respect of the Transaction Documents in
      no
      way creates a presumption that the Buyers are in any way acting in concert
      or as
      a “group” for purposes of Section 13(d) of the 1934 Act in respect of the
      Transaction Documents or the transactions contemplated hereby or thereby. Each
      Buyer shall be entitled to independently protect and enforce its rights,
      including, without limitation, the rights arising out of this Agreement, or
      out
      of the Registration Rights Agreement, its Note, its Warrant and the right of
      set-off under the Guaranties, and it shall not be necessary for any other Buyer
      to be joined as an additional party in any proceeding for such
      purpose.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    (q)
      [intentionally omitted.]

     

    (r)
      Definitions:
      For
      purposes of this Securities Purchase Agreement and the Notes, the following
      terms shall have the following meanings:

     

    "Principal
      Amount"
      shall
      mean the Principal (as defined in the Notes) amount.

     

    "Solvent"
      means,
      with respect to any Person on a particular date, that on such date i) the fair
      value of the property of such Person is not less than the total amount of the
      liabilities of such Person (and including as assets for this purpose at a fair
      valuation all rights of subrogation, contribution or indemnification arising
      pursuant to any guarantees given by such Person, to the extent such amount
      is
      readily ascertainable), ii) the present fair salable value of the assets of
      such
      Person (and including as assets for this purpose at a fair valuation all rights
      of subrogation, contribution or indemnification arising pursuant to any
      guarantees given by such Person, to the extent such amount is readily
      ascertainable) is not less than the amount that will be required to pay the
      probable liability of such Person on its existing debts as they become absolute
      and matured, iii) such Person is able to realize upon its assets and pay its
      debts and other liabilities, contingent obligations and other commitments as
      they mature in the normal course of business, iv) such Person does not intend
      to, and does not believe that it will, incur debts or liabilities beyond such
      Person's ability to pay as such debts and liabilities mature, and v) such Person
      is not engaged in business or a transaction, and is not about to engage in
      business or a transaction, for which such Person's property would constitute
      unreasonably small capital. 

     

    "Subsidiary"
      means,
      from time to time, any entity in which the Company, directly or indirectly,
      owns
      any of the capital stock, equity or similar interest or voting power of such
      entity at the date of this Agreement.

     

     

    [Signature
      Pages Follow]

    

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    
      	 	 	 
	 	COMPANY:
	 	 
	 	GOLDEN
              AUTUMN HOLDINGS INC.
	 	 	 
	 	By:  	/s/Charles
              Fu
	 	
              
Name:
              Charles Fu
	 	Title:
              President

    

    
      	
            	 	 
	 	 	 
	 	BUYERS:
	 	 
	 	STRATEGIC
              ALLIANCE FUND, L.P.
	 	 	 
	 	By:	Strategic
              Alliance
              Capital, LLC, General Partner 
	 	 	 
	 	By: 	/s/Daniel
              F. Carlson
	 	
              

            
	 	Name:
              Daniel F. Carlson 
	 	Title:
              Manafer

    

    
      	
            	 	 
	 	 
	 	STRATEGIC
              ALLIANCE FUND II, L.P.
	 	 	 
	 	By:	Strategic
              Alliance Capital, LLC, General Partner
	 	 	 
	 	By:  	/s/Daniel
              F.
              Carlson
	 	
              
Name:
              Daniel F. Carlson
	 	Title:
              Manager

    

    

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      OF BUYERS

     

    
      
        	
                (1)

              	 	
                (2)

              	 	
                (3)

              	 	
                (4)

              	 	
                (5)

              
	 	 	 	 	 	 	 	 	 
	
                Buyer

              	 	
                Address,
                  Telephone

                Number
                  and E-Mail

              	 	
                Original

                Principal

                Amount
                  of

                Notes

              	 	
                Purchase
                  Price

              	 	
                Legal
                  Representative’s

                Address,
                  Telephone

                Number
                  and Facsimile

                Number

              
	 	 	 	 	 	 	 	 	 
	
                Strategic
                  Alliance Fund, L.P.

              	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
                Strategic
                  Alliance Fund II, L.P.

              	 	 	 	 	 	 	 	 

      

    

     

    
      
        	
                Exhibit A

              	
                Form
                  of Notes

              
	
                Exhibit B

              	
                Form
                  of Warrant

              
	
                Exhibit
                  C

              	
                Form
                  of Limited Guaranty

              
	
                Exhibit
                  D

              	
                Form
                  of Pledge Agreement

              
	
                Exhibit E

              	
                Form
                  of Registration Rights Agreement

              
	
                Exhibit F

              	
                Form
                  of Transfer Agent Instructions

              
	
                Exhibit G

              	
                Form
                  of Secretary’s Certificate

              
	
                Exhibit H

              	
                Form
                  of Officer’s Certificate

              

      

      

      SCHEDULES
        

       

      
        	
                Schedule 3(a)

              	
                Organization
                  and Qualification

              
	
                Schedule 3(f)

              	
                Acknowledgement
                  Regarding Buyer’s Purchase of Securities

              
	
                Schedule 3(k)

              	
                Absence
                  of Certain Changes

              
	
                Schedule 3(n)

              	
                Transactions
                  with Affiliates

              
	
                Schedule 3(o)

              	
                Equity
                  Capitalization; Debt

              
	
                Schedule 3(p)

              	
                Indebtedness
                  and Other Contracts 

              
	
                Schedule 3(t)

              	
                Title

              
	
                Schedule 3(u)

              	
                Intellectual
                  Property Rights

              
	
                Schedule 3(x)

              	
                Tax
                  Status

              
	
                Schedule 3(ff)

              	
                ERISA

              
	
                Schedule 4(d)

              	
                Use
                  of Proceeds

              

      

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    Disclosure
      Schedules

    to

    Securities
      Purchase Agreement

     

    (Prepared
      in connection with an
      aggregate of $1,000,000 of 8% Senior Secured Notes together with a Common Stock
      Purchase Warrant to purchase a number of shares of the Company equal to 30%
      of
      the number of shares of common stock into which the Note is convertible
sold
      by the Company to the Purchaser under the Securities Purchase Agreement dated
      August 31, 2007 (the “Securities Purchase Agreement”). Capitalized terms not
      defined herein shall have the meaning given to such terms in the Securities
      Purchase Agreement.) 

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(a): Organization and Qualification

    

    Golden
      Autumn Holdings, Inc. has three subsidiaries:

    1)
      Sichuan Baoguang Golden Autumn Senior Living Development Co., Ltd. (92%) (the
      “JV”)

    2)
      Golden
      Autumn Holdings (Hong Kong) Ltd. (100%)

    3)
      Golden
      Autumn Development (Hong Kong) Ltd. (100%)

    (Note:
      The two Hong Kong subsidiaries do not have any substantial operating activities
      yet.)

    

    Under
      the
      JV, there are three wholly-owned subsidiaries:

    1)
      Chendu
      Xinjin Hua Yuan Real Estate Development Co., Ltd.

    2)
      Sichuan Golden Autumn Property Management Services Co., Ltd.

    3)
      Sichuan Baoguang Memorial Products & Services Chain Co., Ltd.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(f): Acknowledgement Regarding Buyer’s Purchase of
      Securities

     

    N/A

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    

    Schedule
      3(k): Absence of Certain Changes

    

    N/A

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(n): Transactions with Affiliates

     

    At
      December 31, 2005, Chengdu Jinma Chuanxi Entertainment Co., Ltd., a company
      under the control of Mr. Guanglong Li, and director of Golden Autumn Holdings
      Inc. maintained a loan payable balance of $3,353,020. The outstanding loan
      balance comprised of cash advances of approximately $2,319,665 for the purposes
      of acquiring certain shares of the Predecessor. These debts are unsecured and
      interest free. In 2006, Chengdu Jinma Chuanxi Entertainment Co., Ltd repaid
      a
      portion of the debt by returning common shares in Golden Autumn Holdings Inc.
      valued $2,319,665. As of June 30, 2007, Chengdu Jinma Chuanxi Entertainment
      Co.,
      Ltd. outstanding receivable was approximately $905,150. Chuanxi Entertainment
      paid off $128,205(1,000,000 CNY) in January of 2007.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(o): Equity Capitalization; Debt

    

    1
      million
      warrants at the exercise price of $1 per share, issued to Galway
      Holdings.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(p): Indebtedness and Other Contracts

    

    N/A

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(t): Title

    

    N/A

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(u): Intellectual Property Rights

    

    N/A

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(x): Tax Status

    

    N/A

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    Schedule
      (ff): ERISA

    

    N/A

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    

    Schedule
      4(d): Use of Proceeds

     

    For
      general corporate purposes (e.g., hiring a CFO with good work experience with
      the U.S. GAAP and SEC filings, expenses in raising funds with Roth Capital,
      etc.)

     

    
      
        
        

      

      
        48NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
      OF
      COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, IN A GENERALLY ACCEPTABLE FORM,
      THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT
      TO, AND IN ACCORDANCE WITH, RULE 144 OR RULE 144A UNDER SAID ACT.
      NOTWITHSTANDING THE FOREGOING, SUBJECT TO COMPLIANCE WITH APPLICABLE SECURITIES
      LAWS, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. THIS
      INSTRUMENT IS SUBJECT TO THE TERMS OF A SECURITIES PURCHASE AGREEMENT, DATED
      AS
      OF AUGUST 31, 2007, BY AND AMONG GOLDEN AUTUMN HOLDINGS INC. AND THE BUYERS
      LISTED THEREIN.

     

    GOLDEN
      AUTUMN HOLDINGS INC.

     

    Senior
      Secured Convertible Note

     

    
      	
              Issuance
                Date: September 4, 2007

            	
              Original
                Principal Amount: $690,000.00

            

    

    

    FOR
      VALUE RECEIVED,
      Golden
      Autumn Holdings Inc., a Nevada corporation (the "Company"),
      hereby promises to pay to the order of Strategic Alliance Fund, L.P. or
      registered permitted assigns ("Holder")
      the
      amount set out above as the Original Principal Amount (as reduced pursuant
      to
      the terms hereof pursuant to redemption (or prepayment), conversion, or
      otherwise, the "Principal")
      when
      due, whether upon the Maturity Date (as defined below), acceleration, redemption
      (or prepayment) or otherwise (in each case in accordance with the terms hereof)
      and to pay interest ("Interest")
      on any
      outstanding Principal at the applicable Interest Rate, from September 4, 2007
      (the "Interest
      Commencement Date")
      until
      the same becomes due and payable, whether upon an Interest Date (as defined
      below), the Maturity Date, acceleration, conversion, redemption (or prepayment)
      or otherwise (in each case in accordance with the terms hereof). This Senior
      Secured Convertible Note (including all Senior Secured Convertible Notes issued
      in exchange, transfer or replacement hereof, as amended, restated, supplemented
      and/or modified from time to time in accordance with the provisions hereof,
      this
      "Note")
      is one
      of an issue of Senior Secured Convertible Notes issued pursuant to the
      Securities Purchase Agreement on the Closing Date (collectively, the
      "Notes"
      and
      such other Senior Secured Convertible Notes, the "Other Notes").
      Certain capitalized terms used herein are defined in Section 28. Capitalized
      terms used but not defined herein shall have the meanings ascribed to them
      in
      the Securities Purchase Agreement.

     

    (1) MATURITY;
      PREPAYMENT.
      On the
      Maturity Date, the Company shall pay to the Holder an amount in cash
      representing all outstanding Principal, accrued and unpaid Interest and accrued
      and unpaid Late Charges (as defined in Section 18(b) hereof) on such Principal
      and Interest. The "Maturity Date"
      shall
      be August 31, 2008. Provided an “Event of Default (as such term defined in
      Section 4(a)) does not then exist, the Company may prepay all or a portion
      of
      the outstanding principal amount of this Note upon ten days prior written notice
      to the Holder. In such event the Company shall pay to the Holder 125% of the
      principal amount being prepaid plus all accrued interest to the date of
      prepayment.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (2)
INTEREST;
      INTEREST RATE (a)
      Interest on this Note (i) shall accrue at the Interest Rate, commencing on
      the
      Interest Commencement Date, (ii) shall be computed on the
      basis of a 360-day year and (iii) shall be payable in cash on the Maturity
      Date
      or the date of any prepayment of principal as provided in Section 1. (If this
      Note is automatically converted into shares of common stock of the Company
      pursuant to Section 3 hereof, then all accrued interest, in addition to
      outstanding principal shall be so converted 

     

    Interest
      on this Note that is payable, and is punctually paid or duly provided for,
      shall
      be paid to the Person in whose name this Note is registered at the office or
      agency of the Company maintained for such purpose or at the office of a payment
      agent located in the state of New York engaged by the Company for the purpose
      of
      making payments under this Note and the Other Notes. Each payment of interest
      on
      this Note shall be made by check mailed to the address of the Holder specified
      in the register of Notes; provided,
      however,
      that,
      at the request of the Holder in writing to the Company, interest on the Holder's
      Note(s) shall be paid by wire transfer in immediately available funds in
      accordance with the written wire transfer instruction supplied by the Holder
      from time to time to the Company. 

    

    From
      and
      after the occurrence and during the continuance of an Event of Default, the
      Interest Rate shall be increased to five percent (5.0%) in excess of the
      Interest Rate otherwise payable at such time. For purposes of this Section
      2(c),
      the period of the Event of Default in respect of Section 4(a)(i) only, shall
      commence the first day after the grace periods specified therein expire and
      shall end on the day upon which the applicable Registration Statement becomes
      effective or again becomes available, as applicable.

    

    (3)
      CONVERSION
      OF NOTES.
      Simultaneously with the consummation of a Financing (as hereinafter defined),
      the entire principal amount, plus accrued interest, of this Note shall
      automatically convert into Shares of the Company) at a conversion rate which
      shall be equal to a 35% discount from the lowest price per Share or Share
      equivalent sold in the Financing to a person other than the Holder, but in
      no
      case a conversion rate of less than one Share for each $.50 of principal and
      interest converted; provided,
      however,
      in the
      event the Financing involves a security with a conversion price that is not
      fixed, then the Company shall issue to the Investor the same security, at a
      thirty-five percent (35%) discount to the price paid in the Financing. If the
      Financing is not completed by November 30, 2007, until the Financing is
      completed, the conversion discount will increase on the first day of each month
      by 5% per month up to a maximum conversion discount of fifty percent (50%)
      but
      in no case a conversion rate of less than one Share for each $.50 of principal
      and interest converted. For purposes of this Note, the term “Financing” means a
      financing in which the Company would issue equity securities of the Company
      for
      gross proceeds of not less than $5,100,000

     

    (4)
      RIGHTS
      UPON EVENT OF DEFAULT.

     

    (a) Event
      of Default.
      Each of
      the following events shall constitute an "Event
      of Default":

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (i) the
      Company's failure to pay to the Holder any amount of Principal (including,
      without limitation, any redemption payments), Interest, Late Charges or other
      amounts when and as due under this Note or any other Transaction Document (as
      defined in the Securities Purchase Agreement) or any other agreement, document,
      certificate or other instrument delivered in connection with the transactions
      contemplated hereby and thereby to which the Holder is a party, except, in
      the
      case of a failure to pay Interest or Late Charges when and as due, in which
      case
      only if such failure continues for a period of at least two (2) Business
      Days;

     

    (ii) the
      Company's or any Subsidiary's failure to pay any principal of or interest or
      premium on any of its Indebtedness (excluding Indebtedness evidenced by any
      of
      the Notes), to the extent that the aggregate principal amount of all such
      Indebtedness exceeds $100,000, when due (whether by scheduled maturity, required
      prepayment, acceleration, demand or otherwise) and such failure shall continue
      after the applicable grace period, if any, specified in the agreement or
      instrument relating to such Indebtedness, or any other default under any
      agreement or instrument relating to any such Indebtedness, or any other event,
      shall occur and shall continue after the applicable grace period, if any,
      specified in such agreement or instrument, if the effect of such default or
      event is to accelerate, or to permit the acceleration of, the maturity of such
      Indebtedness; or any such Indebtedness shall be declared to be due and payable,
      or required to be prepaid (other than by a regularly scheduled required
      prepayment), redeemed, purchased or defeased or an offer to prepay, redeem,
      purchase or defease such Indebtedness shall be required to be made, in each
      case, prior to the stated maturity thereof;

     

    (iii) the
      Company or any of
      its
      Subsidiaries (A)
      shall
      institute any proceeding or voluntary case seeking to adjudicate it bankrupt
      or
      insolvent, or seeking dissolution, liquidation, winding up, reorganization,
      arrangement, adjustment, protection, relief or composition of it or its debts
      under any law relating to bankruptcy, insolvency, reorganization or relief
      of
      debtors, or seeking the entry of an order for relief or the appointment of
      a
      receiver, administrative receiver, administrator, trustee, custodian, liquidator
      or other similar official for any such Person or for any substantial part of
      its
      property, or any other Insolvency Proceeding, (B) shall be generally not paying
      its debts as such debts become due or shall admit in writing its inability
      to
      pay its debts generally or shall be unable to pay its debts, (C) shall make
      a
      general assignment for the benefit of creditors, or (D) shall take any action
      to
      authorize or effect any of the actions set forth above in this subsection (vii);
      

     

    (iv) any
      proceeding shall be instituted against the Company or any of its Subsidiaries
      seeking to adjudicate it bankrupt or insolvent, or seeking dissolution,
      liquidation, winding up, reorganization, arrangement, adjustment, protection,
      relief of debtors, or seeking the entry of an order for relief or the
      appointment of a receiver, administrative receiver, administrator, trustee,
      custodian, liquidator or other similar official for any such Person or for
      any
      substantial part of its property, or any other Insolvency Proceeding shall
      be
      instituted against the Company or any Subsidiary, and any such proceeding shall
      remain undismissed or unstayed for a period of thirty (30) days or any of the
      actions sought in such proceeding (including, without limitation, the entry
      of
      an order for relief against any such Person or the appointment of a receiver,
      administrative receiver, administrator, trustee, custodian, liquidator or other
      similar official for it or for any substantial part of its property) shall
      occur;

     

    (v) any
      provision of any Note, Security Document or any other security document entered
      into for the benefit of the Collateral Agent or any Holder, after delivery
      thereof pursuant the Securities Purchase Agreement or any Note shall at any
      time
      for any reason (other than pursuant to the express terms thereof) cease to
      be
      valid and binding on or enforceable against the Company, or the validity or
      enforceability thereof shall be contested by the Company, or a proceeding shall
      be commenced by the Company or any Guarantor or any Governmental Authority
      having jurisdiction over any of them, seeking to establish the invalidity or
      unenforceability thereof, or the Company shall deny in writing that it has
      any
      liability or obligation purported to be created under any Note or Security
      Document; 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (vi)
      any
      Security Document entered into for the benefit of the Collateral Agent (as
      defined in the Securities Purchase Agreement) or any Holder, after delivery
      thereof pursuant to the Securities Purchase Agreement or any Note, shall be
      invalid or illegal or for any reason fail or cease to create a valid and
      perfected and, except to the extent permitted by the terms hereof or thereof,
      first priority Lien (subject to Permitted Liens) in favor of the Collateral
      Agent for the benefit of Holders on any Collateral purported to be covered
      thereby or prior to the later of the consummation of the Financing or Reverse
      Merger the Company grants to any person an additional security interest in
      any
      collateral of the Company in which the Collateral Agent or the Holder shall
      have
      a security interest;

     

    (vii) the
      loss,
      suspension or revocation of, or failure to renew, any license or permit now
      held
      or hereafter acquired by the Company, if such license or permit is not replaced
      with a similar license or permit and, after giving effect to such replacement
      license or permit, such loss, suspension, revocation or failure to renew has
      or
      could reasonably be expected to have a Material Adverse Effect;

     

    (viii) a
      breach,
      default, event of default or termination shall occur under any Material Contract
      after giving effect to applicable grace periods, if any, contained in any such
      Material Contract that gives any third party the right to terminate any such
      Material Contract that could reasonably be expected to have a Material Adverse
      Effect which has not been cured;

     

    (ix) proceedings
      are instituted against the Company or any Subsidiary in which a judgment adverse
      to the Company or a Subsidiary in excess of $2,000,000 in the aggregate is
      reasonably expected by the Holder prior to the Maturity Date; 

     

    (xi
      Any
      representation or warranty made by the Company or any Subsidiary herein (a)
      containing a materiality threshold, is incorrect or misleading when made or
      (b)
      in respect of any such representation or warranty which does not contain a
      materiality threshold, the same is materially misleading or materially incorrect
      when made or (B) the Company breaches any covenant or other material term or
      condition of any Transaction Document, except, in the case of a breach of a
      covenant, term or condition which is curable, only if such breach continues
      for
      a period of at least twenty (20) consecutive Business Days;

     

    (xii) any
      material breach or failure to comply with Section 13 of this Note which has
      not
      been cured; 

     

    (xiii) Reserved;
      

     

    (xiv) the
      Company is enjoined, restrained or in any way prevented by the order of any
      court or any Governmental Authority from conducting all or any material part
      of
      its business for more than ten (10) days provided that such curtailment could
      reasonably be expected to have a Material Adverse Effect; 

     

    (xv) any
      cessation of a substantial part of the business of the Company for a period
      which could reasonably be expected to have a Material Adverse
      Effect.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b) Redemption
      Right.
      Upon
      the Company's obtaining knowledge of the occurrence of an Event of Default
      in
      respect of this Note or any Other Note, the Company shall, as soon as possible,
      but in any event, within three (3) Business Days thereafter deliver written
      notice thereof via facsimile and overnight courier (an "Event
      of Default Notice")
      to the
      Holder. At any time after the earlier of the Holder's receipt of such Event
      of
      Default Notice and the Holder's becoming aware of such an Event of Default
      in
      respect of this Note or any Other Note, the Holder may require the Company
      to
      redeem all or any portion of this Note by delivering written notice thereof
      (the
      "Event
      of Default Redemption Notice")
      to the
      Company, which Event of Default Redemption Notice shall indicate the portion
      of
      this Note the Holder is electing to redeem. Each portion of this Note subject
      to
      redemption by the Company pursuant to this Section 4(b) shall be redeemed as
      provided in Section 9(a) by the Company at a price equal to 150% of the
      outstanding principal amount of this Note plus all accrued interest (the
      "Event
      of Default Redemption Price").
      The
      Company agrees that in the event of the Company's redemption of any portion
      of
      the Note under this Section 4(b), the Holder's damages would be uncertain and
      difficult to estimate because of the parties' inability to predict future
      interest rates and the uncertainty of the availability of a suitable substitute
      investment opportunity for the Holder. Accordingly, any redemption premium
      due
      under this Section 4(b) is intended by the parties to be, and shall be deemed,
      a
      reasonable estimate of the Holder's actual loss of its investment opportunity
      and not as a penalty.

     

    (5)
      RIGHTS
      UPON FUNDAMENTAL TRANSACTION.
      Until
      none of the Buyers hold any Securities, the Company shall not enter into or
      be
      party to a Fundamental Transaction unless, in the case of a Fundamental
      Transaction of the type described in clause (ii), (iii), (iv), or (v) of the
      definition thereof if the Successor Entity in such Fundamental Transaction
      is a
      person other than the Company, (i) such Successor Entity assumes in writing
      all of the obligations of the Company under this Note and the other Transaction
      Documents in accordance with the provisions of this Section 5(a) pursuant to
      written agreements in form and substance reasonably satisfactory to the Required
      Holders including agreements to deliver to each holder of Notes in exchange
      for
      such Notes securities of the Successor Entity evidenced by a written instrument
      substantially similar in form and substance to the Notes, including, without
      limitation, having a principal amount and interest rate equal to the principal
      amounts then outstanding and the interest rates of the Notes held by such
      holder, having similar conversion rights as the Notes and having similar ranking
      to the Notes, and reasonably satisfactory to the Required Holders and
      (ii) such Successor Entity (or its Parent Entity) is a publicly traded
      corporation whose common stock is quoted on or listed for trading on an Eligible
      Market. Upon the occurrence of any Fundamental Transaction, such Successor
      Entity shall succeed to, and be substituted for (so that from and after the
      date
      of such Fundamental Transaction, the provisions of this Note referring to the
      "Company" shall refer instead to such Successor Entity), and may exercise every
      right and power of the Company and shall assume all of the obligations of the
      Company under this Note with the same effect as if such Successor Entity had
      been named as the Company herein. Upon consummation of the Fundamental
      Transaction, such Successor Entity shall deliver to the Holder confirmation
      that
      there shall be issued upon conversion or redemption of this Note at
      any
      time after the consummation of the Fundamental Transaction, in lieu of the
      Shares (or
      other
      securities, cash, assets or other property) issuable
      upon the conversion or redemption of the Notes prior to such Fundamental
      Transaction,
      such
      shares of the publicly traded common stock (or their equivalent) of the
      Successor Entity (including its Parent Entity), as adjusted in accordance with
      the provisions of this Note. The
      provisions of this Section shall apply similarly and equally to successive
      Fundamental Transactions and shall be applied without regard to any limitations
      on the conversion or redemption of this Note.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (6)
      RIGHTS
      UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

     

    (a)
      Purchase
      Rights.
      Other
      than in connection with issuances of Shares and/or Options to employees,
      directors, officers or consultants of the Company (“Exempted Issuances”), if at
      any time the Company grants, issues or sells any Options, Convertible Securities
      or rights to purchase stock, warrants, securities or other property pro rata
      to
      the record holders of any class of Shares (collectively, the "Purchase
      Rights"),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of Shares acquirable upon complete
      conversion of this Note (without taking into account any limitations or
      restrictions on the convertibility of this Note) immediately before the date
      on
      which a record is taken for the grant, issuance or sale of such Purchase Rights,
      or, if no such record is taken, the date as of which the record holders of
      Shares are to be determined for the grant, issue or sale of such Purchase
      Rights.

    

    (b)
      Other
      Corporate Events.
      In
      addition to and not in substitution for any other rights hereunder, but without
      duplication of the consideration issuable pursuant to Section 5(a), prior to
      the
      consummation of any Fundamental Transaction pursuant to which holders of Shares
      are entitled to receive securities or other assets in respect of or in exchange
      for Shares (a "Corporate
      Event"),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon a conversion of this Note, (i) in
      addition to the Shares receivable upon such conversion, such securities or
      other
      assets to which the Holder would have been entitled in respect of such Shares
      had such Shares been held by the Holder upon the consummation of such Corporate
      Event (without taking into account any limitations or restrictions on the
      convertibility of this Note) or (ii) in lieu of the Shares otherwise receivable
      upon such conversion, such securities or other assets received by the holders
      of
      Shares in connection with the consummation of such Corporate Event in such
      amounts as the Holder would have been entitled to receive had this Note
      initially been issued with conversion rights for the form of such consideration
      (as opposed to Shares) at a conversion rate for such consideration commensurate
      with the Conversion Rate. Provision made pursuant to the preceding sentence
      shall be in a form and substance satisfactory to the Required Holders. The
      provisions of this Section shall apply similarly and equally to successive
      Corporate Events and shall be applied without regard to any limitations on
      the
      conversion or redemption of this Note.

     

    (7)
      SECURITY.
      This
      Note and the Other Notes are secured to the extent and in the manner set forth
      in the Security Documents.

     

    (8)
      NONCIRCUMVENTION.
      The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Certificate of Incorporation, Bylaws or through any reorganization, transfer
      of assets, consolidation, merger, scheme of arrangement, 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 of this Note, and will at all
      times in good faith carry out all of the provisions of this Note and take all
      action as may be required to protect the rights of the Holder of this Note.
      

     

    (9)
      HOLDER'S
      REDEMPTIONS.

     

    (a)
      Mechanics.
      The
      Company shall deliver the applicable Event of Default Redemption Price to the
      Holder within three (3) Business Days after the Company's receipt of the
      Holder's Event of Default Redemption Notice; provided that if the Event(s)
      of
      Default giving rise to the redemption right shall have been cured or waived
      on
      or before the third (3rd) Business Day after the Company's receipt of the
      Holder's Event of Default Redemption Notice, such redemption right shall
      terminate.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    (b)
      Redemption
      by Other Holders.
      Upon
      the Company's receipt of notice from any of the holders of the Other Notes
      for
      redemption or repayment as a result of an event or occurrence substantially
      similar to the events or occurrences described in Section 4(b) (each, an
      "Other
      Redemption Notice"),
      the
      Company shall immediately, but no later than one (1) Business Day after its
      receipt thereof, forward to the Holder by facsimile a copy of such notice.
      If
      the Company receives a Redemption Notice and one or more Other Redemption
      Notices, during the seven (7) Business Day period beginning on and including
      the
      date which is three (3) Business Days prior to the Company's receipt of the
      Holder's Redemption Notice and ending on and including the date which is three
      (3) Business Days after the Company's receipt of the Holder's Redemption Notice
      and the Company is unable to redeem all principal, interest and other amounts
      designated in such Redemption Notice and such Other Redemption Notices received
      during such seven (7) Business Day period, then the Company shall redeem a
      pro
      rata amount from each holder of the Notes (including the Holder) based on the
      principal amount of the Notes submitted for redemption pursuant to such
      Redemption Notice and such Other Redemption Notices received by the Company
      during such seven Business Day period.

    

    (10)
      VOTING
      RIGHTS.
      The
      Holder shall have no voting rights as the holder of this Note, except as
      required by law. 

     

    (11)
      COVENANTS.
      

     

    (a)
      Rank.
      All
      payments due under this Note (i) shall rank (A) pari
      passu
      with all
      Other Notes, (B) senior to the Subordinated Indebtedness, all Indebtedness
      not
      constituting Permitted Indebtedness and all Permitted Indebtedness expressly
      designated as ranking junior to the Notes, and (C) pari
      passu
      with all
      other Permitted Indebtedness and (ii) shall be secured by a first priority
      security interest in substantially all of the Company’s intellectual property.
      Notwithstanding the foregoing, if Company shall have received notice of the
      existence of any Lien, the existence or priority of which is in violation of
      the
      first sentence of this Section 11(a), Company shall have ten (10) days after
      the
      receipt of such notice to remove such Lien (or obtain the agreement of the
      holder of such Lien that such Lien ranks in priority in accordance with the
      first sentence of this Section 11(a)).

    

    (b)
      Incurrence
      of Indebtedness.
      Until
      this Note has been converted, redeemed or otherwise satisfied in accordance
      with
      its terms (other than in respect of contingent indemnification obligations
      in
      respect of which no claim has been asserted), the Company shall not, and the
      Company shall not permit any of its Subsidiaries to, directly or indirectly,
      incur or guarantee, assume or suffer to exist any Indebtedness, other than
      (i)
      the Indebtedness evidenced by this Note and the Other Notes and (ii) Permitted
      Indebtedness; provided, that prior to the incurrence of such Permitted
      Indebtedness, the Company or such Subsidiary, as applicable, shall deliver
      to
      the Collateral Agent a certificate setting out the basis of the calculation
      of
      the amount of Permitted Indebtedness, together with the opinion of an
      independent expert as to any production capacity assumptions used in such
      calculation.

    

    (c)
      Existence
      of Liens.
      Until
      this Note has been converted, redeemed or otherwise satisfied in accordance
      with
      its terms (other than in respect of contingent indemnification obligations
      in
      respect of which no claim has been asserted), the Company shall not, and the
      Company shall not permit any of its Subsidiaries to, create,
      incur, assume or suffer to exist any Lien upon or in respect of any of its
      intellectual property, whether now owned or hereafter acquired; file or suffer
      to exist under the Uniform Commercial Code or any similar law or statute of
      any
      jurisdiction, a financing statement (or the equivalent thereof) that names
      it or
      any of its Subsidiaries as debtor; sign or suffer to exist any security
      agreement authorizing any secured party thereunder to file such financing
      statement (or the equivalent thereof); sell any of its property or assets
      subject to an understanding or agreement, contingent or otherwise, to repurchase
      such property or assets (including sales of accounts) with recourse to it or
      any
      of its Subsidiaries or assign or otherwise transfer, or permit any of its
      Subsidiaries to assign or otherwise transfer, any account or other right to
      receive income; other than, as to all of the above, Permitted Liens.
      Notwithstanding the foregoing, if Company shall have received notice of the
      existence of any Lien, the existence of which is in violation of the first
      sentence of this Section 11(c), Company shall have ten (10) days after the
      receipt of such notice to effect the removal of such Lien.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (d)
      Restricted
      Payments.
      The
      Company shall not, and the Company shall not permit any of its Subsidiaries
      to,
      directly or indirectly, redeem, defease, repurchase, repay or make any payments
      in respect of, by the payment of cash or cash equivalents (in whole or in part,
      whether by way of open market purchases, tender offers, private transactions
      or
      otherwise), all or any portion of any Indebtedness (other than Indebtedness
      evidenced by the Other Notes or Permitted Indebtedness, the payment of which
      shall not be restricted by the provisions of this Note, the Security Documents,
      the Warrant, the Securities Purchase Agreement or the Registration Rights
      Agreement), whether by way of payment in respect of principal of (or premium,
      if
      any) or interest on such Indebtedness, if at the time such payment is due or
      is
      otherwise made, or, after giving effect to such payment, an event constituting,
      or that with the passage of time and without being cured would constitute,
      an
      Event of Default has occurred or would occur and is, or would be, continuing;
      provided that notwithstanding the foregoing, no principal (or any portion
      thereof) of any Subordinated Indebtedness may be paid (whether upon maturity,
      redemption, acceleration or otherwise) so long as this Note is outstanding
      and
      for at least 91 days thereafter.

    

    (e)
      Restriction
      on Redemption and Cash Dividends.
      Until
      this Note has been converted, redeemed or otherwise satisfied in accordance
      with
      its terms (other than in respect of contingent indemnification obligations
      in
      respect of which no claim has been asserted), the Company shall not, nor permit
      any of its Subsidiaries to, directly or indirectly, 

    

    (i) Declare
      or pay any dividend or other distribution, or permit any Subsidiary to declare
      or pay any dividend or other distribution, in each case directly or indirectly,
      on account of any equity of the Company or any Subsidiary, except: 

     

    (A) any
      Subsidiary of the Company may pay dividends or make other distributions to
      the
      Company or any Subsidiary;

     

    (B) the
      Company or any Subsidiary may pay dividends in the form of common stock or
      preference stock otherwise permitted to be issued hereunder (but in no event
      in
      the form of preference stock requiring redeemption prior to the Maturity Date);
      and

     

    (C) the
      Company or any Subsidiary may pay cash dividends on any preference stock
      included within the limits for Subordinated Indebtedness in the definition
      of
      Permitted Indebtedness below.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (ii) Make
      any
      repurchase, redemption (other than redemption of the Notes in accordance with
      the terms hereof), retirement, defeasance, sinking fund or similar payment,
      purchase or other acquisition for value, direct or indirect, of any equity
      of
      the Company or any direct or indirect parent of the Company, now or hereafter
      outstanding or make any payment to retire, or to obtain the surrender of, any
      outstanding warrants, options or other rights for the purchase or acquisition
      of
      shares of any class of equity of the Company, now or hereafter outstanding,
      

     

    (iii) Return
      any equity to any shareholders or other equity holders of the Company or any
      of
      its Subsidiaries, or make any other distribution of property, assets, equity,
      warrants, rights, options, obligations or securities thereto as such (other
      than
      as permitted hereunder or, in the case of such distribution of property or
      assets, to the extent not otherwise prohibited hereunder); 

     

    (iv) Pay
      any
      management fees or any other fees or expenses (including the reimbursement
      thereof by the Company) pursuant to any management, consulting or other services
      agreement to any of the shareholders or other equity holders of the Company;
      or

     

    (v) Directly
      or indirectly make or commit to make any optional prepayment of, or otherwise
      repurchase any Indebtedness that is subordinated in right of payment to the
      Notes, including without limitation, any Subordinated Indebtedness.

     

    (f)
      Preservation
      of Existence, Etc.
      Until
      this Note has been converted, redeemed or otherwise satisfied in accordance
      with
      its terms (other than in respect of contingent indemnification obligations
      in
      respect of which no claim has been asserted), the Company shall maintain and
      preserve, and cause each of its Subsidiaries to maintain and preserve, its
      existence, rights and privileges, and become or remain, and cause each of its
      Subsidiaries to become or remain, duly qualified and in good standing in each
      jurisdiction in which the character of the properties owned or leased by it
      or
      in which the transaction of its business makes such qualification necessary,
      where the failure to qualify or be in good standing could reasonably be expected
      to have a Material Adverse Effect. Notwithstanding anything to the contrary
      set
      forth in this Note, without the consent of any Holder, a Subsidiary may be
      dissolved by merger into the Company, or dissolved; provided that all assets
      thereof shall theretofore have been transferred to the Company. 

    

    (g)
      Keeping
      of Records and Books of Account.
      Until
      this Note has been converted, redeemed or otherwise satisfied in accordance
      with
      its terms (other than in respect of contingent indemnification obligations
      in
      respect of which no claim has been asserted), the Company shall keep, and cause
      each of its Subsidiaries to keep, adequate records and books of account, with
      complete entries made to permit the preparation of financial statements in
      accordance with GAAP.

    

    (h)
      Type
      of Business.
      Until
      this Note has been converted, redeemed or otherwise satisfied in accordance
      with
      its terms (other than in respect of contingent indemnification obligations
      in
      respect of which no claim has been asserted), the Company shall not, and shall
      not permit any of its Subsidiaries to, engage in any business, other than the
      businesses of the Company and/or such Subsidiary on the Closing Date and any
      business reasonably related, similar, ancillary or complementary to the business
      in which the Company or the Subsidiaries of the Company are engaged on the
      Closing Date;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (i)
      Loans,
      Advances and Investments.
      Until
      this Note has been converted, redeemed or otherwise satisfied in accordance
      with
      its terms (other than in respect of contingent indemnification obligations
      in
      respect of which no claim has been asserted), the Company shall not, and shall
      not permit any of its Subsidiaries to, make, directly or indirectly, any loans
      or advance money or property to any person, or invest in (by capital
      contribution, dividend or otherwise) or purchase or repurchase the Equity
      Interest or Indebtedness or all or a substantial part of the assets or property
      of any person, or form or acquire any Subsidiaries, or agree to do any of the
      foregoing, or permit any Subsidiary to do any of the foregoing,
      except:

    (vi) any
      investment in cash or Cash Equivalents; and

     

    (vii) dividends,
      redemptions, repurchases and other distributions permitted
      hereunder.

     

    (j)
      Transactions
      with Affiliates.
      Except
      for Exempted Issuances, until this Note has been converted, redeemed or
      otherwise satisfied in accordance with its terms (other than in respect of
      contingent indemnification obligations in respect of which no claim has been
      asserted), the Company shall not, and shall not permit any of its Subsidiaries
      to, enter into, renew, extend or be a party to, any transaction or series of
      related transactions (including, without limitation, the purchase, sale, lease,
      transfer or exchange of property or assets of any kind or the rendering of
      services of any kind) with any Affiliate, except to the extent necessary or
      desirable for the prudent operation of its business and for fair consideration
      and on terms no less favorable to it than would be obtainable in a comparable
      arm's length transaction with a Person that is not an Affiliate thereof;
      provided that, (A) if each party to such transaction is the Company, then the
      consideration and terms may be less favorable to one of them to the extent
      it is
      more favorable to the other, provided that such other entity is Solvent (as
      defined in the Securities Purchase Agreement) at the time of the transaction
      or
      (B) if a party to such transaction is the Company and the other is a Subsidiary
      or Affiliate, the consideration and terms may be less favorable to such
      Subsidiary or Affiliate.

    

    (k)
      Environmental.
      Until
      this Note has been converted, redeemed or otherwise satisfied in accordance
      with
      its terms (other than in respect of contingent indemnification obligations
      in
      respect of which no claim has been asserted), the Company shall not, and shall
      not permit any of its Subsidiaries to, permit the use, handling, generation,
      storage, treatment, release or disposal of Hazardous Materials (as defined
      in
      the Securities Purchase Agreement) at any property owned or leased by it or
      any
      of its Subsidiaries, except in compliance with Environmental Laws (as defined
      in
      the Securities Purchase Agreement), so long as such use, handling, generation,
      storage, treatment, release or disposal of Hazardous Materials could not
      reasonably be expected to result in Material Adverse Effect.

    

    (l)
      Compliance
      with Laws.
      Until
      this Note has been converted, redeemed or otherwise satisfied in accordance
      with
      its terms (other than in respect of contingent indemnification obligations
      in
      respect of which no claim has been asserted), the Company shall comply, and
      cause each of its Subsidiaries to comply, with all applicable laws, rules,
      regulations, judgments and orders (including, without limitation, all
      Environmental Laws) in each case material to the conduct of its business and
      operations, except where the failure to so comply could not reasonably be
      expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    (12)
      TRANSFER.
      This
      Note may be offered, sold, assigned or transferred by the Holder without the
      consent of the Company, provided that Holder and/or assignee give Company
      written notice of such assignment within ten (10) Business Days after the
      consummation of such assignment.

     

    (13)
      REISSUANCE OF THIS NOTE.

     

    (a)
      Transfer.
      If this
      Note is to be transferred, the Holder shall surrender this Note to the Company,
      whereupon the Company will forthwith issue and deliver upon the order of the
      Holder a new Note (in accordance with Section 13(d)), registered as the Holder
      may request, representing the outstanding Principal being transferred by the
      Holder and, if less then the entire outstanding Principal is being transferred,
      a new Note (in accordance with Section 13(d)) to the Holder representing the
      outstanding Principal not being transferred. 

    

    (b)
      Lost,
      Stolen or Mutilated Note.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Note, and, in the case of loss,
      theft or destruction, of any indemnification undertaking by the Holder to the
      Company in customary form and, in the case of mutilation, upon surrender and
      cancellation of this Note, the Company shall execute and deliver to the Holder
      a
      new Note (in accordance with Section 13(d)) representing the outstanding
      Principal.

    

    (c)
      Note
      Exchangeable for Different Denominations.
      This
      Note is exchangeable, upon the surrender hereof by the Holder at the principal
      office of the Company, for a new Note or Notes (in accordance with Section
      13(d)
      and in principal amounts of at least $1,000) representing in the aggregate
      the
      outstanding Principal of this Note, and each such new Note will represent such
      portion of such outstanding Principal as is designated by the Holder at the
      time
      of such surrender.

    

    (d)
      Issuance
      of New Notes.
      Whenever the Company is required to issue a new Note pursuant to the terms
      of
      this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall
      represent, as indicated on the face of such new Note, the Principal remaining
      outstanding (or in the case of a new Note being issued pursuant to Section
      13(a)
      or Section 13(c), the principal designated by the Holder which, when added
      to
      the principal represented by the other new Notes issued in connection with
      such
      issuance, does not exceed the Principal remaining outstanding under this Note
      immediately prior to such issuance of new Notes), (iii) shall have an issuance
      date, as indicated on the face of such new Note, which is the same as the
      Issuance Date of this Note, (iv) shall have the same rights and conditions
      as
      this Note, and (v) shall represent accrued and unpaid Interest and Late Charges
      on the Principal and Interest of this Note, if any, from the Interest
      Commencement Date.

    

    (14)
      REMEDIES,
      CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
      RELIEF.
      The
      remedies provided in this Note shall be cumulative and in addition to all other
      remedies available under this Note and any of the other Transaction Documents
      at
      law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the Holder's right to pursue
      actual and consequential damages for any failure by the Company to comply with
      the terms of this Note. Amounts set forth or provided for herein in respect
      of
      payments, conversion and the like (and the computation thereof) shall be the
      amounts to be received by the Holder and shall not, except as expressly provided
      herein, be subject to any other obligation of the Company (or the performance
      thereof). The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the Holder shall be entitled,
      in
      addition to all other available remedies, to an injunction restraining any
      breach, without the necessity of showing economic loss and without any bond
      or
      other security being required.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (15)
      PAYMENT
      OF COLLECTION, ENFORCEMENT AND OTHER COSTS.
      If (a)
      this Note is placed in the hands of an attorney for collection or enforcement
      or
      is collected or enforced through any legal proceeding or the Holder otherwise
      takes action to collect amounts due under this Note or to enforce the provisions
      of this Note or (b) there occurs any bankruptcy, reorganization, receivership
      of
      the Company or other proceedings affecting Company creditors' rights and
      involving a claim under this Note, then the Company shall pay the reasonable
      costs incurred by the Holder for such collection, enforcement or action or
      in
      connection with such bankruptcy, reorganization, receivership or other
      proceeding, including, but not limited to, reasonable attorneys' and financial
      advisory fees and disbursements. 

     

    (16)
      CONSTRUCTION;
      HEADINGS.
      This
      Note shall be deemed to be jointly drafted by the Company and the Holder and
      shall not be construed against any person as the drafter hereof. The headings
      of
      this Note are for convenience of reference and shall not form part of, or affect
      the interpretation of, this Note.

     

    (17)
      FAILURE
      OR INDULGENCE NOT WAIVER.
      No
      failure or delay on the part of the Holder in the exercise of any power, right
      or privilege hereunder shall operate as a waiver thereof, nor shall any single
      or partial exercise of any such power, right or privilege preclude other or
      further exercise thereof or of any other right, power or privilege.

     

    (18)
      NOTICES;
      PAYMENTS.

     

    (a)
      Notices.
      Whenever notice is required to be given under this Note, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Securities Purchase Agreement. 

    

    (b)
      Payments.
      Whenever any payment of cash is to be made by the Company to any Person pursuant
      to this Note, such payment shall be made in lawful money of the United States
      of
      America by a check drawn on the account of the Company or any payment agent
      located in the state of New York engaged by the Company for purposes of making
      payments under this Note and the Other Notes and sent via overnight courier
      service to such Person at such address as previously provided to the Company
      in
      writing (which address, in the case of each of the Purchasers, shall initially
      be as set forth on the Schedule of Buyers attached to the Securities Purchase
      Agreement); provided that the Holder of Note(s) may elect to receive a payment
      of cash via wire transfer of immediately available funds by providing the
      Company with prior written notice setting out such request and the Holder's
      wire
      transfer instructions. Whenever any amount expressed to be due by the terms
      of
      this Note is due on any day which is not a Business Day, the same shall instead
      be due on the next succeeding day which is a Business Day and, in the case
      of
      any Interest Date which is not the date on which this Note is paid in full,
      the
      extension of the due date thereof shall not be taken into account for purposes
      of determining the amount of Interest due on such date. Any amount of Principal
      or other amounts due under the Transaction Documents, other than Interest,
      which
      is not paid when due shall result in a late charge being incurred and payable
      by
      the Company in an amount equal to interest on such amount at the rate of five
      percent (5.0%) per annum from the date such amount was due until the same is
      paid in full ("Late
      Charge").

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    (19)
      CANCELLATION.
      After
      all Principal, accrued Interest and other amounts at any time owed on this
      Note
      have been paid in full (other than contingent indemnification obligations in
      respect of which no claim has been asserted) or all remaining amounts
      outstanding hereunder are converted to Shares, this Note shall automatically
      be
      deemed canceled, shall be surrendered to the Company for cancellation and shall
      not be reissued.

     

    (20)
      WAIVER
      OF NOTICE.
      Except
      as otherwise expressly set forth herein, to the extent permitted by law, the
      Company hereby waives demand, notice, protest and all other demands and notices
      in connection with the delivery, acceptance, performance, default or enforcement
      of this Note and the Securities Purchase Agreement.

     

    (21)
      GOVERNING
      LAW; JURISDICTION;
      SEVERABILITY; JURY TRIAL.
      This
      Note shall be construed and enforced in accordance with, and all questions
      concerning the construction, validity, interpretation and performance of this
      Note shall be governed by, the internal laws of the State of New York, without
      giving effect to any choice of law or conflict of law provision or rule (whether
      of the State of New York or any other jurisdictions) that would cause the
      application of the laws of any jurisdictions other than the State of New York.
      The Company hereby irrevocably submits to the exclusive jurisdiction of the
      state and federal courts sitting in The City of New York, Borough of Manhattan,
      for the adjudication of any dispute hereunder or in connection herewith or
      with
      any transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is brought in an inconvenient forum or that
      the
      venue of such suit, action or proceeding is improper. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any manner
      permitted by law. In the event that any provision of this Note is invalid or
      unenforceable under any applicable statute or rule of law, then such provision
      shall be deemed inoperative to the extent that it may conflict therewith and
      shall be deemed modified to conform with such statute or rule of law. Any such
      provision which may prove invalid or unenforceable under any law shall not
      affect the validity or enforceability of any other provision of this Note.
      Nothing contained herein shall be deemed or operate to preclude the Holder
      from
      bringing suit or taking other legal action against the Company in any other
      jurisdiction to collect on the Company's obligations to the Holder, to realize
      on any collateral or any other security for such obligations, or to enforce
      a
      judgment or other court ruling in favor of the Holder. THE
      COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED
      HEREBY.

     

    (22)
      CERTAIN
      DEFINITIONS.
      For
      purposes of this Note, the following terms shall have the following
      meanings:

     

    (a)
      "Business
      Day"
      means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

    

    (b)
      "Cash
      Equivalents"
      means
      (i) securities issued or directly and fully guaranteed or insured by the United
      States or any agency or instrumentality thereof (provided that the full faith
      and credit of the United States is pledged in support thereof) having maturities
      of not more than one year from the date of acquisition, (ii) time deposits
      and
      certificates of deposit of any commercial bank, or which is the principal
      banking subsidiary of a bank holding company organized under the laws of the
      United States, and any State thereof, the District of Columbia or any foreign
      jurisdiction, having capital, surplus and undivided profits aggregating in
      excess of $500,000,000, with maturities of not more than one year from the
      date
      of acquisition by such Person, (iii) repurchase obligations with a term of
      not
      more than ninety (90) days for underlying securities of the types described
      in
      clause (i) above entered into with any bank meeting the qualifications specified
      in clause (ii) above, (iv) commercial paper issued by any Person incorporated
      in
      the United States rated at least A-1 or the equivalent thereof by Standard
&
Poors Rating Services or at least P-1 or the equivalent there of by Moody's
      Investor Service, Inc. and in each case maturing not more than one year after
      the date of acquisition by such Person, (v) investments in money market funds
      substantially all of whose assets are comprised of securities of the types
      described in clauses (i) through (iv) above, or (vi) with respect to investments
      denominated in the currency of the Federative Republic of Brazil, other
      investments considered as “cash equivalents” under GAAP.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    (c)
      "Calendar
      Quarter"
      means
      each of: the period beginning on and including January 1 and ending on and
      including March 31; the period beginning on and including April 1 and ending
      on
      and including June 30; the period beginning on and including July 1 and ending
      on and including September 30; and the period beginning on and including October
      1 and ending on and including December 31.

    

    (d)
      "Capitalized
      Lease"
      means,
      in respect of any Person, any lease of real or personal property by such Person
      as lessee which is (a) required under GAAP to be capitalized on the balance
      sheet of such Person or (b) a transaction of a type commonly known as a
      "synthetic lease" (i.e., a lease transaction that is treated as an operating
      lease for accounting purposes but in respect of which payments of rent are
      intended to be treated as payments of principal and interest on a loan for
      federal income tax purposes).

    

    (e)
      "Capitalized
      Lease Obligations"
      means,
      in respect of any Person, obligations of such Person and its Subsidiaries under
      Capitalized Leases, and, for purposes hereof, the amount of any such obligation
      shall be the capitalized amount thereof determined in accordance with
      GAAP.

    

    (f)
      "Closing
      Date"
      shall
      have the meaning set forth in the Securities Purchase Agreement, which date
      is
      the date the Company initially issued Notes pursuant to the terms of the
      Securities Purchase Agreement.

    

    (g)
      "Contingent
      Obligation"
      means,
      in respect of any Person, any obligation of such Person guaranteeing or intended
      to guarantee any Indebtedness, leases, dividends or other obligations ("primary
      obligations") of any other Person (the "primary obligor") in any manner, whether
      directly or indirectly, including, without limitation, (i) the direct or
      indirect guaranty, endorsement (other than for collection or deposit in the
      ordinary course of business), co-making, discounting with recourse or sale
      with
      recourse by such Person of the obligation of a primary obligor, (ii) the
      obligation to make take-or-pay or similar payments, if required, regardless
      of
      nonperformance by any other party or parties to an agreement, (iii) any
      obligation of such Person, whether or not contingent, (w) to purchase any such
      primary obligation or any property constituting direct or indirect security
      therefor, (x) to advance or supply funds (A) for the purchase or payment of
      any
      such primary obligation or (B) to maintain working capital or equity capital
      of
      the primary obligor or otherwise to maintain the net worth or solvency of the
      primary obligor, (y) to purchase property, assets, securities or services
      primarily for the purpose of assuring the owner of any such primary obligation
      of the ability of the primary obligor to make payment of such primary obligation
      or (z) otherwise to assure or hold harmless the holder of such primary
      obligation against loss in respect thereof; provided that, the term "Contingent
      Obligation" shall not include any product warranties extended in the ordinary
      course of business. The amount of any Contingent Obligation shall be deemed
      to
      be an amount equal to the stated or determinable amount of the primary
      obligation in respect of which such Contingent Obligation is made (or, if less,
      the maximum amount of such primary obligation for which such Person may be
      liable pursuant to the terms of the instrument evidencing such Contingent
      Obligation) or, if not stated or determinable, the maximum reasonably
      anticipated liability with respect thereto (assuming such Person is required
      to
      perform thereunder), as determined by such Person in good faith. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    (h)
      "Convertible
      Securities"
      means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for Shares.

    

    (i)
      "Default"
      means
      any event that with notice or lapse of time, or both, would give rise to an
      Event of Default.

    

    (j)
      "Eligible
      Market"
      means
      the OTC Bulletin Board, The New York Stock Exchange, Inc., the American Stock
      Exchange, The NASDAQ Global Select Market, The NASDAQ Global Market or The
      NASDAQ Capital Market.

    

    (k)
      "ERISA"
      means
      the Employee Retirement Income Security Act of 1974, as amended, and any
      successor statute of similar import, and regulations thereunder, in each case,
      as in effect from time to time. References to sections of ERISA shall be
      construed also to refer to any successor sections.

    

    (l)
      "ERISA
      Affiliate"
      means
      (a) any Person subject to ERISA whose employees are treated as employed by
      the
      same employer as the employees of the Company or any of its Subsidiaries under
      Internal Revenue Code Section 414(b), (b) any trade or business subject to
      ERISA
      whose employees are treated as employed by the same employer as the employees
      of
      the Company or any of its Subsidiaries under Internal Revenue Code Section
      414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of
      the
      Internal Revenue Code, any organization subject to ERISA that is a member of
      an
      affiliated service group of which the Company or any of its Subsidiaries is
      a
      member under Internal Revenue Code Section 414(m), or (d) solely for purposes
      of
      Section 302 of ERISA and Section 412 of the Internal Revenue Code, any Person
      subject to ERISA that is a party to an arrangement with the Company or any
      of
      its Subsidiaries and whose employees are aggregated with the employees of the
      Company or any of its Subsidiaries under Internal Revenue Code Section
      414(o).

    

    (m)
      "Fiscal
      Quarter" means
      each of the fiscal quarters adopted by the Company for financial reporting
      purposes that correspond to the Company's Fiscal
      Year,
      or such
      other fiscal quarter adopted by the Company for financial reporting purposes
      in
      accordance with GAAP.

    

    (n)
      "Fiscal
      Year"
      means
      each of the fiscal years that ends on December 31, or such other fiscal year
      adopted by the Company for financial reporting purposes in accordance with
      GAAP.

    

    (o)
      "Fundamental
      Transaction"
      means
      that the Company shall, directly or indirectly, in one or more related
      transactions, after the date hereof (i) be dissolved or liquidated or be the
      subject of a plan of dissolution or liquidation adopted by its stockholders;
      (ii) consolidate or merge with or into (whether or not the Company is the
      surviving corporation) another Person or Persons; (iii) sell, assign, transfer,
      convey or otherwise dispose of all or substantially all of the properties or
      assets of the Company to another Person; (iv) allow another Person to make
      a
      purchase, tender or exchange offer that is accepted by the holders of more
      than
      the 50% of the outstanding shares of Voting Stock (not including any shares
      of
      Voting Stock held by the Person or Persons making or party to, or associated
      or
      affiliated with the Persons making or party to, such purchase, tender or
      exchange offer); (v) consummate a stock purchase agreement or other business
      combination (including, without limitation, a reorganization, recapitalization,
      spin-off or scheme of arrangement) with another Person whereby such other Person
      acquires more than 50% of the outstanding shares of Voting Stock (not including
      any shares of Voting Stock held by the other Person or other Persons making
      or
      party to, or associated or affiliated with the other Persons making or party
      to,
      such stock purchase agreement or other business combination); (vi) any "person"
      or "group" (as these terms are used for purposes of Sections 13(d) and 14(d)
      of
      the Exchange Act) is or shall become the "beneficial owner" (as defined in
      Rule
      13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate
      ordinary voting power represented by issued and outstanding Shares;
      (vii)Reserved ; or (viii) fails to own, directly or indirectly, one hundred
      (100%) percent of the voting power (directly or indirectly) of the total
      outstanding voting stock of each of the Subsidiaries other than (A) pursuant
      to
      a sale of the voting stock of any Subsidiary permitted hereunder, (B) pursuant
      to a transfer of such voting stock to a Guarantor permitted herein, or (C)
      in
      the case of a Subsidiary is acquired after the date hereof pursuant to a
      Permitted Acquisition where less than one hundred (100%) percent of the voting
      power of the total outstanding voting stock of such Subsidiary is acquired.
      Notwithstanding anything to the contrary, the Financing will not be considered
      to be a Fundamental Transaction.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    (p)
      "GAAP"
      means
      the generally accepted accounting principles of the United States of America,
      consistently applied.

    

    (q)
      "Governmental
      Authority"
      means
      any nation or government, any foreign, Federal, State, city, town, municipality,
      county, local or other political subdivision thereof or thereto and any
      department, commission, board, bureau, instrumentality, agency or other entity
      exercising executive, legislative, judicial, taxing, regulatory or
      administrative powers or functions of or pertaining to government.

    

    (r)
      "Hedging
      Agreement"
      means
      any interest rate, foreign currency, commodity or equity swap, collar, cap,
      floor or forward rate agreement, or other agreement or arrangement designed
      to
      protect against fluctuations in interest rates or currency, commodity (other
      than in the normal course of business) or equity values (including, without
      limitation, any option in respect of any of the foregoing and any combination
      of
      the foregoing agreements or arrangements), and any confirmation executed in
      connection with any such agreement or arrangement.

    

      
      (s)
      "Indebtedness"
      means,
      in respect of any Person, without duplication, (i) all indebtedness of such
      Person for borrowed money; (ii) all obligations of such Person for the deferred
      purchase price of property or services (provided that neither trade payables
      or
      other accounts payable incurred in the ordinary course of such Person's business
      and not outstanding for more than ninety (90) days after such payable was due
      under its original terms nor such trade payables, if outstanding longer, that
      are being contested or disputed by such Person in good faith in the ordinary
      course of business shall be deemed to constitute Indebtedness) and including
      any
      earn-outs or similar arrangements in connection with any acquisition of
      businesses by such Person, whether contingent or otherwise subject to any
      conditions or limitations; (iii) all obligations of such Person evidenced by
      bonds, debentures, notes or other similar instruments or upon which interest
      payments are customarily made; (iv) all reimbursement, payment or other
      obligations and liabilities of such Person created or arising under any
      conditional sales or other title retention agreement in respect of property
      used
      and/or acquired by such Person, even though the rights and remedies of the
      lessor, seller and/or lender thereunder may be limited to repossession or sale
      of such property and all obligations and liabilities arising in connection
      with
      factoring arrangements or other arrangements in respect of the sale of
      receivables; (v) that portion of Capitalized Lease Obligations of such Person
      that is (or is required to be) classified as a liability on its balance sheet
      in
      conformity with GAAP; (vi) all obligations and liabilities, contingent or
      otherwise, of such Person, in respect of letters of credit, acceptances and
      similar facilities; (vii) all net obligations and liabilities, of such Person
      under Hedging Agreements; (viii) all Contingent Obligations; (ix) liabilities
      incurred under Title IV of ERISA in respect of any plan (other than a
      Multiemployer Plan) covered by Title IV of ERISA and maintained for employees
      of
      such Person or any of its ERISA Affiliates; (x) withdrawal liability incurred
      under ERISA by such Person or any of its ERISA Affiliates in respect of any
      Multiemployer Plan; and (xi) all obligations referred to in clauses (i) through
      (x) of this definition of another Person secured by (or for which the holder
      of
      such Indebtedness has an existing right, contingent or otherwise, to be secured
      by) a Lien upon property owned by such Person, even though such Person has
      not
      assumed or become liable for the payment of such Indebtedness. The Indebtedness
      of any Person shall include the Indebtedness of any partnership of or joint
      venture in which such Person is a general partner or a joint venturer to the
      extent such Person is liable therefor as a result of such Person's ownership
      interest in such entity, except to the extent the terms of such Indebtedness
      expressly provide that such Person is not liable therefor. No Management
      Incentive Plan shall be "Indebtedness"
      for
      purposes hereof. For purpose hereof “Management
      Incentive Plan”
means
      any management incentive plan adopted or to be adopted by the Board of Directors
      or the Compensation Committee of the Board of Directors, pursuant to which
      each
      of the identified officers therein will receive an annual performance-based
      bonus for each fiscal year within the employment period set forth in such
      officer’s employment agreement with such bonus being tied to achievement of the
      annual bonus targets to be set by the Board of Directors or the Compensation
      Committee of the Board of Directors. 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    (t)
      "Insolvency
      Proceeding"
      means
      (a) any proceeding by or against any Person seeking to adjudicate it a bankrupt
      or insolvent, or seeking dissolution, liquidation, winding up, reorganization,
      administration, arrangement, adjustment, protection, relief or composition
      of it
      or its debts under any provision of the Bankruptcy Code, or seeking the entry
      of
      an order for relief or the appointment of a receiver, administrative receiver,
      administrator, manager, examiner, trustee, custodian, liquidator, sequestrator
      or other similar official for any such Person or for any substantial part of
      its
      property under any provision of the Bankruptcy Code, or (b) the appointment
      of a
      receiver, administrative receiver, administrator, manager, examiner, trustee,
      liquidator, custodian, sequestrator or similar official for such Person or
      a
      substantial part of its assets shall occur under any provisions of the
      Bankruptcy Code.

    

    (u)
      [intentionally left blank]

     

    (v)
      "Interest Rate"
      means
      8% per annum. 

    

    (w)
      "Lien"
      means
      any mortgage, deed of trust, deed to secure debt or similar instrument, pledge,
      lien (statutory or otherwise), security interest, charge, attachment, assignment
      or other encumbrance or security or preferential arrangement of any nature,
      including, without limitation, any conditional sale or title retention
      arrangement, any Capitalized Lease and any assignment, deposit arrangement
      or
      financing lease intended as, or having the effect of, security.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    (x)
      “Issuance
      Date”
means
      the date hereof. 

    

    (y)
      "Material
      Contract"
      means
      (i) each contract or agreement to which the Company or any of their Subsidiaries
      is a party involving aggregate consideration payable to or by such Person of
      $100,000 or
      more
      in any twelve month period and (iii) all other contracts or agreements material
      to the business, operations, condition (financial or otherwise), performance,
      or
      properties of the Company and its Subsidiaries (taken as a whole).

    

    (z)
      "Multiemployer
      Plan"
      means a
      "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the
      Company or any ERISA Affiliates has contributed to, or has been obligated to
      contribute.

    

    (aa)
      "Options"
      means
      any rights, warrants or options to subscribe for or purchase Shares or
      Convertible Securities.

    

    (bb)
      "Parent
      Entity"
      of a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on an Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

    

    (cc)
      "Permitted
      Indebtedness"
      means:

    

    (i) any
      Indebtedness of the Company or any Subsidiary listed on Schedule
      21(cc)
      hereto;

     

    (ii) purchase
      money Indebtedness of the Company or any Subsidiary (including purchase money
      Capitalized Leases and including all reimbursement, payment or other obligations
      and liabilities of the Company or such Subsidiary created or arising under
      any
      conditional sales or other title retention agreement in respect of property
      used
      and/or acquired by the Company or such Subsidiary, even though the rights and
      remedies of the lessor, seller and/or lender thereunder may be limited to
      repossession or sale of such property) arising after the date hereof to the
      extent secured by purchase money security interests in equipment (including
      Capitalized Leases) and purchase money mortgages, deeds of trust, deeds to
      secure debt or similar instruments on Real Property so long as such security
      interests and mortgages, deed of trusts, deeds to secure debt or similar
      instruments do not apply to any property of the Company or any Subsidiary other
      than the equipment or Real Property so acquired and other equipment or Real
      Property financed by such lender to the extent that such financing constitutes
      Permitted Indebtedness and is evidenced by an agreement that includes customary
      provisions requiring cross-collateralization thereof, and the Indebtedness
      secured thereby does not exceed the cost of the equipment or Real Property
      so
      acquired and the cost of other equipment or Real Property financed by such
      lender to the extent that such financing constitutes Permitted Indebtedness
      and
      is evidenced by an agreement that includes customary provisions requiring
      cross-collateralization thereof, as the case may be;

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (iii) Indebtedness
      under a line of credit with a bank or financial institutional secured by
      substantially all of the assets of the Company other than the Company’s
      intellectual property;

     

    (iv) Indebtedness
      of the Company and the Guarantors arising after the date hereof issued in
      exchange for, or the proceeds of which are used to refinance, replace or
      substitute for all or any portion of the Indebtedness permitted under clause
      (iii) of this definition (the "Refinancing
      Indebtedness");
      

     

    (v) In
      addition to all other Permitted Indebtedness, Subordinated Indebtedness or
      issuance of preference shares (or preferred stock, as applicable) of the Company
      or any Subsidiary arising after the date hereof, provided that (w) the
      Collateral Agent shall have received not less than ten (10) days prior written
      notice of the intention of the Company or such Subsidiary to incur such
      Indebtedness or issue such preference shares (or preferred stock, as
      applicable), which notice shall set forth in reasonable detail satisfactory
      to
      the Holders the amount of such Indebtedness or issuance of preference shares
      (or
      preferred stock, as applicable), the person or persons to whom such Indebtedness
      or preference shares (or preferred stock, as applicable) will be owed, the
      interest or dividend rate, the schedule of repayments and maturity date or
      redemption with respect thereto and such other information as the Holders may
      request with respect thereto, (y) the Holders shall have received true, correct
      and complete copies of all agreements, documents and instruments evidencing
      or
      otherwise related to such Indebtedness or preference shares (or preferred stock,
      as applicable) and (z) as of the date of incurring such Indebtedness and after
      giving effect thereto, no Default or Event of Default shall exist or have
      occurred; 

     

    (vi) Indebtedness
      consisting of liabilities incurred under Title IV of ERISA in respect of any
      plan (other than a Multiemployer Plan) covered by Title IV of ERISA and
      maintained for employees of such Person or any of its ERISA Affiliates and
      withdrawal liability incurred under ERISA by such Person or any of its ERISA
      Affiliates in respect of any Multiemployer Plan to the extent that in each
      case
      such Indebtedness does not otherwise constitute or give rise to an Event of
      Default; 

     

    (vii) incentive
      bonus plans and other employee benefit plans of the Company and/or its
      Subsidiaries to the extent that obligations under such plans constitute
      "Indebtedness"; and

     

    (viii) trade
      payables or other accounts payable incurred in the ordinary course of the
      Company's or any Subsidiary's business and not outstanding for more than one
      hundred and twenty (120) days after such amount is due by the Company or such
      Subsidiary or, if outstanding longer, that are being contested or disputed
      by
      the Company and/or such Subsidiary in good faith in the ordinary course of
      business.

     

    (ix) Any
      Indebtedness incurred as the result of the Financing. 

     

    (dd)
      "Permitted
      Liens"
      means:

     

    (i) Liens
      securing the obligations under the Notes;

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (ii) Liens
      securing the payment of taxes, assessments or other governmental charges or
      levies either not yet overdue or the validity of which are being contested
      in
      good faith by appropriate proceedings diligently pursued and available to the
      Company or any other Subsidiary of the Company, as the case may be and in
      respect of which adequate reserves have been set aside on its
      books;

     

    (iii) Liens
      constituting purchase money security interests in equipment (including
      Capitalized Leases) and purchase money mortgages, deeds of trust, deeds to
      secure debt or similar instruments on real property to secure Indebtedness
      permitted under clause (ii) of the definition of the term "Permitted
      Indebtedness";

     

    (iv) Liens
      imposed by law, such as carriers', warehousemen's, mechanics', materialmen's
      and
      other similar Liens arising in the ordinary course of business and securing
      obligations (other than Indebtedness for borrowed money) that are not overdue
      by
      more than thirty (30) days or are being contested in good faith and by
      appropriate proceedings promptly initiated and diligently conducted; provided
      that they are subordinate to the Collateral Agent's Liens on the Collateral
      (except to the extent of customary fees payable in respect of such obligations),
      and a reserve or other appropriate provision, if any, as shall be required
      by
      GAAP shall have been made therefor;

     

    (v) Liens
      and
      the right of setoff against deposits of cash by the Company or any Subsidiary
      in
      the ordinary course of business with any financial institution at which a
      deposit account of the Company or such Subsidiary is maintained to secure
      obligations of the Company or such Subsidiary to such financial institution
      in
      connection with such deposit account and the cash management services provided
      by such financial institution for which such deposit account is used consistent
      with the current practices of the Company or such Subsidiary as of the date
      hereof; provided that, such Liens are subordinate to the Collateral Agent's
      Liens on the Collateral, except to the extent of customary fees, items returned
      unpaid and overdrafts payable in respect of such obligations; 

     

    (vi) easements,
      zoning restrictions and similar encumbrances on real property owned by the
      Company or any Subsidiary and minor irregularities in the title thereto that
      do
      not (x) secure obligations for the payment of money, or (y) materially impair
      the value of such property or its use by the Company or any Subsidiary in the
      normal conduct of the Company's or such Subsidiary business;

     

    (vii) Any
      Liens
      incurred as result of the Financing. 

     

    (ee)
      "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, any other entity and
      a
      government or any department or agency thereof. 

    

    (ff)
      "Principal
      Market"
      means,
      from time to time, the Eligible Market upon which the Shares are admitted or
      listed and principally trade.

    

    (gg)
      "Real
      Property"
      means
      all now owned and hereafter acquired real property of the Company and each
      Subsidiary, including leasehold interests, together with all buildings,
      structures, and other improvements located thereon and all licenses, easements
      and appurtenances relating thereto, wherever located.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

    (hh)
      "Registration
      Rights Agreement"
      means
      that certain registration rights agreement dated as of the Issuance Date by
      and
      among the Company and the initial holders of the Notes relating to, among other
      things, the registration for resale of the Shares issuable upon conversion
      of
      the Notes and exercise of the Warrants.

    

    (ii)
      "Required
      Holders"
      means
      the holders of Notes representing at least a majority of the aggregate principal
      amount of the Notes then outstanding; provided that any Note that is held by
      an
      Affiliate of the Company shall not be deemed to be outstanding for purposes
      of
      the determination of "Required Holders."

    

    (jj)
      "SEC"
      means
      the United States Securities and Exchange Commission. 

    

    (kk)
      "Securities
      Purchase Agreement"
      means
      that certain Securities Purchase Agreement dated as of the Subscription Date
      by
      and among the Company and the initial holders of the Notes, pursuant to which
      the Company issued the Notes.

    

    (ll)
      "Subordinated
      Indebtedness"
      means
      Indebtedness (secured or unsecured) incurred by the Company and/or its
      Subsidiaries that is made expressly subordinate in right of payment to the
      Indebtedness evidenced by this Note, as reflected in a written agreement
      acceptable to the Holder and approved by the Holder in writing; provided that
      no
      such Indebtedness shall provide at any time for (1) the payment, prepayment,
      repayment, repurchase or defeasance, directly or indirectly, of any principal
      or
      premium, if any, thereon until ninety-one (91) days after the Maturity Date
      or
      later and (2) total cash interest at a rate in excess of eleven percent (11.0%)
      per annum.

    

    (mm)
      "Subscription
      Date"
      means
      August 31, 2007.

    

    (nn)
      "Subsidiary"
      means,
      from time to time, any entity in which the Company directly or indirectly,
      owns
      any of the capital stock or holds an equity or similar interest.

    

      
      (oo) 
      "Successor
      Entity"
      means
      the Person, which may be the Company, formed by, resulting from or surviving
      any
      Fundamental Transaction or the Person with which such Fundamental Transaction
      shall have been made, provided that if such Person is not a publicly traded
      entity whose common stock or equivalent equity security is quoted or listed
      for
      trading on an Eligible Market, Successor Entity shall mean such Person's Parent
      Entity.

    

    (pp)
      "Trading
      Day"
      means
      any day on which the Shares are traded on the Principal Market, or, if the
      Principal Market is not the principal trading market for the Shares, then on
      the
      Eligible Market which is the principal securities exchange or securities market
      on which the Shares are then traded; provided that "Trading Day" shall not
      include any day on which the Shares are scheduled to trade on such exchange
      or
      market for less than 4.5 hours or any day that the Shares is suspended from
      trading during the final hour of trading on such exchange or market (or if
      such
      exchange or market does not designate in advance the closing time of trading
      on
      such exchange or market, then during the hour ending at 4:00:00 p.m., New York
      Time).

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (qq)
      "Voting
      Stock"
      of a
      Person means capital stock of such Person of the class or classes pursuant
      to
      which the holders thereof have the general voting power to elect, or the general
      power to appoint, at least a majority of the board of directors, managers or
      trustees of such Person (irrespective of whether or not at the time capital
      stock of any other class or classes shall have or might have voting power by
      reason of the happening of any contingency).

    

    (rr)
      "Warrants"
      has the
      meaning ascribed to such term in the Securities Purchase Agreement, and shall
      include all warrants issued in exchange therefor or replacement
      thereof.

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Note to be duly executed as of
      the
      Issuance Date set out above.

     

    
      
        	
                GOLDEN
                  AUTUMN HOLDINGS INC.

              
	 
	
                By:

              	
                /s/Charles
                  Fu

              
	 	
                Name:
                  Charles Fu

              
	 	
                Title:
                  President

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