Document:

Unassociated Document

     

    NEITHER
      THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
      HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
      SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR STATE
      LAW
      OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

    
      	
              US$[________]

            	
              May
                30, 2008

            

    

     

    GENESIS
      PHARMACEUTICALS ENTERPRISES, INC.

     

    6%
      CONVERTIBLE NOTES DUE MAY , 2011

     

    FOR
      VALUE
      RECEIVED, Genesis Pharmaceuticals Enterprises, Inc., a Florida corporation
      (the
“Company”), hereby promises to pay to the order of Pope Investments, LLC, a
      Delaware limited liability company, or registered assigns (the “Holder”),
      the
      principal amount of _______ United States dollars (US$_________) on May 30,
      2011
      (“Maturity
      Date”).
      Interest on the outstanding principal balance shall be paid at the rate of
      six
      percent (6%) per annum, in semi-annual installments payable on
      November 30th and May 30th of each year, to the holder of record of this
      Note on the 15th
      day of
      such month, with the first interest payment being due on November 30, 2008.
      Interest shall be computed on the basis of a 360-day year, using the number
      of
      days actually elapsed. This Note is issued pursuant to a Securities Purchase
      Agreement (the “Agreement”)
      dated
      May 30, 2008, by and among the Company, Karmoya International Ltd., a British
      Virgin Islands company, Genesis Jiangbo (Laiyang) Biotech Technologies Co.,
      Ltd., a wholly owned foreign enterprise in the People’s Republic of China, Mr.
      Wubo Cao and the Investors named therein pursuant to which the Company issued
      Notes in the aggregate principal amount of US$30,000,000. The Notes issued
      pursuant to the Agreement which are outstanding at any time are collectively
      referred to as the “Notes.” All terms defined in the Agreement and used in the
      Notes, unless otherwise defined in the Notes, shall have the same meaning in
      the
      Notes as in the Agreement.

     

    Article
      1.

    Covenants
      of the Company

     

    (a) Payment
      of Principal and Interest.
      The
      Company shall pay principal and interest in the amounts and at the times set
      forth in this Note.

     

    (b) Fundamental
      Transaction.
      The
      Company shall not enter into any agreement with respect to Fundamental
      Transaction, as hereinafter defined, without the prior approval of the holders
      of a majority of the principal amount of the Notes.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Article
      2.

    Events
      of Default; Acceleration

     

    (a) Events
      of Default Defined.
“Event
      of Deault”, whenever used herein, means any one or more the following events
      shall have occurred (for any reason whatsoever and whether such happening shall
      be voluntary or involuntary or be affected or come about by operation of law
      pursuant to or in compliance with any judgment, decree, or order of any court
      or
      any order, rule or regulation of any administrative or governmental body) and
      be
      continuing:

     

    (i) if
      failure shall be made in the payment of the principal when and as the same
      shall
      become due; or

     

    (ii) if
      failure shall be made in the payment of interest on the Note when and as the
      same shall become due and such failure shall continue for a period of five
      (5)
      business days after such payment is due; or

     

    (iii) An
      event
      of default shall occur at any time under the terms of any other agreements
      involving borrowed money in excess of One Million Dollars (US$1,000,000) under
      which the Company or any Subsidiary may be obligated as a borrower or guarantor
      and such event of default permits the acceleration of such borrowed money;
      or

     

    (iv) if
      any
      court or agency of the government of the Peoples’ Republic of China shall make a
      final determination that the PRC Agreements (as defined in the November
      Securities Purchase Agreement) are not valid and enforceable agreement and
      such
      determination results if the Company not being able to realize in any material
      respect the benefits intended to be derived from the PRC Agreements and the
      Company is not able to restructure the PRC Agreements or enter into new
      agreement that provide the Company with substantially the benefits contemplated
      by the PRC Agreements; or 

     

    (v) if
      the
      Company shall violate or breach any of the representations, warranties and
      covenants contained in the Notes or the Agreement and such violation or breach
      shall continue for thirty (30) days after written notice of such breach, setting
      forth in reasonable detail the nature of the breach, shall have been received
      by
      the Company from the Holder; or 

     

    (vi) if
      the
      Company or any Significant Subsidiary (which term shall mean any subsidiary
      of
      the Company which would be considered a significant subsidiary, as defined
      in
      Rule 1-02 of Regulation S-X of the SEC and shall include each of the Related
      Companies) shall consent to the appointment of a receiver, trustee or liquidator
      of itself or of a substantial part of its property, or shall admit in writing
      its inability to pay its debts generally as they become due, or shall make
      a
      general assignment for the benefit of creditors, or shall file a voluntary
      petition in bankruptcy, or an answer seeking reorganization in a proceeding
      under any bankruptcy law (as now or hereafter in effect) or an answer admitting
      the material allegations of a petition filed against the Company or any
      Significant Subsidiary, in any such proceeding, or shall by voluntary petition,
      answer or consent, seek relief under the provisions of any other now existing
      or
      future bankruptcy or other similar law providing for the reorganization or
      winding up of corporations, or an arrangement, composition, extension or
      adjustment with its or their creditors, or shall, in a petition in bankruptcy
      filed against it or them be adjudicated a bankrupt, or the Company or any
      Significant Subsidiary or their directors or a majority of its stockholders
      shall vote to dissolve or liquidate the Company or any Significant Subsidiary
      other than a liquidation involving a transfer of assets from a Subsidiary to
      the
      Company or another Subsidiary; or

    
      
        
        

      

      
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    (vii) if
      an
      involuntary petition shall be filed against the Company or any Significant
      Subsidiary seeking relief against the Company or any Significant Subsidiary
      under any now existing or future bankruptcy, insolvency or other similar law
      providing for the reorganization or winding up of corporations, or an
      arrangement, composition, extension or adjustment with its or their creditors,
      and such petition shall not be vacated or set aside within ninety (90) days
      from
      the filing thereof; or

     

    (viii) if
      a
      court of competent jurisdiction shall enter an order, judgment or decree
      appointing, without consent of the Company or any Significant Subsidiary, a
      receiver, trustee or liquidator of the Company or any Significant Subsidiary,
      or
      of all or any substantial part of the property of the Company or any Significant
      Subsidiary, or approving a petition filed against the Company or any Significant
      Subsidiary seeking a reorganization or arrangement of the Company or any
      Significant Subsidiary under the Federal bankruptcy laws or any other applicable
      law or statute of the United States of America or any State thereof, or any
      substantial part of the property of the Company or any Significant Subsidiary
      shall be sequestered; and such order, judgment or decree shall not be vacated
      or
      set aside within ninety (90) days from the date of the entry thereof;
      or

     

    (ix) if,
      under
      the provisions of any law for the relief or aid of debtors, any court of
      competent jurisdiction shall assume custody or control of the Company or any
      Significant Subsidiary or of all or any substantial part of the property of
      the
      Company or any Significant Subsidiary and such custody or control shall not
      be
      terminated within ninety (90) days from the date of assumption of such custody
      or control;

     

    (x) if,
      as of
      August 31, 2008, the Company shall not have increased the number of authorized
      shares of the Common Stock to 900,000,000 shares; or

     

    (xi) if
      the
      Company breaches its obligations under Section 4.20(d) of the Purchase
      Agreement.

     

    (b) Rights
      of Holder upon Default.
      Upon
      the occurrence of an Event of Default, the entire unpaid principal amount of
      this Note, together with interest thereon shall, on written notice to the
      Company given by the Holders of a majority of the principal amount of the Notes
      then outstanding, become and be due and payable without presentment, demand,
      protest or any other notice of any kind, all of which are hereby expressly
      waived. Upon the occurrence and during the continuance of an Event of Default,
      the interest rate on the Note shall be sixteen percent (16%) per annum, payable
      on a semi-annual basis, accreted from the par value of the Note. In addition
      to
      the foregoing remedy, upon the occurrence or existence of any Event of Default,
      the Holders of a majority of the principal amount of the Notes then outstanding
      may exercise any other right power or remedy permitted to them by law, either
      by
      suit in equity or by action at law, or both. Such acceleration may be rescinded
      and annulled by Holders of a majority of the principal amount of the Notes
      then
      outstanding at any time prior to payment hereunder and the Holder shall have
      all
      rights as a holder of the Note until such time, if any, as the Holder receives
      full payment pursuant to this Section 2(b). No such rescission or annulment
      shall affect any subsequent Event of Default or impair any right consequent
      thereon.

    
      
        
        

      

      
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    (c) Limited
      Guaranty.
      Genesis
      Jiangbo (Laiyang) Biotech Technologies Co., Ltd., a limited liability company
      organized under the laws of the People’s Republic of China and Karmoya
      International Ltd., a British Virgin Islands company (collectively, the
“Guarantors”), by execution of this Note, do hereby jointly and severally
      acknowledge that they and each of them will be a direct beneficiary of the
      financing provided by these Notes and, as an inducement to Holder to purchase
      the Notes, they do hereby jointly and severally guarantee the payment of the
      Company’s obligations under this Note to Holder promptly upon demand therefore
      by the Holders of a majority of the Notes then outstanding, but if only if
      this
      Note shall become due and payable following an Event of Default pursuant to
      Section 2(a)(iii) of this Note. This guaranty is a continuing guarantee and
      shall remain in full force and effect until the Company’s obligations under this
      Note shall have been fully and irrevocably paid, discharged or satisfied in
      full
      regardless of any intermediate payment or discharge in part. The obligations
      of
      the Guarantors under this guarantee will not be affected by any act, omission,
      matter or thing which, but for this provision, would reduce, release or
      prejudice any of its obligations under this guarantee or prejudice or diminish
      those obligations in whole or in part. All payments by the Guarantors under
      this
      guarantee shall be made to the Holder of this Note to its account at such office
      or bank whose main office is located in the United States of America as the
      Holder may notify to the Guarantors for this purpose, and Guarantors covenant
      to
      take such action and seek such consents as are necessary to make such payments
      in US Dollars to the Holder as contemplated hereby. All payments made by the
      Guarantors under this guarantee shall be made without set-off or counterclaim.
      

     

    (d) Rights
      of Note Holder.
      Nothing
      in this Note shall be construed to modify, amend or limit in any way the right
      of the Holder of this Note to bring an action against the Company.

     

    Article
      3.

    Conversion

     

    (a) Conversions
      at Option of Holder.
      This
      Note shall be initially convertible, in whole at any time or in part from time
      to time into such number of shares of Common Stock as is determined by dividing
      the amount of principal being converted by the Conversion Price. The Conversion
      Price shall be twenty cents (US$.20), subject to adjustment as provided in
      this
      Article 3. 

    
      
        
        

      

      
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    (b) Automatic
      Conversion.
      Upon
      and subject to the satisfaction of each of the conditions set forth in the
      next
      sentence of this Article 3(b), all or any part of the outstanding principal
      of
      this Note may be converted at the option of the Company at any time into shares
      of Common Stock. This Note may be convertible at the option of the Company
      if
      all of the following four conditions are met: (i) a Registration Statement
      or
      Registration Statements with respect to all Conversion Shares and Warrant Shares
      (each as defined in the Registration Rights Agreement) shall have been declared
      effective (ii) the VWAP of the Common Stock on its principal trading market
      has
      been equal to or greater than 250% of the Conversion Price (as adjusted pursuant
      to the terms of this Note) for 20 consecutive trading days, (iii) the average
      dollar trading volume of the Common Stock on its principal trading market for
      the same 20 consecutive trading days referred to in subsection (ii) above
      exceeds US$500,000 and (iv) the Company achieves 2008 Guaranteed EBT and 2009
      Guaranteed EBT. Prior to the issuance of any Conversion Shares to the Holder
      pursuant to an automatic conversion under this Section 3(b), the Company shall
      notify the Holder in writing of the number of shares of Conversion Shares
      issuable to the Holder pursuant to such automatic conversion and the effective
      date of such automatic conversion. The Conversion Price shall be twenty cents
      (US$.20), subject to adjustment as provided in this Article 3. 

     

    (c) Mechanics
      of Conversion.

     

    (i) The
      Holder of this Note shall effect conversions at the option of the Holder by
      providing the Company with the form of conversion notice attached hereto as
      Annex
      A
      (a
“Notice
      of Conversion”)
      executed by the Holder, together with the delivery by the Holder to the Company
      of this Note, with this Note being duly endorsed in full for transfer to the
      Company or with an applicable stock power duly executed by the Holder in the
      manner and form as deemed reasonable by the transfer agent of the Common Stock.
      Each Notice of Conversion shall specify the principal amount of this Note to
      be
      converted, the principal amount of this Note outstanding prior to the conversion
      at issue, the principal amount of this Note owned subsequent to the conversion
      at issue, and the date on which such conversion is to be effected, which date
      may not be prior to the date the Holder delivers such Notice of Conversion
      to
      the Company by overnight delivery service or by telecopier or PDF (the
“Conversion
      Date”).
      If no
      Conversion Date is specified in a Notice of Conversion, the Conversion Date
      shall be the Trading Day immediately preceding the date that such Notice of
      Conversion and applicable stock certificates are received by the Company. The
      calculations and entries set forth in the Notice of Conversion shall control
      in
      the absence of manifest or mathematical error. The principal amount of this
      Note
      being converted in accordance with the terms of this Section 3(c)(i) shall
      be
      canceled and may not be reissued.

     

    (ii) Except
      as
      otherwise set forth herein, not later than three Trading Days after each
      Conversion Date (the “Share
      Delivery Date”),
      the
      Company shall deliver to the Holder a certificate or certificates which, after
      the Effective Date, shall be free of restrictive legends and trading
      restrictions (other than those required by the Agreement and the Securities
      Act)
      representing the number of shares of Common Stock being acquired upon the
      conversion of this Note. After the effective date of the Registration Statement,
      the Company shall, upon request of the Holder, deliver any certificate or
      certificates required to be delivered by the Company under this Section
      electronically through the Depository Trust Company or another established
      clearing Company performing similar functions if the Company’s transfer agent
      has the ability to deliver shares of Common Stock in such manner. If in the
      case
      of any Notice of Conversion such certificate or certificates are not delivered
      to or as directed by the applicable Holder by the third Trading Day after the
      Conversion Date, the Holder shall be entitled to elect by written notice to
      the
      Company at any time on or before its receipt of such certificate or certificates
      thereafter, to rescind such conversion, in which event the Company shall
      immediately return the this Note to the Holder.

    
      
        
        

      

      
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    (iii) The
      Company’s obligations to issue and deliver the Conversion Shares upon conversion
      of this Note in accordance with the terms hereof are absolute and unconditional,
      irrespective of any action or inaction by the Holder to enforce the same, any
      waiver or consent with respect to any provision hereof, the recovery of any
      judgment against any Person or any action to enforce the same, or any setoff,
      counterclaim, recoupment, limitation or termination, or any breach or alleged
      breach by the Holder or any other Person of any obligation to the Company or
      any
      violation or alleged violation of law by the Holder or any other person, and
      irrespective of any other circumstance which might otherwise limit such
      obligation of the Company to the Holder in connection with the issuance of
      such
      Conversion Shares. In the event a Holder shall elect to convert any or all
      of
      this Note, the Company may not refuse conversion based on any claim that such
      Holder or any one associated or affiliated with the Holder of has been engaged
      in any violation of law, agreement or for any other reason unless, an injunction
      from a court, on notice, restraining and or enjoining conversion of all or
      part
      of this Note shall have been sought and obtained and the Company posts a surety
      bond for the benefit of the Holder in the amount of 150% of the Conversion
      Value
      of the principal amount of the Note outstanding (i.e.,
      the
      value of the shares of Common Stock issued upon conversion of such principal
      amount of this Note) which is subject to the injunction, which bond shall remain
      in effect until the completion of arbitration/litigation of the dispute and
      the
      proceeds of which shall be payable to such Holder to the extent it obtains
      judgment. In the absence of an injunction precluding the same, the Company
      shall
      issue Conversion Shares upon a properly noticed conversion. 

     

    (iv) If
      the
      Company fails to deliver to the Holder such certificate or certificates pursuant
      to Section 3(c)(ii) by a Share Delivery Date, and if after such Share Delivery
      Date the Holder purchases (in an open market transaction or otherwise) Common
      Stock to deliver in satisfaction of a sale by such Holder of the Conversion
      Shares which the Holder was entitled to receive upon the conversion relating
      to
      such Share Delivery Date (a “Buy-In”),
      then
      the Company shall pay in cash to the Holder the amount by which (x) the Holder’s
      total purchase price (including brokerage commissions, if any) for the Common
      Stock so purchased exceeds (y) the product of (I) the aggregate number of shares
      of Common Stock that such Holder was entitled to receive from the conversion
      at
      issue multiplied by (II) the price at which the sell order giving rise to such
      purchase obligation was executed. For example, if the Holder purchases Common
      Stock having a total purchase price of US$11,000 to cover a Buy-In with respect
      to an attempted conversion of a portion of this Note with respect to which
      the
      aggregate sale price giving rise to such purchase obligation is US$10,000,
      under
      clause (A) of the immediately preceding sentence the Company shall be required
      to pay the Holder US$1,000. The Holder shall provide the Company written notice
      indicating the amounts payable to the Holder in respect of the Buy-In, together
      with applicable confirmations and other evidence reasonably requested by the
      Company. Nothing herein shall limit a Holder’s right to pursue any other
      remedies available to it hereunder, at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive relief with
      respect to the Company’s failure to timely deliver certificates representing
      shares of Common Stock upon conversion of this Note as required pursuant to
      the
      terms hereof.

    
      
        
        

      

      
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    (d) Reservation
      of Share of Common Stock.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock solely for the purpose of
      issuance upon conversion of this Note, as herein provided, free from preemptive
      rights or any other actual contingent purchase rights of persons other than
      the
      Holders, not less than such number of shares of the Common Stock as shall
      (subject to any additional requirements of the Company as to reservation of
      such
      shares set forth in the Agreement) be issuable upon the conversion of this
      Note.
      The Company covenants that all shares of Common Stock that shall be so issuable
      shall, upon issue, be duly and validly authorized, issued and fully paid,
      non-assessable.

     

    (e) Fractional
      Shares.
      Upon a
      conversion hereunder, the Company shall not be required to issue stock
      certificates representing fractions of shares of the Common Stock. All
      fractional shares shall be carried forward and any fractional shares which
      remain after the Holder converts the full principal amount of this Note shall
      be
      dropped and eliminated.

     

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

     

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

     

    (h) Certain
      Adjustments.

     

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

    
      
        
        

      

      
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    (ii) Issuance
      of Common Stock Equivalents.
      If the
      Company, at any time while this Note is outstanding, issues Common Stock
      Equivalents to holders of shares of Common Stock entitling them to subscribe
      for
      or purchase shares of Common Stock at a price per share (or a conversion price
      per share) less than the Conversion Price on the date of issuance of such Common
      Stock Equivalents, the Conversion Price shall be decreased by multiplying the
      Conversion Price in effect immediately prior to the such date of issuance by
      a
      fraction, of which: (A) the numerator shall be the sum of (x) the number of
      shares of Common Stock outstanding immediately prior to such issuance, plus
      (y)
      the total number of shares of Common Stock that the aggregate offering price
      of
      the total number of shares of Common Stock offered for subscription or purchase
      (or the aggregate conversion price of such Convertible Securities) would
      purchase at the Conversion Price on the date of such issuance; and (B) the
      denominator shall be the sum of (x) the number of shares of Common Stock
      outstanding immediately prior to such issuance, plus (y) the number of
      additional shares of Common Stock offered for subscription or purchase (or
      into
      which such Convertible Securities could be converted). For purposes of this
      Section, the term “Common
      Stock Equivalents”
shall
      mean means any rights, warrants or options to subscribe for or purchase shares
      of Common
      Stock or
      securities convertible into or exercisable for shares of Common
      Stock.

     

    (iii) Cash
      Dividends or Distributions
      If the
      Company, at any time while this Note is outstanding, makes a dividend or
      distribution consisting exclusively of cash to holders of the Common Stock,
      the
      Conversion Price shall be decreased by multiplying the Conversion Price in
      effect on the record date for the determination of shareholders entitled to
      such
      distribution by a fraction, of which: (A) the numerator shall be the Conversion
      Price on such record date less the amount of cash to be distributed per share
      of
      Common Stock; and (B) the denominator shall be the Conversion Price on such
      record date. 

     

    (iv) Repurchases
      If the
      Company, at any time while this Note is outstanding, makes a payment in respect
      of a repurchase (including by way of a tender or an exchange offer) of shares
      of
      Common Stock the consideration for which exceeds the Conversion Price
      immediately prior to the announcement of such repurchase, the Conversion Price
      shall be decreased by multiplying the Conversion Price in effect immediately
      prior to the announcement of such repurchase by a fraction, of which: (A) the
      numerator shall be (x) the total number of shares of Common Stock outstanding
      on
      the date immediately prior to the announcement of such repurchase multiplied
      by
      the Conversion Price as of such date, minus (y) the aggregate consideration
      paid
      in connection with such repurchase; and (B) the denominator shall be the number
      of shares of Common Stock outstanding on the date immediately prior to the
      announcement of such repurchase, minus the total number of shares of Common
      Stock repurchased.

    
      
        
        

      

      
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    (v) Pro
      Rata Distributions
      If the
      Company, at any time while this Note is outstanding, distributes to all holders
      of Common Stock (and not to the Holders) evidences of its indebtedness, or
      any
      other securities or other assets (other than stock dividends described in
      subsection (i) above, Common Stock Equivalents described in subsection (ii)
      above and dividends and distributions paid exclusively in cash described in
      subsection (iii) above) then in each such case the Conversion Price shall be
      decreased by multiplying such Conversion Price in effect immediately prior
      to
      the record date fixed for determination of stockholders entitled to receive
      such
      distribution by a fraction of which the denominator shall be the Conversion
      Price determined as of the record date for such distribution, and of which
      the
      numerator shall be such Conversion Price on such record date less the then
      fair
      market value at such record date of the portion of such assets or evidence
      of
      indebtedness so distributed applicable to one (1) outstanding share of the
      Common Stock as determined by the Board of Directors of the Company in good
      faith. Such adjustment shall be made whenever any such distribution is made
      and
      shall become effective immediately after the record date mentioned above.

     

    (vi) Price
      Adjustment.
      From
      and after the Closing Date and until such time as this Note is no longer
      outstanding, except for (a) Exempt Issuances, (b) issuances covered by Sections
      3(h) of this Note, or (c) an issuance of Common Stock upon exercise or upon
      conversion of warrants, options or other convertible securities for which an
      adjustment has already been made pursuant to this Section 3(h) of this Note,
      if
      the Company closes on the sale or issuance of Common Stock at a price, or issues
      Convertible Securities with a conversion price or exercise price per share
      which
      is less than the Conversion Price then in effect (such lower sales price,
      conversion or exercise price, as the case may be, being referred to as the
      “Lower
      Price”),
      the
      Company shall issue to and each Holder shall receive such number of additional
      shares of the Common Stock equal to the quotient of such Holder’s Investment
      Amount divided by the Lower Price less the number of Notes such Investor
      received on the Closing Date.

     

    (i) Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be.

     

    (j) Notice
      to Holders.

     

    (i) Adjustment
      to Conversion Price.
      Whenever the Conversion Price is adjusted pursuant to this Section 3, the
      Company shall promptly mail to each Holder a notice setting forth the adjustment
      and setting forth a brief statement of the facts requiring such adjustment.
      If
      the Company issues a variable rate security the Company shall be deemed to
      have
      issued Common Stock or Common Stock equivalents at the lowest possible
      conversion or exercise price at which such securities may be converted or
      exercised.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (ii) Notices
      of Other Events.
      If (a)
      the Company shall declare a dividend (or any other distribution) on the Common
      Stock; (b) the Company shall declare a redemption of the Common Stock; (c)
      the
      Company shall authorize the granting to all holders of the Common Stock rights
      or warrants to subscribe for or purchase any shares of capital stock of any
      class or of any rights; (d) the approval of any stockholders of the Company
      shall be required in connection with any reclassification of the Common Stock
      or
      any Fundamental Transaction, (e) the Company shall authorize the voluntary
      or
      involuntary dissolution, liquidation or winding up of the affairs of the
      Company; then in each case, the Company shall cause to be filed at each office
      or agency maintained for the purpose of conversion of this Note, and shall
      cause
      to be mailed to the Holder of this Note at such Holder’s last addresses as it
      shall appear upon the stock books of the Company, at least twenty (20) calendar
      days prior to the applicable record or effective date hereinafter specified,
      a
      notice stating (x) the date on which a record is to be taken for the purpose
      of
      such dividend, distribution, redemption, rights or warrants, or if a record
      is
      not to be taken, the date as of which the holders of the Common Stock of record
      to be entitled to such dividend, distributions, redemption, rights or warrants
      are to be determined or (y) the date on which such reclassification is expected
      to become effective or close, and the date as of which it is expected that
      holders of the Common Stock of record shall be entitled to exchange their shares
      of the Common Stock for securities, cash or other property deliverable upon
      such
      reclassification or Fundamental Transaction; provided, that the failure to
      mail
      such notice or any defect therein or in the mailing thereof shall not affect the
      validity of the corporate action required to be specified in such
      notice.

     

    (iii) Exempt
      Issuance
      Notwithstanding anything set forth in this Note, no adjustment in the Conversion
      Price will be made in respect of an Exempt Issuance. For purposes of this Note,
      the term “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers,
      directors of and consultants (other than consultants whose services relate
      to
      the raising of funds) of the Company pursuant to any stock or option plan that
      was or may be adopted by a majority of independent members of the Board of
      Directors of the Company or a majority of the members of a committee of
      independent directors established for such purpose, and approved by a majority
      of the Company’s stockholders; provided that (i) no options are granted at a
      price which is less than the fair market value on the date of grant and (ii)
      no
      more than such number of shares of Common Stock as represents 5% of the then
      outstanding shares of Common Stock shall be included in the definition of Exempt
      Issuances; (b) securities upon the exercise of or conversion of any Notes or
      Warrants and any other options, warrants, convertible debentures or other
      convertible securities which are outstanding on the date hereof including the
      Debentures and the November Warrants, and (c) securities issued pursuant to
      acquisitions, licensing agreements, or other strategic transactions, provided
      any such issuance shall only be to a Person which is, itself or through its
      subsidiaries, an operating company in a business which the Company’s board of
      directors believes is beneficial to the Company and in which the Company
      receives benefits in addition to the investment of funds, but shall not include
      a transaction in which the Company is issuing securities primarily for the
      purpose of raising capital or to an entity whose primary business is investing
      in securities

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (k) Fundamental
      Transaction.
      If, at
      any time while this Note is outstanding, (A) the Company effects any merger
      or
      consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (in any such case, a “Fundamental
      Transaction”),
      then
      upon any subsequent conversion of this Note, the Holder shall have the right
      to
      receive, for each Conversion Share that would have been issuable upon such
      conversion absent such Fundamental Transaction, the same kind and amount of
      securities, cash or property as it would have been entitled to receive upon
      the
      occurrence of such Fundamental Transaction if it had been, immediately prior
      to
      such Fundamental Transaction, the holder of one share of Common Stock (the
      “Alternate
      Consideration”).
      For
      purposes of any such conversion, the determination of the Conversion Price
      shall
      be appropriately adjusted to apply to such Alternate Consideration based on
      the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Conversion Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any conversion of this Note following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall assume this Note. 

     

    (l) Ownership
      Limitation

    Notwithstanding
      anything set forth in this Note, the Company shall not effect any conversion
      of
      this Note, and a Holder shall not have the right to convert any portion of
      this
      Note, to the extent that after giving effect to such issuance after exercise,
      such Holder (together with such Holder’s affiliates, and any other person or
      entity acting as a group together with such Holder or any of such Holder’s
      affiliates), as set forth on the applicable Notice of Conversion, would
      beneficially own in excess of the Beneficial Ownership Limitation (as defined
      below).  For purposes of the foregoing sentence, the number of shares of
      Common Stock beneficially owned by such Holder and its affiliates shall include
      the number of shares of Common Stock issuable upon conversion of this Note
      with
      respect to which the determination of such sentence is being made, but shall
      exclude the number of shares of Common Stock which would be issuable upon (A)
      exercise of the remaining, unconverted portion of this Note beneficially owned
      by such Holder or any of its affiliates and (B) exercise or conversion of the
      unexercised or nonconverted portion of any other securities of the Company
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein beneficially owned by such Holder or any of its
      affiliates.  Except as set forth in the preceding sentence, beneficial
      ownership shall be calculated in accordance with Section 13(d) of the Exchange
      Act and the rules and regulations promulgated thereunder, it being acknowledged
      by a Holder that the Company is not representing to such Holder that such
      calculation is in compliance with Section 13(d) of the Exchange Act and such
      Holder is solely responsible for any schedules required to be filed in
      accordance therewith. To the extent that the limitation contained in this
      Section applies, the determination of whether this Note is convertible (in
      relation to other securities owned by such Holder) and of which a portion of
      this Note is convertible shall be in the sole discretion of a Holder, and the
      submission of a Notice of Conversion shall be deemed to be each Holder’s
      determination of whether this Note is convertible (in relation to other
      securities owned by such Holder) and of which portion of this Note is
      convertible, in each case subject to such aggregate percentage limitation,
      and
      the Company shall have no obligation to verify or confirm the accuracy of such
      determination. In addition, a determination as to any group status as
      contemplated above shall be determined in accordance with Section 13(d) of
      the
      Exchange Act and the rules and regulations promulgated thereunder. For purposes
      of this Section, in determining the number of outstanding shares of Common
      Stock, a Holder may rely on the number of outstanding shares of Common Stock
      as
      reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case
      may be, (y) a more recent public announcement by the Company or (z) any other
      notice by the Company or the Company’s Transfer Agent setting forth the number
      of shares of Common Stock outstanding.  Upon the written or oral request of
      a Holder, the Company shall within two Trading Days confirm orally and in
      writing to such Holder the number of shares of Common Stock then
      outstanding.  In any case, the number of outstanding shares of Common Stock
      shall be determined after giving effect to the conversion or exercise of
      securities of the Company, including this Note, by such Holder or its affiliates
      since the date as of which such number of outstanding shares of Common Stock
      was
      reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of
      shares of the Common Stock outstanding immediately after giving effect to the
      issuance of shares of Common Stock issuable upon conversion of this Note. The
      Beneficial Ownership Limitation provisions of this Section may be waived by
      such
      Holder, at the election of such Holder, upon not less than 61 days’ prior notice
      to the date of the particular Notice of Conversion which would result in the
      Holder beneficially owning shares of Common Stock in excess of the Beneficial
      Ownership Limitation. The limitations contained in this paragraph shall apply
      to
      a successor holder of this Note.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    Article
      4.

    Put
      Right

    

    (a) Right
      to Require Redemption Except
      as
      set forth in Section 4(c) hereof, the Holder may elect by written notice to
      the
      Company to require the Company to redeem in cash all or a portion of this Note
      at any time following the occurrence of any of the following events (i) a Change
      in Control of the Company, (ii) the occurrence and continuance of an Event
      of
      Default hereunder and (iii) if any governmental agency in the People’s Republic
      of China challenges or otherwise takes any action that directly and specifically
      adversely affects the transactions contemplated by the Securities Purchase
      Agreement and the Company can no undo such governmental action or otherwise
      address the material adverse effect to the reasonable satisfaction of the
      holders of a majority of the then outstanding principal amount of the Notes.
      For
      purposes of this Note, the term “Change
      in Control”
means
      at such time as (i) any person or group (as the term “person” or :group” is used
      in Section 13(d) of the Securities Exchange Act of 1934, as amended) other
      than
      Wubo Cao has become the beneficial owner of 50% or more of the Company’s capital
      stock having the power to vote for the election of directors under ordinary
      circumstances (“Voting
      Stock”),
      (ii)
      there shall be consummated any consolidation or merger of the Company (A) in
      which the Company is not the continuing or surviving corporation or (B) pursuant
      to which any Voting Stock of the Company would be converted into cash,
      securities or other property, in each case, other than a consolidation or merger
      in which the holders of such Voting Stock immediately prior thereto have at
      least a majority of the Voting Stock, directly or indirectly, of the resulting
      or surviving corporation immediately after the consolidation or merger, (iii)
      a
      sale of all or substantially all of the assets of the Company or (iv) there
      shall occur the replacement at one time or within a three year period of more
      than one half of the members of the Company’s Board of Directors which is not
      approved by a majority of those individuals who are members of the Company’s
      Board of Directors as of the date hereof (or by those individuals who are
      serving as members of the Board of Directors on any date whose nomination to
      the
      Board of Directors was approved by a majority of the members of the Board of
      Directors who are members on the date hereof). 

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (b) Redemption
      Price The
      redemption price with respect to this Note, if redeemed pursuant to Section
      4(a)
      shall be equal to 100% of outstanding principal amount of this Note plus
      a yield
      from the original issue date to the redemption date of 15% per annum
plus
      any
      accrued any unpaid interest on this Note less
      any
      interest including any Default Interest previously paid with respect to this
      Note; provided,
      however,
      that
      notwithstanding the foregoing, in the event that either the 2008 Make Good
      Shares or the 2009 Make Good Shares are transferred to the Investors and the
      Investors do not opt to return such Make Good Shares to the Company, the
      redemption price with respect to this Note, if redeemed pursuant to Section
      4(a)
      shall be equal to 100% of outstanding principal amount of this Note plus
      a yield
      from the original issue date to the redemption date of 10% per annum
plus
      any
      accrued any unpaid interest on this Note less
      any
      interest including any Default Interest previously paid with respect to this
      Note; and provided,
      further, however,
      notwithstanding anything set forth in this Section 4, in the event that both
      the
      2008 Make Good Shares and the 2009 Make Good Shares are transferred to the
      Investors, the Holder shall have no redemption rights with respect to this
      Note
      unless and until the Investors return all such 2008 Make Good Shares and 2009
      Make Good Shares to the Shareholder.

     

    Article
      5.

    Miscellaneous

     

    (a) Transferability.
      This
      Note shall not be transferred except in a transaction exempt from registration
      pursuant to the Securities Act and applicable state securities law. The Company
      shall treat as the owner of this Note the person shown as the owner on its
      books
      and records.

     

    (b) Limited
      Right of Prepayment.
      The
      Company shall have no right to prepay this Note without the prior written
      consent of the Holder, which consent may be given or withheld by the Holder
      in
      its sole discretion. Any prepayment shall be accompanied by interest on this
      Note to the date of prepayment.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (c) WAIVER
      OF TRIAL BY JURY.
      IN ANY
      LEGAL PROCEEDING TO ENFORCE PAYMENT OF THIS NOTE, THE COMPANY WAIVES TRIAL
      BY
      JURY.

     

    (d) WAIVER
      OF ANY RIGHT OF COUNTERCLAIM.
      EXCEPT
      AS PROHIBITED BY LAW, THE COMPANY HEREBY WAIVES ANY RIGHT TO ASSERT ANY CLAIM
      IT
      MAY HAVE AGAINST THE HOLDER OF THIS NOTE BY WAY OF A COUNTERCLAIM (OTHER THAN
      A
      COMPULSORY COUNTERCLAIM) IN ANY ACTION ON THIS NOTE.

     

    (e) Usury
      Saving Provision.
      All
      payment obligations arising under this Note are subject to the express condition
      that at no time shall the Company be obligated or required to pay interest
      at a
      rate which could subject the Holder of this Note to either civil or criminal
      liability as a result of being in excess of the maximum rate which the Company
      is permitted by law to contract or agree to pay. If by the terms of this Note,
      the Company is at any time required or obligated to pay interest at a rate
      in
      excess of such maximum rate, the applicable rate of interest shall be deemed
      to
      be immediately reduced to such maximum rate, and interest thus payable shall
      be
      computed at such maximum rate, and the portion of all prior interest payments
      in
      excess of such maximum rate shall be applied and shall be deemed to have been
      payments in reduction of principal.

     

    (f) Notice
      to Company.
      Notice
      to the Company shall be given to the Company at its principal executive offices,
      presently located at Middle Section, Longmao Street, Area A, Laiyang
      Waixiangxing Industrial Park, Laiyang City, Yantai, Shandong Province, People’s
      Republic of China 710075, attention of Mr. Cao, Wubo, Chief Executive Officer,
      with a copy to Loeb & Loeb LLP, 345 Park Avenue, New York, NY 10154,
      attention of Angela M. Dowd, Esq, or to such other address or person as the
      Company may, from time to time, advise the holder of this Note, or to the holder
      of this Note at the address set forth on the Company’s records. Notice shall be
      given by hand delivery, certified or registered mail, return receipt requested,
      overnight courier service which provides evidence of delivery, or by telecopier
      if confirmation of receipt is given or of confirmation of transmission is sent
      as herein provided.

     

    (g) Governing
      Law.
      This
      Note shall be governed by the laws of the State of New York applicable to
      agreements executed and to be performed wholly within such state. The Company
      hereby (i) consents to the exclusive jurisdiction of the United States District
      Court for the Southern District of New York and Supreme Court of the State
      of
      New York in the County of New York in any action relating to or arising out
      of
      this Note, (ii) agrees that any process in any such action may be served upon
      it
      either (x) by certified or registered mail, return receipt requested, or by
      an
      overnight courier service which obtains evidence of delivery, with the same
      full
      force and effect as if personally served upon him in New York City or (y) any
      other manner permitted by law, and (iii) waives any claim that the jurisdiction
      of any such tribunal is not a convenient forum for any such action and any
      defense of lack of in personam jurisdiction with respect thereto.

     

    (h) Expenses.
      In the
      event that the Holder commences a legal proceeding in order to enforce its
      rights under this Note, the Company shall pay all reasonable legal fees and
      expenses incurred by the holder with respect thereto.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has executed this Note as of the date and year
      first aforesaid.

    

    
      	
              GENESIS
                PHARMACEUTICALS ENTERPRISES, INC.

            
	 	 
	
              By:

            	   
	 	
              Cao
                Wubo, Chief Executive Officer

            

    

     

    The
      undersigned do hereby agree to the guarantee set forth in Section 2(c) of this
      Note.

    

    
      	
              GENESIS
                JIANGBO (LAIYANG) BIOTECH TECHNOLOGIES CO., LTD.

            
	 	 
	
              By:

            	
                 

            
	 	
              Name:
                Cao Wubo

            
	 	
              Title:
                Chief Executive Officer

            
	 
	
              KARMOYA
                INTERNATIONAL LTD.

            
	 	 
	
              By:

            	
                 

            
	 	
              
                Name:
                  Cao Wubo

              

            
	 	
              
                Title:
                  Chief Executive
                  Officer

              

            

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    NOTICE
      OF
      CONVERSION

     

    [To
      be
      Signed Only Upon Conversion

    of
      Part
      or All of Notes]

     

    Genesis
      Pharmaceuticals Enterprises, Inc.

     

    The
      undersigned, the holder of the foregoing Note, hereby surrenders such Note
      for
      conversion into shares of Common Stock of Genesis Pharmaceuticals Enterprises,
      Inc. to the extent of US$ * unpaid principal amount of due on such Note, and
      requests that the certificates for such shares be issued in the name of
      ________________, and delivered to ____________________, whose address is
      ___________________.

     

    
      	
              Dated:

            	
                  
                

            
	 
	
                 

            
	
              (Signature)

            

    

     

    (Signature
      must conform in all respects to name of holder as specified on the face of
      the
      Note.)

     

    *
      Insert
      here the unpaid principal amount of the Note (or, in the case of a partial
      conversion, the portion thereof as to which the Note is being converted). In
      the
      case of a partial conversion, a new Note will be issued and delivered,
      representing the unconverted portion of the unpaid principal amount of this
      Note, to or upon the order of the holder surrendering such
      Note.

    
      
        
        

      

      
        16Unassociated Document

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

    

    CLASS
      A COMMON STOCK PURCHASE WARRANT

    

    To
      Purchase ___________ Shares of Common Stock of

     

    GENESIS
      PHARMACEUTICALS ENTERPRISES, INC.

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, ____________ (the “Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the date hereof (the
      “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the date which is the fifth anniversary
      of
      the Effective Date (such date shall be referred to herein as the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Genesis Pharmaceuticals
      Enterprises, Inc., a Florida corporation (the “Company”),
      up to
      ________ shares (the “Warrant
      Shares”)
      of
      Common Stock, par value $0.001 per share, of the Company (the “Common
      Stock”).
      The
      purchase price of one share of Common Stock under this Warrant shall be equal
      to
      the Exercise Price, as defined in Section 2(b). 

     

    Section
      1. Definitions.
      Capitalized terms used and not otherwise defined herein shall have the meanings
      set forth in that certain Securities Purchase Agreement (the “Purchase
      Agreement”),
      dated
      as of May 30, 2008, among the Company and the investors signatory
      thereto.

     

    Section
      2. Exercise.

     

    a) Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made, in
      whole or in part, at any time or times on or after the Initial Exercise Date
      and
      on or before the Termination Date by delivery to the Company of a duly executed
      facsimile copy of the Notice of Exercise Form annexed hereto (or such other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered Holder at the address of such Holder appearing on the books of the
      Company); provided,
      however,
      within
      5 Trading Days of the date said Notice of Exercise is delivered to the Company,
      the Holder shall have surrendered this Warrant to the Company and the Company
      shall have received payment of the aggregate Exercise Price of the shares
      thereby purchased by wire transfer or cashier’s check drawn on a United States
      bank.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    b) Exercise
      Price.
      The
      exercise price of the Common Stock under this Warrant shall be $0.25 subject
      to
      adjustment hereunder (the “Exercise
      Price”).

     

    c) Cashless
      Exercise.
      If at
      any time after six (6) months from the date of issuance of this Warrant there
      is
      no effective Registration Statement registering, or no current prospectus
      available for, the resale of the Warrant Shares by the Holder, then this Warrant
      may also be exercised at such time by means of a “cashless exercise” in which
      the Holder shall be entitled to receive a certificate for the number of Warrant
      Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),
      where:

     

    
      	
            	(A)
              = 	
              the
                VWAP on the Trading Day immediately preceding the date of such
                election;

            

    

    

    
      	
            	(B)
              = 	
              the
                Exercise Price of this Warrant, as adjusted; and
                

            

    

    

    
      	
            	(X)
              = 	
              the
                number of Warrant Shares issuable upon exercise of this Warrant in
                accordance with the terms of this Warrant by means of a cash exercise
                rather than a cashless
                exercise.

            

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    d) Exercise
      Limitations.
      

     

    Holder’s
      Restrictions.
      The
      Company shall not effect any exercise of this Warrant, and a Holder shall not
      have the right to exercise any portion of this Warrant, pursuant to Section
      2(c)
      or otherwise, to the extent that after giving effect to such issuance after
      exercise, such Holder (together with such Holder’s affiliates, and any other
      person or entity acting as a group together with such Holder or any of such
      Holder’s affiliates), as set forth on the applicable Notice of Exercise, would
      beneficially own in excess of the Beneficial Ownership Limitation (as defined
      below).  For purposes of the foregoing sentence, the number of shares of
      Common Stock beneficially owned by such Holder and its affiliates shall include
      the number of shares of Common Stock issuable upon exercise of this Warrant
      with
      respect to which the determination of such sentence is being made, but shall
      exclude the number of shares of Common Stock which would be issuable upon (A)
      exercise of the remaining, nonexercised portion of this Warrant beneficially
      owned by such Holder or any of its affiliates and (B) exercise or conversion
      of
      the unexercised or nonconverted portion of any other securities of the Company
      (including, without limitation, any other Warrants) subject to a limitation
      on
      conversion or exercise analogous to the limitation contained herein beneficially
      owned by such Holder or any of its affiliates.  Except as set forth in the
      preceding sentence, for purposes of this Section 2(d), beneficial ownership
      shall be calculated in accordance with Section 13(d) of the Exchange Act and
      the
      rules and regulations promulgated thereunder, it being acknowledged by a Holder
      that the Company is not representing to such Holder that such calculation is
      in
      compliance with Section 13(d) of the Exchange Act and such Holder is solely
      responsible for any schedules required to be filed in accordance therewith.
      To
      the extent that the limitation contained in this Section 2(d) applies, the
      determination of whether this Warrant is exercisable (in relation to other
      securities owned by such Holder) and of which a portion of this Warrant is
      exercisable shall be in the sole discretion of a Holder, and the submission
      of a
      Notice of Exercise shall be deemed to be each Holder’s determination of whether
      this Warrant is exercisable (in relation to other securities owned by such
      Holder) and of which portion of this Warrant is exercisable, in each case
      subject to such aggregate percentage limitation, and the Company shall have
      no
      obligation to verify or confirm the accuracy of such determination. In addition,
      a determination as to any group status as contemplated above shall be determined
      in accordance with Section 13(d) of the Exchange Act and the rules and
      regulations promulgated thereunder. For purposes of this Section 2(d), in
      determining the number of outstanding shares of Common Stock, a Holder may
      rely
      on the number of outstanding shares of Common Stock as reflected in (x) the
      Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
      recent public announcement by the Company or (z) any other notice by the Company
      or the Company’s Transfer Agent setting forth the number of shares of Common
      Stock outstanding.  Upon the written or oral request of a Holder, the
      Company shall within two Trading Days confirm orally and in writing to such
      Holder the number of shares of Common Stock then outstanding.  In any case,
      the number of outstanding shares of Common Stock shall be determined after
      giving effect to the conversion or exercise of securities of the Company,
      including this Warrant, by such Holder or its affiliates since the date as
      of
      which such number of outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the
      Common Stock outstanding immediately after giving effect to the issuance of
      shares of Common Stock issuable upon exercise of this Warrant. The Beneficial
      Ownership Limitation provisions of this Section 2(d) may be waived by such
      Holder, at the election of such Holder, upon not less than 61 days’ prior notice
      to the date of the particular Notice of Exercise which would result in the
      Holder beneficially owning shares of Common Stock in excess of the Beneficial
      Ownership Limitation. The limitations contained in this paragraph shall apply
      to
      a successor holder of this Warrant.

     

    e) Mechanics
      of Exercise.
      

     

    i. Authorization
      of Warrant Shares.
      The
      Company covenants that all Warrant Shares which may be issued upon the exercise
      of the purchase rights represented by this Warrant will, upon exercise of the
      purchase rights represented by this Warrant, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges in
      respect of the issue thereof (other than taxes in respect of any transfer
      occurring contemporaneously with such issue). 

    
      
        
        

      

      
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    ii. Delivery
      of Certificates Upon Exercise.
      Certificates for shares purchased hereunder shall be transmitted by the transfer
      agent of the Company to the Holder by crediting the account of the Holder’s
      prime broker with the Depository Trust Company through its Deposit and
      Withdrawals at Custodian (“DWAC”)
      system
      if the Company is a participant in such system, and otherwise by physical
      delivery to the address specified by the Holder in the Notice of Exercise within
      five (5) Trading Days from the delivery to the Company of the Notice of Exercise
      Form, surrender of this Warrant and payment of the aggregate Exercise Price
      as
      set forth above (“Warrant
      Share Delivery Date”).
      This
      Warrant shall be deemed to have been exercised on the date the Exercise Price
      is
      received by the Company. The Warrant Shares shall be deemed to have been issued,
      and Holder or any other person so designated to be named therein shall be deemed
      to have become a holder of record of such shares for all purposes, as of the
      date the Warrant has been exercised by payment to the Company of the Exercise
      Price and all taxes required to be paid by the Holder, if any, pursuant to
      Section 2(d)(vii) prior to the issuance of such shares, have been paid.

     

    iii. Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Company shall, at the time of
      delivery of the certificate or certificates representing Warrant Shares, deliver
      to Holder a new Warrant evidencing the rights of Holder to purchase the
      unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
      in all other respects be identical with this Warrant.

     

    iv. Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to this
      Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder will have
      the right to rescind such exercise.

    
      
        
        

      

      
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    v. Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.
      In
      addition to any other rights available to the Holder, if the Company fails
      to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the Warrant Shares pursuant to an exercise on or before the Warrant
      Share Delivery Date, and if after such date the Holder is required by its broker
      to purchase (in an open market transaction or otherwise) shares of Common Stock
      to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
      the Holder anticipated receiving upon such exercise (a “Buy-In”),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Shares that the Company was required
      to
      deliver to the Holder in connection with the exercise at issue times (B) the
      price at which the sell order giving rise to such purchase obligation was
      executed, and (2) at the option of the Holder, either reinstate the portion
      of
      the Warrant and equivalent number of Warrant Shares for which such exercise
      was
      not honored or deliver to the Holder the number of shares of Common Stock that
      would have been issued had the Company timely complied with its exercise and
      delivery obligations hereunder. For example, if the Holder purchases Common
      Stock having a total purchase price of $11,000 to cover a Buy-In with respect
      to
      an attempted exercise of shares of Common Stock with an aggregate sale price
      giving rise to such purchase obligation of $10,000, under clause (1) of the
      immediately preceding sentence the Company shall be required to pay the Holder
      $1,000. The Holder shall provide the Company written notice indicating the
      amounts payable to the Holder in respect of the Buy-In, together with applicable
      confirmations and other evidence reasonably requested by the Company. Nothing
      herein shall limit a Holder’s right to pursue any other remedies available to it
      hereunder, at law or in equity including, without limitation, a decree of
      specific performance and/or injunctive relief with respect to the Company’s
      failure to timely deliver certificates representing shares of Common Stock
      upon
      exercise of the Warrant as required pursuant to the terms hereof.

     

    vi. No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay a
      cash adjustment in respect of such final fraction in an amount equal to such
      fraction multiplied by the Exercise Price.

     

    vii. Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    viii. Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

    
      
        
        

      

      
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    Section
      3. Certain Adjustments.

     

    a) Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company pursuant to this Warrant), (B)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (C) combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by reclassification
      of shares of the Common Stock any shares of capital stock of the Company, then
      in each case the Exercise Price shall be multiplied by a fraction of which
      the
      numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding immediately before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding
      immediately after such event and the number of shares issuable upon exercise
      of
      this Warrant shall be proportionately adjusted. Any adjustment made pursuant
      to
      this Section 3(a) shall become effective immediately after the record date
      for
      the determination of stockholders entitled to receive such dividend or
      distribution and shall become effective immediately after the effective date
      in
      the case of a subdivision, combination or re-classification.

     

    b) Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this Warrant
      is outstanding, shall offer, sell, grant any option to purchase or offer, sell
      or grant any right to reprice its securities, or otherwise dispose of or issue
      any Common Stock or Common Stock Equivalents entitling any Person to acquire
      shares of Common Stock for no consideration or at an effective price per share
      less than the then Exercise Price (such issuances collectively, a “Dilutive
      Issuance”),
      as
      adjusted hereunder (if the holder of the Common Stock or Common Stock
      Equivalents so issued shall at any time, whether by operation of purchase price
      adjustments, reset provisions, floating conversion, exercise or exchange prices
      or otherwise, or due to warrants, options or rights per share which is issued
      in
      connection with such issuance, be entitled to receive shares of Common Stock
      for
      no consideration or at an effective price per share which is less than the
      Exercise Price, such issuance shall be deemed to have occurred for less than
      the
      Exercise Price on such date of the adjustment of the Dilutive Issuance), the
      then-existing Exercise Price shall be reduced by multiplying the Exercise Price
      in effect immediately prior to such Dilutive Issuance by a fraction, the
      numerator of which is the number of shares of Common Stock outstanding
      immediately prior to such Dilutive Issuance plus the number of shares of Common
      Stock which could be purchased at the current Exercise Price on the date of
      such
      Dilutive Issuance with the aggregate consideration received or receivable by
      the
      Company in connection with such Dilutive Issuance and the denominator of which
      is the number of shares of Common Stock outstanding immediately prior to such
      Dilutive Issuance plus the number of shares of Common Stock to be so issued
      or
      sold (the “Base
      Share Price”).
      Such
      adjustment shall be made whenever such Common Stock or Common Stock Equivalents
      are issued. Notwithstanding the foregoing, no adjustments shall be made, paid
      or
      issued under this Section 3(b) in respect of an Exempt Issuance. The Company
      shall notify the Holder in writing, no later than the Trading Day following
      the
      issuance of any Common Stock or Common Stock Equivalents subject to this
      section, indicating therein the applicable issuance price, or of applicable
      reset price, exchange price, conversion price and other pricing terms (such
      notice the “Dilutive
      Issuance Notice”).
      For
      purposes of clarification, whether or not the Company provides a Dilutive
      Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
      Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
      entitled to receive a number of Warrant Shares based upon the Base Share Price
      and the number of shares issuable upon exercise of this Warrant shall be
      proportionately adjusted regardless of whether the Holder accurately refers
      to
      the Base Share Price in the Notice of Exercise. 

    
      
        
        

      

      
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    c) Pro
      Rata Distributions.
      If the
      Company, at any time prior to the Termination Date, shall distribute to all
      holders of Common Stock (and not to Holders of the Warrants) evidences of its
      indebtedness or assets (including cash and cash dividends) or rights or warrants
      to subscribe for or purchase any security other than the Common Stock (which
      shall be subject to Section 3(b)), then in each such case the Exercise Price
      shall be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to receive
      such distribution by a fraction of which the denominator shall be the VWAP
      determined as of the record date mentioned above, and of which the numerator
      shall be such VWAP on such record date less the then per share fair market
      value
      at such record date of the portion of such assets or evidence of indebtedness
      so
      distributed applicable to one outstanding share of the Common Stock as
      determined by the Board of Directors in good faith and the number of shares
      issuable upon exercise of this Warrant shall be proportionately adjusted. In
      either case the adjustments shall be described in a statement provided to the
      Holder of the portion of assets or evidences of indebtedness so distributed
      or
      such subscription rights applicable to one share of Common Stock. Such
      adjustment shall be made whenever any such distribution is made and shall become
      effective immediately after the record date mentioned above.

     

    d) Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (in any such case, a “Fundamental
      Transaction”),
      then,
      upon any subsequent exercise of this Warrant, the Holder shall have the right
      to
      receive, for each Warrant Share that would have been issuable upon such exercise
      immediately prior to the occurrence of such Fundamental Transaction, at the
      option of the Holder, (a) upon exercise of this Warrant, the number of shares
      of
      Common Stock of the successor or acquiring corporation or of the Company, if
      it
      is the surviving corporation, and any additional consideration (the
“Alternate
      Consideration”)
      receivable upon or as a result of such reorganization, reclassification, merger,
      consolidation or disposition of assets by a Holder of the number of shares
      of
      Common Stock for which this Warrant is exercisable immediately prior to such
      event or (b) if the Company is acquired in an all cash transaction, cash equal
      to the value of this Warrant as determined in accordance with the Black-Scholes
      option pricing formula. For purposes of any such exercise, the determination
      of
      the Exercise Price shall be appropriately adjusted to apply to such Alternate
      Consideration based on the amount of Alternate Consideration issuable in respect
      of one share of Common Stock in such Fundamental Transaction, and the Company
      shall apportion the Exercise Price among the Alternate Consideration in a
      reasonable manner reflecting the relative value of any different components
      of
      the Alternate Consideration. If holders of Common Stock are given any choice
      as
      to the securities, cash or property to be received in a Fundamental Transaction,
      then the Holder shall be given the same choice as to the Alternate Consideration
      it receives upon any exercise of this Warrant following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new warrant consistent with the foregoing provisions
      and evidencing the Holder’s right to exercise such warrant into Alternate
      Consideration. The terms of any agreement pursuant to which a Fundamental
      Transaction is effected shall include terms requiring any such successor or
      surviving entity to comply with the provisions of this Section 3(d) and insuring
      that this Warrant (or any such replacement security) will be similarly adjusted
      upon any subsequent transaction analogous to a Fundamental
      Transaction.

    
      
        
        

      

      
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    e) Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

     

    f) Voluntary
      Adjustment By Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Exercise Price to any amount and for any period of time deemed appropriate
      by
      the Board of Directors of the Company.

     

    g) Notice
      to Holders.
      

     

    i. Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company
      shall promptly mail to each Holder a notice setting forth the Exercise Price
      after such adjustment and setting forth a brief statement of the facts requiring
      such adjustment. If the Company issues a variable rate security, despite the
      prohibition thereon in the Purchase Agreement, the Company shall be deemed
      to
      have issued Common Stock or Common Stock Equivalents at the lowest possible
      conversion or exercise price at which such securities may be converted or
      exercised, to the extent ascertainable at the time of issuance.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    ii. Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Company shall declare a special nonrecurring cash dividend on
      or
      a redemption of the Common Stock; (C) the Company shall authorize the granting
      to all holders of the Common Stock rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights; (D) the
      approval of any stockholders of the Company shall be required in connection
      with
      any reclassification of the Common Stock, any consolidation or merger to which
      the Company is a party, any sale or transfer of all or substantially all of
      the
      assets of the Company, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; (E) the Company shall
      authorize the voluntary or involuntary dissolution, liquidation or winding
      up of
      the affairs of the Company; then, in each case, the Company shall cause to
      be
      mailed to the Holder at its last address as it shall appear upon the Warrant
      Register of the Company, at least 20 calendar days prior to the applicable
      record or effective date hereinafter specified, a notice stating (x) the date
      on
      which a record is to be taken for the purpose of such dividend, distribution,
      redemption, rights or warrants, or if a record is not to be taken, the date
      as
      of which the holders of the Common Stock of record to be entitled to such
      dividend, distributions, redemption, rights or warrants are to be determined
      or
      (y) the date on which such reclassification, consolidation, merger, sale,
      transfer or share exchange is expected to become effective or close, and the
      date as of which it is expected that holders of the Common Stock of record
      shall
      be entitled to exchange their shares of the Common Stock for securities, cash
      or
      other property deliverable upon such reclassification, consolidation, merger,
      sale, transfer or share exchange; provided,
      that
      the failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      20-day period commencing on the date of such notice to the effective date of
      the
      event triggering such notice.

    

    Section
      4. Transfer
      of Warrant.

     

    a) Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Sections 5(a) and 4(d) hereof, this Warrant and all rights hereunder are
      transferable, in whole or in part, upon surrender of this Warrant at the
      principal office of the Company, together with a written assignment of this
      Warrant substantially in the form attached hereto duly executed by the Holder
      or
      its agent or attorney and funds sufficient to pay any transfer taxes payable
      upon the making of such transfer. Upon such surrender and, if required, such
      payment, the Company shall execute and deliver a new Warrant or Warrants in
      the
      name of the assignee or assignees and in the denomination or denominations
      specified in such instrument of assignment, and shall issue to the assignor
      a
      new Warrant evidencing the portion of this Warrant not so assigned, and this
      Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be
      exercised by a new holder for the purchase of Warrant Shares without having
      a
      new Warrant issued. 

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    b) New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice.

     

    c) Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    d) Transfer
      Restrictions.
      If,
      at the
time
      of
      the surrender of this Warrant in connection with any transfer of this Warrant,
      the transfer of this Warrant shall not be registered pursuant to an effective
      registration
      statement under the Securities Act
      and
under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer (i) that the Holder or transferee of this
      Warrant, as the case may be, furnish to the Company a written opinion of counsel
      (which opinion shall be in form, substance and scope customary for opinions
      of
      counsel in comparable transactions) to the effect that such transfer may be
      made
      without
      registration under
      the
      Securities Act and under applicable state securities or blue sky laws, (ii)
      that
      the holder or transferee execute and deliver to the Company an investment letter
      in form and substance acceptable to the Company and (iii) that the transferee
      be
      an “accredited
      investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
      promulgated under the Securities Act or a qualified institutional buyer as
      defined in Rule 144A(a) under the Securities Act.

     

    Section
      5. Miscellaneous.

     

    a) Title
      to Warrant.
      Prior
      to the Termination Date and subject to compliance with applicable laws and
      Section 4 of this Warrant, this Warrant and all rights hereunder are
      transferable, in whole or in part, at the office or agency of the Company by
      the
      Holder in person or by duly authorized attorney, upon surrender of this Warrant
      together with the Assignment Form annexed hereto properly endorsed. The
      transferee shall sign an investment letter in form and substance reasonably
      satisfactory to the Company.

     

    b) No
      Rights as Shareholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof. Upon the surrender
      of
      this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares
      so purchased shall be and be deemed to be issued to such Holder as the record
      owner of such shares as of the close of business on the later of the date of
      such surrender or payment.

     

    c) Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    d) Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday, Sunday or a legal holiday,
      then such action may be taken or such right may be exercised on the next
      succeeding day not a Saturday, Sunday or legal holiday.

     

    e) Authorized
      Shares.
      

     

    The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to execute and issue
      the
      necessary certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable action
      as
      may be necessary to assure that such Warrant Shares may be issued as provided
      herein without violation of any applicable law or regulation, or of any
      requirements of the Trading Market upon which the Common Stock may be listed.
      

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant. 

     

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    f) Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be determined in accordance with the provisions of the
      Purchase Agreement.

     

    g) Registration
      Rights and Restrictions.
      The
      Holder of this Warrant shall be entitled to the benefits of the Registration
      Rights Agreement. Notwithstanding the foregoing, the Holder acknowledges that
      the Warrant Shares acquired upon the exercise of this Warrant, if not
      registered, will have restrictions upon resale imposed by state and federal
      securities laws. 

     

    h) Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all rights
      hereunder terminate on the Termination Date. If the Company willfully and
      knowingly fails to comply with any provision of this Warrant, which results
      in
      any material damages to the Holder, the Company shall pay to Holder such amounts
      as shall be sufficient to cover any costs and expenses including, but not
      limited to, reasonable attorneys’ fees, including those of appellate
      proceedings, incurred by Holder in collecting any amounts due pursuant hereto
      or
      in otherwise enforcing any of its rights, powers or remedies
      hereunder.

     

    i) Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    j) Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant or purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    k) Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive the defense in any action
      for specific performance that a remedy at law would be adequate.

     

    l) Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by any such Holder
      or
      holder of Warrant Shares.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    m) Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    n) Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

     

    o) Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

    

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

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized.

     

    

    Dated:
      May 30, 2008

     

    
      	
              GENESIS
                PHARMACEUTICALS ENTERPRISES, INC.

            
	 	 
	
              By:

            	
                 

            
	 	
              Name:
                Cao Wubo

            
	 	
              
                Title:
                  Chief Executive
                  Officer

              

            

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    NOTICE
      OF EXERCISE

    

    TO: GENESIS
      PHARMACEUTICALS ENTERPRISES, INC.

    

    (1) The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2) Payment
      shall take the form of (check applicable box):

     

    [  ]
      cash in lawful money of the United States;

     

    [  ]
      .a check payable in lawful money of the United States to the order of Genesis
      Pharmaceuticals Enterprises, Inc; or

     

    [  ]
      the cancellation of such number of Warrant Shares as is necessary, in accordance
      with the formula set forth in subsection 2(c), to exercise this Warrant with
      respect to the maximum number of Warrant Shares purchasable pursuant to the
      cashless exercise procedure set forth in subsection 2(c). 

     

    (3) Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

    

    The
      Warrant Shares shall be delivered to the following:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

    (4)
      Accredited
      Investor.
      The
      undersigned is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act of 1933, as amended.

    

    [SIGNATURE
      OF HOLDER]

     

    
      	
              Name of Investing Entity:  

            	
               

            

    

    
      	
              Signature of Authorized Signatory of Investing Entity:  

            	
               

            

    

    
      	
              Name of Authorized Signatory:  

            	
               

            

    

    
      	
              Title of Authorized Signatory:  

            	
               

            

    

    
      	
              Date:  

            	
               

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

    

    Holder’s
      Signature: _____________________________

    

    Holder’s
      Address: _____________________________

    

    _____________________________

    

    Signature
      Guaranteed: ___________________________________________

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

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