Document:

Unassociated Document

     

    
      

       

      RESCISSION
AGREEMENT

       

      This
Rescission Agreement (this “Agreement”) is entered into
as of the ___ day of February, 2010, by and among Allied Security Innovations,
Inc., a Delaware corporation (the “Company”), and each of the
holders listed on the schedules hereto (each, a “Holder” and, collectively,
the “Holders”), with
reference to the following facts:

       

      WHEREAS,
the Company and the Holder are parties to that certain Recapitalization
Agreement (the “Recapitalization Agreement”),
dated May 16, 2008, pursuant to which the Company exchanged the Old Notes (as
defined therein) for New Notes (as defined therein); and

       

      WHEREAS,
the Company and the Holder wish to reinstate the Old Notes and rescind and
cancel the New Notes.

       

      NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:

       

      1.  Rescission.  The
Company and the Holders hereby agree that the Recapitalization Agreement is
hereby rescinded and the terms and provisions therein are null and void.
Accordingly, the New Notes set forth on Schedule I, annexed hereto, shall be
void ab initio as if they were never issued by the Company to the Holders and
the Old Notes shall hereby be returned to the Holders, with the respective
outstanding principal amounts set forth on Schedule I, as if they had never been
exchanged for the New Notes pursuant to the Recapitalization
Agreement.

       

      2.  Representations and
Warranties of the Company.  The Company represents and warrants
to each Holder, as of the date hereof, that:

       

      2.1  Organization and
Qualification.  The Company is duly organized, validly existing
and in good standing under the laws of Delaware and has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement to which it is a party.

       

      2.2  Authorization and Binding
Obligation.  The Company has full corporate power to execute
and deliver this Agreement. The execution and delivery of this Agreement by the
Company and the performance of its obligations hereunder have been, and the
execution and delivery by the Company have been duly authorized by all necessary
corporate action, and no other corporate proceedings on the Company’s part are
necessary for the execution and delivery of this Agreement, and the performance
of the Company’s obligations provided for herein and therein.  This
Agreement will be binding obligations of each Holder party thereto, this
Agreement constitutesvalid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

       

      2.3  No Conflict; Required
Filings and Consents.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

          (a)  The
execution and delivery of this Agreement by the Company, and the performance of
the Company’s obligations hereunder and thereunder, will not (1) conflict with
or violate Articles of Incorporation, By-laws or other organizational documents,
(2) conflict with or violate any Legal Requirement applicable to the Company, or
by which any of its properties is bound or affected, or (3) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument to
which the Company is a party or by which the Company or any of its properties is
bound or affected, except where, in the case of clauses (ii) and (iii), any of
the foregoing would not, either individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.

       

          (b)  The
execution and delivery of this Agreement by the Company, and the performance of
its obligations hereunder and thereunder, will not require any prior consent,
approval or authorization, or prior filing with or notification to, any
Governmental Authority, except where the failure to obtain such prior consents,
approvals or permits, or to make such prior filings or notifications, would not
have or reasonably be expected to have a Material Adverse Effect.

      
         

        2.4  Material
Disclosure.  There has been no change in the business or
financial condition of the Company and its subsidiaries, taken as a whole, since
December 31, 2008, which would reasonably be expected to have a Material
Adverse Effect, except as has been disclosed or contained or reflected in any
report, schedule, form, statement or other document (together with all exhibits,
financial statements, schedules and any amendments thereto) that has been filed
by the Company with the Securities Exchange Commission (the “SEC”) prior to the
date of this Agreement.

         

        2.5  No
Integration.  Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D of the Securities Act (“Regulation D”)) has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any security (as defined in the
Securities Act), that is or will be integrated with the sale of the New Notes in
a manner that would require registration of the New Notes under the Securities
Act.

         

        2.6  No General
Solicitation.  Neither the Company nor any of its affiliates or
any other person acting on its or their behalf (other than the Holders or their
affiliates or any other person acting on their behalf, as to which no
representation is made) has solicited offers for, or offered or sold, the New
Notes by means of any form of general solicitation or general advertising within
the meaning of Rule 502(c) of Regulation D or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.

         

        2.7  Securities Law
Exemptions.  Assuming the accuracy of the representations and
warranties of the Holders contained herein and their compliance with their
agreements set forth herein, it is not necessary, in connection with the
issuance and sale of the New Notes to the Holders, to register the New Notes
under the Securities Act.

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        2.8  Public
Documents.  The Company has filed all reports, registration
statements, proxy statements, and other materials, together with any amendments
required to be made with respect thereto, that were required to be filed with
the SEC under the Securities Act or the Exchange Act (all such reports and
statements are collectively referred to herein as the “Commission
Filings”).  As of their respective filing dates, the Commission
Filings, including the financial statements contained therein, complied in all
material respects with all of the statutes and published rules and regulations
enforced or promulgated by the regulatory authority with which the Commission
Filings were filed, including, without limitation, that the Commission Filings
did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.

         

        2.9  Common
Stock.  All of the outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and
non-assessable.

         

        2.10  Shell Company
Status.  The Company is not now, and has not, prior to the date
of this Agreement, been a “shell company” as such term is defined in
Rule 12b-2 of the Exchange Act.

      

      
         

        3.  Representations and
Warranties of each Holder.

         

           Each Holder
represents and warrants to the Company, as of the date hereof, as
follows:

      

      
         

        3.1  Organization’s
Authority.  Such Holder is an entity duly organized and validly
existing under the laws of the jurisdiction of its organization with the
requisite power and authority to enter into this Agreement to which it is a
party and otherwise to carry out its obligations hereunder and
thereunder.

         

        3.2  Ownership of
Securities.  Such Holder is reinstating all of the Old Notes
set forth in Column I on such Holder’s Schedule I attached
hereto.  Such Holder will own all of such reinstated Old Notes free
and clear of any Liens.  Without limiting the foregoing, except for
such Holder’s obligations under this Agreement, such Holder has sole power of
disposition with respect to all such Old Notes, with no restrictions on its
rights of disposition pertaining thereto and no person or entity other than such
Holder has any right to direct or approve the disposition of any such Old
Notes.  All of such Holder’s Old Notes will be held for the account of
such Holder by the entity named on its signature page of this
Agreement.

         

        3.3  No Sale or
Distribution.  Such Holder is rescinding the New Notes, and
upon conversion of the New Notes will acquire the Conversion Shares issuable
upon conversion of the New Notes, for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the Securities
Act; provided,
however, that
by making the representations herein, such Holder does not agree to hold any of
the Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption (including under Section 4(1) of the
Securities Act or Rule 144) under the Securities Act and pursuant to the
applicable terms of the Transaction Documents.  Such Holder is
acquiring the Securities hereunder in the ordinary course of its
business.  Such Holder does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

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

         

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

         

        3.6  Transfer or
Resale.  Such Holder understands that (1) the Securities may
not be offered for sale, sold, assigned or transferred unless (a) the Securities
have been registered under the Securities Act or any state securities laws, (b)
the Company shall have received an opinion of counsel, in a generally acceptable
form, to the effect that such Securities to be sold, assigned or transferred may
be sold, assigned or transferred pursuant to an exemption from such
registration, or (c) such Holder provides the Company with reasonable assurance
that such Securities can be sold, assigned or transferred pursuant to Rule 144
or Rule 144A promulgated under the Securities Act, as amended (or a successor
rule thereto) (collectively, “Rule 144”); (2) any
sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person) through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (3)neither the Company nor any other
Person is under any obligation to register the Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder.  The Securities may be pledged in connection
with a bona fide margin account or other loan or financing arrangement secured
by the Securities and such pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Holder
effecting a pledge of Securities shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement, including, without limitation, this Section 3.8. 

         

        3.7  Validity;
Enforcement.  This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Holder and shall constitute
the legal, valid and binding obligations of such Holder enforceable against such
Holder in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        3.8  No
Conflicts.  The execution, delivery and performance by such
Holder of this Agreement, will not (1) result in a violation of the
organizational documents of such Holder or (2) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
such Holder is a party, or (3) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws) applicable to such Holder, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Holder to perform its obligations
hereunder.

      

      
         

        4.  Covenants.

      

      
         

        4.1  Confidentiality.  Each
Holder shall keep the existence and terms of the transaction confidential until
the issuer publicly announces the transaction, if required by law.

         

        4.2  No
Integration.  Neither the Company, nor any of its affiliates
(as defined in Rule 501(b) of Regulation D) will, directly or through any agent,
sell, offer for sale, solicit offers to buy or otherwise negotiate in respect
of, any security (as defined in the Securities Act), that is or will be
integrated with the reinstatement of the New Notes in a manner that would
require registration of the New Notes under the Securities Act.

         

        4.3  Cancellation; No
Distribution of New Notes.  Upon receipt of the rescinded New
Notes by the Company, such New Notes will be cancelled and void and will cease
to be outstanding.  The Company shall not resell or reissue the New
Notes in any manner that would cause the Holder to be engaged in a distribution
of the New Notes under the Securities Act.

         

        4.4  Tax
Treatment.  The parties agree to treat the rescission of the
New Notes in exchange for the reinstatement of the Old Notes as a taxable
exchange for United States federal income tax purposes, unless otherwise
required by law, and acknowledge that, depending upon the circumstances, the Old
Notes may bear original issue discount.

         

        4.5  Tacking
of Holding Period.  It
is the intention of the parties that the holding period of the Old Notes will be
reinstated to the time the Old Notes were issued to the Holders.  The
Company hereby covenants and agrees that it will promptly honor all requests for
conversion of the Old Notes and will deliver to the Holders certificates for
common stock free of any restrictive legend provided that such shares are issued
upon conversion of Old Notes which have been held for the requisite period under
Rule 144.

      

      
        
           

          5.  Miscellaneous.

        

      

      
         

        5.1  Governing
Law.  This Agreement shall be governed in all respects by the
internal laws of the State of New York without regard to principles of conflicts
of law or choice of law.

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        5.2  Further Assurances;
Additional Documents.  The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement upon the reasonable request of
the other party.

         

        5.3  Severability.  If
any term or provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.  Upon determination that any term or
other provision of this Agreement is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to attempt to agree
on a modification of this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by law in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the greatest extent possible.

         

        5.4  Entire
Agreement.  This Agreement represent the entire agreement and
understanding among the parties concerning the rescission and the other matters
described herein and therein and supersedes and replaces any and all prior
agreements and understandings.

         

        5.5  No Oral
Modification.  This Agreement may only be amended in writing
signed by the Company and by each Holder.

         

        5.6  Notices.  All
notices, requests and other communications hereunder shall be in writing and
shall be deemed to have been duly given at the time of receipt if delivered by
hand, by reputable overnight courier or by facsimile transmission (with receipt
of successful and full transmission) to the applicable parties hereto at the
address stated on the signature pages hereto or if any party shall have
designated a different address or facsimile number by notice to the other party
given as provided above, then to the last address or facsimile number so
designated.

         

        5.7  Submission to
Jurisdiction.  Each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any federal court located in the
state of New York or any New York state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated hereby, (ii)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (iii) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a federal or state court sitting in
the state of New York.

         

        5.8  Jury Trial
Waiver.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        5.9  Counterparts.  This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original and all of which together shall constitute one
instrument.  Facsimile signatures shall constitute original
signatures.

      

      
        
          
             

            6.  Certain
Definitions.

          

        

      

      
         

        6.1  Definitions.  For
purposes of this Agreement, the following terms shall have the following
meanings (capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the Old Notes):

         

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

         

        “Governmental
Authority” means the United States of America, any state, commonwealth,
territory or possession of the United States of America, any foreign state and
any political subdivision or quasi governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing.

         

        “Legal Requirement”
means applicable common law and any statute, ordinance, code or other law, rule,
regulation, order, technical or other written standard, requirement, policy or
procedure enacted, adopted, promulgated, applied or followed by any Governmental
Authority, including any judgment or order and all judicial decisions applying
common law or interpreting any other Legal Requirement, in each case, as
amended.

         

        “Lien” means any
security interest, any interest retained by the transferor under a conditional
sale or other title retention agreement, mortgage, lien, pledge, option,
encumbrance, adverse interest, constructive exception to, defect in or other
condition affecting title or other ownership interest of any kind, which
constitutes an interest in or claim against property, whether or not arising
pursuant to any Legal Requirement.

         

        “Material Adverse
Effect” means a material adverse effect on (1) the business or condition
(financial or otherwise) of the Company and its direct and indirect
subsidiaries, taken as a whole, (2) the ability of the Company to perform its
obligations under this Agreement or (3) the ability of the Company to issue the
New Notes in accordance with the terms of this Agreement.

         

        “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof, including in the United States of
America.

         

        “Securities” means the
Old Notes and the Conversion Shares.

         

        “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      [Signatures
on the following pages]

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      THE
COMPANY’S SIGNATURE PAGE TO RESCISSION AGREEMENT

      

      IN
WITNESS WHEREOF the parties have executed this Agreement on the date set forth
below.

       

      
        	 
      	
                ALLIED
      SECURITY INNOVATIONS, INC.

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	
                Anthony
      R. Shupin

              	 
	 
      	
                President
      and Chief Executive Officer

              	 
	 
      	 
      	 
	 
      	 
      	 
	
                Notice
      Address:

              	
                With
      a copy to:

              	 
	 
      	 
      	 
	
                Allied
      Security Innovations, Inc.

                1709
      Route 34

                Farmingdale,
      New Jersey 07727

                Attention:
      President and Chief Executive Officer

                Telephone:  (732)
      751-1115

                Facsimile:   (732)
      751-1130

              	
                Louis
      A. Brilleman, Esq.

                110
      Wall Street, 11th
      Floor

                New
      York, New York 10005

                 

                 

              	 

      

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      HOLDER’S
SIGNATURE PAGE TO RESCISSION AGREEMENT

       

      AJW
PARTNERS, LLC.

      By:  SMS
Group, LLC

      

      _____________________________

      Corey S.
Ribotsky, Manager

      

      

      

      AJW
MASTER FUND, LTD.

      By:  First
Street Manager II, LLC

      

      _____________________________

      Corey S.
Ribotsky, Manager

      

      

      

      NEW
MILLENNIUM CAPITAL PARTNERS II, LLC

      By:  First
Street Manager II, LLC

      

      _____________________________

      Corey S.
Ribotsky, Manager

      

      

      

      AJW
OFFSHORE, LTD.

      By:  First
Street Manager II, LLC

      

      ______________________________

      Corey S.
Ribotsky, Manager

      

      

      

      AJW
QUALIFIED PARTNERS, LLC

      By:  AJW
Manager, LLC

      

      ______________________________

      Corey S.
Ribotsky, Manager

      

      

      
        	
                Notice
      Address:

              	
                With
      a copy to:

              
	
                1044
      Northern Boulevard, Suite 305

                Roslyn,
      NY  11576

                Attention:  Corey S.
      Ribotsky

              	
                Yoel
      Goldfeder

                1044
      Northern Boulevard, Suite 305

                Roslyn,
      NY  11576

              

      

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      SCHEDULE
I

       

      AJW
PARTNERS, LLC

       

      

      
        	
                
                  Date(s)
      of Old Notes to be Exchanged and of New Notes to be
      received

                

              	 	
                
                  Column
      I – Current Principal Amount of Old Notes owned by
      Holder

                

              	 	
                
                  Column
      II -- New Notes to be cancelled

                

              
	 
      	 	 
      	 	 
      
	
                December
      31, 2001

              	 	
                $63,215.40            

              	 	 
      
	
                June
      13, 2002

              	 	
                $37,500.00            

              	 	 
      
	
                January
      14, 2003

              	 	
                $75,000.00            

              	 	 
      
	
                February
      28, 2003

              	 	
                $37,500.00            

              	 	 
      
	
                March
      31, 2003

              	 	
                $37,500.00            

              	 	 
      
	
                November
      30, 2004

              	 	
                $560,000.00            

              	 	 
      
	
                December
      31, 2006

              	 	
                $144,488.10            

              	 	 
      
	
                December
      31, 2007

              	 	
                $75,986.37            

              	 	 
      
	
                May
      16, 2008

              	 	 
      	 	
                $102,000.00            

              
	
                May
      16, 2008

              	 	 
      	 	
                $1,395,098.37            

              
	
                May
      16, 2008

              	 	 
      	 	
                $136,357.00            

              
	
                May
      16, 2008

              	 	 
      	 	
                $205,325.00            

              

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      SCHEDULE
I

       

      NEW
MILLENNIUM CAPITAL PARTNERS II, LLC

       

       

      
        
          	
                  
                    Date(s)
      of Old Notes to be Exchanged and of New Notes to be
      received

                  

                	 	
                  
                    Column
      I – Current Principal Amount of Old Notes owned by
      Holder

                  

                	 	
                  
                    Column
      II -- New Notes to be cancelled

                  

                
	 
      	 	 
      	 	 
      
	
                  December
      31, 2001

                	 	
                  $86,439.90            

                	 	 
      
	
                  June
      13, 2002

                	 	
                  $33,822.96            

                	 	 
      
	
                  November
      30, 2004

                	 	
                  $70,000.00            

                	 	 
      
	
                  October
      27, 2005

                	 	
                  $157,833.41            

                	 	 
      
	
                  December
      31, 2006

                	 	
                  $64,518.73            

                	 	 
      
	
                  December
      31, 2007

                	 	
                  $19,198.96            

                	 	 
      
	
                  May
      16, 2008

                	 	 
      	 	
                  $306,000.00            

                
	
                  May
      16, 2008

                	 	 
      	 	
                  $263,936.18            

                
	
                  May
      16, 2008

                	 	 
      	 	
                  $34,452.00            

                
	
                  May
      16, 2008

                	 	 
      	 	
                  $91,685.00            

                

        

      

       

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      SCHEDULE
I

       

      AJW
OFFSHORE, LTD.

       

       

      
        	
                
                  Date(s)
      of Old Notes to be Exchanged and of New Notes to be
      received

                

              	 	
                
                  Column
      I – Current Principal Amount of Old Notes owned by
      Holder

                

              	 	
                
                  Column
      II -- New Notes to be cancelled

                

              
	
                September
      30, 2002

              	 	
                $26,301.39            

              	 	 
      
	
                January
      14, 2003

              	 	
                $33,762.85            

              	
                 

              	 
      
	
                February
      28, 2003

              	 	
                $50,000.00            

              	
                 

              	 
      
	
                March
      31, 2003

              	 	
                $50,000.00            

              	
                 

              	 
      
	
                October
      1, 2003

              	 	
                $25,000.00            

              	 	 
      
	
                December
      8, 2003

              	 	
                $22,500.00            

              	 	 
      
	
                November
      30, 2004

              	 	
                $1,435,000.00            

              	 	 
      
	
                October
      27, 2005

              	 	
                $381,733.54            

              	 	 
      
	
                December
      31, 2006

              	 	
                $135,094.88            

              	 	 
      
	
                May
      16, 2008

              	 	 
      	 	
                $5,220,911.98            

              
	
                May
      16, 2008

              	 	 
      	 	
                $706,207.05            

              
	
                May
      16, 2008

              	 	 
      	 	
                $191,980.00            

              

      

       

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      SCHEDULE
I

       

      AJW
Master Fund, LTD.

       

       

      
        	
                
                  Date(s)
      of Old Notes to be Exchanged and of New Notes to be
      received

                

              	 	
                
                  Column
      I – Current Principal Amount of Old Notes owned by
      Holder

                

              	 	
                
                  Column
      II -- New Notes to be cancelled

                

              
	
                December
      31, 2007

              	 	
                $473,544.78            

              	 	 
      
	
                May
      16, 2008

              	 	 
      	 	
                $102,000.00            

              
	
                May
      16, 2008

              	 	 
      	 	
                $849,775.00            

              

      

       

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      SCHEDULE
I

       

      AJW
QUALIFIED PARTNERS, LLC

       

       

      
        	
                
                  Date(s)
      of Old Notes to be Exchanged and of New Notes to be
      received

                

              	 	
                
                  Column
      I – Current Principal Amount of Old Notes owned by
      Holder

                

              	 	
                
                  Column
      II -- New Notes to be cancelled

                

              
	
                September
      30, 2002

              	 	
                $32,225.58            

              	 	 
      
	
                January
      14, 2003

              	 	
                $27,083.19            

              	 	 
      
	
                February
      28, 2003

              	 	
                $37,500.00            

              	 	 
      
	
                March
      31, 2003

              	 	
                $37,500.00            

              	 	 
      
	
                October
      1, 2003

              	 	
                $25,000.00            

              	 	 
      
	
                December
      8, 2003

              	 	
                $22,500.00            

              	 	
                 
      

              
	
                November
      30, 2004

              	 	
                $1,435,000.00            

              	 	 
      
	
                October
      27, 2005

              	 	
                $103,774.40            

              	 	 
      
	
                December
      31, 2006

              	 	
                $192,444.55            

              	 	     
      
	
                May
      16, 2008

              	 	 
      	 	
                $3,776,694.44            

              
	
                May
      16, 2008

              	 	 
      	 	
                $273,475.00Unassociated Document

    EXHIBIT
10.1

    

    EMPLOYMENT
AGREEMENT

    

    This
Agreement (this “Agreement”) is entered into by and between China Polypeptide
Group, Inc., a Delaware corporation (the “Company”), and Richard Liu (the
“Employee”), effective as of March 1, 2010 (“Effective Date”).

    

    WHEREAS,
the Company desires to employ the Employee on the terms and conditions set forth
herein, and the Employee desires to be employed by the Company in such capacity
on such terms and conditions.

    

    NOW,
THEREFORE, in consideration of the mutual promises contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

     

    1.           Employment. The
Company hereby employs the Employee, and the Employee hereby accepts such
employment on the terms and conditions hereinafter set forth.

    

    2.           Term of Employment.
The initial term of employment under this Agreement shall be for a three (3)
year period commencing on the Effective Date (the “Term”) unless the Agreement
is terminated earlier in accordance with the provisions herein; provided that
such Term will be extended upon the same terms and conditions contained herein
and any additional terms and conditions upon expiration of the Term as mutually
agreed by both parties (an “Extended Term”) unless a written notice of
nonrenewal is given by either party at least ninety (90) days prior to the
expiration date of the Term or the Extended Term, as the case may
be.

    

    3.           Duties. The Employee
shall be appointed as Chief Financial Officer and, as such, the Employee shall
perform such duties and possess such authorities and privileges consistent with
such position and such duties and rights as may reasonably be assigned by and
subject to the direction of the Company’s Chief Executive Officer or any other
executive officer in similar capacities in writing from time to time during the
Term. The Company shall provide all necessary supports and convenience for the
performance of such duties of the Employee.  During the Term, the
Employee shall have no other employment or receive compensation for services
rendered to any other person other than the Company and any affiliated entities
without the consent of the Company.  Accordingly, the Employee agrees
to devote his full working time and best efforts in such capacities as set forth
herein to the business of the Company.  Notwithstanding the foregoing,
the Employee may engage in other activities, such as serving on the board of
directors or advisors of any entity and activities involving any professional,
charitable, educational, religious and similar types of entity provided that
such other activities do not materially interfere with or prohibit the
performance of the Employee’s duties under this Agreement, or conflict in any
material way or compete, directly or indirectly, with the business of the
Company or of its subsidiaries and affiliates.

    

    4.           Compensation. The
Employee’s compensation (the “Compensation”) shall consist of the
following:

     

    4.1               Annual Base Salary.
The Employee shall be paid an annual base salary equivalent to no less than RMB
600,000 per year, payable in equal monthly installments once every month, by the
Company or its designated subsidiaries or affiliates.  From time to
time during the Term (or the Extended Term, as the case may be), the Employee’s
base salary may be increased at the discretion of the Company, but shall in no
event be decreased from the amount of the base salary in effect at that time.
The Company shall review the Employee’s base salary at least on an annual
basis.

    

    4.2               Cash Bonus. In
addition to the Employee’s base salary, the Employee shall be eligible to
receive at the Company’s sole discretion, performance-based bonuses from time to
time in accordance with the Company’s bonus policy for executive
employees.

    

    4.3              Stock Award. The
Employee shall have the right to receive, in the form of a restricted stock
grant (the “Restricted Stock”), a) 8,000 shares of the Company’s common stock,
$0.0001 par value (the “Common Stock”), which shall vest immediately upon
execution of this Agreement, and b) an additional 90,000 shares of Common Stock,
which 90,000 shares shall vest in six (6) equal installments of 15,000 shares at
the beginning of each six-month period during the Term of this Agreement, with
the first installment of 15,000 shares vesting on March 1, 2010.  The
Restricted Stock shall be “restricted” and cannot be resold without their prior
registration or compliance with the terms of Rule 144 promulgated by the
Securities Act of 1933, as amended (the “Securities Act”) or an exemption from
the Securities Act.  The number of shares and/or kind of Restricted
Stock referenced in this section are subject to adjustments in the case of any
stock split, subdivision, reverse stock split, combination, recapitalization,
reclassification, reorganization, merger, consolidation, or similar
events.

    

    4.4              Stock Option Grant.
The Employee shall be eligible to be granted stock options (the “Stock Options”)
under the stock option plan or any other share incentive program of the Company
that is to be issued. The number of the Stock Options to be granted to the
Employee over the same vesting period shall be no less than those to be granted
to the Company’s Chief Executive Officer and/or any other such executive officer
in similar capacities with no less frequent vesting schedule than such other
executive officers.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    5.           Expenses.  The
Employee shall be reimbursed for all reasonable expenses for travel, lodging,
communication, entertainment and other expenses as incurred in connection with
the business of the Company in accordance with the Company’s business expense
policy in effect from time to time.  The Employee shall provide
receipts of such expenses.

     

    6.           Annual
Vacation.  The Employee shall be entitled to a paid annual
vacation of 10 business days in any given calendar year. The unused vacation
days may be carried forward to the following calendar year.

    

    7.            Other
Benefits.  During the Term, the Employee shall be afforded the
other welfare benefits, including, without limitation, health insurance and
retirement benefits, in accordance with the Company’s executive employee pension
or welfare benefit policies or plans and the applicable laws and
regulations.

    

    8.           Termination.
Notwithstanding Section 2 above, the Employee’s employment with the Company may
be terminable at any time during the Term or the Extended Term, as the case may
be (“Early Termination”) as follows:

    

    8.1              
By the Company, subject only to such notification requirements as are required
by this Section 8.1:

    

    
      	 
      	
              (i)

            	
              upon
      the Employee’s incapacitation by accident, sickness, or other circumstance
      which renders him mentally or physically incapable of performing the
      duties and services required of him hereunder, other than any such
      circumstance caused in performing the duties and services for the Company,
      for a period of at least 180 days during any 12-month
    period;

            

    

    

    
      	 
      	
              (ii)

            	
              for
      “Cause,” which for purposes of this Agreement shall mean the Employee has
      (a) engaged in gross negligence or willful misconduct that results in
      material harm to the Company, (b) repeatedly failed to perform his
      assigned duties after receiving written notification of such failure from
      the Company, (c) materially breached any material provision of this
      Agreement, (d) been convicted of a felony under the applicable laws
      (other than a traffic violation), (e) been declared by a court that
      the Employee is insane or incompetent to manage his business affairs, or
      (f) been habitual drug or alcohol abuse which materially impairs the
      Employee’s ability to perform his duties, in each case of which the
      Company shall be entitled to terminate the employment hereunder upon
      thirty (30) days’ prior written notice to the Employee, which notice shall
      state the reason for such termination;
or

            

    

    

    
      	 
      	
              (iii)

            	
              for
      any other reason, upon 90 days written notice to the Employee;
      and

            

    

    

    8.2              By
the Employee, subject only to such notification requirements as are required by
this Section 8.2:

    

    
      	 
      	
              (i)

            	
              for
      “Good Reason,” which for purposes of this Agreement shall mean (a) a
      material breach of any material provision of this Agreement by the
      Company, (b) a material  reduction in or adverse
      modification of the nature and scope of the Employee’s authority, duties
      and privileges while being employed (whether or not accompanied by a
      change in title), or (c) any reduction by the Company in the Employee’s
      Compensation as defined in Section 4 or the Company’s failure to pay to
      the Employee any portion of the Employee’s Compensation as defined in
      Section 4, but in each case only if such Good Reason has not been
      corrected or cured by the Company within 30 days after the Company has
      received a written notice from the Employee of Employee’s intent to
      terminate the Employee’s employment for Good Reason and specifying the
      basis for such termination, and the Employee’s termination shall become
      effective on the 31st day following the notice to the Company if the
      Company fails to remedy or cure the circumstances constituting Good Reason
      within such a 30-day period; or

            

    

    

    
      	 
      	
              (ii)

            	
              for
      any other reason, upon 90 days written notice to the
    Company.

            

    

    

    9.           Effect upon
Termination.

    

    9.1              Upon
the Early Termination of the Employee’s employment as defined in Section 8
above, the Employee shall be entitled to receive the following:

    

    (i)        In
the event, during the Term (or the Extended Term, as the case may be), the
Company terminates the Employee’s employment with the Company for any reason
other than Sections 8.1 (i) and 8.1 (ii), within thirty (30) days following such
Early Termination, the Employee shall receive from the Company (a) any accrued
and unpaid cash salary and bonus and any accrued and unvested Restricted Stock
and Stock Options for any prior year and on a pro rata basis for the year in
which such Termination occurs and (b) six (6) months, i.e., 50%, of the
Compensation (as defined in Section 4), including 50% of his then current annual
base salary, 50% of cash bonus equivalent to the average annual cash bonus
payments paid by the Company to the Employee in the preceding years while being
employed, and any non-vested Restricted Stock and Stock Options that otherwise
would have been vested during the six (6) months following the date of the Early
Termination.

    

    (ii)        In
the event, during the Term (or the Extended Term, as the case may be), the
Employee terminates the Employee’s employment with the Company pursuant to
Section 8.2 (i), within thirty (30) days upon such Early Termination, the
Employee shall receive from the Company (a) any accrued and unpaid cash salary
and bonus and any accrued and unvested Restricted Stock and Stock Options for
any prior year and on a pro rata basis for the year in which such early
Termination occurs as of the date of Early Termination, and (b) three (3)
months, i.e., 25%, of the Compensation (as defined in Section 4), including 25%
of his then current annual base salary, 25% of cash bonus equivalent to the
average annual cash bonus payments paid by the Company to the Employee in the
preceding years while being employed, any non-vested Restricted Stock and Stock
Options that otherwise would have been vested during the three (3) months
following the date of the Early Termination.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    9.2              In
the event of Early Termination pursuant to Sections 8.1 (i), (ii) and 8.2 (ii),
within thirty (30) days following the date of such Early Termination, the
Company shall pay the Employee any accrued and unpaid cash salary and bonus and
any accrued and unvested Restricted Stock and Stock Options for any prior fiscal
year and on a pro rata basis for the year in which such Termination
occurs.

    

    9.3              All
Stock Options that are vested to the Employee shall remain exercisable until the
one-year anniversary following the termination or the expiration of the
Employee’s employment or their original maximum term without regard to any early
termination provisions.

    

    10.           Indemnification. The
Company shall indemnify, defend and hold the Employee harmless for all losses,
costs, expenses or liabilities based upon or related to acts, decisions or
omissions made by the Employee in good faith while performing services within
the scope of his employment for the Company.  The Company’s obligation
under this Section 10 shall survive any termination or expiration of the
Employee’s employment.

    

    11.           Confidential
Information. The Employee agrees that both during the Term and one year
thereafter to keep secret and confidential all information labeled confidential
or not generally known which is heretofore or hereafter acquired concerning the
business and affairs of the Company, including without limitation, information
regarding trade secrets, proprietary processes, confidential business plans,
market research data and financial data, and further agrees not to disclose any
such information to any person, firm, or corporation or use the same in any
manner other than in furtherance of the business or affairs of the Company or
unless such information shall become public knowledge by other
means.  The Employee agrees that such information is a valuable,
special, and unique asset of Company. Upon the termination of the Employee’s
employment with Company, the Employee shall immediately return to the Company
all documents, records, notebooks, and similar repositories of information
relating to confidential information of the Company and/or the development of
any inventions. The provisions of this Section 11 shall survive the termination
of this Agreement and the Employee’s employment for one year.

    

     12.           Notice. Any and all
notices or other communications of deliveries required or permitted to be
provided hereunder shall be deemed to have been duly given if in writing and
hand delivered or sent by certified or registered mail, return receipt
requested, to the appropriate address indicated below or to such other address
as may be given in a notice sent to all parties hereto:

    

    
      	 
      	
              (a)

            	
              If
      to the Company, to:

            
	 
      	
              Dongliang
      Chen

            

    

    
      	 
      	
              China
      Polypeptide Group, Inc,

            
	 
      	
              No.
      11 Jiangda Road

            

    

    
      	 
      	
              Jianghan
      Economical Development Zone

            
	 
      	
              Wuhan
      430023, PRC

            

    

    

    
      	 
      	
              (b)

            	
              If
      to the Employee by email or to the address or facsimile number that is on
      file with the Company from time to time, as may be updated by the
      Employee.

            

    

    

    13.           Entire Agreement.
Except as provided below, this Agreement contains the complete agreement and
understanding concerning the employment arrangement between the parties and
shall supersede all other agreements, understandings or commitments between the
parties as to such subject matter.

    

    14.           Parties Bound. The
terms, promises, covenants, and agreements contained in this Agreement shall
apply to, be binding upon, and inure to the benefit of the parties hereto and
their respective subsidiaries, affiliates, successors and assigns (whether
direct or indirect, by purchase, merger, consolidation or otherwise); provided,
however, that this Agreement may not be assigned by the Company or the Employee
without the prior written consent of the other party.

    

    15.           Modification; Waiver.
No provision of this Agreement may be modified, waived or discharged unless
modification, waiver or discharge is agreed to in writing signed by the Employee
and the Company. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by such other party will be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.

    

    16.           Governing Law. The
validity of this Agreement and any of the terms or provisions as well as the
rights and duties of the parties hereunder shall be governed by the laws of Hong
Kong Special Administrative Region of PRC, without reference to any conflict of
law or choice of law principles thereof.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

    17.           Arbitration.

    

    17.1              Except
as provided in Section 17.2, any dispute, claim or controversy arising in
connection with this Agreement shall be settled by arbitration in Hong Kong in
accordance with Hong Kong International Arbitration Institute (except as
modified herein). Arbitration shall be the sole method of resolving disputes not
settled by mutual agreement. The determination of the arbitrators shall be
final, not subject to appeal, and binding on all parties and may be enforced by
appropriate judicial order of any court of competent jurisdiction.

    

    17.2              Notwithstanding
the foregoing, in the event of any claim or controversy arising in connection
with this Agreement for which the remedy is equitable or injunctive relief, the
aggrieved party shall be entitled to seek injunctive or other equitable relief
from any court of competent jurisdiction.

    

    18           Validity. The
invalidity or unenforceability of any provision or provisions of this Agreement
will not affect the validity or enforceability of any other provision of this
Agreement, which will remain in full force and effect.

    

    19.           Counterparts. This
Agreement may be executed in multiple original counterparts, each of which shall
be deemed an original and all of which together shall constitute but one and the
same document.

    

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

    

    
      	 
      	
              China
      Polypeptide Group, Inc.

            
	 
      	 
      	 
      
	 
      	 
      	
              /S/
      Dongliang Chen

            
	 
      	 
      	
              Dongliang
      Chen

            
	 
      	 
      	
              Chairman
      & Chief Executive Officer

            
	 
      	 
      	 
      
	 
      	
              Employee

            
	 
      	 
      	 
      
	 
      	 
      	
              /s/
      Richard Liu

            
	 
      	 
      	
              Richard
      Liu

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}]]