Document:

ABCS(2007)2002

     

    Mortgage
Contract

    

    Mortagee (full name):
Agricultural Bank of China, Kunming Shuanglong Branch

     

    Mortgagor: Kunming Shenghuo
Pharmaceutical (group) Co., Ltd

    

    This
Mortgage Contract is entered into by and among the two parties in accordance
with relevant Chinese laws and regulations for purpose of ensuring that Kunming
Shenghuo Pharmaceutical (group) Co., Ltd. will repay the loan under the Loan
Contract as above mentioned.

    

    1.
Type and Amount of the Creditor’s Principal Claim

     

    The
creditor’s principal claim guaranteed is the loan borrowed for current capital
in the amount of RMB10 million.

     

    2.
The Scope of Guaranty of Mortgage

     

    The scope
of this guaranty of mortgage includes the amount of creditor’s principal claim
and the interest thereof, default fine, compensation for damage and all kinds of
relevant expenses on for the mortgagee to realize the creditor’s claim and the
mortgaged right.

     

    3.
Collateral

     

    The
mortgagor agrees on the mortgagor of land and its attachments, as to the details
of collateral please find the List of Mortgage of Real Estate
as attached, which constitutes the integral part of this Contract and has
same legal force and effect as in the Contract; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
provisional price of the above mentioned collateral is RMB14, 994,259 while the
terminal value will be determined by its actual disposing price.

     

    4.
Covenants of the Mortgagor

     

    4.1 The
Mortgagor has obtained authorization necessary to enter into this Contract
pursuant to relevant regulations and procedures.

     

    4.2 The
full and undisputed ownership and disposition right of the collateral is
entitled to the mortgagor.

     

    4.3 The
collateral is negotiable or transferable according to law.

     

    4.4 Such
cases as the collateral has been sealed up, distrained or supervised would not
happen.

     

    4.5 The
mortgagor shall make a full and accurate disclosure to the extent that the money
and collateral such as tax in default, construction mortgages have been
mortgaged or rented.

     

    4.6 The
Mortgagor has obtained approval from co-owners of the right to be pledged under
this Contract.

     

    4.7
During the term of mortgage, the mortgagor shall inform the mortgagee in written
for any of following cases:

     

    4.7.1 The
collateral has been sealed up, distrained, supervised or has been taken other
enforcement actions.

     

    4.7.2 The
mortgagor changed the capital structure or operation system, include but not
limited to contract operation, leasing, shareholding system transformation,
joint operation, merger, separation, partnership, asset transferring, and
etc.

     

    4.7.3 The
business licenses of the mortgagor has been cancelled or revoked, or he is
ordered to close down or was terminated for other causes.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.7.4 The
mortgagor applies for bankruptcy, reorganization, reconciliation or is the
subject of bankruptcy and reorganization applications.

     

    4.8 There
is no existence of other cases that would affect the realization of
collateral.

     

    5.
Effect of the Collateral

     

    The
effect of collateral is extended to the ancillary component, incidental right,
subrogation of mortgage or other property and rights associated with the
collateral according to laws and regulations.

     

    6.
Management and Utility of the Collateral

     

    6.1 The
collateral under this Contract shall be kept by the mortgagor; the mortgagor
shall be liable for the management of utility of the collateral. And the
mortgagee shall be entitled to supervise and review how the collateral was
managed and used.

     

    6.2
During the term of mortgage, the mortgagor may not grant or transfer, rent,
remortgage the collateral or dispose it in other ways without the written
approval of the mortgagee. Where the written approval is available, the proceeds
from the collateral disposition shall firstly be used to liquidate the secured
creditor’s principal claim and the escrow.

     

    6.3 Where
the collateral was damaged, lost, expropriated, or was owned by the third party
resulted from the affiliation, mixture or process of the collateral, the
mortgagor shall take active measures to prevent the loss from increasing,
meanwhile shall notify the mortgagee in written. The mortgagee is entitled
to obtain the indemnity at first priority. Where the performance term of the
secured creditor’s claim has not elapsed, the mortgagee is entitled to liquidate
the debt or to escrow in advance.

     

    6.4
During the term of mortgage, where the value of collateral is decreased, the
mortgagee is entitled to ask the mortgagor resuming original value of the
collateral or offering a guaranty which is equivalent to the decreased value and
needs to be recognized by the mortgagee.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      7.
Insurance of the Collateral

       

    

    
      7.1 The
mortgagor shall effect the insurance for the collateral at the request of the
mortgagee and designate the mortgagee as the first beneficiary. The original
insurance document shall be delivered to the mortgagee for storage.

       

    

    
      7.2 The
mortgagor shall be liable for the insurance premiums and pay it in full amount
and on time. It also requires the mortgagor perform other obligations under the
insurance contract (including the insurance document or other insurance
certificate). During the term of mortgage, where the mortgagor didn’t pay the
insurance premiums or effect (or renew) the insurance contract on time, the
mortgagee is entitled to make advance payment of the insurance premiums or
effect the insurance contract on behalf of the mortgagor, while the mortgagor
shall be liable for those expenses. The mortgagor agrees that the mortgagee
could collect the above mentioned expenses from its account opened at the
mortgagee.

       

    

    
      7.3
During the term of mortgage, the mortgagor may not unilaterally or negotiate
with the insurer to change or terminated the insurance contract without the
written approval of mortgagee; neither should he waive the right to insurance
claims or the right to claim compensation against the third party.

       

    

    
      7.4
During the term of mortgage, where an insurance incident incurred to the
collateral, the mortgagor shall immediately inform the insurer and mortgagee,
and shall be responsible to claim compensation. Where the mortgagee didn’t
perform his obligation of notification or claiming compensation, causing the
loss of the mortgagee, the mortgagor shall be liable for indemnity.

       

    

    
       
8.
Registration of Mortgage

       

    

    
      8.1 The
mortgagor shall register this Mortgage Contract with relevant registration
authorities within 5 days from the date of its execution; all of those
certificates, mortgage registration document associated with the collateral
shall be kept by the mortgagee.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    
      8.2
During the term of mortgage, where the registration needs to be changed, the
mortgagor shall be liable to do so.

       

    

    
      8.3
During the term of mortgage, where the mortgaged right is transferred by the
mortgagor according to this Contract; the mortgagor shall be in assistance with
the mortgagee and transferee on the change of registration.

       

    

    
      9.
Transfer of Mortgaged Right

       

    

    
       
Where
part of the creditor’s claim is transferred by the mortgagee, he is entitled not
to transfer the corresponding mortgaged right.

       

    

    
       
10.
Realization of Mortgaged Right

       

    

    10.1
Under any of the following circumstances, the mortgagee has the right to
exercise the mortgaged right:

     

    10.1.1
The mortgagee is not paid at the maturity of the obligation under the principal
contract.

     

    10.1.2
The business licenses of the debtor or mortgagor has been cancelled or revoked,
or he is ordered to close down or was terminated for other causes.

     

    10.1.3
The People’s Court has accepted the bankruptcy application of the debtor or
mortgagor or has made the determination of a settlement.

     

    10.1.4
The debtor or mortgagor was dead or was declared lost or dead.

     

    10.1.5
The collateral has been sealed up, distrained, supervised or has been taken
other enforcement actions.

     

    10.1.6
The collateral was damaged, lost or expropriated.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.1.7
The mortgagor didn’t resume the value of the collateral or offer the
corresponding guaranty at the request of mortgagee.

     

    10.1.8
The mortgagor violated those obligations under this Contract.

     

    10.1.9
Other circumstances that have material effect on the realization of mortgaged
right.

     

    10.2
Where more than two material guarantors for the creditor’s claim under this
Contract exist in the mean time, the mortgagee is entitled to exercise the
security right to any one of the collateral or both of them.

     

    10.3
Where the mortgagor is the third person other than the debtor, meanwhile the
debtor has offered material guaranty for the creditor’s claim under the
principal contract, and the mortgagor has waived this security right, the
mortgagor agrees to offer a guaranty of mortgage for the creditor’s claim under
the principal contract.

     

    11.
Liability for Breach of Contract

     

    11.1
After this Contract takes effect, where the mortgagee didn’t perform his
obligations, resulting in the loss of mortgagor, the mortgagee shall be liable
for the indemnity.

     

    11.2 The
mortgagor shall indemnify the mortgagee in case of committing any of the
following acts:

     

    11.2.1
Didn’t obtain legal and effect authorization which is necessary for the guaranty
under this Contract.

     

    11.2.2
Didn’t perform his obligation of making a full and accurate disclosure to the
extent that there is a existence of tax in default, construction mortgage,
co-ownership of the collateral and a dispute over the collateral, or the
collateral was mortgaged or rented, or the collateral has been sealed up,
distrained or supervised.

     

    11.2.3
Didn’t register the Mortgage Contract according to the provisions
herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11.2.4
Disposed the collateral without the written approval of the
mortgagee.

     

    11.2.5
Didn’t resume the value of the collateral or offer the corresponding guaranty at
the request of the mortgagee.

     

    11.2.6
Other activities that have violated the agreement under this Contract or
affected the realization of mortgaged right.

     

    12.
Liability for Expenses

     

    The
mortgagor shall be liable for incurred costs in the course of collateral
appraisement, evaluation, storage, registration, notarization and
escrow.

     

    13.
Resolution of Disputes

     

    Any
dispute arising from this Contract shall be resolved by both parties through
friendly discussion, or

     

    12.1
Shall be resolved by litigation which falls within the jurisdiction of People’s
Court in the mortgagee’s place of residence or by arbitration.

     

    12.2
During the course of the litigation or arbitration, this Contract shall be
performed except for the part under dispute.

     

    14.
Other Matters

     

    14.1 The
mortgagor hereby acknowledged the receipt of the principal contract and have
read and understood this contract secured by the mortgagor.

     

    15.
Effect of the Contract

     

    This
Contract shall take effect from the date of its execution.

     

    16. This
Contract is made out in 4 copies and each one for the Mortgagee, the Mortgagor,
the Authority of Mortgage and the Public Notary Office. Each copy has same legal
force and effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    17.
Reminder

     

    The
mortgagee has notified the mortgagor to make a complete and accurate
understanding for each provision under this Contract and have made explanations
for corresponding provisions as per the requirement of the mortgagor. Both
parties reached an agreement on this Contract.

     

    Mortgagee:

     

    Agricultural
Bank of China, Kunming Shuanglong Branch

     

    Signature: Zuowu
Zhou

    

    Mortgagor:

     

    Kunming
Shenghuo Pharmaceutical (group) Co., Ltd.

     

    Signature: Guihua
Lan

     

    Date of
Execution: January 2010

     

    Place of
Execution: Kunming

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    List
of Mortgage of Real Estate

    

    Mortgagee
(full name):

     

    Agricultural
Bank of China, Kunming Shuanglong Branch

    

    Mortgagor:

     

    Kunming
Shenghuo Pharmaceutical (group) Co., Ltd.

    

    Collateral:  land and its
attachments

    

    Provisional price of the collateral: RMB14,
994,259

    

    This List
constitutes an integral part of the Mortgage Contract.

    

    Mortgagee:

     

    Agricultural
Bank of China, Kunming Shuanglong Branch

     

    Signature: Zuowu
Zhou

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Mortgagor:

     

    Kunming
Shenghuo Pharmaceutical (group) Co., Ltd.

     

    Signature: Guihua
Lan

    

    Date: January
2010

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      Notary
Certificate

       

    

    
      (2010)
Yun Kun Zhen Yuan Zi No.:1986

       

    

    
      Applicant:

       

    

    Mortgagee: Agricultural Bank
of China, Kunming Shuanglong Branch

     

    Place of Residence: No.199
Tang Shuang Road, Kunming City

     

    Person-in-charge: Zuowu
Zhou

     

    Mortgagor: Kunming Shenghuo
Pharmaceutical (group) Co., Ltd.

     

    
      Place of residence: No.2 Jing
You Road, Kunming National Economy

       

    

    
      And
Technology Developing District

       

    

    
      Legal representative: Guihua
Lan

       

    

    
      Business License No.:
530100400000723

    

    

    
      Notarization: The Mortgage
Contract

       

    

    
      Both
parties agree on the notarization application for the above mentioned
Contract on January 26, 2010.

    

     

    
      We hereby
prove that both parties have signed the above mentioned Mortgage
Contract upon consensus. The mortgagee is a qualified financial institution
engaging in RMB loan business and its governor is entitled
to sign this Contract on behalf of his bank; while the Mortgagor is a
qualified entity to sign this Contract.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    This
mortgage Contract is entered into by those two parties according to
relevant laws and regulations of China for purpose of ensuring that Kunming
Shenghuo Pharmaceutical (group) Co., Ltd. will repay the loan under the Loan
Contract as above mentioned. This Contract is secured by the land located in
No.11-2, Kunming National Economy and Technology Developing Zone held by Kunming
Shenghuo Pharmaceutical Co., Ltd., with an amount of guaranty of RMB10 million.
Upon examination, the mortgagee agrees to accept the guaranty of mortgage
offered by the mortgagor. Specific provisions such as Amount of Guaranty, Term
of Guaranty, Way of Payment, Rights and Obligations of Both Parties, Liability
for Breach of Contract have been clarified therein.

    

    Based
upon the above mentioned facts, we hereby certify that the above Mortgage
Contract is dated January 26, 2010, and is entered into at Kunming City, Yunnan
Province by and among Zuowu Zhou, the governor of Agricultural Bank of China,
Kunming Shuanglong Branch and Guihua Lan, the legal representative of Kunming
Shenghuo Pharmaceutical (group) Co., Ltd. This Contract entered into by both
parties is in compliance with Article 55 of The General Principles of the Civil
Law of the People’s Republic of China; the signatures and seals of both parties
are found to be authentic; the contents of this Contract are in compliance with
regulations of The Contract Law of the People’s Republic of China and The
Property Law of the People’s Republic of China, respectively.

    

    Pursuant
to Article 187 of The Property Law of the People’s Republic of China, where the
real estate is mortgaged, the collateral is established from the date of
registration with the local authorities.

    

    Issued
by:

     

    
      Juming
Feng,

    

    Zhenyuan
Public Notary Office, Kunming City,

    Yunnan
Province, P.R.C.

    Date:
January 26, 2010THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER SUCH ACT OR ON OPINION OF COUNSEL THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.

     

    STOCK
PURCHASE WARRANT

     

    April 20,
2007

     

    THIS
WARRANT CERTIFIES THAT, for value received, CCG Investor Relations Partners LLC
(“Holder”) is entitled to purchase up to 200,000 fully-paid and non-assessable
shares of the Common Stock, par value $.0001 per share (the “Shares”) of China
Shenghuo at a price of $3.50 per Share, subject to adjustment pursuant to
Article 2 hereof (the “Warrant Price”), subject to the provisions and upon the
terms and conditions of set forth herein.

     

    ARTICLE
I

     

    TERM AND
EXERCISE

     

    1.1         Term: Notice of
Expiration. This Warrant is exercisable, in whole or in part, at any time
and from time to time on or before 5:00 p.m. California time on the fourth
anniversary date of this Warrant, April 19th, 2011
(“Expiration Date”). The Company shall give Holder written notice of Holder’s
right to exercise this Warrant in the form attached as Appendix A at least 30
days before the Expiration Date. If the notice is not so given, the Expiration
Date shall automatically be extended until 30 days after the date the Company
delivers the notice to Holder.

     

    1.2          Method of Exercise.
Holder may exercise this Warrant by delivering this Warrant and a duly executed
Notice of Exercise in substantially the form attached as Appendix B to the
principal office of the Company. Unless Holder is exercising the conversion
right set forth in Section 1.3, Holder shall also deliver to the Company a check
for the aggregate Warrant Price for the Shares being purchased.

     

    1.3          Conversion Right. In
lieu of exercising this Warrant as specified in Section 1.2, Holder may from
time to time convert this Warrant, in whole or in part, into a number of Shares
determined by dividing (a) the aggregate fair market value of the Shares or
other securities otherwise issuable upon exercise of this Warrant minus the
aggregate Warrant Price of such Shares by (b) the fair market value of one
Share. The fair market value of the Shares shall be determined pursuant to
Section 1.5.

     

    1.4          [Intentionally
Omitted]

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    1.5          Fair Market Value. If
the Shares are traded regularly in a public market, the fair market value of the
Shares shall be the last sale price or bid price reported for the business day
immediately before Holder delivers its Notice of Exercise to the Company. If the
Shares are not regularly traded, the Board of Directors of the Company shall
determine fair market value in its good faith judgment.

     

    1.6          Delivery of Certificate and
New Warrant. Promptly after the Holder exercises or converts this
Warrant, the Company shall deliver to Holder certificates for the Shares
acquired and, if this Warrant has not been fully exercised or converted and has
not expired, a new Warrant representing the Shares not so acquired.

     

    1.7          Lost or Destroyed
Warrant. Upon receipt of evidence reasonably satisfactory to Company of
the ownership of and the loss, theft, destruction or mutilation of this Warrant
and (in the case of loss, theft or destruction) upon delivery of an indemnity
agreement reasonably satisfactory to Company, or (in the case of mutilation)
upon surrender and cancellation of the mutilated Warrant, Company will execute
and deliver, in lieu thereof, a new Warrant of like tenor. This Warrant is not a
negotiable instrument and is transferable only in accordance with the provisions
of Section 3.3.

     

    1.8          Repurchase on Sale, Merger,
or Consolidation of the Company.

     

    1.8.1      Acquisition. For the
purpose of this Warrant, “Acquisition” means any sale, license, or other
disposition of substantially all of the assets of the Company, or any
reorganization, consolidation, or merger of the Company where the Company is not
the surviving corporation and the securities issued with respect to the
Company’s securities outstanding immediately before the transaction represent
less than 50% of the beneficial ownership of the new entity immediately after
the transaction.

     

    1.8.2      Assumption of
Warrant. If, upon the closing of any Acquisition, the successor entity
assumes the obligations of this Warrant, then this Warrant shall be exercisable
for the same securities, cash, and property as would be payable for the Share’s
issuable upon exercise of the unexercised portion of this Warrant as if such
Shares were outstanding on the record date for the Acquisition and subsequent
closing. The Warrant Price shall be adjusted accordingly. The Company shall use
reasonable efforts to cause the surviving corporation to assume the obligations
of this Warrant.

     

    1.8.3      Non-Assumption. If
upon the closing of any Acquisition, the successor entity does not assume the
obligations of this Warrant and Holder has not otherwise exercised this Warrant
in full, then the unexercised portion of this Warrant shall be deemed to have
been automatically converted pursuant to Section 1.3. This board of directors of
the Company shall then reasonably and in good faith calculate the pro rata
amount of cash, property, and securities that Holder would be entitled to
receive if Holder had exercised the unexercised portion of this Warrant in full
for cash immediately before the record date for determining the shareholders
entitled to participate in the Acquisition (the “Gross Proceeds”). The Company
shall then distribute to Holder an amount of such cash, property, and
securities, in the same proportion as distributed to the other shareholders of
the Company, equal in value to the Gross Proceeds less the aggregate Warrant
Price of the unexercised portion of this Warrant, but not less than
zero.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    1.9           Purchase Right.
Notwithstanding the foregoing, at the election of Holder, the Company shall
purchase the unexercised portion of this Warrant for cash upon the closing of
any Acquisition for an amount equal to (a) the fair market value of any
consideration that would have been received by Holder in consideration of the
Shares had Holder exercised the unexercised portion of this Warrant immediately
before the record date for determining the shareholders entitled to participate
in the proceeds of the Acquisition, less (b) the aggregate Warrant Price of the
Shares, but in no event less than zero.

     

    ARTICLE
II

     

    ADJUSTMENTS TO THE
SHARES

     

    2.1           Certain Definitions.
As used in this Article II, the following terms have the following respective
meanings:

     

    (a)           “Option”
means any right, option, or warrant to subscribe for, purchase, or otherwise
acquire common stock or Convertible Securities.

     

    (b)           “Convertible
Securities” means any evidences of indebtedness, shares of stock, or other
securities directly or indirectly convertible into or exchangeable for common
stock.

     

    (c)           “Dilutive
Issue” means the issuance of Additional Common Shares at a price below the
Warrant Exercise Price.

     

    (d)           “Issue”
means to grant, issue, sell, assume, or fix a record date for determining
persons entitled to receive, any security (including Options), whichever of the
foregoing is the first to occur.

     

    (e)           “Additional
Common Shares” means all common stock of the Company (including reissued shares)
Issued (or deemed to be Issued pursuant to Section 2.2) after the date of this
Warrant. Additional Common Shares does not include, however, any common stock
Issued in a transaction described in Section 2.10, 2.11, or 2.12; any common
stock Issued upon conversion of preferred stock outstanding on the date of this
Warrant; the Shares; or common stock Issued as incentive or in a non-financing
transaction to employees, officers, directors, or consultants to the Company. If
the Shares are ultimately convertible into securities other than common stock,
“Additional Common Shares” shall mean all such other securities (including
reissued securities) Issued (or deemed to be Issued) after the date of this
Warrant, and all references in this Article to common stock shall be deemed to
refer to such other securities.

     

    2.2           Deemed Issuance of
Additional Common Shares. The shares of common stock ultimately Issuable
upon exercise of an Option (including the shares of common stock ultimately
Issuable upon conversion of exercise of a Convertible Security Issuable pursuant
to an Option) are deemed to be Issued when the Option is Issued. The shares of
common stock ultimately Issuable upon conversion of exercise of a Convertible
Security (other than a Convertible Security Issued pursuant to an Option) shall
be deemed Issued upon Issuance of the Convertible Security. The maximum amount
of common stock Issuable is determine without regard to any future adjustments
permitted under the instrument creating the Options or Convertible
Securities.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    2.3          Adjustment of Warrant for
Dilutive Issuances.

     

    2.3.1      Adjustment. If the
Company issues Additional Common Shares after the date of this Warrant in a
Dilutive Issue, the Warrant Price shall be reduced to the new Series A
Conversion Price (as such term is defined in the Amended and Restated Articles
of Incorporation of the Company, as hereinafter amended from time to time) after
the Dilutive Issue.

     

    2.3.2      Adjustment of Number of
Shares. Upon each Dilutive Issue, the number of Shares Issuable upon
exercise of this Warrant shall be increased to equal the product obtained by
multiplying the number of Shares Issuable on exercise of this Warrant by a
fraction the numerator of which is the Series A Conversion Price prior to the
Dilutive Issue and the denominator is the Series A Conversion Price immediately
after the Dilutive Issue.

     

    2.3.3      No Adjustment for Issuances
Following Deemed Issuances. No Adjustment to the Warrant Price or Shares
Issuable upon exercise of this Warrant shall be made upon the exercise of
Options or conversion of Convertible Securities.

    

    2.4          Adjustment Following Changes
in Terms of Options or Convertible Securities. If the consideration
payable to, or the amount of common stock Issuable by, the Company increases or
decreases, respectively, pursuant to the terms of any outstanding Options or
Convertible Securities, the Warrant Shares shall be recomputed to reflect such
increase or decrease. The recomputation shall be made as of the time of the
Issuance of the Options or Convertible Securities. Any changes in the Warrant
Shares that occurred after such Issuance because other Additional Common Shares
were Issued or deemed Issued shall also be recomputed.

    

    2.5          Recomputation Upon
Expiration of Options or Convertible Securities. The Warrant Shares
computed upon the original Issue of any Options or Convertible Securities, and
any subsequent adjustments based thereon, shall be recomputed when any Options
or rights of conversion under Convertible Securities expire without having been
exercised. In the case of Convertible Securities or Options for common stock,
the Warrant Shares shall be recomputed as if the only Additional Common Shares
Issued were the shares of common stock actually Issued upon the exercise of such
securities, if any, and as if the only consideration received therefor was the
consideration actually received upon the Issue, exercise, or conversion of the
Options or Convertible Securities. In the case of Options for Convertible
Securities, the Warrant Shares shall be recomputed as if the only convertible
Securities Issued were the Convertible Securities actually Issued upon the
exercise thereof, if any, and as if the only consideration received therefor was
the consideration actually received by the Company (determined pursuant to
Section 2.9), if any, upon the Issue of the Options for the Convertible
Securities.

     

    2.6          30-Day Options. In
the case of any Options that expire by their terms not more than 30 days after
the date of Issue thereof no adjustment of the Warrant Shares shall be made
until the expiration or exercise of all such Options.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    2.7          Computation of
Consideration. The consideration received by the Company for the Issue of
any Additional Common shares shall be computed as follows:

     

    2.7.1      Cash. Cash shall be
valued at the amount of case received by the Corporation, excluding amounts paid
or payable for accrued interest or accrued dividends.

     

    2.7.2      Property. Property
other than cash shall be computed at the fair market value thereof at the time
of Issue, as determined in good faith by the Board of Directors of the
Company.

     

    2.7.3      Mixed Consideration.
The consideration for Additional Common Shares Issued together with other
property of the Company for consideration that covers both shall be determined
in good faith by the Board of Directors.

     

    2.7.4      Options and Convertible
Securities. The consideration per Additional Common Share for Options and
Convertibles shall be determined by dividing: (a) the total amount, if any,
received or receivable by the Company for the Issue of the Options or
Convertible Securities, plus the minimum amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Company upon exercise of the Options or conversion of the Convertible
Securities, by (b) the maximum amount of common stock (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such number) ultimately Issuable upon the
exercise of such Options or the conversion of such Convertible
Securities.

     

    2.8          Stock Dividends, Splits,
Etc. If the Company declares or pays a dividend on its common stock (or
the Shares if the Shares are securities other than common stock) payable in
common stock, Options, or Convertible Securities, subdivides the outstanding
common stock into a greater amount of common stock, or, if the Shares are
securities other than common stock, subdivide the Shares in a transaction that
increases the amount of common stock into which the Shares are convertible, then
upon exercise of this Warrant, for each Share acquired, Holder shall receive,
without cost to Holder, the total number and kind of securities to which Holder
would have been entitled had Holder owned the Shares of record as of the date
the dividend or subdivision occurred.

     

    2.9          Reclassification,
Reorganization, Consolidation or Merger. Subject to Section 1.8, upon any
reorganization, consolidation, merger, or other event that results in a
reclassification of the securities Issuable upon exercise or conversion of this
Warrant, Holder shall be entitled to receive, upon exercise or conversion of
this Warrant, the number and kind of securities and property that Holder would
have received for the Shares if this Warrant had been exercised immediately
before such reclassification, reorganization, consolidation, or merger. Such an
event shall include any automatic conversion of the outstanding or Issuable
securities of the Company of the same class or series as the Shares to common
stock pursuant to the terms of the Company’s Articles of Incorporation upon the
closing of a registered public offering of the Company’s common stock. The
Company or its successor shall promptly issue to Holder a new Warrant for such
new securities or other property. The new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 2 including, without limitation, adjustments to the
Warrants

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    2.10         Adjustments for
Combinations, Etc. If the outstanding Shares (or the outstanding
securities into which the Shares are directly or indirectly convertible) are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.

     

    2.11         No Impairment. The
Company shall not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue,
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Company, but shall at all times in good faith assist in
carrying out of all the provisions of this Article 2 and in taking all such
action as may be necessary or appropriate to protect Holder’s right under this
Article against impairment. If the Company takes any action affecting the Shares
or its common stock other than as described above that adversely affects
Holder’s rights under this Warrant, the Warrant Price shall be adjusted downward
and the number of Shares Issuable upon exercise of this Warrant shall be
adjusted upward, and if necessary the class of securities Issuable upon exercise
of this Warrant shall be adjusted, in such a manner that the aggregate Warrant
Price of this Warrant is unchanged and the aggregate number of shares ultimately
Issuable upon exercise of this Warrant and conversion of the Shares is
unchanged.

     

    2.12         Fractional Shares. No
fractional Shares shall be Issuable upon exercise or conversion of the Warrant
and the number of Shares to be issued shall be rounded down to the nearest whole
Share. If a fractional share interest arises upon any exercise or conversion of
the Warrant, the Company shall eliminate such fractional share interest by
paying Holder an amount computed by multiplying the fractional interest by the
fair market value of a full Share.

     

    2.13         Certificate as to
Adjustments. In any case of an adjustment or readjustment of the Warrant
Price or the number of Shares, the Company’s chief financial officer at its
expense shall compute such adjustment or readjustment in accordance with the
provisions hereof and shall prepare a certificate showing such adjustment or
readjustment, and shall mail such certificate, by first class mail, postage
prepaid, to Holder at Holder’s address as shown in Company’s books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based including a
statement of (a) the consideration received or deemed to be received by Company
for any Common Stock issued or sold or deemed to have been issued or sold, (b)
the Warrant Price at the time in effect and the adjusted Warrant Price, (c) the
number of additional Shares and (d) the type and amount, if any, of other
property which at the time would be received upon exercise of this Warrant.
Notwithstanding the above, the Holder may select and cause independent public
accountants of recognized standing also to compute such adjustment or
readjustment in accordance with the provisions hereof and to prepare a
certificate showing such adjustment or readjustment. If, by such computation,
the Holder shall determine that the computation performed by the Company’s chief
financial officer was incorrect by more than five percent (5%) and such
inaccuracy was prejudicial to the Holder, then, at the option of Holder, the
cost of Holder’s computation and certificate preparation shall be borne by the
Company and shall be due and owing upon demand.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    ARTICLE
III

     

    REGISTRATION
RIGHTS

     

    3.1          “Piggy Back”
Registration. (a) If at any time the Company shall determine to register
under the Securities Act of 1933, as amended (including pursuant to a demand of
any Shareholder of the Company exercising registration rights) any of its common
stock (other than a registration statement on Form S-4 or S-8), it shall send to
the Holder, written notice of such determination at least thirty (30) days prior
to the filing of any registration statement and, if within fifteen (15) days
after receipt of such notice, the Holder, shall so request in writing, the
Company shall use its best efforts to include in such registration statement all
of the Registrable Shares that such Holder, requests to be registered. For
purposes of this Article III, the term “Registrable Shares” means and includes
any common stock of the Company issued or issuable upon the conversion or
exercise of any warrant, right or other security or which is issued as a result
of a stock split, dividend or other distribution with respect to or in exchange
for or in replacement of such shares.

     

    (b) If
such registration involves an underwritten public offering and the total amount
of securities, including Registrable Shares, requested by shareholders to be
included in such offering exceeds the amount of securities that the managing
underwriter determines in its reasonable discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Shares,
which the managing underwriter determines in its reasonable discretion will not
jeopardize the success of the offering (the securities so included to be
apportioned in the following order of priority (A) first, to any Shareholder of
the Company exercising registration rights pursuant to which the Company
initiated the registration, (B) second, to the Company, (C) third, among the
Holders requesting to register Registrable Shares on a pro rata basis according
to each Holder’s ownership of Registrable Shares relative to all other Holders’
ownership of Registrable Shares who have requested registration hereunder, and,
(D) fourth, to the extent additional securities may be included therein, pro
rata among the other selling Shareholders according to the total amount of
securities owned by each such Shareholder); provided, however, that in any
registration other than the initial public offering of the Company’s common
stock the number of shares requested to be included by the Holder shall not be
reduced below 20% of the total number of securities to be provided in the
registration. For purposes of the preceding parenthetical concerning
apportionment, for any selling Shareholder which is a holder of Registrable
Shares and which is a partnership or corporation, the partners, retired partners
and Shareholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single “selling Shareholder,” and any
pro-rata reduction with respect to such “selling Shareholder” shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such “selling Shareholder,” as defined in
this sentence. If any Holder disapproves of the terms of such underwriting, he
may elect to withdraw his or its Registrable Shares therefrom by written notice
to the Company and the underwriter.

     

    3.2           Registration on Form
S-3. In case the Company shall receive from a Holder or Holders of at
least 20% of Registrable Shares a written request or requests that the Company
effect a registration on Form S-3 (or any similar form promulgated by the
Securities and Exchange Commission (“SEC”)) and any related qualification or
compliance with respect to all or a part of the Registrable Shares owned by such
Holder or Holders, the Company will:

     

    (a)
promptly give written notice of the proposed registration, and any related
qualification or compliance, to all other Holders of Registrable Shares;
and

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (b) as
soon as practicable, use its best efforts to effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder’s
or Holders’ Registrable Shares as are specified in such request, together with
all or such portion of the Registrable Shares of any other Holder or Holders
joining in such request as are specified in a written request given within
twenty (20) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 3.2: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Company
shall furnish to the Holders a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its Shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 3.2; provided, however, that
the Company shall not utilize this right more than once in any 12-month period;
(3) if the Company has effected two (2) registrations pursuant to this Section
3.2 within the past 12 months and such registrations have been declared or
ordered effective; or (4) if the Company has effected three registrations
pursuant to this Section 3.2 and such registrations have been declared or
ordered effective.

     

    (c)
Subject to the foregoing, the Company shall use its best efforts to file a
registration statement covering the Registrable Shares and other securities so
requested to be registered as soon as practicable after receipt of the request
or requests of the Holders. Registrations effected pursuant to this Section 3.2
shall not be counted as registrations effected pursuant to Sections 3.1. If the
Holders giving the initial notice propose to offer the Registrable Shares by
means of an underwriting, the terms of Section 3.1 (b) shall apply.

     

    3.3           Effectiveness. (a)
The Company will use its reasonable best efforts to maintain the effectiveness
for up to nine months of any registration statement pursuant to which any of the
Registrable Shares are being offered; provided, however, that: (i) such
nine-month period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of common stock (or other securities) of the Company
and (ii) in the case of any registration of Registrable Shares on Form S-3 which
are intended to be offered on a continuous or delayed basis, such nine-month
period shall be extended, if necessary, to keep the registration statement
effective until the earlier to occur of (A) 18 months following the
effectiveness of the registration statement or (B) the date that all such
Registrable Shares are sold, provided that Rule 415, or any successor rule under
Securities Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under Securities Act governing the
obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (1) includes any prospectus required by Section
10(a)(3) of Securities Act or (2) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (1) and (2) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), in the registration statement.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (b) The
Company will from time to time amend or supplement such registration statement
and the prospectus contained therein as and to the extent necessary to comply
with the Securities Act and any applicable state securities statute or
regulation.

     

    3.4           Exchange Act
Registration. With a view to making available to the Holders the benefits
of Rule 144 promulgated under Securities Act and any other rule or regulation of
the SEC that may at any time permit a Holder to sell securities of the Company
to the public without registration or pursuant to a registration on Form S-3,
the Company agrees to:

     

    (a) use
its best efforts to make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after the effective
date of the first registration statement filed by the Company for the offering
of its securities to the general public;

     

    (b)
maintain the registration of its common stock under Section 12 of the Exchange
Act, as is necessary to enable the Holders to utilize Form S-3 for the sale of
their Registrable Shares;

     

    (c) file
on a timely basis with the SEC all information that the SEC may require under
either of Section 13 or Section 15(d) of the Exchange Act and, so long as it is
required to file such information, take all action that may be required as a
condition to the availability of Rule 144 under the Securities Act (or any
successor exemptive rule hereinafter in effect) with respect to the Company’s
common stock;

     

    (d)
furnish to any Holder forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of Rule 144, (ii) a
copy of the most recent annual or quarterly report of the Company as filed with
the SEC and (iii) any other reports and documents that a Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing a
Holder to sell any such Registrable Shares without registration.

     

    3.5           Further Obligations of the
Company. Whenever the Company is required under this Article III to
register Registrable Shares, it agrees that it shall also do the
following:

     

    (a)
Furnish to each selling Holder such copies of the registration statement
(including any amendments thereto) and each preliminary and final prospectus and
any other documents that such Holder may reasonably request to facilitate the
public offering of its Registrable Shares;

     

    (b) Use
its reasonable best efforts to register or qualify the Registrable Shares to be
registered pursuant to this Agreement under the applicable securities or “blue
sky” laws of such jurisdictions as any selling Holder may reasonably request;
provided, however, that the Company shall not be obligated to qualify to do
business in any jurisdiction where it is not then so qualified or to take any
action that would subject it to the service of process in suits other than those
arising out of the offer or sale of the securities covered by the registration
statement in any jurisdiction where it is not then so subject;

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (c)
notify each Holder of Registrable Shares covered by such registration statement
at any time when a prospectus relating thereto is required to be delivered under
Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing;

     

    (d) Cause
all such Registrable Shares registered pursuant hereunder to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;

     

    (e)
Provide a transfer agent and registrar for all Registrable Shares registered
pursuant hereunder and a CUSIP number for all such Registrable Shares, in each
case not later than the effective date of such registration;

     

    (f) In
the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement; in usual and customary form, with.
the managing underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement;

     

    (g)
Furnish, at the request of any Holder requesting registration of Registrable
Shares pursuant to this Article III, on the date that such Registrable Shares
are delivered to the underwriters for sale in connection with a registration
pursuant to this Article III, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective:

     

    (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Shares;
and

     

    (ii)
“comfort” letters signed by the Company’s independent public accountants who
have examined and reported on the Company’s financial statements included in the
registration statement, to the extent permitted by the standards of the American
Institute of Certified Public Accountants, covering substantially the same
matters with respect to the registration statement (and the prospectus included
therein) and (in the case of the accountants “comfort” letters) with respect to
events subsequent to the date of the financial statements, as are customarily
covered in opinions of issuer’s counsel and in accountants’ “comfort” letters
delivered to the underwriters in underwritten public offerings of securities,
but only if and to the extent that the Company is required to deliver or cause
the delivery of such opinion or “comfort” letters to the underwriters in an
underwritten public offering of securities;

     

    (h)
Permit each selling Holder or his counselor other representatives to inspect and
copy such corporate documents and records as may reasonably be requested by
them; and

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (i)
Furnish to each selling Holder, upon request, a copy of all documents filed and
all correspondence from or to the SEC in connection with any such offering
unless confidential treatment of such information has been requested of the
SEC.

     

    3.6           Expenses. The Company
shall bear all costs and expenses of each such registration, including, but not
limited to, printing, legal and accounting expenses, SEC filing fees, “blue sky”
fees and expenses, and all NASD, stock exchange listing and qualification fees,
including in connection with the Company’s initial public offering, reasonable
fees and disbursements of counsel for the Company in its capacity as counsel to
the selling Holders hereunder; provided, however, if Company counsel does not
make itself available for this purpose, the Company will pay the reasonable fees
and disbursements of one counsel for the selling Holders selected by them;
provided, however, that the Company shall have no obligation to pay or otherwise
bear (i) any portion of the underwriter’s commissions or discounts attributable
to the Registrable Shares being offered and sold by the Holders of Registrable
Shares, or (ii) any of such expenses if the payment of such expenses by the
Company is prohibited by the laws of a state in which such offering is qualified
and only to the extent so prohibited; provided, however, that the Company shall
not be required to pay for any expenses of any registration proceeding begun
pursuant to Section 3.2 if the registration request is subsequently withdrawn at
the request of the Holders initiating such registration (“Initiating Holders”)
(in which case, subject to the last provision of this Section 3.6 all Initiating
Holders shall bear such expenses pro rata based upon the total number of
Registrable Shares requested to be included therein by each such Holder), unless
such Initiating Holders agree to forfeit their right to one demand registration
pursuant to Section 3.2; and provided further, however, that if (a) at the time
of such withdrawal of registration request the Initiating Holders have learned
of a material adverse change in the condition, business, or prospects of the
Company not known to such Initiating Holders at the time of their request, and
(b) such Initiating Holders have withdrawn the request with reasonable
promptness following discovery of such material adverse change, then such
Initiating Holders shall not be required to pay any of such expenses with
respect to any registration and shall retain all their rights pursuant to
Section 3.2 and the rest of this Article III.

     

    3.7           Transfer of Registration
Rights. The registration rights of Registrable Shares under this
Agreement may be transferred (i) in the case of an individual, to any member of
the immediate family of such individual or to trust for the benefit of the
individual or any such family member or members, (ii) to any partner, member or
affiliate of/Holder, and (iii) to any transferee provided that the transferee
receives at least 2,000 Registrable Shares (as adjusted for stock splits,
considerations and the like), or all of such transferring Holder’s shares, if
less. In the event of a transfer of registration rights as provided in (i), (ii)
or (iii) above, the transferee shall execute a counterpart to this Agreement and
agree to be bound by the terms of this Agreement. The transferor shall provide
the Company with written notice of such transfer within a reasonable
time.

     

    3.8           No Superior Rights.
The Company will not grant any superior registration rights to any holder or
prospective holder of any securities of the Company without first obtaining the
prior written consent of the Holders of a majority of the Registrable
Shares.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    3.9           Termination of Registration
Rights. The obligations of the Company to register any Holder’s
Registrable Shares pursuant to this Article III shall terminate if all
Registrable Securities held by and issuable to such Holder (and each of its
affiliates, partners, former partners, members, former members and other lawful
transferees) may be sold under Rule 144 during any single 90-day
period.

     

    ARTICLE
IV

     

    CASHLESS
EXERCISE

     

    4.1.         
In addition to and without limiting the rights of each Holder under paragraph
1.3, at each Holder’s option, this Warrant may be exercised by being exchanged
in whole or from time to time in part at any time on or prior to the Expiration
Date, for a number of shares of Common Stock having an aggregate Current Market
Price (as defined below) on the date of such exercise equal to the difference
between (x) the Current Market Price of the number of shares of Common Stock
subject to this Warrant designated by the Holder on the date of the exercise
(the “Designated Number of Shares”) and (y) the aggregate Warrant Exercise Price
for such shares in effect at such time.

    Upon any
such exercise, the number of shares of Common Stock purchasable upon exercise of
this Warrant shall be reduced by the Designated Number of Shares and, if a
balance of purchasable shares of Common Stock remains after such exercise, the
Company shall execute and deliver to the Holder (or its designee) a new Warrant
for such balance of shares. No payment of any cash or other consideration to the
Company shall be required from the Holder (or its designee) in connection with
any exercise of this Warrant by exchange pursuant to this paragraph 1(b). Such
exchange shall be effective upon the date of receipt by the Company of the
Warrant surrendered for cancellation and a written request from the Holder that
the exchange pursuant to this section be made, or at such later date as may be
specified in such request. No fractional shares arising out of the above formula
for determining the number of shares issuable in such exchange shall be issued,
and the Company shall in lieu thereof make payment to the Holder of cash in the
amount of such fraction multiplied by the Current Market Price of a share of
Common Stock on the date of the exchange.

     

    So long
as no cash is paid in connection with the cashless exercise of this Warrant, the
holding period for the shares issued in connection with such cashless exercise,
for the purposes of Rule 144 of the Securities Act of 1933, shall relate back to
the date of this Warrant.

     

    ARTICLE
V

     

    MISCELLANEOUS

     

    
      	
               
      

            	
              5.1

            	
              Legends. This
      Warrant and the Shares (and the securities issuable, directly or
      indirectly, upon conversion of the Shares, if any) shall be imprinted with
      a legend in substantially the following
form:

            

    

     

    “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER SUCH ACT OR ON OPINION OF COUNSEL THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.”

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    5.2           Compliance with Securities
Laws on Transfer. This Warrant and the Shares issuable upon exercise this
Warrant (and the securities issuable, directly or indirectly, upon conversion of
the Shares, if any) may not be transferred or assigned in whole or in part
without compliance with applicable federal and state securities laws by the
transferor and the transferee (including, without limitation, the delivery of
investment representation letters and legal opinions reasonably satisfactory to
the Company, if reasonably requested by the Company and in such event, the cost
of the opinion shall be borne by the Company). The Company shall not require
Holder to provide an opinion of counsel if the transfer is to an affiliate of
Holder or if there is no material questions as to the availability of current
information as referenced in Rule 144(c), Holder represents that it has complied
with Rule 144(d) and (e) in reasonable detail, the selling broker represents
that it has complied with Rule 144(f), and the Company is provided with a copy
of Holder’s notice of proposed sale.

     

    5.3            Transfer Procedure.
The Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant or the Shares issuable upon exercise of this Warrant
(or the securities issuable, directly or indirectly, upon conversion of the
Shares, if any) by giving the Company notice of the portion of the Warrant being
transferred setting forth the name, address, and taxpayer identification number
of the transferee and surrendering this Warrant to the Company for re-issuance
to the transferee(s) (and Holder if applicable). Unless the Company is filing
financial information with the SEC pursuant to the Securities Exchange Act of
1934, the Company shall have the right to refuse to transfer any portion of this
Warrant to any person who directly competes with the Company.

     

    5.4            Notice of Certain
Events. In addition to any notices required by to given pursuant to
Article III hereof, if the Company proposes at any time (a) to declare any
dividend or distribution upon its common stock, whether in cash, property,
stock, or other securities and whether or not a regular cash dividend, (b) to
offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; (c)
to effect any reclassification or recapitalization of common stock; (d) to merge
or consolidate with or into any other corporation, or sell, lease, license, or
convey all or substantially all of its assets, or to liquidate, dissolve, or
wind up; or (e) offer holders of registration rights the opportunity to
participate in an underwritten public offering of the Company’s securities for
cash, then, in connection with each such event, the Company shall give Holder
(1) at least 20 days prior written notice of the date on which a record will be
taken for such dividend, distribution or subscription rights (and specifying the
date on which the holders of common stock will be entitled thereto) or for
determining rights to vote, if any, in respect of the matters referred to in (c)
and (d) above; (2) in the case of the matters referred to in (c) and (d) above,
at least 20 days’ prior written notice of the date when the same will take place
(and specifying the date on which the holders of common stock will be entitled
to exchange their common stock for securities or other property deliverable upon
the occurrence of such event), and (3) in the case of the matter referred to in
(e) above, the same notice as is given to holders of such registration
rights.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    5.5            Notices. Any notice
required to be given under the terms of this Warrant shall be sent by certified
or registered mail (return receipt requests) or delivered by hand or confirmed
facsimile, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt of refusal of receipt, if delivered by hand or confirmed
facsimile, in each case addressed as follows:

     

    (i)        if
to the Company:

     

    CHINA
SHENGHUO

    No. 2,
Jing You Road

    Kunming
National Economy &

    Technology
Developing District

    People’s
Republic of China

    650217

    Attn:
  Qiong Hua Gao

    Chief
Financial Officer

     

    (ii)        if
to the Holder:

     

    CCG
Investor Relations Partners, LLC

    10960
Wilshire Blvd., Suite 2050

    Los
Angeles, CA 90024

    Attention:
William F. Coffin

    Fax:
1-310-231-8663

     

    5.6             Amendments. This
Warrant may be amended only in writing, signed by the party against whom
enforcement is sought.

     

    5.7             Governing Law. This
Warrant and all rights and obligation hereunder shall be governed by the laws of
the State of California.

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly
authorized officer as of the date first above written.

    

    
      
        
          
            
              
                	
                        Accepted
      by:

                      	 	 
      
	 
      	 	 
      
	
                        CHINA
      SHENGHUO

                      	 	 
      
	 
      	 	 
      
	/s/
      Qiong
      Hua Gao  	 	April
      15, 2007
	
                        Qiong
      Hua Gao

                      	 	
                        Date

                      
	
                        Chief
      Financial Officer

                      	 	 
      
	 
      	 	 
      
	
                        Accepted
      by:

                      	 	 
      
	
                        CCG
      INVESTOR RELATIONS

                      	 	 
      
	 
      	 	 
      
	/s/
      William
      F. Coffin	 	
                        April
      15, 2007 

                      
	
                        William
      F. Coffin

                      	 	
                        Date

                      
	
                        CEO

                      	 	 
      

              

            

          

        

      

    

    
      
         

      

      
        14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}]]