Document:

Unassociated Document

    

    Exhibit
      4.5

     

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES MAY NOT BE SOLD,
      TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
      FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
      AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT
      REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
      144
      OR REGULATION S UNDER SAID ACT.

     

    CALLABLE
      SECURED CONVERTIBLE NOTE

     

    Mount
      Vernon, NY

    
      
        	
                May
                  31, 2007

              	
                $24,000

              

      

    

     

    FOR
      VALUE RECEIVED,
      CLICKABLE ENTERPRISES, INC.,
      a
      Delaware corporation (hereinafter called the “Borrower”),
      hereby promises to pay to the order of New Millennium Capital Partners II,
      LLC
      or registered assigns (the “Holder”)
      the
      sum of $24,000, on May 31, 2010 (the “Maturity
      Date”),
      and
      to pay interest on the unpaid principal balance hereof at the rate of eight
      percent (8%) (the “Interest
      Rate”)
      per
      annum from May 31, 2007 (the “Issue
      Date”)
      until
      the same becomes due and payable, whether at maturity or upon acceleration
      or by
      prepayment or otherwise. Any amount of principal or interest on this Note which
      is not paid when due shall bear interest at the rate of fifteen percent (15%)
      per annum from the due date thereof until the same is paid (“Default
      Interest”).
      Interest shall commence accruing on the Issue Date, shall be computed on the
      basis of a 365-day year and the actual number of days elapsed and shall be
      payable quarterly provided that no interest shall be due and payable for any
      month in which the Trading Price (as such term is defined below) is greater
      than
      $.028125 for each Trading Day (as such term is defined below) of the month.
      All
      payments due hereunder (to the extent not converted into common stock, $.001
      par
      value per share (the “Common
      Stock”)
      in
      accordance with the terms hereof) shall be made in lawful money of the United
      States of America. All payments shall be made at such address as the Holder
      shall hereafter give to the Borrower by written notice made in accordance with
      the provisions of this Note. Whenever any amount expressed to be due by the
      terms of this Note is due on any day which is not a business day, the same
      shall
      instead be due on the next succeeding day which is a business day and, in the
      case of any interest payment date which is not the date on which this Note
      is
      paid in full, the extension of the due date thereof shall not be taken into
      account for purposes of determining the amount of interest due on such date.
      As
      used in this Note, the term “business day” shall mean any day other than a
      Saturday, Sunday or a day on which commercial banks in the city of New York,
      New
      York are authorized or required by law or executive order to remain closed.
      Each
      capitalized term used herein, and not otherwise defined, shall have the meaning
      ascribed thereto in that certain Securities Purchase Agreement, dated May 31,
      2007, pursuant to which this Note was originally issued (the “Purchase
      Agreement”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      Note
      is free from all taxes, liens, claims and encumbrances with respect to the
      issue
      thereof and shall not be subject to preemptive rights or other similar rights
      of
      shareholders of the Borrower and will not impose personal liability upon the
      holder thereof. The obligations of the Borrower under this Note shall be secured
      by that certain Security Agreement and Intellectual Property Security Agreement,
      each dated May 31, 2007 by and between the Borrower and the Holder.

     

    The
      following terms shall apply to this Note:

     

     

    43. CONVERSION
      RIGHTS

     

    A. Conversion
      Right.
      The
      Holder shall have the right from time to time, and at any time on or prior
      to
      the earlier of (i) the Maturity Date and (ii) the date of payment of the Default
      Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III,
      the Optional Prepayment Amount (as defined in Section 5.1 or any payments
      pursuant to Section 1.7, each in respect of the remaining outstanding principal
      amount of this Note to convert all or any part of the outstanding and unpaid
      principal amount of this Note into fully paid and non-assessable shares of
      Common Stock, as such Common Stock exists on the Issue Date, or any shares
      of
      capital stock or other securities of the Borrower into which such Common Stock
      shall hereafter be changed or reclassified at the conversion price (the
“Conversion
      Price”)
      determined as provided herein (a “Conversion”);
      provided,
      however,
      that in
      no event shall the Holder be entitled to convert any portion of this Note in
      excess of that portion of this Note upon conversion of which the sum of (1)
      the
      number of shares of Common Stock beneficially owned by the Holder and its
      affiliates (other than shares of Common Stock which may be deemed beneficially
      owned through the ownership of the unconverted portion of the Notes or the
      unexercised or unconverted portion of any other security of the Borrower
      (including, without limitation, the warrants issued by the Borrower pursuant
      to
      the Purchase Agreement) subject to a limitation on conversion or exercise
      analogous to the limitations contained herein) and (2) the number of shares
      of
      Common Stock issuable upon the conversion of the portion of this Note with
      respect to which the determination of this proviso is being made, would result
      in beneficial ownership by the Holder and its affiliates of more than 4.99%
      of
      the outstanding shares of Common Stock and provided further
      that the
      Holder shall not be entitled to convert any portion of this Note during any
      month immediately succeeding a Determination Date on which the Borrower
      exercises its prepayment option pursuant to Section 5.2 of this Note. For
      purposes of the proviso to the immediately preceding sentence, beneficial
      ownership shall be determined in accordance with Section 13(d) of the Securities
      Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except
      as
      otherwise provided in clause (1) of such proviso. The number of shares of Common
      Stock to be issued upon each conversion of this Note shall be determined by
      dividing the Conversion Amount (as defined below) by the applicable Conversion
      Price then in effect on the date specified in the notice of conversion, in
      the
      form attached hereto as Exhibit A (the “Notice
      of Conversion”),
      delivered to the Borrower by the Holder in accordance with Section 1.4 below;
      provided that the Notice of Conversion is submitted by facsimile (or by other
      means resulting in, or reasonably expected to result in, notice) to the Borrower
      before 6:00 p.m., New York, New York time on such conversion date (the
“Conversion
      Date”).
      The
      term “Conversion
      Amount”
means,
      with respect to any conversion of this Note, the sum of (1) the principal amount
      of this Note to be converted in such conversion plus
      (2)
      accrued and unpaid interest, if any, on such principal amount at the interest
      rates provided in this Note to the Conversion Date plus
      (3)
      Default Interest, if any, on the amounts referred to in the immediately
      preceding clauses (1) and/or (2) plus
      (4) at
      the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and
      1.4(g) hereof or pursuant to Section 2(c) of that certain Registration Rights
      Agreement, dated as of May 31, 2007, executed in connection with the initial
      issuance of this Note and the other Notes issued on the Issue Date (the
“Registration
      Rights Agreement”).
      The
      term “Determination
      Date” means
      the
      last business day of each month after the Issue Date.

     

    
      
        
        

      

      
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    B. Conversion
      Price.

     

    1. Calculation
      of Conversion Price.
      The
      Conversion Price shall be Variable Conversion Price (as defined herein (subject
      to equitable adjustments for stock splits, stock dividends or rights offerings
      by the Borrower relating to the Borrower’s securities or the securities of any
      subsidiary of the Borrower, combinations, recapitalization, reclassifications,
      extraordinary distributions and similar events). The “Variable
      Conversion Price”
shall
      mean the Applicable Percentage (as defined herein) multiplied by the Market
      Price (as defined herein). “Market
      Price”
means
      the average of the lowest three (3) Trading Prices (as defined below) for the
      Common Stock during the twenty (20) Trading Day period ending one Trading Day
      prior to the date the Conversion Notice is sent by the Holder to the Borrower
      via facsimile (the “Conversion
      Date”).
      “Trading
      Price”
means,
      for any security as of any date, the intraday trading price on the
      Over-the-Counter Bulletin Board (the “OTCBB”)
      as
      reported by a reliable reporting service mutually acceptable to and hereafter
      designated by Holders of a majority in interest of the Notes and the Borrower
      or, if the OTCBB is not the principal trading market for such security, the
      intraday trading price of such security on the principal securities exchange
      or
      trading market where such security is listed or traded or, if no intraday
      trading price of such security is available in any of the foregoing manners,
      the
      average of the intraday trading prices of any market makers for such security
      that are listed in the “pink sheets” by the National Quotation Bureau, Inc. If
      the Trading Price cannot be calculated for such security on such date in the
      manner provided above, the Trading Price shall be the fair market value as
      mutually determined by the Borrower and the holders of a majority in interest
      of
      the Notes being converted for which the calculation of the Trading Price is
      required in order to determine the Conversion Price of such Notes. “Trading
      Day”
shall
      mean any day on which the Common Stock is traded for any period on the OTCBB,
      or
      on the principal securities exchange or other securities market on which the
      Common Stock is then being traded. “Applicable
      Percentage”
shall
      mean 40%. In addition, the Holder agrees that it will limit all of its
      conversions to no more than the greater of (1) $60,000 per calendar month;
      or
      (2) the average daily dollar volume calculated during the ten (10) business
      days
      prior to a conversion, per conversion.

     

    2. Conversion
      Price During Major Announcements.
      Notwithstanding
      anything contained in Section 1.2(a) to the contrary, in the event the Borrower
      (i) makes a public announcement that it intends to consolidate or merge with
      any
      other corporation (other than a merger in which the Borrower is the surviving
      or
      continuing corporation and its capital stock is unchanged) or sell or transfer
      all or substantially all of the assets of the Borrower or (ii) any person,
      group
      or entity (including the Borrower) publicly announces a tender offer to purchase
      50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the
      date of the announcement referred to in clause (i) or (ii) is hereinafter
      referred to as the “Announcement
      Date”),
      then
      the Conversion Price shall, effective upon the Announcement Date and continuing
      through the Adjusted Conversion Price Termination Date (as defined below),
      be
      equal to the lower of (x) the Conversion Price which would have been applicable
      for a Conversion occurring on the Announcement Date and (y) the Conversion
      Price
      that would otherwise be in effect. From and after the Adjusted Conversion Price
      Termination Date, the Conversion Price shall be determined as set forth in
      this
      Section 1.2(a). For purposes hereof, “Adjusted
      Conversion Price Termination Date”
shall
      mean, with respect to any proposed transaction or tender offer (or takeover
      scheme) for which a public announcement as contemplated by this Section 1.2(b)
      has been made, the date upon which the Borrower (in the case of clause (i)
      above) or the person, group or entity (in the case of clause (ii) above)
      consummates or publicly announces the termination or abandonment of the proposed
      transaction or tender offer (or takeover scheme) which caused this Section
      1.2(b) to become operative.

     

    
      
        
        

      

      
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    C. Authorized
      Shares.
      The
      Borrower covenants that during the period the conversion right exists, following
      the amendment to the Company’s Certificate of Incorporation increasing the
      authorized Common Stock to an amount sufficient to reserve the Conversion Shares
      and Warrant Shares, as required by the Purchase Agreement, the Borrower will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares, free from preemptive rights, to provide for the issuance of Common
      Stock
      upon the full conversion of this Note and the other Notes issued pursuant to
      the
      Purchase Agreement. The Borrower is required at all times described in the
      previous sentence to have authorized and reserved two times the number of shares
      that is actually issuable upon full conversion of the Notes (based on the
      Conversion Price of the Notes or the Exercise Price of the Warrants in effect
      from time to time) (the “Reserved
      Amount”).
      The
      Reserved Amount shall be increased from time to time in accordance with the
      Borrower’s obligations pursuant to Section 4(h) of the Purchase Agreement. The
      Borrower represents that upon issuance, such shares will be duly and validly
      issued, fully paid and non-assessable. In addition, if the Borrower shall issue
      any securities or make any change to its capital structure which would change
      the number of shares of Common Stock into which the Notes shall be convertible
      at the then current Conversion Price, the Borrower shall at the same time make
      proper provision so that thereafter there shall be a sufficient number of shares
      of Common Stock authorized and reserved, free from preemptive rights, for
      conversion of the outstanding Notes. The Borrower (i) acknowledges that it
      has
      irrevocably instructed its transfer agent to issue certificates for the Common
      Stock issuable upon conversion of this Note, subject to amendment to the
      Certificate of Incorporation to authorize additional Common Stock, and
      (ii) agrees that its issuance of this Note shall constitute full authority
      to its officers and agents who are charged with the duty of executing stock
      certificates to execute and issue the necessary certificates for shares of
      Common Stock in accordance with the terms and conditions of this
      Note.

     

    
      
        
        

      

      
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    If,
      at
      any time a Holder of this Note submits a Notice of Conversion, and the Borrower
      does not have sufficient authorized but unissued shares of Common Stock
      available to effect such conversion in accordance with the provisions of this
      Article I (a “Conversion
      Default”),
      subject to Section 4.8, the Borrower shall issue to the Holder all of the shares
      of Common Stock which are then available to effect such conversion. The portion
      of this Note which the Holder included in its Conversion Notice and which
      exceeds the amount which is then convertible into available shares of Common
      Stock (the “Excess
      Amount”)
      shall,
      notwithstanding anything to the contrary contained herein, not be convertible
      into Common Stock in accordance with the terms hereof until (and at the Holder’s
      option at any time after) the date additional shares of Common Stock are
      authorized by the Borrower to permit such conversion, at which time the
      Conversion Price in respect thereof shall be the lesser of (i) the Conversion
      Price on the Conversion Default Date (as defined below) and (ii) the Conversion
      Price on the Conversion Date thereafter elected by the Holder in respect
      thereof. In addition, the Borrower shall pay to the Holder payments
      (“Conversion
      Default Payments”)
      for a
      Conversion Default in the amount of (x) the sum
      of
      (1) the
      then outstanding principal amount of this Note plus
      (2)
      accrued and unpaid interest on the unpaid principal amount of this Note through
      the Authorization Date (as defined below) plus
      (3)
      Default Interest, if any, on the amounts referred to in clauses (1) and/or
      (2),
multiplied
      by
      (y) .24,
multiplied
      by
      (z)
      (N/365), where N = the number of days from the day the holder submits a Notice
      of Conversion giving rise to a Conversion Default (the “Conversion
      Default Date”)
      to the
      date (the “Authorization
      Date”)
      that
      the Borrower authorizes a sufficient number of shares of Common Stock to effect
      conversion of the full outstanding principal balance of this Note; provided
      however, that no Conversion Default Payments shall be due for any Conversion
      Default occurring within 120 days of the date hereof. The Borrower shall use
      its
      best efforts to authorize a sufficient number of shares of Common Stock as
      soon
      as practicable following the earlier of (i) such time that the Holder notifies
      the Borrower or that the Borrower otherwise becomes aware that there are or
      likely will be insufficient authorized and unissued shares to allow full
      conversion thereof and (ii) a Conversion Default. The Borrower shall send notice
      to the Holder of the authorization of additional shares of Common Stock, the
      Authorization Date and the amount of Holder’s accrued Conversion Default
      Payments. The accrued Conversion Default Payments for each calendar month shall
      be paid in cash or shall be convertible into Common Stock (at such time as
      there
      are sufficient authorized shares of Common Stock) at the applicable Conversion
      Price, at the Borrower’s option, as follows:

     

    1. In
      the
      event Holder elects to take such payment in cash, cash payment shall be made
      to
      Holder by the fifth (5th)
      day of
      the month following the month in which it has accrued; and

     

    2. In
      the
      event Holder elects to take such payment in Common Stock, the Holder may convert
      such payment amount into Common Stock at the Conversion Price (as in effect
      at
      the time of conversion) at any time after the fifth day of the month following
      the month in which it has accrued in accordance with the terms of this Article
      I
      (so long as there is then a sufficient number of authorized shares of Common
      Stock).

     

    The
      Holder’s election shall be made in writing to the Borrower at any time prior to
      6:00 p.m., New York, New York time, on the third day of the month following
      the
      month in which Conversion Default payments have accrued. If no election is
      made,
      the Holder shall be deemed to have elected to receive cash. Nothing herein
      shall
      limit the Holder’s right to pursue actual damages (to the extent in excess of
      the Conversion Default Payments) for the Borrower’s failure to maintain a
      sufficient number of authorized shares of Common Stock, and each holder shall
      have the right to pursue all remedies available at law or in equity (including
      degree of specific performance and/or injunctive relief).

     

    
      
        
        

      

      
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    D. Method
      of Conversion.

     

    1. Mechanics
      of Conversion.
      Subject
      to Section 1.1, this Note may be converted by the Holder in whole or in part
      at
      any time from time to time after the Issue Date, by (A) submitting to the
      Borrower a Notice of Conversion (by facsimile or other reasonable means of
      communication dispatched on the Conversion Date prior to 6:00 p.m., New York,
      New York time) and (B) subject to Section 1.4(b), surrendering this Note at
      the principal office of the Borrower. 

     

    2. Surrender
      of Note Upon Conversion.
      Notwithstanding
      anything to the contrary set forth herein, upon conversion of this Note in
      accordance with the terms hereof, the Holder shall not be required to physically
      surrender this Note to the Borrower unless the entire unpaid principal amount
      of
      this Note is so converted. The Holder and the Borrower shall maintain records
      showing the principal amount so converted and the dates of such conversions
      or
      shall use such other method, reasonably satisfactory to the Holder and the
      Borrower, so as not to require physical surrender of this Note upon each such
      conversion. In the event of any dispute or discrepancy, such records of the
      Borrower shall be controlling and determinative in the absence of manifest
      error. Notwithstanding the foregoing, if any portion of this Note is converted
      as aforesaid, the Holder may not transfer this Note unless the Holder first
      physically surrenders this Note to the Borrower, whereupon the Borrower will
      forthwith issue and deliver upon the order of the Holder a new Note of like
      tenor, registered as the Holder (upon payment by the Holder of any applicable
      transfer taxes) may request, representing in the aggregate the remaining unpaid
      principal amount of this Note. The Holder and any assignee, by acceptance of
      this Note, acknowledge and agree that, by reason of the provisions of this
      paragraph, following conversion of a portion of this Note, the unpaid and
      unconverted principal amount of this Note represented by this Note may be less
      than the amount stated on the face hereof.

     

    3. Payment
      of Taxes.
      The
      Borrower shall not be required to pay any tax which may be payable in respect
      of
      any transfer involved in the issue and delivery of shares of Common Stock or
      other securities or property on conversion of this Note in a name other than
      that of the Holder (or in street name), and the Borrower shall not be required
      to issue or deliver any such shares or other securities or property unless
      and
      until the person or persons (other than the Holder or the custodian in whose
      street name such shares are to be held for the Holder’s account) requesting the
      issuance thereof shall have paid to the Borrower the amount of any such tax
      or
      shall have established to the satisfaction of the Borrower that such tax has
      been paid.

     

    4. Delivery
      of Common Stock Upon Conversion.
      Upon
      receipt by the Borrower from the Holder of a facsimile transmission (or other
      reasonable means of communication) of a Notice of Conversion meeting the
      requirements for conversion as provided in this Section 1.4, the Borrower shall
      issue and deliver or cause to be issued and delivered to or upon the order
      of
      the Holder certificates for the Common Stock issuable upon such conversion
      within two (2) business days after such receipt (and, solely in the case of
      conversion of the entire unpaid principal amount hereof, surrender of this
      Note)
      (such second business day being hereinafter referred to as the “Deadline”)
      in
      accordance with the terms hereof and the Purchase Agreement (including, without
      limitation, in accordance with the requirements of Section 2(g) of the Purchase
      Agreement that certificates for shares of Common Stock issued on or after the
      effective date of the Registration Statement upon conversion of this Note shall
      not bear any restrictive legend).

     

    
      
        
        

      

      
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    5. Obligation
      of Borrower to Deliver Common Stock.
      Upon
      receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed
      to
      be the holder of record of the Common Stock issuable upon such conversion,
      the
      outstanding principal amount and the amount of accrued and unpaid interest
      on
      this Note shall be reduced to reflect such conversion, and, unless the Borrower
      defaults on its obligations under this Article I, all rights with respect to
      the
      portion of this Note being so converted shall forthwith terminate except the
      right to receive the Common Stock or other securities, cash or other assets,
      as
      herein provided, on such conversion. If the Holder shall have given a Notice
      of
      Conversion as provided herein, the Borrower’s obligation to issue and deliver
      the certificates for Common Stock shall be absolute and unconditional,
      irrespective of the absence of any action by the Holder to enforce the same,
      any
      waiver or consent with respect to any provision thereof, the recovery of any
      judgment against any person or any action to enforce the same, any failure
      or
      delay in the enforcement of any other obligation of the Borrower to the holder
      of record, or any setoff, counterclaim, recoupment, limitation or termination,
      or any breach or alleged breach by the Holder of any obligation to the Borrower,
      and irrespective of any other circumstance which might otherwise limit such
      obligation of the Borrower to the Holder in connection with such conversion.
      The
      Conversion Date specified in the Notice of Conversion shall be the Conversion
      Date so long as the Notice of Conversion is received by the Borrower before
      6:00
      p.m., New York, New York time, on such date.

     

    6. Delivery
      of Common Stock by Electronic Transfer.
      In
      lieu
      of delivering physical certificates representing the Common Stock issuable
      upon
      conversion, provided the Borrower’s transfer agent is participating in the
      Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer (“FAST”)
      program, upon request of the Holder and its compliance with the provisions
      contained in Section 1.1 and in this Section 1.4, the Borrower shall use its
      best efforts to cause its transfer agent to electronically transmit the Common
      Stock issuable upon conversion to the Holder by crediting the account of
      Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission
      (“DWAC”)
      system.

     

    7. Failure
      to Deliver Common Stock Prior to Deadline.
      Without
      in any way limiting the Holder’s right to pursue other remedies, including
      actual damages and/or equitable relief, the parties agree that if delivery
      of
      the Common Stock issuable upon conversion of this Note is more than two (2)
      business days after the Deadline (other than a failure due to the circumstances
      described in Section 1.3 above, which failure shall be governed by such Section)
      the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond
      the Deadline that the Borrower fails to deliver such Common Stock. Such cash
      amount shall be paid to Holder by the fifth day of the month following the
      month
      in which it has accrued or, at the option of the Holder (by written notice
      to
      the Borrower by the first day of the month following the month in which it
      has
      accrued), shall be added to the principal amount of this Note, in which event
      interest shall accrue thereon in accordance with the terms of this Note and
      such
      additional principal amount shall be convertible into Common Stock in accordance
      with the terms of this Note.

     

    
      
        
        

      

      
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    E. Concerning
      the Shares.
      The
      shares of Common Stock issuable upon conversion of this Note may not be sold
      or
      transferred unless (i) such shares are sold pursuant to an effective
      registration statement under the Act or (ii) the Borrower or its transfer agent
      shall have been furnished with an opinion of counsel (which opinion shall be
      in
      form, substance and scope customary for opinions of counsel in comparable
      transactions) to the effect that the shares to be sold or transferred may be
      sold or transferred pursuant to an exemption from such registration or
      (iii) such shares are sold or transferred pursuant to Rule 144 under the
      Act (or a successor rule) (“Rule
      144”),
      and
      the transfer agent shall have been furnished with such opinion of counsel as
      it
      customarily requires in connection with sales pursuant to Rule 144 or (iv)
      such
      shares are transferred to an “affiliate” (as defined in Rule 144) of the
      Borrower who agrees to sell or otherwise transfer the shares only in accordance
      with this Section 1.5 and who is an Accredited Investor (as defined in the
      Purchase Agreement). Except as otherwise provided in the Purchase Agreement
      (and
      subject to the removal provisions set forth below), until such time as the
      shares of Common Stock issuable upon conversion of this Note have been
      registered under the Act as contemplated by the Registration Rights Agreement
      or
      otherwise may be sold pursuant to Rule 144 without any restriction as to the
      number of securities as of a particular date that can then be immediately sold,
      each certificate for shares of Common Stock issuable upon conversion of this
      Note that has not been so included in an effective registration statement or
      that has not been sold pursuant to an effective registration statement or an
      exemption that permits removal of the legend, shall bear a legend substantially
      in the following form, as appropriate:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED
      OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND
      SCOPE
      CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION
      IS NOT REQUIRED UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION
      S
      UNDER SAID ACT.”

     

    The
      legend set forth above shall be removed and the Borrower shall issue to the
      Holder a new certificate therefore free of any transfer legend if (i) the
      Borrower or its transfer agent shall have received an opinion of Qualifying
      Borrower Counsel (as defined in the Purchase Agreement), in form, substance
      and
      scope customary for opinions of counsel in comparable transactions, to the
      effect that a public sale or transfer of such Common Stock may be made without
      registration under the Act and the shares are so sold or transferred, (ii)
      such
      Holder provides the Borrower or its transfer agent with reasonable assurances
      (including any opinion of counsel the transfer agent customarily required under
      such circumstances)that the Common Stock issuable upon conversion of this Note
      (to the extent such securities are deemed to have been acquired on the same
      date) can be sold pursuant to Rule 144 or (iii) in the case of the Common Stock
      issuable upon conversion of this Note, such security is registered for sale
      by
      the Holder under an effective registration statement filed under the Act or
      otherwise may be sold pursuant to Rule 144 without any restriction as to the
      number of securities as of a particular date that can then be immediately sold.
      Nothing in this Note shall (i) limit the Borrower’s obligation under the
      Registration Rights Agreement or (ii) affect in any way the Holder’s obligations
      to comply with applicable prospectus delivery requirements upon the resale
      of
      the securities referred to herein.

     

    
      
        
        

      

      
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    F. Effect
      of Certain Events.

     

    1. Effect
      of Merger, Consolidation, Etc.
      At the
      option of the Holder, the sale, conveyance or disposition of all or
      substantially all of the assets of the Borrower, the effectuation by the
      Borrower of a transaction or series of related transactions in which more than
      50% of the voting power of the Borrower is disposed of, or the consolidation,
      merger or other business combination of the Borrower with or into any other
      Person (as defined below) or Persons when the Borrower is not the survivor
      shall
      either: (i) be deemed to be an Event of Default (as defined in Article III)
      pursuant to which the Borrower shall be required to pay to the Holder upon
      the
      consummation of and as a condition to such transaction an amount equal to the
      Default Amount (as defined in Article III) or (ii) be treated pursuant to
      Section 1.6(b) hereof. “Person”
shall
      mean any individual, corporation, limited liability company, partnership,
      association, trust or other entity or organization.

     

    2. Adjustment
      Due to Merger, Consolidation, Etc.
      If,
      at
      any time when this Note is issued and outstanding and prior to conversion of
      all
      of the Notes, there shall be any merger, consolidation, exchange of shares,
      recapitalization, reorganization, or other similar event, as a result of which
      shares of Common Stock of the Borrower shall be changed into the same or a
      different number of shares of another class or classes of stock or securities
      of
      the Borrower or another entity, or in case of any sale or conveyance of all
      or
      substantially all of the assets of the Borrower other than in connection with
      a
      plan of complete liquidation of the Borrower, then the Holder of this Note
      shall
      thereafter have the right to receive upon conversion of this Note, upon the
      basis and upon the terms and conditions specified herein and in lieu of the
      shares of Common Stock immediately theretofore issuable upon conversion, such
      stock, securities or assets which the Holder would have been entitled to receive
      in such transaction had this Note been converted in full immediately prior
      to
      such transaction (without regard to any limitations on conversion set forth
      herein), and in any such case appropriate provisions shall be made with respect
      to the rights and interests of the Holder of this Note to the end that the
      provisions hereof (including, without limitation, provisions for adjustment
      of
      the Conversion Price and of the number of shares issuable upon conversion of
      the
      Note) shall thereafter be applicable, as nearly as may be practicable in
      relation to any securities or assets thereafter deliverable upon the conversion
      hereof. The Borrower shall not effect any transaction described in this Section
      1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days
      prior written notice (but in any event at least fifteen (15) days prior written
      notice) of the record date of the special meeting of shareholders to approve,
      or
      if there is no such record date, the consummation of, such merger,
      consolidation, exchange of shares, recapitalization, reorganization or other
      similar event or sale of assets (during which time the Holder shall be entitled
      to convert this Note) and (b) the resulting successor or acquiring entity (if
      not the Borrower) assumes by written instrument the obligations of this Section
      1.6(b). The above provisions shall similarly apply to successive consolidations,
      mergers, sales, transfers or share exchanges.

     

    
      
        
        

      

      
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    3. Adjustment
      Due to Distribution.
      If
      the
      Borrower shall declare or make any distribution of its assets (or rights to
      acquire its assets) to holders of Common Stock as a dividend, stock repurchase,
      by way of return of capital or otherwise (including any dividend or distribution
      to the Borrower’s shareholders in cash or shares (or rights to acquire shares)
      of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”),
      then
      the Holder of this Note shall be entitled, upon any conversion of this Note
      after the date of record for determining shareholders entitled to such
      Distribution, to receive the amount of such assets which would have been payable
      to the Holder with respect to the shares of Common Stock issuable upon such
      conversion had such Holder been the holder of such shares of Common Stock on
      the
      record date for the determination of shareholders entitled to such
      Distribution.

     

    4. Purchase
      Rights.
      If,
      at
      any time when any Notes are issued and outstanding, the Borrower issues any
      convertible securities or rights to purchase stock, warrants, securities or
      other property (the “Purchase
      Rights”)
      pro
      rata to the record holders of any class of Common Stock, then the Holder of
      this
      Note will be entitled to acquire, upon the terms applicable to such Purchase
      Rights, the aggregate Purchase Rights which such Holder could have acquired
      if
      such Holder had held the number of shares of Common Stock acquirable upon
      complete conversion of this Note (without regard to any limitations on
      conversion contained herein) immediately before the date on which a record
      is
      taken for the grant, issuance or sale of such Purchase Rights or, if no such
      record is taken, the date as of which the record holders of Common Stock are
      to
      be determined for the grant, issue or sale of such Purchase Rights.

     

    5. Notice
      of Adjustments.
      Upon
      the
      occurrence of each adjustment or readjustment of the Conversion Price as a
      result of the events described in this Section 1.6, the Borrower, at its
      expense, shall promptly compute such adjustment or readjustment and prepare
      and
      furnish to the Holder of a certificate setting forth such adjustment or
      readjustment and showing in detail the facts upon which such adjustment or
      readjustment is based. The Borrower shall, upon the written request at any
      time
      of the Holder, furnish to such Holder a like certificate setting forth (i)
      such
      adjustment or readjustment, (ii) the Conversion Price at the time in effect
      and
      (iii) the number of shares of Common Stock and the amount, if any, of other
      securities or property which at the time would be received upon conversion
      of
      the Note.

     

    
      
        
        

      

      
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    G. Trading
      Market Limitations.
      Unless
      permitted by the applicable rules and regulations of the principal securities
      market on which the Common Stock is then listed or traded, in no event shall
      the
      Borrower issue upon conversion of or otherwise pursuant to this Note and the
      other Notes issued pursuant to the Purchase Agreement more than the maximum
      number of shares of Common Stock that the Borrower can issue pursuant to any
      rule of the principal United States securities market on which the Common Stock
      is then traded (the “Maximum
      Share Amount”),
      which
      shall be 19.99% of the total shares outstanding on the Closing Date (as defined
      in the Purchase Agreement), subject to equitable adjustment from time to time
      for stock splits, stock dividends, combinations, capital reorganizations and
      similar events relating to the Common Stock occurring after the date hereof.
      Once the Maximum Share Amount has been issued (the date of which is hereinafter
      referred to as the “Maximum
      Conversion Date”),
      if
      the Borrower fails to eliminate any prohibitions under applicable law or the
      rules or regulations of any stock exchange, interdealer quotation system or
      other self-regulatory organization with jurisdiction over the Borrower or any
      of
      its securities on the Borrower’s ability to issue shares of Common Stock in
      excess of the Maximum Share Amount (a “Trading
      Market Prepayment Event”),
      in
      lieu of any further right to convert this Note, and in full satisfaction of
      the
      Borrower’s obligations under this Note, the Borrower shall pay to the Holder,
      within fifteen (15) business days of the Maximum Conversion Date (the
“Trading
      Market Prepayment Date”),
      an
      amount equal to 130% times
      the
sum
      of (a)
      the then outstanding principal amount of this Note immediately following the
      Maximum Conversion Date, plus
      (b)
      accrued and unpaid interest on the unpaid principal amount of this Note to
      the
      Trading Market Prepayment Date, plus
      (c)
      Default Interest, if any, on the amounts referred to in clause (a) and/or (b)
      above, plus
      (d) any
      optional amounts that may be added thereto at the Maximum Conversion Date by
      the
      Holder in accordance with the terms hereof (the then outstanding principal
      amount of this Note immediately following the Maximum Conversion Date,
plus
      the
      amounts referred to in clauses (b), (c) and (d) above shall collectively be
      referred to as the “Remaining
      Convertible Amount”).
      With
      respect to each Holder of Notes, the Maximum Share Amount shall refer to such
      Holder’s pro rata
      share
      thereof determined in accordance with Section 4.8 below. In the event that
      the
      sum of (x) the aggregate number of shares of Common Stock issued upon conversion
      of this Note and the other Notes issued pursuant to the Purchase Agreement
      plus
      (y) the
      aggregate number of shares of Common Stock that remain issuable upon conversion
      of this Note and the other Notes issued pursuant to the Purchase Agreement,
      represents at least one hundred percent (100%) of the Maximum Share Amount
      (the
“Triggering
      Event”),
      the
      Borrower will use its best efforts to seek and obtain Shareholder Approval
      (or
      obtain such other relief as will allow conversions hereunder in excess of the
      Maximum Share Amount) as soon as practicable following the Triggering Event
      and
      before the Maximum Conversion Date. As used herein, “Shareholder
      Approval”
means
      approval by the shareholders of the Borrower to authorize the issuance of the
      full number of shares of Common Stock which would be issuable upon full
      conversion of the then outstanding Notes but for the Maximum Share
      Amount.

     

    H. Status
      as Shareholder.
      Upon
      submission of a Notice of Conversion by a Holder, (i) the shares covered thereby
      (other than the shares, if any, which cannot be issued because their issuance
      would exceed such Holder’s allocated portion of the Reserved Amount or Maximum
      Share Amount) shall be deemed converted into shares of Common Stock and (ii)
      the
      Holder’s rights as a Holder of such converted portion of this Note shall cease
      and terminate, excepting only the right to receive certificates for such shares
      of Common Stock and to any remedies provided herein or otherwise available
      at
      law or in equity to such Holder because of a failure by the Borrower to comply
      with the terms of this Note. Notwithstanding the foregoing, if a Holder has
      not
      received certificates for all shares of Common Stock prior to the tenth (10th)
      business day after the expiration of the Deadline with respect to a conversion
      of any portion of this Note for any reason, then (unless the Holder otherwise
      elects to retain its status as a holder of Common Stock by so notifying the
      Borrower) the Holder shall regain the rights of a Holder of this Note with
      respect to such unconverted portions of this Note and the Borrower shall, as
      soon as practicable, return such unconverted Note to the Holder or, if the
      Note
      has not been surrendered, adjust its records to reflect that such portion of
      this Note has not been converted. In all cases, the Holder shall retain all
      of
      its rights and remedies (including, without limitation, (i) the right to receive
      Conversion Default Payments pursuant to Section 1.3 to the extent required
      thereby for such Conversion Default and any subsequent Conversion Default and
      (ii) the right to have the Conversion Price with respect to subsequent
      conversions determined in accordance with Section 1.3) for the Borrower’s
      failure to convert this Note.

     

    
      
        
        

      

      
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    44. CERTAIN
      COVENANTS

     

    A. Distributions
      on Capital Stock.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent (a) pay, declare or set apart for such
      payment, any dividend or other distribution (whether in cash, property or other
      securities) on shares of capital stock other than dividends on shares of Common
      Stock solely in the form of additional shares of Common Stock or (b) directly
      or
      indirectly or through any subsidiary make any other payment or distribution
      in
      respect of its capital stock except for distributions pursuant to any
      shareholders’ rights plan which is approved by a majority of the Borrower’s
      disinterested directors.

     

    B. Restriction
      on Stock Repurchases.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent redeem, repurchase or otherwise acquire
      (whether for cash or in exchange for property or other securities or otherwise)
      in any one transaction or series of related transactions any shares of capital
      stock of the Borrower or any warrants, rights or options to purchase or acquire
      any such shares, except for repurchases or redemptions of the Series A
      Convertible Preferred Stock..

     

    C. Borrowings.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, create, incur, assume or suffer to
      exist any liability for borrowed money, except (a) borrowings in existence
      or
      committed on the date hereof and of which the Borrower has informed Holder
      in
      writing prior to the date hereof, (b) indebtedness to trade creditors or
      financial institutions incurred in the ordinary course of business or (c)
      borrowings, the proceeds of which shall be used to repay this Note.

     

    D. Sale
      of Assets.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, sell, lease or otherwise dispose of
      any significant portion of its assets outside the ordinary course of business.
      Any consent to the disposition of any assets may be conditioned on a specified
      use of the proceeds of disposition.

     

    E. Advances
      and Loans.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, lend money, give credit or make
      advances to any person, firm, joint venture or corporation, including, without
      limitation, officers, directors, employees, subsidiaries and affiliates of
      the
      Borrower, except loans, credits or advances (a) in existence or committed on
      the
      date hereof and which the Borrower has informed Holder in writing prior to
      the
      date hereof, (b) made in the ordinary course of business or (c) not in excess
      of
      $50,000.

     

    F. Contingent
      Liabilities.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, which shall not be unreasonably
      withheld, assume, guarantee, endorse, contingently agree to purchase or
      otherwise become liable upon the obligation of any person, firm, partnership,
      joint venture or corporation, except by the endorsement of negotiable
      instruments for deposit or collection and except assumptions, guarantees,
      endorsements and contingencies (a) in existence or committed on the date hereof
      and which the Borrower has informed Holder in writing prior to the date hereof,
      and (b) similar transactions in the ordinary course of business. 

     

    
      
        
        

      

      
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    45. EVENTS
      OF
      DEFAULT

     

    If
      any of
      the following events of default (each, an “Event
      of Default”)
      shall
      occur:

     

    A. Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay the principal hereof or interest thereon when due on
      this
      Note, whether at maturity, upon a Trading Market Prepayment Event pursuant
      to
      Section 1.7, upon acceleration or otherwise;

     

    B. Conversion
      and the Shares.
      The
      Borrower fails to issue shares of Common Stock to the Holder (or announces
      or
      threatens that it will not honor its obligation to do so) upon exercise by
      the
      Holder of the conversion rights of the Holder in accordance with the terms
      of
      this Note (for a period of at least sixty (60) days, if such failure is solely
      as a result of the circumstances governed by Section 1.3 and the Borrower is
      using its best efforts to authorize a sufficient number of shares of Common
      Stock as soon as practicable), fails to transfer or cause its transfer agent
      to
      transfer (electronically or in certificated form) any certificate for shares
      of
      Common Stock issued to the Holder upon conversion of or otherwise pursuant
      to
      this Note as and when required by this Note or the Registration Rights
      Agreement, or fails to remove any restrictive legend (or to withdraw any stop
      transfer instructions in respect thereof) on any certificate for any shares
      of
      Common Stock issued to the Holder upon conversion of or otherwise pursuant
      to
      this Note as and when required by this Note or the Registration Rights Agreement
      (or makes any announcement, statement or threat that it does not intend to
      honor
      the obligations described in this paragraph) and any such failure shall continue
      uncured (or any announcement, statement or threat not to honor its obligations
      shall not be rescinded in writing) for two (2) days after the Borrower shall
      have been notified thereof in writing by the Holder; provided however, that
      any
      failure to issue shares upon exercise of conversion rights due to the
      circumstances governed by Section 1.3 hereof shall during the 120 day period
      following the date hereof shall not be an Event of Default;

     

    C. Failure
      to Timely File Registration or Effect Registration.
      The
      Borrower fails to file the Registration Statement within sixty (30) days
      following an Investor Demand (as defined in the Registration Rights Agreement)
      or obtain effectiveness with the Securities and Exchange Commission of the
      Registration Statement within one hundred twenty (120) days following such
      Investor Demand (as defined in the Registration Rights Agreement) or such
      Registration Statement lapses in effect (or sales cannot otherwise be made
      thereunder effective, whether by reason of the Borrower’s failure to amend or
      supplement the prospectus included therein in accordance with the Registration
      Rights Agreement or otherwise) for more than ten (10) consecutive days or twenty
      (20) days in any twelve month period after the Registration Statement becomes
      effective;

     

    D. Breach
      of Covenants.
      The
      Borrower breaches any material covenant or other material term or condition
      contained in Sections 1.3, 1.6 or 1.7 of this Note, or Sections 4(c), 4(e),
      4(h), 4(i), 4(j) or 5 of the Purchase Agreement and such breach continues for
      a
      period of ten (10) days after written notice thereof to the Borrower from the
      Holder;

     

    E. Breach
      of Representations and Warranties.
      Any
      representation or warranty of the Borrower made herein or in any agreement,
      statement or certificate given in writing pursuant hereto or in connection
      herewith (including, without limitation, the Purchase Agreement and the
      Registration Rights Agreement), shall be false or misleading in any material
      respect when made and the breach of which has (or with the passage of time
      will
      have) a material adverse effect on the rights of the Holder with respect to
      this
      Note, the Purchase Agreement or the Registration Rights Agreement;

     

    
      
        
        

      

      
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    F. Receiver
      or Trustee.
      The
      Borrower or any subsidiary of the Borrower shall make an assignment for the
      benefit of creditors, or apply for or consent to the appointment of a receiver
      or trustee for it or for a substantial part of its property or business, or
      such
      a receiver or trustee shall otherwise be appointed;

     

    G. Judgments.
      Any
      money judgment, writ or similar process shall be entered or filed against the
      Borrower or any subsidiary of the Borrower or any of its property or other
      assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
      for a period of twenty (20) days unless otherwise consented to by the Holder,
      which consent will not be unreasonably withheld;

     

    H. Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings for relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower or any subsidiary of
      the
      Borrower; or

     

    I. Default
      Under Other Notes.
      An Event
      of Default has occurred and is continuing under any of the other Notes issued
      pursuant to the Purchase Agreement, then, upon the occurrence and during the
      continuation of any Event of Default specified in Section 3.1, 3.2, 3.3, 3.4,
      3.5, 3.7 or 3.9, at the option of the Holders of a majority of the aggregate
      principal amount of the outstanding Notes issued pursuant to the Purchase
      Agreement exercisable through the delivery of written notice to the Borrower
      by
      such Holders (the “Default
      Notice”),
      and
      upon the occurrence of an Event of Default specified in Section 3.6 or 3.8,
      the
      Notes shall become immediately due and payable and the Borrower shall pay to
      the
      Holder, in full satisfaction of its obligations hereunder, an amount equal
      to
      the greater of (i) 140% times
      the
sum
      of (w)
      the then outstanding principal amount of this Note plus
      (x)
      accrued and unpaid interest on the unpaid principal amount of this Note to
      the
      date of payment (the “Mandatory
      Prepayment Date”)
      plus
      (y)
      Default Interest, if any, on the amounts referred to in clauses (w) and/or
      (x)
plus
      (z) any
      amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof or
      pursuant to Section 2(c) of the Registration Rights Agreement (the then
      outstanding principal amount of this Note to the date of payment plus
      the
      amounts referred to in clauses (x), (y) and (z) shall collectively be known
      as
      the “Default
      Sum”)
      or
      (ii) the “parity value” of the Default Sum to be prepaid, where parity value
      means (a) the highest number of shares of Common Stock issuable upon conversion
      of or otherwise pursuant to such Default Sum in accordance with Article I,
      treating the Trading Day immediately preceding the Mandatory Prepayment Date
      as
      the “Conversion Date” for purposes of determining the lowest applicable
      Conversion Price, unless the Default Event arises as a result of a breach in
      respect of a specific Conversion Date in which case such Conversion Date shall
      be the Conversion Date), multiplied
      by
      (b) the
      highest Closing Price for the Common Stock during the period beginning on the
      date of first occurrence of the Event of Default and ending one day prior to
      the
      Mandatory Prepayment Date (the “Default
      Amount”)
      and
      all other amounts payable hereunder shall immediately become due and payable,
      all without demand, presentment or notice, all of which hereby are expressly
      waived, together with all costs, including, without limitation, legal fees
      and
      expenses, of collection, and the Holder shall be entitled to exercise all other
      rights and remedies available at law or in equity. If the Borrower fails to
      pay
      the Default Amount within five (5) business days of written notice that such
      amount is due and payable, then the Holder shall have the right at any time,
      so
      long as the Borrower remains in default (and so long and to the extent that
      there are sufficient authorized shares), to require the Borrower, upon written
      notice, to immediately issue, in lieu of the Default Amount, the number of
      shares of Common Stock of the Borrower equal to the Default Amount divided
      by
      the Conversion Price then in effect.

     

    
      
        
        

      

      
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    46. MISCELLANEOUS

     

    A. Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder in the exercise of any power, right
      or privilege hereunder shall operate as a waiver thereof, nor shall any single
      or partial exercise of any such power, right or privilege preclude other or
      further exercise thereof or of any other right, power or privileges. All rights
      and remedies existing hereunder are cumulative to, and not exclusive of, any
      rights or remedies otherwise available.

     

    B. Notices.
      Any
      notice herein required or permitted to be given shall be in writing and may
      be
      personally served or delivered by courier or sent by United States mail and
      shall be deemed to have been given upon receipt if personally served (which
      shall include telephone line facsimile transmission) or sent by courier or
      three
      (3) days after being deposited in the United States mail, certified, with
      postage pre-paid and properly addressed, if sent by mail. For the purposes
      hereof, the address of the Holder shall be as shown on the records of the
      Borrower; and the address of the Borrower shall be 711 South Columbus Avenue,
      Mount Vernon, New York 10550, facsimile
      number: 914-663-4634.
      Both the Holder and the Borrower may change the address for service by service
      of written notice to the other as herein provided.

     

    C. Amendments.
      This
      Note and any provision hereof may only be amended by an instrument in writing
      signed by the Borrower and the Holder. The term “Note” and all reference
      thereto, as used throughout this instrument, shall mean this instrument (and
      the
      other Notes issued pursuant to the Purchase Agreement) as originally executed,
      or if later amended or supplemented, then as so amended or
      supplemented.

     

    D. Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to be the benefit of the Holder and its successors and assigns.
      Each
      transferee of this Note must be an “accredited investor” (as defined in Rule
      501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary,
      this Note may be pledged as collateral in connection with a bona fide
      margin
      account or other lending arrangement.

     

    E. Cost
      of Collection.
      If
      default is made in the payment of this Note, the Borrower shall pay the Holder
      hereof costs of collection, including reasonable attorneys’ fees.

     

    
      
        
        

      

      
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    F. Governing
      Law.
      THIS
      NOTE SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
      WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE
      BORROWER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
      FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING
      UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
      TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE
      THE
      DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
      BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST
      CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
      THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER
      PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH
      PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR
      PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
      SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
      PREVAIL IN ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL
      FEES
      AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
      CONNECTION WITH SUCH DISPUTE.

     

    G. Certain
      Amounts.
      Whenever
      pursuant to this Note the Borrower is required to pay an amount in excess of
      the
      outstanding principal amount (or the portion thereof required to be paid at
      that
      time) plus accrued and unpaid interest plus Default Interest on such interest,
      the Borrower and the Holder agree that the actual damages to the Holder from
      the
      receipt of cash payment on this Note may be difficult to determine and the
      amount to be so paid by the Borrower represents stipulated damages and not
      a
      penalty and is intended to compensate the Holder in part for loss of the
      opportunity to convert this Note and to earn a return from the sale of shares
      of
      Common Stock acquired upon conversion of this Note at a price in excess of
      the
      price paid for such shares pursuant to this Note. The Borrower and the Holder
      hereby agree that such amount of stipulated damages is not plainly
      disproportionate to the possible loss to the Holder from the receipt of a cash
      payment without the opportunity to convert this Note into shares of Common
      Stock.

     

    H. Allocations
      of Maximum Share Amount and Reserved Amount.
      The
      Maximum Share Amount and Reserved Amount shall be allocated pro rata among
      the
      Holders of Notes based on the principal amount of such Notes issued to each
      Holder. Each increase to the Maximum Share Amount and Reserved Amount shall
      be
      allocated pro rata among the Holders of Notes based on the principal amount
      of
      such Notes held by each Holder at the time of the increase in the Maximum Share
      Amount or Reserved Amount. In the event a Holder shall sell or otherwise
      transfer any of such Holder’s Notes, each transferee shall be allocated a pro
      rata portion of such transferor’s Maximum Share Amount and Reserved Amount. Any
      portion of the Maximum Share Amount or Reserved Amount which remains allocated
      to any person or entity which does not hold any Notes shall be allocated to
      the
      remaining Holders of Notes, pro rata based on the principal amount of such
      Notes
      then held by such Holders.

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

    I. Damages
      Shares.
      The
      shares of Common Stock that may be issuable to the Holder pursuant to Sections
      1.3 and 1.4(g) hereof and pursuant to Section 2(c) of the Registration Rights
      Agreement (“Damages
      Shares”)
      shall
      be treated as Common Stock issuable upon conversion of this Note for all
      purposes hereof and shall be subject to all of the limitations and afforded
      all
      of the rights of the other shares of Common Stock issuable hereunder, including
      without limitation, the right to be included in the Registration Statement
      filed
      pursuant to the Registration Rights Agreement. For purposes of calculating
      interest payable on the outstanding principal amount hereof, except as otherwise
      provided herein, amounts convertible into Damages Shares (“Damages
      Amounts”)
      shall
      not bear interest but must be converted prior to the conversion of any
      outstanding principal amount hereof, until the outstanding Damages Amounts
      is
      zero.

     

    J. Denominations.
      At the
      request of the Holder, upon surrender of this Note, the Borrower shall promptly
      issue new Notes in the aggregate outstanding principal amount hereof, in the
      form hereof, in such denominations of at least $50,000 as the Holder shall
      request.

     

    K. Purchase
      Agreement.
      By its
      acceptance of this Note, each Holder agrees to be bound by the applicable terms
      of the Purchase Agreement.

     

    L. Notice
      of Corporate Events.
      Except
      as otherwise provided below, the Holder of this Note shall have no rights as
      a
      Holder of Common Stock unless and only to the extent that it converts this
      Note
      into Common Stock. The Borrower shall provide the Holder with prior notification
      of any meeting of the Borrower’s shareholders (and copies of proxy materials and
      other information sent to shareholders). In the event of any taking by the
      Borrower of a record of its shareholders for the purpose of determining
      shareholders who are entitled to receive payment of any dividend or other
      distribution, any right to subscribe for, purchase or otherwise acquire
      (including by way of merger, consolidation, reclassification or
      recapitalization) any share of any class or any other securities or property,
      or
      to receive any other right, or for the purpose of determining shareholders
      who
      are entitled to vote in connection with any proposed sale, lease or conveyance
      of all or substantially all of the assets of the Borrower or any proposed
      liquidation, dissolution or winding up of the Borrower, the Borrower shall
      mail
      a notice to the Holder, at least twenty (20) days prior to the record date
      specified therein (or thirty (30) days prior to the consummation of the
      transaction or event, whichever is earlier), of the date on which any such
      record is to be taken for the purpose of such dividend, distribution, right
      or
      other event, and a brief statement regarding the amount and character of such
      dividend, distribution, right or other event to the extent known at such time.
      The Borrower shall make a public announcement of any event requiring
      notification to the Holder hereunder substantially simultaneously with the
      notification to the Holder in accordance with the terms of this Section
      4.12.

     

    M. Remedies.
      The
      Borrower acknowledges that a breach by it of its obligations hereunder will
      cause irreparable harm to the Holder, by vitiating the intent and purpose of
      the
      transaction contemplated hereby. Accordingly, the Borrower acknowledges that
      the
      remedy at law for a breach of its obligations under this Note will be inadequate
      and agrees, in the event of a breach or threatened breach by the Borrower of
      the
      provisions of this Note, that the Holder shall be entitled, in addition to
      all
      other available remedies at law or in equity, and in addition to the penalties
      assessable herein, to an injunction or injunctions restraining, preventing
      or
      curing any breach of this Note and to enforce specifically the terms and
      provisions thereof, without the necessity of showing economic loss and without
      any bond or other security being required.

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    47. CALL
      OPTION

     

    A. Call
      Option.
      Notwithstanding anything to the contrary contained in this Article V, so long
      as
(i) no
      Event of Default or Trading Market Prepayment Event shall have occurred and
      be
      continuing, (ii) the
      Borrower has a sufficient number of authorized shares of Common Stock reserved
      for issuance upon full conversion of the Notes, then at any time after the
      Issue
      Date, and (iii) the
      Common Stock is trading at or below $.12 per share, the Borrower shall have
      the
      right, exercisable on not less than ten (10) Trading Days prior written notice
      to the Holders of the Notes (which notice may not be sent to the Holders of
      the
      Notes until the Borrower is permitted to prepay the Notes pursuant to this
      Section 5.1), to prepay all of the outstanding Notes in accordance with this
      Section 5.1. Any notice of prepayment hereunder (an “Optional
      Prepayment”)
      shall
      be delivered to the Holders of the Notes at their registered addresses appearing
      on the books and records of the Borrower and shall state (1) that the Borrower
      is exercising its right to prepay all of the Notes issued on the Issue Date
      and
      (2) the date of prepayment (the “Optional
      Prepayment Notice”).
      On
      the date fixed for prepayment (the “Optional
      Prepayment Date”),
      the
      Borrower shall make payment of the Optional Prepayment Amount (as defined below)
      to or upon the order of the Holders as specified by the Holders in writing
      to
      the Borrower at least one (1) business day prior to the Optional Prepayment
      Date. If the Borrower exercises its right to prepay the Notes, the Borrower
      shall make payment to the holders of an amount in cash (the “Optional
      Prepayment Amount”)
      equal
      to either (i) 120% (for prepayments occurring within thirty (30) days of
      the Issue Date), (ii) 130% for prepayments occurring between thirty-one
      (31) and sixty (60) days of the Issue Date, or (iii) 140% (for prepayments
      occurring after the sixtieth (60th)
      day
      following the Issue Date), multiplied by the sum of (w) the then outstanding
      principal amount of this Note plus
      (x) accrued and unpaid interest on the unpaid principal amount of this Note
      to the Optional Prepayment Date plus
      (y)
      Default Interest, if any, on the amounts referred to in clauses (w) and (x)
      plus
      (z) any
      amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof or
      pursuant to Section 2(c) of the Registration Rights Agreement (the then
      outstanding principal amount of this Note to the date of payment plus
      the
      amounts referred to in clauses (x), (y) and (z) shall collectively be known
      as
      the “Optional
      Prepayment Sum”).
      Notwithstanding notice of an Optional Prepayment, the Holders shall at all
      times
      prior to the Optional Prepayment Date maintain the right to convert all or
      any
      portion of the Notes in accordance with Article I and any portion of Notes
      so
      converted after receipt of an Optional Prepayment Notice and prior to the
      Optional Prepayment Date set forth in such notice and payment of the aggregate
      Optional Prepayment Amount shall be deducted from the principal amount of Notes
      which are otherwise subject to prepayment pursuant to such notice. If the
      Borrower delivers an Optional Prepayment Notice and fails to pay the Optional
      Prepayment Amount due to the Holders of the Notes within two (2) business days
      following the Optional Prepayment Date, the Borrower shall forever forfeit
      its
      right to redeem the Notes pursuant to this Section 5.1.

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

    B. Partial
      Call Option.
      Notwithstanding anything to the contrary contained in this Article V, in the
      event that the Average Daily Price of the Common Stock, as reported by the
      Reporting Service, for each day of the month ending on any Determination Date
      is
      below the Initial Market Price, the Borrower may, at its option, prepay a
      portion of the outstanding principal amount of the Notes equal to 101% of the
      principal amount hereof divided by thirty-six (36) plus one month’s interest. In
      the event Borrower makes such a prepayment, Holders shall not convert any
      principal or interest on the Notes during the period of thirty (30) days
      following the date of prepayment. The term “Initial
      Market Price”
      means
      shall mean the volume weighted average price of the Common Stock for the five
      (5) Trading Days immediately preceding the Closing which is $.03. The term
      “Reporting
      Service”
      means a
      reliable reporting service mutually acceptable to and hereinafter designated
      by
      the Holder.

    

     

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by its duly authorized
      officer this 31st
      day of
      May, 2007.

     

    
      	 	 	 
	 	CLICKABLE
              ENTERPRISES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              

              Nicholas
                Cirillo

            
	 	
              President
                

            

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    NOTICE
      OF CONVERSION 

    (To
      be
      Executed by the Registered Holder

    in
      order
      to Convert the Notes)

     

    The
      undersigned hereby irrevocably elects to convert $__________ principal amount
      of
      the Note (defined below) into shares of common stock, par value $.001 per share
      (“Common
      Stock”),
      of
      Clickable Enterprises, Inc., a Delaware corporation (the “Borrower”)
      according to the conditions of the convertible Notes of the Borrower dated
      as of
      May 31, 2007 (the “Notes”),
      as of
      the date written below. If securities are to be issued in the name of a person
      other than the undersigned, the undersigned will pay all transfer taxes payable
      with respect thereto and is delivering herewith such certificates. No fee will
      be charged to the Holder for any conversion, except for transfer taxes, if
      any.
      A copy of each Note is attached hereto (or evidence of loss, theft or
      destruction thereof).

     

    The
      Borrower shall electronically transmit the Common Stock issuable pursuant to
      this Notice of Conversion to the account of the undersigned or its nominee
      with
      DTC through its Deposit Withdrawal Agent Commission system (“DWAC
      Transfer”).

    

      
        	
                Name
                  of DTC Prime Broker:

              	 

      

      
        	
                Account
                  Number:

              	 

      

    

     

    In
      lieu
      of receiving shares of Common Stock issuable pursuant to this Notice of
      Conversion by way of a DWAC Transfer, the undersigned hereby requests that
      the
      Borrower issue a certificate or certificates for the number of shares of Common
      Stock set forth below (which numbers are based on the Holder’s calculation
      attached hereto) in the name(s) specified immediately below or, if additional
      space is necessary, on an attachment hereto:

    

      
        	
                Name:

              	 
	
                Address:

              	 

      

    

     

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable to the undersigned upon conversion of the Notes
      shall
      be made pursuant to registration of the securities under the Securities Act
      of
      1933, as amended (the “Act”),
      or
      pursuant to an exemption from registration under the Act.

     

    Date
      of
      Conversion:___________________________

    Applicable
      Conversion Price:____________________

    Number
      of
      Shares of Common Stock to be Issued Pursuant to

    Conversion
      of the Notes:______________

    Signature:___________________________________

    Name:______________________________________

    Address:____________________________________

     

    The
      Borrower shall issue and deliver shares of Common Stock to an overnight courier
      not later than three business days following receipt of the original Note(s)
      to
      be converted, and shall make payments pursuant to the Notes for the number
      of
      business days such issuance and delivery is late.

     

    
      
        
        

      

      
        55SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of December 24, 2007, by and among Discovery
      Technologies, Inc. a Nevada corporation,
      and all
      predecessors thereof
      (the
“Company”),
      Green
      Agriculture Holding Corporation, a New Jersey corporation (“Green”), Shaanxi
      TechTeam Jinong Humic Acid Product Co., Ltd., a company organized under the
      laws
      of the People’s Republic of China, and all predecessors thereof (“WOFE”),
      and
      the investors identified on the signature pages hereto (each, an “Investor”
      and
      collectively, the “Investors”).
      

     

    RECITALS:

     

    WHEREAS,
      as of the Closing Date the Company is entering into a Share Exchange
      Agreement,
      dated
      as of the date hereof
      (the
“Exchange
      Agreement”)
      with
      Green and the owners of 100% of the outstanding capital stock of Green
      (“Green
      Shareholders”),
      pursuant to which the Company will, subject to the terms and conditions thereof,
      acquire all of the outstanding capital stock of Green, in exchange for Common
      Stock (as defined below) under the Exchange Agreement and immediately prior
      to
      the Closing under this Agreement (the “Exchange”).

     

    WHEREAS,
      the closing of the Exchange is conditioned, among other things, on the
      consummation of the financing contemplated by this Agreement immediately
      thereafter.

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      exemptions from registration under the Securities Act (as defined below), the
      Company desires to issue and sell to each Investor, and each Investor, severally
      and not jointly, desires to purchase from the Company, shares of the Company’s
      Common Stock, as more fully described in this Agreement.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and the Investors agree as
      follows:

     

    ARTICLE
      1.

    DEFINITIONS

     

    1.1. Definitions.
      In
      addition to the terms defined elsewhere in this Agreement, for all purposes
      of
      this Agreement, the following terms shall have the meanings indicated in this
      Section 1.1:

     

     “2009
      Guaranteed
      ATNI” has
      the
      meaning set forth in Section 4.11.

     

    “2009
      Make Good Shares” means
      the
      following, as
      equitably adjusted for any stock splits, stock combinations, stock dividends
      or
      similar transactions:
      the
      Shares times 50%.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “2009
      Annual
      Report”
      means
      the
      Annual Report on Form 10-KSB or appropriate form pursuant to the then effective
      rules under the Exchange Act of the Company for the fiscal year ending June
      30,
      2009, as filed with the Commission.

     

    “2009
      Guaranteed
      EPS” means
      ninety three percent of the 2009 Guaranteed ATNI divided by the Closing
      Outstanding Shares (as
      may
      be equitably adjusted for any stock splits, stock combinations, stock dividends
      or similar transactions):

     

    2009
      Guaranteed ATNI × 93%

    Closing
      Outstanding Shares

    

    “Action”
      means
      any action, suit, inquiry, notice of violation, proceeding (including any
      partial proceeding such as a deposition) or investigation pending or threatened
      in writing against or affecting the Company, any Subsidiary or any of their
      respective properties before or by any court, arbitrator, governmental or
      administrative agency, regulatory or self regulatory authority (federal, state,
      county, local or foreign), stock market, stock exchange or trading
      facility.

     

    “Affiliate”
      means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 405 under the Securities
      Act.

     

    “After
      Tax Net Income”
      shall
      have the meaning set forth in Section 4.11.

     

    “Available
      Undersubscription Amount”
      has the
      meaning set forth in Section 4.15(c).

     

    “Basic
      Amount”
has
      the
      meaning set forth in Section 4.15(b).

     

    “Board
      Holdback Escrow
      Amount”
      has the
      meaning set forth in section 4.12. 

     

    “Business
      Day”
      means
      any day except Saturday, Sunday and any day which is a federal legal holiday
      or
      a day on which banking institutions in the State of New York are authorized
      or
      required by law or other governmental action to close.

     

    “Buy-In”
      has
      the
      meaning set forth in Section 4.1(c).

     

    “CFO
      Holdback Escrow
      Amount” has
      the
      meaning set forth in section 4.16.

     

    “Circular
      75” means Notice
      on
      Relevant Issues of PRC State Administration of Foreign Exchange (“SAFE”)
      concerning Foreign Exchange Administration for Domestic Residents to Engage
      in
      Financing and Round-trip Investment via Overseas Special Purpose Companies
      promulgated by SAFE on October 21, 2005 and effective from November 1,
      2005.

     

    “Circular
      106”
      means
      the implementation guidance to Circular 75 promulgated by SAFE on May 29, 2007
      and effective from June 11, 2007. 

     

    “Closing”
      means
      the closing of the purchase and sale of the Shares
      pursuant
      to Article II.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Closing
      Date”
      means
      the Business Day on which all of the conditions set forth in Sections 5.1 and
      5.2 hereof are satisfied, or such other date as the parties may
      agree.

     

    "Closing
      Escrow Agreement"
      means
      the Escrow Agreement, dated as of the date hereof, by
      and
among
      the
      Company, the Investors and Escrow Agent in the form of Exhibit
      A
      hereto. 

     

    “Closing
      Outstanding Shares”
      means
      the number of shares of Common Stock outstanding immediately following the
      Closing. 

     

    “Commission”
      means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
      means
      the common stock of the Company, par value $0.001 per share, and any securities
      into which such common stock may hereafter be reclassified or for which it
      may
      be exchanged as a class.

     

    “Common
      Stock Equivalents”
      means
      any securities of the Company or any Subsidiary which entitle the holder thereof
      to acquire Common Stock at any time, including without limitation, any debt,
      preferred stock, rights, options, warrants or other instrument that is at any
      time convertible into or exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock or other securities that entitle the holder
      to
      receive, directly or indirectly, Common Stock.

     

    “Company”
      has
      the
      meaning set forth in the preamble to this Agreement.

     

    “Company
      Entities”
      means
      the Company, Green and WOFE and all existing Subsidiaries of any such entities
      and any other entities which hereafter become Subsidiaries of any such
      entities.

     

     “Company
      U.S. Counsel”
      means
      Guzov Ofsink, LLC.

     

    “Company
      Deliverables”
      has the
      meaning set forth in Section 2.2(a).

     

    “Compliance
      Notice Date”
      has the
      meaning set forth in Section 4.21.

     

    “Compliance
      Period”
      has the
      meaning set forth in Section 4.21.

     

    “Disclosure
      Materials”
      has the
      meaning set forth in Section 3.1(h).

     

    “Earnings
      Per Share” shall
      have the meaning set forth in Section 4.11.

     

    “Effective
      Date”
      means
      the date that the initial Registration Statement required by Section 2(a) of
      the
      Registration Rights Agreement is first declared effective by the
      Commission.

     

    “Escrow
      Agent” shall
      mean Tri-State
      Title & Escrow, LLC and any successor thereto or replacement
      thereof.

     

    “Evaluation
      Date” has
      the
      meaning set forth in Section 3.1(s).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Exchange”
      has the
      meaning set forth in the recitals to this Agreement.

     

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended.

     

    “Exchange
      Agreement”
      has the
      meaning set forth in the recitals to this Agreement. 

     

    “Existing
      Company Entities”
      means
      the Company, Green and WOFE and their respective Subsidiaries. 

     

    “FCPA”
      shall
      have the meaning set forth in Section 3.1(cc). 

     

    “GAAP”
      means
      U.S. generally accepted accounting principles.

     

    “Green”
      has the
      meaning set forth in the preamble to this Agreement.

     

    “Holdback
      Escrow Agreement” means
      Holdback Escrow Agreement, dated as of the date hereof, by
      and
among
      the
      Company, the Investors and Escrow Agent in the form of Exhibit
      B
      hereto.

     

    “Intellectual
      Property Rights”
      has the
      meaning set forth in Section 3.1(p).

     

    “Intellectual
      Property Right Licensing Agreements” has
      the
      meaning set forth in Section 3.1(p).

     

    “Investment
      Amount”
      means,
      with respect to each Investor, the Investment Amount indicated on such
      Investor’s signature page to this Agreement.

     

    “Investor
      Deliverables”
      has the
      meaning set forth in Section 2.2(b).

     

    “Investor
      Party”
      has the
      meaning set forth in Section 4.7.

     

    “IR
      Holdback Escrow
      Amount”
      has the
      meaning set forth in Section 4.13.

     

    “Lien”
      means
      any lien, charge, encumbrance, security interest, pre-emptive right, right
      of
      first refusal, right of participation or any other restrictions of any
      kind.

     

    “Lockup
      Agreement”
      means
      the Lockup Agreement, dated as of the date hereof, by and between the Company
      and each person listed as a signatory thereto, in the form attached as
Exhibit
      C
      hereto.

     

    “Losses”
      means
      any loss, liability, obligation, claim, contingency, damage, cost or expense,
      including all judgments, amounts paid in settlements, court costs and reasonable
      attorneys’ fees and costs of investigation related thereto.

     

    “Make
      Good Escrow Agreement” means
      the
      Make Good Escrow Agreement, dated as of the date hereof, among the Company,
      the
      Make Good Escrow Agent, the Make Good Pledgor
      and the
      Investors, in the form of Exhibit
      D
      hereto.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Make
      Good Escrow Agent” shall
      mean Tri-State
      Title & Escrow, LLC and any successor thereto or replacement thereof.

     

    “Make
      Good Pledgor” means
      Mr.
      Yinshing David To. 

     

    “Material
      Adverse Effect”
      means
      any of (i) a material and adverse effect on the legality, validity or
      enforceability of any Transaction Document, (ii) a material and adverse effect
      on the results of operations, assets, properties, prospects, business or
      condition (financial or otherwise) of the Company and the Subsidiaries, taken
      as
      a whole, or (iii) an adverse impairment to the Company’s ability to perform on a
      timely basis its obligations under any Transaction Document, or the Exchange
      Agreement.

     

    “Money
      Laundering Laws”
has
      the
      meaning set forth in Section 3.1(ff).

     

    “New
      York Courts”
      means
      the state and federal courts sitting in the City of New York, Borough of
      Manhattan.

     

    “Notice
      of Acceptance”
      has the
      meaning set forth in Section 4.15(c).

     

    “Notice”
      has the
      meaning set forth in Section 4.21.

     

    “OFAC”
      has the
      meaning set forth in Section 3.1(ee).

     

    “Offer”
has
      the
      meaning set forth in Section 4.15(b).

     

    “Offer
      Notice”
has
      the
      meaning set forth in Section 4.15(b).

     

    “Offer
      Period”
      has the
      meaning set forth in Section 4.15(c).

     

    “Offered
      Securities”
has
      the
      meaning set forth in Section 4.15(b).

     

    “Outside
      Date”
      means
      the fifteenth calendar day (if such calendar day is a Trading Day and if not,
      then the first Trading Day following such fifteenth calendar day) following
      the
      date of this Agreement.

     

    “Per
      Share Purchase Price”
      means
      $3.25. 

     

    “Person”
      means an
      individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Pinnacle”
      means
      Pinnacle China Fund, L.P.

     

    “PRC”
means
      the People’s Republic of China, not including Taiwan, Hong Kong and
      Macau.

     

    “Proceeding”
      means an
      action, claim, suit, investigation or proceeding (including, without limitation,
      an investigation or partial proceeding, such as a deposition), whether commenced
      or threatened.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “Refused
      Securities”
      has the
      meaning set forth in Section 4.15(d).

     

    “Registration
      Rights Agreement”
      means
      the Registration Rights Agreement, dated as of the date hereof, among the
      Company and the Investors, in the form of Exhibit
      E
      hereto.

     

    “Registration
      Statement”
      means a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Investors of the
      Shares.

     

    “Rule
      144”
      means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      rule.

     

    “SEC
      Reports”
      has the
      meaning set forth in Section 3.1(h).

     

    “Securities
      Act”
      means
      the Securities Act of 1933, as amended.

     

    “September
      8 Merger and Acquisition Rules”
means
      Rules on Acquisition of Domestic Enterprises by Foreign Investors jointly
      promulgated by six ministries in PRC including PRC Ministry of Commerce and
      SAFE
      on August 8, 2006 and effective from September 8, 2006. 

     

    “Share
      Delivery Date”
      has the
      meaning set forth in Section 4.1(c).

     

    “Shares”
      means
      the shares of Common Stock being offered and sold to the Investors by the
      Company hereunder.

     

    “Short
      Sales”
      include,
      without limitation, all “short sales” as defined in Rule 200 promulgated under
      Regulation SHO under the Exchange Act and all types of direct and indirect
      stock
      pledges, forward sale contracts, options, puts, calls, swaps and similar
      arrangements (including on a total return basis), and sales and other
      transactions through non-US broker dealers or foreign regulated
      brokers.

     

    “Subsequent
      Placement”
has
      the
      meaning set forth in Section 4.15(a).

     

    “Subsequent
      Placement Agreement”
has
      the
      meaning set forth in Section 4.15(d).

     

    “Subsidiary”
      of any
      Person means any “significant subsidiary” as defined in Rule 1-02(w) of the
      Regulation S-X promulgated by the Commission under the Exchange Act of such
      Person. The term “Subsidiaries” shall be deemed to include Green and WOFE and
      their respective subsidiaries as if the Exchange shall have been consummated
      as
      of the time of the execution of this Agreement, with the effect that all
      references to Subsidiaries of the Company in this Agreement shall also refer
      to
      Green, WOFE and their respective subsidiaries.

     

     “Trading
      Day”
      means
      (i) a day on which the Common Stock is traded on a Trading Market (other than
      the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
      Market (other than the OTC Bulletin Board), a day on which the Common Stock
      is
      traded in the over-the-counter market, as reported by the OTC Bulletin Board,
      or
      (iii) if the Common Stock is not quoted on any Trading Market, a day on which
      the Common Stock is quoted in the over-the-counter market as reported by the
      Pink Sheets LLC (or any similar organization or agency succeeding to its
      functions of reporting prices); provided, that in the event that the Common
      Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
      Trading Day shall mean a Business Day.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “Trading
      Market”
      means
      whichever of the New York Stock Exchange, the American Stock Exchange, the
      NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
      or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
      on the date in question.

     

    “Transaction
      Documents”
      means
      this Agreement, the Registration Rights Agreement, the Closing Escrow Agreement,
      the Holdback Escrow Agreement, the Lockup Agreements, the Make Good Escrow
      Agreement and any other documents or agreements executed in connection with
      the
      transactions contemplated hereunder.

     

    “Undersubscription
      Amount”
has
      the
      meaning set forth in Section 4.15(b).

     

    “WOFE”
      has the
      meaning specified in the preamble of this Agreement.

     

    “WOFE
      Financial Statements”
has
      the
      meaning set forth in Section 5.1(e).

     

    ARTICLE
      2.

    PURCHASE
      AND SALE

     

    2.1. Closing.
      Subject
      to the terms and conditions set forth in this Agreement, at the Closing the
      Company shall issue and sell to each Investor, and each Investor shall,
      severally and not jointly, purchase from the Company, the Shares representing
      such Investor’s Investment Amount. The Closing shall take place at the offices
      of Guzov Ofsink, LLC, 600 Madison, 14th
      Floor,
      New York, NY 10022 on the Closing Date or at such other location or time as
      the
      parties may agree.

     

    2.2. Closing
      Deliveries.
      (a)
      At the
      Closing, the Company shall deliver or cause to be delivered to each Investor
      the
      following (the “Company
      Deliverables”):

     

    (i) a
      single
      certificate representing that number of aggregate Shares to be issued and sold
      at Closing to such Investor, determined under Section 2.1(a), registered in
      the
      name of such Investor; 

     

    (ii) the
      Closing Escrow Agreement, duly executed by the Company and the Escrow
      Agent;

     

    (iii) the
      Holdback Escrow Agreement, duly executed by the Company and the Escrow
      Agent;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (iv) the
      Make
      Good Escrow Agreement, duly executed by the Company and the Escrow
      Agent;

     

    (v) the
      legal
      opinion of Company U.S. Counsel, in agreed form, addressed to the Investors;
      

     

    (vi) the
      legal
      opinion of special PRC counsel to WOFE, in agreed form, addressed to the
      Investors; 

     

    (vii) the
      Registration Rights Agreement, duly executed by the Company;

     

    (viii) the
      Lockup Agreement, duly executed by each party thereto.

     

    (b) At
      the
      Closing, each Investor shall deliver or cause to be delivered the following
      (collectively, the “Investors
      Deliverables”):

     

    (i) to
      the
      Company, the Closing Escrow Agreement, duly executed by such
      Investor;

     

    (ii) to
      the
      Company, the Holdback Escrow Agreement, duly executed by such
      Investor;

     

    (iii) to
      the
      Company, the Registration Rights Agreement, duly executed by such Investor;
      and

     

    (iv) to
      the
      Company, the Make Good Escrow Agreement, duly executed by such
      Investor.

     

    (c) Within
      one Business Day following the date of this Agreement, each Investor shall
      cause
      to be delivered to the Escrow Agent, its Investment Amount, in United States
      dollars and in immediately available funds, by wire transfer to an account
      designated for such purpose in accordance with the terms of the Closing Escrow
      Agreement.

     

    ARTICLE
      3.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1. Representations
      and Warranties of the Existing Company Entities.
      The
      Company, Green and WOFE hereby jointly and severally make the following
      representations and warranties to each Investor:

     

    (a) Subsidiaries.
      Except as disclosed on Schedule 3.1 (a) none of the Existing Company Entities
      have any direct or indirect Subsidiaries. Except as disclosed in Schedule
      3.1(a), (i) the Company owns, directly or indirectly, all of the capital stock
      of each other Existing Company Entity, and each other Existing Company Entity
      owns, directly or indirectly, all of the capital stock of its respective
      Subsidiaries, in each case free and clear of any and all Liens, and (ii) all
      the
      issued and outstanding shares of capital stock of each Subsidiary are validly
      issued and are fully paid, non-assessable and free of any and all Liens. As
      of
      the Closing, the Company shall own 100% of the capital stock of Green and Green
      shall own 100% of the capital stock of WOFE, in each case free and clear of
      all
      Liens. Prior to the Closing Green Shareholders own 100% of the capital stock
      of
      Green free and clear of all Liens. Prior to the Closing Green is the owner
      of
      100% of the capital stock of WOFE, subject to the full payment of the purchase
      price of the WOFE. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b) Organization
      and Qualification. Each Existing Company Entity is duly incorporated or
      otherwise organized, validly existing and in good standing under the laws of
      the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its respective properties and
      assets and to carry on its respective business as currently conducted and as
      to
      be conducted as specified in the Exchange Agreement, and Current Report on
      Form
      8-K to be filed in accordance with Section 4.5 herein. No Existing Company
      Entity is in violation of any of the provisions of its respective certificate
      or
      articles of incorporation, bylaws or other organizational or charter documents.
      Each Existing Company Entity is duly qualified to conduct its respective
      businesses and is in good standing as a foreign corporation or other entity
      in
      each jurisdiction in which the nature of the business conducted or property
      owned by it makes such qualification necessary, except where the failure to
      be
      so qualified or in good standing, as the case may be, could not, individually
      or
      in the aggregate, have or reasonably be expected to result in a Material Adverse
      Effect. 

     

    (c) Authorization;
      Enforcement. Each Existing Company Entity which is or is to become party to
      any
      Transaction Document and the Exchange Agreement has the requisite corporate
      and
      other power and authority to enter into and to consummate the transactions
      contemplated by each such Transaction Document and the Exchange Agreement to
      which it is a party and otherwise to carry out its obligations thereunder.
      The
      execution and delivery of the Transaction Documents, by each Existing Company
      Entity to be party thereto and the consummation by each of them of the
      transactions contemplated thereby have been duly authorized by all necessary
      action on the part of such Existing Company Entity, and no further action is
      required by any of them in connection with such authorization. Each Transaction
      Document and the Exchange Agreement has been (or upon delivery will have been)
      duly executed by the Company, each other Existing Company Entity required to
      execute the same and each Subsidiary (to the extent any of them is a party
      thereto) and, when delivered in accordance with the terms hereof, will
      constitute the valid and binding obligation of the Company, such Existing
      Company Entity and such Subsidiary, enforceable against each in accordance
      with
      its terms, except as such enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
      laws
      relating to, or affecting generally the enforcement of, creditors’ rights and
      remedies or by other equitable principles of general application. The execution
      and delivery of the Exchange Agreement by each party thereto and the
      consummation by each of them of the transactions contemplated thereby have
      been
      duly authorized by all necessary action on the part of each such party thereto,
      and no further action is required by any of them in connection with such
      authorization. The Exchange Agreement has
      been (or
      upon delivery will have been) duly executed by each party thereto and will
      constitute the valid and binding obligation of each party thereto enforceable
      against each party thereto in accordance with its terms, except as such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally the enforcement of, creditors’ rights and remedies or by
      other equitable principles of general application.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (d) No
      Conflicts. The execution, delivery and performance of the Transaction Documents
      by the Company, and each other Existing Company Entity and Subsidiary (to the
      extent a party thereto) and the consummation by the Company, and such other
      Existing Company Entities and Subsidiaries, of the transactions contemplated
      thereby do not and will not (i) conflict with or violate any provision of the
      Company’s, such Existing Company Entity’s or any Subsidiary’s certificate or
      articles of incorporation, bylaws or other organizational or charter documents,
      or (ii) conflict with, or constitute a default (or an event that 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 (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing an Existing Company Entity or Subsidiary debt or
      otherwise) or other understanding to which any Existing Company Entity or any
      Subsidiary is a party or by which any property or asset of the Company or any
      Subsidiary is bound or affected, or (iii) result in a violation of any law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of
      any United States or PRC court or governmental authority to which the Company
      or
      a Subsidiary is subject (including United States federal and state and PRC
      national and provincial securities laws and regulations), or by which any
      property or asset of the Company or a Subsidiary is bound or affected; except
      in
      the case of each of clauses (ii) and (iii), such as could not, individually
      or
      in the aggregate, have or reasonably be expected to result in a Material Adverse
      Effect. 

     

    (e) Filings,
      Consents and Approvals. No Existing Company Entity is required to obtain any
      consent, waiver, authorization, approval or order of, give any notice to, or
      make any filing or registration with, any United States or PRC court or other
      federal, provincial, state, local or other governmental authority or any other
      Person in connection with the execution, delivery and performance by the Company
      and each Subsidiary to the extent a party thereto of the Transaction Documents,
      other than (i) the filing with the Commission of one or more Registration
      Statements in accordance with the requirements of the Registration Rights
      Agreement, (ii) filings required by state securities laws, (iii) the filing
      of a
      Notice of Sale of Securities on Form D with the Commission under Regulation
      D of
      the Securities Act, (iv) the filings required in accordance with Section 4.5,
      (v) filings, consents and approvals required by the rules and regulations of
      the
      applicable Trading Market and (vi) those that have been made or obtained prior
      to the date of this Agreement.

     

    (f) Issuance
      of the Shares. The Shares have been duly authorized and, when issued and paid
      for in accordance with the Transaction Documents, will be duly and validly
      issued, fully paid and nonassessable, free and clear of any and all Liens.
      The
      Company has reserved from its duly authorized capital stock the shares of Common
      Stock issuable pursuant to this Agreement in order to issue the Shares.

     

    (g) Capitalization.
      The number of shares of all authorized, issued and outstanding capital stock
      of
      the Company, and all shares of Common Stock reserved for issuance under the
      Company’s various option and incentive plans is specified in Schedule
      3.1(g). No securities of any Existing Company Entity are entitled to preemptive
      or similar rights, and no Person has any right of first refusal, preemptive
      right, right of participation, or any similar right to participate in the
      transactions contemplated by the Transaction Documents. There are no outstanding
      options, warrants, scrip rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities, rights or obligations
      convertible into or exchangeable for, or giving any Person any right to
      subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
      understandings or arrangements by which the Company or any Subsidiary is or
      may
      become bound to issue additional shares of Common Stock, or securities or rights
      convertible or exchangeable into shares of Common Stock. The issue and sale
      of
      the Shares hereunder will not, immediately or with the passage of time, obligate
      the Company or any Subsidiary to issue shares of Common Stock or other
      securities to any Person (other than the Investors) and will not result in
      a
      right of any holder of Company or Subsidiary securities to adjust the exercise,
      conversion, exchange or reset price under such securities. No Existing Company
      Entity has issued any capital stock in a private placement transaction,
      including, without limitation, in a transaction commonly referred to in the
      PRC
      as a “1 1⁄2 transaction.”

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (h) SEC
      Reports; Financial Statements. The Company has filed all reports required to
      be
      filed by it under the Securities Act and the Exchange Act, including pursuant
      to
      Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof
      (or such shorter period as the Company was required by law to file such
      reports), including, for this purpose, the current report on Form 8-K that
      is
      being filed by the Company on or about the date hereof to disclose the
      transactions contemplated hereby and by the Exchange Agreement (the foregoing
      materials being collectively referred to herein as the “SEC
      Reports”
      and,
      together with the Schedules to this Agreement (if any), the “Disclosure
      Materials”)
      on a
      timely basis or has timely filed a valid extension of such time of filing and
      has filed any such SEC Reports prior to the expiration of any such extension.
      As
      of their respective dates, the SEC Reports complied in all material respects
      with the requirements of the Securities Act and the Exchange Act and the rules
      and regulations of the Commission promulgated thereunder, and none of the SEC
      Reports, when filed, contained any untrue statement of a material fact or
      omitted to state a material fact required to be stated therein or necessary
      in
      order to make the statements therein, in light of the circumstances under which
      they were made, not misleading. The financial statements of the Company and
      each
      Subsidiary included in the SEC Reports comply in all material respects with
      applicable accounting requirements and the rules and regulations of the
      Commission with respect thereto as in effect at the time of filing. Such
      financial statements have been prepared in accordance with GAAP applied on
      a
      consistent basis during the periods involved, except as may be otherwise
      specified in such financial statements or the notes thereto, and fairly present
      in all material respects the financial position of the Company and its
      consolidated Subsidiaries as of and for the dates thereof and the results of
      operations and cash flows for the periods then ended, subject, in the case
      of
      unaudited statements, to normal, immaterial, year-end audit adjustments. The
      WOFE Financial Statements comply in all material respects with applicable
      accounting requirements and the rules and regulations of the Commission with
      respect thereto as in effect at the time of filing. The WOFE Financial
      Statements have been prepared in accordance with GAAP applied on a consistent
      basis during the periods involved, except as may be otherwise specified in
      such
      financial statements or the notes thereto, and fairly present in all material
      respects the financial position of WOFE and its consolidated Subsidiaries as
      of
      and for the dates thereof and the results of operations and cash flows for
      the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

     

    (i) Press
      Releases. The press releases disseminated by the Company during the twelve
      months preceding the date of this Agreement taken as a whole do not contain
      any
      untrue statement of a material fact or omit to state a material fact required
      to
      be stated therein or necessary in order to make the statements therein, in
      light
      of the circumstances under which they were made and when made, not
      misleading.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (j) Material
      Changes. Since
      the
      date of latest audited financial statements included in the Company’s SEC
      Reports (i) there has been no event, occurrence or development that has had
      or
      that could reasonably be expected to result in a Material Adverse Effect, (ii)
      no Existing Company Entity has incurred any liabilities (contingent or
      otherwise) other than (A) trade payables, accrued expenses and other liabilities
      incurred in the ordinary course of business consistent with past practice and
      (B) liabilities not required to be reflected in the Company’s or its
      Subsidiaries’ financial statements pursuant to GAAP or required to be disclosed
      in filings made with the Commission, (iii) no Existing Company Entity has
      altered its method of accounting or the identity of its auditors, (iv) no
      Existing Company Entity has declared or made any dividend or distribution of
      cash or other property to its stockholders or purchased, redeemed or made any
      agreements to purchase or redeem any shares of its capital stock, and (v) no
      Existing Company Entity has issued any equity securities to any officer,
      director or Affiliate. The Company does not have pending before the Commission
      any request for confidential treatment of information. 

     

    (k) Litigation.
      There is no Action which (i) adversely affects or challenges the legality,
      validity or enforceability of any of the Transaction Documents, the Exchange
      Agreement or the Shares or (ii) except as specifically disclosed in the SEC
      Reports, could, if there were an unfavorable decision, individually or in the
      aggregate, have or reasonably be expected to result in a Material Adverse
      Effect. No Existing Company Entity, nor any director or officer thereof (in
      his
      or her capacity as such), is or has been the subject of any Action involving
      a
      claim of violation of or liability under federal or state securities laws or
      a
      claim of breach of fiduciary duty, except as specifically disclosed in the
      SEC
      Reports. There has not been, and to the knowledge of the Existing Company
      Entities, there is not any pending investigation by or before the Commission
      or
      any other court, arbitrator, governmental or administrative agency, regulatory
      or self regulatory authority (federal, state, county, local or foreign), stock
      market, stock exchange or trading facility involving any Existing Company Entity
      or any of their respective current or former directors or officers (in his
      or
      her capacity as such). The Commission has not issued any stop order or other
      order suspending the effectiveness of any registration statement filed by the
      Company or any Subsidiary under the Exchange Act or the Securities
      Act.

     

    (l) Labor
      Relations. No material labor dispute exists or, to the knowledge of the Existing
      Company Entities, is imminent with respect to any of the employees of any
      Existing Company Entity. No Existing Company Entity has any employment or labor
      contracts, agreements or other understandings with any Person. 

     

    (m) Indebtedness;
      Compliance. Except as disclosed on Schedule 3.1(m), no Existing Company Entity
      is a party to any indenture, debt, loan or credit agreement by which it or
      any
      of its properties is bound. WOFE has no and as of the Closing will not have
      any
      liabilities of any nature, contingent or otherwise. No Existing Company Entity
      (i) is in default under or in violation of (and no event has occurred that
      has
      not been waived that, with notice or lapse of time or both, would result in
      a
      default by such Existing Company Entity under), nor has any Existing Company
      Entity received notice of a claim that it is in default under or that it is
      in
      violation of, any indenture, loan or credit agreement or any other agreement
      or
      instrument to which it is a party or by which it or
      any of
      its properties is bound (whether
      or not such default or violation has been waived), (ii) is in violation of
      any
      court, arbitrator, governmental or administrative agency, regulatory or self
      regulatory authority (federal, state, county, local or foreign), stock market,
      stock exchange or trading facility, or (iii) is or has been in violation of
      any
      statute, rule or regulation of any governmental authority, including, without
      limitation, all foreign, federal, state and local laws relating to taxes,
      environmental protection, occupational health and safety, product quality and
      safety and employment and labor matters, except in each case as could not,
      individually or in the aggregate, have or reasonably be expected to result
      in a
      Material Adverse Effect. The Exchange Agreement complies with all applicable
      laws, rules and regulations of the United States. The Company is in compliance
      with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended,
      and the rules and regulations thereunder, that are applicable to it, except
      where such noncompliance could not have or reasonably be expected to result
      in a
      Material Adverse Effect. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (n) Regulatory
      Permits. The Existing Company Entities possess all certificates, authorizations
      and permits issued by the appropriate federal, state, local or foreign
      regulatory authorities necessary to conduct their respective businesses as
      described in the SEC Reports, except where the failure to possess such permits
      could not, individually or in the aggregate, have or reasonably be expected
      to
      result in a Material Adverse Effect, and no Existing Company Entity has received
      any notice of proceedings relating to the revocation or modification of any
      such
      permits.

     

    (o) Title
      to
      Assets. Except as set forth in Schedule 3.1(o), the Existing Company Entities
      have valid land use rights for all real property that is material to their
      respective businesses and good and marketable title in all personal property
      owned by them that is material to their respective businesses, in each case,
      free and clear of all Liens, except for Liens as do not materially affect the
      value of such property and do not materially interfere with the use made and
      proposed to be made of such property by such Existing Company Entity. Any real
      property and facilities held under lease by any Existing Company Entity are
      held
      by them under valid, subsisting and enforceable leases of which such Existing
      Company Entity is in compliance, except as could not, individually or in the
      aggregate, have or reasonably be expected to result in a Material Adverse
      Effect. 

     

    (p) Patents
      and Trademarks. Schedule 3.1(p) sets forth all of the patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      copyrights, licenses and other similar rights that the Existing Company Entities
      own or have the rights to use (collectively, the “Intellectual
      Property Rights”).
      The
      Intellectual Property Rights constitute all of the patents, patent applications,
      trademarks, trademark applications, service marks, trade names, copyrights,
      licenses and other similar rights that are necessary for use by the Existing
      Company Entities in connection with their respective businesses as described
      in
      the SEC Reports. No Existing Company Entity has received a written or oral
      notice that the Intellectual Property Rights used by any of them violates or
      infringes upon the rights of any Person. Except as set forth in Schedule 3.1(p),
      all such Intellectual Property Rights are enforceable and there is no existing
      infringement by another Person of any of the Intellectual Property Rights.
      To
      the knowledge of the Existing Company Entities, no former or current employee,
      no former or current consultant, and no third-party joint developer of any
      Existing Company Entity has any Intellectual Property Rights made, developed,
      conceived, created or written by the aforesaid employee, consultant or
      third-party joint developer during the period of his or her retention by, or
      joint venture with, such Existing Company Entity which can be asserted against
      any Existing Company Entity. The
      Intellectual Property Rights and the owner thereof or agreement through which
      they are licensed to any of the Existing Company are set forth on Schedule
      3.1(p).
      By the
      Closing, the WOFE shall have entered into agreements by which it is granted
      irrevocable, exclusive, royalty-free licenses on all Intellectual Property
      Rights that are registered to or owned by any Person other than the WOFE or
      its
      predecessor. Such agreements together with the agreements referenced in
Schedule
      3.1(p)
      are
      collectively the “Intellectual
      Property Right Licensing Agreements.”
The
      Existing Company Entities will take such action as may be required, including
      making and maintaining the filings set forth in Schedule
      3.1(p)
      and
      shall cause any such transfers of Intellectual Property Rights to the
      WOFE to be granted as is required in order for the WOFE to become the
      registered owner (in its current name) of all such Intellectual Property Rights
      (including, without limitation, the entering into of any Intellectual Property
      Right Licensing Agreements as may be necessary and the filing and maintaining
      of
      any information with the relevant PRC authority which relate to the change
      of
      name for those Intellectual Property Rights currently in the name of the WOFE’s
      predecessor).  

     

    
      
        
        

      

      
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    (q) Insurance.
      Schedule 3.1(q) sets forth a list of all the insurance policies held by each
      Existing Company Entity. The Company has no reason to believe that it or any
      Existing Company Entity will not be able to renew its existing respective
      insurance coverage as and when such coverage expires or to obtain similar
      coverage from similar insurers as may be necessary to continue its business
      on
      terms consistent with market for the Company’s and such other Existing Company
      Entity’s respective lines of business.

     

    (r) Transactions
      With Affiliates and Employees; Customers. Except as set forth in the Schedule
      3.1(r), none of the officers or directors of any Existing Company Entity, and,
      to the knowledge of the Existing Company Entities, none of the employees of
      any
      Existing Company Entity, is presently a party to any transaction with any
      Existing Company Entity (other than for services as employees, officers and
      directors), including any contract, agreement or other arrangement providing
      for
      the furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the knowledge of the Existing Company Entities,
      any entity in which any officer, director, or any such employee has a
      substantial interest or is an officer, director, trustee or partner.
None
      of
      the Existing Company Entities owes any money or other compensation to any of
      their respective officers or directors or shareholders, except to the extent
      of
      ordinary course compensation arrangements specified in Schedule 3.1(r).
No
      material customer of any Existing Company Entity has indicated its intention
      to
      diminish its relationship with any Existing Company Entity and no Existing
      Company Entity has any knowledge from which it could reasonably conclude that
      any such customer relationship may be adversely affected.

     

    (s) Internal
      Accounting Controls. Except as set forth on Schedule 3.1(s), the Company
      Entities maintain a system of internal accounting controls sufficient to provide
      reasonable assurance that (i) transactions are executed in accordance with
      management’s general or specific authorizations, (ii) transactions are recorded
      as necessary to permit preparation of financial statements in conformity with
      GAAP and to maintain asset accountability, (iii) access to assets is permitted
      only in accordance with management’s general or specific authorization, and (iv)
      the recorded accountability for assets is compared with the existing assets
      at
      reasonable intervals and appropriate action is taken with respect to any
      differences. The Company has established disclosure controls and procedures
      (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company Entities
      and designed such disclosure controls and procedures to ensure that material
      information relating to the Company Entities is made known to the certifying
      officers by others within those entities, particularly during the period in
      which the Company’s Form 10-KSB or 10-QSB, as the case may be, is being
      prepared. The Company’s certifying officers have evaluated the effectiveness of
      the Company’s controls and procedures in accordance with Item 307 of Regulation
      S-B under the Exchange Act for the Company’s most recently ended fiscal quarter
      or fiscal year-end (such date, the “Evaluation
      Date”).
      The
      Company presented in its most recently filed Form 10-KSB or Form 10-QSB the
      conclusions of the certifying officers about the effectiveness of the disclosure
      controls and procedures based on their evaluations as of the Evaluation Date.
      Since the Evaluation Date, there have been no significant changes in the
      Existing Company Entities’ internal controls (as such term is defined in Item
      308(c) of Regulation S-B under the Exchange Act) or, to the Company’s knowledge,
      in other factors that could significantly affect any Company Entity’s internal
      controls.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (t) Solvency.
      Based on the financial condition of the Company, including the Existing Company
      Entities, as of the Closing Date (and assuming that the Closing shall have
      occurred), (i) the Existing
      Company Entity’s
      fair
      saleable value of their respective assets exceeds the amount that will be
      required to be paid on or in respect of the Existing Company Entity’s existing
      debts and other liabilities (including known contingent liabilities) as they
      mature, (ii) the Existing Company Entity’s assets do not constitute unreasonably
      small capital to carry on their respective business for the current fiscal
      year
      as now conducted and as proposed to be conducted including its capital needs
      taking into account the particular capital requirements of the business
      conducted by the Existing Company Entities, and projected capital requirements
      and capital availability thereof, and (iii) the current cash flow of the
      Existing Company Entities, together with the proceeds the Existing Company
      Entities would receive, were they to liquidate all of their respective assets,
      after taking into account all anticipated uses of the cash, would be sufficient
      to pay all amounts on or in respect of its debt when such amounts are required
      to be paid. The Existing Company Entities do not intend to incur debts beyond
      their respective ability to pay such debts as they mature (taking into account
      the timing and amounts of cash to be payable on or in respect of its
      debt).

     

    (u) Certain
      Fees. Except as described in Schedule 3.1(u), no brokerage or finder’s fees or
      commissions are or will be payable by any Existing Company Entity to any broker,
      financial advisor or consultant, finder, placement agent, investment banker,
      bank or other Person with respect to the transactions contemplated by this
      Agreement. The Investors shall have no obligation with respect to any fees
      or
      with respect to any claims (other than such fees or commissions owed by an
      Investor pursuant to written agreements executed by such Investor which fees
      or
      commissions shall be the sole responsibility of such Investor) made by or on
      behalf of other Persons for fees of a type contemplated in this Section that
      may
      be due in connection with the transactions contemplated by this
      Agreement.

     

    (v) Certain
      Registration Matters. Assuming the accuracy of the Investors’ representations
      and warranties set forth in Sections 3.2(b)-(e), no registration under the
      Securities Act is required for the offer and sale of the Shares by the Company
      to the Investors hereunder. The Company is eligible to register its Common
      Stock
      for resale by the Investors under Form SB-2 (or under any successor form
      thereof) promulgated under the Securities Act. Except as specified in Schedule
      3.1(v), no Existing Company Entity has granted or agreed to grant to any Person
      any rights (including “piggy-back” registration rights) to have any securities
      of the Company registered with the Commission or any other governmental
      authority that have not been satisfied.

     

    
      
        
        

      

      
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    (w) Listing
      and Maintenance Requirements. Except as specified in the SEC Reports, the
      Company has not, in the two years preceding the date hereof, received notice
      from any Trading Market to the effect that the Company is not in compliance
      with
      the listing or maintenance requirements thereof. The Company is, and has no
      reason to believe that it will not in the foreseeable future continue to be,
      in
      compliance with the listing and maintenance requirements for continued listing
      of the Common Stock on the Trading Market on which the Common Stock is currently
      listed or quoted. The issuance and sale of the Shares under the Transaction
      Documents does not contravene the rules and regulations of the Trading Market
      on
      which the Common Stock is currently listed or quoted, and no approval of the
      stockholders of the Company thereunder is required for the Company to issue
      and
      deliver to the Investors the Shares as contemplated by the Transaction
      Documents.

     

    (x) Investment
      Company. The Company is not, and is not an Affiliate of, and immediately
      following the Closing will not have become, an “investment company” within the
      meaning of the Investment Company Act of 1940, as amended.

     

    (y) Application
      of Takeover Protections. The Company has taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s Articles of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Investors as a result
      of
      the Investors and the Company fulfilling their obligations or exercising their
      rights under the Transaction Documents, including, without limitation, the
      Company’s issuance of the Shares and the Investors’ ownership of the Shares.

     

    (z) No
      Additional Agreements. No Existing Company Entity has any agreement or
      understanding with any Investor with respect to the transactions contemplated
      by
      the Transaction Documents other than as specified in the Transaction
      Documents.

     

    (aa) Consultation
      with Auditors. The Company has consulted its independent auditors concerning
      the
      accounting treatment of the transactions contemplated by the Transaction
      Documents, and in connection therewith has furnished such auditors complete
      copies of the Transaction Documents.

     

    (bb) Make
      Good
      Shares. The Make Good Pledgor
      is
      the sole
      record and beneficial owners of the 2009 Make Good Shares and hold such shares
      free and clear of all Liens. 

     

    (cc) Foreign
      Corrupt Practices Act. No Existing Company Entity, nor to the knowledge of
      the
      Existing Company Entities, any agent or other person acting on behalf of any
      Existing Company Entity, has, directly or indirectly, (i) used any funds, or
      will use any proceeds from the sale of the Shares, for unlawful contributions,
      gifts, entertainment or other unlawful expenses related to foreign or domestic
      political activity, (ii) made any unlawful payment to foreign or domestic
      government officials or employees or to any foreign or domestic political
      parties or campaigns from corporate funds, (iii) failed to disclose fully any
      contribution made by the Company or any Subsidiary (or made by any Person acting
      on their behalf of which the Company is aware) which is in violation of law,
      or
      (iv) except as set forth in Schedule 3.1(cc), has violated in any material
      respect any provision of the Foreign Corrupt Practices Act of 1977, as amended,
      and the rules and regulations thereunder (the “FCPA”).

     

    
      
        
        

      

      
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    (dd) PFIC.
      No
      Existing Company Entity is or intends to become a “passive foreign investment
      company” within the meaning of Section 1297 of the U.S. Internal Revenue Code of
      1986, as amended. 

     

    (ee) OFAC.
      No
      Existing Company Entity nor, to the knowledge of the Existing Company Entities,
      any director, officer, agent, employee, Affiliate or Person acting on behalf
      of
      any Existing Company Entity, is currently subject to any U.S. sanctions
      administered by the Office of Foreign Assets Control of the U.S. Treasury
      Department (“OFAC”);
      and
      the Company will not directly or indirectly use the proceeds of the sale of
      the
      Shares, or lend, contribute or otherwise make available such proceeds to any
      Subsidiary, joint venture partner or other Person or entity, towards any sales
      or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
      sanctioned by OFAC or for the purpose of financing the activities of any Person
      currently subject to any U.S. sanctions administered by OFAC.

     

    (ff) Money
      Laundering Laws. The operations of each Existing Company Entity are and have
      been conducted at all times in compliance with the money laundering statutes
      of
      applicable jurisdictions, the rules and regulations thereunder and any related
      or similar rules, regulations or guidelines, issued, administered or enforced
      by
      any applicable governmental agency (collectively, the “Money
      Laundering Laws”)
      and no
      action, suit or proceeding by or before any court or governmental agency,
      authority or body or any arbitrator involving any Existing Company Entity with
      respect to the Money Laundering Laws is pending or, to the best knowledge of
      the
      Company, threatened.

     

    (gg) Other
      Representations and Warranties Relating to WOFE. 

     

    (i) All
      material consents, approvals, registrations, authorizations or licenses
      requisite under PRC law for the due and proper establishment and operation
      of
      WOFE have been duly obtained from the relevant PRC governmental authorities
      and
      are in full force and effect.

     

    (ii) All
      filings and registrations with the PRC governmental authorities required in
      respect of WOFE and its capital structure and operations including, without
      limitation, the registration
      with the Ministry of Commerce, the China Securities Regulatory Commission,
      the
      State Administration of Industry and Commerce, the State
      Administration for Foreign Exchange, tax bureau and customs
      authorities,
      if
      necessary
      under
      current PRC laws and regulations as of the date of this Agreement, have been
      duly completed in accordance with the relevant PRC laws, rules and regulations,
      except where, the failure to complete such filings and registrations does not,
      and would not, individually or in the aggregate, have a Material Adverse
      Effect.

     

    (iii) WOFE
      has
      complied with all relevant PRC laws and regulations regarding the contribution
      and payment of its registered capital, the payment schedule of which has been
      approved by the relevant PRC governmental authorities. There are no outstanding
      rights of, or commitments made by the Company or any Subsidiary to sell any
      equity interest in WOFE.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (iv) WOFE
      is
      not in receipt of any letter or notice from any relevant PRC governmental or
      quasi-governmental authority notifying it of revocation of any licenses or
      qualifications issued to it or any subsidy granted to it by any PRC governmental
      or quasi-governmental authority for non-compliance with the terms thereof or
      with applicable PRC laws, or the need for compliance or remedial actions in
      respect of the activities carried out by WOFE, except such revocation does
      not,
      and would not, individually or in the aggregate, have a Material Adverse
      Effect.

     

    (v) WOFE
      has
      conducted its business activities within the permitted scope of business or
      has
      otherwise operated its business in compliance with all relevant legal
      requirements and with all requisite licenses and approvals granted by competent
      PRC governmental authorities other than such non-compliance that do not, and
      would not, individually or in the aggregate, have a Material Adverse Effect.
      As
      to licenses, approvals and government grants and concessions requisite or
      material for the conduct of any part of WOFE’s business which is subject to
      periodic renewal, the Company has no knowledge of any grounds on which such
      requisite renewals will not be granted by the relevant PRC governmental
      authorities.

     

    With
      regard to employment and staff or labor, WOFE has complied with all applicable
      PRC laws and regulations in all material respects, including without limitation,
      laws and regulations pertaining to welfare funds, social benefits, medical
      benefits, insurance, retirement benefits, pensions or the like, other than
      such
      non-compliance that do not, and would not, individually or in the aggregate,
      have a Material Adverse Effect.

     

    (hh) Disclosure.
      Neither any Existing Company Entity nor any Person acting on its behalf has
      provided any Investor or its respective agents or counsel with any information
      that any Existing Company Entity believes constitutes material, non-public
      information concerning the Company, the Subsidiaries or their respective
      businesses, except insofar as the existence and terms of the proposed
      transactions contemplated hereunder may constitute such information. Each of
      the
      Existing Company Entities understands and confirms that the Investors will
      rely
      on the foregoing representations and covenants in effecting transactions in
      securities of the Existing Company Entities. All disclosure provided to the
      Investors regarding the Existing Company Entities and their respective
      businesses and the transactions contemplated hereby, furnished by or on behalf
      of the Existing Company Entities (including their respective representations
      and
      warranties set forth in this Agreement) are true and correct and do 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 light of the
      circumstances under which they were made, not misleading. Each Investor
      acknowledges and agrees that the Existing Company Entities make no
      representations or warranties with respect to their respective businesses or
      the
      transactions contemplated hereby other than those specifically set forth in
      this
      Section 3.1 and each of the Investors have relied solely on those
      representations and review of the SEC Reports in making its investment decision.
      

     

    
      
        
        

      

      
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    3.2. Representations
      and Warranties of the Investors.
      Each
      Investor hereby, for itself and for no other Investor, represents and warrants
      to the Company as follows:

     

    (a) Organization;
      Authority. Such Investor is an entity duly organized, validly existing and
      in
      good standing under the laws of the jurisdiction of its organization with the
      requisite corporate or partnership power and authority to enter into and to
      consummate the transactions contemplated by the applicable Transaction Documents
      and otherwise to carry out its obligations thereunder. The execution, delivery
      and performance by such Investor of the transactions contemplated by this
      Agreement has been duly authorized by all necessary corporate or, if such
      Investor is not a corporation, such partnership, limited liability company
      or
      other applicable like action, on the part of such Investor. Each of this
      Agreement and the Registration Rights Agreement has been duly executed by such
      Investor, and when delivered by such Investor in accordance with the terms
      hereof, will constitute the valid and legally binding obligation of such
      Investor, enforceable against it in accordance with its terms, except as such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally the enforcement of, creditors’ rights and remedies or by
      other equitable principles of general application.

     

    (b) Investment
      Intent. Such Investor is acquiring the Shares as principal for its own account
      for investment purposes only and not with a view to or for distributing or
      reselling such Shares or any part thereof, without prejudice, however, to such
      Investor’s right at all times to sell or otherwise dispose of all or any part of
      such Shares in compliance with applicable federal and state securities laws.
      Subject to the immediately preceding sentence, nothing contained herein shall
      be
      deemed a representation or warranty by such Investor to hold the Shares for
      any
      period of time. Such Investor is acquiring the Shares hereunder in the ordinary
      course of its business. Such Investor does not have any agreement or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Shares.

     

    (c) Investor
      Status. At the time such Investor was offered the Shares, it was, and at the
      date hereof and the time of sale it is, an “accredited investor” as defined in
      Rule 501(a) under the Securities Act. Such Investor is not a registered
      broker-dealer under Section 15 of the Exchange Act. Each Investor has such
      sophistication, knowledge and skill to be able to fully evaluate the risks
      of
      investing in the Company.

     

    (d) General
      Solicitation. Such Investor is not purchasing the Shares as a result of any
      advertisement, article, notice or other communication regarding the Shares
      published in any newspaper, magazine or similar media or broadcast over
      television or radio or presented at any seminar or any other general
      solicitation or general advertisement.

     

    (e) Access
      to
      Information. Such Investor acknowledges that it has reviewed the Disclosure
      Materials and has been afforded (i) the opportunity to ask such questions as
      it
      has deemed necessary of, and to receive answers from, representatives of the
      Company concerning the terms and conditions of the offering of the Shares and
      the merits and risks of investing in the Shares; (ii) access to information
      about the Company and the Subsidiaries and their respective financial condition,
      results of operations, business, properties, management and prospects sufficient
      to enable it to evaluate its investment; and (iii) the opportunity to obtain
      such additional information that the Company possesses or can acquire without
      unreasonable effort or expense that is necessary to make an informed investment
      decision with respect to the investment. Neither such inquiries nor any other
      investigation conducted by or on behalf of such Investor or its representatives
      or counsel shall modify, amend or affect such Investor’s right to rely on the
      truth, accuracy and completeness of the Disclosure Materials and the Company’s
      representations and warranties contained in the Transaction
      Documents.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (f) Certain
      Trading Activities. Such Investor has not directly or indirectly, nor has any
      Person acting on behalf of or pursuant to any understanding with such Investor,
      engaged in any transactions in the securities of the Company (including, without
      limitation, any Short Sales involving the Company’s securities) since the
      earlier to occur of (1) the time that such Investor was first contacted by
      the
      Company or the placement agent regarding an investment in the Company and (2)
      the 30th
      day
      prior to the date of this Agreement. Such Investor covenants that neither it
      nor
      any Person acting on its behalf or pursuant to any understanding with it will
      engage in any transactions in the securities of the Company (including Short
      Sales) prior to the time that the transactions contemplated by this Agreement
      are publicly disclosed.

     

    (g) Independent
      Investment Decision. Such Investor has independently evaluated the merits of
      its
      decision to purchase the Shares pursuant to the Transaction Documents, and
      such
      Investor confirms that it has not relied on the advice of any other Investor’s
      business and/or legal counsel in making such decision. Such Investor has not
      relied on the business or legal advice of the Company or any of its agents,
      counsel or Affiliates in making its investment decision hereunder, and confirms
      that none of such Persons has made any representations or warranties to such
      Investor in connection with the transactions contemplated by the Transaction
      Documents.

     

    The
      Company Entities acknowledge and agree that no Investor has made or makes any
      representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in this Section
      3.2.

     

    ARTICLE
      4.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1. (a)
      Shares
      may only be disposed of in compliance with state and federal securities laws.
      In
      connection with any transfer of the Shares other than pursuant to an effective
      registration statement, to the Company, to an Affiliate of an Investor or in
      connection with a pledge as contemplated in Section 4.1(b), the Company may
      require the transferor thereof to provide to the Company an opinion of counsel
      selected by the transferor, the form and substance of which opinion shall be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Shares under the Securities
      Act.

     

    (b) Certificates
      evidencing the Shares will contain the following legend, until such time as
      they
      are not required under Section 4.1(c):

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
      EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
      AN EXEMPTION FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933,
      AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
      SOLD
      EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
      ACT
      OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
      TO,
      THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
      APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
      TO
      THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
      ACCEPTABLE TO THE COMPANY. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES
      MAY
      BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH
      SECURITIES.

     

    
      
        
        

      

      
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    The
      Company acknowledges and agrees that an Investor may from time to time pledge,
      and/or grant a security interest in some or all of the Shares pursuant to a
      bona
      fide margin agreement in connection with a bona fide margin account and, if
      required under the terms of such agreement or account, such Investor may
      transfer pledged or secured Shares to the pledgees or secured parties. Such
      a
      pledge or transfer would not be subject to approval or consent of the Company
      and no legal opinion of legal counsel to the pledgee, secured party or pledgors
      shall be required in connection with the pledge, but such legal opinion may
      be
      required in connection with a subsequent transfer following default by the
      Investor transferee of the pledge. No notice shall be required of such pledge.
      At the appropriate Investor’s expense, the Company will execute and deliver such
      reasonable documentation as a pledgee or secured party of Shares may reasonably
      request in connection with a pledge or transfer of the Shares, including the
      preparation and filing of any required prospectus supplement under Rule 424(b)
      under the Securities Act or other applicable provision of the Securities Act
      to
      appropriately amend the list of selling stockholders thereunder. Except as
      otherwise provided in Section 4.1(c), any Shares subject to a pledge or security
      interest as contemplated by this Section 4.1(b) shall continue to bear the
      legend set forth in this Section 4.1(b) and be subject to the restrictions
      on
      transfer set forth in Section 4.1(a).

     

    (c) Certificates
      evidencing Shares and
      2009
      Make Good Shares, if 2009 Make Good Shares are due to be delivered to Investors
      or their transferees pursuant to the Transaction Documents (collectively, the
      “Securities”),
      shall
      not
      contain any legend (including the legend set forth in Section 4.1(b)): (i)
      while
      a registration statement (including the Registration Statement) covering such
      Securities
      is then
      effective (provided, however,
      that the Company reserves the right to issue stop transfer instructions to
      the
      transfer agent (with a copy to the Investors) with respect to the Securities
      in the
      event that the Registration Statement with respect to the Securities
      is no
      longer current) or (ii) following a sale or transfer of such Securities
      pursuant
      to Rule 144 (assuming the transferee is not an Affiliate of the Company), or
      (iii) while such Securities
      are eligible for sale by the selling Investor without volume restrictions under
      Rule 144. The Company agrees that following the Effective Date or such other
      time as legends are no longer required to be set forth on certificates
      representing Securities under this Section 4.1(c), it will, no longer than
      three
      Trading Days following the delivery by an Investor to the Company or the
      Transfer Agent of a certificate representing such Securities containing a
      restrictive legend, deliver or cause to be delivered to such investor Securities
      which are free of all restrictive and other legends. If the Company is then
      eligible, certificates for Securities subject to legend removal hereunder shall
      be transmitted by the Transfer to an Investor by crediting the prime brokerage
      account of such Investor with the Depository Trust Company System as directed
      by
      such Investor.
      If an
      Investor shall make a sale or transfer of Securities
      either
      (x) pursuant to Rule 144 or (y) pursuant to a registration statement and in
      each
      case shall have delivered to the Company or the Company’s transfer agent the
      certificate representing Securities
      containing a restrictive legend which are the subject of such sale or transfer
      and a representation letter in customary form (the
      date
      of such sale or transfer and Securities
      delivery
      being the “Share
      Delivery Date”)
      and (1)
      the Company shall fail to deliver or cause to be delivered to such Investor
      a
      certificate representing such Securities
      that is
      free from all restrictive or other legends by the third
      Trading
      Day following the Share Delivery Date and (2) following such third
      Trading
      Day after the Share Delivery Date and prior to the time such Securities
      are
      received free from restrictive legends, the Investor, or any third party on
      behalf of such Investor, purchases (in an open market transaction or otherwise)
      shares of Common Stock to deliver in satisfaction of a sale by the Investor
      of
      such Shares (a "Buy-In"),
      then
      the Company shall pay in cash to the Investor (for costs incurred either
      directly by such Investor or on behalf of a third party) the amount by which
      the
      total purchase price paid for Common Stock as a result of the Buy-In (including
      brokerage commissions, if any) exceed the proceeds received by such Investor
      as
      a result of the sale to which such Buy-In relates. The Investor shall provide
      the Company written notice indicating the amounts payable to the Investor in
      respect of the Buy-In. The Company may not make any notation on its records
      or
      give instructions to any transfer agent of the Company that enlarge the
      restrictions on transfer set forth in this Section.

     

    
      
        
        

      

      
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    4.2. Furnishing
      of Information.
      As long
      as any Investor owns the Securities,
      the
      Company covenants to timely file (or obtain extensions in respect thereof and
      file within the applicable grace period) all reports required to be filed by
      the
      Company after the date hereof pursuant to the Exchange Act. As long as any
      Investor owns Securities,
      if the
      Company is not required to file reports pursuant to such laws, it will prepare
      and furnish to the Investors and make publicly available in accordance with
      Rule
      144(c) such information as is required for the Investors to sell the
Securities
      under
      Rule 144. The Company further covenants that it will take such further action
      as
      any holder of Securities
      may
      reasonably request, all to the extent required from time to time to enable
      such
      Person to sell the Securities
      without
      registration under the Securities Act within the limitation of the exemptions
      provided by Rule 144.

     

    4.3. Integration.
      The
      Company shall not, and shall use its best efforts to ensure that no Affiliate
      of
      the Company shall, sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities
      in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities
      to the
      Investors, or that would be integrated with the offer or sale of the
Securities
      for
      purposes of the rules and regulations of any Trading Market in a manner that
      would require stockholder approval of the sale of the Securities
      to the
      Investors.

     

    4.4. Subsequent
      Registrations.
      Except
      as set forth on Schedule 4.4, the Company may not file any registration
      statement (other than on Form S-8 and Form S-4) with the Commission with respect
      to any securities of the Company prior to the time that all Shares are
      registered pursuant to one or more effective Registration Statement(s), and
      the
      prospectuses forming a portion of such Registration Statement(s) is available
      for the resale of all Shares.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    4.5. Securities
      Laws Disclosure; Publicity.
      By 9:00
      a.m. (New York time) on the Trading Day following the Closing Date, the Company
      shall issue a press release disclosing the transactions contemplated hereby
      and
      the Closing (including, without limitation, details with respect to the make
      good provision and thresholds contained in Section 4.11 herein). Within
four
      Trading
Days
      following the Closing Date the Company will file a Current Report on Form 8-K
      disclosing the material terms of the Transaction Documents, including details
      with respect to the make good provision and thresholds contained in Section
      4.11
      herein (and attach as exhibits thereto the Transaction Documents) and the
      Closing. The Company shall make the foregoing disclosure such that following
      such disclosure, the Investors shall no longer be in possession of any material,
      non-public information with respect to the Company. In addition, the Company
      will make such other filings and notices in the manner and time required by
      the
      Commission and the Trading Market on which the Common Stock is listed.
      Notwithstanding the foregoing, the Company shall not publicly disclose the
      name
      of any Investor, or include the name of any Investor in any filing with the
      Commission (other than the Registration Statement and any exhibits to filings
      made in respect of this transaction in accordance with periodic filing
      requirements under the Exchange Act) or any regulatory agency or Trading Market,
      without the prior written consent of such Investor, except to the extent such
      disclosure is required by law or Trading Market regulations.

     

    4.6. Limitation
      on Issuance of Future Priced Securities.
      During
      the six months following the Closing Date, the Company shall not issue any
      “Future Priced Securities” as such term is described by NASD
      IM-4350-1.

     

    4.7. Indemnification
      of Investors.
      In
      addition to the indemnity provided in the Registration Rights Agreement, the
      Company Entities will jointly and severally, indemnify and hold the Investors
      and their directors, officers, shareholders, members, partners, employees and
      agents (each, an “Investor
      Party”)
      harmless from any and all losses, liabilities, obligations, claims,
      contingencies, damages, costs, disbursements and expenses, including all
      judgments, arbitral awards, amounts paid in settlements, court costs and
      reasonable attorneys’ fees and costs of investigation (collectively,
“Losses”)
      that
      any such Investor Party may suffer or incur as a result of or relating to any
      misrepresentation, breach or inaccuracy of any representation, warranty,
      covenant or agreement made by any Company Entities in any Transaction Document.
      In addition to the indemnity contained herein, the Company Entities will jointly
      and severally, reimburse each Investor Party for its reasonable legal and other
      expenses (including the cost of any investigation, preparation and travel in
      connection therewith) incurred in connection therewith, as such expenses are
      incurred. Except as otherwise set forth herein, the mechanics and procedures
      with respect to the rights and obligations under this Section 4.7 shall be
      the
      same as those set forth in Section 5 of the Registration Rights
      Agreement.

     

    4.8. Non-Public
      Information.
      The
      Company covenants and agrees that neither it, any Company Entity nor any other
      Person acting on its or their behalf will provide any Investor or its agents
      or
      counsel with any information that the Company believes constitutes material
      non-public information, unless prior thereto such Investor shall have executed
      a
      written agreement regarding the confidentiality and use of such information.
      The
      Company understands and confirms that each Investor shall be relying on the
      foregoing representations in effecting transactions in securities of the
      Company.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    4.9. Listing
      of Securities.
      The
      Company agrees (i) if the Company applies to have the Common Stock traded on
      any
      other Trading Market, it will include in such application the Securities,
      and
      will take such other action as is necessary or desirable to cause the
Securities
      to be
      listed on such other Trading Market as promptly as possible, and (ii) the
      Company will take all action reasonably necessary to continue the listing and
      trading of its Common Stock on a Trading Market and will comply in all material
      respects with the Company’s reporting, filing and other obligations under the
      bylaws or rules of the Trading Market.

     

    4.10. Use
      of
      Proceeds.
      The
      Company will use the net proceeds from the sale of the Shares hereunder for
      working capital purposes and not for the satisfaction of any portion of the
      Company’s debt (other than payment of trade payables and accrued expenses in the
      ordinary course of the Company’s business and consistent with prior practices
      and the WOFE Purchase Price as referred to in Article 4.20 below), or to redeem
      any Common Stock or Common Stock Equivalents (other than a redemption of 246,148
      shares of Common Stock for $550,000 in connection with the closing under the
      Exchange Agreement). 

     

    4.11. Make
      Good
      Shares. 

     

    (a) The
      Make
      Good Pledgor
      agrees
      that
      in
      the
      event that either (i) the Earnings Per Share (as defined below) reported in
      the
      2009 Annual Report is less than 2009 Guaranteed EPS or (ii) the After Tax Net
      Income (as defined below) reported in the 2009 Annual Report is less than
      $12,000,000 (the “2009
      Guaranteed ATNI”),
      the
      Make Good Pledgor will
      transfer (in accordance with the Make Good Escrow Agreement) to the Investors
      on
      a pro-rata basis (determined by dividing each Investor’s Investment Amount by
      the aggregate of all Investment Amounts delivered to the Company by the
      Investors hereunder) for no consideration other than payment of their respective
      Investment Amount paid at Closing, the 2009 Make Good Shares. “After
      Tax Net Income”
shall
      mean the Company’s income after taxes for the fiscal year ending June 30, 2009
      determined in accordance with GAAP as reported in the 2009 Annual Report.
“Earnings
      Per Share”
shall
      mean the Company’s After Tax Net Income divided by the number of shares of
      common stock of the Company outstanding on
      a
      fully diluted basis. In
      the
      event that the After Tax Net Income reported in the 2009 Annual Report is equal
      to or greater than the 2009 Guaranteed ATNI and the Earnings Per Share is
      greater than the 2009 Guaranteed EPS,
      no
      transfer of the 2009 Make Good Shares shall be required by the Make Good Pledgor
      to the Investors and such 2009 Make Good Shares shall be returned in accordance
      with the Make Good Escrow Agreement. Any
      such
      transfer of the 2009 Make Good Shares shall be made within ten (10)
      Business Days after
      the date
which
      the
      2009
      Annual Report is filed. Notwithstanding
      anything to the contrary contained herein, in determining
      whether the Company has achieved the 2009 Guaranteed ATNI or
      2009
      Guaranteed EPS, the
      Company may disregard any compensation charge or expense required to be
      recognized by the Company under GAAP resulting from
      the
      release of the 2009 Make Good Shares to Make
      Good
      Pledgor if and to the extent such charge or expense is specified in the
      Company’s independent auditor’s report for the relevant year, as filed with the
      Commission. No other exclusions shall be made for any non-recurring expenses
      of
      the Company, including liquidated damages under the Transaction Documents,
      in
      determining whether 2009 Guaranteed ATNI or 2009 Guaranteed EPS have been
      achieved. If prior to the second anniversary of the filing of the 2009 Annual
      Report, the Company or their auditors report or recognize that the financial
      statements contained in such report are subject to amendment or restatement
      such
      that the Company would recognize or report adjusted after tax net income of
      less
      than the 2009 Guaranteed ATNI or Earnings Per Share of less than the 2009
      Guaranteed EPS, as applicable, then notwithstanding any prior return
of
      2009
      Make Good Shares
      to the
      Make Good Pledgor, the Make Good Pledgor will, within 10 Business Days following
      the earlier of the filing of such amendment or restatement or recognition,
      deliver the 2009 Make Good Shares to the Investors.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (b) In
      connection with the foregoing,
      the Make
      Good Pledgor
      agrees
      that
      within three Trading Days following the Closing, the
      Make
      Good Pledgor will
      deposit all potential 2009 Make Good Shares into escrow in accordance with
      the
      Make Good Escrow Agreement along with bank signature stamped stock powers
      executed in blank (or such other signed instrument of transfer acceptable to
      the
      Company’s transfer agent), and the handling and disposition of the 2009 Make
      Good Shares shall be governed by this Section 4.11 and the Make Good Escrow
      Agreement.
      The
      Company shall notify the Investors as soon as the 2009 Make Good Shares have
      been deposited with the Make Good Escrow Agent. The Make Good Pledgor hereby
      agrees that his
      obligation to transfer shares of Common Stock to Investors pursuant to this
      Section 4.11 and the Make Good Escrow Agreement shall continue to run to the
      benefit of each Investor even if such Investor shall have transferred or sold
      all or any portion of its Shares, and that each Investor shall have the right
      to
      assign its rights to receive all or any such shares of Common Stock to other
      Persons in conjunction with negotiated sales or transfers of any of its
      Shares.

     

    (c) The
      Company covenants and agrees that upon any transfer of 2009 Make Good Shares
      to
      the Investors in accordance with the Make Good Escrow Agreement, the Company
      shall promptly instruct its transfer agent to reissue such 2009 Make Good Shares
      in the applicable Investor’s name and deliver the same as directed by such
      Investor.

     

    (d) If
      any
      term or provision of this Section 4.11 is in contradiction of or conflicts
      with
      any term or provision of the Make Good Escrow Agreement, the terms of the Make
      Good Escrow Agreement shall control. 

     

    4.12. Independent
      Board of Directors. The Company covenants and agrees that no later than 120
      days
      following the Closing Date, the Board of Directors of the Company shall be
      comprised of a minimum of five members, a majority of which shall be
“independent directors” as such term is defined in NASDAQ Marketplace Rule
      4200(a)(15). The Company agrees that $2,000,000 (the
      “Board
      Holdback Escrow
      Amount”)
      shall
      be held in escrow pursuant to the Holdback Escrow Agreement until such time
      as
      the Company complies with its obligations under this Section 4.12. If for any
      reason or for no reason whatsoever, the Escrow Agent does not receive the
      written notice contemplated
      by the
      Holdback Escrow Agreement from the Company and the Investors
      then holding a majority of the Shares
      relating
      to either the release of (i) the Board Holdback Escrow Amount prior to 125
      calendar days following the Closing Date or (ii) CFO Holdback Escrow Amount
      prior to 95 calendar days following the Closing Date (each such failure or
      breach being referred to as an “Event,”
      and for
      purposes of this section the date such Event occurs being referred to as
“Event
      Date”),
      then
      in addition to any other rights the Investors may have hereunder or under
      applicable law, on each such Event Date and on each monthly anniversary of
      such
      Event Date (if
      the
      applicable Event shall not have been cured by such date) until the applicable
      Event is cured,
      the
      Company shall pay to each Investor by wire transfer an amount in immediately
      available funds, as partial liquidated damages and not as a penalty, equal
      to 1%
      of the aggregate Investment Amount paid by such Investor for Shares pursuant
      to
      this Agreement. The partial liquidated damages payable under this Section 4.12
      shall
      be
      independent of any other damages payable under this Agreement or any other
      Transaction Document and shall
      apply on a daily pro-rata basis for any portion of a month prior to the cure
      of
      an Event. In no event will the Company be liable for partial liquidated damages
      in excess of 1% of the aggregate Investment Amount of the Investors in any
      30-day period in respect of any single Event (it being understood that if the
      Company suffers an Event relating to its failure to comply with this Section
      4.12 and an Event relating to its failure to comply with Section 4.15 in a
      30-day period it will be responsible for 2% of liquidated damages in a 30-day
      period). It is further understood that the partial liquidated damages
      contemplated hereby are limited to the Board Holdback Escrow Amount as to that
      Event and the CFO Holdback Escrow Amount as to that Event; provided that the
      Investors are entitled to all other remedies available under applicable law.
      On
      any Event Date, the Company will deliver to each Investor a written notice
      which
      shall set forth the relevant Event. If
      any
      term or provision of this Section 4.12 as to the Board Holdback Escrow Amount
      and/or partial liquidated damages is in contradiction of or conflicts with
      any
      term or provision of the Holdback Escrow Agreement relating thereto, the terms
      of the Holdback Escrow Agreement shall control. 

     

    
      
        
        

      

      
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    4.13. Third
      Party Hiring. By the thirtieth day following the Closing Date, the Company
      shall
      hire either of CCG Elite, Hayden Communications, or Integrated Corporate
      Relations as the Company’s investor relations firm. The
      Company agrees that $250,000 (the
      “IR
      Holdback Escrow
      Amount”)
      shall
      be held in escrow pursuant to the Holdback Escrow Agreement until such time
      as
      the Company complies with its obligations under this Section 4.13. If
      any
      term or provision of this Section 4.13 as to the IR Holdback Escrow Amount
      is in
      contradiction of or conflicts with any term or provision of the Holdback Escrow
      Agreement relating thereto, the terms of the Holdback Escrow Agreement shall
      control.

     

    4.14. Right
      of
      First Refusal. 

     

    (a) From
      the
      date hereof until the first anniversary of the effective date of the
      Registration Statement
      (plus
      one additional day for each Trading Day following the Effective Date of any
      Registration Statement during which either (1) the Registration Statement is
      not
      effective or (2) the prospectus forming a portion of the Registration Statement
      is not available for the resale of all Registrable Securities (as defined in
      the
      Registration Rights Agreement)),
      the
      Company will not, directly or indirectly, offer, sell, grant any option to
      purchase, or otherwise dispose of (or announce any offer, sale, grant or any
      option to purchase or other disposition of) any of its or its Subsidiaries'
      equity or equity equivalent securities, including, without limitation, any
      debt,
      preferred stock or other instrument or security that is, at any time during
      its
      life and under any circumstances, convertible into or exchangeable or
      exercisable for shares of Common Stock or Common Stock Equivalents (any such
      offer, sale, grant, disposition or announcement being referred to as a
      "Subsequent
      Placement")
      unless
      the Company shall have first complied with this Section 4.14. If the Company
      desires to sell any securities it shall deliver to each of the Investors a
      written notice to such effect specifying the general terms of the offering
      the
      Company desires to make and for a period of at least twenty Business Days after
      the giving of such notice the Company agrees to negotiate in good faith with
      any
      Investors responding to such notice the terms of a sale of the Company’s
      securities to such responding Investors. 

     

    (b) In
      the
      event that the Company shall receive an
      unsolicited offer regarding the purchase of the Company’s securities, the
      Company shall deliver to each Investor hereunder a written notice (the
      "Offer
      Notice")
      of any
      proposed or intended issuance or sale or exchange (the "Offer")
      of the
      securities being offered (the "Offered
      Securities")
      in a
      Subsequent Placement, which Offer Notice shall (v) identify and describe the
      Offered Securities, (w) specify the price and other terms upon which the Offered
      Securities are to be issued, sold or exchanged, and the number or amount of
      the
      Offered Securities to be issued, sold or exchanged, (x) identify the persons
      or
      entities (to the extent known) to which or with which the Offered Securities
      are
      to be offered, issued, sold or exchanged and (y) offer to issue and sell to
      or
      exchange with such Investors all of the Offered Securities, allocated among
      such
      Investors (i) based on such Investor's pro rata portion of the total Investment
      Amount hereunder (the "Basic
      Amount"),
      and
      (ii) with respect to each Investor that elects to purchase its Basic Amount,
      any
      additional portion of the Offered Securities attributable to the Basic Amounts
      of other Investors as such Investor shall indicate it will purchase or acquire
      should the other Investors subscribe for less than their Basic Amounts (the
      "Undersubscription
      Amount"),
      which
      process shall be repeated until the Investors shall have an opportunity to
      subscribe for any remaining Undersubscription Amount.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (c) To
      accept
      an Offer, in whole or in part, such Investor must deliver a written notice
      to
      the Company prior to the end of the fifth Business Day after such Investor's
      receipt of the Offer Notice (the "Offer
      Period"),
      setting forth the portion of such Investor's Basic Amount that such Investor
      elects to purchase and, if such Investor shall elect to purchase all of its
      Basic Amount, the Undersubscription Amount, if any, that such Investor elects
      to
      purchase (in either case, the "Notice
      of Acceptance").
      If
      the Basic Amounts subscribed for by all Investors are less than the total of
      all
      of the Basic Amounts, then each Investor who has set forth an Undersubscription
      Amount in its Notice of Acceptance shall be entitled to purchase, in addition
      to
      the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
      for; provided, however, that if the Undersubscription Amounts subscribed for
      exceed the difference between the total of all the Basic Amounts and the Basic
      Amounts subscribed for (the "Available
      Undersubscription Amount"),
      each
      Investor who has subscribed for any Undersubscription Amount shall be entitled
      to purchase only that portion of the Available Undersubscription Amount as
      the
      Basic Amount of such Investor bears to the total Basic Amounts of all Investors
      that have subscribed for Undersubscription Amounts, subject to rounding by
      the
      Company to the extent its deems reasonably necessary.

     

    (d) The
      Company shall have twenty Business Days from the expiration of the Offer Period
      above to (i) offer, issue, sell or exchange the Offered Securities as to which
      a
      Notice of Acceptance has not been given by the Investors (the “Refused
      Securities”)
      but
      only to the offerees described in the Offer Notice (if so described therein)
      and
      only upon terms and conditions (including, without limitation, unit prices
      and
      interest rates) that are not more favorable to the acquiring person or persons
      or less favorable to the Company than those set forth in the Offer Notice and
      (ii) to publicly announce (a) the execution of such Subsequent Placement
      Agreement (as defined below), and (b) either (x) the consummation of the
      transactions contemplated by such Subsequent Placement Agreement or (y) the
      termination of such Subsequent Placement Agreement, which shall be filed with
      the Commission on a Current Report on Form 8-K with such Subsequent Placement
      Agreement and any documents contemplated therein filed as exhibits thereto.
      If
      no disclosure has been made by the Company by the end of the twenty Business
      Day
      period referred to in this subsection (d), the Subsequent Placement shall be
      deemed to have been abandoned and the Investors shall no longer be deemed to
      be
      in possession of any non-public information with respect to the Company. The
      purchase by the Investors of any Offeree Securities is subject in all cases
      to
      the preparation, execution and delivery by the Company and the Investors of
      a
      purchase agreement relating to such Offered Securities reasonably satisfactory
      in form and substance to the Investors and their respective counsel (such
      agreement, the “Subsequent
      Placement Agreement.”)
      

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (e) In
      the
      event the Company shall propose to sell less than all the Refused Securities
      (any such sale to be in the manner and on the terms specified in this Section
      4.15), then each Investor may, at its sole option and in its sole discretion,
      reduce the number or amount of the Offered Securities specified in its Notice
      of
      Acceptance to an amount that shall be not less than the number or amount of
      the
      Offered Securities that such Investor elected to purchase pursuant to Section
      4.15(c) above multiplied by a fraction, (i) the numerator of which shall be
      the
      number or amount of Offered Securities the Company actually proposes to issue,
      sell or exchange (including Offered Securities to be issued or sold to Investors
      pursuant to Section 4.15(c) above prior to such reduction) and (ii) the
      denominator of which shall be the original amount of the Offered Securities.
      In
      the event that any Investor so elects to reduce the number or amount of Offered
      Securities specified in its Notice of Acceptance, the Company may not issue,
      sell or exchange more than the reduced number or amount of the Offered
      Securities unless and until such securities have again been offered to the
      Investors in accordance with Section 4.15(b) above.

     

    (f) Upon
      the
      closing of the issuance, sale or exchange of all or less than all of the Refused
      Securities, the Investors shall acquire from the Company, and the Company shall
      issue to the Investors, the number or amount of Offered Securities specified
      in
      the Notices of Acceptance, as reduced pursuant to Section 4.15(e) above if
      the
      Investors have so elected, upon the terms and conditions specified in the Offer.
      

     

    (g) Any
      Offered Securities not acquired by the Investors or other persons in accordance
      with Section 4.15(d) above may not be issued, sold or exchanged until they
      are
      again offered to the Investors under the procedures specified in this
      Agreement.

     

    (h) In
      exchange for the Company’s willingness to agree to these procedures, each
      Investor hereby irrevocably agrees that it will hold in strict confidence any
      and all Offer Notices, the information contained therein, and the fact that
      the
      Company is contemplating a Subsequent Placement, until such time as the Company
      is obligated to make the disclosures required by Section 4.15(d), or unless
      it
      notifies the Company in writing that it no longer desires to receive Offer
      Notices. 

     

    4.15. Chief
      Financial Officer. No later than three
      months
      following the Closing Date, the Company will hire a chief financial officer
      (“CFO”) who is a
      certified public accountant or possesses experience such that he or she can
      reasonably serve as a chief financial officer, fluent in English, and
who
      has a
      working familiarity with
      (i) US
      GAAP and (ii) auditing procedures and compliance for United States public
      companies.
      In the
      event that the proposed CFO is not a certified public accountant, who is fluent
      in English and an expert in GAAP and auditing procedures and compliance for
      United States public companies, then such proposed CFO shall be subject to
      Pinnacle’s reasonable approval. The Company shall enter into an employment
      agreement with the CFO for a term of no less than two years. Should the CFO
      be
      dismissed at any time prior to two years from the Closing Date, the Company
      shall replace the CFO with a Chief Financial Officer who fits the criteria
      set
      forth herein as soon as practicable.
      By
      9:00
      a.m. (New York time) on the fourth Trading Day following the hiring of such
      chief financial officer, the Company will file a Current Report on Form 8-K
      disclosing the information required by Item 5.02 of Form 8-K. The Company shall
      deposit $2,000,000 to be held in escrow (the “CFO
      Holdback Escrow
      Amount”)
      in
      accordance with the terms of the Holdback Escrow Agreement pending compliance
      with this provision. If any term or provision of this Section 4.15 as to the
      CFO
      Holdback Escrow Amount is in contradiction of or conflicts with any term or
      provision of the Holdback Escrow Agreement relating thereto, the terms of the
      Holdback Escrow Agreement shall control.

     

    
      
        
        

      

      
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    4.16. Liquidated
      Damages for Governmental Rescission of the Transaction. If any governmental
      agency in the PRC challenges or otherwise takes any action that adversely
      affects the transactions contemplated by the Exchange Agreement, and the Company
      cannot undo such governmental action or otherwise address the material adverse
      effect to the reasonable satisfaction of the Investors within sixty (60) days
      of
      the occurrence of such governmental action, then, upon written demand from
      an
      Investor, the Company shall promptly, and in any event within thirty (30) days
      from the date of such written demand, pay to that Investor, as liquidated
      damages, an amount equal to that Investor’s entire Investment Amount with
      interest thereon from the Closing date until the date paid at the rate of 10%
      per annum. As a condition to the receipt of such payment, the Investor shall
      return to the Company for cancellation the certificates evidencing the Shares
      acquired by the Investor under the Agreement.

     

    4.17. Further
      Assurances. The Company will, and will cause all of the Company Entities and
      their management to, use their best efforts to satisfy all of the closing
      conditions under Section 5.1, and will not take any action which could frustrate
      or delay the satisfaction of such conditions. In addition, either prior to
      or
      following the Closing, each Existing Company Entity signatory hereto will,
      and
      will cause each other Company Entity and its management to, perform, or cause
      to
      be done and performed, all such further acts and things, and shall execute
      and
      deliver all such other agreements, certificates, instruments and documents,
      as
      any other party may reasonably request in order to carry out the intent and
      accomplish the purposes of this Agreement and the consummation of the
      transactions contemplated hereby.

     

    4.19 Insurance.
      Within sixty (60) days following the Closing Date, each Existing Company Entity
      shall become insured by insurers of recognized financial responsibility against
      such losses and risks and in such amounts as are prudent and customary in the
      businesses in which it is engaged and as may be necessary to continue its
      business on terms consistent with market for the Company’s and such other
      Existing Company Entity’s respective lines of business.

     

    4.20 Completion
      of WOFE Purchase and Increase of WOFE’s Registered Capital.

     

    (a) Completion
      of WOFE Purchase. By the 20th
      day
      following the Closing Date, the Company shall complete the WOFE Purchase.
In
      order
      to complete the WOFE Purchase, the Company and Green agree to transmit
      approximately $4,000,000 (“WOFE Purchase Price”) to the accounts of the former
      WOFE shareholders and complete additional filings and registrations, including
      obtaining a new business license and certificate from the PRC State
      Administration of Foreign Exchange reflecting the completion of the payment
      of
      the Purchase Price. The Company Entities represent and warrant that the former
      WOFE shareholders have agreed that they will not retain the WOFE Purchase Price
      and have issued an instruction that the PRC State Administration of Foreign
      Exchange, Xi’An branch, transmit the WOFE Purchase Price, when received, to the
      WOFE. In furtherance of the Company’s obligations under this Section, by the
      20th
      day
      following the Closing Date, the Company shall provide the Investors with
      evidence reasonably acceptable to them that the aggregate registered capital
      deficit (the WOFE Purchase Price) has been paid by providing a copy of the
      new
      business license evidencing that the aggregate capital deficit (the WOFE
      Purchase Price) has been paid as described above. 

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    (b) Completion
      of the Increase of WOFE’s Registered Capital. By the 65th
      day
      following the Closing Date, the Company shall complete the increase of WOFE’s
      registered capital from approximately $4,000,000 to such amount as necessary
      to
      accommodate the net proceeds of the sale of Shares under this Agreement. The
      WOFE is to receive all necessary documentation evidencing the completion of
      the
      registered capital increase including the approval from provincial commercial
      bureau, a new business license from the local State Administration of Industrial
      and Commerce and an updated certificate from PRC State Administration of Foreign
      Exchange, Xi’An branch. 

     

    4.21 The
      Trademarks of the WOFE. For any Intellectual Property Rights that
      are
      owned in
      the name of any predecessor of the WOFE,
      the WOFE
      shall complete the
      change of the registered owner from that of the WOFE’s predecessor to the WOFE’s
      current name, address and other related updates which is required by PRC
      Trademark Offices within 18 months of the Closing Date (the“Compliance
      Period”)
      as
      evidenced by a written notice certifying the completion of the change of
      registered owner information (the “Notice”)
      from
      the PRC Trademark Offices (the date which is 18 months following the Closing
      Date, the “Compliance
      Notice Date”).
      A copy
      of the Notice shall be promptly provided to the Investors. If for any reason
      or
      for no reason whatsoever, the WOFE does not receive the Notice from the PRC
      Trademark Offices and provide such evidence to the Investors within the
      Compliance Period, then on the Compliance Notice Date and on each monthly
      anniversary thereof (until the WOFE provides a copy of the Notice to the
      Investors) the Company shall pay to each Investor by wire transfer an amount
      in
      immediately available funds, as partial liquidated damages and not as a
      penaltyequal to 0.5% of the aggregate Investment Amount paid by such Investor
      for Shares pursuant to this Agreement. The
      partial liquidated damages pursuant to the terms of this Section 4.21 shall
      be
      independent of any other damages payable under this Agreement or any other
      Transaction Document and shall apply on a daily pro-rata basis for any portion
      of a month prior to the time the Investors are provided a copy of the
      Notice.  

     

    ARTICLE
      5. 

    CONDITIONS
      PRECEDENT TO CLOSING

     

    5.1. Conditions
      Precedent to the Obligations of the Investors to Purchase Shares.
      The
      obligation of each Investor to acquire Shares at the Closing is subject to
      the
      satisfaction or waiver by such Investor, at or before the Closing, of each
      of
      the following conditions:

     

    (a) Representations
      and Warranties. The representations and warranties of the Existing Company
      Entities contained herein shall be true and correct in all material respects
      as
      of the date when made and as of the Closing as though made on and as of such
      date;

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (b) Performance.
      The Existing Company Entities shall have performed, satisfied and complied
      in
      all material respects with all covenants, agreements and conditions required
      by
      the Transaction Documents and the Exchange Agreement to be performed, satisfied
      or complied with by it at or prior to the Closing;

     

    (c) No
      Injunction. No statute, rule, regulation, executive order, decree, ruling or
      injunction shall have been enacted, entered, promulgated or endorsed by any
      court or governmental authority of competent jurisdiction that prohibits the
      consummation of any of the transactions contemplated by the Transaction
      Documents and the Exchange Agreement;

     

    (d) Adverse
      Changes. Since the date of execution of this Agreement, no event or series
      of
      events shall have occurred that reasonably could have or result in a Material
      Adverse Effect or a material adverse change with respect to the
      Subsidiaries;

     

    (e) WOFE
      Financial Statements. WOFE shall have completed and delivered audited
      consolidated financial statements for the fiscal years ended June 30, 2006
      and
      2007 to the Company and the Investors and shall have received an audit report
      from an independent audit firm that is registered with the Public Company
      Accounting Oversight Board relating to the fiscal years ended June 30, 2006
      and
      2007, a copy of which shall be promptly provided to the Investors (collectively,
      the “WOFE
      Financial Statements”);

     

    (f) WOFE
      Intellectual Property Rights. The WOFE shall provide to the Investors evidence
      acceptable to the Investors that all Intellectual Property Rights are either
      (i)
      validly owned by the WOFE, or (ii) (a) if owned by any Person other than
      the WOFE or its predecessor, subject to valid and binding Intellectual Property
      Right Licensing Agreements which may not be terminated for any reason until
      any
      such Intellectual Property Right covered thereby is validly owned by the WOFE,
      or (b) if owned by the predecessor of the WOFE, the application for the change
      of the registered owner information from that of the WOFE’s predecessor to the
      WOFE’s current name, address and other related updates which is or may be
      required by relevant PRC authorities in charge of such Intellectual Property
      is
      submitted by the WOFE to the relevant PRC authority on or before the Closing.
      

     

    (g) PRC
      Opinion. The Company shall have delivered to the Investors, and the Investors
      shall be able to rely upon, the legal opinions that the Company shall have
      received from its legal counsel in the PRC (which, among other things, shall
      confirm the legality under applicable PRC law of the WOFE and the applicability
      of SAFE Circular 75, Circular 106 and the September 8 Merger and Acquisition
      Rules) with such legal opinions being in a form acceptable to the Investors
      in
      their sole discretion.

     

    (h) Exchange
      Agreement and Form 8-K. Concurrently with or immediately prior to the Closing,
      (i) the Company shall have completed the acquisition of all of the outstanding
      capital stock of Green pursuant to the Exchange Agreement, and (ii) the Company
      shall have provided the Investors with the Current Report on Form 8-K to be
      filed in accordance with the Exchange Agreement, containing the audited
      financial statements of Green and other required disclosure with respect to
      Green and WOFE, provided that, prior to the filing of such Current Report,
      the
      Company shall give the Investors a meaningful opportunity to review and comment
      on the draft thereof and incorporate in good faith any comments from the
      Investors reasonably acceptable to the Company; 

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    (i) Derivative
      Securities. Any issued and outstanding options, convertible notes or other
      securities of the Company that are exercisable or exchangeable for or
      convertible into Common Stock shall have been exercised, converted or exchanged
      for Common Stock in a manner satisfactory to the Investors; 

     

    (j) Closing
      Officer’s Certificate. At the Closing, the Company shall have delivered to each
      Investor an officer’s certificate to the effect that each of the conditions
      specified in Sections 5.1(a) - 5.1(i) is satisfied in all respects.

     

    (k) Company
      Deliverables. The Company shall have delivered the Company Deliverables in
      accordance with Section 2.2(a); and

     

    (l) Termination.
      This Agreement shall not have been terminated as to such Investor in accordance
      with Section 6.5.

     

    (m) Minimum/Maximum.
      The Company shall have delivered to each Investor signature pages to
      this Agreement indicating that the aggregate Investment Amount payable
      to the Company hereunder on the Closing Date is not less than $20,000,000 and
      no
      more than $26,000,000.

     

    5.2. Conditions
      Precedent to the Obligations of the Company to Sell Shares.
      The
      obligation of the Company to sell Shares at the Closing is subject to the
      satisfaction or waiver by the Company, at or before the Closing, of each of
      the
      following conditions:

     

    (a) Representations
      and Warranties. The representations and warranties of each Investor contained
      herein shall be true and correct in all material respects as of the date when
      made and as of the Closing Date as though made on and as of such
      date;

     

    (b) Performance.
      Each Investor shall have performed, satisfied and complied in all material
      respects with all covenants, agreements and conditions required by the
      Transaction Documents to be performed, satisfied or complied with by such
      Investor at or prior to the Closing;

     

    (c) No
      Injunction. No statute, rule, regulation, executive order, decree, ruling or
      injunction shall have been enacted, entered, promulgated or endorsed by any
      court or governmental authority of competent jurisdiction that prohibits the
      consummation of any of the transactions contemplated by the Transaction
      Documents;

     

    (d) Exchange
      Agreement. Concurrently with or immediately prior to the Closing, the Company
      shall have acquired all of the outstanding capital stock of Green pursuant
      to
      the Exchange Agreement. 

     

    (e) Investors
      Deliverables. Each Investor shall have delivered its Investors Deliverables
      in
      accordance with Section 2.2(b); and

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    (f) Termination.
      This Agreement shall not have been terminated as to such Investor in accordance
      with Section 6.5.

     

    ARTICLE
      6.

    MISCELLANEOUS

     

    6.1. Fees
      and
      Expenses.
      At the
      Closing, the Company shall reimburse Pinnacle upon presentation to the Company
      of a
      summary
      invoice
      therefor
      which is addressed to Pinnacle by its counsel, up
      to
$60,000
      for
      Pinnacle’s legal fees in connection with the transactions contemplated by the
      Transaction Documents
      (Pinnacle may deduct such amount from the Investment Amount deliverable to
      the
      Company at Closing), it being understood that Bryan Cave LLP has only rendered
      legal advice to Pinnacle, and not to the Company or any other Investor in
      connection with the transactions contemplated hereby, and that each of the
      Company and the other Investors has relied for such matters on the advice of
      its
      own respective counsel.
      In
      addition, the Company shall at the Closing pay to Pinnacle, upon presentation
      to
      the Company of reasonable documentation therefor,
      not more
      than $7,500 to reimburse Pinnacle for its out-of-pocket due diligence expenses
      in connection with the transactions contemplated by the Transaction Documents.
      Except
      as
      specified in the immediately preceding two sentences and as described in Section
      6.4, each party shall pay the fees and expenses of its advisers, counsel,
      accountants and other experts, if any, and all other expenses incurred by such
      party incident to the negotiation, preparation, execution, delivery and
      performance of the Transaction Documents. The Company shall pay all stamp and
      other taxes and duties levied in connection with the sale of the
      Shares.
      In the
      event that any waivers or amendments are required with respect to any
      Transaction Document or the transactions contemplated thereby, the Company
      covenants to reimburse Pinnacle for reasonable legal expenses incurred in
      connection therewith.

     

    6.2. Entire
      Agreement.
      The
      Transaction Documents, together with the Exhibits and Schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements, understandings, discussions and
      representations, oral or written, with respect to such matters, which the
      parties acknowledge have been merged into such documents, exhibits and
      schedules.

     

    6.3. Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile (provided the sender receives a machine-generated
      confirmation of successful transmission) at the facsimile number specified
      in
      this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b)
      the
      next Trading Day after the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this Section
      on
      a day that is not a Trading Day or later than 6:30 p.m. (New York City time)
      on
      any Trading Day, or (c) upon actual receipt by the party to whom such notice
      is
      required to be given, if sent by any means other than facsimile transmission.
      The address for such notices and communications shall be as
      follows:

    

      
        	
                If
                  to the Company:

              	 	
                Discovery
                  Technologies, Inc

              
	 	 	
                45
                  Old Millstone Drive, Unit 6,

              
	 	 	
                East
                  Windsor, NJ 08520

              
	 	 	
                Attn:
                  Mr. Yinshing David To

              

      

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      
        	
                With
                  a copy to:

              	 	
                Guzov
                  Ofsink, LLC

              
	 	 	
                600
                  Madison Avenue, 14th
                  Floor

              
	 	 	
                New
                  York, New York 10022

              
	 	 	
                Facsimile:
                  (212) 688-7273

              
	 	 	
                Attn.:
                  Darren L. Ofsink, Esq.

              
	 	 	 
	
                If
                  to an Investor:

              	 	
                To
                  the address set forth under such Investor’s name on the signature pages
                  hereof;

              
	 	 	 
	
                With
                  a copy to:

              	 	
                Bryan
                  Cave LLP

              
	
                (only
                  for notices to

              	 	
                1290
                  Avenue of the Americas

              
	
                investors)

              	 	
                New
                  York, New York 10104

              
	 	 	
                Facsimile:
                  (212) 541-4630

              
	 	 	
                Email:
                  elcohen@bryancave.com

              
	 	 	
                Attn.:
                  Eric L. Cohen, Esq.

              

      

    

     

    or
      such
      other address as may be designated in writing hereafter, in the same manner,
      by
      such Person.

     

    6.4. Amendments;
      Waivers; No Additional Consideration.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed by the Company and the Investors holding a majority of the
      Shares. No waiver of any default with respect to any provision, condition or
      requirement of this Agreement shall be deemed to be a continuing waiver in
      the
      future or a waiver of any subsequent default or a waiver of any other provision,
      condition or requirement hereof, nor shall any delay or omission of either
      party
      to exercise any right hereunder in any manner impair the exercise of any such
      right. No consideration shall be offered or paid to any Investor to amend or
      consent to a waiver or modification of any provision of any Transaction Document
      unless the same consideration is also offered to all Investors who then hold
      Shares. The Company shall pay for any fees, including reasonable attorney’s fees
      for one counsel representing the Investors, incurred by the Investors in
      connection with any amendment to a Transaction Document.

     

    6.5. Termination.
      This
      Agreement may be terminated prior to Closing:

     

    (a) by
      written agreement of the Investors holding a majority of the Shares to be issued
      at Closing pursuant to the terms hereof and the Company; and

     

    (b) by
      an
      Investor (as to itself but no other Investor) upon written notice to the
      Company, if the Closing shall not have taken place by 6:30 p.m. Eastern time
      on
      the Closing Date; provided, that the right to terminate this Agreement under
      this Section 6.5(b) shall not be available to any Person whose failure to comply
      with its obligations under this Agreement has been the cause of or resulted
      in
      the failure of the Closing to occur on or before such time.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    In
      the
      event of a termination pursuant to Section 6.5(a) upon delivery of a joint
      written notice from the Company and the Investors to the Escrow Agent or in
      the
      event of a termination pursuant to Section 6.5(b) upon delivery of written
      notice by an Investor to the Escrow Agent, such Investor shall have the right
      to
      a return of up to its entire Investment Amount deposited with the Escrow Agent
      pursuant to Section 2.2(b)(i), without interest or deduction. The Company
      covenants and agrees to cooperate with such Investor in obtaining the return
      of
      its Investment Amount, and shall not communicate any instructions to the
      contrary to the Escrow Agent.

     

    In
      the
      event of a termination pursuant to this Section, the Company shall promptly
      notify all non-terminating Investors. Upon a termination in accordance with
      this
      Section 6.5, the Company and the terminating Investor(s) shall not have any
      further obligation or liability (including as arising from such termination)
      to
      the other and no Investor will have any liability to any other Investor under
      the Transaction Documents as a result therefrom.

     

    6.6. Construction.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party. This Agreement shall be
      construed as if drafted jointly by the parties, and no presumption or burden
      of
      proof shall arise favoring or disfavoring any party by virtue of the authorship
      of any provisions of this Agreement or any of the Transaction
      Documents.

     

    6.7. Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of the Investors. Any Investor may assign any or all of its rights
      under
      this Agreement to any Person to whom such Investor assigns or transfers any
      Shares, provided such transferee agrees in writing to be bound, with respect
      to
      the transferred Shares, by the provisions hereof that apply to the “Investors.”
Notwithstanding anything to the contrary herein, for the avoidance of doubt,
      each Investor may freely transfer any Shares to any Person (including its
      Affiliates or any investment fund sponsored or advised by such Investor) without
      the consent of any of the Existing Company Entities or any other
      Investor.

     

    6.8. No
      Third-Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Section 4.7 (as to each Investor Party).

     

    6.9. Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof. Each party agrees that all Proceedings
      concerning the interpretations, enforcement and defense of the transactions
      contemplated by this Agreement and any other Transaction Documents (whether
      brought against a party hereto or its respective Affiliates, employees or
      agents) shall be commenced exclusively in the New York Courts. Each party hereto
      hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
      for the adjudication of any dispute hereunder or in connection herewith or
      with
      any transaction contemplated hereby or discussed herein (including with respect
      to the enforcement of the any of the Transaction Documents), and hereby
      irrevocably waives, and agrees not to assert in any Proceeding, any claim that
      it is not personally subject to the jurisdiction of any such New York Court,
      or
      that such Proceeding has been commenced in an improper or inconvenient forum.
      Each party hereto hereby irrevocably waives personal service of process and
      consents to process being served in any such Proceeding by mailing a copy
      thereof via registered or certified mail or overnight delivery (with evidence
      of
      delivery) to such party at the address in effect for notices to it under this
      Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      Each party hereto hereby irrevocably waives, to the fullest extent permitted
      by
      applicable law, any and all right to trial by jury in any legal proceeding
      arising out of or relating to this Agreement or the transactions contemplated
      hereby. If either party shall commence a Proceeding to enforce any provisions
      of
      a Transaction Document, then the prevailing party in such Proceeding shall
      be
      reimbursed by the other party for its reasonable attorneys’ fees and other costs
      and expenses incurred with the investigation, preparation and prosecution of
      such Proceeding.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    6.10. Survival.
      The
      representations, warranties, agreements and covenants contained herein shall
      survive the Closing and the delivery of the Shares.

     

    6.11. Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original
      thereof.

     

    6.12. Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

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

     

    6.14. Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities
      is
      mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
      issued in exchange and substitution for and upon cancellation thereof, or in
      lieu of and substitution therefor, a new certificate or instrument, but only
      upon receipt of evidence reasonably satisfactory to the Company of such loss,
      theft or destruction and customary and reasonable indemnity, if requested.
      The
      applicants for a new certificate or instrument under such circumstances shall
      also pay any reasonable third-party costs associated with the issuance of such
      replacement Securities.
      If a
      replacement certificate or instrument evidencing any Securities
      is
      requested due to a mutilation thereof, the Company may require delivery of
      such
      mutilated certificate or instrument as a condition precedent to any issuance
      of
      a replacement.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    6.15. Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Investors and the Company will
      be entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation the defense that a remedy at law would be
      adequate.

     

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

     

    6.17. Independent
      Nature of Investors’ Obligations and Rights.
      The
      obligations of each Investor under any Transaction Document are several and
      not
      joint with the obligations of any other Investor, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor under any Transaction Document. The decision of each Investor to
      purchase Shares pursuant to the Transaction Documents has been made by such
      Investor independently of any other Investor. Nothing contained herein or in
      any
      Transaction Document, and no action taken by any Investor pursuant thereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      Each
      Investor acknowledges that no other Investor has acted as agent for such
      Investor in connection with making its investment hereunder and that no Investor
      will be acting as agent of such Investor in connection with monitoring its
      investment in the Shares or enforcing its rights under the Transaction
      Documents. Each Investor shall be entitled to independently protect and enforce
      its rights, including without limitation the rights arising out of this
      Agreement or out of the other Transaction Documents, and it shall not be
      necessary for any other Investor to be joined as an additional party in any
      proceeding for such purpose. The Company acknowledges that each of the Investors
      has been provided with the same Transaction Documents for the purpose of closing
      a transaction with multiple Investors and not because it was required or
      requested to do so by any Investor.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    6.18. Limitation
      of Liability.
      Notwithstanding anything herein to the contrary, the Company acknowledges and
      agrees that the liability of an Investor arising directly or indirectly, under
      any Transaction Document of any and every nature whatsoever shall be satisfied
      solely out of the assets of such Investor, and that no trustee, officer, other
      investment vehicle or any other Affiliate of such Investor or any investor,
      shareholder or holder of shares of beneficial interest of such a Investor shall
      be personally liable for any liabilities of such Investor.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGES FOLLOW]

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      December 24, 2007.

     

    
      	 	 	 
	 	DISCOVERY TECHNOLOGIES,
              INC.
	 
 	 
 	 
 
	
            	By:  	/s/ Tao
              Li
	 	
              
Name:
              Tao Li
	 	
              Title:
                Chairman of the Board,

               
                President and Chief Executive Officer

            

    

    
       

      
        	 	 	 
	 	GREEN AGRICULTURE HOLDING
                CORPORATION
	 
 	 
 	 
 
	
              	By:  	/s/ Yinshing
                David To
	 	
                
Name:
                Yinshing David To
	 	Title: Director

      

       

    

    
      
        	 	 	 
	 	
                SHAANXI
                  TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD.

              
	 
 	 
 	 
 
	
              	By:  	/s/ Tao
                Li
	 	
                
Name:
                Tao Li
	 	
                Title:
                  Chairman of the Board,

                 
                  President and Chief Executive
                  Officer

              

      

       

      
        
          	 	 	 
	 	Only as to Sections 3.1(bb), 4.11,
                  4.16
                  and 4.17
                  and
                  Article 6 herein:
	 
 	 
 	 
 
	
                	          
                  	/s/ Yinshing
                  David To
	 	
                  
Yinshing
                  David To
	 	 
	 	 
	 	/s/
                  Tao
                  Li
	 	
                  
Tao
                  Li

        

         

      

    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      the
      date set forth above.

     

    
      	 	 	 
	 	NAME OF INVESTOR
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name: 
	 	Title: 

    

     

    
      	 	 	 
	 	Investment Amount: $ 
	 	 
	 	Tax ID No.:
	 	 
	 	 
	 	ADDRESS FOR
              NOTICE
	 	 
	 	Attention: 
	 
 	 
 	 
 
	
            	Tel:  	
            
	 	 	 
	 	Fax:	 
	 	 	
              
 
	 	Email:   	 
	 	
              

            

    

     

    
      	 	 	 
	 	
              DELIVERY
                INSTRUCTIONS

              (if
                different from above)

            
	 
 	 
 	 
 
	
            	c/o:  	
            
	 	 	 
	 	Street:  	 
	 	 	 
	 	City/State/Zip:
	 	 	 
	 	Attention:
	 	 	 
	 	Tel:	 

    

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    

      Schedules
        to

      Securities
        Purchase Agreement

      

      dated
        as of December 24, 2007, by and among Discovery
        Technologies, Inc. a Nevada corporation,
        and all predecessors thereof
        (the “Company”),
        Green Agriculture Holding Corporation, a New Jersey corporation (“Green”),
        Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., a company organized
        under
        the laws of the People’s Republic of China (“WOFE”), and the investors
        identified on the signature pages hereto (each, an “Investor” and collectively,
        the “Investors”).

      

      Schedule
        3.1 (a) Subsidiary

      

      Xi’an
        Jintai Agriculture Technology Development Company,
        a company incorporated in January 19, 2007 in the PRC is the wholly owned
        subsidiary of the WOFE, it serves as the WOFE’s research and development and
        experimental base. Its registered capital is RMB 1 million (approximately
        US$135,000)

      

      Schedule
        3.1 (g) Capitalization

      

      Please
        refer to the Cap table in excel format.

      

      Schedule
        3.1(k) Litigation

      

      Xi’an
        Techteam Science and Technology Industry (Group) Co., Ltd. (the “Group
        Company”), the former parent company of WOFE was a former 20% shareholder of
        Shanghai Li Ao Hi-Tech Investment Co., Ltd. (“Shanghai Li Ao”) as a nominee. The
        Group Company is substantially owned and controlled by Tao Li, the Chairman
        and
        CEO of WOFE.

      

      Shanghai
        Li Ao invested monies in Xinjiang Delong Group. Some of the top management
        of
        Xinjiang Delong Group was convicted in the PRC in 2006 of illegally taking
        deposit accounts from investors and stock manipulation. At no time has the
        Group
        Company, Shanghai Li Ao, Tao Li, WOFE or any employee, officer or director
        thereof been charged with any wrongdoing in connection with this
        matter.

      

      Schedule
        3.1 (m) Indebtedness

      

      
        	
                Loan
                  No.

              	 	
                Borrower

              	 	
                Amount

                (million
                  in RMB)

              	 	
                Dated

              	 	
                Term

              	 	
                Gurantee

              	 	
                Secured
                  Property 

              
	
                Xi
                  Shang Yin Xincheng Jie 

                Zi
                  [2007] No. 010

              	 	
                Xi’an
                  City Commercial Bank, Xincheng Branch

              	 	
                15

              	 	
                4/29/2007

              	 	
                4/29/2007~4/1/2008

              	 	
                Xishangyin
                  Xincheng Bao Zi [2007] No. 010

              	 	
                Property
                  Certificate No. Yang Guo Yong (2006) No.06

                Building
                  Certificate No. Yang Fang Quan Zheng Zi No. 20060030

              
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Yang
                  Nong Yin Jie Zi [2007] No. 001

              	 	
                Agricultural
                  Bank of China, Yangling Branch

              	 	
                13.5

              	 	
                3/28/2007

              	 	
                3/28/2007~3/27/2007

              	 	
                Yang
                  Nong Yin Bao Zi [2007] No. 001

              	 	
                None

              
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Shannong
                  Xin Jie Zi Beiwen No. [2007] No. 620

              	 	
                Xi’an
                  Beilin District Country Credit Union North Wenyi Road
                  Branch

              	 	
                3.8

              	 	
                9/18/2007

              	 	
                9/18/2007~9/16/2007

              	 	
                None

              	 	
                Mortgage
                  of Building of another company Xi’an Xiansheng Info. Technology Co., Ltd.,
                  which is majority owned by Mr. Tao
                  Li

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Schedule
        3.1 (o) Title to Assets

      

      There
        is
        a mortgage over the following land use right and building owned by the WFOE
        for
        a loan of RMB15million with Xincheng Branch of Commercial Bank of Xi’an City as
        referred to under Schedule 3.1 (m).

      

      
        	
                 

              	
                 

              	
                License
                  No. 

              	
                 

              	
                Area

              	
                 

              	
                Term

              
	
                Property
                  at Yangling

              	 	
                Yangguan
                  Guo Yong [2006] No. 06

              	 	
                30,946.65
                  m2

              	 	
                Land
                  use right valid through 01/2001-01/2051

              
	 	 	 	 	 	 	 
	
                Building
                  at Yangling

              	 	
                No.
                  20060030

              	 	
                6494.91
                  m2

              	 	
                —

              

      

       

      Schedule
        3.1 (p) Patents and Trademarks

      

      The
        following patents are in the process of application by the
        WFOE:

      

      
        	
                SN

              	
                 

              	
                Application
                  Number

              	
                 

              	
                Date
                  of Application

              	
                 

              	
                Applicant

              	
                 

              	
                Contents

              
	
                1

              	 	
                200720031884.2

              	 	
                5/29/2007

              	 	
                Shaanxi
                  Techteam Jinong Humici Acid Product Co.,Ltd

              	 	
                Production
                  facility of Humic Acid Products

              
	 	 	 	 	 	 	 	 	 
	
                2

              	 	
                200710017334.x

              	 	
                2/1/2007

              	 	
                Shaanxi
                  Techteam Jinong Humici Acid Product Co.,Ltd

              	 	
                Method
                  and recipe of the water solube humic acid fertilizers
                  

              

      

       

      A.
        Xi’an
        Techteam Science and Technology Industry (Group) Co., Ltd. (the “Group
        Company”), a company Mr. Tao Li has controlling shares is the registered owner
        of the following trademark:

       

      
        	Jinong (“Farmers’
                Helper”)   	Registration number: No. 1357523
                

      

       

      The
        Group
        Company is in the process of transferring the trademark to the WOFE. The
        application of the transfer with the PRC State Trademark Offices is dated
        October 15, 2007. There is a licensing agreement between the Group Company
        and
        the WOFE dated December 19, 2007 pursuant to which the Group Company granted
        an
        irrevocable, royalty free, exclusive license to the WOFE on the trademark
        of
        Jinong for the period from the date of the licensing agreement to the date
        on
        which the WOFE is transferred the trademark. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      B.
        Yanglin Techteam Jinong Humic Acid Product Co., Ltd. (“Yanglin”), the
        predecessor of the WOFE, is the registered owner of the following
        trademark:

       

      
        	Libangnong
                (“Farmer’s Mighty Helper”)  	Registration number: No.1503
                

      

       

      Yanglin
        is in the process of updating the owner information records with the PRC
        State
        Trademark Offices. The application is dated August 23, 2007.

      

      C.
        Yanglin is the registered owner of the following trademarks:

       

      
        
          	Zhimeizi (“Make
                  Plants Grow with Luster”)  	Registration number: No. 1504 
	 	 
	Lepushi (“Make
                  Farming Pleasant”)  	Registration number: No. 1428
                  

        

      

       

      Yanglin
        is in preparing the application for the owner information records updating
        and
        expect to file the application by the Closing.

      

      Schedule
        3.1 (q) Insurance

      

        
          	
                  SN

                	 	
                  Insurance
                    Category

                	 	
                  Policy
                    Number

                	 	
                  Premium
                    (RMB)

                	 	
                  Insured
                    Property Value (RMB)

                	 	
                  Insurance
                    Carrier

                	 	
                  Term
                    of the Policy

                
	
                  1

                	 	
                  Social
                    Insurance

                	 	
                  Endowment
                    Insurance

                	 	
                  N/A

                	 	
                  54.5.4/m/19
                    Persons

                	 	
                  N/A

                	 	

                  It
                    is different with 

                	 	
                  N/A

                
	 	 	 	 	
                  Medical
                    Insurance

                	 	
                  N/A

                	 	
                  1640.52/m/19
                    Persons

                	 	
                  N/A

                	 	
                  
                    each
                      employee 

                    when
                      they

                  

                	 	 
	 	 	
                	 	
                  Unemployment
                    Insurance

                	 	
                  N/A

                	 	
                  696.83/m/19
                    Persons

                	 	
                  N/A

                	 	
                  contracted
                    with

                  the
                    Insurance 

                	 	 
	 	 	 	 	
                  Maternity
                    Insurance

                	 	
                  N/A

                	 	
                  106.25/m/19
                    Persons

                	 	
                  N/A

                	 	
                  company
                    
                    at
                      the beginning.

                  

                	 	 
	 	 	 	 	
                  Industrial
                    Injury Insurance

                	 	
                  N/A

                	 	
                  193.05/m/19
                    Persons

                	 	
                  N/A

                	 	
                	 	 
	
                  2

                	 	
                  Assets
                    Comprehensive 

                	 	
                  Fixed
                        Assets

                	 	
                  6005745

                	 	
                  6,800.00

                	 	
                  1,360,000.00

                	 	
                  PICC
                    Property and Causalty Company Limited,Shaanxi 

                	 	
                  Expires
                    on 12/29/2008

                
	
                   

                	
                   

                	
                  Insurance

                	 	
                  Finished
                    Products

                	 	 	 	
                  2,000.00

                	 	
                  400,000.00

                	 	Branch	 	 
	 	 	 	 	
                  Packing
                    Materials

                	 	 	 	
                  1,000.00

                	 	
                  200,000.00

                	 	
                	 	 

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Schedule
        3.1 (r)

      

      As
        of the
        date of this Agreement, the WOFE owes $135,947 to its officers and shareholders.
        Such advance from the officers and shareholders to the WOFE was unsecured,
        non-interest bearing and due on demand. The WOFE plans to pay the amount
        off by
        December 31, 2007.

      

      Schedule
        3.1 (s) 

      

      The
        Company intends to hire a chief financial officer who has experience with
        public
        accounting, the requirements of GAAP and the United States securities laws.
        The
        Company has not yet evaluated its internal controls over financial reporting
        in
        order to allow management to report on, and the independent auditors to attest
        to, its internal controls over financial reporting, as will be required by
        Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations
        of
        the SEC. The Company has never performed the system and process evaluation
        and
        testing required in an effort to comply with the management assessment and
        auditor certification requirements of Section 404, which will initially apply
        to
        us as of December 31, 2007.

      

      Schedule
        3.1 (u) Certain Fees

      

      In
        connection with the financing contemplated under the Securities Purchase
        Agreement, Hickey Freihofner Capital, a Division of Brill Securities, Inc.,
        member of FINRA, MSRB, SIPC, as placement agent, is to receive a cash fee
        of 6%
        of the monies raised comprised of a 5% placement agent fee and 1% for
        non-accountable expenses and foreign finders received 2%.

      

      Schedule
        3.1 (v) Certain Registration Matters

      

      Michael
        Friess and Sanford Schwartz (the “Shell Sellers”), the directors and controlling
        owners of the Company before the Closing, has piggy-back registration rights
        on
        111,386 shares of common stock for the period that they hold those shares,
        pursuant to Redemption Agreement by and among the Shell Sellers and the Company
        dated the Closing Date. The piggy-back registration rights are conditioned
        on
        Rule 415 cutback. 

      

      Schedule
        3.1 (cc) Foreign
        Corrupt Practices Act  

       

      Under
        the
        FCPA, companies that have a class of securities registered under Section
        12 of
        the Exchange Act, or that are required to file reports under Section 15(d)
        of
        the Exchange Act, are required to devise and maintain a system of internal
        accounting controls sufficient to provide reasonable assurances that:

       

      
        	 	
                ·

              	
                transactions
                  are executed in accordance with management's general or specific
                  authorization; 

              

      

       

      
        	 	
                ·

              	
                transactions
                  are recorded as necessary (1) to permit preparation of financial
                  statements in conformity with generally accepted accounting principles
                  or
                  any other criteria applicable to such statements, and (2) to maintain
                  accountability for assets; 

              

      

       

      
        	 	
                ·

              	
                access
                  to assets is permitted only in accordance with management's general
                  or
                  specific authorization; and 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                ·

              	
                the
                  recorded accountability for assets is compared with the existing
                  assets at
                  reasonable intervals and appropriate action is taken with respect
                  to any
                  differences.

              

      

       

      Reference
        is made to Schedule 3.1(s). 

       

      Schedule
        4.4

       

      Reference
        is made to Schedule 3.1 (v).

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