Document:

EXHIBIT
      10.2

    

    AGFEED
      INDUSTRIES, INC.

     

    FORM
      OF
      REGISTRATION RIGHTS AGREEMENT

     

    This
      REGISTRATION RIGHTS AGREEMENT (the “Agreement”), dated as of February __, 2008,
      is made by and between AGFEED INDUSTRIES, INC., a Nevada corporation (the
“Company”), and the Investors listed on Exhibit A hereto.

     

    This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      February 25, 2008, between the Company and each Investor (the “
      Purchase Agreement”).

    

    The
      Company and each Investor hereby agree as follows:

     

    Capitalized
      terms used and not otherwise defined herein that are defined in the Purchase
      Agreement shall have the meanings given such terms in the Purchase
      Agreement.
      As used
      in this Agreement, the following terms shall have the following
      meanings:

    

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

     

    1. Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the following respective
      meanings:

     

    “Commission”
      shall mean the Securities and Exchange Commission, or any other federal agency
      at the time administering the Securities Act.

     

    “Effectiveness
      Date” shall mean that date which is one hundred eighty (180) days following the
      date hereof.

     

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

     

    “Filing
      Date” shall mean that date which is ten (10) business days following the date
      hereof, and, with respect to any additional Registration Statements which may
      be
      required pursuant to Section 3(l), the earliest practical date on which the
      Company is permitted to file such additional Registration Statement related
      to
      the Registrable Securities.

      

    “Register,”
      “registered” and “registration” each shall refer to a registration effected by
      preparing and filing a Registration Statement or statements or similar documents
      in compliance with the Securities Act and the declaration or ordering of
      effectiveness of such Registration Statement or document by the
      Commission.

     

    “Registrable
      Securities” shall mean (i) all of the shares of Common Stock issuable upon
      conversion in full of the Notes at the initial conversion price (assuming on
      the
      date of determination the Notes are converted in full without regard to any
      conversion limitations therein)and (ii) all Warrant Shares at the initial
      exercise price (assuming on the date of determination the Warrants are exercised
      in full without regard to any exercise limitations therein). If and when
      issuable, Registrable Securities shall also mean (a) all shares of Common Stock
      issuable as interest or principal on the Notes assuming all permissible interest
      and principal payments are made in shares of Common Stock and the Notes are
      held
      until maturity, (b) any additional shares of Common Stock issuable in connection
      with any anti-dilution or conversion price reset provisions in the Notes or
      the
      Warrants (in each case, without giving effect to any limitations on conversion
      set forth in the Notes or limitations on exercise set forth in the Warrant),
      (c)
      shares of Common Stock issuable in lieu of cash payments of partial liquidated
      damages pursuant to Section 2(b) and (d) any securities issued or
      issuable upon any stock split, dividend or other
      distribution,  recapitalization or similar event with respect to the
      foregoing.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Securities
      Act” shall mean the Securities Act of 1933, as amended.

      

    “Securities
      Purchase Agreement” means that certain Securities Purchase Agreement by and
      among the parties hereto dated as of the date hereof.

    

    2. Automatic
      Registration.

     

    (a) On
      or
      prior to the Filing Date, the Company shall prepare and file with the Commission
      a Registration Statement covering the resale of 130% of the Registrable
      Securities held by Investors at such time for an offering to be made on a
      continuous basis pursuant to Rule 415. Registration Statement required hereunder
      shall be on Form S-3. Subject to the terms of this Agreement, the Company shall
      use its commercially reasonable efforts to cause the Registration Statement
      to
      be declared effective under the Securities Act as promptly as possible after
      the
      filing thereof, but in any event not later than the Effectiveness Date, and
      shall use its commercially reasonable efforts to keep the Registration Statement
      continuously effective under the Securities Act until the date when all
      Registrable Securities covered by the Registration Statement have been sold
      or
      may be sold without volume restrictions pursuant to Rule 144(b)(1) (without
      being subject to the limitations of Rule 144(c)(1)) as determined by the counsel
      to the Company pursuant to a written opinion letter to such effect, addressed
      and acceptable to the Company’s transfer agent and the Investors (the
“Effectiveness Period”).

     

    (b) If:
      (i) a
      Registration Statement is not filed on or prior to the Filing Date, or (ii)
      the
      Company fails to file with the Commission a request for acceleration in
      accordance with Rule 461 promulgated under the Securities Act, within 5 trading
      days of the date that the Company is notified (orally or in writing, whichever
      is earlier) by the Commission that a Registration Statement will not be
“reviewed,” or is not subject to further review, or (iii) prior to the date when
      such Registration Statement is first declared effective by the Commission,
      the
      Company fails to file a pre-effective amendment and otherwise respond in writing
      to comments made by the Commission in respect of such Registration Statement
      within 15 trading days after the receipt of comments by or notice from the
      Commission that such amendment is required in order for a Registration Statement
      to be declared effective, or (iv) a Registration Statement filed or required
      to
      be filed hereunder is not declared effective by the Commission on or before
      the
      Effectiveness Date as a result of the failure of the Company to meet its
      obligations with respect to such filing as provided for herein, or (v) after
      a
      Registration Statement is first declared effective by the Commission, it ceases
      for any reason to remain continuously effective as to the Registrable Securities
      held by the Investors, or the Investors are not permitted to utilize the
      Prospectus therein to resell such Registrable Securities, for in any such case
      15 consecutive trading days but no more than an aggregate of 25 trading days
      during any 12-month period (which need not be consecutive trading days) (any
      such failure or breach being referred to as an “Event,” and for purposes of
      clause (i) or (iv) the date on which such Event occurs, or for purposes of
      clause (ii) the date on which such 5 trading day period is exceeded, or for
      purposes of clause (iii) the date which such 15 trading day period is exceeded,
      or for purposes of clause (v) the date on which such 15- or 25-day period,
      as
      applicable, is exceeded being referred to as “Event Date”), then: (x) on the
      first Event Date to occur the Company shall pay to such Investor an amount
      in
      cash, as liquidated damages and not as a penalty, equal to 2.0% of the aggregate
      purchase price paid by such Investor pursuant to the Securities Purchase
      Agreement for any Registrable Securities then held by such Investor for which
      such Investor has not received liquidated damages pursuant to Section 2(c)
      below; and (y) on each anniversary of such Event Date (if the applicable Event,
      or any subsequent Event, shall not have been cured by such date) until all
      Event(s) are cured, the Company shall pay to such Investor an amount in cash,
      as
      liquidated damages and not as a penalty, equal to 2.0% of the aggregate purchase
      price paid by such Investor pursuant to the Securities Purchase Agreement for
      any Registrable Securities then held by such Investor for which such Investor
      has not received liquidated damages pursuant to Section 2(c) below. If the
      Company fails to pay any liquidated damages pursuant to this Section in full
      within seven days after the date payable, the Company will pay interest thereon
      at a rate of 15% per annum (or such lesser maximum amount that is permitted
      to
      be paid by applicable law) to the Investor, accruing daily from the date such
      liquidated damages are due until such amounts, plus all such interest thereon,
      are paid in full. The liquidated damages pursuant to the terms hereof shall
      apply on a daily pro-rata basis for any portion of a year prior to the cure
      of
      an Event.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) Notwithstanding
      any other provision of this Section 2, if the Commission determines that
      the number of securities that the Company may register on the Registration
      Statement pursuant to Rule 415 is limited such that the shares so registered
      thereunder shall exclude any Registrable Securities held by the Investor, then
      the Company shall promptly so advise the Investors and the Company shall use
      commercially reasonable efforts to effect the registration of any Registrable
      Securities not so included on the Registration Statement as a result thereof
      as
      soon as is legally possible to do so. In such event, the Company shall pay
      to
      the Investors liquidated damages as set forth in Section 2(b) hereof with
      respect to  any Registrable Securities then held by any Investor that were
      not registered by the Effectiveness Date.

     

    (d) The
      parties acknowledge and agree that (i) the maximum amount of damages that the
      Company shall be obligated to pay all Investors for any and all breaches of
      this
      Section 2 is the amount of liquidated damages set forth in Section 2(b) or
      2(c),
      and (ii) such liquidated damages shall be the sole remedy available to Investors
      for any breach of this Agreement, provided that nothing in this Section 2(d)
      shall preclude any Investor from seeking injunctive relief, including specific
      performance of its rights under this Section 2.

     

    3. Registration
      Procedures.
      If and
      whenever the Company is required by the provisions of Section 2 hereof to use
      its commercially reasonable efforts to effect the registration of any
      Registrable Securities under the Securities Act, the Company will, as
      expeditiously as possible:

     

    (a) prepare
      and file with the Commission the Registration Statement with respect to such
      securities and use its reasonable best efforts to cause such Registration
      Statement to become effective in an expeditious manner;

     

    (b) prepare
      and file with the Commission such amendments and supplements to such
      Registration Statement and the prospectus used in connection therewith as may
      be
      necessary to keep such Registration Statement continuously effective during
      the
      Effectiveness Period and comply with the provisions of the Securities Act with
      respect to the disposition of all Registrable Securities covered by such
      Registration Statement in accordance with the intended method of disposition
      set
      forth in such Registration Statement for such period;

     

    (c) furnish
      to each seller of Registrable Securities and to each underwriter such number
      of
      copies of the Registration Statement and the prospectus included therein
      (including each preliminary prospectus) as such persons reasonably may request
      in order to facilitate the intended disposition of the Registrable Securities
      covered by such Registration Statement;

     

    (d) use
      its
      commercially reasonable efforts (i) to register or qualify the Registrable
      Securities covered by such Registration Statement under the securities or “blue
      sky” laws of such jurisdictions as the sellers of Registrable Securities or, in
      the case of an underwritten public offering, the managing underwriter,
      reasonably shall request, (ii) to prepare and file in those jurisdictions such
      amendments (including post-effective amendments) and supplements, and take
      such
      other actions, as may be necessary to maintain such registration and
      qualification in effect at all times for the period of distribution contemplated
      thereby and (iii) to take such further action as may be necessary or advisable
      to enable the disposition of the Registrable Securities in such jurisdictions,
      provided, that the Company shall not for any such purpose be required to qualify
      generally to transact business as a foreign corporation in any jurisdiction
      where it is not so qualified or to consent to general service of process in
      any
      such jurisdiction;

     

    (e) use
      its
      commercially reasonable efforts to list the Registrable Securities covered
      by
      such Registration Statement with any securities exchange on which the Common
      Stock of the Company is then listed;

     

    (f) immediately
      notify each seller of Registrable Securities and each underwriter under such
      Registration Statement, at any time when a prospectus relating thereto is
      required to be delivered under the Securities Act, of the happening of any
      event
      of which the Company has knowledge as a result of which the prospectus contained
      in such Registration Statement, as then in effect, includes any untrue statement
      of a material fact or omits to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading in light
      of
      the circumstances then existing and promptly amend or supplement such
      Registration Statement to correct any such untrue statement or
      omission;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g) promptly
      notify each seller of Registrable Securities of the issuance by the Commission
      of any stop order suspending the effectiveness of the Registration Statement
      or
      the initiation of any proceedings for that purpose and make every reasonable
      effort to prevent the issuance of any stop order and, if any stop order is
      issued, to obtain the lifting thereof at the earliest possible
      time;

     

    (h) if
      the
      offering is an underwritten offering, enter into a written agreement with the
      managing underwriter selected in the, manner herein provided in such form and
      containing such provisions as are usual and customary in the securities business
      for such an arrangement between such underwriter and companies of the Company’s
      size and investment stature, including, without limitation, customary
      indemnification and contribution provisions;

     

    (i) if
      the
      offering is an underwritten offering, at the request of any seller of
      Registrable Securities, use its commercially reasonable efforts to furnish
      to
      such seller on the date that Registrable Securities are delivered to the
      underwriters for sale pursuant to such registration: (i) a copy of an opinion
      dated such date of counsel representing the Company for the purposes of such
      registration, addressed to the underwriters, stating that such Registration
      Statement has become effective under the Securities Act and that (A) to the
      knowledge of such counsel, no stop order suspending the effectiveness thereof
      has been issued and no proceedings for that purpose have been instituted or
      are
      pending or contemplated under the Securities Act, (B) the Registration
      Statement, the related prospectus and each amendment or supplement thereof
      comply as to form in all material respects with the requirements of the
      Securities Act (except that such counsel need not express any opinion as to
      financial statements or other financial or statistical information contained
      therein) and (C) to such other effects as reasonably may be requested by counsel
      for the underwriters; and (ii) a copy of a letter dated such date from the
      independent public accountants retained by the Company, addressed to the
      underwriters, stating that they are independent public accountants within the
      meaning of the Securities Act and that, in the opinion of such accountants,
      the
      financial statements of the Company included in the Registration Statement
      or
      the prospectus, or any amendment or supplement thereof, comply as to form in
      all
      material respects with the applicable accounting requirements of the Securities
      Act, and such letter shall additionally cover such other financial matters
      (including information as to the period ending no more than five business days
      prior to the date of such letter) with respect to such registration as such
      underwriters reasonably may request;

     

    (j) take
      all
      actions reasonably necessary to facilitate the timely preparation and delivery
      of certificates (not bearing any legend restricting the sale or transfer of
      such
      securities) representing the Registrable Securities to be sold pursuant to
      the
      Registration Statement and to enable such certificates to be in such
      denominations and registered in such names as the Investor or any underwriters
      may reasonably request;

      

    (k) take
      all
      other reasonable actions necessary to expedite and facilitate the registration
      of the Registrable Securities pursuant to the Registration Statement;
      and

    

    (l) if
      during
      the Effectiveness Period, the number of Registrable Securities at any time
      exceeds 100% of the number of shares of Common Stock then registered on a
      Registration Statement, then the Company shall file as soon as reasonably
      practicable, but in any case prior to the applicable Filing Date, an additional
      Registration Statement covering the resale by the Investor of not less than
      the
      number of such Registrable Securities.

     

    4. Obligations
      of Investors.
      Each
      Investor shall furnish to the Company such information regarding such Investor,
      the number of Registrable Securities owned and proposed to be sold by it, the
      intended method of disposition of such securities and any other information
      as
      shall be required to effect the registration of the Registrable Securities,
      and
      cooperate with the Company in preparing the Registration Statement and in
      complying with the requirements of the Securities Act.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5. Expenses.

     

    (a) All
      expenses incurred by the Company in complying with Sections 2 and 3 including,
      without limitation, all registration and filing fees (including the fees of
      the
      Securities and Exchange Commission and any other regulatory body with which
      the
      Company is required to file), printing expenses, fees and disbursements of
      counsel and independent public accountants for the Company, fees and expenses
      (including counsel fees) incurred in connection with complying with state
      securities or “blue sky” laws, fees of transfer agents and registrars and fees
      and disbursements of one counsel for the holders of Registrable Securities,
      not
      to exceed $5,000, but excluding any Selling Expenses, are called “Registration
      Expenses.” All underwriting discounts and selling commissions applicable to the
      sale of Registrable Securities are called “Selling Expenses.”

     

    (b) The
      Company will pay all Registration Expenses in connection with any Registration
      Statement filed hereunder, and the Selling Expenses in connection with each
      such
      Registration Statement shall be borne by the participating sellers in proportion
      to the number of Registrable Securities sold by each or as they may otherwise
      agree.

     

    6. Indemnification
      and Contribution.

     

    (a) In
      the
      event of a registration of any of the Registrable Securities under the
      Securities Act pursuant to the terms of this Agreement, the Company will
      indemnify and hold harmless and pay and reimburse, each seller of such
      Registrable Securities thereunder, each underwriter of such Registrable
      Securities thereunder and each other person, if any, who controls such seller
      or
      underwriter within the meaning of the Securities Act, against any losses,
      claims, damages or liabilities, joint or several, to which such seller,
      underwriter or controlling person may become subject under the Securities Act
      or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement of any material fact contained in any Registration Statement
      under which such Registrable Securities were registered under the Securities
      Act
      pursuant hereto or any preliminary prospectus or final prospectus contained
      therein, or any amendment or supplement thereof, or arise out of or are based
      upon the omission or alleged omission to state therein a material fact required
      to be stated therein or necessary to make the statements therein not misleading,
      or any violation or alleged violation of the Securities Act or any state
      securities or blue sky laws and will reimburse each such seller, each such
      underwriter and each such controlling person for any legal or other expenses
      reasonably incurred by them in connection with investigating or defending any
      such loss, claim, damage, liability or action; provided, that the Company will
      not be liable in any such case if and to the extent that any such loss, claim,
      damage or liability arises out of or is based upon the Company’s reliance on an
      untrue statement or alleged untrue statement or omission or alleged omission
      so
      made in conformity with information furnished by any such seller, any such
      underwriter or any such controlling person in writing specifically for use
      in
      such Registration Statement or prospectus.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      (b)
        In
        the event of a registration of any of the Registrable Securities under the
        Securities Act pursuant hereto each seller of such Registrable Securities
        thereunder, severally and not jointly, will indemnify and hold harmless the
        Company, each person, if any, who controls the Company within the meaning
        of the
        Securities Act, each officer of the Company who signs the Registration
        Statement, each director of the Company, each underwriter and each person
        who
        controls any underwriter within the meaning of the Securities Act, against
        all
        losses, claims, damages or liabilities, joint or several, to which the Company
        or such officer, director, underwriter or controlling person may become subject
        under the Securities Act or otherwise, insofar as such losses, claims, damages
        or liabilities (or actions in respect thereof) arise out of or are based
        upon
        reliance on any untrue statement or alleged untrue statement of any material
        fact contained in the Registration Statement under which such Registrable
        Securities were registered under the Securities Act pursuant hereto or, any
        preliminary prospectus or final prospectus contained therein, or any amendment
        or supplement thereof, or arise out of or are based upon the omission or
        alleged
        omission to state therein a material fact required to be stated therein or
        necessary to make the statements therein not misleading, and will reimburse
        the
        Company and each such officer, director, underwriter, and controlling person
        for
        any legal or other expenses reasonably incurred by them in connection with
        investigating or defending any such loss, claim, damage, liability or action,
        provided, that such seller will be liable hereunder in any such case if and
        only
        to the extent that any such loss, claim, damage or liability arises out of
        or is
        based upon an untrue statement or alleged untrue statement or omission or
        alleged omission made in reliance upon and in conformity with information
        pertaining to such seller, as such, furnished in writing to the Company by
        such
        seller specifically for use in such Registration Statement or prospectus,
        and
        provided, that the liability of each seller hereunder shall be limited to
        the
        proceeds received by such seller from the sale of Registrable Securities
        covered
        by such Registration Statement. Notwithstanding the foregoing, the indemnity
        provided in this Section 6(b) shall not apply to amounts paid in settlement
        of
        any such loss, claim, damage, liability or expense if such settlement is
        effected without the consent of such indemnified party and provided further,
        that the Company shall not be liable in any such case to the extent that
        any
        such loss, claim, damage or liability (or action in respect thereof) arises
        out
        of or is based upon an untrue statement or alleged untrue statement or omission
        or alleged omission in such Registration Statement, which untrue statement
        or
        alleged untrue statement or omission or alleged omission is completely corrected
        in an amendment or supplement to the Registration Statement and the undersigned
        indemnitees thereafter fail to deliver or cause to be delivered such
        Registration Statement as so amended or supplemented prior to or concurrently
        with the sale of the Registrable Securities to the person asserting such
        loss,
        claim, damage or liability (or actions in respect thereof) or expense after
        the
        Company has furnished the undersigned with the same.

    

    

    (c) Promptly
      after receipt by an indemnified party hereunder of notice of the commencement
      of
      any action, such indemnified party shall, if a claim in respect thereof is
      to be
      made against the indemnifying party hereunder, notify the indemnifying party
      in
      writing thereof, but the omission so to notify the indemnifying party shall
      not
      relieve it from any liability which it may have to such indemnified party other
      than under this Section 6 and shall only relieve it from any liability which
      it
      may have to such indemnified party under this Section 6 if and to the extent
      the
      indemnifying party is materially prejudiced by such omission. In case any such
      action shall be brought against any indemnified party and it shall notify the
      indemnifying party of the commencement thereof, the indemnifying party shall
      be
      entitled to participate in and, to the extent it shall wish, to assume and
      undertake the defense thereof with counsel reasonably satisfactory to such
      indemnified party, and, after notice from the indemnifying party to such
      indemnified party of its election so to assume and undertake the defense
      thereof, the indemnifying party shall not be liable to such indemnified party
      under this Section 6 for any legal expenses subsequently incurred by such
      indemnified party in connection with the defense thereof other than reasonable
      costs of investigation and of Liaison with counsel so selected, provided
      that if
      the defendants in any such action include both the indemnified party and the
      indemnifying party and the indemnified party shall have reasonably concluded
      based upon written advise of its counsel that there may be reasonable defenses
      available to it which are different from or additional to those available to
      the
      indemnifying party or if the interests of the indemnified party reasonably
      may
      be deemed to conflict with the interests of the indemnifying party, the
      indemnified party shall have the right to select a separate counsel and to
      assume such legal defenses and otherwise to participate in the defense of such
      action, with the expenses and fees of such separate counsel and other expenses
      related to such participation to be reimbursed by the indemnifying party as
      incurred.

     

    (d) In
      order
      to provide for just and equitable contribution to joint liability under the
      Securities Act in any case in which either (i) any holder of Registrable
      Securities exercising rights under this Agreement, or any controlling person
      of
      any such holder, makes a claim for indemnification pursuant to this Section
      6
      but it is judicially determined (by the entry of a final judgment or decree
      by a
      court of competent jurisdiction and the expiration of time to appeal or the
      denial of the last right of appeal) that such indemnification may not be
      enforced in such case notwithstanding the fact that this Section 6 provides
      for
      indemnification in such case, or (ii) contribution under the Securities Act
      may
      be required on the part of any such selling holder or any such controlling
      person in circumstances for which indemnification is provided under this Section
      6; then, and in each such case, the Company and such holder will contribute
      to
      the aggregate losses, claims, damages or liabilities to which they may be
      subject (after contribution from others) in such proportion so that such holder
      is responsible for the portion represented by the percentage that the public
      offering price of its Registrable Securities offered by the Registration
      Statement bears to the public offering price of all securities offered by such
      Registration Statement, and the Company is responsible for the remaining
      portion; provided, that, in any such case, (A) no such holder will be required
      to contribute any amount in excess of the public offering price of all such
      Registrable Securities offered by it pursuant to such Registration Statement
      and
      (B) no person or entity guilty of fraudulent misrepresentation (within the
      meaning of Section 12 (f) of the Securities Act) will be entitled to
      contribution from any person or entity who was not guilty of such fraudulent
      misrepresentation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7. Changes
      in Capital Stock.
      If, and
      as often as, there is any change in the capital stock of the Company by way
      of a
      stock split, stock dividend, combination or reclassification, or through a
      merger, consolidation, reorganization or recapitalization, or by any other
      means, appropriate adjustment shall be made in the provisions hereof so that
      the
      rights and privileges granted hereby shall continue as so changed.

     

    8. Representations
      and Warranties of the Company.
      The
      Company represents and warrants to the Investors as follows:

     

    (a) The
      execution, delivery and performance of this Agreement by the Company have been
      duly authorized by all requisite corporate action and will not violate any
      provision of law, any order of any court or other agency of government, the
      Articles of Incorporation or By-laws of the Company or any provision of any
      indenture, agreement or other instrument to which it or any or its properties
      or
      assets is bound, conflict with, result in a breach of or constitute (with due
      notice or lapse of time or both) a default under any such indenture, agreement
      or other instrument or result in the creation or imposition of any lien, charge
      or encumbrance of any nature whatsoever upon any of the properties or assets
      of
      the Company or its subsidiaries.

     

    (b) This
      Agreement has been duly executed and delivered by the Company and constitutes
      the legal, valid and binding obligation of the Company, enforceable in
      accordance with its terms, subject to any applicable bankruptcy, insolvency
      or
      other laws affecting the rights of creditors generally and to general equitable
      principles and the availability of specific performance.

     

    9. Assignment
      of Registration Rights.
      The
      rights to have the Company register Registrable Securities pursuant to this
      Agreement may be assigned by the Investor to transferees or assignees of such
      securities; provided, that the Company is, within a reasonable time after such
      transfer, furnished with written notice of the name and address of such
      transferee or assignee and the securities with respect to which such
      registration rights are being assigned. The term “Investor” as used in this
      Agreement shall include such permitted assigns.

     

    10. Rule
      144 Requirements.
      The
      Company agrees to:

     

    (a) make
      and
      keep current public information about the Company available, as those terms
      are
      understood and defined in Rule 144;

     

    (b) use
      its
      commercially reasonable efforts to file with the Commission in a timely manner
      all reports and other documents required of the Company under the Securities
      Act
      and the Exchange Act (at any time after it has become subject to such reporting
      requirements); and

     

    (c) furnish
      to any holder of Registrable Securities upon request (i) a written statement
      by
      the Company as to its compliance with the reporting requirements of Rule 144
      and
      of the Securities Act and the Exchange Act (at any time after it has become
      subject to such reporting requirements), (ii) a copy of the most recent annual
      or quarterly report of the Company, and (iii) such other reports and documents
      of the Company as such holder may reasonably request to avail itself of any
      similar rule or regulation of the Commission allowing it to sell any such
      securities without registration.

     

    11. Termination.
      All of
      the Company’s obligations to register Registrable Shares under Sections 2 and 3
      hereto shall terminate upon the date on which the Investor holds no Registrable
      Securities or all of the Registrable Securities are eligible for sale under
      Rule
      144(b)(1) (without being subject to the limitations of Rule
      144(c)(1)).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12. Miscellaneous.

     

    (a) All
      covenants and agreements contained in this Agreement by or on behalf of any
      of
      the parties hereto shall bind and inure to the benefit of the respective
      successors and assigns of the parties hereto (including without limitation
      transferees of any Registrable Securities), whether so expressed or
      not.

     

    (b) All
      notices, requests, consents and other communications hereunder shall be in
      writing and shall be delivered in person, mailed by certified or registered
      mail, return receipt requested, or sent by telecopier, addressed (i) if to
      the
      Company, at AgFeed Industries, Inc., 1095 Qing Lan Avenue, Economic and
      Technical Development Zone, Nan Chang City, Jiangxi, Province, China 330013,
      Attn: Attn: Mr. Junhong Xiong, CEO, phone 86-0791-2189878, facsimile
      86-20¬87785878; and (ii) if to any holder of Registrable Securities, to it at
      such address as may have been furnished to the Company in writing by such
      holder; or, in any case, at such other address or addresses as shall have been
      furnished, in writing to the Company (in the case of a holder of Registrable
      Securities) or to the holders of Registrable Securities (in the case of the
      Company) in accordance with the provisions of this paragraph.

     

    (c) This
      Agreement shall be governed by and construed under the laws of the State of
      New
      York as applied to agreements among New York residents entered into and to
      be
      performed entirely within New York. The Company (1) agrees that any legal suit,
      action or proceeding arising out of or relating to this Agreement shall be
      instituted exclusively in New York State Supreme Court, County of New York,
      or
      in the United States District Court for the Southern District of New York,
      (2)
      waives any objection which the Company may have now or hereafter to the venue
      of
      any such suit, action or proceeding, and (3) irrevocably consents to the
      jurisdiction of the New York State Supreme Court, County of New York, and the
      United States District Court for the Southern District of New York in any such
      suit, action or proceeding. The Company further agrees to accept and acknowledge
      service of any and all process which may be served in any such suit, action
      or
      proceeding in the New York State Supreme Court, County of New York, or in the
      United States District Court for the Southern District of New York and agrees
      that service of process upon the Company mailed by certified mail to the
      Company’s address shall be deemed in every respect effective service of process
      upon the Company, in any such suit, action or proceeding. THE PARTIES HERETO
      AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
      OF
      ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT
      CONTEMPLATED HEREBY.

     

    (d) In
      the
      event of a breach by the Company or by the Investors of any of their obligations
      under this Agreement, the Investors or the Company, as the case may be, in
      addition to being entitled to exercise all rights granted by law and under
      this
      Agreement, including recovery of damages, will be entitled to specific
      performance of its rights under this Agreement. The Company and the Investors
      agree that monetary damages would not provide adequate compensation for any
      losses incurred by reason of a breach by it of any of the provisions of this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall waive the defense
      that
      a remedy at law would be adequate.

     

    (e) This
      Agreement may not be amended or modified without the written consent of the
      Company and the holder of a majority of the Registrable Securities.

     

    (f) Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof. No waiver shall be effective unless and until it is in writing
      and signed by the party granting the waiver.

     

    (g) This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument. This Agreement, once executed by a party, may be delivered to the
      other party hereto by facsimile transmission of a copy of this Agreement bearing
      the signature of the party so delivering this Agreement.

     

    (h) If
      any
      provision of this Agreement shall be held to be illegal, invalid or
      unenforceable, such illegality, invalidity or unenforceability shall attach
      only
      to such provision and shall not in any manner affect or render illegal, invalid
      or unenforceable any other provision of this Agreement, and this Agreement
      shall
      be carried out as if any such illegal, invalid or unenforceable provision were
      not contained herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i) This
      Agreement constitutes the entire contract among the Company and the Investors
      relative to the subject matter hereof and supersedes in its entirety any and
      all
      prior agreements, understandings and discussions with respect
      thereto.

     

    (j) The
      headings of the sections of this Agreement are for convenience and shall not
      by
      themselves determine the interpretation of this Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

    
      	 	
              COMPANY

            
	 	 
	 	
              AGFEED
                INDUSTRIES, INC.

            
	 	 
	 	
              By:

            	 
	 	 	
              Name:
                Li Songyan

            
	 	 	
              Title:
                Chairman

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              INVESTOR

            
	 	 
	 	
              APOLLO
                ASIA OPPORTUNITY MASTER

            
	 	
              FUND,
                L.P.

            
	 	 
	 	
              By: 
                Apollo Asia Management, L.P.

            
	 	
              By: 
                Apollo Asia management GP, LLC

            
	 	 
	 	
              By:

            	 
	 	 	
              Name:

            
	 	 	
              Title:

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              INVESTOR:

            
	 	 
	 	
              JABCAP
                MULTI-STRATEGY MASTER

            
	 	
              FUND
                LIMITED

            
	 	
              By:
                J-Invest Limited

            
	 	 
	 	 	 
	 	 	
              Name:

            
	 	 	
              Title:

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              INVESTOR:

            
	 	 
	 	
              J-INVEST
                LTD.

            
	 	 
	 	 	 
	 	 	
              Name:

            
	 	 	
              Title:

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              INVESTOR:

            
	 	 
	 	
              DEUTSCHE
                BANK AG LONDON

            
	 	 
	 	 
	 	
              Name:

            
	 	
              Title:EXHIBIT
      10.3

     

    FORM
      OF SENIOR CONVERTIBLE NOTE

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
      (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER) IN A FORM REASONABLY ACCEPTABLE
      TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
      (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. ANY
      TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE,
      INCLUDING SECTIONS 3(c)(iii) AND 16(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED
      BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF
      MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION
      3(c)(iii) OF THIS NOTE.

     

    AgFeed
      Industries, Inc.

     

    Senior
      Convertible Note

     

    
      	
              Issuance
                Date: February __, 2008

            	
              Principal:
                U.S. $_____________.__

            

    

    

    CUSIP:
      00846LAA9

    ISIN:
      US00846LAA98

    

    FOR
      VALUE RECEIVED,
      AgFeed
      Industries, Inc., a Nevada corporation (the “Company”),
      hereby promises to pay to______________________________
      or
      registered assigns (“Holder”)
      the
      amount set out above as the Principal (as reduced pursuant to the terms hereof
      pursuant to redemption, conversion or otherwise, the “Principal”)
      when
      due, whether upon the Maturity Date (as defined below), acceleration, redemption
      or otherwise (in each case in accordance with the terms hereof) and to pay
      interest (“Interest”)
      on any
      outstanding Principal at the rate of 7.00% per annum (the “Interest
      Rate”),
      from
      the date set out above as the Issuance Date (the “Issuance Date”)
      until
      the same becomes due and payable, whether upon an Interest Date (as defined
      below), the Maturity Date, acceleration, conversion, redemption or otherwise
      (in
      each case, in accordance with the terms hereof). This Senior Convertible Note
      (including all Senior Convertible Notes issued in exchange, transfer or
      replacement hereof, this “Note”)
      is one
      of an issue of Senior Convertible Notes issued pursuant to the Securities
      Purchase Agreement (as defined below) on the Closing Date (collectively, the
      “Notes”
and
      such other Senior Convertible Notes, the “Other Notes”).
      Certain capitalized terms used herein are defined in Section 26.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (1) MATURITY.
      On the
      Maturity Date, the Holder shall surrender the Note to the Company and the
      Company shall pay to the Holder an amount in cash representing all outstanding
      Principal and accrued but unpaid Interest. The “Maturity Date”
shall
      be the third anniversary of the Issuance Date, as may be extended at the option
      of the Holder (i) in the event that, and for so long as, an Event of Default
      (as
      defined in Section 4(a)) shall have occurred and be continuing or any event
      shall have occurred and be continuing which with the passage of time and the
      failure to cure would result in an Event of Default and (ii) through the date
      that is ten (10) days after the consummation of a Change of Control in the
      event
      that a Change of Control is publicly announced or a Change of Control Notice
      (as
      defined in Section 5(b)) is delivered prior to the Maturity Date.

     

    (2) INTEREST;
      INTEREST RATE.
      Interest on this Note shall commence accruing on the Issuance Date and shall
      be
      computed on the basis of a 360-day year comprised of twelve 30-day months and
      shall be payable in arrears on the first day of each February and August during
      the period beginning on the Issuance Date and ending on, and including, the
      Maturity Date (each, an “Interest Date”)
      with
      the first Interest Date being August 1, 2008. Interest shall be payable on
      each
      Interest Date in cash. 

     

    (3) CONVERSION
      OF NOTES.
      This
      Note shall be convertible into shares of the Company’s common stock, par value
      $.001 per share (the “Common
      Stock”),
      on
      the terms and conditions set forth in this Section 3.

     

    (a) Conversion
      Right.
      Subject
      to the provisions of Section 3(d), at any time or times on or after the Issuance
      Date, the Holder shall be entitled to convert all or any portion of the
      outstanding and unpaid Conversion Amount (as defined below) into fully paid
      and
      nonassessable shares of Common Stock in accordance with Section 3(c), at the
      Conversion Rate (as defined below). Upon any such conversion, the Company shall
      also pay to the Holder all accrued but unpaid Interest on the Conversion Amount
      to be converted through the Conversion Date (as defined below). The Company
      shall not issue any fraction of a share of Common Stock upon any conversion.
      If
      the issuance would result in the issuance of a fraction of a share of Common
      Stock, the Company shall round such fraction of a share of Common Stock down
      to
      the nearest whole share. The Company shall pay any and all taxes that may be
      payable with respect to the issuance and delivery of Common Stock upon
      conversion of any Conversion Amount; provided that the Company shall not be
      required to pay any tax that may be payable in respect of any transfer involved
      in the issue and delivery of Common Stock to any Person other than the Holder
      or
      with respect to any income tax due by the Holder with respect to such Common
      Stock issued upon conversion.

     

    (b) Conversion
      Rate.
      The
      number of shares of Common Stock issuable upon conversion of any Conversion
      Amount pursuant to Section 3(a) shall be determined by dividing (x) such
      Conversion Amount by (y) the Conversion Price (such number of shares, the
“Conversion
      Rate”).

     

    (i) “Conversion
      Amount”
means
      the portion of the Principal to be converted, redeemed or otherwise with respect
      to which this determination is being made.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (ii) “Conversion
      Price”
means,
      as of any Conversion Date (as defined below) or other date of determination
      a
      price equal to $10.00, subject to adjustment as provided herein.

     

    (c) Mechanics
      of Conversion.

     

    (i) Optional
      Conversion.
      To
      convert any Conversion Amount into shares of Common Stock on any date (a
“Conversion
      Date”),
      the
      Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
      on or
      prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice
      of conversion in the form attached hereto as Exhibit
      I
      (the
“Conversion
      Notice”)
      to the
      Company and (B) if required by Section 3(c)(iii), surrender this Note to a
      common carrier for delivery to the Company as soon as practicable on or
      following such date (or an indemnification undertaking reasonably satisfactory
      to the Company with respect to this Note in the case of its loss, theft or
      destruction) and (C) pay any transfer taxes or other applicable taxes or duties,
      if any, required in connection with the issuance of shares of Common Stock
      to a
      Person other than the Holder. On or before the second (2nd)
      Business Day following the date of receipt of a Conversion Notice, the Company
      shall transmit by facsimile a confirmation of receipt of such Conversion Notice
      to the Holder and the Company’s transfer agent (the “Transfer
      Agent”).
      On or
      before the third (3rd)
      Business Day following the date of receipt of a Conversion Notice (the
“Share
      Delivery Date”),
      the
      Company shall (X) provided that the Transfer Agent is participating in the
      Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer Program, credit such aggregate number of shares
      of
      Common Stock to which the Holder shall be entitled to the Holder’s or its
      designee’s balance account with DTC through its Deposit Withdrawal Agent
      Commission system or (Y) if the Transfer Agent is not participating in the
      DTC
      Fast Automated Securities Transfer Program, issue and deliver to the address
      as
      specified in the Conversion Notice a certificate, registered in the name of
      the
      Holder or its designee, for the number of shares of Common Stock to which the
      Holder shall be entitled. If this Note is physically surrendered for conversion
      as required by Section 3(c)(iii) and the outstanding Principal of this Note
      is
      greater than the Conversion Amount being converted, then the Company shall
      as
      soon as practicable and in no event later than five (5) Business Days after
      receipt of this Note and at its own expense, issue and deliver to the holder
      a
      new Note (in accordance with Section 16(d)) representing the outstanding
      Principal not converted. The Person or Persons entitled to receive the shares
      of
      Common Stock issuable upon a conversion of this Note shall be treated for all
      purposes as the record holder or holders of such shares of Common Stock on
      the
      Conversion Date. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (ii) Company’s
      Failure to Timely Convert.
      If the
      Company shall fail to issue a certificate to the Holder or credit the Holder’s
      balance account with DTC for the number of shares of Common Stock to which
      the
      Holder is entitled upon conversion of any Conversion Amount on or prior to
      the
      date which is five Business Days after the Conversion Date (a “Conversion
      Failure”),
      then
      (A) the Company shall pay in cash to the Holder on the seventh day of each
      consecutive seven day period of such Conversion Failure an amount equal to
      1.5%
      of the product of (I) the number of shares of Common Stock not issued to the
      Holder on or prior to the Share Delivery Date and to which the Holder is
      entitled, and (II) the Closing Sale Price of the Common Stock on the Share
      Delivery Date and (B) the Holder, upon written notice to the Company, may void
      its Conversion Notice with respect to, and retain or have returned, as the
      case
      may be, any portion of this Note that has not been converted pursuant to such
      Conversion Notice; provided
      that the
      voiding of a Conversion Notice shall not affect the Company’s obligations to
      make any payments which have accrued prior to the date of such notice pursuant
      to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if within
      three (3) Trading Days after the Company’s receipt of the facsimile copy of a
      Conversion Notice the Company shall fail to issue and deliver a certificate
      to
      the Holder or credit the Holder’s balance account with DTC for the number of
      shares of Common Stock to which the Holder is entitled upon such holder’s
      conversion of any Conversion Amount, and if on or after such Trading Day the
      Holder purchases (in an open market transaction or otherwise) Common Stock
      to
      deliver in satisfaction of a sale by the Holder of Common Stock issuable upon
      such conversion that the Holder anticipated receiving from the Company (a
“Buy-In”),
      then
      the Company shall, within three (3) Business Days after the Holder’s request and
      in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal
      to the Holder’s total purchase price (including brokerage commissions and other
      out-of-pocket expenses, if any) for the shares of Common Stock so purchased
      (the
“Buy-In
      Price”),
      at
      which point the Company’s obligation to deliver such certificate (and to issue
      such Common Stock) shall terminate, or (ii) promptly honor its obligation to
      deliver to the Holder a certificate or certificates representing such Common
      Stock and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (A) such number of shares of Common Stock
      times (B) the Closing Bid Price on the Conversion Date.

     

    (iii) Book-Entry.
      Notwithstanding anything to the contrary set forth herein, upon conversion
      of
      any portion of this Note in accordance with the terms hereof, the Holder shall
      not be required to physically surrender this Note to the Company unless (A)
      the
      full Conversion Amount represented by this Note is being converted or (B) the
      Holder has provided the Company with prior written notice (which notice may
      be
      included in a Conversion Notice) requesting physical surrender and reissue
      of
      this Note. The Holder and the Company shall maintain records showing the
      Principal converted and the dates of such conversions or shall use such other
      method, reasonably satisfactory to the Holder and the Company, so as not to
      require physical surrender of this Note upon conversion.

     

    (iv) Pro
      Rata Conversion; Disputes.
      If the
      Company receives a Conversion Notice from more than one holder of Notes for
      the
      same Conversion Date and the Company can convert some, but not all, of such
      portions of the Notes submitted for conversion, the Company, subject to Section
      3(d), shall convert from each holder of Notes electing to have Notes converted
      on such date a pro rata amount of such holder’s portion of its Notes submitted
      for conversion based on the principal amount of Notes submitted for conversion
      on such date by such holder relative to the aggregate principal amount of all
      Notes submitted for conversion on such date. In the event of a dispute as to
      the
      number of shares of Common Stock issuable to the Holder in connection with
      a
      conversion of this Note, the Company shall issue to the Holder the number of
      shares of Common Stock not in dispute and resolve such dispute in accordance
      with Section 21.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (d) Limitations
      on Conversions.
      

     

    (i) Beneficial
      Ownership.
      The
      Company shall not effect any conversion of this Note, and the Holder of this
      Note shall not have the right to convert any portion of this Note pursuant
      to
      Section 3(a), to the extent that after giving effect to such conversion, the
      Holder (together with the Holder’s affiliates) would beneficially own in excess
      of 9.99% (the “Maximum Percentage”)
      of the
      number of shares of Common Stock outstanding immediately after giving effect
      to
      such conversion. For purposes of the foregoing sentence, the number of shares
      of
      Common Stock beneficially owned by the Holder and its affiliates shall include
      the number of shares of Common Stock issuable upon conversion of this Note
      with
      respect to which the determination of such sentence is being made, but shall
      exclude the number of shares of Common Stock that would be issuable upon (A)
      conversion of the remaining, nonconverted portion of this Note beneficially
      owned by the Holder or any of its affiliates and (B) exercise or conversion
      of
      the unexercised or nonconverted portion of any other securities of the Company
      (including, without limitation, any Other Notes or warrants) subject to a
      limitation on conversion or exercise analogous to the limitation contained
      herein beneficially owned by the Holder or any of its affiliates. Except as
      set
      forth in the preceding sentence, for purposes of this Section 3(d)(i),
      beneficial ownership shall be calculated in accordance with Section 13(d) of
      the
      Securities Exchange Act of 1934, as amended. For purposes of this Section
      3(d)(i), in determining the number of outstanding shares of Common Stock, the
      Holder may rely on the number of outstanding shares of Common Stock as reflected
      in (x) the Company’s most recent Form 10-K, Form 10-Q or Form 8-K, as the case
      may be, (y) a more recent public announcement by the Company or (z) any other
      notice by the Company or the Transfer Agent setting forth the number of shares
      of Common Stock outstanding. For any reason at any time, upon the written or
      oral request of the Holder, the Company shall within one Business Day confirm
      orally and in writing to the Holder the number of shares of Common Stock then
      outstanding. In any case, the number of outstanding shares of Common Stock
      shall
      be determined after giving effect to the conversion or exercise of securities
      of
      the Company, including this Note, by the Holder or its affiliates since the
      date
      as of which such number of outstanding shares of Common Stock was reported.
      

     

      (ii) Principal
        Market Regulation.
        The
        Company shall not issue any shares of Common Stock upon conversion of this
        Note,
        and the Holder of this Note shall not have the right to receive upon conversion
        of this Note any shares of Common Stock (and only such shares of Common Stock),
        if the issuance of such shares of Common Stock would exceed the aggregate
        number
        of shares of Common Stock which the Company may issue upon conversion or
        exercise, as applicable, of the Notes and Warrants without breaching the
        Company’s obligations under the rules or regulations of the Principal Market
        (the “Exchange
        Cap”),
        except that such limitation shall not apply in the event that the Company
        obtains the approval of its stockholders as required by the applicable rules
        of
        the Principal Market for issuances of Common Stock in excess of such amount,
        which such approval the Company will use its best efforts to obtain. Until
        such
        approval is obtained, no purchaser of the Notes pursuant to the Securities
        Purchase Agreement (the “Purchasers”)
        shall
        be issued in the aggregate, upon conversion or exercise, as applicable, of
        Notes
        or Warrants, shares of Common Stock in an amount greater than the product
        of the
        Exchange Cap multiplied by a fraction, the numerator of which is the principal
        amount of Notes issued to the Purchasers pursuant to the Securities Purchase
        Agreement on the Closing Date and the denominator of which is the aggregate
        principal amount of all Notes issued to the Purchasers pursuant to the
        Securities Purchase Agreement on the Closing Date (with respect to each
        Purchaser, the “Exchange
        Cap Allocation”).
        In
        the event that any Purchaser shall sell or otherwise transfer any of such
        Purchaser’s Notes, the transferee shall be allocated a pro rata portion of such
        Purchaser’s Exchange Cap Allocation, and the restrictions of the prior sentence
        shall apply to such transferee with respect to the portion of the Exchange
        Cap
        Allocation allocated to such transferee. In the event that any holder of
        Notes
        shall convert all of such holder’s Notes into a number of shares of Common Stock
        that, in the aggregate, is less than such holder’s Exchange Cap Allocation, then
        the difference between such holder’s Exchange Cap Allocation and the number of
        shares of Common Stock actually issued to such holder shall be allocated
        to the
        respective Exchange Cap Allocations of the remaining holders of Notes on
        a pro
        rata basis in proportion to the aggregate principal amount of the Notes then
        held by each such holder. In avoidance of confusion, the Holder acknowledges
        that on the Closing Date of the Securities Purchase Agreement the Company
        shall
        also issue 2,444,448 shares of Common Stock in an unrelated registered offering
        pursuant to the purchase agreement dated February 22, 2008 among the investors
        named therein and the Company (the “Registration
        Shares”)
        and
        the Holder further acknowledges that the Registration Shares shall be included
        in calculating the Exchange Cap.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (e) Conversion
      Price Adjustment.
      In the
      event that the Company’s audited net income for the fiscal year ended December
      31, 2008, as reported in the Company’s Form 10-K for the year ended December 31,
      2008, as filed with the Securities and Exchange Commission (the “SEC”), is less
      than $30 million (excluding warrant accounting charges, transaction fees related
      to this offering and interest charges related to the Convertible Note), the
      then
      existing Conversion Price shall be adjusted downward by the percentage of
      shortfall in reaching the $30 million goal. By way of example, if the company
      fell 10% short of its goal of reaching $30 million, then the conversion price
      would be adjusted downward by 10% to $9.00 per share. If the Company’s audited
      net income for the fiscal year ended December 31, 2009, as reported in the
      Company’s Form 10-K for the year ended December 31, 2009, as filed with the SEC,
      is less than $40 million (excluding warrant accounting charges, transaction
      fees
      related to this offering and interest charges related to the Convertible Note),
      the then existing Conversion Price will also be adjusted downward proportionally
      to the Company’s percentage shortfall for 2009. In no event shall the aggregate
      adjustments of the Conversion Price result in a Conversion Price below $5.00
      per
      share; provided
      that the
      Conversion Price that results from any adjustment set forth in this paragraph
      shall be further adjusted to reflect any adjustment to such resulting Conversion
      Price pursuant to Section 7(a) occurring between the Subscription Date and
      the
      date of the adjustment under this paragraph. 

     

    (i) Notice
      of Adjustments.
      Whenever the Conversion Price is adjusted pursuant to this Section 3(e), the
      Company shall promptly deliver to the Holder a notice setting forth the
      Conversion Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment, provided that any failure to so provide
      such notice shall not affect the automatic adjustment hereunder.

     

    (4) RIGHTS
      UPON EVENT OF DEFAULT.

     

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

     

    (i) the
      failure of the applicable Registration Statement required to be filed pursuant
      to the Registration Rights Agreement to be declared effective by the SEC on
      or
      prior to the Effectiveness Date (as defined in the Registration Rights
      Agreement), or, while the applicable Registration Statement is required to
      be
      maintained effective pursuant to the terms of the Registration Rights Agreement,
      the effectiveness of the applicable Registration Statement lapses for any reason
      (including, without limitation, the issuance of a stop order) or is unavailable
      to any holder of the Notes for sale of all of such holder’s Registrable
      Securities (as defined in the Registration Rights Agreement) in accordance
      with
      the terms of the Registration Rights Agreement, and such lapse or unavailability
      continues for a period of fifteen (15) consecutive days or for more than an
      aggregate of twenty-five (25) Trading Days in any 365-day period (other than
      days during any grace period allowed under the Registration Rights
      Agreement);

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (ii) the
      Company’s (A) failure to cure a Conversion Failure by delivery of the required
      number of shares of Common Stock within ten (10) Business Days after the
      applicable Conversion Date or (B) notice, written or oral, to any holder of
      the
      Notes, including by way of public announcement or through any of its agents,
      at
      any time, of its intention not to comply with a permitted request for conversion
      of any Notes into shares of Common Stock that is tendered in accordance with
      the
      provisions of the Notes (other than notice delivered by the Company in good
      faith in connection with a dispute that is being resolved in accordance with
      Section 21 as to the appropriate number of shares of Common Stock to be
      delivered upon conversion of the Notes so long as the Company timely delivers
      any shares not subject to such dispute and following the resolution of such
      dispute the Company delivers such appropriate number of shares to the Holder
      within two (2) days of such resolution);

     

    (iii) the
      failure for ten (10) consecutive Business Days of the Holder’s Authorized Share
      Allocation to equal or exceed the number of shares of Common Stock that the
      Holder would be entitled to receive upon a conversion of the full Conversion
      Amount of this Note (without regard to any limitations on conversion set forth
      in Section 3(d) or otherwise); 

     

    (iv) the
      Company’s failure to pay to the Holder any amount of Principal, Interest or
      other amounts when and as due under this Note (including, without limitation,
      the Company’s failure to pay any redemption payments, premiums or other amounts
      hereunder) or any other Transaction Document (as defined in the Securities
      Purchase Agreement) except, in the case of a failure to pay Interest when and
      as
      due, in which case only if such failure continues for a period of at least
      three
      (3) Business Days after written notice thereof is delivered to the
      Company;

     

    (v) the
      Company or
      any of
      its material Subsidiaries,
      pursuant to or within the meaning of Title 11, U.S. Code, or any similar Federal
      or state law for the relief of debtors (collectively, “Bankruptcy
      Law”),
      (A)
      commences a voluntary case, (B) consents to the entry of an order for relief
      against it in an involuntary case, (C) consents to the appointment of a
      receiver, trustee, assignee, liquidator or similar official (a “Custodian”),
      (D)
      makes a general assignment for the benefit of its creditors or (E) admits in
      writing that it is generally unable to pay its debts as they become
      due;

     

    (vi) a
      court
      of competent jurisdiction enters an order or decree under any Bankruptcy Law
      that (A) is for relief against the Company in an involuntary case, (B) appoints
      a Custodian of the Company or
      any of
      its material Subsidiaries
      or (C)
      orders the liquidation of the Company or
      any of
      its material Subsidiaries;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (vii) the
      Company breaches, in any material manner, any representation, warranty, covenant
      (other than the covenants set forth in Section 12 of this Note) or other term
      or
      condition of any Transaction Document, except, in the case of a breach of a
      covenant which is curable, only if such breach continues for a period of at
      least thirty (30) consecutive days after written notice thereof is delivered
      to
      the Company;

     

    (viii) any
      breach or failure to comply with Section 12 of this Note; 

     

    (ix) an
      event
      or change in circumstances occurs that has had or could reasonably be expected
      to have a Material Adverse Effect (as defined in the Securities Purchase
      Agreement); or

     

    (x) any
      Event
      of Default (as defined in the Other Notes) occurs with respect to any Other
      Notes.

     

    (b) Redemption
      Right.
      Promptly after the occurrence of an Event of Default, the Company shall deliver
      written notice thereof via facsimile and overnight courier (an “Event
      of Default Notice”)
      to the
      Holder. At any time after the earlier of the Holder’s receipt of an Event of
      Default Notice and the Holder becoming aware of an Event of Default, any
      Required Holder may require the Company to redeem all or any portion of the
      Note
      held by such Required Holder (and, upon the consent of each Holder of Other
      Notes, all or any portion of such Other Notes) by delivering written notice
      thereof (the “Event
      of Default Redemption Notice”)
      to the
      Company, which Event of Default Redemption Notice shall indicate the portion
      of
      such Note such Required Holder is electing to redeem. Each portion of this
      Note
      subject to redemption by the Company pursuant to this Section 4(b) shall be
      redeemed by the Company at a price equal to the greater of (i) the Conversion
      Amount to be redeemed plus all accrued but unpaid Interest thereon and (ii)
      the
      product of (A) the Conversion Rate with respect to such Conversion Amount in
      effect at such time as the Holder delivers an Event of Default Redemption
      Notice, and (B) the Closing Sale Price of the Common Stock on the date
      immediately preceding such Event of Default, plus all accrued but unpaid
      interest on such Conversion Amount (the “Event
      of Default Redemption
      Price”).
      Redemptions required by this Section 4(b) shall be made in accordance with
      the
      provisions of Section 11. 

     

    (5) RIGHTS
      UPON FUNDAMENTAL TRANSACTION, CHANGE OF CONTROL AND TERMINATION OF
      TRADING.

     

    (a) Assumption.
      The
      Company shall not enter into or be party to a Fundamental Transaction unless
      (i)  the Successor Entity assumes in writing all of the obligations of the
      Company under this Note and the other Transaction Documents in accordance with
      the provisions of this Section 5(a) pursuant to written agreements in form
      and
      substance satisfactory to the Required Holders and approved by the Required
      Holders prior to such Fundamental Transaction, including agreements to deliver
      to each holder of Notes in exchange for such Notes a security of the Successor
      Entity evidenced by a written instrument substantially similar in form and
      substance to the Notes, including, without limitation, having a principal amount
      and interest rate equal to the principal amounts and the interest rates of
      the
      Notes held by such holder and having similar ranking to the Notes, and
      satisfactory to the Required Holders, and (ii) the Successor Entity
      (including its Parent Entity) is a publicly traded corporation whose common
      stock is quoted on or listed for trading on an Eligible Market. Upon the
      occurrence of any Fundamental Transaction, the Successor Entity shall succeed
      to, and be substituted for (so that from and after the date of such Fundamental
      Transaction, the provisions of this Note referring to the “Company” shall refer
      instead to the Successor Entity), and may exercise every right and power of
      the
      Company and shall assume all of the obligations of the Company under this Note
      with the same effect as if such Successor Entity had been named as the Company
      herein. Upon consummation of the Fundamental Transaction, the Successor Entity
      shall deliver to the Holder confirmation that there shall be issued upon
      conversion or redemption of this Note at
      any
      time after the consummation of the Fundamental Transaction, in lieu of the
      shares of the Company’s Common Stock (or
      other
      securities, cash, assets or other property) issuable
      upon the conversion or redemption of the Notes prior to such Fundamental
      Transaction,
      such
      shares of stock, securities, cash, assets or any other property whatsoever
      (including warrants or other purchase or subscription rights) which the Holder
      would have been entitled to receive upon the happening of such Fundamental
      Transaction had this Note been converted immediately prior to such Fundamental
      Transaction, as adjusted in accordance with the provisions of this Note.
The
      provisions of this Section shall apply similarly and equally to successive
      Fundamental Transactions and shall be applied without regard to any limitations
      on the conversion or redemption of this Note.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b) Redemption
      Right.
      No
      sooner than fifteen (15) days nor later than ten (10) days prior to the
      consummation of a Change of Control, but not prior to the public announcement
      of
      such Change of Control, the Company shall deliver written notice thereof via
      facsimile and overnight courier to the Holder (a “Change
      of Control Notice”).
      At
      any time during the period (the “Change
      of Control Period”)
      beginning after the Holder’s receipt of a Change of Control Notice and ending on
      the date of the consummation of such Change of Control (or, in the event a
      Change of Control Notice is not delivered at least ten (10) days prior to a
      Change of Control, at any time on or after the date which is ten (10) days
      prior
      to a Change of Control and ending ten (10) days after the consummation of such
      Change of Control), the Holder may require the Company to redeem all or any
      portion of this Note by delivering written notice thereof (“Change
      of Control Redemption Notice”)
      to the
      Company, which Change of Control Redemption Notice shall indicate the Conversion
      Amount the Holder is electing to redeem. The portion of this Note subject to
      redemption pursuant to this Section 5(b) shall be redeemed by the Company in
      cash at a price equal to the sum of (i) the Make-Whole Premium plus (ii) the
      Conversion Amount being redeemed plus (iii) all accrued but unpaid interest
      on
      the Conversion Amount being redeemed (the “Change
      of Control Redemption Price”).

     

    (c) Termination
      of Trading.
      Upon
      the occurrence and during the continuation of a Termination of Trading, the
      Holder may require the Company to redeem all or any portion of this Note by
      delivering written notice thereof (a “Termination
      of Trading Redemption Notice”
      and,
      together with the Event of Default Redemption Notice and the Change of Control
      Redemption Notice, the “Redemption
      Notices”
and
      each a “Redemption
      Notice”)
      to the
      Company, which Termination of Trading Redemption Notice shall indicate the
      Conversion Amount the Holder is electing to redeem. The portion of this Note
      subject to redemption pursuant to this Section 5(c) shall be redeemed by the
      Company in cash at a price equal to the sum of (i) the Make-Whole Premium plus
      (ii) the Conversion Amount being redeemed plus (iii) all accrued but unpaid
      interest on the Conversion Amount being redeemed (the “Termination
      of Trading Redemption Price”
      and,
      together with the Event of Default Redemption Price and the Change of Control
      Redemption Price, the “Redemption
      Prices”
and,
      each a “Redemption Price”).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (d) Priority
      over Stockholders.
      Redemptions required by this Section 5 shall be made in accordance with the
      provisions of Section 11 and shall have priority to payments to stockholders
      in
      connection with a Change of Control or Termination of Trading. Notwithstanding
      anything to the contrary in this Section 5, until the Change of Control
      Redemption Price or Termination of Trading Redemption Price, as the case may
      be,
      is paid in full, the Conversion Amount submitted for redemption under this
      Section 5 may be converted, in whole or in part, by the Holder into Common
      Stock, or if the Conversion Date is after the consummation of a Change of
      Control, shares of stock or equity interests of the Successor Entity
      substantially equivalent to the Company's Common Stock pursuant to Section
      3.

     

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

     

    (a) Purchase
      Rights.
      If at
      any time the Company grants, issues or sells any Options, Convertible Securities
      or rights to purchase stock, warrants, securities or other property pro rata
      to
      the record holders of any class of Common Stock (the “Purchase
      Rights”),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete conversion of this Note (without taking into account any
      limitations or restrictions on the convertibility of this Note) immediately
      before the date on which a record is taken for the grant, issuance or sale
      of
      such Purchase Rights, or, if no such record is taken, the date as of which
      the
      record holders of Common Stock are to be determined for the grant, issue or
      sale
      of such Purchase Rights.

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (7) RIGHTS
      UPON ISSUANCE OF OTHER SECURITIES.

     

    (a) Adjustment
      of Conversion Price upon Issuance of Common Stock.
      If and
      whenever on or after the Subscription Date, the Company issues or sells, or
      in
      accordance with this Section 7(a) is deemed to have issued or sold, any shares
      of Common Stock (including the issuance or sale of shares of Common Stock owned
      or held by or for the account of the Company, but excluding shares of Common
      Stock deemed to have been issued or sold by the Company in connection with
      any
      Excluded Security or for which the Holder has a participation right pursuant
      to
      Section 13) for a consideration per share (the “New Issuance
      Price”)
      less
      than a price (the “Applicable
      Price”)
      equal
      to the Conversion Price in effect immediately prior to such issue or sale (the
      foregoing a “Dilutive
      Issuance”),
      then
      immediately after such Dilutive Issuance, the Conversion Price then in effect
      shall be reduced to an amount equal to the product of (A) the Conversion Price
      in effect immediately prior to such Dilutive Issuance and (B) the quotient
      determined by dividing (1) the sum of (I) the product derived by multiplying
      the
      Conversion Price in effect immediately prior to such Dilutive Issuance and
      the
      number of shares of Common Stock Deemed Outstanding immediately prior to such
      Dilutive Issuance plus (II) the consideration, if any, received by the Company
      upon such Dilutive Issuance, by (2) the product derived by multiplying (I)
      the
      Conversion Price in effect immediately prior to such Dilutive Issuance by (II)
      the number of shares of Common Stock Deemed Outstanding immediately after such
      Dilutive Issuance; provided
      that the
      Conversion Price that results from any adjustment set forth in this paragraph
      shall be further adjusted to reflect any adjustment to such resulting Conversion
      Price pursuant to Section 3(e) occurring between the Subscription Date and
      the
      date of the adjustment under this paragraph.
      For
      purposes of determining the adjusted Conversion Price under this Section 7(a),
      the following shall be applicable:

     

    (i) Issuance
      of Options.
      If the
      Company in any manner grants or sells any Options and the lowest price per
      share
      for which one share of Common Stock is issuable upon the exercise of any such
      Option or upon conversion or exchange or exercise of any Convertible Securities
      issuable upon exercise of such Option is less than the Applicable Price, then
      such share of Common Stock shall be deemed to be outstanding and to have been
      issued and sold by the Company at the time of the granting or sale of such
      Option for such price per share. For purposes of this Section 7(a)(i), the
      “lowest price per share for which one share of Common Stock is issuable upon
      the
      exercise of any such Option or upon conversion or exchange or exercise of any
      Convertible Securities issuable upon exercise of such Option” shall be equal to
      the sum of the lowest amounts of consideration (if any) received or receivable
      by the Company with respect to any one share of Common Stock upon granting
      or
      sale of the Option, upon exercise of the Option and upon conversion or exchange
      or exercise of any Convertible Security issuable upon exercise of such Option.
      No further adjustment of the Conversion Price shall be made upon the actual
      issuance of such share of Common Stock or of such Convertible Securities upon
      the exercise of such Options or upon the actual issuance of such Common Stock
      upon conversion or exchange or exercise of such Convertible
      Securities.

     

    (ii) Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon such
      conversion or exchange or exercise thereof is less than the Applicable Price,
      then such share of Common Stock shall be deemed to be outstanding and to have
      been issued and sold by the Company at the time of the issuance of sale of
      such
      Convertible Securities for such price per share. For the purposes of this
      Section 7(a)(ii), the “price per share for which one share of Common Stock is
      issuable upon such conversion or exchange or exercise” shall be equal to the sum
      of the lowest amounts of consideration (if any) received or receivable by the
      Company with respect to any one share of Common Stock upon the issuance or
      sale
      of the Convertible Security and upon the conversion or exchange or exercise
      of
      such Convertible Security. No further adjustment of the Conversion Price shall
      be made upon the actual issuance of such share of Common Stock upon conversion
      or exchange or exercise of such Convertible Securities, and if any such issue
      or
      sale of such Convertible Securities is made upon exercise of any Options for
      which adjustment of the Conversion Price had been or are to be made pursuant
      to
      other provisions of this Section 7(a), no further adjustment of the Conversion
      Price shall be made by reason of such issue or sale.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (iii) Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the issue, conversion, exchange or exercise of any Convertible
      Securities, or the rate at which any Convertible Securities are convertible
      into
      or exchangeable or exercisable for Common Stock changes at any time, the
      Conversion Price in effect at the time of such change shall be adjusted to
      the
      Conversion Price which would have been in effect at such time had such Options
      or Convertible Securities provided for such changed purchase price, additional
      consideration or changed conversion rate, as the case may be, at the time
      initially granted, issued or sold. For purposes of this Section 7(a)(iii),
      if
      the terms of any Option or Convertible Security that was outstanding as of
      the
      Subscription Date are changed in the manner described in the immediately
      preceding sentence, then such Option or Convertible Security and the Common
      Stock deemed issuable upon exercise, conversion or exchange thereof shall be
      deemed to have been issued as of the date of such change. No adjustment shall
      be
      made pursuant to this Section 7(a) if such adjustment would result in an
      increase of the Conversion Price then in effect.

     

    (iv) Calculation
      of Consideration Received.
      In case
      any Option is issued in connection with the issue or sale of other securities
      of
      the Company, together comprising one integrated transaction in which no specific
      consideration is allocated to such Options by the parties thereto, the Options
      will be deemed to have been issued for a consideration of $.01. If any Common
      Stock, Options or Convertible Securities are issued or sold or deemed to have
      been issued or sold for cash, the consideration received therefor will be deemed
      to be the net amount received by the Company therefor. If any Common Stock,
      Options or Convertible Securities are issued or sold for a consideration other
      than cash, the amount of the consideration other than cash received by the
      Company will be the fair value of such consideration, except where such
      consideration consists of securities, in which case the amount of consideration
      received by the Company will be the Closing Sale Price of such securities on
      the
      date of receipt. If any Common Stock, Options or Convertible Securities are
      issued to the owners of the non-surviving entity in connection with any merger
      in which the Company is the surviving entity, the amount of consideration
      therefor will be deemed to be the fair value of such portion of the net assets
      and business of the non-surviving entity as is attributable to such Common
      Stock, Options or Convertible Securities, as the case may be. The fair value
      of
      any consideration other than cash or securities will be determined jointly
      by
      the Company and the Required Holders. If such parties are unable to reach
      agreement within ten (10) days after the occurrence of an event requiring
      valuation (the “Valuation
      Event”),
      the
      fair value of such consideration will be determined within five (5) Business
      Days after the tenth (10th)
      day
      following the Valuation Event by an independent, reputable appraiser jointly
      selected by the Company and the Required Holders. The determination of such
      appraiser shall be deemed binding upon all parties absent manifest error and
      the
      fees and expenses of such appraiser shall be borne by the Company. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (v) Record
      Date.
      If the
      Company takes a record of the holders of Common Stock for the purpose of
      entitling them (A) to receive a dividend or other distribution payable in Common
      Stock, Options or in Convertible Securities or (B) to subscribe for or purchase
      Common Stock, Options or Convertible Securities, then such record date will
      be
      deemed to be the date of the issue or sale of the Common Stock deemed to have
      been issued or sold upon the declaration of such dividend or the making of
      such
      other distribution or the date of the granting of such right of subscription
      or
      purchase, as the case may be.

     

    (b) Adjustment
      of Conversion Price upon Subdivision or Combination of Common
      Stock.
      If the
      Company at any time on or after the Subscription Date subdivides (by any stock
      split, stock dividend, recapitalization or otherwise) one or more classes of
      its
      outstanding shares of Common Stock into a greater number of shares, the
      Conversion Price in effect immediately prior to such subdivision will be
      proportionately reduced. If the Company at any time on or after the Subscription
      Date combines (by combination, reverse stock split or otherwise) one or more
      classes of its outstanding shares of Common Stock into a smaller number of
      shares, the Conversion Price in effect immediately prior to such combination
      will be proportionately increased.

     

    (c) Other
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section 7 but
      not expressly provided for by such provisions (including, without limitation,
      the granting of stock appreciation rights, phantom stock rights or other rights
      with equity features), then the Company’s Board of Directors will make an
      appropriate adjustment in the Conversion Price so as to protect the rights
      of
      the Holder under this Note; provided that no such adjustment will increase
      the
      Conversion Price as otherwise determined pursuant to this Section
      7.

     

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

     

    (9) RESERVATION
      OF AUTHORIZED SHARES.

     

    (a) Reservation.
      The
      Company shall initially reserve out of its authorized and unissued Common Stock
      a number of shares of Common Stock for the Notes equal to 130% of the Conversion
      Rate with respect to the Conversion Amount of each such Note as of the
      Issuance Date.
      So
      long as any of the Notes are outstanding, the Company shall take all action
      necessary to reserve and keep available out of its authorized and unissued
      Common Stock, solely for the purpose of effecting the conversion of the Notes,
      130% of the number of shares of Common Stock as shall from time to time be
      necessary to effect the conversion of all of the Notes then outstanding;
      provided that at no time shall the number of shares of Common Stock so reserved
      be less than the number of shares required to be reserved by the previous
      sentence (without regard to any limitations on conversions) (the “Required
      Reserve Amount”).
      The
      initial number of shares of Common Stock reserved for conversions of the Notes
      and each increase in the number of shares so reserved shall be allocated pro
      rata among the holders of the Notes based on the principal amount of the Notes
      held by each holder at the Closing (as defined in the Securities Purchase
      Agreement) or increase in the number of reserved shares, as the case may be
      (the
“Authorized
      Share Allocation”).
      In
      the event that a holder shall sell or otherwise transfer any of such holder’s
      Notes, each transferee shall be allocated a pro rata portion of such holder’s
      Authorized Share Allocation. Any shares of Common Stock reserved and allocated
      to any Person which ceases to hold any Notes shall be allocated to the remaining
      holders of Notes, pro rata based on the principal amount of the Notes then
      held
      by such holders.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (b) Insufficient
      Authorized Shares.
      If at
      any time while any of the Notes remain outstanding the Company does not have
      a
      sufficient number of authorized and unreserved shares of Common Stock to satisfy
      its obligation to reserve for issuance upon conversion of the Notes at least
      a
      number of shares of Common Stock equal to the Required Reserve Amount (an
“Authorized
      Share Failure”),
      then
      the Company shall immediately take all action necessary to increase the
      Company’s authorized shares of Common Stock to an amount sufficient to allow the
      Company to reserve the Required Reserve Amount for the Notes then outstanding.
      Without limiting the generality of the foregoing sentence, as soon as
      practicable after the date of the occurrence of an Authorized Share Failure,
      but
      in no event later than seventy-five (75) days after the occurrence of such
      Authorized Share Failure, the Company shall hold a meeting of its stockholders
      for the approval of an increase in the number of authorized shares of Common
      Stock. In connection with such meeting, the Company shall provide each
      stockholder with a proxy statement and shall use its reasonable best efforts
      to
      solicit its stockholders’ approval of such increase in authorized shares of
      Common Stock and to cause its board of directors to recommend to the
      stockholders that they approve such proposal.

     

    (10) HOLDER’S
      REDEMPTIONS.
      

     

    (a) The
      Company shall deliver the applicable Event of Default Redemption Price or
      Termination of Trading Redemption Price to the Holder within five (5) Business
      Days after the Company’s receipt of the Holder’s Event of Default Redemption
      Notice or Termination of Trading Redemption Notice, as the case may be. If
      the
      Holder has submitted a Change of Control Redemption Notice in accordance with
      Section 5(b), the Company shall deliver the applicable Change of Control
      Redemption Price to the Holder concurrently with the consummation of such Change
      of Control if such notice is received prior to the consummation of such Change
      of Control and within five (5) Business Days after the Company’s receipt of such
      notice otherwise. In the event of a redemption of less than all of the
      Conversion Amount of this Note, the Company shall promptly cause to be issued
      and delivered to the Holder a new Note (in accordance with Section 16(d))
      representing the outstanding Principal which has not been redeemed. If the
      Company does not pay the applicable Redemption Price to the Holder within the
      time period required, at any time thereafter and until the Company pays such
      unpaid Redemption Price in full, the Holder shall have the option, in lieu
      of
      redemption, to require the Company to promptly return to the Holder all or
      any
      portion of this Note representing the Conversion Amount that was submitted
      for
      redemption and for which the applicable Redemption Price has not been paid.
      Upon
      the Company’s receipt of such notice, (x) the Redemption Notice shall be null
      and void with respect to such Conversion Amount, (y) the Company shall
      immediately return this Note, or issue a new Note (in accordance with
      Section 16(d)) to the Holder representing such Conversion Amount and (z)
      the Conversion Price of this Note or such new Notes shall be adjusted to the
      lesser of (A) the Conversion Price as in effect on the date on which the
      Redemption Notice is voided and (B) the lowest Closing Bid Price of the Common
      Stock during the period beginning on and including the date on which the
      Redemption Notice is delivered to the Company and ending on and including the
      date on which the Redemption Notice is voided.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (b) Redemption
      by Other Holders.
      Upon
      the Company’s receipt of notice from any of the holders of the Other Notes for
      redemption or repayment as a result of an event or occurrence substantially
      similar to the events or occurrences described in Section 4(b), Section 5(b),
      5(c) or Section 9 (each, an “Other
      Redemption Notice”),
      the
      Company shall immediately, but no later than one (1) Business Day after its
      receipt thereof, forward to the Holder by facsimile a copy of such notice.
      If
      the Company receives a Redemption Notice and one or more Other Redemption
      Notices, during the seven (7) Business Day period beginning on and including
      the
      date which is three (3) Business Days prior to the Company’s receipt of the
      Holder’s Redemption Notice and ending on and including the date which is three
      (3) Business Days after the Company’s receipt of the Holder’s Redemption Notice
      and the Company is unable to redeem all principal, interest and other amounts
      designated in such Redemption Notice and such Other Redemption Notices received
      during such seven (7) Business Day period, then the Company shall redeem a
      pro
      rata amount from each holder of the Notes (including the Holder) based on the
      principal amount of the Notes submitted for redemption pursuant to such
      Redemption Notice and such Other Redemption Notices received by the Company
      during such seven Business Day period.

     

    (11) VOTING
      RIGHTS.
      The
      Holder shall have no voting rights as the holder of this Note, except as
      required by law, including, but not limited to, the General Corporation Law
      of
      the State of Nevada, and as expressly provided in this Note.

     

    (12) RANK.
      All
      payments due under this Note and the Other Notes shall be senior to all other
      current and future Indebtedness (as defined in the Securities Purchase
      Agreement) of the Company and its Subsidiaries.

     

    (13) PARTICIPATION.
      The
      Holder, as the holder of this Note, shall be entitled to receive such dividends
      paid and distributions made to the holders of Common Stock to the same extent
      as
      if the Holder had converted this Note into Common Stock (without regard to
      any
      limitations on conversion herein or elsewhere) and had held such shares of
      Common Stock on the record date for such dividends and distributions. Payments
      under the preceding sentence shall be made concurrently with the dividend or
      distribution to the holders of Common Stock. 

     

    (14) VOTE
      TO ISSUE, OR CHANGE THE TERMS OF, NOTES.
      The
      affirmative vote at a meeting duly called for such purpose or the written
      consent without a meeting of the Required Holders shall be required for any
      change or amendment to this Note or the Other Notes. Any change or amendment
      so
      approved shall be binding upon all existing and future holders of this Note
      and
      the Other Notes.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (15) TRANSFER.
      This
      Note and any shares of Common Stock issued upon conversion of this Note may
      be
      offered, sold, assigned or transferred by the Holder without the consent of
      the
      Company, subject only to the provisions of the Securities Purchase Agreement
      including, without limitation, Section 2(f) thereof.

     

    (16) REISSUANCE
      OF THIS NOTE.

     

    (a) Transfer.
      If this
      Note is to be transferred, the Holder shall surrender this Note to the Company,
      whereupon the Company will forthwith issue and deliver upon the order of the
      Holder a new Note (in accordance with Section 16(d)), registered as the Holder
      may request, representing the outstanding Principal being transferred by the
      Holder and, if less then the entire outstanding Principal is being transferred,
      a new Note (in accordance with Section 16(d)) to the Holder representing the
      outstanding Principal not being transferred. The Holder and any assignee, by
      acceptance of this Note, acknowledge and agree that, by reason of the provisions
      of Section 3(c)(iii) following conversion or redemption of any portion of this
      Note, the outstanding Principal represented by this Note may be less than the
      Principal stated on the face of this Note.

     

    (b) Lost,
      Stolen or Mutilated Note.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Note, and, in the case of loss,
      theft or destruction, of any indemnification undertaking by the Holder to the
      Company in customary form and, in the case of mutilation, upon surrender and
      cancellation of this Note, the Company shall execute and deliver to the Holder
      a
      new Note (in accordance with Section 16(d)) representing the outstanding
      Principal.

     

    (c) Note
      Exchangeable for Different Denominations.
      This
      Note is exchangeable, upon the surrender hereof by the Holder at the principal
      office of the Company, for a new Note or Notes (in accordance with Section
      16(d)
      and in principal amounts of at least $100,000) representing in the aggregate
      the
      outstanding Principal of this Note, and each such new Note will represent such
      portion of such outstanding Principal as is designated by the Holder at the
      time
      of such surrender.

     

    (d) Issuance
      of New Notes.
      Whenever the Company is required to issue a new Note pursuant to the terms
      of
      this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall
      represent, as indicated on the face of such new Note, the Principal remaining
      outstanding (or in the case of a new Note being issued pursuant to Section
      16(a)
      or Section 16(c), the Principal designated by the Holder which, when added
      to
      the principal represented by the other new Notes issued in connection with
      such
      issuance, does not exceed the Principal remaining outstanding under this Note
      immediately prior to such issuance of new Notes), (iii) shall have an
      issuance date, as indicated on the face of such new Note, which is the same
      as
      the Issuance Date of this Note, (iv) shall have the same rights and conditions
      as this Note, and (v) shall represent accrued Interest on the Principal of
      this Note, from the Issuance Date.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

    (21) DISPUTE
      RESOLUTION.
      In the
      case of a dispute as to the determination of the Closing Bid Price, the Closing
      Sale Price or the arithmetic calculation of the Conversion Rate or the
      Redemption Price, the Company shall submit the disputed determinations or
      arithmetic calculations via facsimile within one (1) Business Day of receipt,
      or
      deemed receipt, of the Conversion Notice or Redemption Notice or other event
      giving rise to such dispute, as the case may be, to the Holder. If the Holder
      and the Company are unable to agree upon such determination or calculation
      within one (1) Business Day of such disputed determination or arithmetic
      calculation being submitted to the Holder, then the Company shall, within one
      Business Day submit via facsimile (a) the disputed determination of the Closing
      Bid Price or the Closing Sale Price to an independent, reputable investment
      bank
      selected by the Company and approved by the Holder or (b) the disputed
      arithmetic calculation of the Conversion Rate or the Redemption Price to the
      Company’s independent, outside accountant. The Company, at the Company’s
      expense, shall use its commercially reasonable efforts to cause the investment
      bank or the accountant, as the case may be, to perform the determinations or
      calculations and notify the Company and the Holder of the results no later
      than
      five (5) Business Days from the time it receives the disputed determinations
      or
      calculations. Such investment bank’s or accountant’s determination or
      calculation, as the case may be, shall be binding upon all parties absent
      demonstrable error. The Company shall not be required to pay any penalty
      payments hereunder solely relating to the matter and the amount in dispute
      during the pendency of any bona fide, good faith dispute hereunder as to such
      matter. 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (22) NOTICES;
      PAYMENTS.

     

    (a) Notices.
      Whenever notice is required to be given under this Note, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Securities Purchase Agreement. The Company shall provide the Holder with
      prompt written notice of all actions taken pursuant to this Note, including
      in
      reasonable detail a description of such action and the reason therefor. Without
      limiting the generality of the foregoing, the Company will give written notice
      to the Holder (i) immediately upon any adjustment of the Conversion Price,
      setting forth in reasonable detail, and certifying, the calculation of such
      adjustment and (ii) at least twenty (20) days prior to the date on which the
      Company closes its books or takes a record (A) with respect to any dividend
      or
      distribution upon the Common Stock, (B) with respect to any pro rata
      subscription offer to holders of Common Stock or (C) for determining rights
      to
      vote with respect to any Fundamental Transaction, dissolution or liquidation,
      provided in each case that such information shall be made known to the public
      prior to or in conjunction with such notice being provided to the
      Holder.

     

    (b) Payments.
      Whenever any payment of cash is to be made by the Company to any Person pursuant
      to this Note, such payment shall be made in lawful money of the United States
      of
      America by a check drawn on the account of the Company and sent via overnight
      courier service to such Person at such address as previously provided to the
      Company in writing (which address, in the case of each of the Purchasers, shall
      initially be as set forth on the Schedule of Buyers attached to the Securities
      Purchase Agreement); provided that the Holder may elect to receive a payment
      of
      cash via wire transfer of immediately available funds by providing the Company
      with prior written notice setting out such request and the Holder’s wire
      transfer instructions. Whenever any amount expressed to be due by the terms
      of
      this Note is due on any day which is not a Business Day, the same shall instead
      be due on the next succeeding day which is a Business Day and, in the case
      of
      any Interest Date which is not the date on which this Note is paid in full,
      the
      extension of the due date thereof shall not be taken into account for purposes
      of determining the amount of Interest due on such date. 

     

    (23) CANCELLATION.
      After
      all Principal, accrued Interest and other amounts at any time owed on this
      Note
      have been paid in full, this Note shall automatically be deemed canceled, shall
      be surrendered to the Company for cancellation and shall not be
      reissued.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (24) WAIVER
      OF NOTICE.
      To the
      extent permitted by law, the Company hereby waives demand, notice, protest
      and
      all other demands and notices in connection with the delivery, acceptance,
      performance, default or enforcement of this Note and the Securities Purchase
      Agreement.

     

    (25) GOVERNING
      LAW.
      This
      Note shall be construed and enforced in accordance with, and all questions
      concerning the construction, validity, interpretation and performance of this
      Note shall be governed by, the internal laws of the State of New York, without
      giving effect to any choice of law or conflict of law provision or rule (whether
      of the State of New York or any other jurisdictions) that would cause the
      application of the laws of any jurisdictions other than the State of New
      York.

     

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

     

    (a) “Approved
      Stock Plan”
means
      any employee benefit plan which is or has been approved by the Board of
      Directors of the Company, pursuant to which the Company’s securities may be
      issued to any employee, officer or director for services provided to the
      Company.

     

    (b) “Bloomberg”
means
      Bloomberg Financial Markets.

     

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

     

    (d) “Change
      of Control”
means
      any Fundamental Transaction other than (A) a Fundamental Transaction in which
      holders of the Company’s voting power immediately prior to the Fundamental
      Transaction continue after the Fundamental Transaction to hold publicly traded
      securities and, directly or indirectly, the voting power of the surviving entity
      or entities necessary to elect a majority of the members of the board of
      directors (or their equivalent if other than a corporation) of such entity
      or
      entities, or (B) pursuant to a migratory merger effected solely for the purpose
      of changing the jurisdiction of incorporation of the Company.

     

    (e) “Closing
      Bid Price”
and
      “Closing
      Sale Price”
means,
      for any security as of any date, the last closing bid price and last closing
      trade price, respectively, for such security on the Principal Market, as
      reported by Bloomberg, or, if the Principal Market begins to operate on an
      extended hours basis and does not designate the closing bid price or the closing
      trade price, as the case may be, then the last bid price or last trade price,
      respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
      by Bloomberg, or, if the Principal Market is not the principal securities
      exchange or trading market for such security, the last closing bid price or
      last
      trade price, respectively, of such security on the principal securities exchange
      or trading market where such security is listed or traded as reported by
      Bloomberg, or if the foregoing do not apply, the last closing bid price or
      last
      trade price, respectively, of such security in the over-the-counter market
      on
      the electronic bulletin board for such security as reported by Bloomberg, or,
      if
      no closing bid price or last trade price, respectively, is reported for such
      security by Bloomberg, the average of the bid prices, or the ask prices,
      respectively, of any market makers for such security as reported in the “pink
      sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
      the Closing Bid Price or the Closing Sale Price cannot be calculated for a
      security on a particular date on any of the foregoing bases, the Closing Bid
      Price or the Closing Sale Price, as the case may be, of such security on such
      date shall be the fair market value as mutually determined by the Company and
      the Holder. If the Company and the Holder are unable to agree upon the fair
      market value of such security, then such dispute shall be resolved pursuant
      to
      Section 21. All such determinations are to be appropriately adjusted for any
      stock dividend, stock split, stock combination or other similar transaction
      during the applicable calculation period.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

    (g) “Common
      Stock Deemed Outstanding”
means,
      at any given time, the number of shares of Common Stock actually outstanding
      at
      such time, plus the number of shares of Common Stock deemed to be outstanding
      pursuant to Sections 7(a)(i) and 7(a)(ii) hereof regardless of whether the
      Options or Convertible Securities are actually exercisable at such time, but
      excluding any Common Stock owned or held by or for the account of the Company
      or
      issuable upon conversion or exercise, as applicable, of the Notes and the
      Warrants.

     

    (h) “Convertible
      Securities”
means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for Common Stock.

     

    (i) “Eligible
      Market”
means
      the Principal Market, The New York Stock Exchange, the American Stock Exchange
      or The Nasdaq Global Market.

     

    (j) “Excluded
      Securities”
means
      any Common Stock issued or issuable: (i) in connection with any Approved Stock
      Plan; (ii) upon conversion of the Notes or the exercise of the Warrants; (iii)
      pursuant to a bona fide firm commitment underwritten public offering at a price
      per share of Common Stock not less than the Conversion Price in effect at the
      time of such offering with a nationally recognized underwriter which generates
      net proceeds to the Company of at least $25 million (other than an
“at-the-market offering” as defined in Rule 415(a)(4) under the 1933 Act
      and “equity lines”) (iv) in connection with any acquisition by the Company,
      whether through an acquisition of stock or a merger of any business, assets
      or
      technologies the primary purpose of which is not to raise equity capital in
      an
      amount not to exceed, in the aggregate twenty (20%) of the outstanding shares
      of
      Common Stock in any twelve (12) month period; (v) upon conversion of any Options
      or Convertible Securities which are outstanding on the day immediately preceding
      the Subscription Date, provided that the terms of such Options or Convertible
      Securities are not amended, modified or changed on or after the Subscription
      Date; and (vi) immediately prior to or contemporaneous with the transactions
      contemplated by this Note or the Securities Purchase Agreement.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (k) “Fundamental
      Transaction”
means
      that the Company shall, directly or indirectly, in one or more related
      transactions, (i) consolidate or merge with or into (whether or not the Company
      is the surviving corporation) another Person, or (ii) sell, assign, transfer,
      convey or otherwise dispose of all or substantially all of the properties or
      assets of the Company to another Person, or (iii) be subject to an offer from
      another Person or group of related Persons (as defined in Sections 13(d) and
      14(d) of the Exchange Act) to make a purchase, tender or exchange offer that
      is
      accepted by the holders of more than the 50% of the outstanding shares of Voting
      Stock (not including any shares of Voting Stock held by the Person or Persons
      making or party to, or associated or affiliated with the Persons making or
      party
      to, such purchase, tender or exchange offer), or (iv) consummate a stock
      purchase agreement or other business combination (including, without limitation,
      a reorganization, recapitalization, spin-off or scheme of arrangement) with
      another Person or group of related Persons (as defined in Sections 13(d) and
      14(d) of the Exchange Act) whereby such other Person or group acquires more
      than
      the 50% of the outstanding shares of Voting Stock (not including any shares
      of
      Voting Stock held by the other Person or other Persons making or party to,
      or
      associated or affiliated with the other Persons making or party to, such stock
      purchase agreement or other business combination), or (v) reorganize,
      recapitalize or reclassify its Common Stock.

     

    (l) “GAAP”
means
      United States generally accepted accounting principles, consistently
      applied.

     

    (m) “Make-Whole
      Premium”
means
      an amount equal to the value of the conversion feature of this Note, determined
      using the Black-Scholes method and using a risk-free rate equal to the yield
      of
      the U.S. Treasury Swap rate with a maturity date nearest the Maturity Date
      and a
      volatility equal to the 250-day historical price volatility of the Common Stock
      prior to (i) the public announcement of the Change of Control or (ii) the
      Termination of Trading, as applicable.

     

    (n) “Options”
means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities.

     

    (o) “Note”
means
      this
      Senior Convertible Note issued pursuant to the Securities Purchase Agreement
      on
      the Closing Date.

     

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

     

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

     

    (r) “Principal
      Market”
means
      the Nasdaq Global Market.

     

    (s) “Registration
      Rights Agreement”
means
      that certain registration rights agreement dated as of the Subscription Date
      by
      and among the Company and the initial holders of the Notes relating to, among
      other things, the registration of the resale of the Common Stock issuable upon
      conversion of the Notes and exercise of the Warrants.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (t) “Required
      Holders”
means
      the holders of Notes representing at least a majority of the aggregate principal
      amount of the Notes then outstanding. 

     

    (u) “SEC”
means
      the United States Securities and Exchange Commission.

     

    (v) “Securities
      Purchase Agreement”
means
      that certain securities purchase agreement dated February 25, 2008, by and
      among
      the Company and the initial holders of the Notes pursuant to which the Company
      issued the Notes.

     

    (w) “Subscription
      Date”
means
      February __, 2008.

     

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

     

    (y) “Termination
      of Trading”
means
      the suspension from trading or failure of the Common Stock to be listed on
      an
      Eligible Market for a period of ten (10) consecutive Trading Days or for more
      than an aggregate of twenty (20) Trading Days in any 365-day
      period.

     

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

     

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

     

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

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

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

     

    

    
      	 	 	
              AgFeed
                Industries, Inc.

            
	 	 	 
	 	 	
              By:______________________________

            
	 	 	
              Name:

            
	 	 	
              Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]