SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

BY AND AMONG

ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.,
 
BARRON PARTNERS LP

AND

EOS HOLDINGS, LLC
 
DATED

FEBRUARY 25, 2008
 
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
 
This SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made and entered into as
of the 25th day of February, 2008 between Entech Environmental Technologies,
Inc., a Florida corporation (the “Company”), and each of the parties signatory
hereto (each an “Investor”, and collectively, the “Investors”).
 
RECITALS
 
WHEREAS, the Investors wish to purchase from the Company, upon the terms and
subject to the conditions of this Agreement, for the Purchase Price, as
hereinafter defined, an aggregate of (i) 2,833,333 shares of the Company’s
Series B Convertible Preferred Stock, par value $0.001 per share (“Series B
Preferred Stock”), with each share of Series B Preferred Stock being initially
convertible into one (1) share of the Company’s common stock, par value $0.001
per share (“Common Stock”), subject to adjustment, and (ii) common stock
purchase warrants to purchase Seven Million (7,000,000) shares of Common Stock
at Three Dollar ($3.00) per share (collectively, the “Warrants”).
 
WHEREAS, the Investors are purchasing Securities in the amounts set forth in
Schedule A of this Agreement;

WHEREAS, the parties intend to memorialize the terms on which the Company will
sell to the Investors and the Investors will purchase the Securities;

NOW, THEREFORE, in consideration of the mutual covenants and premises contained
herein, and for other good and valuable consideration, the receipt and adequacy
of which are hereby conclusively acknowledged, the parties hereto, intending to
be legally bound, agree as follows:

Article 1
 
INCORPORATION BY REFERENCE AND DEFINITIONS
 
1.1 Incorporation by Reference. The foregoing recitals and the exhibits and
schedules attached hereto and referred to herein, are hereby acknowledged to be
true and accurate, and are incorporated herein by this reference.
 
1.2 Supersedes Other Agreements. This Agreement, to the extent that it is
inconsistent with any other instrument or understanding among the parties, shall
supersede such instrument or understanding to the fullest extent permitted by
law. A copy of this Agreement shall be filed at the Company’s principal office.
 

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1.3 Certain Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings (all capitalized terms used
in this Agreement that are not defined in this Article 1 shall have the meanings
set forth elsewhere in this Agreement):
 
1.3.1 “4.9% Limitation” has the meaning set forth in Section 2.1.2 of this
Agreement.
 
1.3.2 “1933 Act” means the Securities Act of 1933, as amended.
 
1.3.3 “1934 Act” means the Securities Exchange Act of 1934, as amended.
 
1.3.4 “Affiliate” means a Person or Persons directly or indirectly, through one
or more intermediaries, controlling, controlled by or under common control with
the Person(s) in question. The term “control,” as used in the immediately
preceding sentence, means, with respect to a Person that is a corporation, the
right to exercise, directly or indirectly, more than 50% of the voting rights
attributable to the shares of such controlled corporation and, with respect to a
Person that is not a corporation, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
controlled Person.
 
1.3.5 “Articles” means the Articles of Incorporation of the Company, as the same
may be amended from time to time.
 
1.3.6 “Authorized Stock Proviso” has the meaning set forth in Section 4.4.3 of
this Agreement.
 
1.3.7 “Board of Directors” means the Board of Directors of the Company
 
1.3.8 “Bylaws” means the Bylaws of the Company, as the same may be amended from
time to time.
 
1.3.9 “Certificate of Designation” means the Certificate of Designations,
Preferences and Rights, with respect to the Series B Preferred Stock. The
Certificate of Designation shall be in substantially the form of Exhibit A to
this Agreement.
 
1.3.10 “Closing” means the consummation of the transactions contemplated by this
Agreement, all of which transactions shall be consummated simultaneously.
 
1.3.11 “Closing Date” shall have the meaning set forth in Section 3.1 of this
Agreement.
 
1.3.12 “Closing Escrow Agreement” shall mean the agreement between the Company,
the Investors and the Escrow Agent pursuant to which securities are deposited
into escrow to be held as provided in Section 6 of this Agreement. The Closing
Escrow Agreement shall be in substantially the form of Exhibit B to this
Agreement.
 
1.3.13 “Common Stock” means the Company’s common stock, which is presently
designated as the common stock, par value $0.001 per share.
 
1.3.14 “Company’s Governing Documents” means the Articles and Bylaws.
 
1.3.15 “Escrow Agent” means Tri-State Tile and Escrow, LLC, a Virginia limited
liability company.
 
1.3.16 “Escrow Agreement” means the Escrow Agreement dated February 7, 2008,
among the Company, the Investors and the Escrow Agent. The Escrow Agreement
shall be in substantially the form of Exhibit C to this Agreement.
 
1.3.17 “Exempt Issuance” means the issuance of (a) shares of Common Stock or
options to employees, officers, directors and consultants (other than
consultants whose services relate to the raising of funds) of the Company
pursuant to any stock or option plan that was or may be adopted by (i) a
majority of independent members of the Board of Directors or (ii) a majority of
the members of a committee of independent directors established for compensatory
purposes, (b) securities upon the exercise or conversion of any securities
issued hereunder or pursuant to other Transaction Documents, the Series B
Preferred Stock, the Warrants and the Certificate of Designation and (c), (d)
securities issued pursuant to acquisitions, licensing agreements, or other
strategic transactions provided, with respect to clause (e), any such issuance
shall only be to a Person which is, itself or through its subsidiaries, an
operating company in a business which the Board of Directors believes is
beneficial to the Company and in which the Company receives benefits in addition
to the investment of funds, but shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to
an entity whose primary business is investing in securities.
 
1.3.18 “Florida Law” shall mean the Florida Business Corporation Act, as amended
from time to time.
 
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1.3.19 “Fully Diluted Shares Outstanding” means all shares of Common Stock
issuable upon conversion of convertible securities and upon exercise of warrants
and options (whether or not vested) regardless of whether (i) such shares are
treated as outstanding for determining diluted earnings per share under GAAP,
(ii) such securities are “in the money,” or (iii) such shares may be issued as a
result of the 4.9% Limitation.
 
1.3.20 “GAAP” means United States generally accepted accounting principles
consistently applied.
 
1.3.21 “Make Good Escrow Stock” means 2,000,000 shares of Series B Preferred
Stock.
 
1.3.22 “Material Adverse Effect” means any adverse effect on the business,
operations, properties or financial condition of the Company or any of its
Subsidiaries that is material and adverse to the Company and its Subsidiaries
taken as a whole and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company or
any Subsidiary to perform any of its material obligations under this Agreement,
the Registration Rights Agreement or the Warrants or to perform its obligations
under any other material agreement.
 
1.3.23 “Person” means an individual, partnership, firm, limited liability
company, trust, joint venture, association, corporation, or any other legal
entity.
 
1.3.24 “Preferred Stock” means the Company’s authorized preferred stock, par
value $0.001 per share.
 
1.3.25 “Pre-Tax Income” means, with respect to any complete fiscal year, income
before income taxes determined in accordance with GAAP plus (a) any cash or
non-cash charges relating to the transaction contemplated by the Transaction
Documents (including, without limitation, any charges for derivative
instruments), minus (b) the amount, if any, by which all non-recurring losses or
expenses exceed all non-recurring items of income or gain. Pre-Tax Income shall
not be adjusted if all non-recurring items of income or gain exceed all
non-recurring losses or expenses. Items shall be deemed to be non-recurring only
if they qualify as non-recurring pursuant to GAAP.
 
1.3.26 “Pre-Tax Income Per Share” means with respect to a particular fiscal
year, the Pre-Tax Income for such fiscal year divided by the Fully Diluted
Shares Outstanding at the end of such fiscal year.
 
1.3.27 “Purchase Price” means the three million and four hundred thousand
dollars ($3,400,000) to be paid by the Investors to the Company for the
Securities.
 
1.3.28 “Registration Rights Agreement” means the registration rights agreement
by and among the Investors and the Company in substantially the form of Exhibit
D to this Agreement.
 
1.3.29 “Registration Statement” means the registration statement under the 1933
Act to be filed with the SEC for the registration of the Shares pursuant to the
Registration Rights Agreement.
 
1.3.30 “Required Pre-Tax Income Per Share” means with respect to a particular
fiscal year, the applicable Target Number (as defined in Section 6.16) for such
fiscal year divided by the Fully Diluted Shares Outstanding at the end of such
fiscal year.
 
1.3.31 “Restricted Stockholders” shall have the meaning set forth in Section
6.17 of this Agreement.
 
1.3.32 “Restriction Termination Date” shall mean the date on which the Investors
shall have (a) converted or sold all shares of Series B Preferred Stock and
exercised or sold all Warrants (other than Warrants that shall have expired
unexercised) and (b) sold the underlying Shares (other than the shares issuable
upon exercise of the Warrants that shall have expired unexercised) in the public
market.
 
1.3.33 “Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
 
1.3.34 “Securities” means the shares of Series B Preferred Stock, the Warrants
and the Shares.
 
1.3.35 “SEC” means the Securities and Exchange Commission.
 
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1.3.36 “SEC Documents” means, at any given time, the Company’s latest Form 10-K
or Form 10-KSB, all Forms 10-Q or 10-QSB, 8-K and all proxy statements or
information statements filed between the date the most recent Form 10-K or Form
10-KSB was filed and the date as to which a determination is being made.
 
1.3.37 “Series B Preferred Stock” means the shares of Series B Preferred Stock
having the rights, preferences and privileges and subject to the limitations set
forth in the Certificate of Designation.
 
1.3.38 “Shares” means, collectively, the shares of Common Stock issued or
issuable (i) upon conversion of the Series B Preferred Stock and (ii) upon
exercise of the Warrants.
 
1.3.39 “Share Exchange Agreement” means the share exchange agreement dated
February ___, 2008 by and among the Company, Terrence Leong, and the
shareholders of Pacific Industry Holding Group Co., Ltd..
 
1.3.40 “Subsidiary” means an entity in which the Company and/or one or more
other Subsidiaries directly or indirectly own either 50% of the voting rights or
50% of the equity interests.
 
1.3.41 “Subsequent Financing” means any offer and sale of shares of Preferred
Stock or debt that is initially convertible into shares of Common Stock or
otherwise senior or superior to the Series B Preferred Stock.
 
1.3.42 “Target Number” with respect to any fiscal year, has the meaning set
forth in Section 6.16 of this Agreement.
 
1.3.43 “Total Shares” means the number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock and exercise of the Warrants, as
adjusted from time to time in accordance with the Certificate of Designation and
the terms of the Warrants.
 
1.3.44 “Transaction Documents” means this Agreement, all schedules and exhibits
attached hereto, the Share Exchange Agreement, the Certificate of Designation,
the Warrants, the Registration Rights Agreement, the Closing Escrow Agreement,
the Escrow Agreement and all other documents and instruments to be executed and
delivered by the parties in order to consummate the transactions contemplated
hereby.
 
1.3.45 “Warrants” means the common stock purchase warrants in substantially the
form of Exhibits E-1 to this Agreement.
 
1.4 All references in this Agreement to “herein” or words of like effect, when
referring to preamble, recitals, article and section numbers, schedules and
exhibits shall refer to this Agreement unless otherwise stated.
 
Article 2

SALE AND PURCHASE OF SECURITIES; PURCHASE PRICE
 
2.1 Sale of Securities. 
 
2.1.1 Upon the terms and subject to the conditions set forth herein, and in
accordance with applicable law, the Company agrees to sell to the Investors, and
each Investor agrees to purchase from the Company, on the Closing Date, the
number of Securities and for the Purchase Price set forth after such Investor’s
name on Schedule A attached hereto. At or prior to the Closing each Investor
shall wire the portion of the Purchase Price set forth opposite such Investor’s
name on Schedule A to the Escrow Agent, who shall release the Purchase Price to
the Company upon receipt of instructions from the Investors and the Company as
provided in the Escrow Agreement. The Company shall cause the Securities to be
issued to the Investors upon the release of the Purchase Price to the Company by
the Escrow Agent pursuant to the terms of the Escrow Agreement.
 
2.1.2 Except as expressly provided in the Certificate of Designation, the
Investors shall not be entitled to convert the Series B Preferred Stock into
shares of Common Stock or to exercise the Warrants to the extent that such
conversion or exercise would result in beneficial ownership by the Investors and
their respective Affiliates of more than 4.9% of the then outstanding number of
shares of Common Stock on such date after giving effect to such conversion or
exercise. For the purposes of this Agreement, beneficial ownership shall be
determined in accordance with Section 13(d) of the 1934 Act, and Regulation
13d-3 thereunder. The limitation set forth in this Section 2.1.2 is referred to
as the “4.9% Limitation.”
 
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Article 3
 
CLOSING DATE AND DELIVERIES AT CLOSING
 
3.1 Closing Date. The Closing of the transactions contemplated by this
Agreement, unless expressly determined herein, shall be held at the offices of
Guzov Ofsink, LLC, 600 Madison Avenue, New York, New York 10022, at 2:00 P.M.
local time, on __________ or on such other date and at such other place as may
be mutually agreed by the parties, including closing by facsimile with originals
to follow (the “Closing Date”).
 
3.2 Deliveries by the Company. In addition to and without limiting any other
provision of this Agreement, the Company agrees to deliver, or cause to be
delivered, to the Escrow Agent under the Closing Escrow Agreement, the
following:
 
(a) At or prior to Closing, an executed Agreement with all exhibits and
schedules attached hereto;
 
(b) At the Closing, shares of Series B Preferred Stock and Warrants in the name
of the Investors in the numbers set forth in Schedule A to this Agreement;
 
(c) The executed Registration Rights Agreement;
 
(d) The executed Escrow Agreement and Closing Escrow Agreement;
 
(e) Copies of all SEC correspondence, if any, since the last Form 10-KSB and any
correspondence which was issued prior to the last Form 10-KSB, if any, which has
not been resolved to the satisfaction of the SEC;
 
(f) Schedule of all amounts owed (cash and stock) to officers, consultants and
key employees (salary, bonuses, etc.);
 
(g) Certifications in form and substance acceptable to the Company and the
Investors from any and all brokers or agents involved in the transactions
contemplated hereby as to the amount of commission or compensation payable to
such broker or agent as a result of the consummation of the transactions
contemplated hereby and from the Company or Investors, as appropriate, to the
effect that reasonable reserves for any other commissions or compensation that
may be claimed by any broker or agent have been set aside
 
(h) Copies of management letters from the Company’s registered independent
accounting firm issued in connection with the Company’s most recent audit;
 
(i) Evidence of approval by the Board of Directors of this Agreement and other
Transaction Documents and the transactions contemplated hereby and thereby;
 
(j) Agreements from the Restricted Stockholders pursuant to Section 6.17 of this
Agreement;
 
(k) Good standing certificate from the Secretary of State of the State of
Florida;
 
(l) Copy of the Company’s Articles and the Certificate of Designation, as
currently in effect, certified by the Secretary of State of the State of
Florida;
 
(m) An opinion from the Company’s legal counsel, Guzov Ofsink, LLC, concerning
this Agreement and other Transaction Documents and the transactions contemplated
hereby and thereby in form and substance reasonably acceptable to the Investors;
 
(n) Executed disbursement instructions pursuant to the Escrow Agreement, which
shall provide that the Escrow Agent continue to hold $100,000 to pay the
Company’s anticipated obligations to its investor relations company;
 
(o) Copies of (i) all executive employment agreements which have not been
disclosed in the Company’s Form 10-KSB for the year ended December 31, 2006,
(ii) all past and present financing documents or other documents where stock
could potentially be issued or issued as payment, (iii) all past and present
material litigation documents which have not been disclosed in the Company’s
Form 10-KSB for the year ended December 31, 2006; and
 
(p) Such other documents or certificates as shall be reasonably requested by the
Investors or their counsel.
 
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3.3 Deliveries by the Investors. In addition to and without limiting any other
provision of this Agreement, the Investors agree to deliver, or cause to be
delivered, to the Escrow Agent under the Closing Escrow Agreement, the
following:
 
(a) The Purchase Price;
 
(b) The executed Agreement with all exhibits and schedules attached hereto;
 
(c) The executed Registration Rights Agreement;
 
(d) The executed Escrow Agreement and the Closing Escrow Agreement;
 
(e) The executed disbursement instructions pursuant to the Escrow Agreement; and
 
(f) Such other documents or certificates as shall be reasonably requested by the
Company or its counsel.
 
3.4 Delivery of Original Documents. In the event any document provided to the
other party in Paragraphs 3.2 and 3.3 herein is provided by facsimile, the party
shall forward an original document to the other party within seven (7) business
days.
 
3.5 Further Assurances. The Company and the Investors shall, upon request, on or
after the Closing Date, cooperate with one other by furnishing any additional
information, executing and delivering any additional documents and/or other
instruments and doing any and all such things as may be reasonably required by
the parties or their counsel to consummate or otherwise implement the
transactions contemplated by this Agreement.
 
3.6 Waiver. The Investors may waive any of the requirements of Section 3.2 of
this Agreement, and the Company may waive any of the provisions of Section 3.3
of this Agreement. The Investors may also waive any of the requirements of the
Company under the Escrow Agreement and the Closing Escrow Agreement.
 
Article 4
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company represents and warrants to the Investors as of the date hereof and
as of Closing Date (which warranties and representations shall survive the
Closing regardless of any examinations, inspections, audits and other
investigations the Investors have heretofore made or may hereinafter make with
respect to such warranties and representations) as set forth below. The
Investors are entering into this Agreement in reliance on the representations
and warranties set forth in this Agreement and no reliance is being placed on
oral representations, if any, that may have been made prior to the execution and
delivery of this Agreement.
 
4.1 Organization and Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
and has the requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted and is
duly qualified to do business in any other jurisdiction where the nature of the
businesses conducted by it or the ownership or leasing of its properties
requires such qualification, except where the failure to be so qualified will
not have a Material Adverse Effect on the business, operations, properties,
assets, financial condition or results of operation of the Company and its
Subsidiaries taken as a whole.
 
4.2 Company’s Governing Documents. Complete and correct copies of the Company’s
Governing Documents (a) have been provided to the Investors and (b) have been
filed with the SEC in accordance with the regulations of the SEC and (c) will be
in full force and effect on the Closing Date.
 
4.3 Capitalization.
 
4.3.1 The authorized and outstanding capital stock of the Company as of the date
of this Agreement and as adjusted to reflect the issuance and sale of the
Securities pursuant to this Agreement and the other Transaction Documents is set
forth in Schedule 4.3.l to this Agreement. Schedule 4.3.1 also lists all shares
issuable pursuant to employment, consulting and other services agreements,
acquisition agreements, options and equity-based incentive plans, debt
securities, convertible securities, warrants, financing or business
relationships as well as each agreement, plan, arrangement or understanding
pursuant to which any shares of any class of capital stock may be issued (except
as previously disclosed in the Company’s filings with the SEC and except for
shares issuable hereunder or under the other Transaction Documents), a copy of
each of which has been provided to the Investors.
 
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4.3.2 All shares of capital stock to be issued pursuant to this Agreement have
been duly authorized and when issued, will be validly issued, fully paid and
non-assessable and free of preemptive rights.
 
4.3.3 Except pursuant to this Agreement, the other Transaction Documents and as
set forth in Schedule 4.3.1 or as previously disclosed in the Company’s filings
with the SEC, as of the date hereof, there are no outstanding options, warrants,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any class of capital stock of the Company, or agreements,
understandings or arrangements to which the Company is a party, or by which the
Company is or may be bound, to issue additional shares of its capital stock or
options, warrants, scrip or rights to subscribe for, calls or commitment of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, any shares of any class of its capital stock. The Company
agrees to inform the Investors in writing of any additional warrants or other
awards granted prior to the Closing Date.
 
4.4 Authority.
 
4.4.1 The Company has all requisite corporate power and authority to execute and
deliver this Agreement, the Securities, the Registration Rights Agreement, the
Escrow Agreement and any other Transaction Documents to which the Company is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement, the Securities, the Registration Rights Agreement, the Escrow
Agreement and any other Transaction Documents to which the Company is a party,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company is necessary to authorize this
Agreement or any other Transaction Document or to consummate the transactions
contemplated hereby and thereby except as disclosed in this Agreement. This
Agreement has been duly executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency and other laws of general application affecting the
enforcement of creditors’ rights and except that any granting of equitable
relief is in the discretion of the court.
 
4.4.2 The Securities, when issued pursuant to this Agreement, constitute the
legal, valid, and binding obligations of the Company enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency and other laws of general application affecting the
enforcement of creditors’ rights and except that any granting of equitable
relief is in the discretion of the court. The Certificate of Designation has
been approved by the Board of Directors. Upon the filing of the Certificate of
Designation, the Series B Preferred Stock, when issued, will be duly and validly
authorized and issued, fully paid and non-assessable. The Warrants constitute
the valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency and other laws of general application affecting the
enforcement of creditors’ rights and except that any granting of equitable
relief is in the discretion of the court. All the Securities, when so issued,
will be free and clear of all liens, charges, claims, options, pledges,
restrictions, preemptive rights, rights of first refusal and encumbrances
whatsoever (other than those, if any, incurred by the Investors).
 
4.4.3 Notwithstanding any contrary representations and warranties, no
representation is made with respect to the ability of any Investor to convert
the Series B Preferred Stock or exercise any Warrant if and to the extent that
the conversion price of the Series B Preferred Stock, as defined in the
Certificate of Designation, or the number of shares of Common Stock issuable
upon exercise of the Warrants would result in the issuance of a number of shares
of Common Stock which is greater than the amount by which the authorized shares
of Common Stock exceeds the sum of the outstanding Common Stock and the shares
of Common Stock reserved for issuance pursuant to outstanding agreements and
outstanding options, warrants, rights, convertible securities and other
securities upon the exercise or conversion of which (or pursuant to the terms of
which) additional shares of Common Stock may be issuable (the foregoing proviso
being referred to as the “Authorized Stock Proviso”).
 
4.5 No Conflict; Required Filings and Consents. Neither the issuance of the
Securities, nor the execution and delivery of this Agreement and other
Transaction Documents by the Company and the performance by the Company of its
obligations hereunder and thereunder will: (i) conflict with or violate the
Company’s or any Subsidiary’s Governing Instruments; (ii) conflict with, breach
or violate any federal, state, foreign or local law, statute, ordinance, rule,
regulation, order, judgment or decree (collectively, “Laws”) in effect as of the
date of this Agreement and applicable to the Company or any Subsidiary; or (iii)
result in any breach of, constitute a default (or an event that with notice or
lapse of time or both would become a default) under, give to any other entity
any right of termination, amendment, acceleration or cancellation of, require
payment under, or result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of their
respective properties or assets is bound, other than (with respect to clauses
(i), (ii) and (iii) above) such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens that would not, in the
aggregate, have a Material Adverse Effect and except to the extent that
stockholder approval may be required as a result of the Authorized Stock
Proviso, in which event, the Company will seek stockholder approval to effect an
increase in the authorized Common Stock sufficient to enable the Company to be
in compliance with this Section 4.5.
 
4.6 Report and Financial Statements. Set forth in Schedule 4.4 attached hereto
is Shaanxi Tianren’s audited consolidated financial statements, certified by
Child, Van Wagoner & Bradshaw, PLLC (the “Auditor”), Shaanxi Tianren’s
independent registered accounting firm. Each of the consolidated balance sheets
contained in Schedule 4.4 fairly presents the financial position of the Company,
as of its date, and each of the consolidated statements of income, stockholders’
equity and cash flows (including any related notes and schedules thereto) fairly
presents the results of operations, cash flows and changes in stockholders’
equity, as the case may be, of Shaanxi Tianren for the periods to which they
relate, in each case in accordance with GAAP consistently applied during the
periods involved. The Auditor is independent as to Shaanxi Tianren in accordance
with the rules and regulations of the SEC. The books and records of Shaanxi
Tianren and its subsidiaries have been, and are being, maintained in all
material respects in accordance applicable legal and accounting requirements and
reflect only actual transactions.
 
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4.7 Compliance with Applicable Laws. Neither the Company nor any Subsidiary is
in violation of, or, to the knowledge of the Company is under investigation with
respect to, or has been given notice or has been charged with the violation of,
any Law of a governmental agency, except for violations which individually or in
the aggregate do not have a Material Adverse Effect.
 
4.8 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
 
4.9 SEC Documents. The Investors acknowledge that the Company is a publicly held
company and has made available to the Investors upon request true and complete
copies of any requested SEC Documents. The Company has registered its Common
Stock pursuant to Section 12(d) of the 1934 Act, and the Common Stock is quoted
and traded on the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. The Company has received no notice, either oral or written, with
respect to the continued quotation or trading of the Common Stock on the OTC
Bulletin Board. The Company has not provided to the Investors any information
that, according to applicable law, rule or regulation, should have been
disclosed publicly prior to the date hereof by the Company, but which has not
been so disclosed. The SEC Documents, taken as a whole, complied in all material
respects with the requirements of the 1934 Act, and rules and regulations of the
SEC promulgated thereunder and the SEC Documents did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
 
4.10 Litigation. To the knowledge of the Company, no litigation, claim, or other
proceeding before any court or governmental agency is pending or to the
knowledge of the Company, threatened against the Company, the prosecution or
outcome of which may affect the validity of this Agreement or the right of the
Company to enter into this Agreement or to consummate the transactions
contemplated hereby.
 
4.11 [Intentionally Omitted.]
 
4.12 Exemption from Registration. Subject to the accuracy of each Investor’s
representations in Article V of this Agreement, except as required pursuant to
the Registration Rights Agreement, the sale of the Series B Preferred Stock and
Warrants by the Company to such Investor will not require registration under the
1933 Act. When issued upon conversion of the Series B Preferred Stock or upon
exercise of the Warrants in accordance with their terms, the shares of Common
Stock underlying the Series B Preferred Stock and the Warrants will be duly and
validly authorized and issued, fully paid, and non-assessable. The Company is
issuing the Series B Preferred Stock and the Warrants in accordance with and in
reliance upon the exemption from registration afforded, inter alia, by Rule 506
under Regulation D as promulgated by the SEC under the 1933 Act, and/or Section
4(2) of the 1933 Act.
 
4.13 No General Solicitation or Advertising in Regard to this Transaction.
Neither the Company nor any of its Affiliates nor, to the knowledge of the
Company, any Person acting on its or their behalf (i) has conducted or will
conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D as promulgated by the SEC under the 1933 Act) or general
advertising with respect to the sale of the Series B Preferred Stock or
Warrants, or (ii) made any offers or sales of any security or solicited any
offers to buy any security under any circumstances that would require
registration of the Series B Preferred Stock or Warrants under the 1933 Act,
except as required herein and the other Transaction Documents.
 
4.14 No Material Adverse Effect. Since December 31, 2006, no event or
circumstance resulting in a Material Adverse Effect has occurred or exists with
respect to Shaanxi Tianren. No material supplier or customer has given notice,
oral or written, that it intends to cease or reduce the volume of its business
with Shaanxi Tianren from historical levels. Since December 31, 2006, no event
or circumstance has occurred or exists with respect to Shaanxi Tianren or its
businesses, properties, operations or financial condition, that, under any
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by Shaanxi Tianren but which has not been so publicly
announced or disclosed in writing to the Investors.
 
Material Non-Public Information. The Company has not disclosed to the Investors
any material non-public information that (i) if disclosed, would reasonably be
expected to have a material effect on the price of the Common Stock or (ii)
according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof but which has not been so
disclosed. After the Closing Date, the Company shall not communicate with Barron
in any way, including phone conversations, e-mails, and all other forms of
communication, any material information which is not already disclosed in
previously filed SEC documents. If after the Closing, the Company provides
Barron material non-public information, the Company will within 24 hours file a
report on Form 8-K or on another appropriate form of report to disclose that
information to the general public.

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4.15 Internal Controls And Procedures. Shaanxi Tianren maintains books and
records and internal accounting controls which provide reasonable assurance that
(i) all transactions to which Shaanxi Tianren is a party or by which its
properties are bound are executed with management’s authorization; (ii) the
recorded accounting of the Company’s consolidated assets is compared with
existing assets at regular intervals; (iii) access to Shaanxi Tianren’s
consolidated assets is permitted only in accordance with management’s
authorization; and (iv) all transactions to which Shaanxi Tianren is a party or
by which any of its properties are bound are recorded as necessary to permit
preparation of the financial statements of the Tianren in accordance with the
applicable accounting rules, and with respect to any such financial statements
prepared for the fiscal years 2005 and 2005 and the interim period ended
September 30, 2007, in accordance with GAAP.
 
4.16 Full Disclosure. No representation or warranty made by the Company in this
Agreement and no certificate or document furnished to the Investors pursuant to
this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained herein or
therein, taken as a whole and in the light of the circumstances under which they
were made herein or therein, not misleading.
 
Article 5
 
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
 
Each Investor represents and warrants to the Company as of the date hereof and
as of Closing Date (which warranties and representations shall survive the
Closing regardless of any examinations, inspections, audits and other
investigations the Company has heretofore made or may hereinafter make with
respect to such warranties and representations) as set forth below:
 
5.1 Concerning the Investor. The state in which any offer to purchase shares
hereunder was made or accepted by the Investor is the state shown as the
Investor’s address. The Investor was not formed for the purpose of investing
solely in the Securities.
 
5.2 Authorization and Power. The Investor has the requisite corporate power and
authority to execute and deliver this Agreement, the Registration Rights
Agreement, the Escrow Agreement and any other Transaction Documents to which it
is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement by the Investor and the consummation
by the Investor of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Investor is necessary to authorize the foregoing agreements
or to consummate the transactions contemplated hereby or thereby. This
Agreement, the Registration Rights Agreement, the Escrow Agreement, the Closing
Escrow Agreement and the other Transaction Documents to which it is a party have
been duly executed and delivered by the Investor and at the Closing shall
constitute legal, valid and binding obligations of the Investor enforceable
against the Investor in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency and other laws of general application
affecting the enforcement of creditors’ rights and except that any granting of
equitable relief is in the discretion of the court.
 
5.3 No Conflicts. The execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Escrow Agreement and the other Transaction
Documents to which the Investor is a party, and the consummation by the Investor
of the transactions contemplated hereby or thereby or relating hereto or thereto
do not and will not (i) result in a violation of the Investor’s charter
documents or bylaws where appropriate or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument to which
the Investor is a party, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to the Investor or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have a
Material Adverse Effect on the Investor). The Investor is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of the Investor’s obligations under this Agreement, the Registration Rights
Agreement, the Closing Escrow Agreement, the Escrow Agreement and the other
Transaction Documents to which the Investor is a party, or to purchase the
Securities from the Company in accordance with the terms hereof.
 
5.4 Financial Risks. The Investor acknowledges that the Investor is able to bear
the financial risks associated with an investment in the Securities being
purchased by the Investor from the Company and that it has been given full
access to such records of the Company and its Subsidiaries and to the officers
of the Company and its Subsidiaries as it has deemed necessary or appropriate to
conduct its due diligence investigation. The Investor is capable of evaluating
the risks and merits of an investment in the securities being purchased by the
Investor from the Company by virtue of its experience as an investor and its
knowledge, experience, and sophistication in financial and business matters and
the Investor is capable of bearing the entire loss of its investment in the
securities being purchased by the Investor from the Company.
 
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5.5 Accredited Investor. The Investor is (i) an “accredited investor” as that
term is defined in Rule 501 of Regulation D promulgated under the 1933 Act by
reason of Rule 501(a)(3) and (6), (ii) experienced in making investments of the
kind and under the terms and conditions described in this Agreement and the
other Transaction Documents, (iii) able, by reason of the business and financial
experience of its officers (if an entity) and professional advisors (who are not
affiliated with or compensated in any way by the Company or any of its
affiliates or selling agents), to protect its own interests in connection with
the transactions described in this Agreement and the other Transaction
Documents, (iv) able to afford the entire loss of its investment in the
securities being purchased by the Investor from the Company.
 
5.6 Brokers. Except as set forth on Schedule 5.6, no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
Commission in connection with the transactions contemplated by this Agreement
and the other Transaction Documents based upon arrangements made by or on behalf
of the Investor.
 
5.7 Knowledge of Company. The Investor and its advisors, if any, have been, upon
request, furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
securities being purchased by the Investor from the Company. The Investor and
its advisors, if any, have been afforded the opportunity to ask questions of the
Company and have received complete and satisfactory answers to any such
inquiries.
 
5.8 Risk Factors. The Investor understands that the Investor’s investment in the
securities being purchased by the Investor from the Company involves a high
degree of risk. The Investor understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the securities being purchased by the Investor
from the Company. The Investor warrants that the Investor is able to bear the
complete loss of its investment in the securities being purchased by the
Investor from the Company.
 
5.9 Full Disclosure. No representation or warranty made by the Investor in this
Agreement and no certificate or document furnished to the Company pursuant to
this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading. Except as set forth or referred to in this Agreement,
the Investor does not have any agreement or understanding with any person
relating to acquiring, holding, voting or disposing of any securities of the
Company.
 
Article 6 
 
COVENANTS OF THE COMPANY
 
6.1 Reservation of Shares. As of the date hereof, the Company has reserved and
the Company shall continue to reserve and keep available at all times, free of
preemptive rights, the maximum number of Shares for the purpose of enabling the
Company to issue the shares issuable on conversion of the Series B Preferred
Stock and on exercise of the Warrants without giving effect to any adjustments.
 
6.2 Compliance with Laws. The Company hereby agrees to comply in all material
respects with the Company’s reporting, filing and other obligations under the
securities Laws.
 
6.3 Exchange Act Registration. The Company will continue its obligation to
report to the SEC under Section 12 of the 1934 Act and will use its best efforts
to comply in all material respects with its reporting and filing obligations
under the 1934 Act, and will not take any action or file any document (whether
or not permitted by the 1934 Act or the rules thereunder) to terminate or
suspend any such registration or to terminate or suspend its reporting and
filing obligations under the 1934 except as permitted under the Transaction
Documents until the Investors have disposed of all of their Shares.
 
6.4 Corporate Existence; No Conflicting Agreements. The Company will take all
steps necessary to preserve and continue the corporate existence of the Company.
The Company shall not enter into any agreement, the terms of which agreement
would restrict or impair the right or ability of the Company to perform any of
its obligations under this Agreement or any of the other agreements attached as
exhibits hereto.
 
6.5 Listing, Securities Exchange Act of 1934 and Rule 144 Requirements. The
Company shall not take any action or file any document (whether or not permitted
by the Securities Act or the rules promulgated thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act except as permitted under
the Transaction Documents. The Company will take all action necessary to
continue the quotation or listing of its Common Stock on the OTC Bulletin Board
or other exchange or market on which the Common Stock is trading or may be
traded in the future. If, for any time after the Closing, the Company is no
longer no longer regulated by the Securities Exchange Act of 1934 or is not a
fully reporting Company, then, subject to the limit set forth in Section 6.27,
the Company shall pay to the Investors, pro rata, as liquidated damages and not
as a penalty, an amount equal to fourteen percent (14%) of the Purchase Price
per annum, payable monthly in cash calculated based on the number of days that
the Company shall not be in compliance with this Section 6.5. Subject to the
terms of the Transaction Documents, the Company further covenants that it will
take such further action as the Investors may reasonably request, all to the
extent required from time to time to enable the Investors to sell the Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144. Upon the request of an Investors, the Company
shall deliver to such Investor a written certification of a duly authorized
officer as to whether it has complied with such requirements.
 
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6.6 Preferred Stock. On or prior to the Closing Date, the Company will cause to
be canceled all preferred stock in the Company with the exceptions of Preferred
Stock issued to the Investors. For a period of three years from the Closing
Date, for so long as the Investors shall continue to beneficially own 20% of the
Series B Preferred Stock issued hereunder, the Company will not issue any
preferred stock of the Company with the exception of Preferred Stock issued to
the Investors.
 
6.7 Convertible Debt. On or prior to the Closing Date, the Company will cause to
be cancelled all convertible debt in the Company. For a period of three years
from the Closing Date, for so long as the Investors shall continue to
beneficially own 20% of the Series B Preferred Stock issued hereunder, the
Company will not issue any convertible debt.
 
6.8 [Intentionally omitted.]
 
6.9 No Outside Interests. Until the Restriction Termination Date, the Company’s
chairman, chief executive officer, chief financial officer will not have any
business interests or activities other than as the Company’s, except that they
may devote time which shall not be material and which shall not interfere with
his duties as the Company’s chief executive officer, to personal passive
investments and charitable and community activities.
 
6.10 Debt Limitation. Until the expiration of two (2) years from the Closing
Date, at any given date, the Company’s debt-to- EBITDA ratio shall not exceed
3.5:1 for the most recent 12-months period.
 
6.11 Independent Directors. No later than sixty (60) days after the Closing
Date, the Company shall increase the size of the Board to five or seven and
shall cause the appointment of the majority of the Board of Directors to be
independent directors, as defined by the rules of the Nasdaq Stock Market. If,
for any time after the Closing, the Company is no longer in compliance with this
Section 6.11, then, subject to the limit set forth in Section 6.27, the Company
shall pay to the Investors, pro rata, as liquidated damages and not as a
penalty, an amount equal to fourteen percent (14%) of the Purchase Price per
annum, payable monthly in cash as calculated based on the number of days that
the Company shall not be in compliance with this Section 6.11.
 
6.12 Independent Directors on Audit and Compensation Committees. No later than
sixty (60) days after the Closing Date, the Company shall have an audit
committee comprised solely of not less than three independent directors and a
compensation committee comprised of not less than three directors, a majority of
whom are independent directors. If, for any time after the Closing, the Company
is no longer in compliance with this Section 6.12, then, subject to the limit
set forth in Section 6.27, the Company shall pay to the Investors, pro rata, as
liquidated damages and not as a penalty, an amount equal to fourteen percent
(14%) of the Purchase Price per annum, payable monthly in cash as calculated
based on the number of days that the Company shall not be in compliance with
this Section 6.12.
 
6.13 Use of Proceeds. The Company will use the net proceeds from the sale of the
Securities, after payment of legal fees and other closing costs, for
acquisitions, working capital and other general corporate purposes.
 
6.14 Right of First Refusal.
 
6.14.1 In the event that the Company seeks to raise additional funds through a
private placement of its securities, other than Exempt Issuances and issuances
of the Company’s securities in a firm underwritten IPO as to which this section
does not apply (a “Proposed Financing”), for a period of thirty-six months after
the Closing provided that the Investors shall continue to beneficially own in
the aggregate at least 20% of Series B Preferred Sock or the Common Stock issued
thereunder, the Investors shall have the right to participate in such private
placement at the offering price so long as such participation does not exceed
the total Purchase Price hereunder.
 
6.14.2 The terms on which the Investors shall purchase securities pursuant to
the Proposed Financing shall be the same as such securities are purchased by
other investors. The Company shall give the Investors the opportunity to
participate in the offering by giving the Investors not less than ten (10) days
notice setting forth the terms of the Proposed Financing. In the event that the
terms of the Proposed Financing are changed in a manner which is more favorable
to the other potential investors, the Company shall provide the Investors, at
the same time as the notice is provided to the other potential investors, with a
new ten (10) day notice setting forth the revised terms that are provided to the
other potential investors.
 
6.14.3 In the event that the Investors do not exercise its right to participate
in the Proposed Financing within the time limits set forth in Section 6.14.2 of
this Agreement, the Company may sell the securities in the Proposed Financing at
a price and on terms which are no more favorable to the other potential
investors than the terms provided to the Investors. If the Company subsequently
changes the price or terms so that the price or other terms is more favorable to
the other potential investors, the Company shall provide the Investors with the
opportunity to purchase the securities on the revised terms in the manner set
forth in Section 6.14 of this Agreement.
 
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6.15 Price Adjustment. For so long as the Investors shall hold at least 20% of
the Series B Preferred Stock issued hereunder (except for Exempt Issuances not
to exceed 5% of the outstanding shares of Common Stock for every two year period
and other issuances as to which this Section 6.15 does not apply pursuant to the
Certificate of Designations), if the Company closes on the sale or issuance of
Common Stock at a sale price, or warrants, options, convertible debt or equity
securities with a exercise or conversion price per share which is less than the
Conversion Price (as defined in the Certificate of Designation) then in effect,
the Conversion Price in effect from and after the date of such transaction shall
be adjusted in accordance with the terms of the Certificate of Designations.
 
6.16 Deliveries from Escrow Based on Pre-Tax Income Per Share.
 
6.16.1 The Company hereby represents to the Investors that (A) the Company’s
consolidated Pre-Tax Income for the fiscal year ending December 31, 2007 shall
be at least RMB 67,400,000 (or the Required Pre-Tax Income Per Share) (the “2007
Target Number”), and (B) the Company’s consolidated Pre-Tax Income for the
fiscal year ending December 31, 2008 shall be at least RMB 84,924,000 (or the
Required Pre-Tax Income Per Share), (the “2008 Target Number”), (C) the
Company’s consolidated Pre-Tax Income for the fiscal year ending December 31,
2009 shall be at least RMB 107,004,240 (or the Required Pre-Tax Income Per
Share).   As the Investors are relying on such expected profit in making its
investment hereunder, and in order to attempt to make whole the Investors in the
event these numbers are not met, the Company shall deliver to the Escrow Agent
at the Closing the Make Good Escrow Stock. In the event the Company’s
consolidated Pre-Tax income, on a fully-diluted basis, for the year ended
December 31, 2007, 2008 or 2009 is less than the Target Numbers the percentage
shortfall shall be determined by dividing the amount of the shortfall by the
applicable Target Number. The Parties hereby agree that:
 
6.16.1.1 If the Percentage Shortfall the fiscal year 2007is greater than 50%,
then the Escrow Agent shall deliver to the Investors all of the Make Good Escrow
Stock according to the Investors’ Ownership Percentages. An Investor’s Ownership
Percentage Shall be the ratio of such Investor’s initial Purchase Price to the
total purchase price of all Shares in this Transaction.  If the percentage
shortfall for 2007 is less than fifty percent (50%), then the adjustment
percentage shall be determined. The adjustment percentage shall mean the
percentage that the percentage shortfall bears to fifty percent (50%). The
Escrow Agent shall deliver to an Investor according to such Investor’s Ownership
Percentage of such number of shares of Series B Preferred Stock as is determined
by multiplying the adjustment percentage by Make Good Escrow Stock and retain
the balance. For example, if the percentage shortfall is 20%, the adjustment
percentage would be 40%, and 40% of the Make Good Escrow Shares would be
delivered to the Investors, with the balance being retained by the Escrow
Agent. 
 
6.16.1.2 If the percentage shortfall for 2008 is equal to or greater than fifty
percent (50%), then the Escrow Agent shall deliver all of the remaining Make
Good Escrow Stock then held by the Escrow Agent to the Investors according to
the each Investor’s Ownership Percentage. If the percentage shortfall for 2008
is less than fifty percent (50%), then the adjustment percentage for 2008 shall
be determined. The adjustment percentage shall mean the percentage that the
percentage shortfall bears to fifty percent (50%). The maximum number of shares
to be delivered shall be determined by multiplying the initial Make Good Escrow
Shares. The number of shares to be delivered to the Investors shall be the
lesser of the number of shares of Make Good Escrow Stock then held by the Escrow
Agent or the number of shares determined by the preceding sentence. The Escrow
Agent shall deliver to the Investors the number of shares of Make Good Escrow
Stock as is determined pursuant to this Section 6.16.1.2 according to the
Investor’s Ownership Percentage.
 
6.16.1.3 If the percentage shortfall for 2009 is equal to or greater than fifty
percent (50%), then the Escrow Agent shall deliver all of the remaining Make
Good Escrow Stock then held by the Escrow Agent to the Investors according to
each Investor’s Ownership Percentage. If the percentage shortfall for 2009 is
less than fifty percent (50%), then the adjustment percentage for 2009 shall be
determined. The adjustment percentage shall mean the percentage that the
percentage shortfall bears to fifty percent (50%). The maximum number of shares
to be delivered shall be determined by multiplying the adjustment percentage by
initial Make Good Escrow Shares. The number of shares to be delivered to the
Investors shall be the lesser of the number of shares of Make Good Escrow Stock
then held by the Escrow Agent or the number of shares determined by the
preceding sentence. The Escrow Agent shall deliver to the Investors the number
of shares of Make Good Escrow Stock as is determined pursuant to this Section
6.16.1.3 according to each Investor’s Ownership Percentage.
 
6.16.1.4 Notwithstanding anything to the contrary set forth herein, an Investor
is only entitled to Make Good Escrow Stock if the Investor owns shares of Series
B Preferred acquired under the Purchase Agreement and remains shareholders of
the Company at the time that any Make Good Escrow Stock becomes deliverable
hereunder.
 
6.16.2 The distribution of shares of Common Stock pursuant to this Section 6.16
shall be made within seven (7) business days after the date the Company is
required to file its Form 10-KSB for the applicable fiscal year with the SEC. In
the event that the Company does not file its Form 10-KSB for the year ended
December 31, 2007 or 2008 with the SEC within thirty (30) days after the date
that filing was required, after giving effect to any extension pursuant to Rule
12b-25 of the Exchange Act, all of the remaining shares Make Good Escrow Stock
shall be delivered to the Investors.
 
6.16.3 The parties understand that, pursuant to the Escrow Agreement, the Escrow
Agent will not make any deliveries of shares without the signed written
instructions from the Company and the Investors. 
 
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6.17 Insider Selling. No Restricted Stockholders (as defined below) may sell any
shares of Common Stock in the public market prior to the earlier of thirty six
(36) months from date the Registration Statement is deemed effective;.
“Restricted Stockholders” shall mean any Person who is an officer, director or
Affiliate of the Company on the date hereof or who becomes an officer or
director of the Company subsequent to the Closing Date. The Company shall
require any newly elected officer or director to agree to the restriction set
forth in this Section 6.17. Andrew Barron Worden and the Investors shall not be
considered “Restricted Stockholders”.
 
6.18 Non Compete. The Company and any affiliated or related entities, and any
all of the officers and directors of the Company may not be involved in any
business or ventures which in any way may be deemed to be competitive or have a
similar nature in any way to the business of the Company unless such activity is
fully within the Company.
 
6.19 Chief Financial Officer. No later than thirty (30) days after the Closing
Date, the Company shall hire a chief financial officer who speaks and
understands both English and Chinese and is familiar with GAAP (a “qualified
CFO”). If, for any time after the Closing, the Company is no longer in
compliance with this Section 6.19 the Company shall pay to the Investors, pro
rata, as liquidated damages and not as a penalty, an amount equal to fourteen
percent (14%) of the Purchase Price per annum, payable monthly in cash or Series
B Preferred Stock at the option of the Investors, such payment shall be based on
the number of days that such condition exists. Notwithstanding the foregoing,
the Company shall, by Closing, engage an accounting consultant, which may be an
accounting firm, that has experience in preparing financial statements for
public companies and in advising public companies on the implementation of
internal controls as required by the 1934 Act, and shall continue to engage such
firm as a consultant until not earlier than the date on which the Company shall
have both (i) filed two consecutive annual reports with the SEC on time and
without requesting an extension, and (ii) filed a registration statement
pursuant to the Registration Rights Agreement and shall have responded to all
accounting comments raised by the staff of the SEC to the satisfaction of the
accounting examiner at the SEC.
 
6.20 Employment and Consulting Contracts. For three years after the Closing, the
Company shall obtain approval from the majority of the independent directors of
the Board of Directors that any awards other than salary are customary,
appropriate and reasonable for any officer, director or consultants whose
compensation is more than $100,000 per annum. This Section 6.20 does not apply
to attorneys, accountants and other persons who provide professional services to
the Company. This section shall only apply for so long as that the Investors
shall continue to beneficially own in the aggregate at least 20% of Series B
Preferred Sock issued hereunder.
 
6.21 Subsequent Transactions. From the date hereof until such time as no
Purchaser holds any of the Securities, the Company shall be prohibited from
effecting or entering into an agreement to effect any transaction involving a
“Variable Rate Transaction” or an “MFN Transaction” (each as defined below). The
term “Variable Rate Transaction” shall mean a transaction in which the Company
issues or sells (i) any debt or equity securities that are convertible into,
exchangeable or exercisable for, or include the right to receive additional
shares of Common Stock either (A) at a conversion, exercise or exchange rate or
other price that is based upon and/or varies with the trading prices of or
quotations for the shares of Common Stock at any time after the initial issuance
of such debt or equity securities, or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the occurrence of
specified or contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock. The term “MFN Transaction” shall
mean a transaction in which the Company issues or sells any securities in a
capital raising transaction or series of related transactions which grants to an
investor the right to receive additional shares based upon future transactions
of the Company on terms more favorable than those granted to such investor in
such offering. The Investors shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy shall be in
addition to any right to collect damages. Notwithstanding the foregoing, this
Section 6.21 shall not apply in respect of an Exempt Issuance, except that no
Variable Rate Transaction or MFN Transaction shall be an Exempt Issuance.
 
6.22 Certificate of Designation. The Board of Directors has approved the
Certificate of Designation. The Company shall file the Certificate of
Designation with the Secretary of State of the State of Florida prior to the
Closing.
 
6.23 Amendment to Certificate of Incorporation. At or before the next annual
meeting of the stockholders of the Company, the Board of Directors shall propose
and submit to the holders of the Common Stock for approval, an amendment to the
Certificate of Incorporation that provides substantially as follows:
 
“Subject to the applicable laws of Florida, the terms and conditions of any
rights, options and warrants approved by the Board of Directors may provide that
any or all of such terms and conditions may be waived or amended only with the
consent of the holders of a designated percentage of a designated class or
classes of capital stock of the Corporation (or a designated group or groups of
holders within such class or classes, including but not limited to disinterested
holders), and the applicable terms and conditions of any such rights, options or
warrants so conditioned may not be waived or amended absent such consent.”.
 
6.24 Stock Splits. Except as permitted or required under the Transaction
Documents, all forward and reverse stock splits shall effect all equity and
derivative holders proportionately.
 
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6.25 Retention of Investor Relations Firm. The Company shall instruct the Escrow
Agent to retain $100,000 of the proceeds of the sale of the Securities hereunder
to be utilized for payment to investor relations firms in approximately equal
quarterly installments. The Company shall retain an investor relations firm
within 30 days after the Closing Date. If at any time after 30 days from the
Closing, the Company shall not have retained an investor relations and public
relations firm, the Company shall pay to the Investors, pro rata, as liquidated
damages and not as a penalty, an amount equal to fourteen percent (14%) per
annum of the Purchase Price for the Shares payable monthly in cash or Series B
Preferred Stock at the option of the Investors, such payment shall be based on
the number of days that such condition exists.
 
6.26 Payment of Due Diligence Expenses. At Closing the Escrow Agent shall
disperse to Barron Partners, LLC the sum of seventy five thousand dollars
($75,000.00) for its due diligence expenses.
 
6.27 Shares Issued as Liquidated Damages. Notwithstanding anything provided in
this Agreement, the Warrants and the Registration Rights Statement to the
contrary, in no event, shall the aggregate liquidated damages payable by the
Company under this Agreement, the Warrant and the Registration Rights Agreement
exceed eighteen (18%) of the total Purchase Price. If, pursuant to any Section
of this Agreement and the Registration Rights Agreement, liquidated damages are
incurred by the Company and are payable by the Company to the Investors in cash
and the Company shall have failed to pay the Investors within 15 days following
the end of the month when such cash liquidated damages shall have become due,
then, at the election of the Investors, shares of Series B Preferred Stock are
to be delivered as liquidating damages to the Investors pro rata based on the
percentage that the number of Series B Preferred Stock beneficially owned by
such Investor bears to the total number of Series B Preferred Stock outstanding
at the time when the cash liquidated damages are due. The number of shares due
will be calculated by taking amount of liquidating damages due in dollars and
divide it by $1.2 per share and further divide it by the Conversion Ratio, as
set forth in the Certificate of Designation, which initially shall be 1 for 1.
For example if $12,000 worth of liquidating damages are due, each share of
Preferred B Stock is convertible into 1 share of Common Stock, then the number
of Preferred B Stock received shall be 10,000 shares.
 
6.28 Management Agreements and Consolidation of Financials. Within 30 days
following the Closing Date, the Company shall cause Shaanxi Tianren Food
Company, Ltd., its indirect subsidiary in the People’s Republic of China
(“Tianren Food”), to (i) extend the term of its current management agreement
with HuLuDao WanJia Factory (the “HuLuDao WanJia Agreement”) to 20 years under
the terms and conditions similar to those in the current management agreement,
and (ii) enter into a management agreement with YinKou Trusty Factory under the
terms and conditions similar to those in the HuLuDao WanJia Agreement. When it
becomes legally and financially feasible, the Company shall cause Shaanxi
Tianren to make arrangements, including without limitation, acquisition
arrangements, with HuLuDao WanJia Factory and YinKou Trusty Factory so that
after giving effect to such arrangements, the financials of HuLuDao WanJia
Factory and YinKou Trusty Factory can be consolidated into the Company’s
financials in accordance with the principles of the US GAAP.
 
6.29 Amendment of Articles of Incorporation. The Company agrees that it shall,
in good faith, promptly take any and all such action as may, in the opinion of
its counsel, be necessary to effect the Reverse Split (as defined in the
Certificate of Designations of the Series B Preferred Stock). In the event the
Reverse Split is not effected within 120 days following the Closing Date, then,
subject to the limit set forth in Section 6.27, the Company shall pay to the
Investors, pro rata, as liquidated damages and not as a penalty, an amount equal
to one (1%) of the Purchase Price per month, payable monthly in cash as
calculated based on the number of days that the Company shall not be in
compliance with this Section 6.29.
 
Article 7 
 
COVENANTS OF THE INVESTORS
 
Each Investor covenants and agrees with the Company as follows:
 
7.2 Compliance with Law. The Investor’s trading activities with respect to
Company’s Common Stock will be in compliance with all applicable state and
federal securities laws, rules and regulations and rules and regulations of any
public market on which the Common Stock is listed.
 
7.3 Limitation on Short Sales. The Investor and its Affiliates shall not engage
in short sales of the Company's Common Stock.
 
7.4 Transfer Restrictions. The Investor acknowledges that (a) the Securities
have not been registered under the provisions of the 1933 Act, and may not be
transferred unless (i) subsequently registered thereunder or (ii) the Investor
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; and (b) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of said rule
and further, if said rule is not applicable, any resale of such securities under
circumstances in which the seller, or the person through whom the sale is made,
may be deemed to be an underwriter, as that term is used in the 1933 Act, may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder.
 
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7.5 Restrictive Legend. The Investor acknowledges and agrees that the Securities
shall bear a restrictive legend and a stop-transfer order may be placed against
transfer of any such Securities except that the requirement for a restrictive
legend shall not apply to Shares sold pursuant to a current and effective
registration statement or a sale pursuant Rule 144.
 
Article 8 
 
CONDITIONS PRECEDENT TO THE COMPANY’S OBLIGATIONS
 
The obligation of the Company to consummate the transactions contemplated hereby
shall be subject to the fulfillment, on or prior to Closing Date, of the
following conditions:
 
8.1 No Termination. This Agreement shall not have been terminated pursuant to
Article 10 hereof.
 
8.2 Representations True and Correct. The representations and warranties of the
Investor contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as if made
on as of the Closing Date.
 
8.3 Compliance with Covenants. The Investor shall have performed and complied in
all material respects with all covenants, agreements, and conditions required by
this Agreement to be performed or complied by them prior to or at the Closing
Date.
 
8.4 No Adverse Proceedings. On the Closing Date, no action or proceeding shall
be pending by any public authority or individual or entity before any court or
administrative body to restrain, enjoin, or otherwise prevent the consummation
of this Agreement or any Transaction Documents or the transactions contemplated
hereby or thereby or to recover any damages or obtain other relief as a result
of the transactions proposed hereby or thereby.
 
8.5 Shareholder Consent. On the Closing Date, shareholders of the Company
holding at least a majority of shares of the Company’s Common Stock immediately
prior to the Closing shall have consented to the Reverse Split (as defined in
the Certificate of Designations of the Series B Preferred Stock).
 
Article 9 
 
CONDITIONS PRECEDENT TO INVESTORS’ OBLIGATIONS
 
The obligation of the Investors to consummate the transactions contemplated
hereby shall be subject to the fulfillment, on or prior to Closing Date unless
specified otherwise, of the following conditions:
 
9.1 No Termination. This Agreement shall not have been terminated pursuant to
Article 10 hereof.
 
9.2 Representations True and Correct. The representations and warranties of the
Company contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as if made
on as of the Closing Date.
 
9.3 Compliance with Covenants. The Company shall have performed and complied in
all material respects with all covenants, agreements, and conditions required by
this Agreement to be performed or complied by it prior to or at the Closing
Date.
 
9.4 No Adverse Proceedings. On the Closing Date, no action or proceeding shall
be pending by any public authority or individual or entity before any court or
administrative body to restrain, enjoin, or otherwise prevent the consummation
of this Agreement or any Transaction Document or the transactions contemplated
hereby or thereby to recover any damages or obtain other relief as a result of
the transactions proposed hereby or thereby.
 
9.5 Shareholder Consent. On the Closing Date, shareholders of the Company
holding at least a majority of shares of the Company’s Common Stock immediately
prior to the Closing shall have consented to the Reverse Split (as defined in
the Certificate of Designations of the Series B Preferred Stock).
 
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Article 10  
 
TERMINATION, AMENDMENT AND WAIVER
 
10.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date.
 
10.1.1 by mutual written consent of the Investors and the Company;
 
10.1.2 by the Company upon a material breach of any representation, warranty,
covenant or agreement on the part of the Investors set forth in this Agreement,
or by the Investors upon a material breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company or the Investors, respectively,
shall have become untrue, in either case such that any of the conditions set
forth in Article 8 or Article 9 hereof would not be satisfied (a “Terminating
Breach”), and such breach shall, if capable of cure, not have been cured within
ten (10) business days after receipt by the party in breach of a notice from the
non-breaching party setting forth in detail the nature of such breach.
 
10.2 Effect of Termination. Except as otherwise provided herein, in the event of
the termination of this Agreement pursuant to Section 10.1 hereof, there shall
be no liability on the part of the Company or the Investors or any of their
respective officers, directors, agents or other representatives and all rights
and obligations of any party hereto shall cease, provided that in the event of a
Terminating Breach, the breaching party shall be liable to the non-breaching
party for all costs and expenses incurred by the non-breaching party not to
exceed $50,000.00.
 
10.3 Amendment. This Agreement may be amended by the parties hereto any time
prior to the Closing Date by an instrument in writing signed by the parties
hereto; provided, however that the 4.9% Limitation may not be amended or waived.
 
10.4 Waiver. At any time prior to the Closing Date, the Company or the
Investors, as appropriate, may: (a) extend the time for the performance of any
of the obligations or other acts of the other party or; (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto which have been made to it or them; or (c)
waive compliance with any of the agreements or conditions contained herein for
its or their benefit other than the 4.9% Limitation which may not be waived. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
 
Article 11 
 
GENERAL PROVISIONS
 
11.1 Transaction Costs Except as otherwise provided herein, each of the parties
shall pay all of his or its costs and expenses (including attorney fees and
other legal costs and expenses and accountants’ fees and other accounting costs
and expenses) incurred by that party in connection with this Agreement;
provided, the Company shall pay Barron Partners, LLC the due diligence expenses
as described in Section 6.26.
 
11.2 Indemnification.
 
11.2.1 The Investors agree to jointly and severally indemnify, defend and hold
the Company (following the Closing Date) and its officers, directors,
representatives and agents harmless against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities or damages,
including interest, penalties and reasonable attorney’s fees, that any of them
shall incur or suffer, which arise out of or result from any breach of this
Agreement by the Investors or failure by the Investors to perform with respect
to the representations, warranties or covenants contained in this Agreement or
in any exhibit or other instrument furnished or to be furnished under this
Agreement.
 
11.2.2 The Company agrees to indemnify, defend and hold the Investors (following
the Closing Date) harmless against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities or damages, including
interest, penalties and reasonable attorney’s fees, that it shall incur or
suffer, which arise out of, result from or relate to any breach of this
Agreement or failure by the Company to perform with respect to the
representations, warranties or covenants contained in this Agreement or in any
exhibit or other instrument furnished or to be furnished under this Agreement.
 
In no event shall the Company or the Investors be entitled to recover
consequential or punitive damages resulting from a breach or violation of this
Agreement nor shall any party have any liability hereunder in the event of gross
negligence or willful misconduct of the indemnified party. The indemnification
by the Investors shall be limited to $50,000.00.
 
11.3 Headings. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
 
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11.4 Entire Agreement. This Agreement (together with the schedule, exhibits, and
agreements and documents referred to herein) constitute the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof.
 
11.5 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given (i) on the date they are delivered if
delivered in person; (ii) on the date initially received if delivered by
facsimile transmission or electronic mail followed by registered or certified
mail confirmation; (iii) on the date delivered by an overnight courier service;
or (iv) on the third business day after it is mailed by registered or certified
mail, return receipt requested with postage and other fees prepaid as follows:
 
If to the Company:
 
Entech Environmental Technologies, Inc.
c/o Shaanxi Tianren Food Company, Ltd.
Attn: Mr. Yongke Xue
A-4/F Tongxinge, Xietong Building, No.12,
Gaoxin 2nd Road, Hi&Tech Zone,
Xi'an, Shaanxi,710065
Email: xyk666@163.com 
Fax: 88386656-86
 
With a copy to, which copy shall not constitute a notice to the Company

Guzov Ofsink, LLC
600 Madison
New York, New York 10022
Attention: Darren Ofsink
E-mail: dofsink@golawintl.com
Fax: (212) 688-7273
 
If to Barron:
 
Barron Partners L.P.
c/o Barron Capital Advisors, LLC
730 Fifth Avenue, 25th Floor
New York, New York 10019
Attn: Andrew Barron Worden
E-mail: abw@barronpartners.com and onf@barronpartners.com
Fax: (212) 359-0222
 
If to EOS Holdings LLC
 
Eos Holdings LLC:
2560 Highvale Dr
Las Vegas, NV 89134
Attn: Jon R. Carnes
E-mail: jcarnes@eosfunds.com

11.6 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any such term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.
 
11.7 Binding Effect. All the terms and provisions of this Agreement whether so
expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective administrators, executors, legal
representatives, heirs, successors and assignees.
 
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11.8 Preparation of Agreement. This Agreement shall not be construed more
strongly against any party regardless of who is responsible for its preparation.
The parties acknowledge each contributed to and is equally responsible for its
preparation. In
 
11.9 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
applicable principles of conflicts of law.
 
11.10 Jurisdiction; Waiver of Jury Trial. If any action is brought among the
parties with respect to this Agreement or otherwise, by way of a claim or
counterclaim, the parties agree that in any such action, and on all issues, the
parties irrevocably waive their right to a trial by jury. Exclusive jurisdiction
and venue for any such action shall be the federal and state courts situated in
the City, County and State of New York. In the event suit or action is brought
by any party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court if such party prevails on substantially all issues in dispute.
 
11.11 Preparation and Filing of Securities and Exchange Commission filings. The
Investors shall reasonably assist and cooperate with the Company in the
preparation of all filings with the SEC after the Closing Date due after the
Closing Date.
 
11.12 Further Assurances, Cooperation. Each party shall, upon reasonable request
by the other party, execute and deliver any additional documents necessary or
desirable to complete the transactions herein pursuant to and in the manner
contemplated by this Agreement. The parties hereto agree to cooperate and use
their respective best efforts to consummate the transactions contemplated by
this Agreement.
 
11.13 Survival. The representations, warranties, covenants and agreements made
herein shall survive the Closing of the transaction contemplated hereby.
 
11.14 Third Parties. Except as disclosed in this Agreement, nothing in this
Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the
parties hereto and their respective administrators, executors, legal
representatives, heirs, successors and assignees. Nothing in this Agreement is
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any third
persons any right of subrogation or action over or against any party to this
Agreement.
 
11.15 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay
on the part of any party hereto in the exercise of any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty, covenant or agreement herein, nor shall
nay single or partial exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
 
Counterparts. This Agreement may be executed in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement. A facsimile transmission or
transmission via electronic mail of a PDF version of this signed Agreement shall
be legal and binding on all parties hereto.
 
[SIGNATURES ON FOLLOWING PAGE]
 
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IN WITNESS WHEREOF, the Investors and the Company have as of the date first
written above executed this Agreement.
 
THE COMPANY:
   
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
   
By: 
/s/ Joseph I. Emas
Name: 
Joseph I. Emas
Title:
Director

INVESTORS:
 
BARRON PARTNERS LP
 
By: Barron Capital Advisors, LLC, its General Partner
 
/s/ Andrew Barron Worden
Andrew Barron Worden, President

 
EOS HOLDINGS, LLC
   
By:
/s/ Jon Carnes
Name: 
Jon Carnes
Title: 
President

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Schedule A
 
Name and Address
 
Amount of Investment
 
Number of Shares
of Series B Preferred Stock
 
Number of
Shares Underlying Series B Preferred Stock
 
Number of Shares
Underlying $3.00 Warrants
                     
Barron Partners LP
730 Fifth Avenue, 25th Floor
New York, New York 10019
Attn: Andrew Barron Worden
 
$
3,300,000
   
2,750,000
   
2,750,000
   
6,794,118
                             
EOS Holdings, LLC
 
$
100,000
   
83,333
   
83,333
   
205,882
 

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Exhibit A
 
Form of Certificate of Designation of Preferences, Rights and Limitations

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Exhibit B

Closing Escrow Agreement

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Exhibit C

Escrow Agreement

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Exhibit D

Registration Rights Agreement

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Exhibit E-1

$3.00 Warrants

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