SECURITIES PURCHASE AGREEMENT
 
THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of June 30,
2008, by and among Environment Ecology Holding Co. of China a Florida
corporation, with headquarters located at 391 Hun Yu Lane, Dong Xin Street,
Xi’an, Shaanxi Province, P.R. China (the “Company”), and Trafalgar Capital
Specialized Investment Fund, Luxembourg   (the “Buyer”).
 
WITNESSETH:
 
WHEREAS, the Company and the Buyer are executing and delivering this Agreement
in reliance upon an exemption from securities registration pursuant to Section
4(2) and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by the U.S.
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933,
as amended (the “1933 Act”);
 
WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Buyer(s), as provided
herein, and the Buyer(s) shall purchase up to Six Million Dollars ($6,000,000)
of secured convertible redeemable debentures (the “Debentures”), of which: (a)
Two Million Five Hundred Thousand Dollars ($2,500,000) shall be funded on the
date hereof (the “First Closing”) and (b) up to an additional Three Million Five
Hundred Thousand Dollars ($3,500,000) shall be funded at the discretion of the
Buyer following the request of the Company (the “Second Closing”) (each
individually referred to as a “Closing” collectively referred to as the
“Closings”)for a total purchase price of up to Six Million Dollars ($6,000,000),
(the “Purchase Price”). For the avoidance of doubt, there shall be no non-usage
fees or obligation to fund or request any amount beyond that funded at the First
Closing; and
 
WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit A (the “Registration Rights
Agreement”) pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
there under, and applicable state securities laws; and
 
WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering Irrevocable Transfer Agent
Instructions substantially in the form attached hereto as Exhibit B (the
“Irrevocable Transfer Agent Instructions”); and
 
WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Security Agreement
substantially in the form attached hereto as Exhibit C, (the “Security
Agreement”) pursuant to which the Company has agreed to provide the Buyer a
security interest in Pledged Property (as this term is defined in the Security
Agreement dated the date hereof) to secure Company’s obligations under this
Agreement, the Debenture, the Registration Rights Agreement, the Security
Agreement and the Irrevocable Transfer Agent Instructions (collectively, the
“Transaction Documents”) or any other obligations of the Company to the Buyer;
 
NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Buyer hereby agree as follows:
 
1. PURCHASE AND SALE OF DEBENTURES.
 
(a) Purchase of Debentures.  Subject to the satisfaction (or waiver) of the
terms and conditions of this Agreement, the Buyer agrees to purchase at the
Closings (as defined herein) and the Company agrees to sell and issue to the
Buyer, at such Closings, Debentures in amounts corresponding purchased at such
Closings.   The Debentures purchased by Buyer shall have a maturity date of two
(2) years from the First Closing.  Upon execution hereof by Buyer, the Buyer
shall wire transfer the portion of the Purchase Price necessary to purchase the
Debentures to be acquired in the First Closing to: “James G. Dodrill II, P.A. as
Escrow Agent for Trafalgar – Environment Ecology” (“Escrow Agent”).  If the
Buyer and Seller agree to consummate the Second Closing, the Buyer shall wire
transfer the portion of the Purchase Price necessary to purchase the Debentures
to be acquired in the Second Closing to Escrow Agent.
 
(b) Closing Dates.  The First Closing of the purchase and sale of the Debentures
shall take place on the date hereof, subject to notification of satisfaction of
the conditions to the First Closing set forth herein and in Sections 6 and 7
below (or such later date as is mutually agreed to by the Company and the
Buyer(s)) (the “First Closing Date”).   The Second Closing of the purchase and
sale of the Debentures shall occur only if requested by the Company and upon the
consent of the Buyer, at which time such Second Closing take place on a date
mutually agreed to by the Company and Buyer, subject to notification of
satisfaction of the conditions to the Second Closing set forth herein and in
Sections 6 and 7 below (or such later date as is mutually agreed to by the
Company and the Buyer(s)) (the “Second Closing Date”) (collectively referred to
a the “Closing Dates”).  The Closings shall occur on their respective Closing
Dates at the offices of James G. Dodrill II, P.A., 5800 Hamilton Way, Boca
Raton, FL  33496 (or such other place as is mutually agreed to by the Company
and the Buyer(s).
 
(c) Escrow Arrangements; Form of Payment.  Upon execution hereof by Buyer and
pending the Closings and disbursement, the Purchase Price for the Debentures to
be purchased at the First Closing shall be deposited in an escrow account (the
“Escrow Account”) with James G. Dodrill II, P.A., as escrow agent (the “Escrow
Agent”), pursuant to the terms of the Escrow Agreement.  Subject to the
satisfaction of the terms and conditions of this Agreement, on the First Closing
Date, (i) the Escrow Agent shall deliver to the Company in accordance with the
terms of the Escrow Agreement that portion of the Escrow Funds (as that term is
defined in the Escrow Agreement) equal to the gross amount of the Debentures
being purchased by the Buyer on the First Closing Date as set forth on  Schedule
I (minus the fees and expenses as set forth herein which shall be paid directly
from the Escrow Funds at such Closing) by wire transfer of immediately available
funds and (ii) the Company shall deliver to the Buyer, Debentures which the
Buyer is purchasing duly executed on behalf of the Company.  Prior to the Second
Closing Date, the Buyer shall deposit the Purchase Price for the Debentures to
be purchased at such Closings into the Escrow Account.  Subject to the
satisfaction of the terms and conditions of this Agreement, on the Second
Closing Date (i) the Escrow Agent shall deliver to the Company in accordance
with the terms of the Escrow Agreement that portion of the Escrow Funds (as that
term is defined in the Escrow Agreement) equal to the gross amount of the
Debentures being purchased by the Buyer on such Closing Date (minus the fees and
expenses as set forth herein which shall be paid directly from the Escrow Funds
at such Closing) by wire transfer of immediately available funds and (ii) the
Company shall deliver to the Buyer, Debentures which such Buyer(s) is purchasing
duly executed on behalf of the Company along with the shares of Common Stock to
be issued pursuant to Section 4(f) hereof.
 
 (d)           The Debentures shall contain provisions that provide that in the
event the Euro strengthens against the U.S. Dollar during the life of the
Debenture, the Buyer shall be afforded an adjustment to compensate for any such
movement in either conversions or redemptions.   
 
2. BUYER’S REPRESENTATIONS AND WARRANTIES.
 
The Buyer represents and warrants that:
 
(a) Investment Purpose.  The Buyer is acquiring the Debentures for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act.
 
(b) Accredited Investor Status.  The Buyer is an “Accredited Investor” as that
term is defined in Rule 501(a)(3) of Regulation D.
 
(c) Reliance on Exemptions.  The Buyer understands that the Debentures are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Buyer’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to acquire
such securities.
 
(d) Information.  The Buyer and its advisors (and his or, its counsel), if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and information he deemed material to making an
informed investment decision regarding his purchase of the Debentures, which
have been requested by such Buyer.  The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and its
management.  Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its representatives shall
modify, amend or affect such Buyer’s right to rely on the Company’s
representations and warranties contained in Section 3 below.  The Buyer
understands that its investment in the Debentures involves a high degree of
risk.  The Buyer is in a position regarding the Company, which, based upon
employment, family relationship or economic bargaining power, enabled and
enables such Buyer to obtain information from the Company in order to evaluate
the merits and risks of this investment.  The Buyer has sought such accounting,
legal and tax advice, as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Debentures.
 
(e) No Governmental Review.  The Buyer 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 Debentures, or the fairness or
suitability of the investment in the Debentures, nor have such authorities
passed upon or endorsed the merits of the offering of the Debentures.
 
(f) Transfer or Resale.  The Buyer understands that: (i) the Debentures have not
been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, or (B) such Buyer shall have delivered to
the Company an opinion of counsel, in a generally acceptable form, to the effect
that such securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration requirements;
(ii) any sale of such securities made in reliance on Rule 144 under the 1933 Act
(or a successor rule thereto) (“Rule 144”) may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
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
defined in the 1933 Act) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
 
 
 

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(g) Legends.  The Buyer understands that the certificates or other instruments
representing the Debentures and all certificates or other instruments
representing the shares of the Company’s common stock into which the Debentures
are converted shall bear a restrictive legend in substantially the following
form (and a stop ­transfer order may be placed against transfer of such
certificates):
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, GENERALLY ACCEPTABLE TO COMPANY’S
COUNSEL, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS.
 
The legend set forth above shall be removed and the Company within three (3)
business days shall issue a certificate without such legend to the holder of the
security upon which it is stamped, if, unless otherwise required by state
securities laws, (i) in connection with a sale transaction, provided the
securities are registered under the 1933 Act or (ii) in connection with a sale
transaction, after such holder provides the Company with an opinion of counsel,
which opinion shall be in form, substance and scope reasonably acceptable to
counsel for the Company, to the effect that a public sale, assignment or
transfer of the securities may be made without registration under the 1933 Act.
 
(h) Authorization, Enforcement.  This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyer enforceable in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
 
(i) Receipt of Documents.  The Buyer and his or its counsel has received and
read in their entirety:  (i) this Agreement and each representation, warranty
and covenant set forth herein, and the Transaction Documents; (ii) all due
diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; and (iii)
answers to all questions the Buyer submitted to the Company regarding an
investment in the Company; and the Buyer has relied on the information contained
therein and has not been furnished any other documents, literature, memorandum
or prospectus.
 
(j) Due Formation Buyer.  If the Buyer is a corporation, trust, partnership or
other entity that is not an individual person, it has been formed and validly
exists and has not been organized for the specific purpose of purchasing the
Debentures and is not prohibited from doing so.
 
(k) No Legal Advice From the Company.  The Buyer acknowledges, that it had the
opportunity to review this Agreement and the transactions contemplated by this
Agreement with his or its own legal counsel and investment and tax
advisors.  The Buyer is relying solely on such counsel and advisors and not on
any statements or representations of the Company or any of its representatives
or agents for legal, tax or investment advice with respect to this investment,
the transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
 
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
 
Except as otherwise provided in the Company Disclosure Schedule delivered
herewith, the Company represents and warrants as of the date hereof and as of
the Closing Date to the Buyer that:
 
(a) Organization and Qualification.  The Company and its subsidiaries are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted.  Each of the Company and its subsidiaries is duly qualified as
a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
 
(b) Authorization, Enforcement, Compliance with Other Instruments.  (i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Transaction Documents, and any related agreements,
and to issue the Debentures in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, the Transaction Documents and
any related agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Debentures, have been duly authorized by the Company’s Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders, (iii) this Agreement, the
Transaction Documents and any related agreements have been duly executed and
delivered by the Company, (iv) this Agreement, the Transaction Documents and any
related agreements constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.  The Company knows of no reason why the Company cannot perform any of
the Company’s obligations under this Agreement or the Transaction Documents.
 
(c) Capitalization.  The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, par value $0.001 per share and shares of
preferred stock, par value $0.001 per share.  As of the date hereof (not
including any shares issued pursuant to this transaction), the Company has
30,662,114 shares of Common Stock issued and outstanding and 100,000 shares of
preferred stock issued and outstanding.  All of such outstanding shares have
been validly issued and are fully paid and nonassessable.  No shares of Common
Stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company.  As of the date of this
Agreement, other than as disclosed in the attached schedule 3(c), (i) there are
no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act and (iv) there
are no outstanding registration statements and there are no outstanding comment
letters from the SEC or any other regulatory agency.  There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Debentures as described in this Agreement.  The
Company has furnished to the Buyer true and correct copies of the Company’s
Articles of Incorporation, as amended and as in effect on the date hereof (the
“Articles of Incorporation”), and the Company’s By-laws, as in effect on the
date hereof (the “By-laws”), and the terms of all securities convertible into or
exercisable for Common Stock and the material rights of the holders thereof in
respect thereto other than stock options issued to employees and consultants.
 
(d) Issuance of Securities.  The Debentures are duly authorized and, upon
issuance in accordance with the terms hereof, shall be duly issued, fully paid
and nonassessable, are free from all taxes, liens and charges with respect to
the issue thereof.
 
(e) No Conflicts.  The execution, delivery and performance of this Agreement,
the Transaction Documents and any related agreements by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
will not (i) result in a violation of the Articles of Incorporation or the
By-laws or (ii), to the best knowledge of the Company, 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 Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including United States federal and state securities laws and regulations and
the rules and regulations of The OTC Bulletin Board on which the Common Shares
are quoted) applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected.  To the best knowledge of the Company, neither the Company nor its
subsidiaries is in violation of any term of or in default under its Articles of
Incorporation or By-laws or their organizational charter or by-laws,
respectively, or, any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries.  The business of the
Company and its subsidiaries is not being conducted, and shall not be conducted
in violation of any material law, ordinance, or regulation of any governmental
entity.  Except as specifically contemplated by this Agreement and as required
under the 1933 Act and any applicable state securities laws, the Company 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 its obligations under or contemplated by this
Agreement in accordance with the terms hereof.  All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof, except for any required post-Closing notice filings under
applicable United States federal or state securities laws, if any.
 
(f) SEC Documents: Financial Statements.  Except as set forth on the attached
schedule, since June 1, 2006 the Company has filed, or furnished, as applicable,
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC under the Exchange Act (the foregoing materials,
including the exhibits and schedules thereto, and such financial statements and
documents incorporated by reference therein, being hereinafter referred to as
the “SEC Documents”).  The Company has delivered to the Buyer or its
representatives, or made available through the SEC’s website at
http://www.sec.gov, true and complete copies of the SEC Documents.  As of their
respective dates, the financial statements of the Company included in the SEC
Documents (the “Financial Statements”) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto as in effect at the time of filing.  Such financial statements have been
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such Financial Statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and, fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
 
 
 

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(g)  No Material Misstatement or Omission.  None of the Company’s SEC Documents
at the time of filing, none of the materials provided to the Buyer by the
Company and none of the representation and warranties made in this Agreement or
any of the other  Transaction Documents include any untrue statements of
material fact, nor do the Company’s SEC Documents at the time of filing and none
of the representations and warranties made in this Agreement or any of the other
Transaction Documents omit to state any material fact required to be stated
therein necessary to make the statements made, in light of the circumstances
under which they were made, not misleading.
 
(h) Absence of Litigation.  There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby or (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the Transaction Documents have a
material adverse effect on the business, operations, properties, financial
condition or results of  operations of the Company and its subsidiaries taken as
a whole.
 
(i) Acknowledgment Regarding Buyer’s Purchase of the Debentures.  The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereby.  The Company further acknowledges that the Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by the Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to such Buyer’s purchase of the
Debentures.  The Company further represents to the Buyer that the Company’s
decision to enter into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
 
(j) No General Solicitation.  Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the 1933 Act) in connection with the offer or sale of the Debentures.
 
(k) No Integrated Offering.  Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the Debentures under the
1933 Act or cause this offering of the Debentures to be integrated with prior
offerings by the Company for purposes of the 1933 Act.
 
(l) Employee Relations.  Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened.  None of the Company’s or its
subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are good.
 
(m) Intellectual Property Rights.  The Company and its subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted.  The Company and its subsidiaries do not have any knowledge of any
infringement by the Company or its subsidiaries of trademark, trade name rights,
patents, patent rights, copyrights, inventions, licenses, service names, service
marks, service mark registrations, trade secret or other similar rights of
others, and, to the knowledge of the Company there is no claim, action or
proceeding being made or brought against, or to the Company’s knowledge, being
threatened against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service mark registrations, trade secret or other infringement;
and the Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
 
(n) Environmental Laws.  The Company and its subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
 
(o) Title.  Any real property and facilities held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
 
(p) Insurance.  The Company and each of its current and future acquired
subsidiaries are or will be upon acquisition by the Company insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its subsidiaries are engaged.  Neither the
Company nor any such subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a whole.
 
(q) Regulatory Permits.  The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
 
(r) Internal Accounting Controls.  The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
and (iii) the recorded amounts for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
 
(s) No Material Adverse Breaches, etc.  Neither the Company nor any of its
subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a material adverse
effect on the business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries.  Neither the Company
nor any of its subsidiaries is in breach of any contract or agreement which
breach, in the judgment of the Company’s officers, has or is expected to have a
material adverse effect on the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
subsidiaries.
 
(t) Tax Status.  The Company and each of its subsidiaries has made and filed all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject and (unless and only to the
extent that the Company and each of its subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) has paid all taxes and other governmental assessments and charges that
are material in amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply.  There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.
 
(u) Certain Transactions.  Except for arm’s length transactions pursuant to
which the Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from third parties and other
than the grant of stock options or stock grants disclosed to the Buyer, none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
 
(v) Fees and Rights of First Refusal.  The Company is not obligated to offer the
securities offered hereunder on a right of first refusal basis or otherwise to
any third parties including, but not limited to, current or former shareholders
of the Company, underwriters, brokers, agents or other third parties.
 
 
 

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4. COVENANTS.
 
(a) Best Efforts.  Each party shall use its best efforts timely to satisfy each
of the conditions to be satisfied by it as provided in Sections 6 and 7 of this
Agreement.
 
(b) Form D.  The Company agrees to file a Form D with respect to the Debentures
as required under Regulation D and to provide a copy thereof to the Buyer
promptly after such filing.  The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is necessary to
qualify the Debentures, or obtain an exemption for the Debentures for sale to
the Buyer at the Closing pursuant to this Agreement under applicable securities
or “Blue Sky” laws of the states of the United States, and shall provide
evidence of any such action so taken to the Buyer on or prior to the Closing
Date.
 
(c) Reporting Status.  Until the date on which none of the Debentures are
outstanding (the “Registration Period”), the Company shall file in a timely
manner all reports required to be filed with the SEC pursuant to the 1934 Act
and the regulations of the SEC thereunder, and the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would otherwise permit such
termination.
 
(d) Use of Proceeds.  The Company will use the net proceeds from the sale of the
Debentures for working capital purposes.
 
(e) Reservation of Shares.  The Company shall take all action reasonably
necessary to at all times have authorized, and reserved for the purpose of
issuance, such number of shares of Common Stock as shall be necessary to effect
the issuance of the shares upon conversion of the Debentures.  If at any time
the Company does not have available such shares of Common Stock as shall from
time to time be sufficient to effect the issuance of all shares upon conversion
of the Debentures, the Company shall file a preliminary proxy statement with the
Securities and Exchange Commission within ten (10) business day and shall call
and hold a special meeting of the shareholders as soon as practicable after such
occurrence, for the sole purpose of increasing the number of shares
authorized.  The Company’s management shall recommend to the shareholders to
vote in favor of increasing the number of shares of Common Stock
authorized.  Management shall also vote all of its shares in favor of increasing
the number of authorized shares of Common Stock.
 
(f) Fees and Expenses.
 
(i) Each of the Company and the Buyer shall pay all costs and expenses incurred
by such party in connection with the negotiation, investigation, preparation,
execution and delivery of this Agreement the Transaction Documents and any other
documents relating to this transaction.
 
(ii) The Company has agreed to pay a legal and documentation review fee to Buyer
of Twenty Thousand Dollars ($20,000), Five Thousand Dollars ($5,000) of which
has been paid prior to this date and the remainder of which shall be paid
directly from the proceeds of the First Closing.
 
(iii) The Company has agreed to pay a Due Diligence Fee to Buyer of Ten Thousand
Dollars ($10,000), one-half of which has been paid prior to this date and
one-half of which shall be paid directly from the proceeds of the First Closing.
 
(iv) On each Closing Date, the Company shall issue to the Buyer two million five
hundred thousand (2,500,000) restricted shares of Common Stock.
 
(v) The Company shall pay to the Buyer a Commitment Fee equal to six percent
(6%) of the principal amount of each Debenture issued which shall be paid
directly from the proceeds of the Closing at which such Debenture is issued.
 
(vi) The Company shall pay to the Buyer a Facility Fee equal to two percent (2%)
of the principal amount of each Debenture issued which shall be paid directly
from the proceeds of the Closing at which such Debenture is issued.
 
(vii) The Company shall pay One Hundred Twenty Thousand Dollars ($120,000) of
prepaid accounting expenses to Greentree Financial Group, Inc. which shall be
paid directly from the proceeds of the First Closing.
 
(g) Corporate Existence. So long as any of the Debentures remain outstanding,
the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, reverse stock split consolidation, sale of all or
substantially all of the Company’s assets or any similar transaction or related
transactions (each such transaction, an “Organizational Change”) unless, prior
to the consummation an Organizational Change, the Company obtains the written
consent of the Buyer .  In the case of any Organizational Change, the Company
will make appropriate provision with respect to such holders’ rights and
interests to insure that the provisions of this Section 4(g) will thereafter be
applicable to the Debentures.
 
(h) Transactions With Affiliates. So long as any Debentures are outstanding, the
Company shall not, and shall cause each of its subsidiaries not to, enter into,
amend, modify or supplement, or permit any subsidiary to enter into, amend,
modify or supplement any agreement, transaction, commitment, or arrangement with
any of its or any subsidiary’s officers, directors, persons who were officers or
directors at any time during the previous two (2) years, stockholders who
beneficially own five percent (5%) or more of the Common Stock, or Affiliates
(as defined below) or with any individual related by blood, marriage, or
adoption to any such individual or with any entity in which any such entity or
individual owns a five percent (5%) or more beneficial interest (each a “Related
Party”), except for (a) customary employment arrangements and benefit programs
on reasonable terms, (b) any investment in an Affiliate of the Company,  (c) any
agreement, transaction, commitment, or arrangement on an arms-length basis on
terms no less favorable than terms which would have been obtainable from a
person other than such Related Party, (d) any agreement transaction, commitment,
or arrangement which is approved by a majority of the disinterested directors of
the Company, for purposes hereof, any director who is also an officer of the
Company or any subsidiary of the Company shall not be a disinterested director
with respect to any such agreement, transaction, commitment, or
arrangement.  “Affiliate” for purposes hereof means, with respect to any person
or entity, another person or entity that, directly or indirectly, (i) has a ten
percent (10%) or more equity interest in that person or entity, (ii) has ten
percent (10%) or more common ownership with that person or entity, (iii)
controls that person or entity, or (iv) shares common control with that person
or entity.  “Control” or “controls” for purposes hereof means that a person or
entity has the power, direct or indirect, to conduct or govern the policies of
another person or entity.
 
(i) Transfer Agent.  The Company covenants and agrees that, in the event that
the Company’s agency relationship with the transfer agent should be terminated
for any reason prior to a date which is two (2) years after the Closing Date,
the Company shall immediately appoint a new transfer agent.
 
(j)           Restriction on Issuance of the Capital Stock. So long as any of
the principal of or interest on the Debenture remains unpaid, the Company shall
not, without the prior written consent of the Buyer, (i) issue or sell shares of
Common Stock or Preferred Stock without consideration or for a consideration per
share less than the bid price of the Common Stock determined immediately prior
to its issuance provided that upon such sale with Buyer’s consent, the Fixed
Conversion Price in the Debentures shall be reset to an amount equal to
eighty-five percent of such sales price (the “Reset Price”) if such Reset Price
would be lower than the then current Fixed Conversion Price, (ii) issue or sell
any warrant, option, right, contract, call, or other security instrument
granting the holder thereof, the right to acquire Common Stock without
consideration or for a consideration less than such Common Stock’s bid price
value determined immediately prior to it’s issuance, (iii) enter into any
security instrument granting the holder a security interest in any and all
assets of the Company or any subsidiary of the Company (whether now owned or
acquired in the future while the Debentures are outstanding) unless such
security interest is junior to the security interest held by the Holder
hereunder and under the Security Agreement and in no way or manner diminishes
Holder’s rights hereunder or under the Security Agreement,, (iv) permit any
subsidiary of the Company (whether now owned or acquired in the future while the
Debentures are outstanding) to enter into any security instrument granting the
holder a security interest in any and all assets of such subsidiary or (v) file
any registration statement on Form S-8.  Notwithstanding anything to the
contrary herein or in any other Transaction Document, the Company shall be
permitted to issue up to seventy five thousand dollars ($75,000) worth of Common
Stock per year as compensation to key employees.
 
 
 

--------------------------------------------------------------------------------

 
 
(k)           Restriction on “Short” Position.  Neither the Buyer nor any of its
affiliates have an open short position in the Common Stock of the Company, and
the Buyer agrees that it shall not, and that it will cause its affiliates not
to, engage in any short sales with respect to the Common Stock as long as any
Debentures shall remain outstanding.
 
(l)           Restriction on Incurring Additional Secured Debt.  The Company
shall not  incur any additional secured debt or permit any subsidiary of the
Company to incur any additional secured debt without the Holder’s prior written
consent unless the security interest on such secured debt is junior to the
security interest held by the Holder hereunder and under the Security Agreement.
 
5. TRANSFER AGENT INSTRUCTIONS.
 
The Company shall enter into irrevocable transfer agent instructions in
substantially the form attached hereto as Exhibit C (the “Irrevocable Transfer
Agent Instructions”) and shall pay the law offices of James G. Dodrill II, P.A.
a cash fee of One Hundred Dollars ($100) for every occasion they act pursuant to
the Irrevocable Transfer Agent Instructions.
 
6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
 
The obligation of the Company hereunder to issue and sell the Debentures to the
Buyer at each Closing is subject to the satisfaction of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole discretion:
 
(a) The Buyer shall have executed this Agreement and the Transaction Documents
and delivered the same to the Company.
 
(b) The Buyer shall have delivered to the Company the Purchase Price for
Debentures to be purchased at such Closing (minus the fees and expenses as set
forth herein which shall be paid directly at the Closing) by wire transfer of
immediately available U.S. funds pursuant to the wire instructions provided by
the Company.
 
(c) The representations and warranties of the Buyer shall be true and correct in
all material respects as of the date when made and as of each Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to such Closing Date.
 
(d) The Company shall have filed a form UCC-1 with regard to the Pledged
Property and Pledged Collateral as detailed in the Security Agreement dated the
date hereof and provided proof of such filing to the Buyer.
 
(e) The Company shall have executed such other documents as are reasonably
required by the Buyer.
 
7. CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.
 
The obligation of the Buyer hereunder to disburse to the Company the net
proceeds of the Purchase Price at each Closing is subject to the satisfaction,
of each of the following conditions, provided that these conditions are for the
Buyer’s sole benefit and may be waived by the Buyer at any time in its sole
discretion:
 
(a) The Company shall have executed this Agreement the Transaction Documents and
any other documents relating to this transaction and delivered the same to the
Buyer.
 
(b) The trading in the Common Shares on the over-the-counter bulletin board
shall not have been suspended for any reason.
 
(c) The representations and warranties of the Company in this Agreement, the
Debentures and the Transaction Documents shall be true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing Dates as
though made at that time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Dates.  If requested by the Buyer, the Buyer
shall have received a certificate, executed by the President of the Company,
dated as of the respective Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by the Buyer.
 
(d) The Company shall have executed and delivered to the Buyer the Debentures.
 
(e) The Buyer shall have received an opinion of counsel from counsel to the
Company in a form satisfactory to the Buyer(s).
 
(f) The Company shall have provided to the Buyer a certificate of good standing
from the secretary of state from the state in which the company is incorporated.
 
(g) As of the Closing Date, the Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of issuing shares
of Common Stock upon conversion of the Debenture, shares of Common Stock to
effect the issuance of the shares of Common Stock: (1) upon conversion of the
Debenture in accordance with the Fixed Conversion Price.
 
(h) The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to Buyer, shall have been delivered to and acknowledged in writing
by the Company’s transfer agent.
 
(i) The Company shall provide to the Buyer an acknowledgement, to the
satisfaction of the Buyer, from the Company’s independent certified public
accountants as to its ability to provide all consents required in order to file
a registration statement in connection with this transaction.
 
(j) The Company shall file a form UCC-1 or such other forms as may be required
to perfect the Buyer’s interest in the Pledged Collateral as detailed in the
Security Agreement dated the date hereof, providing the Buyer with a senior lien
on all of the Company’s assets and intellectual property and provided proof of
such filing to the Buyer.
 
(k) The Company shall have provided the Buyer with evidence of an aggressive
investor relations program with a firm recommended by the Buyer.
 
(l) The Company shall have delivered to the Buyer the shares of Common Stock
required under Section 4(f) hereof.
 
 
 

--------------------------------------------------------------------------------

 
 
8. INDEMNIFICATION.
 
(a) In consideration of the Buyer’s execution and delivery of this Agreement and
acquiring the Debentures hereunder, and in addition to all of the Company’s
other obligations under this Agreement, the Company shall defend, protect,
indemnify and hold harmless the Buyer and each other holder of the Debentures,
and all of their officers, directors, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Buyer Indemnitees”) from and against any and
all actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Buyer Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”), incurred by the Buyer
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in this Agreement, the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in this Agreement, or
the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Buyer Indemnitee by a third party and arising out
of or resulting from a material misrepresentations  by the Company under this
Agreement or due to a material breach by the Company of its obligations under
this Agreement and the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the Indemnities, any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of the issuance of
the Debentures or the status of the Buyer or holder of the Debentures,  as a
Buyer of Debentures in the Company.  To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable law.
 
(b) In consideration of the Company’s execution and delivery of this Agreement,
and in addition to all of the Buyer’s other obligations under this Agreement,
the Buyer shall defend, protect, indemnify and hold harmless the Company and all
of its officers, directors, employees and agents (including, without limitation,
those retained in connection with the transactions contemplated by this
Agreement) (collectively, the “Company Indemnitees”) from and against any and
all Indemnified Liabilities incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Buyer in this Agreement, the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby executed by the Buyer, (b) any breach of any
covenant, agreement or obligation of the Buyer contained in this Agreement, the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby executed by the Buyer, or (c) any cause of
action, suit or claim brought or made against such Company Indemnitee based on
material misrepresentations or due to a material breach and arising out of or
resulting from the execution, delivery, performance or enforcement of this
Agreement, the Transaction Documents or any other certificate instrument,
document or agreement executed pursuant hereto by any of the Company
Indemnities.  To the extent that the foregoing undertaking by the Buyer may be
unenforceable for any reason, the Buyer shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.
 
9. GOVERNING LAW: MISCELLANEOUS.
 
(a) Governing Law.  This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Florida without regard to the
principles of conflict of laws.  The parties further agree that any action
between them shall be heard in Broward County, Florida and expressly consent to
the jurisdiction and venue of the State Court sitting in Broward County, Florida
and the United States District Court for the Southern District of Florida for
the adjudication of any civil action asserted pursuant to this Paragraph.
 
(b) Counterparts.  This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party.
 
(c) Headings.  The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.
 
(d) Severability.  If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
 
(e) Entire Agreement, Amendments.  This Agreement supersedes all other prior
oral or written agreements between the Buyer, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters.  No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.
 
(f) Notices.  Any notices, consents, waivers, or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon confirmation of receipt, when sent by facsimile; (iii)
three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same.  The addresses and facsimile numbers for such communications
shall be:
 
If to the Company, to:
Environment Ecology Holding Co. of China
 
391 Hun Yu Lane, Dong Xin Street
 
Xi’an Shaanxi Province, P.R. China
 
Attention:  Mr. Liu Sheng Li, President
 
Telephone:
       
With a copy to:
JPF Securities Law, LLC
 
17111 Kenton Drive, Suite 100B
 
Cornelius, NC 28031
 
Attention:  Jared P. Febbroriello, Esq. LLM
 
Telephone: (704) 897-8334
 
Facsimile:  (888) 606-5705
   
If to the Buyer:
Trafalgar Capital Specialized Investment Fund
 
8-10 Rue Mathias Hardt
 
BP 3023
 
L-1030 Luxembourg
 
Attention: Andrew Garai, Chairman of the Board of
 
Trafalgar Capital Sarl, General Partner
 
Facsimile:          011-44-207-405-0161 and
                        001-786-323-1651
   
With Copy to:
James G. Dodrill II, P.A.
 
5800 Hamilton Way
 
Boca Raton, FL  33496
 
Attention:                               Jim Dodrill, Esq.
 
Telephone:                              (561) 862-0529
 
Facsimile:                               (561) 892-7787
   

 
 
 

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If to the Buyer, to its address and facsimile number on Schedule I, with copies
to the Buyer’s counsel as set forth on Schedule I.  Each party shall provide
five (5) days’ prior written notice to the other party of any change in address
or facsimile number.
 
(g) Successors and Assigns.  This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns.  Neither
the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto.
 
(h) No Third Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
 
(i) Survival.  Unless this Agreement is terminated under Section 9(l), the
representations and warranties of the Company and the Buyer contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9,
and the indemnification provisions set forth in Section 8, shall survive the
Closing for a period of two (2) years following the date on which the Debentures
are redeemed in full.  The Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
 
(j) Publicity.  The Company and the Buyer shall have the right to approve,
before issuance any press release or any other public statement with respect to
the transactions contemplated hereby made by any party; provided, however, that
the Company shall be entitled, without the prior approval of the Buyer, to issue
any press release or other public disclosure with respect to such transactions
required under applicable securities or other laws or regulations (the Company
shall use its best efforts to consult the Buyer in connection with any such
press release or other public disclosure prior to its release and Buyer shall be
provided with a copy thereof upon release thereof).
 
(k) Further Assurances.  Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.  Furthermore, the Company agrees to execute such other documents as are
reasonably required by the Buyer.  It shall be deemed a default of this
Agreement and the Transaction Documents if the Company or the referenced
shareholders fail to sign such agreements within one business day of the date of
request by the Buyer.
 
(l) Termination.  In the event that the Closing shall not have occurred with
respect to the Buyer on or before five (5) business days from the date hereof
due to the Company’s or the Buyer’s failure to satisfy the conditions set forth
in Sections 6 and 7 above (and the non-breaching party’s failure to waive such
unsatisfied condition(s)), the non-breaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated by the Company pursuant
to this Section 9(l), the Company shall remain obligated to pay the Buyer for
the legal and documentation review fee described in Section 4(f) above.
 
(m) No Strict Construction.  The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
 

 
COMPANY:
 
ENVIRONMENT ECOLOGY HOLDING CO. OF CHINA
     
By:                                                                
 
Name: Liu Sheng Li
 
Title:   President
   

 
BUYER:
 
TRAFALGAR CAPITAL SPECIALIZED
 
INVESTMENT FUND, LUXEMBOURG
 
By:           Trafalgar Capital Sarl
 
Its:           General Partner
     
By:                                                                
 
Name: Andrew Garai
 
Title:   Chairman of the Board

 
EXHIBIT A
 
FORM OF REGISTRATION RIGHTS AGREEMENT
 
EXHIBIT B
 
FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
 
EXHIBIT C
 
FORM OF SECURITY AGREEMENT