STOCK PURCHASE AGREEMENT

BETWEEN

AMERICAN NANO SILICON TECHNOLGIES, INC.

AND

INVESTORS LISTED IN SCHEDULE A

DATED

MARCH 19, 2010

 
 

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STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as of
the 19 day of March, 2010 between American Nano Silicon Technology, Inc., a
corporation organized and existing under the laws of the State of California
(“ANNO” or the “Company”) and the Investors in Schedule A (“Investor”).

PRELIMINARY STATEMENT:

 
WHEREAS, the Investor wishes to purchase from the Company, upon the terms and
subject to the conditions of this Agreement, Two Million One Hundred Thousand
(2,100,000) shares of common stock of the Company (the “Shares”) for the
Purchase Price set forth in Section 1.3.13 hereof.  In addition, the Company
will issue to the Investor Common Stock Purchase Warrants (the “Warrants”) to
purchase up to an additional Two Million (2,000,000) shares of common stock of
the Company at exercise prices as stated in the Warrants and will cause certain
shareholders of the Company to deliver to the Investor the Shareholders Warrants
and Shareholder Put Option described herein; and
 
   WHEREAS, the parties intend to memorialize the purchase and sale of such
Shares and the Warrants.

   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 I

 
INCORPORATION BY REFERENCE, SUPERSEDER 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           Superseder. This Agreement, to the extent that it is inconsistent
with any other instrument or understanding among the parties governing the
affairs of the Company, 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.
 
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           “1933 Act” means the Securities Act of 1933, as amended.
 
 
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1.3.2           “1934 Act” means the Securities Exchange Act of 1934, as
amended.
 
1.3.3           “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 the exercise, directly or indirectly, of more than 50
percent 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.
 
1.3.4           “Articles” means the Certificate of Incorporation of the
Company, as the same may be amended from time to time.
 
1.3.5           “Closing” shall mean the Closing of the transactions
contemplated by this Agreement on the Closing Date.
 
1.3.6           “Closing Date” means the date on which the payment of the
Purchase Price (as defined herein) by the Investor to the company is completed
pursuant to this Agreement to purchase the Shares and Warrants, which shall
occur on or before April 15, 2010.
 
1.3.7           “Common Stock” means shares of common stock of the Company, par
value $0.001 per share.
 
1.3.8.  “Escrow Agreement” means the escrow agreement among the Company, certain
shareholders of the Company, the Investors, and Robert Brantl, Esq. as “Escrow
Agent” in the form attached hereto as Exhibit A.
 
1.3.9           "Exempt Issuance" means the issuance of (a) shares of common
stock or options to employees, officers, or directors of the Company pursuant to
any stock or option plan duly adopted by a majority of the non-employee members
of the Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose, (b) securities
upon the exercise of or conversion of any securities issued hereunder, and (c)
securities issued pursuant to acquisitions or strategic transactions, provided
any such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business synergistic with the business
of 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.
 
1.3.10           "Material Adverse Effect" shall mean any adverse effect on the
business, operations, properties or financial condition of the Company that is
material and adverse to the Company and its subsidiaries and affiliates, taken
as a whole and/or any condition, circumstance, or situation that would prohibit
or otherwise materially interfere with the ability of the Company to perform any
of its material obligations under this Agreement  or to perform its obligations
under any other material agreement.
 
1.3.11           “California Act” means the California General Corporation Law,
as amended.
 
1.3.12           “Person” means an individual, partnership, firm, limited
liability company, trust, joint venture, association, corporation, or any other
legal entity.
 
1.3.13           “Purchase Price” means the One Million Dollars ($1,000,000.00)
paid by the Investor to the Company for the Shares and the Warrants.
 
1.3.14            “SEC” means the Securities and Exchange Commission.
 
1.3.15           "SEC Documents" shall mean the Company's latest Form 10-K as of
the time in question, all Forms 10-Q and 8-K filed thereafter, and the Proxy
Statement for its latest fiscal year as of the time in question.
 
1.3.16           “Shareholder Put Option” means the option granted by Huakang
Zhou to the Investors to sell the Shares to Mr. Zhou, in the form attached
hereto as Exhibit B.
 
1.3.17           “Shareholder Warrant” means the warrants to purchase an
aggregate of two million shares at $.80 per share given to the Investors by
certain shareholders named therein, in the form attached hereto as Exhibit C.
 
1.3.18            "Shares" shall mean, collectively, the shares of Common Stock
of the Company purchased hereunder and those shares of Common Stock issuable to
the Investor upon exercise of the Warrants.
 
1.3.19           “Subsequent Financing” shall mean any form of financing that
could result in the issuance of additional shares of common stock any time post
closing or in the future that could be dilutive to existing shareholders
including but not limited to preferred stock, common stock, common stock equity
lines, debt, debt that is convertible into shares of common stock, or preferred
securities that are convertible into shares of common stock.
 
1.3.20            “Transaction Documents” shall mean this Agreement, all
Schedules and Exhibits attached hereto and all other documents and instruments
to be executed and delivered by the parties in order to consummate the
transactions contemplated hereby, including, but not limited to the documents
listed in Sections 3.2 and 3.3 hereof.
 
1.3.21            “Warrants” shall mean the Common Stock Purchase Warrant “A” in
the form attached hereto as Exhibit D.
 
 
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ARTICLE II

SALE AND PURCHASE OFAMERICAN NANO SILICON TECHNOLOGY, INC. COMMON STOCK AND
WARRANTS; PURCHASE PRICE

2.1 Sale of Common Stock and Issuance of Warrants.

(a)           Upon the terms and subject to the conditions set forth herein, and
in accordance with applicable law, the Company agrees to sell to the Investor,
and the Investor agrees to purchase from the Company, on the Closing Date Two
Million One Hundred Thousand (2,100,000) shares of Common Stock and the Warrants
for the price (the “Purchase Price”) of One Million Dollars ($1,000,000.00). The
Purchase Price shall be paid by the Investor to the Company on the Closing Date
by a wire transfer of the Purchase Price payable at the direction of
Company.  The Company shall cause the Common Stock and the Warrants to be issued
to the Investor upon the payment of the Purchase Price to the Company.
 
                (b)           Upon execution and delivery of this Agreement and
the Company’s receipt of the Purchase Price, the Company shall
 
·  
issue to the Investor the Warrants to purchase an aggregate of Two Million
(2,000,000) shares of Common Stock at the exercise price stated in the Warrants,
all pursuant to the terms and conditions of the form of Warrants attached hereto
as Exhibit D;

 
·  
cause to be delivered to each of the Investors the Shareholder Put Option in the
form attached hereto as Exhibit B, providing each Investor the right to sell the
number of Shares acquired hereunder; and

 
·  
cause to be delivered to each of the Investors a Shareholders Warrant in the
form attached hereto as Exhibit C, which will permit the Investor to purchase
from the named Shareholders the same number of shares of common stock of the
Company as that Investor may purchase on exercise of the Warrants;

 
provided, however, that the Investor shall not be entitled to exercise the
Warrants or the Shareholders Warrant and receive shares of Common Stock that
would result in beneficial ownership by the Investor and its affiliates of more
than 4.99% of the then outstanding number of shares of Common Stock on such
date.  For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
 
The Investor, upon not less than 15 days’ prior notice to the Company and/or the
Shareholders, as applicable, may increase or decrease the beneficial ownership
limitation provisions of this Section 2.1(a), provided that the beneficial
ownership limitation in no event exceeds 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance or
acquisition of shares of Common Stock held by the Investor and the provisions of
this Section 2.1(a) shall continue to apply.  Any such increase or decrease will
not be effective until the 16th day after such notice is delivered to the
Company.  The provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this Section
2.1(a) to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly
give effect to such limitation.
 
 
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2.2           Purchase Price.  The Purchase Price shall be delivered by the
Investor in the form of a wire transfer made payable to the Company in United
States Dollars from the Investor to the direction of the Company on the Closing
Date.
 
2.3 Additional Investment Right. The Investor shall have the right to purchase
from the Company, and the Company shall issue and sell to the Investor, in the
event that the Investor exercises such right, up to Two Million One Hundred
Thousand (2,100,000) Shares of Common Stock at a purchase price of One Million
Dollars ($1,000,000.00) pursuant to the terms hereof (the “Investor
Right”).  The Additional Investment Right shall expire four (4) months following
the Closing Date, unless extended by the Company.  The Investor may exercise the
Investor’s right, in whole or in part, by delivering to the Company an Exercise
Form in the form attached hereto as Exhibit E. Within five (5) days of receipt
of such Exercise Form, the Company shall deliver to the Investor a certificate
representing the Common Shares purchased pursuant to the Investor Right (the
“Additional Investment Right Shares”).  Should the Investor exercise any or all
of the Investor Right, the Company will issue to the investor, pro-rata to the
percent of the Investor Right exercised by the Investor, a Warrant attached
herein as Exhibit D.

ARTICLE III

CLOSING DATE AND DELIVERIES AT CLOSING

3.1           Closing Date.                                The closing of the
transactions contemplated by this Agreement (the “Closing”), unless expressly
determined herein, shall be held at the offices of the Escrow Agent, at 5:00
P.M. local time, on the Closing Date 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.

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 Escrow Agreement, the following:
 
(a)  
At or prior to Closing, an executed Agreement with all exhibits and schedules
attached hereto;

(b)  
At or prior to Closing, the executed Shareholder Put Option in the name of the
Investor in the form attached hereto as Exhibit B;

(c)  
At or prior to Closing, the executed Shareholders Warrants in the name of the
Investor in the form attached hereto as Exhibit C;

(d)  
At or prior to Closing, an executed Warrant “A” in the name of the Investor in
the form attached hereto as Exhibit D;

(e)  
The executed Escrow Agreement;

(f)  
Evidence of approval of the Board of Directors of the Company of the Transaction
Documents and the transactions contemplated hereby;

(g)  
An opinion from the Company’s counsel concerning the Transaction Documents and
the transactions contemplated hereby in form and substance reasonably acceptable
to Investor;

(h)  
Stock Certificate in the name of Investor evidencing the Shares;

(i)  
Such other documents or certificates as shall be reasonably requested by
Investor or its counsel.

 
 
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3.3           Deliveries by Investor.  In addition to and without limiting any
other provision of this Agreement, the Investor agrees to deliver, or cause to
be delivered, to the escrow agent under the Escrow Agreement, the following:
 
(a)  
A wire transfer in the amount of the Investor Funds;

(b)  
The executed Agreement with all Exhibits and Schedules attached hereto;

(c)  
The executed Escrow Agreement;

(d)  
Such other documents or certificates as shall be reasonably requested by the
Company or its counsel.

 
In the event any document provided to the other party in Paragraphs 3.2 and 3.3
herein are provided by facsimile, the party shall forward an original document
to the other party within seven (7) business days.
 
3.4 Further Assurances.  The Company and the Investor shall, upon request, on or
after the Closing Date, cooperate with each other (specifically, the Company
shall cooperate with the Investor, and the Investor shall cooperate with the
Company) 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.
 
3.5 Waiver. The Investor may waive any of the requirements of Section 3.2 of
this Agreement, and the Company at its discretion may waive any of the
provisions of Section 3.3 of this Agreement.  The Investor may also waive any of
the requirements of the Company under the Escrow Agreement.
 
ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor as of the date hereof and as
of Closing (which warranties and representations shall survive the Closing
regardless of what examinations, inspections, audits and other investigations
the Investor has heretofore made or may hereinafter make with respect to such
warranties and representations) as follows:
 
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
California, 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 by
virtue of the nature of the businesses conducted by it or the ownership or
leasing of its properties, except where the failure to be so qualified will not,
when taken together with all other such failures, 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           Articles of Incorporation and By-Laws.  The complete and correct
copies of the Company’s Articles and By-Laws, as amended or restated to date
which have been filed with the Securities and Exchange Commission  are a
complete and correct copy of such document as in effect on the date hereof and
as of the Closing Date.
 
4.3           Capitalization.
 
4.3.1  The authorized and outstanding capital stock of the Company is set forth
in the Company’s Annual Report on Form 10-K, filed on December 29, 2009 with the
Securities and Exchange Commission and updated on all subsequent SEC
Documents.  All shares of capital stock have been duly authorized and are
validly issued, and are fully paid and no assessable, and free of preemptive
rights.
 
4.3.2           As of the date of this Agreement, the authorized capital stock
of the Company consists of 200,000,000 shares of common Stock authorized ($.001
par value), of which 26,626,553 shares of common Stock are issued and
outstanding.  As of Closing, following the issuance by the Company of the Shares
to the Investor, the authorized capital stock of the Company will consist of
200,000,000 shares of Common Stock ($.001 par value), of which approximately
28,726,553 share of Common Stock shall be issued and outstanding.  As of
Closing, the Investor will hold Warrants to purchase an aggregate of 4,000,000
shares of Common Stock.  All outstanding shares of capital stock have been duly
authorized and are validly issued, and are fully paid and nonassessable and free
of preemptive rights.  All shares of capital stock described above to be issued
have been duly authorized and when issued, will be validly issued, fully paid
and nonassessable and free of preemptive rights. There are no derivatives
currently outstanding.  The company hereby represents that it is party to
no  contracts or commitments that are potentially dilutive events, including
employment agreements, acquisition, consulting agreements, debts, payments,
financing or business relationships that could be paid in equity, derivatives or
resulting in additional equity issuances that could potentially occur.
 
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4.3.3  Except pursuant to this Agreement, as of the date hereof and as of the
Closing Date, there are not now 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 granted prior to the Closing
Date.
 
4.3.4   The Company on the Closing Date (i) will have full right, power, and
authority to sell, assign, transfer, and deliver, by reason of record and
beneficial ownership, to the Investor, the Company Shares hereunder, free and
clear of all liens, charges, claims, options, pledges, restrictions, and
encumbrances whatsoever; and (ii) upon exercise of the Warrants, the Investor
will acquire good and marketable title to such Shares, free and clear of all
liens, charges, claims, options, pledges, restrictions, and encumbrances
whatsoever, except as otherwise provided in this Agreement as to the limitation
on the voting rights of such Shares in certain circumstances.
 
4.4 Authority. The Company has all requisite corporate power and authority to
execute and deliver this Agreement, the Shares, and the Warrants, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  The execution and delivery of this Agreement
by the Company and the consummation of the transactions contemplated hereby 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 to consummate the transactions contemplated hereby 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.
 
4.5 No Conflict; Required Filings and Consents. The execution and delivery of
this Agreement by the Company does not, and the performance by the Company of
their respective obligations hereunder will not:  (i) conflict with or violate
the Articles or By-Laws of the Company; (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 (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 pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company is a party or by the Company or any of its
properties or assets is bound.  Excluding from the foregoing are such
violations, conflicts, breaches, defaults, terminations, accelerations,
creations of liens, or incumbency that would not, in the aggregate, have a
Material Adverse Effect.
 
4.6 Report and Financial Statements. The Company’s Annual Report on Form 10-K,
filed on December 29, 2009 with the SEC, contains the audited financial
statements of the Company.  The Company has previously provided to the Investor
the audited financial statements of the Company as of September 30, 2009 (the
“Financial Statements”). Each of the balance sheets contained in or incorporated
by reference into any such Financial Statements (including the related notes and
schedules thereto) fairly presented the financial position of the Company, as of
its date, and each of the statements of income and changes in stockholders’
equity and cash flows or equivalent statements in such Financial Statements
(including any related notes and schedules thereto) fairly presents, changes in
stockholders’ equity and changes in cash flows, as the case may be, of the
Company, for the periods to which they relate, in each case in accordance with
United States generally accepted accounting principles (“U.S. GAAP”)
consistently applied during the periods involved, except in each case as may be
noted therein, subject to normal year-end audit adjustments in the case of
unaudited statements.  The books and records of the Company have been, and are
being, maintained in all material respects in accordance with applicable legal
and accounting requirements and reflect only actual transactions.
 
4.7 Compliance with Applicable Laws. The Company is not 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. Except as set forth on Schedule 4.8, 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.
 
 
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4.9 SEC Documents. The Company acknowledges that the Company is a publicly held
company and has made available to the Investor after demand 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 Investor 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. As of their respective dates, the SEC Documents 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 have a Material Adverse Effect.
 
4.11 Exemption from Registration. Subject to the accuracy of the Investor’s
representations in Article V, the sale of the Common Stock and Warrants by the
Company to the Investor will not require registration under the 1933 Act, but
may require registration under New York state securities law if applicable to
the Investor.  Upon exercise of the Warrants in accordance with their terms, the
Shares underlying the Warrants will be duly and validly issued, fully paid, and
non-assessable.  The Company is issuing the Shares and the Warrants in
accordance with and in reliance upon the exemption from securities 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; provided, however, that
certain filings and registrations may be required under state securities “blue
sky” laws depending upon the residency of the Investor.
 
4.12 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 Shares 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 Shares or
Warrants, under the 1933 Act, except as required herein.
 
4.13 No Material Adverse Effect. Except as set forth in Schedule 4.13 attached
hereto, since December 31, 2009, no event or circumstance resulting in a
Material Adverse Effect has occurred or exists with respect to the Company. No
material supplier or customer has given notice, oral or written, that it intends
to cease or reduce the volume of its business with the Company from historical
levels. Since June 30, 2008, no event or circumstance has occurred or exists
with respect to the Company or its businesses, properties, prospects, operations
or financial condition, that, under any applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof by the
Company but which has not been so publicly announced or disclosed in writing to
the Investor.
 
4.14 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.
 
4.15 Internal Controls And Procedures. The Company maintains books and records
and internal accounting controls which provide reasonable assurance that (i) all
transactions to which the Company or any subsidiary 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 the Company's consolidated
assets is permitted only in accordance with management's authorization; and (iv)
all transactions to which the Company or any subsidiary is a party or by which
its properties are bound are recorded as necessary to permit preparation of the
financial statements of the Company in accordance with U.S. generally accepted
accounting principles.
 
4.16 Full Disclosure. No representation or warranty made by the Company in this
Agreement and no certificate or document furnished or to be furnished to the
Investor pursuant to this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
 
 
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ARTICLE V
 
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
 
The Investor represents and warrants to the Company that:

5.1 Organization and Standing of the Investor. The Investor is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware. The state in which any offer to purchase shares
hereunder was made or accepted by such Investor is the state shown as such
Investor’s address. The Investor was not formed for the purpose of investing
solely in the Shares, the Warrants or the shares of Common Stock which are the
subject of this Agreement.
 
5.2 Authorization and Power. The Investor has the requisite power and authority
to enter into and perform this Agreement and to purchase the securities being
sold to it hereunder. 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 limited liability
company action where appropriate. This Agreement and the Escrow Agreement have
been duly executed and delivered by the Investor and at the Closing shall
constitute valid and binding obligations of the Investor enforceable against the
Investor in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
 
5.3 No Conflicts. The execution, delivery and performance of this Agreement and
the consummation by the Investor of the transactions contemplated hereby or
relating hereto do not and will not (i) result in a violation of such 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 such 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 such Investor’s obligations under this Agreement or to
purchase the securities from the Company in accordance with the terms hereof,
provided that for purposes of the representation made in this sentence, the
Investor is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.
 
5.4 Financial Risks. The Investor acknowledges that such 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 the subsidiaries and to the officers
of the Company and the 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.
 
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 described in this Agreement and the related 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 related documents, and (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 in 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
based upon arrangements made by or on behalf of the Investor.
 
5.7 Knowledge of Company; Reliance. The Investor and such Investor’s 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 such Investor’s 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.  In making its investment in the
Shares and Warrants, the Investor is not relying on any information,
representation, projection or other statement by or on behalf of the Company
that is not contained in the SEC Documents.
 
 
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5.8 Risk Factors. The Investor understands that such 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 such Investor is able to bear the
complete loss of such Investor’s 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 or to be furnished to the
Company pursuant to this Agreement contains or will contain any untrue statement
of a material fact, or omits or will omit 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, Investor does not have any agreement or
understanding with any person relating to acquiring, holding, voting or
disposing of any equity securities of the Company.
 
5.10 Payment of Due Diligence Expenses. At Closing the Escrow Agent shall
disperse from the Purchase Price to the direction of T Squared Investments LLC
the sum of Thirty Thousand Dollars ($30,000.00) for due diligence expenses.
 
ARTICLE VI

COVENANTS OF THE COMPANY

6.1 Reservation of Common Stock. 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, shares of Common Stock for the purpose of enabling the
Company to issue the shares of Common Stock underlying the Warrants.
 
6.2 Compliance with Laws. The Company hereby agrees to comply in all respects
with the Company's reporting, filing and other obligations under the Laws.
 
6.3 Exchange Act Registration. For a minimum of Three (3) years post Closing,
the Company (a) will continue its obligation to report to the SEC under Section
E 12(d) of the 1934 Act and will use its best efforts to comply in all 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 until the
Investors have disposed of all of their Shares.
 
6.4 Corporate Existence; 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 is required to maintain its current or a listing on a higher exchange
and maintain their status as a Company regulated by Securities Exchange Act of
1934 and if the Company is current currently listed on the Pink Sheets the
Company must be fully reporting per Rule 144 until such time as they are
regulated by the Securities Exchange Act of 1934. If for any time post Closing
the Company is no longer regulated by the Securities Exchange Act of 1934 and is
not a fully reporting Company, then the Company shall pay to the Investors as
liquidated damages and not as a penalty, in cash or PIK at the option of the
Investor, an amount per month equal to two percent (2%) of the lower of (a) the
purchase price paid by the Investor for any securities it holds at the time of
the de-registration or (b) the closing price of the securities on the trading
day immediately preceding the Company’s announcement of its deregistration. Such
damages shall cease at the time the Company begins complying with the standards
as mentioned above in Section 6.5.
 
6.6 Preferred Stock. On or prior to the Closing Date, the Company will cause to
be cancelled all preferred stock in the Company. From the date hereof until the
earlier of (a) such time as no Purchaser holds any of the Securities or (b) two
years from the closing the Company will not issue any preferred stock of the
Company below $1.00 per share.
 
6.7 Convertible Debt. On or prior to the Closing Date, the Company will cause to
be cancelled all convertible debt in the Company. From the date hereof until the
earlier of (a) such time as no Purchaser holds any of the Securities or (b) two
years from the closing the Company will not issue any convertible debt of the
Company below $1.00 per share.
 
6.8 Reset Equity Deals. On or prior to the Closing Date, the Company will cause
to be cancelled any and all reset features related to any shares outstanding
that could result in additional shares being issued. From the date hereof until
the earlier of (a) such time as no Purchaser holds any of the Securities or (b)
five years after the Closing Date the Company will not issue any security that
contains a reset feature that could result in additional shares being issued.
 
6.9 Independent Directors. The Company shall have caused the appointment of the
majority of the board of directors to be qualified independent directors, as
defined by the NASD, before Closing.  If for any period of 90 consecutive days
occurring during the three years after Closing the board shall not be composed
in the majority of qualified independent directors, the Company shall pay to the
Investors, pro rata, as liquidated damages and not as a penalty, an amount for
each month after said 90 day period equal to two percent (2%) of the lower of
(a) the purchase price paid by the Investor for any securities it holds at the
time of the non-compliance or (b) the closing price of the securities on the
trading day immediately preceding the Company’s announcement of its
non-compliance, payable monthly in cash or  Common Stock at the option of the
Investor.  The parties agree that the only damages payable for a violation of
the terms of this Agreement with respect to which liquidated damages are
expressly provided shall be such liquidated damages.  Nothing shall preclude the
Investor from pursuing or obtaining specific performance or other equitable
relief with respect to this Agreement. The parties hereto agree that the
liquidated damages provided for in this Section 6.9 constitute a reasonable
estimate of the damages that may be incurred by the Investor by reason of the
failure of the Company to appoint at least two independent directors in
accordance with the provision hereof.
 
 
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6.10 Independent Directors Become Majority of Audit and Compensation
Committees.  The Company will cause the appointment of a majority of outside
directors to the audit and compensation committees of the board of directors
before Closing.  If for any period of 90 consecutive days occurring during the
three years  after Closing such independent directors do not compose the
majority of the audit and compensation committees, the Company shall pay to the
Investors, pro rata, as liquidated damages and not as a penalty, an amount for
each month after said 90 day period equal to two percent (2%) of the lower of
(a) the purchase price paid by the Investor for any securities it holds at the
time of the non-compliance or (b) the closing price of the securities on the
trading day immediately preceding the Company’s announcement of its
non-compliance, payable monthly in cash or Common Stock at the option of the
Investor.  The parties agree that the only damages payable for a violation of
the terms of this Agreement with respect to which liquidated damages are
expressly provided shall be such liquidated damages.  Nothing shall preclude the
Investor from pursuing other remedies or obtaining specific performance or other
equitable relief with respect to this Agreement.
 
6.11 Use of Proceeds. The Company will use the proceeds from the sale of the
Shares and the Warrants (excluding amounts paid by the Company for legal and
administrative fees in connection with the sale of such securities) for working
capital and acquisitions.
 
6.12 Right of First Refusal. Each Investor shall have the right to participate
in any subsequent funding completed by the Company during the twelve months
following the Closing Date on a pro rata basis at One Hundred percent (100%) of
the offering price.
 
6.13 Price Adjustment. From the date hereof until the earlier of (a) such time
as no Purchaser holds any of the Securities or (b) two years after the Closing
Date, if the Company closes on the sale of a note or notes, shares of Common
Stock, or shares of any class of Preferred Stock (excluding, in all cases, any
Exempt Issuance) at a price per share of Common Stock, or with a conversion
right to acquire Common Stock at a price per share of Common Stock, that is less
than the Purchase Price per Share (as adjusted to the capitalization per share
as of the Closing Date, following any stock splits, stock dividends, or the
like) , the Company  shall issue to the Investors  a sufficient number of shares
so that the effective price per share paid by the Investor for Shares owned by
the Investor at the time of the price adjustment is reduced to being equivalent
to such lower price after taking into account any prior exercises of the
Warrant.
 
6.14 Price Adjustment Based on Earnings Per Share. In the event the Net Post-Tax
Income of the Company is between $4.0 million and $2.0 million  (50% Decline) as
reported for the audited fiscal year ended September 30, 2010 from continuing
operations before any non-cash items (and excluding charges for the embedded
derivatives arising from this transaction), the Company shall issue to the
Investors  a sufficient number of shares so that the effective price paid by the
Investor for the Shares shall be decreased proportionately by 0% if the Net
Post-Tax Income is $4.0 million and by 50% if the Net Post-Tax Income is $2.0
million (50% decrease).  For example if the Net Post-Tax Income is $3.2 million
and the Additional Investment Right described in Section 2.3 hereof was not
exercised, then the Company shall issue to the Investor 525,000 shares, yielding
an effective purchase price of $.38 per share (i.e. 80% of $0.48).
 
In the event the Net Post-Tax Income of the Company is between $5.0 million and
$2.5 million  (50% Decline) as reported for the audited fiscal year ended
September 30, 2011 from continuing operations before any non-cash items (and
excluding charges for the embedded derivatives arising from this transaction),
the Company shall issue to the Investors  a sufficient number of shares so that
the effective price paid by the Investor for the Shares shall be decreased
proportionately by 0% if the Net Post-Tax Income is $5.0 million and by 50% if
the Net Post-Tax Income is $2.5 million (50% decrease).  For example if the Net
Post-Tax Income is $4.0 million and the Additional Investment Right described in
Section 2.3 hereof was not exercised, then the Company shall issue to the
Investor 525,000 shares, yielding an effective purchase price of $.38 per share
(i.e. 80% of $0.48).
 
6.15 Insider Selling. The earliest any “Insiders” can start selling their shares
shall be Twenty Four (24) Months from Closing. Insiders shall include all
current and future officers, affiliates, consultants and directors of the
Company, even if post this date such Insider is no longer deemed an Insider. The
managing members of the Investor and the Investor shall not be considered
“Insiders”.
 
6.16 Employment and Consulting Contracts. For three years after the Closing
Company must have a unanimous opinion from the Compensation Committee of the
Board of Directors that any awards other than salary are usual, appropriate and
reasonable for any officer, director, employee or consultant holding a similar
position in other fully reporting public companies with independent majority
boards with similar market capitalizations in the same industry with securities
listed on the OTCBB, ASE, NYSE or NASDAQ.
 
6.17 Subsequent Equity Sales.  From the date hereof until the earlier of (a)
such time as no Purchaser holds any of the Securities or (b) the fourth
anniversary of the Closing Date, the Company shall be prohibited from effecting
or entering into an agreement to effect any Subsequent Financing 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.  Any Purchaser 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 6.15 shall not apply in respect of
an Exempt Issuance, except that no Variable Rate Transaction or MFN Transaction
shall be an Exempt Issuance.
 
 
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6.18 Stock Splits. All forward and reverse stock splits shall affect all equity
and derivative holders proportionately.
 
6.19 Escrow of Shares Held by Certain Shareholders.  Pursuant to the terms of
the Escrow Agreement, Huakang Zhou and other shareholders of the Company shall
place into escrow the sum of Four Million (4,000,000) common shares of the
Company, Two Million of which shall be for the purpose of satisfying any
exercise of the Shareholders Warrants and Two Million of which shall secure the
obligation of Huakang Zhou under the Shareholder Put Option.
 
6.20 Chief Financial Officer.  Within nine months post Closing, the Company must
hire an English-speaking Chief Financial Officer with appropriate experience in
United States GAAP and familiarity with being a United States public company.
 
ARTICLE VII

COVENANTS OF THE INVESTOR

7.1           Compliance with Law. The Investor's trading activities with
respect to shares of the 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 Company's Common Stock is
listed.
 
7.2 Transfer Restrictions. The Investor’s acknowledge that (1) the Shares,
Warrants and shares underlying the Warrants have not been registered under the
provisions of the 1933 Act, and may not be transferred unless (A) subsequently
registered thereunder or (B) 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 Shares, Warrants and shares underlying the
Warrants to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; and (2) any sale of the Shares, Warrants and
shares underlying the Warrants made in reliance on Rule 144 promulgated under
the 1933 Act 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.
 
7.3 Restrictive Legend. The Investor acknowledges and agrees that the Shares,
the Warrants and the Shares underlying the Warrants, and, until such time as the
Shares underlying the Warrants have been registered under the 1933 Act and sold
in accordance with an effective Registration Statement, certificates and other
instruments representing any of the Shares, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of any such securities):
 
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT."
 
 
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ARTICLE VIII
 
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 X 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 it 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 the transactions contemplated
hereby or to recover any damages or obtain other relief as a result of the
transactions proposed hereby.

ARTICLE IX
 
CONDITIONS PRECEDENT TO INVESTOR’S 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 X 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 the transactions contemplated
hereby or to recover any damages or obtain other relief as a result of the
transactions proposed hereby.
 
9.5           Escrow.  All securities and documents required to be delivered
into escrow pursuant to the terms of the Escrow Agreement shall have been so
delivered.

 
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ARTICLE X

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 Investor 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 Investor set forth in this
Agreement, or the Investor 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 Investor,
respectively, shall have become untrue, in either case such that any of the
conditions set forth in Article VIII or Article IX hereof would not be satisfied
(a "Terminating Breach"), and such breach shall, if capable of cure, not have
been cured within five (5) 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 Investor 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.
 
10.4           Waiver. At any time prior to the Closing Date, the Company or the
Investor, as appropriate, may: (a) extend the time for the performance of any of
the obligations or other acts of 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.  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 hereby.

ARTICLE XI

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 Investor such due diligence expenses
as described in section 5.10.
 
11.2           Indemnification. The Investor agrees to indemnify, defend and
hold the Company (following the Closing Date) and its officers and directors
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 or
result from any breach of this Agreement by such Investor or failure by such
Investor to perform with respect to any of its representations, warranties or
covenants contained in this Agreement or in any exhibit or other instrument
furnished or to be furnished under this Agreement.  The Company agrees to
indemnify, defend and hold the Investor 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 any of
its 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.  In the
event of a breach of this Agreement by the Company, the Investor shall be
entitled to pursue a remedy of specific performance upon tender into the Court
an amount equal to the Purchase Price hereunder. The indemnification by the
Investor shall be limited to Fifty Thousand Dollars ($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.
 
11.4           Entire Agreement. This Agreement (together with the Schedule,
Exhibits, Warrants and documents referred to herein) constitute the entire
agreement of the parties and supersede all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
 
 
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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 followed by registered or certified mail
confirmation; (iii) on the date initially received if via scanned email upon
confirmation of receipt by receiving party; or (iv) on the date delivered by an
overnight courier service; as follows:

If to the Company:
Yan Deng, Secretary c/o Warner Technology & Investment Corp.
100 Wall Street, 15th Floor
New York, NY 10005
Facsimile No.: 212-785-5867

With a copy to:
Robert Brantl, Esq.
52 Mulligan Lane
Irvington, NY 10533
Facsimile No.: 914-693-1807

If to the Investor:
See Investors in Schedule A

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.
 
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 and is equally responsible
for its preparation.
 
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. This Agreement shall be exclusively governed by and
construed in accordance with the laws of the State of New York. 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 Courts serving
the 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.
 
11.11 Preparation and Filing of Securities and Exchange Commission filings. The
Investor 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.
 
 
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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.
 
11.16           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
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:

 
AMERICAN NANO SILICON TECHNOLGIES, INC.

By:  /s/ Pu Fachun
        Pu Fachun, CEO

INVESTOR:

T Squared Investments LLC
By: T Squared Capital LLC, Managing Member
 
By: /s/ Thomas Sauve
Thomas Sauve
Managing Member
1325 Sixth Avenue, Floor 27
New York NY 10019
T Squared China Fund LLC
By: T Squared Capital LLC, Managing Member
 
By: /s/ Thomas Sauve
Thomas Sauve
Managing Member
1325 Sixth Avenue, Floor 27
New York NY 10019
   
Silver Rock II, Ltd
 
By: Ezzat Jallal
       Ezzat Jallad
Ross Pirasteh
 
By: Ross Pirasteh
       Ross Pirasteh

 
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Schedule A

 
 
NAME AND ADDRESS
 
AMOUNT OF INVESTMENT
   
NUMBER OF SHARES
OF COMMON STOCK
   
NUMBER OF SHARES UNDERLYING WARRANTS
 
T Squared Investments LLC
1325 Sixth Avenue, Floor 27
New York, New York 10019
Attn: Thomas M. Sauve
  $ 625,000       1,312,500       1,250,000  
T Squared China Fund LLC
1325 Sixth Avenue, Floor 27
New York, New York 10019
Attn: Thomas M. Sauve
  $ 75,000       157,500       150,000  
Silver Rock II, Ltd.
Sable Trust Road,
Tortola, BVI
Courier to: Villa D103
Palm Jumeirah Island
Dubai UAE
Attn: Ezzat Jallad
 
  $ 225,000       472,500       450,000  
Ross Pirasteh
130 East 65th St.
New York, NY  10021
 
  $ 75,000       157,500       150,000  

 
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