SECURITIES PURCHASE AGREEMENT

By and among

SUNVALLEY SOLAR, INC.

as the Buyer,

RAYCO Energy, INC.

as the Company,

      and

THE SHAREHOLDERS NAMED HEREIN,

                      as the Sellers.

   EFFECTIVE DATE: MAY 15, 2016

TABLE OF CONTENTS

               Page    

Section 1.

Sale and Purchase of the Shares.
                                                                4

Section 2.

Closing.
                                                                                                       4

Section 3.

Purchase Price.
                                                                                            4

Section 4.

Representations and Warranties of the Sellers
                                            5

Section 5.

Representations and Warranties of the Buyer
                                            13

Section 6.

Survival of Representations and Warranties; Indemnification.                  15

Section 7.

Confidentiality
                                                                                           17

Section 8.

The Company’s Covenants Prior to Close
                                                 17

Section 9.

Conditions Precedent to the Obligation of the Buyer to Close
                  18

Section 10.

Conditions Precedent to the Obligations of Sellers and the

                      Company to Close.
                                                                                    19

Section 11.

The Buyer’s Obligations at Closing.
                                                          20

Section 12.

The Sellers’ Obligations at Closing
                                                           20

Section 13.

Parties in Interest
                                                                                        21

Section 14.

Entire Agreement
                                                                                       21

Section 15.

Governing Law.
                                                                                          21

Section 16.

Expenses
                                                                                                     21

Section 17.

Consent to Jurisdiction
                                                                               21

Section 18.

Arbitration
                                                                                                  21

Section 19.

Severability.
                                                                                                22

Section 20.

Notices.
                                                                                                       22

Section 21.

Non-Waivers
                                                                                              24

Section 22.

Assignment
                                                                                                 24

Section 23.

Miscellaneous
                                                                                             24

                                SCHEDULES

Schedule A:

Company Shares.

                                  EXHIBITS

Exhibit 2(b):

                  Notes to Sellers

Exhibit 4(a)(xix):           Formation Documents, Good Standing Certificates,
and Licenses

1

 

 

 

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 15, 2016,
is entered into by and among the Shareholders of Rayco Energy, Inc. (the
“Sellers”), Rayco Energy, Inc., a California corporation, (the “Company”) and
Sunvalley Solar, Inc., a Nevada corporation (the “Buyer”).

W I T N E S S E T H:

WHEREAS, the Sellers own 100% of the issued and outstanding shares of capital
stock  of the Company (the “Company Shares”), as set forth on Schedule A;

WHEREAS, the Sellers wish to sell and the Buyer wishes to purchase the Company
Shares (the "Acquisition") on the terms and subject to the conditions set forth
in this Agreement;

WHEREAS, the Company has represented it has a pipeline of solar and LED lighting
construction projects;

WHEREAS, the Board of Directors of the Buyer has determined that the Acquisition
is consistent with and in furtherance of its long-term business strategy and
fair to, and in the best interests of the Buyer and its stockholders;

WHEREAS, the Shareholders of the Company have determined that the Acquisition is
consistent with and in furtherance of its long-term business strategy and fair
to, and in the best interests of the Company and its Shareholders;

WHEREAS, the Board of Directors of each of Buyer and the Company have each
adopted resolutions approving this Agreement and the Acquisition, resulting in
the acquisition of all of the issued and outstanding capital stock of the
Company by the Buyer and with the Company continuing as a wholly-owned
subsidiary of the Buyer upon the terms and conditions set forth in this
Agreement.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

Section 1.

Sale and Purchase of the Shares.

Upon the terms and subject to the conditions set forth in this Agreement, at the
Closing (as hereinafter defined), the Sellers shall sell, transfer and deliver
to the Buyer all Company Shares owned by them, and the Buyer shall purchase from
the Sellers all such Company Shares, which collectively constitute one hundred
percent (100%) of the issued and outstanding shares of capital stock of the
Company, all of which shall be transferred to the Buyer free and clear of all
liens, mortgages, deeds of trust, security interests, pledges, charges,
encumbrances, liabilities and claims of every kind, except those contemplated by
the terms of this Agreement or arising under applicable federal and state
securities laws.

Section 2.

Closing.

The closing of the sale and purchase of the Company Shares provided for in
Section 1 of this Agreement (the “Closing”) shall take place upon the execution
of this Agreement. The deliveries to be made by each of the parties at the
Closing are specified in Sections 11 and 12 below.

Section 3.

Purchase Price.  

(a)

Purchase Price.  At Closing, in consideration for Sellers’ sale and transfer of
their Company Shares to the Buyer, the Buyer shall issue SEVENTY FIVE THOUSAND
and FIVE HUNDRED (75,500) SSOL Series B Preferred Shares (approximately 3% of
all issued Buyer preferred shares as of April 30, 2016) to the Sellers as set
forth on Schedule A.. The SSOL Series B Preferred Shares are convertible to
common stock in SSOL at ratio of 10 shares of common stock for each share of
Series B Preferred Stock. In addition to the SSOL Series B Preferred Shares,
Buyer agrees to pay an additional $350,000 in cash to Sellers as set forth on
Schedule A-2, conditioned upon the 2016 net profit from the operation of Rayco
Energy, Inc, as a wholly-owned subsidiary of the Buyer, being in excess of
$10,000 (the “CONDITION”). Buyer also agrees to invest no less than $350,000
working capital into the purchased Company after Closing for its current
projects and working capital. Such additional investment shall be allocated as
set forth in Schedule A-3 hereto, and shall be tendered and paid
contemporaneously with the Closing.

(b)

Promissory Notes. To evidence the unpaid balance of the Purchase Price, Buyer
shall issue to Sellers 6% subordinated promissory notes in the aggregate amount
$350,000.00, payable only upon the condition (the “CONDITION”) listed in Section
3 (a).  As set forth in the form of Note attached hereto as Exhibit 2(b),
interest and principal are payable monthly on first day of each month commencing
May 1, 2017 if the CONDITION is met. The payment amount shall be determined on
the basis of a six-month amortization schedule.  Prepayments may be made at any
time as the Company’s cash flow allows, as determined by the Company’s Board of
Directors. In the event that the CONDITION is not met, such notes shall be
deemed null and void.

 (c)

Effective Date of the Acquisition. The parties hereto agree that the Acquisition
shall be accounted for as if such Acquisition had occurred upon the close of
business on May 15, 2016 (the “Effective Date”), regardless of when the Closing
in fact occurs. In the event that the Acquisition is consummated, Buyer shall
realize any operating profit or loss from the operation of the business of the
Company after the Effective Date. Accordingly, the Sellers agree to consult the
Buyer on any material issues or contracts that relate to a period of time beyond
the Effective Date.

Section 4.

Representations and Warranties of the Sellers.  The representations and
warranties of the Sellers to the Buyer are as set forth in this Section 4.  

(a)

Sellers hereby represent and warrant to the Buyer as of the date hereof, as
follows:

(i)

Ownership of Company Shares.  Sellers are the owners, beneficially and of
record, of the Shares set forth opposite his name in Schedule A attached hereto
(the “Company Shares”). Company Shares are not pledged, mortgaged or otherwise
encumbered in any way and there is no lien, mortgage, charge, claim, liability,
security interest or encumbrance of any nature against the Company Shares
arising from such Sellers’ actions. The Company Shares are not party to any
outstanding warrants, rights of subscription or conversion, calls, commitments,
agreements, arrangements, understandings, plans, contracts, proxies, voting
trusts, voting agreements or instruments of any kind or character, oral or
written, relating to the issuance, voting or sale of Company Shares or of any
securities representing the right to purchase or otherwise receive any such
Shares.  Sellers are not party to any security holders agreements, preemptive
rights or other agreements, arrangements, commitments or understandings, oral or
written, relating to the voting, issuance, acquisition or disposition of the
Company Shares or the conduct or management of the Company by its Board of
Managers. At the Closing, the Sellers shall have good and marketable title to
the Company Shares and full right to transfer title to such Shares, subject to
any restrictions imposed by state or federal securities laws, free and clear of
all liens, mortgages, charges, liabilities, claims, security interests or
encumbrances of every type whatsoever.  The sale, conveyance, transfer and
delivery of the Company Shares by the Sellers to the Buyer pursuant to this
Agreement, against payment therefor in accordance with the terms hereof, will
transfer full legal and equitable right, title and interest in the Company
Shares to the Buyer, free and clear of all liens, mortgages, charges, claims,
liabilities, security interests and encumbrances of any nature whatsoever other
than as contemplated by this Agreement and the other agreements and instruments
to be entered into in connection with the transactions contemplated hereby (the
“Other Agreements”).

(ii)

Capacity.  Sellers have full capacity to enter into and perform their respective
obligations under this Agreement and all Other Agreements to which they are a
party, and to consummate such transactions. No consent of any other persons or
corporations is required to be obtained by Sellers as a condition to their
ability to consummate such transactions.  The Sellers have no equity interest in
any entity engaged in any businesses competitive with those of the Company. This
Agreement and each of the Other Agreements to which Sellers are a party have
been duly executed and delivered by Sellers.  This Agreement and each of the
Other Agreements to which Sellers are a party constitute the legal, valid and
binding obligation of Sellers enforceable against Sellers in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights generally or by general equitable principles.  

(iii)

Company Shares.  The Company Shares, set forth on Schedule A, attached hereto
constitute one hundred percent (100%) of the issued and outstanding shares of
capital stockof the Company.  The Shares are the sole equity of the Company and
are duly authorized, validly issued, fully paid and non-assessable.  The Shares
are not subject to any pledge, mortgage or other encumbrance arising by or
through any act of the Company, and there is no lien, mortgage, charge, claim,
liability, security interest or encumbrance of any nature against the Stock.
There are no outstanding options, warrants, rights of subscription or
conversion, calls, commitments, agreements, arrangements, understandings, plans,
contracts, proxies, voting trusts, voting agreements or instruments of any kind
or character, oral or written, to which the Company is party or by which the
Company is bound, relating to the issuance, voting or sale of the Company
Shares. The Company is not party to any operating agreements, preemptive rights
or other agreements, arrangements, commitments or understandings, oral or
written, relating to the voting, issuance, acquisition or disposition of the
Shares of the Company or the conduct or management of the Company by its Board
of Managers.  

(iv)

Organization; Standing; Capitalization.  The Company has full corporate power
and authority to enter into and perform its obligations under this Agreement and
all Other Agreements to which it is a party, and to consummate such
transactions.  The Company has no subsidiaries.  The Company does not hold any
equity interest in any entity that is engaged in businesses competitive with
those of the Company.  This Agreement and each of the Other Agreements to which
the Company is a party have been duly executed and delivered by the Company.
 This Agreement and each of the Other Agreements to which the Company is a party
constitute the legal, valid and binding obligation of the Company, enforceable
against it in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights generally or by general
equitable principles.  The Company is duly organized and validly existing under
the laws of the State of California, has full power and authority to conduct its
business as it is now being conducted and is duly qualified to do business in
each jurisdiction where the nature of the property owned or leased, or the
nature of the business conducted by the Company requires such qualification,
except where the failure to have such power and authority or to so qualify would
not have a material adverse effect on the Company.  The Articles of
Incorporation of the Company and the Bylaws, and the minutes and records of the
Company delivered to the Buyer are complete and correct.  The Company has all
necessary licenses and authority to operate its business as now being conducted,
except where the failure to have such licenses or authority would not have a
material adverse effect on the Company.

(v)

Legal Proceedings. To the best of Sellers knowledge:

(A)

Neither the Sellers nor the Company is a named party or otherwise directly
involved in any pending litigation, arbitration, administrative proceeding or to
any investigation related to the business of the Company, and no such
litigation, arbitration, administrative proceeding or investigation that, if
adversely decided, would result in a material adverse change in the financial
condition, business or properties of the Company, is threatened.

The Sellers have no knowledge of and have not received written notice of any
claims, threats, plans or intentions to discontinue commercial relations or
transactions from any major customer of the Company, any purchaser of a material
amount of goods or services from the Company, any employee or independent
contractor significant to the conduct or operation of the Company or its
businesses or any party to any material agreement to which the Company is a
party that, if resulting in the actual discontinuance of such commercial
relations or transaction, would result in a material adverse change in the
financial condition, business or properties of the Company .

(B)

The Sellers have received no written notice of any claim (whether on whatever
theory) relating directly or indirectly to any product manufactured or sold, or
any services performed by the Company asserting that the Company is liable for
an alleged deficiency in such product or services that, if adversely decided,
would result in a material adverse change in the financial condition, business
or properties of the Company.

(C)

The Company is under no obligation with respect to the return of goods in the
possession of customers except for those occurring in the ordinary course of
business, which are not in the aggregate material to the Company’s business, or
against which the Company has established a reserve on its financial statements.

(vi)

Encumbrances. There are no liens, mortgages, deeds of trust, claims, charges,
security interests or other encumbrances or liabilities of any type whatsoever
to which any of the assets of the Company are subject, except for those arising
in the ordinary course of business or by operation of law, which do not
materially interfere with the ownership or operation of such assets.

(vii)

Trade Names.  The Company does not own or hold the license or rights to use, any
trade names, trademarks, service marks, assumed names or copyrights.

(viii)

Patents. None.

(ix)

Financial Statements.

(A)

Sellers and Shareholders shall provide the Buyer all financial information
required by Buyer, who shall prepare audited financial statements of the Company
for any time periods required for the Buyers filings (the “Audited Financial
Statements”), together with the related notes and schedules required for Buyer
to prepare interim financial statements of the Company for any period required
thereafter (the “Interim Financial Statements”), together with the related notes
and schedules (collectively, the “Financial Statements”). Sellers shall produce
accurate information as required and Sellers shall sign all Financial Statements
as may be required. Financial Statements prepared by Buyer shall, (i) have been
prepared in accordance with generally accepted accounting principles
consistently applied and as in effect in the United States from time to time
(“GAAP”); (ii) present fairly and in all material respects, the financial
condition, results of operations, and cash flows of the Company as of and for
the periods specified therein; (iii) have been audited by a certified public
accountant and include an unqualified opinion; (iv) are true, correct and
complete statements in all material respects of the financial condition and the
results of operations of the Company as at and for the periods therein
specified; (v) shall and not contain any untrue statements of a material fact or
omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with
respect to the periods covered by the Financial Statements; and (vi) shall have
been prepared from and are in accordance with the accounting Books and Records
of the Company. Sellers shall provide all material assistance reasonably
requested by Buyer in connection with an audit of the financial statements of
the Company to be prepared and filed in compliance with the federal securities
laws.

(B)

Except as and to the extent shown or provided for in the Financial Statements or
as disclosed in any of the Schedules to this Agreement or such current
liabilities as may have been incurred since December 31, 2015 in the ordinary
course of business, the Company has no liabilities or obligations (whether
accrued, absolute, contingent or otherwise). As of December 31, 2015, there was
no material asset used by the Company in its operations that has not been
reflected in the Financial Statements when prepared, and, except as set forth in
the Financial Statements or disclosed in any Schedule to this Agreement, no
material assets have been acquired by the Company since such date except those
acquired in the ordinary course of business.

(x)

Tax Matters.

(A)

Filing of Tax Returns and Payment of Taxes.    As of the date hereof, the
Sellers have not filed any tax returns with any governmental agency on behalf
the Company.  Following the Closing, the Buyer shall be responsible to file all
required tax returns for the period commencing on the Closing Date; provided,
that the Sellers shall file all required tax returns for the period prior to the
date hereof.

(B)

Audit History, Extensions, Etc. There is no action, suit, Taxing authority
proceeding (foreign, federal, state or local), or audit with respect to any Tax
now in progress, pending, or to the best of the Sellers’ knowledge, threatened,
against or with respect to the Company.  

(C)

Shareholdership in Affiliated Groups, Etc.  The Company has never been a member
of any affiliated group, or filed or been included in a combined, consolidated,
or unitary Tax Return other than a consolidated Tax return with respect to the
Company. The Company is not a party to or bound by any Tax sharing or allocation
agreement or has any current or potential contractual obligation to indemnify
any other person with respect to Taxes.

(D)

Withholding Taxes.  The Company has withheld and paid all Taxes required to have
been withheld and paid by it in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other person.

(E)

Amending Tax Returns.  Following Closing, no Tax Returns with respect to the
Company shall be amended without the prior written consent of the Sellers if
such amendments could result in liability to such Sellers.

(xi)

Accounts Receivable. None. (xii)

(xii)

Title of Properties.

(A)

The Company does not own any real property.  Except as disclosed on Schedule
4(a)(xii), the Company has good, marketable and insurable title to all
properties and assets, real and personal, tangible and intangible, as reflected
in the Financial Statements or acquired subsequent to December 31, 2015 (other
than those which have been disposed of in the ordinary course of business prior
to the Closing Date).  

(B)

The Company does not have any leases or other agreements requiring aggregate
payments by the Company in excess of $15,000.

(C)

The Sellers are not aware of, nor has he received notice of, the violation of
any applicable zoning regulation, ordinance or other law, order, regulation or
requirement in force on the date hereof relating to the Company’s business or
its owned or leased real or personal properties,

(xiii)

Material Contracts.

(A)

Schedules B, C and D attached hereto contains a complete and correct list as of
the date hereof of all material agreements, contracts and commitments,
obligations and understandings, as amended, requiring aggregate payments or
services to or by the Company which are not set forth in any other Schedule
(“Material Contracts”). All such Material Contracts are in full force and effect
and, the Company has and, to the best knowledge of the Sellers, all other
parties to, or otherwise bound by, such Material Contracts have performed all
obligations required to be performed by them to date.  The Company has not
received written notice that it is in default of any Material Contract, and to
the best knowledge of the Sellers, no event, occurrence, condition or act exists
which gives rise to (or which with notice or the lapse of time, or both, would
result in) a default or right of cancellation, acceleration or loss of
contractual benefits under any Material Contract.  There have been no written
threatened cancellations thereof, and the Company is not involved in any
outstanding disputes under any Material Contract. No consent of any counterparty
to any Material Contract is required as a condition to the Company’s execution
and delivery of this Agreement.  Any contracts, agreements, leases or
commitments relating to the business of the Company, but held in the name of the
Sellers (and set forth in the Schedules hereto) shall be assigned to either the
Buyer or the Company on the Closing Date.  

(B)

Each Material Contract constitutes a valid and binding obligation of the Company
and, to the best knowledge of the Sellers, of the other respective parties to
such agreements.  To the best knowledge of the Sellers, no counterparty to any
Material Contract is in default thereof, nor are they aware of any event that,
with notice, lapse of time or both, would constitute a default by the Company or
such other parties in respect of which adequate steps have not been taken to
cure such default or to prevent a default from occurring or continuing.  

(C)

No agreement, contract, commitment, obligation or undertaking listed on the
Schedules hereto which the Company is a party or by which it or any of its
properties is bound, contains any provision, the performance of which materially
adversely affects the condition, properties, assets, liabilities, business,
operations or prospects of the Company following the date hereof.

(xiv)

Default; Violations or Restrictions.  The execution, delivery and performance of
this Agreement and of any Other Agreement by the Company, and the consummation
of any of the transactions contemplated hereby or thereby will not (or with the
giving of notice or the lapse of time or both would) (A) result in the breach of
any term or provision of the Articles of Incorporation or Bylaws of the Company;
or (B) violate any provision of or result in the breach of, or constitute a
default under any law, order, writ, injunction, decree, statute, rule or
regulation of any court, governmental agency or arbitration tribunal applicable
to the Company (other than such violations, breaches or defaults that would not
result in a material adverse effect on the Company); or (C) violate any
provision of or result in the breach of, modification of, acceleration of the
maturity of obligations under, or constitute a default, or give rise to any
right of termination, cancellation, acceleration or otherwise be in conflict
with or result in a loss of material contractual benefits to the Company under
any of the terms, conditions or provisions of any contract, lease, note, bond,
mortgage, deed of trust, indenture, license, security agreement, agreement or
other instrument or obligation to which the Company is a party or by which it is
bound (other than such violations, breaches, modifications, defaults or
conflicts that would not result in a material adverse effect on the Company); or
(D) require any consent, approval or notice under any law, rule or decree,
document or instrument (other than where the failure to obtain such consent or
approval, or give such notice, would not result in a material adverse effect on
the Company); or (E) result in the creation or imposition of any lien, claim,
restriction, charge or encumbrance upon the Company’s assets (other than such
liens, claims, restrictions, charges or encumbrances that would not, in the
aggregate, have a material adverse effect on the Company).

(xv)

Court Orders and Decrees.  The Company has not received written or oral notice
that there is outstanding, pending, or threatened any order, writ, injunction or
decree of any court, governmental agency or arbitration tribunal against the
Company or involving the Company Shares or any of the Company’s material assets.
 

(xvi)

Books and Records.  The books and records of the Company are, in all material
respects, complete and correct and have been maintained in accordance with good
business practice.  True and complete copies of the Articles of Incorporation
and Bylaws of the Company and all amendments thereto and true and complete
copies of all minutes, resolutions, Share certificates and Share transfer
records of the Company are contained in the minute books and that have been
previously delivered to the Buyer for inspection, and will be transferred and
delivered to the Buyer at the Closing.

(xvii)

Labor Matters.  Schedule 4(a)(xvii)(a) contains a true, complete and correct
list as of the date hereof setting forth (i) the names, hire dates, current
compensation rates and job titles of all individuals presently employed by the
Company and (ii) the names and total annual compensation for all independent
contractors who render services on a regular basis to the Company. No person
listed thereon has received any bonus or increase in compensation, nor has there
been any promise to the employees listed on Schedule 4(a)(xvii) orally or in
writing made by the Company or its officers or other employees. There is no
commitment or obligation to hire any other person.

The Company is not a party to or obligated with respect to any collective
bargaining agreements or contracts with any labor union or other representative
of employees or any employee benefits provided for by any such agreement.

(xviii)

Relationships with Customers, Clients and Payors.  The Sellers believe that the
Company’s relationships with its customers and clients, and payors are
satisfactory, and the Sellers have no knowledge of any facts or circumstances
which might materially alter, negate, impair or in any way materially adversely
affect the continuity of any such relationships. The Company and the Sellers
have no knowledge of any material claims of any of its customers or clients
presently outstanding, pending or threatened against the Company.  

(xix)

Licenses, Contracts and Permits.  To Sellers’ knowledge, Exhibit (a)(xix)
contains a correct and complete list of all material governmental and
administrative consents, permits, appointments, approvals, licenses,
certificates, payor/insurance contracts and franchises which are (i) necessary
for the operation of the Company, and (ii) required in connection with the
Company’s execution, delivery or performance of this Agreement, all of which
have been obtained by the Company and are in full force and effect. The Company
is and has been in compliance in all material respects with all Permits set
forth on Schedule 4(a)(xix), all of which are valid, binding and in full force
and effect, and the Company has not received any written notice to the contrary.
None of such Permits will require the consent, approval, novation or waiver of,
or giving of notice to, any Governmental Authority or other third party in
connection with the consummation of the transactions contemplated by this
Agreement.

(xx)

Brokers.  No person acting on behalf of any of the Company or under its
authority is or will be entitled to a financial advisory fee, brokerage
commission, finder’s fee or other like payment in connection with the
transactions contemplated hereby.

(xxi)

Compliance With Laws.

(A)

The operations and activities of the Company have previously and continue to
comply in all material respects with all applicable federal, state and local
laws, statutes, codes, ordinances, rules, regulations, permits, judgments,
orders, writs, awards, decrees or injunctions applicable to the Company
(collectively, the “Laws”), as in effect on or before the date of this
Agreement, except where such noncompliance would not have a Material Adverse
Effect.  The conduct of the business of the Company as presently conducted does
not conflict with the rights of any other person or violate (with or without the
giving of notice or the passage of time, or both), conflict with or result in a
default, right to accelerate or loss of material rights under, any terms or
provisions of its Articles of Incorporation and Bylaws as presently in effect,
or any lien, encumbrance, mortgage, deed of trust, lease, license, agreement,
understanding, or Laws to which the Company is a party or by which it is bound,
other than such conflicts, violations or defaults as do not, in the aggregate,
have a Material Adverse Effect.  The Company has received no written notice or
communication from any third party asserting a failure to comply with any Laws,
nor has the Company received any written notice that any authority or third
party intends to seek enforcement against the Company to compel compliance with
any such Laws.

(B)

There are no existing claims or potential claims which may exist against the
Company, with respect to the presence on or under, or the escape, seepage,
leakage, spillage, discharge, or emission discharging or emanating from, the
real property leased by the Company to the extent regulated under any
Environmental Laws (defined below), of any petroleum or fraction thereof,
petroleum product, petroleum by-product, fuel oil, waste oil, explosive,
reactive material, ignitable material, corrosive material, hazardous chemical,
hazardous waste, hazardous substance, extremely hazardous substance, toxic
substance, toxic chemical, radioactive material, medical waste, biomedical
waste, infectious material, pollutant, toxic pollutant, herbicide, fungicide,
rodenticide, insecticide, contaminant or pesticide and any other element,
compound, mixture, solution or substance which may reasonably pose a present or
potential risk to human health or the environment (“Hazardous Material”),
including, without limitation, any losses, liabilities, damages, injuries,
costs, expenses, reasonable fees of counsel or claims asserted or arising under
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended (“CERCLA”), or any other applicable federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree now in effect
(“Environmental Laws”) regulating, relating to or imposing liability or
standards of conduct concerning any Hazardous Material.  Since the date first
acquired or leased by the Company, the Company has not placed any Hazardous
Material on or under the real property owned or leased by the Company and there
has been no Hazardous Material on or under the real property owned or leased by
the Company.

(C)

Neither the Company, nor any officer, employee or agent of the Company acting on
its behalf has, directly or indirectly, within the past three (3) years given or
received or agreed to give or receive any gift or similar benefit to any
governmental employee or other person which violates the Foreign Corrupt
Practices Act or any other similar Law applicable to the Company.

(xxii)

 Guarantees.  The Sellers have not personally guaranteed any of the obligations
of the business of the Company, except as indicated on Schedule A-4 hereto

(xxiii)

Absence of Undisclosed Liabilities. To the best of Sellers knowledge, there are
no undisclosed liabilities.

Section 5.

Representations and Warranties of the Buyer.  Buyer warrants and represents to
the Sellers as of the Closing Date as set forth in this Section 5.  As used
herein, “best knowledge” or “to the best knowledge” shall mean information
actually known by the relevant party or what should be known to such party after
due inquiry or in the exercise of reasonable care in the performance of the
duties of his office.

(a)

Capacity; No Conflict.  The Buyer has full right, power and capacity to execute,
deliver and perform its obligations under this Agreement and the Other
Agreements and to consummate the transactions contemplated hereby and thereby.
 The execution, delivery and performance of this Agreement and the Other
Agreements does not, and the consummation of the transactions contemplated by
this Agreement and the other Agreements will not (i) violate, conflict with or
constitute a breach of or default under any term or provision of the Certificate
of Incorporation or By-laws of the Buyer, (ii) violate, conflict with or
constitute a breach of any law, order, writ, injunction, decree, statute, rule
or regulation of any court, governmental agency or arbitration tribunal known by
the Buyer to be applicable to it, (iii) any violate any provision of or result
in the breach of, modification of, acceleration of the maturity of obligations
under, or constitute a default, or give rise to any right of termination,
cancellation, acceleration or otherwise be in conflict with or result in a loss
of material contractual benefits to the Buyer under any of the terms, conditions
or provisions of any contract, lease, note, bond, indenture, instrument,
mortgage, deed of trust, license, security agreement or other agreement,
obligation or instrument to which the Buyer is a party or by which it is bound,
(iv) require any consent, approval or notice under any law, rule or decree,
document or instrument (other than where the failure to obtain such consent or
approval, or give such notice, would not result in a material adverse effect on
the Buyer); or (v) result in the creation or imposition of any lien, claim,
restriction, charge or encumbrance upon the Buyer or any of its assets, other
than with respect to clauses (ii), (iii) or (iv) of this Section 5(a), such
violations, conflicts, breaches, modifications or defaults, or such liens,
claims, restrictions, charges or encumbrances that would not result in a
material adverse effect on the financial condition of the Buyer or on its
ability to enter into and perform its obligations hereunder and under the Other
Agreements.

(b)

Organization.

The Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, and has the corporate power and authority
to carry on its business as now conducted and to own, lease or operate the
properties and assets now used by it in connection therewith.  The Buyer is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties make such
qualification necessary.

(c)

Consents and Approvals.  No governmental license, permit or authorization, and
no registration or filing with any court, governmental authority or regulatory
agency, and no consent, authorization or approval of, or notice to, any other
third party, is required to be obtained by the Buyer as a condition to or in
connection with its execution, delivery or performance of this Agreement and the
Other Agreements or the consummation of the transactions contemplated hereby or
thereby.

(d)

Legal Proceedings.  Neither the Buyer nor any of its officers or directors is a
party to or affected by any pending litigation, arbitration or any governmental
administrative proceeding or investigation that would in any manner materially
affect its entering into this Agreement or the Other Agreements or performing
the transactions contemplated hereby or thereby, or that might result in any
material adverse change in the financial condition, business or properties of
the Buyer, and to the best of Buyer’s knowledge, no such litigation,
arbitration, proceeding or investigation is threatened.

(e)

Binding Obligation.  This Agreement and each of the Other Agreements has been
duly executed and delivered by the Buyer and constitutes the legal, valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with their respective terms, except to the extent that such enforceability may
be limited by general principles of equity or bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors’ rights generally.  All
action of the Board of Directors of the Buyer and all other corporate action
necessary to authorize the execution, delivery and performance of this Agreement
and the Other Agreements, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly taken.

(f)

Accuracy.  No representation, warranty, covenant or statement by the Buyer in
this Agreement, including the Schedules and Exhibits attached hereto and the
certificates furnished or to be furnished to the Sellers pursuant hereto,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein in light of the
circumstances under which they were made, not false or materially misleading.

 (g)

Compliance With Laws.  The operations and activities of the Buyer have
previously and continue to comply in all material respects with all applicable
federal, state and local laws, statutes, codes, ordinances, rules, regulations,
permits, judgments, orders, writs, awards, decrees or injunctions known to be
applicable to the Buyer (collectively, the “Laws”), as in effect on or before
the date of this Agreement, except where such noncompliance would not materially
and adversely affect the Buyer.  The conduct of the business of the Buyer as
presently conducted does not conflict with the rights of any other person or
violate (with or without the giving of notice or the passage of time, or both),
conflict with or result in a default, right to accelerate or loss of material
rights under, any terms or provisions of its Certificate of Incorporation or
By-laws as presently in effect, or any lien, encumbrance, mortgage, deed of
trust, lease, license, agreement, understanding, or Laws to which the Buyer is a
party or by which it is bound, other than such conflicts, violations or defaults
as do not, in the aggregate, have a material adverse effect on the Buyer. The
Buyer has received no written notice or communication from any third party
asserting a failure to comply with any Laws, nor has the Buyer received any
written notice that any authority or third party intends to seek enforcement
against the Buyer to compel compliance with any such Laws.

Section 6.

Survival of Representations and Warranties; Indemnification.

(a)

Survival of Representations and Warranties.  All representations and warranties
made by the Sellers or the Buyer in this Agreement, including without limitation
all representations and warranties made in any Exhibit or Schedule hereto or
certificate delivered hereunder, shall survive the Closing until two (2) years
from the Closing Date (the “Survival Date”); provided, however, that all
representations and warranties made by the Sellers in Sections 4(a)(x) and
(xxi), and by the Buyer in Section 5(h) hereof shall survive the Closing until
the expiration of the applicable statute of limitations (the “Extended Survival
Date”).

(b)

Indemnification by the Sellers.  Subject to the limitations set forth in Section
6(d)(iv) below, the Sellers hereby agree to indemnify, defend and hold harmless
the Buyer and its affiliates, and the officers, directors, employees,
contractors, agents, representatives of the Buyer, from and against all
liabilities, losses, costs or damages whatsoever (including expenses and
reasonable fees of legal counsel) (“Losses”) arising out of or relating to any
claims, demands, actions, lawsuits or proceedings (“Claims”) made prior to the
Survival Date or the Extended Survival Date, if applicable, that Losses have
been incurred as a result of (i) the inaccuracy in any material respect of any
representation or warranty contained in Section 4 made by the Sellers; (ii) the
non-performance by the Sellers in any material respect of any covenant,
agreement or obligation to be performed by the Sellers under this Agreement or
any Other Agreement; and (iii) the assessment of any federal, state local or
other tax liabilities due and payable by the Company for all periods through the
Closing Date; provided, however, that:

(A)

to the extent that the underlying representation, warranty, covenant, agreement
or obligation (the breach of which gave rise to such Losses) was made by the
Sellers, then Sellers’ indemnification obligations hereunder shall be (subject
to the limitations set forth in Section 6(d)(iv) below) limited in amount to
those Losses directly attributable to Sellers’ breach;

(B)

Sellers shall not be liable for Losses attributable, to the operation of the
business of the Company on and after the Closing Date.

(c)

Indemnification by Buyer.  Subject to the limitations set forth in Section
6(d)(iv) below, the Buyer hereby agrees to indemnify, defend and hold harmless
the Sellers from and against all Losses arising out of or from or based upon (i)
the inaccuracy in any material respect of any representation or warranty
contained in Section 5 by the Buyer; (ii) the non-performance by the Buyer in
any material respect of any covenant, agreement or obligation to be performed by
the Buyer under this Agreement or any Other Agreement; (iii) the assessment of
any federal, state local or other tax liabilities due and payable by the Company
for all periods from and after the Closing Date; and (iv) any liabilities
arising out of the operation of the business of the Company by Buyer on and
after the Closing Date.

(d)

Defense of Claims.  

(i)

Whenever any Claim shall be made that alleges a Loss for which indemnification
would be payable hereunder, the party entitled to indemnification (the
“Indemnitee”) shall notify the indemnifying party (the “Indemnitor”) in writing
within 30 days after the Indemnitee has actual knowledge of such Claim (the
“Notice of Claim”).  The Notice of Claim shall specify all facts known to the
Indemnitee giving rise to such Claim and a detailed breakdown of the amount or
an estimate of the amount of the Loss arising therefrom.

(ii)

If the facts giving rise to any such Claim shall involve any actual, threatened
or possible claim or demand by any person against the Indemnitee, the Indemnitor
shall be entitled (without prejudice to the right of the Indemnitee to
participate at its expense through co-counsel of its own choosing) to contest or
defend such Claim at its expense and through counsel of its own choosing if it
gives written notice of its intention to do so to the Indemnitee within 10 days
after receipt of the Notice of Claim; provided that Indemnitor diligently
prosecutes or defends such Claim.

(iii)

Neither the Indemnitee nor the Indemnitor shall settle any Claim or consent to
the entry of judgment with respect thereto without the prior written consent of
the other party, which consent shall not unreasonably be withheld or delayed.
 If a firm offer is made to settle a Claim defended by the Indemnitee and the
Indemnitor refuses to accept such offer within 20 days after receipt of written
notice from the Indemnitee of the terms of such offer, then, in such event, the
Indemnitee shall continue to contest or defend such Claim and shall be
indemnified pursuant to the terms hereof.  If a firm offer is made to settle a
Claim and the Indemnitor notifies the Indemnitee in writing that the Indemnitor
desires to accept and agree to such settlement, but the Indemnitee elects not to
accept or agree to it, the Indemnitee may continue to contest or defend such
Claim and in such event, the total maximum Losses for which indemnification
would be due hereunder with respect to such Claim shall be limited to and shall
not exceed the amount of such settlement offer, plus reasonable out-of-pocket
costs and expenses (including reasonable attorneys’ fees and disbursements) to
the date of notice that the Indemnitor desires to accept such settlement.

(iv)

Notwithstanding any provision of this Agreement to the contrary, no Claim for
indemnification pursuant to this Section 6 by the Indemnitee shall be asserted
except to the extent indemnifiable Losses exceed, in the aggregate, the sum of
$25,000 (the “Basket Amount”), after which only aggregate Losses in excess of
the Basket Amount shall be indemnifiable hereunder by the Sellers.
 Notwithstanding any provision of this Agreement to the contrary, the maximum
liability for indemnification by the Buyer shall not exceed the Purchase Price,
and for Sellers, shall not exceed the Purchase Price received by Sellers.   Any
liability of any Sellers for indemnification with respect to a Claim shall be
satisfied in cash up to the Purchase Price received by Sellers.

Section 7.

Confidentiality.  From and after the date of this Agreement, each party hereto
and their representatives shall maintain the confidentiality of all documents
and information of a confidential nature received from any other party hereto in
the course of their negotiations and due diligence review.

Section 8.

The Company’s Covenants Prior to Close.  The Company and the Sellers hereby
covenant that, except as otherwise consented to in writing by Buyer, from and
after the date hereof until the Closing or the earlier termination of this
Agreement:

(a)

Conduct of Business.

(A)

The Company shall carry on the Company’s business (the “Business”) in the
ordinary course and in the same manner as heretofore conducted, in consultation
with Buyer, not carry on any activity relating to the Business other than normal
day-to-day activities, and shall not take any action or fail to take any action,
with respect to the Business, if such action or failure thereof could reasonably
be expected to have a material adverse effect ("Material Adverse Effect").
 “Material Adverse Effect” shall mean, with respect to the Business, any
material adverse effect or material adverse change in the financial condition,
operations or results of operations of the Business, taken as a whole, or on the
ability of Sellers to consummate this transaction.

(b)

Further Assurances. If after the Closing, Buyer determines or is advised that
any deeds, bills of sale, instruments of conveyance, assignments, assurances or
any other actions or things are necessary (i) at any time, to vest or perfect
ownership (of record or otherwise) of its right, title or interest in, to or
under, any or all of the Sharess of the Company, (ii) at any time during the
18-month period after the Closing, (A) to vest or perfect ownership (of record
or otherwise) by the Company of any of its rights, properties or assets or (B)
otherwise to carry out this Agreement, Sellers shall execute and deliver, or
cause to be executed and delivered, all deeds, bills of sale, instruments of
conveyance, powers of attorney, assignments and assurances and to take and do
all such other actions and things as are necessary in order to vest or perfect
any and all right, title and interest in, to and under such rights, properties
or assets in Buyer, the Company or otherwise to carry out this Agreement.

Section 9.

Conditions Precedent to the Obligation of the Buyer to Close.  The obligation of
the Buyer to complete this transaction shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions:

(a)

There shall not have been any breach of the representations, warranties,
covenants and agreements of the Sellers or the Company contained in this
Agreement or the Schedules and Exhibits hereto, and all such representations and
warranties shall be true at all times on and before the Closing as if given at
such times, except to the extent that any such representation or warranty is
expressly stated to be true as of some other time.

(b)

The Sellers and the Company shall have performed and complied with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by them prior to or at the Closing Date. All documents and
instruments required in connection with this Agreement shall be reasonably
satisfactory in form and substance to the Buyer.

(c)

The Buyer shall have received certificates dated the Closing Date and signed by
the Sellers and the Company certifying that the conditions specified in
subsections (a) and (b) above have been fulfilled except to the extent that any
non-fulfillment was disclosed in writing to the Buyer prior to the Closing Date.

(d)

The Company and/or the Sellers shall have obtained and delivered to the Buyer
any required consents or approvals of any third parties whose consent is
required by such party as a condition to the consummation of the transactions
contemplated hereunder.

(e)

The Buyer shall have received originals or certified copies, reasonably
satisfactory in form and substance to the Buyer, of the following corporate
documents of the Company:

(i)

the Articles of Incorporation of the Company and all amendments thereto and
restatements thereof certified as of a recent date by the Secretary of State of
California;

(ii)

the Bylaws of the Company and all amendments thereto and restatements thereof
certified as of the Closing Date by an officer of the Company;

(iii)

certificate of existence of the Secretary of State of California, certifying as
of a recent date that the Company is duly organized, validly existing and in
good standing under the laws of that State;

(iv)

copies of the minutes and resolutions of the Shareholders of the Company showing
the approval by the Shareholders of the execution and delivery by the Company to
the Buyer of this Agreement and of the agreements and instruments provided for
herein and of the performance of the obligations of the Company under this
Agreement and such other instruments and agreements, certified as of a recent
date by the Secretary or another officer of the Company;

(v)

a certificate of incumbency identifying the officers and directors of the
Company immediately before Closing;

(vi)

an Investment Letter, executed by each of the Sellers in a form reasonably
acceptable to Buyer.

(f)

The Company and/or the Sellers shall have delivered to the Buyer an assignment
or consent to all of the leases (if any).

(g)

The Buyer shall have received from the Sellers, original copies of this
Agreement and each of the Other Agreements, validly executed and delivered by
the Sellers.

(h)

 There shall have been no material adverse change in the condition (financial or
otherwise), business, assets, liabilities, properties, results of operations or
earnings of the Company.

(i)

There shall be no outstanding actions or threats of action by any party that may
materially adversely effect the condition (financial or otherwise), business,
assets, liabilities, properties, results of operations, or earnings of the
Company.

(j)

The Company’s outstanding debt obligations and Liabilities consists entirely and
solely of those obligations set forth in Schedule A-4 hereto.

Section 10.

Conditions Precedent to the Obligations of Sellers and the Company to Close.
 The obligations of the Sellers and the Company to complete this transaction
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions:

(a)

There shall not have been any breach of the representations, warranties,
covenants and agreements of the Buyer contained in this Agreement, and all such
representations and warranties shall be true at all times at and before the
Closing, except to the extent that any such representation or warranty is
expressly stated to be true as of some other time.

(b)

The Buyer shall have performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by them. All
documents and instruments required in connection with this Agreement shall be
reasonably satisfactory in form and substance to the Sellers.

(c)

The Sellers shall have received a certificate dated the Closing Date and signed
by the Buyer, certifying that the conditions specified in Sections 10(a) and
10(b) above have been fulfilled.

(d)

The Buyer shall have obtained and delivered to the Sellers any required consents
or approvals of any third parties whose consent is required by the Buyer as a
condition to the consummation of the transactions contemplated hereunder.

(e)

The Sellers shall have received from the Buyer, original copies of this
Agreement and each of the Other Agreements, validly executed and delivered by
the Buyer.

(f)

The Sellers shall have received originals or certified copies, reasonably
satisfactory in form and substance to the Sellers, of the following corporate
documents of the Buyer:

(i)

a certificate of existence certifying as of a recent date that the Buyer is a
company in good standing under the laws of its state of incorporation;

(ii)

copies of the minutes and resolutions of the Board of Directors of the Buyer
showing the authorization and approval by such Board of the execution and
delivery by the Buyer of this Agreement and the agreements and instruments
provided for herein and of the performance of the obligations of the Buyer under
this Agreement and such other instruments and agreements, certified as of a
recent date by the Secretary or another officer of the Buyer; and

(iii)

a certificate of incumbency identifying the officers and directors of the Buyer
as of the Closing Date.

Section 11.

The Buyer’s Obligations at Closing.

(a)

At the Closing, in addition to fulfilling the conditions to closing appearing in
Section 9 of this Agreement, the Buyer shall deliver:

(i)

None    

Section 12.

The Sellers’ Obligations at Closing.  At the Closing, in addition to fulfilling
the conditions to Closing appearing in Section 8 herein:

(a)

the Sellers shall deliver to the Buyer the Company Shares representing all of
the securities of the Company, free of all liens, claims and encumbrances
properly endorsed, or with stock powers executed in blank, and with any and all
transfer, stamp or similar taxes upon the transfer of the shares to the Buyer
paid in full by Sellers.

(b)

the Sellers shall transfer and deliver to the Buyer all original minute books,
stock books, stock transfer ledger, canceled stock certificates, corporate seals
and financial records and statements of the Company.

Section 13.

Parties in Interest.  This Agreement shall be binding upon and shall inure to
the benefit of the parties and their successors and assigns. Nothing herein
expressed or implied is intended or shall be construed to confer upon or to give
any person, firm, or corporation other than the parties hereto any rights or
remedies under or by reason hereof.

Section 14.

Entire Agreement.  This Agreement, including the Schedules and Exhibits hereto,
and together with the Other Agreements, contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, supersedes all prior and contemporaneous agreements, arrangements and
understandings, and shall not be modified or affected by any offer, proposal,
statement or representation, oral or written, made by or for any party in
connection with the negotiation of the terms hereof.  All references herein to
this Agreement shall specifically include, incorporate and refer to the
Schedules and Exhibits attached hereto which are hereby made a part hereof.
 There are no representations, promises, warranties, covenants, undertakings or
assurances (express or implied) other than those expressly set forth or provided
for herein and in the other documents referred to herein.  This Agreement may
not be modified or amended orally, but only by a writing signed by all the
parties hereto.

Section 15.

Governing Law.  This Agreement and all rights and obligations hereunder shall be
governed by, and construed in accordance with, the laws of the State of
California, applicable to agreements made and to be performed wholly within said
State, without regard to the conflicts of laws principles of such State.

Section 16.

Expenses.  The Buyer, the Company and the Sellers shall each pay their own
expenses incidental to the preparation of this Agreement, the carrying out of
the provisions of this Agreement and the consummation of the transactions
contemplated hereby.

Section 17.

Consent to Jurisdiction.  Notwithstanding any other provision in this Agreement
to the contrary, controversies between Buyer and Sellers shall be resolved, to
the extent possible, by informal meetings and discussions in good faith between
the parties.

Section 18.

Arbitration.  Any dispute with respect to this Agreement which absent, fraud or
a misrepresentation of a material fact, cannot be made acceptable to the parties
by an adjustment of the Terms of this Agreement shall be resolved by mediation
and, if mediation is not successful, then by arbitration as provided herein.

The parties agree first to endeavor to settle the dispute in an amicable manner
by mediation administered by the American Arbitration Association (the “AAA”) or
such other mediation service as is mutually agreeable to the parties to the
dispute under either the AAA’s Commercial Mediation Rules or such other
commercial mediation rules as is mutually agreeable to the parties to the
dispute.  The mediation shall take place in San Diego, California, with
representatives of the parties present with full authority to negotiate a
settlement.  The parties must participate in the Mediation process with a
neutral mediator for at least ten hours over at least two days prior to
commencement of any arbitration.  If a party to the dispute refuses to
participate in the mediation, the party demanding mediation may either compel
mediation by seeking an appropriate order from a court of competent jurisdiction
or proceed immediately to arbitration.  Thereafter, any unresolved dispute shall
be settled by arbitration administered by the AAA or such other arbitration
service as is mutually agreeable to the parties to the dispute in accordance
with the AAA’s Commercial Arbitration Rules or such other commercial arbitration
rules as is mutually agreeable to the parties to the dispute.  Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof, and the resolution of the disputed matter as determined by
the arbitrator(s) shall be binding on the parties.  Any such mediation or
arbitration shall be conducted in San Diego, California applying California law.

Any party may, without inconsistency with this Agreement, seek from a court any
interim or provisional relief that may be necessary to protect the rights or
property of that party pending the establishment of the arbitral tribunal, or
pending the arbitral tribunal’s determination of the merits of the controversy.

The arbitrator(s) may award costs and fees to the prevailing party if, in
his/her (their) discretion, the non-prevailing party did not prosecute the
arbitration or settlement of the dispute in good faith.  “Costs and fees” for
this purpose shall mean reasonable pre-award expenses of the arbitration,
including fees for the arbitrator(s), administrative fees, travel expenses,
out-of-pocket expenses such as copying and telephone, court costs, witness fees
and attorneys’ fees.  Except as otherwise awarded by the arbitrator(s), all
costs and fees shall be borne by the party incurring such costs and fees.

The award shall be in writing and shall be signed by the arbitrator(s) and shall
include a statement regarding the disposition of any statutory claim.

Section 19.

Severability.  If any part of this Agreement is held to be unenforceable or
invalid under, or in conflict with, the applicable law of any jurisdiction, the
unenforceable, invalid or conflicting part shall, to the extent permitted by
applicable law, be narrowed or replaced, to the extent possible, with a judicial
construction in such jurisdiction that effectuates the intent of the parties
regarding this Agreement and such unenforceable, invalid or conflicting part. To
the extent permitted by applicable law, notwithstanding the unenforceability,
invalidity or conflict with applicable law of any part of this Agreement, the
remaining parts shall be valid, enforceable and binding on the parties.

Section 20.

Notices.

(a)

All notices, requests, consents and demands by the parties hereunder shall be
delivered by hand, by recognized national overnight courier or by deposit in the
United States mail, postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to be notified at the addresses set
forth below:

if to the Company to:

Rayco Energy Inc.

3222 Castro Valley Blvd

Castro Valley, CA 94546

Attn: Ricky Chu

Phone (510) 646-7566

if to the Buyer to:

Sunvalley Solar, Inc.

398 Lemon Creek Dr.

Walnut, CA 91789

Attention: James Zhang

Phone (909) 598-6633

(b)

Notices given by mail shall be deemed effective on the earlier of the date shown
on the proof of receipt of such mail or. unless the recipient proves that the
notice was received later or not received, three (3) days after the date of
mailing thereof. Other notices shall be deemed given on the date of receipt. Any
party hereto may change the address specified herein by written notice to the
other parties hereto.

Section 21.

Non-Waivers.  Neither any failure nor any delay on the part of any party to this
Agreement in exercising any right, power or privilege hereunder shall operate as
a waiver of any right, power or privilege of such party, unless such waiver is
made by a writing executed by the party and delivered to the other parties
hereto; nor shall a single or partial exercise of any right, power or privilege
preclude any other or further exercise of any other right, power or privilege
accorded to any party hereto.

Section 22.

Assignment.  This Agreement may not be assigned by any party without the prior
written consent of the other parties.

Section 23.

Miscellaneous.

(a)

Further Assurances:  Each of the parties hereto shall use its best efforts to
take or cause to be taken, and to cooperate with the other party hereto to the
extent necessary with respect to, all action, and to do, or cause to be done,
consistent with applicable law, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
 Without limiting the generality of the foregoing, the Sellers and Buyer shall
cooperate with and provide assistance to the other in connection with the
preparation and filing of all federal, state, local and foreign income tax
returns which relate to the Company and relate to pre-Closing periods but which
are not required to be filed until after the Closing, and shall also cooperate
with and provide assistance to the other or the Company with respect to any
audit of any tax returns filed prior to, or that related to periods ending prior
to, the Closing; provided, however, that the Buyer and the Company hereby
covenant and agree that the Company will not file any amended income tax return
for any period ending prior to Closing without first obtaining the Sellers’
written consent thereto.

(b)

Headings.  The headings contained herein are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.

(c)

Counterparts.  This Agreement may be executed and delivered in multiple
counterpart copies.  each of which shall be an original and all of which shall
constitute one and the same agreement.

2

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.

SELLERS:

/s/Ricky Chu
Ricky Chu

/s/ Todd Hammer

Todd Hammer

/s/ Gabriel Cooley

THE COMPANY:

RAYCO Energy, INC.

By:/s/ Ricky Chu
Name: Ricky Chu

Title: CEO

BUYER:

SUNVALLEY SOLAR, INC.

BY:/s/ James Zhang
Name: James Zhang

Title:  CEO

3

 

 

 

SCHEDULE A

     

RAYCO Energy, INC. SHAREHOLDERS

SHAREHOLDERS

COMPANY SHARES

% OF COMPANY SHARES

SERIES B PREFERRED STOCK TO BE RECEIVED

Ricky Chu

1,000

33.4%

73,500

Todd Hamer

1,000

33.3%

1,000

Gabriel Cooley

1,000

33.3%

1,000

Totals

3,000

100%

75,500

4

 

 

 

SCHEDULE A-2

SELLERS

CASH PORTION

Ricky Chu

$170,000

Todd Hamer

$90,000

Gabriel Cooley

$90,000

Totals

$350,000

5

 

 

 

 

[f101securities_purchaseag001.jpg] [f101securities_purchaseag001.jpg]

[f101securities_purchaseag002.jpg] [f101securities_purchaseag002.jpg]

INVESTMENT LETTER

To Whom It May Concern:

In connection with the acquisition of a total of 75,500 Series B Preferred
shares (the "Shares") of Sunvalley Solar, Inc. (the "Corporation") by the
undersigned shareholders (the "Shareholders") pursuant to a Securities Purchase
Agreement dated May 15, 2016, the undersigned hereby make the following
acknowledgments, representations and warranties:

l.

Investment Intent. Shareholders are acquiring the Shares for investment solely
for their own account and not with a present view to any distribution, transfer
or resale to others, including any "distribution" within the meaning of
Securities Act of 1933, as amended, (the "Securities Act"). Shareholders
understand that the Shares have not and will not be registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends on, among
other things, the bona fide nature of the investment intent and the accuracy of
their representations made herein.

2.

Financial Ability. Shareholders are financially able to bear the economic risks
of an investment in the Corporation and have no need for liquidity in this
investment. Furthermore, the financial capacity of Shareholders is of such a
proportion that the total cost of Shareholders' commitment is not material when
compared with their total committed capital. Shareholders are financially able
to suffer a complete loss of this investment.

3.

Experience. Shareholders have such knowledge and experience in financial and
business matters in general and with respect to investments of a nature similar
to that evidenced by the Shares so as to be capable, by reason of such knowledge
and experience, of evaluating the merits and risks of, and making an informed
business decision with regard to, and protecting their own interests in
connection with, the acquisition of the Shares.

4.

Restrictive Legend. Shareholders acknowledge that certificates representing the
Shares will bear a legend substantially as follows:

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE TRANSFERRED UNLESS THEY ARE SO REGISTERED OR, IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION, SUCH TRANSFER IS EXEMPT FROM
REGISTRATION.

6.

Reliance for Exemptions. Shareholders understand that the Shares are being
issued to them pursuant to exemptions from the registration requirements of
federal and applicable state securities laws and acknowledges that the
Corporation is relying upon the investment and other representations made herein
as the basis for such exemptions.

7.

Accuracy of Purchaser Representations. Shareholders represent that the
information and representations contained in this letter are true, correct and
complete.

/s/ Ricky Chu
Ricky Chu

/s/ Todd Hammer

Todd Hammer

/s/ Gabriel Cooley

Gabriel Cooley

6

 

 

 

CONVERTIBLE PROMISSORY NOTE

1.  Principal Obligation.  FOR VALUE RECEIVED, SUNVALLEY SOLAR, INC., a Nevada
corporation (“Maker”), promises to pay to RICKY HUGHES (“Holder”) the principal
sum of U.S. One Hundred Seventy Thousand Dollars (US $170,000).

2.  Maturity Date.  Notwithstanding any other provision of this Note, the
maturity date of this Note is November 1, 2017 (the “Maturity Date”) at which
time all principal, accrued and unpaid interest and any other amounts owed under
this Note shall be due and payable in full.

3.  Payment. On or before the Maturity Date, all unpaid principal and accrued
interest shall be due and payable in full.  All payments will be applied first
to interest and then, if any, to principal.

4.  Interest; Monthly Payments.  The outstanding principal sum of this
Promissory Note shall bear interest at six percent (6.00 %) per annum commencing
May 1, 2017.  Maker shall repay this Note in six (6) equal monthly installments
of principal and interest then accrued, commencing on May 1, 2017.

5.

Obligation Conditional.

All obligations arising under this Note shall be conditioned upon the 2016 net
profit from the operation of Rayco Energy, Inc, as a wholly-owned subsidiary of
the Maker, being in excess of $10,000 (the “CONDITION”). In the event that the
CONDITION is not met, this note shall be deemed null and void.

6. Prepayment.  Maker shall have the right to prepay all or any part of the
principal amount of this Note from time to time without penalty.

7.  Default and Acceleration.  Any one or more of the following events shall be
deemed to be a breach by Maker of its obligations under this Note and an event
of default hereunder (individually, an “Event of Default”):  

(i)

Holder’s failure to pay principal, interest, or any other indebtedness, or
monetary obligation or liability to Holder payable under this Note, as and when
due and payable, whether at maturity or by acceleration and without the
necessity of any prior demand therefor by Holder; or

(ii)

Maker’s failure to perform or breach of any non-monetary obligation, covenant,
agreement or condition under this Note, if the same is not cured in full within
ten (10) days following delivery of written notice from Holder to Maker of such
failure; or

  

(iii)

Maker’s commencement of a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to  itself or its debts
under any bankruptcy, insolvency or other similar debtor relief law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it, or any substantial part
of its property, or Maker’s consent to any such relief or to the appointment or
taking possession by any such official in any involuntary case or other
proceeding commenced against it; or

(iv)

An involuntary case or other proceeding commenced against Maker seeking
liquidation, reorganization or other relief with respect  Maker or its debts
under any bankruptcy, insolvency or other similar debtor relief law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it, or over any substantial
part of its property, and such involuntary case or other proceeding shall remain
undis­missed and unstayed for a period of thirty (30) days; or

 

(v)

Maker’s assignment for the benefit of creditors, or admission in writing their
inability to pay their debts generally as they become due.

Upon the occurrence of any Event of Default, Holder shall have and hereby
expressly preserves all rights and remedies, whether provided in this Note, at
law, or in equity.  If any amount due under this Note is reduced to judgment, or
if any Event of Default described above shall occur, without limiting any of its
other rights or remedies, Holder, or any successor Holder of this Note, may, at
its option, accelerate and declare the entire unpaid principal balance then
payable under this Note to be immediately due and payable.

8.  Attorneys’ Fees.  In the event that suit be brought hereon, or an attorney
be employed or expenses be incurred to compel payment of this Note or any
portion of the indebtedness evidenced hereby, or to enforce any rights or
remedies of Holder under this Note in accordance therewith, Maker promises to
pay all such attorney’s fees, costs and expenses of investigation as actually
incurred by Holder  as a result thereof and including, without limitation,
attorneys’ fees, costs and expenses of investigation incurred in appellate
proceedings or in any action or participation in, or in connection with, any
case or proceeding under Chapters 7, 11 or 13 of the United States Bankruptcy
Code or any successor thereto.

9.  Waiver of Notice.  Maker and any endorsers, guarantors and sureties of this
Note, and each of them, jointly and severally hereby waive diligence, grace,
demand, presentment for payment, exhibition of this Note, notice of nonpayment,
notice of dishonor, protest, notice of protest, and any and all exemption rights
against the indebtedness evidenced by this Note, and specifically consent to and
waive notice of any renewals or extensions of this Note, whether made to or in
favor of the Maker or any other person or persons and agree to any and all
extensions or renewals from time to time without notice and to any partial
payments of this Note made before or after maturity and that no such extension,
renewal or partial payment shall release any one or all of them from the
obligation of payment of this Note or any installment of this Note, and consent
to offsets of any sums owed to any one or all of them by Holder at any time.
 The pleading of any statute of limitations as a defense to any demand against
Maker or any such endorsers, guarantors or sureties is expressly waived by each
and all of said parties.

10. Loss, Theft, Destruction or Mutilation of Note.  In the event of the loss,
theft or destruction of this Note, upon Maker’s receipt of a reasonably
satisfactory indemnification agreement executed in favor of Makers by the party
who held this Note immediately prior to its loss, theft or destruction, or in
the event of the mutilation of this Note, upon Holder’s surrender to Maker of
the mutilated Note, Maker shall execute and deliver to such party or Holder, as
the case may be, a new promissory note in form and content identical to this
Note in lieu of the lost, stolen, destroyed or mutilated Note.  

11. Exercise of Rights.  No single or partial exercise of any power granted to
Holder under this Note shall preclude any other or further exercise thereof or
the exercise of any other power.  Holder shall at all times have the right to
proceed in such order and manner as Holder may deem fit, without waiving any
rights with respect to any other remedy.  No delay or omission on the part of
Holder in exercising any right under this Note shall operate as a waiver of such
right or of any other right.

 

12. Successors and Assigns.  The terms of this Note shall apply to, inure to the
benefit of, and bind all parties hereto, their heirs, legatees, devisees,
administrators, executors, successors and assigns.

13. Construction of Note.  Captions in this Note are included solely for
convenience and are not to be referred to in construing or interpreting this
Note.  Each reference in this Note to a particular paragraph is a reference to a
paragraph of this Note unless otherwise expressly indicated.  The terms
“include,” “includes,” and “including” are not used in any limiting sense, but
rather by way of example or illustration.  If any portion of this Note is
declared invalid, illegal or unenforceable by any court of competent
jurisdiction, such portion shall be deemed severed from this Note and the
remaining portions shall continue in full force and effect.  Time is strictly of
the essence of each and every provision of this Note.

14. Choice of Law.  This Note shall be constructed and construed in accordance
with the internal substantive laws of the State of Nevada, without regard to the
choice of law principles of said State.

15. Waiver of Jury Trial.  Maker hereby knowingly, voluntarily, intentionally,
unconditionally and irrevocably waives any and all right to trial by jury in any
action, suit, counterclaim or cross claim arising out of, or in connection with
this Note or any course of conduct, course of dealing, statements (whether oral
or written) or actions of Holder with respect to this Note.  Maker agrees that
it has received sufficient consideration for their waiver hereunder, and
understands that any such action shall be tried by a judge without a jury.

16. Amendments.  The only way to amend or otherwise modify this Note is for all
the parties to sign a written instrument which expresses the intent to amend or
otherwise modify this Note.  The party benefited by any condition or obligation
may waive the same, but such waiver shall not be enforceable by another party
unless made in writing and signed by the waiving party.

IN WITNESS WHEREOF, this Note has been executed effective the date and place
above written.

SUNVALLEY SOLAR, INC.,

a Nevada corporation (“Maker”)

By: /s/ James Zhang

James Zhang

President and CEO

7

 

 

 

CONVERTIBLE PROMISSORY NOTE

1.  Principal Obligation.  FOR VALUE RECEIVED, SUNVALLEY SOLAR, INC., a Nevada
corporation (“Maker”), promises to pay to GABRIEL COOLEY (“Holder”) the
principal sum of U.S. Ninety Thousand Dollars (US $90,000).

2.  Maturity Date.  Notwithstanding any other provision of this Note, the
maturity date of this Note is November 1, 2017 (the “Maturity Date”) at which
time all principal, accrued and unpaid interest and any other amounts owed under
this Note shall be due and payable in full.

3.  Payment. On or before the Maturity Date, all unpaid principal and accrued
interest shall be due and payable in full.  All payments will be applied first
to interest and then, if any, to principal.

4.  Interest; Monthly Payments.  The outstanding principal sum of this
Promissory Note shall bear interest at six percent (6.00 %) per annum commencing
May 1, 2017.  Maker shall repay this Note in six (6) equal monthly installments
of principal and interest then accrued, commencing on May 1, 2017.

5.

Obligation Conditional.

All obligations arising under this Note shall be conditioned upon the 2016 net
profit from the operation of Rayco Energy, Inc, as a wholly-owned subsidiary of
the Maker, being in excess of $10,000 (the “CONDITION”). In the event that the
CONDITION is not met, this note shall be deemed null and void.

6. Prepayment.  Maker shall have the right to prepay all or any part of the
principal amount of this Note from time to time without penalty.

7.  Default and Acceleration.  Any one or more of the following events shall be
deemed to be a breach by Maker of its obligations under this Note and an event
of default hereunder (individually, an “Event of Default”):  

(i)

Holder’s failure to pay principal, interest, or any other indebtedness, or
monetary obligation or liability to Holder payable under this Note, as and when
due and payable, whether at maturity or by acceleration and without the
necessity of any prior demand therefor by Holder; or

(ii)

Maker’s failure to perform or breach of any non-monetary obligation, covenant,
agreement or condition under this Note, if the same is not cured in full within
ten (10) days following delivery of written notice from Holder to Maker of such
failure; or

  

(iii)

Maker’s commencement of a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to  itself or its debts
under any bankruptcy, insolvency or other similar debtor relief law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it, or any substantial part
of its property, or Maker’s consent to any such relief or to the appointment or
taking possession by any such official in any involuntary case or other
proceeding commenced against it; or

(iv)

An involuntary case or other proceeding commenced against Maker seeking
liquidation, reorganization or other relief with respect  Maker or its debts
under any bankruptcy, insolvency or other similar debtor relief law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it, or over any substantial
part of its property, and such involuntary case or other proceeding shall remain
undis­missed and unstayed for a period of thirty (30) days; or

 

(v)

Maker’s assignment for the benefit of creditors, or admission in writing their
inability to pay their debts generally as they become due.

Upon the occurrence of any Event of Default, Holder shall have and hereby
expressly preserves all rights and remedies, whether provided in this Note, at
law, or in equity.  If any amount due under this Note is reduced to judgment, or
if any Event of Default described above shall occur, without limiting any of its
other rights or remedies, Holder, or any successor Holder of this Note, may, at
its option, accelerate and declare the entire unpaid principal balance then
payable under this Note to be immediately due and payable.

8.  Attorneys’ Fees.  In the event that suit be brought hereon, or an attorney
be employed or expenses be incurred to compel payment of this Note or any
portion of the indebtedness evidenced hereby, or to enforce any rights or
remedies of Holder under this Note in accordance therewith, Maker promises to
pay all such attorney’s fees, costs and expenses of investigation as actually
incurred by Holder  as a result thereof and including, without limitation,
attorneys’ fees, costs and expenses of investigation incurred in appellate
proceedings or in any action or participation in, or in connection with, any
case or proceeding under Chapters 7, 11 or 13 of the United States Bankruptcy
Code or any successor thereto.

9.  Waiver of Notice.  Maker and any endorsers, guarantors and sureties of this
Note, and each of them, jointly and severally hereby waive diligence, grace,
demand, presentment for payment, exhibition of this Note, notice of nonpayment,
notice of dishonor, protest, notice of protest, and any and all exemption rights
against the indebtedness evidenced by this Note, and specifically consent to and
waive notice of any renewals or extensions of this Note, whether made to or in
favor of the Maker or any other person or persons and agree to any and all
extensions or renewals from time to time without notice and to any partial
payments of this Note made before or after maturity and that no such extension,
renewal or partial payment shall release any one or all of them from the
obligation of payment of this Note or any installment of this Note, and consent
to offsets of any sums owed to any one or all of them by Holder at any time.
 The pleading of any statute of limitations as a defense to any demand against
Maker or any such endorsers, guarantors or sureties is expressly waived by each
and all of said parties.

10. Loss, Theft, Destruction or Mutilation of Note.  In the event of the loss,
theft or destruction of this Note, upon Maker’s receipt of a reasonably
satisfactory indemnification agreement executed in favor of Makers by the party
who held this Note immediately prior to its loss, theft or destruction, or in
the event of the mutilation of this Note, upon Holder’s surrender to Maker of
the mutilated Note, Maker shall execute and deliver to such party or Holder, as
the case may be, a new promissory note in form and content identical to this
Note in lieu of the lost, stolen, destroyed or mutilated Note.  

11. Exercise of Rights.  No single or partial exercise of any power granted to
Holder under this Note shall preclude any other or further exercise thereof or
the exercise of any other power.  Holder shall at all times have the right to
proceed in such order and manner as Holder may deem fit, without waiving any
rights with respect to any other remedy.  No delay or omission on the part of
Holder in exercising any right under this Note shall operate as a waiver of such
right or of any other right.

 

12. Successors and Assigns.  The terms of this Note shall apply to, inure to the
benefit of, and bind all parties hereto, their heirs, legatees, devisees,
administrators, executors, successors and assigns.

13. Construction of Note.  Captions in this Note are included solely for
convenience and are not to be referred to in construing or interpreting this
Note.  Each reference in this Note to a particular paragraph is a reference to a
paragraph of this Note unless otherwise expressly indicated.  The terms
“include,” “includes,” and “including” are not used in any limiting sense, but
rather by way of example or illustration.  If any portion of this Note is
declared invalid, illegal or unenforceable by any court of competent
jurisdiction, such portion shall be deemed severed from this Note and the
remaining portions shall continue in full force and effect.  Time is strictly of
the essence of each and every provision of this Note.

14. Choice of Law.  This Note shall be constructed and construed in accordance
with the internal substantive laws of the State of Nevada, without regard to the
choice of law principles of said State.

15. Waiver of Jury Trial.  Maker hereby knowingly, voluntarily, intentionally,
unconditionally and irrevocably waives any and all right to trial by jury in any
action, suit, counterclaim or cross claim arising out of, or in connection with
this Note or any course of conduct, course of dealing, statements (whether oral
or written) or actions of Holder with respect to this Note.  Maker agrees that
it has received sufficient consideration for their waiver hereunder, and
understands that any such action shall be tried by a judge without a jury.

16. Amendments.  The only way to amend or otherwise modify this Note is for all
the parties to sign a written instrument which expresses the intent to amend or
otherwise modify this Note.  The party benefited by any condition or obligation
may waive the same, but such waiver shall not be enforceable by another party
unless made in writing and signed by the waiving party.

IN WITNESS WHEREOF, this Note has been executed effective the date and place
above written.

SUNVALLEY SOLAR, INC.,

a Nevada corporation (“Maker”)

By: /s/ James Zhang

James Zhang

President and CEO

8

 

 

 

CONVERTIBLE PROMISSORY NOTE

1.  Principal Obligation.  FOR VALUE RECEIVED, SUNVALLEY SOLAR, INC., a Nevada
corporation (“Maker”), promises to pay to TODD HAMMER (“Holder”) the principal
sum of U.S. Ninety Thousand Dollars (US $90,000).

2.  Maturity Date.  Notwithstanding any other provision of this Note, the
maturity date of this Note is November 1, 2017 (the “Maturity Date”) at which
time all principal, accrued and unpaid interest and any other amounts owed under
this Note shall be due and payable in full.

3.  Payment. On or before the Maturity Date, all unpaid principal and accrued
interest shall be due and payable in full.  All payments will be applied first
to interest and then, if any, to principal.

4.  Interest; Monthly Payments.  The outstanding principal sum of this
Promissory Note shall bear interest at six percent (6.00 %) per annum commencing
May 1, 2017.  Maker shall repay this Note in six (6) equal monthly installments
of principal and interest then accrued, commencing on May 1, 2017.

5.

Obligation Conditional.

All obligations arising under this Note shall be conditioned upon the 2016 net
profit from the operation of Rayco Energy, Inc, as a wholly-owned subsidiary of
the Maker, being in excess of $10,000 (the “CONDITION”). In the event that the
CONDITION is not met, this note shall be deemed null and void.

6. Prepayment.  Maker shall have the right to prepay all or any part of the
principal amount of this Note from time to time without penalty.

7.  Default and Acceleration.  Any one or more of the following events shall be
deemed to be a breach by Maker of its obligations under this Note and an event
of default hereunder (individually, an “Event of Default”):  

(i)

Holder’s failure to pay principal, interest, or any other indebtedness, or
monetary obligation or liability to Holder payable under this Note, as and when
due and payable, whether at maturity or by acceleration and without the
necessity of any prior demand therefor by Holder; or

(ii)

Maker’s failure to perform or breach of any non-monetary obligation, covenant,
agreement or condition under this Note, if the same is not cured in full within
ten (10) days following delivery of written notice from Holder to Maker of such
failure; or

  

(iii)

Maker’s commencement of a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to  itself or its debts
under any bankruptcy, insolvency or other similar debtor relief law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it, or any substantial part
of its property, or Maker’s consent to any such relief or to the appointment or
taking possession by any such official in any involuntary case or other
proceeding commenced against it; or

(iv)

An involuntary case or other proceeding commenced against Maker seeking
liquidation, reorganization or other relief with respect  Maker or its debts
under any bankruptcy, insolvency or other similar debtor relief law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it, or over any substantial
part of its property, and such involuntary case or other proceeding shall remain
undis­missed and unstayed for a period of thirty (30) days; or

 

(v)

Maker’s assignment for the benefit of creditors, or admission in writing their
inability to pay their debts generally as they become due.

Upon the occurrence of any Event of Default, Holder shall have and hereby
expressly preserves all rights and remedies, whether provided in this Note, at
law, or in equity.  If any amount due under this Note is reduced to judgment, or
if any Event of Default described above shall occur, without limiting any of its
other rights or remedies, Holder, or any successor Holder of this Note, may, at
its option, accelerate and declare the entire unpaid principal balance then
payable under this Note to be immediately due and payable.

8.  Attorneys’ Fees.  In the event that suit be brought hereon, or an attorney
be employed or expenses be incurred to compel payment of this Note or any
portion of the indebtedness evidenced hereby, or to enforce any rights or
remedies of Holder under this Note in accordance therewith, Maker promises to
pay all such attorney’s fees, costs and expenses of investigation as actually
incurred by Holder  as a result thereof and including, without limitation,
attorneys’ fees, costs and expenses of investigation incurred in appellate
proceedings or in any action or participation in, or in connection with, any
case or proceeding under Chapters 7, 11 or 13 of the United States Bankruptcy
Code or any successor thereto.

9.  Waiver of Notice.  Maker and any endorsers, guarantors and sureties of this
Note, and each of them, jointly and severally hereby waive diligence, grace,
demand, presentment for payment, exhibition of this Note, notice of nonpayment,
notice of dishonor, protest, notice of protest, and any and all exemption rights
against the indebtedness evidenced by this Note, and specifically consent to and
waive notice of any renewals or extensions of this Note, whether made to or in
favor of the Maker or any other person or persons and agree to any and all
extensions or renewals from time to time without notice and to any partial
payments of this Note made before or after maturity and that no such extension,
renewal or partial payment shall release any one or all of them from the
obligation of payment of this Note or any installment of this Note, and consent
to offsets of any sums owed to any one or all of them by Holder at any time.
 The pleading of any statute of limitations as a defense to any demand against
Maker or any such endorsers, guarantors or sureties is expressly waived by each
and all of said parties.

10. Loss, Theft, Destruction or Mutilation of Note.  In the event of the loss,
theft or destruction of this Note, upon Maker’s receipt of a reasonably
satisfactory indemnification agreement executed in favor of Makers by the party
who held this Note immediately prior to its loss, theft or destruction, or in
the event of the mutilation of this Note, upon Holder’s surrender to Maker of
the mutilated Note, Maker shall execute and deliver to such party or Holder, as
the case may be, a new promissory note in form and content identical to this
Note in lieu of the lost, stolen, destroyed or mutilated Note.  

11. Exercise of Rights.  No single or partial exercise of any power granted to
Holder under this Note shall preclude any other or further exercise thereof or
the exercise of any other power.  Holder shall at all times have the right to
proceed in such order and manner as Holder may deem fit, without waiving any
rights with respect to any other remedy.  No delay or omission on the part of
Holder in exercising any right under this Note shall operate as a waiver of such
right or of any other right.

 

12. Successors and Assigns.  The terms of this Note shall apply to, inure to the
benefit of, and bind all parties hereto, their heirs, legatees, devisees,
administrators, executors, successors and assigns.

13. Construction of Note.  Captions in this Note are included solely for
convenience and are not to be referred to in construing or interpreting this
Note.  Each reference in this Note to a particular paragraph is a reference to a
paragraph of this Note unless otherwise expressly indicated.  The terms
“include,” “includes,” and “including” are not used in any limiting sense, but
rather by way of example or illustration.  If any portion of this Note is
declared invalid, illegal or unenforceable by any court of competent
jurisdiction, such portion shall be deemed severed from this Note and the
remaining portions shall continue in full force and effect.  Time is strictly of
the essence of each and every provision of this Note.

14. Choice of Law.  This Note shall be constructed and construed in accordance
with the internal substantive laws of the State of Nevada, without regard to the
choice of law principles of said State.

15. Waiver of Jury Trial.  Maker hereby knowingly, voluntarily, intentionally,
unconditionally and irrevocably waives any and all right to trial by jury in any
action, suit, counterclaim or cross claim arising out of, or in connection with
this Note or any course of conduct, course of dealing, statements (whether oral
or written) or actions of Holder with respect to this Note.  Maker agrees that
it has received sufficient consideration for their waiver hereunder, and
understands that any such action shall be tried by a judge without a jury.

16. Amendments.  The only way to amend or otherwise modify this Note is for all
the parties to sign a written instrument which expresses the intent to amend or
otherwise modify this Note.  The party benefited by any condition or obligation
may waive the same, but such waiver shall not be enforceable by another party
unless made in writing and signed by the waiving party.

IN WITNESS WHEREOF, this Note has been executed effective the date and place
above written.

SUNVALLEY SOLAR, INC.,

a Nevada corporation (“Maker”)

By: /s/ James Zhang

James Zhang

President and CEO

9