Long-e International Group Co., Ltd.
 
NOTE AND WARRANT PURCHASE AGREEMENT
 
September 22, 2006
 

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TABLE OF CONTENTS

       
Page
         
1.
 
Definitions
 
1
         
2.
 
Terms of the Secured Notes
 
3
   
2.1
 
Issuance of Secured Notes
 
3
   
2.2
 
Right to Convert Notes
 
3
         
3.
 
Warrants
 
4
         
4.
 
Closing Mechanics
 
4
         
5.
 
Representations and Warranties of the Company
 
5
   
5.1
 
Organization, Good Standing and Qualification
 
5
   
5.2
 
Authorization
 
5
   
5.3
 
Compliance with Other Instruments
 
5
   
5.4
 
Valid Issuance of Stock
 
5
         
6.
 
Representations and Warranties of the Lenders
 
6
   
6.1
 
Authorization
 
6
   
6.2
 
Purchase Entirely for Own Account
 
6
   
6.3
 
Disclosure of Information
 
6
   
6.4
 
Investment Experience
 
6
   
6.5
 
Accredited Investor
 
6
   
6.6
 
Restricted Securities
 
6
   
6.7
 
Further Limitations on Disposition
 
7
   
6.8
 
Legends
 
7
         
7.
 
State Commissioners of Corporations
 
7
         
8.
 
Defaults and Remedies
 
7
   
8.1
 
Events of Default
 
7
   
8.2
 
Remedies
 
8
         
9.
 
Miscellaneous
 
9
   
9.1
 
Successors and Assigns
 
9
   
9.2
 
Governing Law
 
9
   
9.3
 
Counterparts
 
9
   
9.4
 
Titles and Subtitles
 
9
   
9.5
 
Notices
 
9
   
9.6
 
Finder’s Fee
 
9
   
9.7
 
Expenses
 
10
   
9.8
 
Entire Agreement; Amendments and Waivers
 
10
   
9.9
 
Effect of Amendment or Waiver
 
10
   
9.10
 
Severability
 
10
   
9.11
 
Stock Purchase Agreement
 
10
   
9.12
 
Exculpation Among Lenders
 
10
   
9.13
 
Acknowledgement
 
11
   
9.14
 
Indemnity; Costs, Expenses and Attorneys’ Fees
 
11
   
9.15
 
Further Assurance
 
11
       
EXHIBIT A
CONVERTIBLE PROMISSORY NOTE
   
EXHIBIT B
WARRANT TO PURCHASE SHARES OF EQUITY SECURITIES
   

 
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NOTE AND WARRANT PURCHASE AGREEMENT
 
THIS NOTE AND WARRANT PURCHASE AGREEMENT (“Agreement”) is made as of September
22, 2006, by and among Long-e International Group Co., Ltd., a British Virgin
Islands corporation (the “Company”), and the lenders (each individually a
“Lender,” and collectively the “Lenders”) named on the Schedule of Lenders
attached hereto (the “Schedule of Lenders”). Capitalized terms not otherwise
defined in this Agreement shall have the meanings ascribed to them in Section 1
below.
 
WHEREAS, each of the Lenders intends to provide certain Consideration to the
Company as described for each Lender on the Schedule of Lenders;
 
WHEREAS, the parties wish to provide for the sale and issuance of such Notes and
Warrants in return for the provision by the Lenders of the Consideration to the
Company; and
 
WHEREAS, the parties intend for the Company to issue in return for the
Consideration one or more Notes and Warrants to purchase shares of the Company’s
Equity Securities.
 
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
 
1. Definitions.
 
(a) “Consideration” shall mean the amount of money paid by each Lender pursuant
to this Agreement as shown on the Schedule of Lenders.
 
(b) “Conversion Shares” shall, for purposes of determining the type of Equity
Securities issuable upon conversion of the Notes or exercise of the Warrants,
mean:
 
(i) if the Notes are converted to equity pursuant to Section 2.2(a) below, the
Equity Securities issued in the Next Equity Financing; and
 
(ii) if the Notes are converted to equity pursuant to Section 2.2(b) or 2.2(c)
below, shares of Common Stock.
 
(c) “Conversion Price” shall mean:
 
(i) with respect to a conversion pursuant to Section 2.2(a) below, 70% of the
price paid per share for Equity Securities by the investors in the Next Equity
Financing; 
 
(ii) with respect to a conversion pursuant to Section 2.2(b) or 2.2(c) below,
(x) 70% of the price to be paid per share for Equity Securities by the investors
in the Next Equity Financing if pricing terms have been agreed upon and
documented in a term sheet or definitive agreement, or (y) if pricing terms have
not yet been documented for the Next Equity Financing, the price stated in a
pricing notice to be provided by the Company, or its representatives, to the
Lender no later than December 31, 2006, or (z) if such pricing notice has not
been provided by December 31, 2006, $0.33 per share (as adjusted for any stock
splits, stock dividends, combinations, subdivisions, recapitalizations or the
like).
 

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(d) “Corporate Transaction” shall mean (A) the closing of the sale, transfer or
other disposition of all or substantially all of this Company’s assets, (B) the
consummation of the merger or consolidation of this Company with or into another
entity (except a merger or consolidation in which the holders of capital stock
of this Company immediately prior to such merger or consolidation continue to
hold at least 50% of the voting power of the capital stock of this Company or
the surviving or acquiring entity), (C) the closing of the transfer (whether by
merger, consolidation or otherwise), in one transaction or a series of related
transactions, to a person or group of affiliated persons (other than an
underwriter of this Company’s securities), of this Company’s securities if,
after such closing, such person or group of affiliated persons would hold 50% or
more of the outstanding voting stock of this Company (or the surviving or
acquiring entity) or (D) a liquidation, dissolution or winding up of this
Company; provided, however, that a transaction shall not constitute a
Liquidation Event if its sole purpose is to change the state of this Company’s
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held this Company’s securities
immediately prior to such transaction; provided, however a Corporate Transaction
shall not include the issuance of Equity Securities in the Next Equity
Financing.
 
(e) “Equity Securities” shall mean the Company’s Common Stock or Preferred Stock
or any securities conferring the right to purchase the Company’s Common Stock or
Preferred Stock or securities convertible into, or exchangeable for (with or
without additional consideration), the Company’s Common Stock or Preferred
Stock, except any security granted, issued and/or sold by the Company to any
director, officer, employee or consultant of the Company in such capacity for
the primary purpose of soliciting or retaining their services.
 
(f) “Majority Note Holders” shall mean the holders of a majority in interest of
the aggregate principal amount of Notes.
 
(g) “Maturity Date” shall mean September 22, 2009.
 
(h) “Next Equity Financing” shall mean the next sale (or series of related
sales) by the Company of its Equity Securities following the date of this
Agreement from which the Company receives gross proceeds of not less than
US$1,000,000 excluding the aggregate amount of debt securities converted into
Equity Securities upon conversion of the Notes pursuant to Section 2.2 below)
and further to which the Company completes a Reverse Merger;
 
(i) “Notes” shall mean the one or more promissory notes issued to each Lender
pursuant to Section 2.1 below, the form of which is attached hereto as Exhibit
A.
 
(j) “Period” shall mean 30 consecutive days, without regard to actual calendar
months.
 
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(k) “Purchase Price of the Warrants” shall mean the price paid by the Lenders to
receive each Warrant, which amount shall be .01% percent of the principal amount
of each Note.
 
(l) “Reverse Merger” shall mean either a (i) merger of the Company into a Shell,
(ii) merger of the Company with a subsidiary of a Shell whereby the Company is
the surviving entity and the shell Exchanges newly issued shares for the
outstanding shares of the Company or (iii) share exchange where shareholders of
the Company exchange their shares for shares of the Shell.
 
(m) “Reverse Merger Withdrawal” shall mean notice by the Company to the Lender
or the Lender having a reasonable basis to believe that the Company does not
intend to effect the Reverse Merger which shall include, but not be limited to,
the Company entering into or agreeing to enter into an alternative financing
transaction or Corporate Transaction other than the Reverse Merger.
 
(n) “Shell” shall mean a company reporting under Section 13 or 15 of the
Securities Exchange Act of 1934, as amended, or that has a class of securities
registered under Section 12 of the Securities Act of 1933, as amended, and that
has no or nominal operations or has identified itself as a shell in its periodic
reports as filed with the Securities and Exchange Commission.
 
(o) “Warrants” shall mean one or more warrants issued pursuant to Section 3
below.
 
(p) “Warrant Coverage Amount” shall mean, with respect to any particular Warrant
issued to a Lender, fifty percent (50%) of the principal amount of the Note
issued to such Lender in conjunction with such Warrant multiplied by (Y) the
number of whole Periods such Note remains outstanding after the date hereof;
provided, that any partial period shall be rounded up to the next whole Period.
 
2. Terms of the Secured Notes.
 
2.1 Issuance of Secured Notes. In return for the Consideration paid by each
Lender, the Company shall sell and issue to such Lender one or more secured
Notes. Each Note shall have a principal balance equal to that portion of the
Consideration, less the Purchase Price of the Warrant, paid by such Lender for
the Note, as set forth in the Schedule of Lenders. Each Note shall be
convertible into Conversion Shares pursuant to Section 2.2 below and shall be
secured by the assets of the Company as described in such Notes and any related
security agreement.
 
2.2 Right to Convert Notes.
 
(a) Next Equity Financing. The principal and unpaid accrued interest of each
Note may be converted, at the option of the holder thereof, in whole or in part,
into Conversion Shares upon the closing of the Next Equity Financing.
Notwithstanding the foregoing, accrued interest on this Note may be paid in cash
at the option of the Company. The number of Conversion Shares to be issued upon
such conversion shall be equal to the quotient obtained by dividing the
outstanding principal and unpaid accrued interest on a Note to be converted, or
portion thereof, on the date of conversion, by the Conversion Price. At least
five (5) days prior to the closing of the Next Equity Financing, the Company
shall notify the holder of each Note in writing of the terms under which the
Equity Securities of the Company will be sold in such financing. The issuance of
Conversion Shares pursuant to the conversion of each Note shall be upon and
subject to the same terms and conditions applicable to the Equity Securities
sold in the Next Equity Financing.
 
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(b) Maturity Conversion. If the Next Equity Financing has not occurred on or
before the Maturity Date, the principal and unpaid accrued interest of each Note
may be converted, at the option of the holder thereof, in whole or in part, into
Conversion Shares. The number of Conversion Shares to be issued upon conversion
shall be equal to the quotient obtained by dividing the outstanding principal
and unpaid accrued interest due on a Note to be converted, or portion thereof,
on the date of conversion by the Conversion Price.
 
(c) Corporate Transaction or Reverse Merger Withdrawal. In the event of a
Corporate Transaction or Reverse Merger withdrawal prior to full payment of a
Note or prior to the time when a Note may be converted (as provided herein), all
outstanding principal and unpaid accrued interest due on such Note shall, at
Lender’s election, be (i) due and payable in full prior to the closing of the
Corporate Transaction or Reverse Merger Withdrawal or (ii) be converted into
Conversion Shares.
 
(d) No Fractional Shares. Upon the conversion of a Note into Conversion Shares,
in lieu of any fractional shares to which the holder of the Note would otherwise
be entitled, the Company shall pay the Note holder cash equal to such fraction
multiplied by the Conversion Price.
 
(e) Mechanics of Conversion. Before any Note holder shall be entitled to convert
the same into Conversion Shares, such holder shall give notice to the Company of
the election to convert such Notes into Conversion Shares. The Company shall not
be required to issue or deliver the Conversion Shares until the Note holder has
surrendered the Note to the Company. Such conversion may be made contingent upon
the closing of the Next Equity Financing, Initial Public Offering or Corporate
Transaction.
 
3. Warrants. Upon the Closing (as defined in Section 4.1 below), and in return
for the Company’s receipt of the Purchase Price of Warrant and the principal of
the Notes, each Lender shall receive a warrant to purchase Conversion Shares in
the form attached hereto as Exhibit B (the “Warrant”). Each Warrant shall be
exercisable for that number of Conversion Shares determined by dividing the
Warrant Coverage Amount by the Conversion Price. The exercise price for the
Conversion Shares purchasable upon exercise of the Warrants shall be the
Conversion Price applicable to such shares.
 
4. Closing Mechanics.
 
The closing (the “Closing”) of the purchase of the Notes and issuance of the
Warrants in return for the Consideration paid by each Lender shall take place at
the offices of the Kirkpatrick & Lockhart Nicholson Graham LLP, at 10100 Santa
Monica Blvd., Seventh Floor, Los Angeles, CA 90037 p.m., on ______________, or
at such other time and place as the Company and Lenders purchasing a majority in
interest of the aggregate principal amount of the Notes to be sold at the
Closing agree upon orally or in writing. At the Closing, each Lender shall
deliver the Consideration to the Company and the Company shall deliver to each
Lender one or more executed Notes and Warrants in return for the respective
Consideration provided to the Company.
 
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5. Representations and Warranties of the Company. In connection with the
transactions provided for herein, the Company hereby represents and warrants to
the Lenders that:
 
5.1 Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of California and has all requisite corporate power and authority to carry
on its business as now conducted. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify would have a material adverse effect on its business or properties.
 
5.2 Authorization. Except for the authorization and issuance of the shares
issuable in connection with the Next Equity Financing, all corporate action has
been taken on the part of the Company, its officers, directors and stockholders
necessary for the authorization, execution and delivery of this Agreement, the
Notes and the Warrants. Except as may be limited by applicable bankruptcy,
insolvency, reorganization, or similar laws relating to or affecting the
enforcement of creditors’ rights, the Company has taken all corporate action
required to make all of the obligations of the Company reflected in the
provisions of this Agreement, the Notes and the Warrants, the valid and
enforceable obligations they purport to be. The issuance of the Notes, or their
subsequent conversion into Conversion Shares, will not be subject to the
preemptive rights of any stockholder of the Company. The Company has authorized
sufficient shares of its capital stock to allow for conversion of the Notes and
exercise of the Warrant as described in Section 2.2 and Section 3.
 
5.3  Compliance with Other Instruments. Neither the authorization, execution and
delivery of this Agreement, nor the issuance and delivery of the Notes and the
Warrants, will constitute or result in a material default or violation of any
law or regulation applicable to the Company or any material term or provision of
the Company’s current Certificate of Incorporation or bylaws or any material
agreement or instrument by which it is bound or to which its properties or
assets are subject.
 
5.4 Valid Issuance of Stock. The Conversion Shares to be issued, sold and
delivered in accordance with the terms of the Warrants will be duly authorized
and validly issued, fully paid and nonassessable and, based in part upon the
representations and warranties of the Lenders in this Agreement, will be issued
in compliance with all applicable federal and state securities laws. The
Conversion Shares to be issued, sold and delivered upon conversion of the Notes
will be duly and validly issued, fully paid and nonassessable and, based in part
upon the representations and warranties of the Lenders in this Agreement, will
be issued in compliance with all applicable federal and state securities laws.
 
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6. Representations and Warranties of the Lenders. In connection with the
transactions provided for herein, each Lender hereby represents and warrants to
the Company that:
 
6.1 Authorization. This Agreement constitutes such Lender’s valid and legally
binding obligation, enforceable in accordance with its terms, except as may be
limited by (i) applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors’ rights and (ii) laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies. Each Lender represents that it has full power and authority
to enter into this Agreement.
 
6.2 Purchase Entirely for Own Account. Each Lender acknowledges that this
Agreement is made with Lender in reliance upon such Lender’s representation to
the Company that the Notes, the Warrants, the Conversion Shares, and any Common
Stock issuable upon conversion of the Conversion Shares (collectively, the
“Securities”) will be acquired for investment for Lender’s own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that such Lender has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, each Lender further represents that such Lender does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to the Securities.
 
6.3 Disclosure of Information. Each Lender acknowledges that it has received all
the information it considers necessary or appropriate for deciding whether to
acquire the Notes and the Warrants. Each Lender further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Notes and the
Warrants.
 
6.4 Investment Experience. Each Lender is an investor in securities of companies
in the development stage and acknowledges that it is able to fend for itself,
can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities. If other than an
individual, each Lender also represents it has not been organized solely for the
purpose of acquiring the Securities.
 
6.5 Accredited Investor. Each Lender is an “accredited investor” within the
meaning of Rule 501 of Regulation D of the Securities and Exchange Commission
(the “SEC”), as presently in effect.
 
6.6 Restricted Securities. Each Lender understands that the Notes and the
Warrants are characterized as “restricted securities” under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. Each Lender represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
 
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6.7 Further Limitations on Disposition. Without in any way limiting the
representations and warranties set forth above, each Lender further agrees not
to make any disposition of all or any portion of the Notes and Warrants unless
and until the transferee has agreed in writing for the benefit of the Company to
be bound by this Section 6 and:
 
(a) There is then in effect a registration statement under the Act covering such
proposed disposition and such disposition is made in accordance with such
registration statement; or
 
(b) (i) Lender has notified the Company of the proposed disposition and has
furnished the Company with a detailed statement of the circumstances surrounding
the proposed disposition and (ii) if reasonably requested by the Company, Lender
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such shares under the Act. It is agreed that the Company will not require
opinions of counsel for transactions made pursuant to Rule 144 except in
extraordinary circumstances.
 
6.8 Legends. It is understood that the Securities may bear the following legend:
 
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.”
 
7. State Commissioners of Corporations.
 
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100,
25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
 
8. Defaults and Remedies.
 
8.1 Events of Default. The following events shall be considered Events of
Default with respect to each Note:
 
(a) The Company shall default in the payment of any part of the principal or
unpaid accrued interest on the Note for more than thirty (30) days after the
Maturity Date or at a date fixed by acceleration or otherwise;
 
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(b) The Company shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts as they become due, or shall
file a voluntary petition for bankruptcy, or shall file any petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
dissolution or similar relief under any present or future statute, law or
regulation, or shall file any answer admitting the material allegations of a
petition filed against the Company in any such proceeding, or shall seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of the Company, or of all or any substantial part of the properties
of the Company, or the Company or its respective directors or majority
stockholders shall take any action looking to the dissolution or liquidation of
the Company;
 
(c) Within thirty (30) days after the commencement of any proceeding against the
Company seeking any bankruptcy reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such proceeding shall not have been
dismissed, or within thirty (30) days after the appointment without the consent
or acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated;
 
(d) Within thirty (30) days after the Company becomes involved in litigation
that threatens to materially and adversely affect the Company’s business,
operations, assets, results of operations or prospects if the Company’s
involvement has not terminated by such date in a manner that does not and could
not reasonably be expected to materially and adversely affect the Company’s
business, operations, assets, results of operations or prospects;
 
(e) Any default or defined event of default that has not otherwise been cured or
forgiven shall occur under any agreement to which the Company or any of its
subsidiaries is a party that evidences Indebtedness of $25,000 or more;
 
(f) Reverse Merger Withdrawal; or
 
(g) The Company shall fail to observe or perform any other obligation to be
observed or performed by it under this Agreement, the Notes, the Warrants or the
Security Agreement within 30 days after written notice from the Majority
Noteholders to perform or observe the obligation.
 
8.2 Remedies. Upon the occurrence of an Event of Default under Section 8.1
hereof, at the option and upon the declaration of the holder of a Note, the
entire unpaid principal and accrued and unpaid interest on such Note shall,
without presentment, demand, protest, or notice of any kind, all of which are
hereby expressly waived, be forthwith due and payable, and such holder may,
immediately and without expiration of any period of grace, enforce payment of
all amounts due and owing under such Note and exercise any and all other
remedies granted to it at law, in equity or otherwise.
 
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9. Miscellaneous.
 
9.1 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties, provided, however, that
the Company may not assign its obligations under this Agreement without the
written consent of the Majority Note Holders. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
 
9.2 Governing Law. This Agreement, the Notes and the Warrants shall be governed
by and construed under the laws of the State of California as applied to
agreements among California residents, made and to be performed entirely within
the State of California.
 
9.3 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
 
9.4 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
9.5 Notices. All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed electronic
mail or facsimile if sent during normal business hours of the recipient, if not
so confirmed, then on the next business day, (iii) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid or (iv) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All
communications shall be sent to the respective parties at the following
addresses (or at such other addresses as shall be specified by notice given in
accordance with this Section 9.5):
 
If to the Company:

Long-e International Group Co., Ltd.
Akara Bldg. 24 De Castro Street Wickhams Cay 1
Road Town Tortola, British Virgin Islands
Attention: Chief Executive Officer

If to Lenders:

At the respective addresses shown on the signature pages hereto.

9.6 Finder’s Fee. Each party represents that it neither is nor will be obligated
for any finder’s fee or commission in connection with this transaction. Lender
agrees to indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of a finder’s fee (and the costs and
expenses of defending against such liability or asserted liability) for which
Lender or any of its officers, partners, employees or representatives is
responsible. The Company agrees to indemnify and hold harmless Lender from any
liability for any commission or compensation in the nature of a finder’s fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
 
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9.7 Expenses. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys’ fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled. The Company shall pay all
costs and expenses that it incurs with respect to the negotiation, execution,
delivery and performance of this Agreement. At the Closing, the Company shall
reimburse the reasonable fees and expenses of
___________________________________________________________ special counsel for
the Lenders, not to exceed $5,000.
 
9.8 Entire Agreement; Amendments and Waivers. This Agreement, the Notes and the
Warrants and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. The Company’s agreements with each of the Lenders
are separate agreements, and the sales of the Notes and Warrants to each of the
Lenders are separate sales. Nonetheless, any term of this Agreement, the Notes
or the Warrants may be amended and the observance of any term of this Agreement,
the Notes or the Warrants may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the Majority Note Holders. Any waiver or amendment effected in
accordance with this Section shall be binding upon each party to this Agreement
and any holder of any Note or Warrant purchased under this Agreement at the time
outstanding and each future holder of all such Notes or Warrants.
 
9.9 Effect of Amendment or Waiver. Each Lender acknowledges that by the
operation of Section 9.8 hereof, the Majority Note Holders will have the right
and power to diminish or eliminate all rights of such Lender under this
Agreement and each Note and Warrant issued to such Lender.
 
9.10 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
 
9.11 Stock Purchase Agreement. Each Lender understands and agrees that the
conversion of the Notes into and exercise of the Warrants for Conversion Shares
may require such Lender’s execution of certain agreements in the form agreed to
by investors in the Next Equity Financing (in form reasonably agreeable to the
Lender) relating to the purchase and sale of such securities as well as
registration, co-sale, rights of first refusal, rights of first offer and voting
rights, if any, relating to such securities.
 
9.12 Exculpation Among Lenders. Each Lender acknowledges that it is not relying
upon any person, firm, corporation or stockholder, other than the Company and
its officers and directors in their capacities as such, in making its investment
or decision to invest in the Company. Each Lender agrees that no other Lender
nor the respective controlling persons, officers, directors, partners, agents,
stockholders or employees of any other Lender shall be liable for any action
heretofore or hereafter taken or omitted to be taken by any of them in
connection with the purchase and sale of the Securities.
 
10

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9.13 Acknowledgement. In order to avoid doubt, it is acknowledged that each
Lender shall be entitled to the benefit of all adjustments in the number of
shares of Common Stock of the Company issuable upon conversion of the Preferred
Stock of the Company or as a result of any splits, recapitalizations,
combinations or other similar transaction affecting the Common Stock or
Preferred Stock underlying the Conversion Shares that occur prior to the
conversion of the Notes or exercise of the Warrants.
 
9.14  Indemnity; Costs, Expenses and Attorneys’ Fees. The Company shall
indemnify and hold each Lender harmless from any loss, cost, liability and legal
or other expense, including attorneys’ fees of such Lender’s counsel, which a
Lender may directly or indirectly suffer or incur by reason of the failure of
the Company to perform any of its obligations under this Agreement, any Note,
any Warrant, any agreement executed in connection herewith or therewith, any
grant of or exercise of remedies with respect to any collateral at any time
securing any obligations evidenced by this Agreement or the Notes, or any
Lender’s execution or performance of this Agreement or any agreement executed in
connection herewith, or acceptance or exercise of any Warrant.
 
9.15 Further Assurance. From time to time, the Company shall execute and deliver
to the Lenders such additional documents and shall provide such additional
information to the Lenders as any Lender may reasonably require to carry out the
terms of this Agreement and the Notes and any agreements executed in connection
herewith or therewith, or to be informed of the financial and business
conditions and prospects of the Company.
 
11

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

       
Long-e International Group Co., Ltd.
 
   
   
  By:   /s/ Bu Shengfu  

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Chief Executive Officer

 
SIGNATURE PAGE TO
NOTE AND WARRANT PURCHASE AGREEMENT

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LENDERS:
 
 
  MidSouth Investor Fund, LP

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By:   /s/ Lyman O. Heidtke  

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Lyman O. Heidtke, General Partner
 

 

       
 
  

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By:    

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By:    

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SIGNATURE PAGE TO
NOTE AND WARRANT PURCHASE AGREEMENT
 

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SCHEDULE OF LENDERS 

Lender
 
Total
Consideration
 
Principal Balance of Promissory Note
 
Purchase Price
of Warrant
 
MidSouth Investor Fund, LP
 
$
500,000.00               
 

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TOTAL
 
$
          
$
     
$
  
 

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