Unassociated Document


    AMENDED
      AND RESTATED SECURITIES PURCHASE AGREEMENT

    


    


    THIS
      AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
      (“Agreement”)
      is
      dated as of May 12, 2008, by and among Ardmore Holding Corporation, a Delaware
      corporation, with an address at 1608 West 2225 South, Woods Cross, Utah 84087
      (the “Company”),
      and
      the Investors set forth on the signature pages affixed hereto (each an
“Investor”
and
      collectively the “Investors”).
      

    


    Recitals:

    


    A.     
      The
      Company previously entered into a Securities Purchase Agreement made as of
      February 2008 (the “Prior
      Agreement”)
      with
      certain of the Investors party hereto. The Company and such investors desire
      to
      amend and restate the Prior Agreement in the manner et forth herein and such
      investors acknowledge that certain of the investors that agreed to invest in
      the
      Company pursuant to the Prior Agreement will not be investing in the Company
      or
      purchasing securities pursuant to this Agreement.

    


    B.  The
      Company and the Investors are executing and delivering this Agreement in
      connection with an offering of securities of the Company (the “Offering”)
      in
      reliance upon the exemption from securities registration afforded by the
      provisions of Regulation D (“Regulation
      D”),
      as
      promulgated by the United States Securities and Exchange Commission (the
“SEC”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”);
      and


    


    C.  The
      Investors wish to purchase from the Company, and the Company wishes to sell
      and
      issue to the Investors, in a Closing to occur on or before May 30, 2008, upon
      the terms and conditions stated in this Agreement, units of securities of the
      Company in an aggregate amount of $1,200,000 (the “Units”),
      each
      Unit to consist of:

    


    (i) a
      warrant, in substantially the form attached hereto as Exhibit
      A
      (the
“Warrant”),
      to
      purchase 11,575 shares of the Company’s Common Stock (as defined);
      and

    


    (ii) a
      convertible promissory note, in substantially the form attached hereto as
Exhibit
      B
      (the
“Note”),
      in
      the original principal amount of $25,000, convertible into shares of the
      Company’s Common Stock at a price per share of $1.08, subject to adjustment as
      set forth therein; and

    


    D.  The
      purchase price shall be $25,000 per Unit; and

    


    E.  
      Contemporaneous with the sale of the Notes and the Warrants, the parties hereto
      will execute and deliver a Registration Rights Agreement, in substantially
      the
      form attached hereto as Exhibit
      C
      (the
“Registration
      Rights Agreement”),
      pursuant to which the Company will agree to provide certain registration rights
      under the 1933 Act, as amended, and the rules and regulations promulgated
      thereunder, and applicable state securities laws.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    F.       
      Contemporaneous
      with the Closing (as defined), the Company, itself or through its wholly-owned
      subsidiary, shall consummate a reverse merger or share exchange with Charleston
      Industrial Ltd., a British Virgin Islands limited company (the “Target”) which
      owns all of Tianjin Yayi Industrial Co., Ltd., an entity organized and existing
      under the laws of the People’s Republic of China (the “Merger”).
      

    


    In
      consideration of the mutual promises made herein and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties hereto agree as follows:

    


    1. Definitions.
      In
      addition to those terms defined above and elsewhere in this Agreement, for
      the
      purposes of this Agreement, the following terms shall have the meanings set
      forth below:

    


    “Affiliate”
means,
      with respect to any Person, any other Person which directly or indirectly
      through one or more intermediaries Controls, is controlled by, or is under
      common control with, such Person.

    


    “Business
      Day”
means
      a
      day, other than a Saturday or Sunday, on which banks in New York City are open
      for the general transaction of business.

    


    “Common
      Stock”
means
      the Company’s common stock, par value $0.001 per share, and any securities into
      which the common stock may be reclassified.

    


    “Company’s
      Knowledge”
means
      the actual knowledge of the executive officers (as defined in Rule 405 under
      the
      1933 Act) of the Company, after due inquiry.

    


    “Confidential
      Information”
means
      trade secrets, confidential information and know-how (including but not limited
      to ideas, formulae, compositions, processes, procedures and techniques, research
      and development information, computer program code, performance specifications,
      support documentation, drawings, specifications, designs, business and marketing
      plans, and customer and supplier lists and related information).

    


    “Control”
      (including the terms “controlling”, “controlled by” or “under common control
      with”) means the possession, direct or indirect, of the power to direct or cause
      the direction of the management and policies of a Person, whether through the
      ownership of voting securities, by contract or otherwise.

    


    “Effective
      Date”
means
      the date on which the initial Registration Statement is declared effective
      by
      the SEC.

    


    “Effectiveness
      Deadline”
means
      the date on which the initial Registration Statement is required to be declared
      effective by the SEC under the terms of the Registration Rights
      Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    


    “Intellectual
      Property”
means
      all of the following: (i) patents, patent applications, patent disclosures
      and
      inventions (whether or not patentable and whether or not reduced to practice);
      (ii) trademarks, service marks, trade dress, trade names, corporate names,
      logos, slogans and Internet domain names, together with all goodwill associated
      with each of the foregoing; (iii) copyrights and copyrightable works; (iv)
      registrations, applications and renewals for any of the foregoing; and (v)
      proprietary computer software (including but not limited to data, data bases
      and
      documentation).

    


    “Material
      Adverse Effect”
means
      a
      material adverse effect on (i) the assets, liabilities, results of operations,
      condition (financial or otherwise), business, or prospects of the Company and
      its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform
      its obligations under the Transaction Documents.

    


    “Notes”
means
      the Notes to be included in the Units purchased in connection with the
      Offering.

    


    “Note
      Shares”
means
      the shares of Common Stock issuable upon conversion of the Notes.

    


    “Person”
means
      an individual, corporation, partnership, limited liability company, trust,
      business trust, association, joint stock company, joint venture, sole
      proprietorship, unincorporated organization, governmental authority or any
      other
      form of entity not specifically listed herein.

    


    “Purchase
      Price”
means
      an aggregate of $1,200,000. 

    


    “Registration
      Statement”
has
      the
      meaning set forth in the Registration Rights Agreement.

    


    “SEC
      Filings”
has
      the
      meaning set forth in Section 4.6.

    


    “Securities”
means
      the Units, the Warrants, the Warrant Shares, the Notes and the Note
      Shares.

    


    “Subsidiary”
of
      any
      Person means another Person, an amount of the voting securities, other voting
      ownership or voting partnership interests of which is sufficient to elect at
      least a majority of its Board of Directors or other governing body (or, if
      there
      are no such voting interests, 50% or more of the equity interests of which)
      is
      owned directly or indirectly by such first Person.

    


    “Transaction
      Documents”
means
      this Agreement, the Warrants, the Notes and the Registration Rights
      Agreement.

    


    “Warrants”
means
      the Warrants to be included in the Units purchased in connection with the
      Offering.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon the exercise of the
      Warrants.

    


    “1933
      Act”
has
      the
      meaning set forth in the Recitals above.

    


    “1934
      Act”
means
      the Securities Exchange Act of 1934, as amended, or any successor statute,
      and
      the rules and regulations promulgated thereunder.

    


    2. Purchase
      and Sale of the Units.
      Subject
      to the terms and conditions of this Agreement, on the Closing Date, the
      applicable Investors shall severally, and not jointly, purchase, and the Company
      shall sell and issue to such Investors, 48 Units of the securities consisting
      of
      the Warrants and the Notes in the respective amounts set forth opposite the
      Investors’ names on the signature pages attached hereto in exchange for each
      Investor’s pro rata share of the Purchase Price; provided,
      however,
      that
      not more than $1,200,000 of Units, in the aggregate, shall be purchased in
      this
      Offering.

    


    3. Closing.
      The
      Company shall deliver to Hodgson Russ LLP, in trust, the originally executed
      Warrants and Notes (collectively, the “Instruments”)
      registered in such name or names as the Investors may designate, with
      instructions that the Instruments are to be held for release to the Investors
      only upon payment in full of each Investor’s pro rata share of the Purchase
      Price to the Company by such Investors. Upon such receipt by Hodgson Russ LLP
      of
      such Instruments, each Investor shall promptly, but no more than one Business
      Day thereafter, cause a wire transfer in same day funds to be sent to the
      account of the Company as instructed in writing by the Company, in an amount
      representing the purchase price to be paid by such investor as set forth on
      the
      signature pages to this Agreement. On the date (the “Closing
      Date”)
      the
      Company receives the Purchase Price from the Investors, and provided each of
      the
      conditions set forth in Section 6 hereof have been satisfied or waived by the
      appropriate party or parties, the Instruments shall be released to the Investor
      purchasing same (the “Closing”).
      The
      Closing shall take place at the offices of Hodgson Russ LLP, 1540 Broadway,
      24th
      Floor,
      New York, New York 10036, or at such other location and on such other date
      as
      the Company and the Investors shall mutually agree. 

    


    4. Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Investors that, except as set
      forth in the schedules delivered herewith (collectively, the “Disclosure
      Schedules”):

    


    4.1 Organization,
      Good Standing and Qualification.
      Each of
      the Company and its Subsidiaries is a corporation duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      incorporation and has all requisite corporate power and authority to carry
      on
      its business as now conducted and to own its properties. Each of the Company
      and
      its Subsidiaries is duly qualified to do business as a foreign corporation
      and
      is in good standing in each jurisdiction in which the conduct of its business
      or
      its ownership or leasing of property makes such qualification or leasing
      necessary unless the failure to so qualify has not had and could not reasonably
      be expected to have a Material Adverse Effect. The Company’s Subsidiaries are
      listed on Schedule
      4.1
      hereto.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    


    4.2 Authorization.
      The
      Company has full power and authority and,
      except
      as described in Schedule 4.2, has
      taken
      all requisite action on the part of the Company, its officers, directors and
      stockholders necessary for (i) the authorization, execution and delivery of
      the
      Transaction Documents, (ii) the authorization of the performance of all
      obligations of the Company hereunder or thereunder, and (iii) the authorization,
      issuance (or reservation for issuance) and delivery of the
      Securities.
      The
      Transaction Documents constitute the legal, valid and binding obligations of
      the
      Company, enforceable against the Company in accordance with their terms, subject
      to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
      and
      similar laws of general applicability, relating to or affecting creditors’
rights generally.

    


    4.3 Capitalization.
      Schedule
      4.3
      sets
      forth (a) the authorized capital stock of the Company on the date hereof; (b)
      the number of shares of capital stock issued and outstanding; (c) the number
      of
      shares of capital stock issuable pursuant to the Company’s stock plans; and (d)
      the number of shares of capital stock issuable and reserved for issuance
      pursuant to securities (other than the Securities) exercisable for, or
      convertible into or exchangeable for any shares of capital stock of the Company.
      All of the issued and outstanding shares of the Company’s capital stock have
      been duly authorized and validly issued and are fully paid, nonassessable and
      free of pre-emptive rights and were issued in full compliance with applicable
      state and federal securities law and any rights of third parties. Except as
      described on Schedule
      4.3,
      all of
      the issued and outstanding shares of capital stock of each Subsidiary have
      been
      duly authorized and validly issued and are fully paid, nonassessable and free
      of
      pre-emptive rights, were issued in full compliance with applicable state and
      federal securities law and any rights of third parties and are owned by the
      Company, beneficially and of record, subject to no lien, encumbrance or other
      adverse claim. Except as described on Schedule
      4.3,
      no
      Person is entitled to pre-emptive or similar statutory or contractual rights
      with respect to any securities of the Company. Except as described on
Schedule
      4.3,
      there
      are no outstanding warrants, options, convertible securities or other rights,
      agreements or arrangements of any character under which the Company or any
      of
      its Subsidiaries is or may be obligated to issue any equity securities of any
      kind and except as contemplated by this Agreement, neither the Company nor
      any
      of its Subsidiaries is currently in negotiations for the issuance of any equity
      securities of any kind. Except as described on Schedule
      4.3,
      and
      except for the Registration Rights Agreement, there are no voting agreements,
      buy-sell agreements, option or right of first purchase agreements or other
      agreements of any kind among the Company and any of the securityholders of
      the
      Company relating to the securities of the Company held by them. Except as
      described on Schedule
      4.3
      and
      except as provided in the Registration Rights Agreement, no Person has the
      right
      to require the Company to register any securities of the Company under the
      1933
      Act, whether on a demand basis or in connection with the registration of
      securities of the Company for its own account or for the account of any other
      Person.

    


    Except
      as
      described on Schedule
      4.3,
      the
      issuance and sale of the Securities hereunder will not obligate the Company
      to
      issue shares of Common Stock or other securities to any other Person (other
      than
      the Investors) and will not result in the adjustment of the exercise,
      conversion, exchange or reset price of any outstanding security.

    


    Except
      as
      described on Schedule
      4.3,
      the
      Company does not have outstanding stockholder purchase rights or “poison pill”
or any similar arrangement in effect giving any Person the right to purchase
      any
      equity interest in the Company upon the occurrence of certain
      events.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    


    4.4 Valid
      Issuance.
      The
      Warrants and Notes have been duly and validly authorized. Upon the due exercise
      of the Warrants and conversion of the Notes, the Warrant Shares and Note Shares,
      respectively, will be validly issued, fully paid and non-assessable free and
      clear of all encumbrances and restrictions, except for restrictions on transfer
      set forth in the Transaction Documents or imposed by applicable securities
      laws
      and except for those created by the Investors. The Company has reserved a
      sufficient number of shares of Common Stock for issuance upon the exercise
      of
      the Warrants and conversion of the Notes, free and clear of all encumbrances
      and
      restrictions, except for restrictions on transfer set forth in the Transaction
      Documents or imposed by applicable securities laws and except for those created
      by the Investors.

    


    4.5 Consents.
      The
      execution, delivery and performance by the Company of the Transaction Documents,
      and the offer, issuance and sale of the Securities, require no consent of,
      action by or in respect of, or filing with, any Person, governmental body,
      agency, or official other than filings that have been made pursuant to
      applicable state securities laws and post-sale filings pursuant to applicable
      state and federal securities laws or any other notices required thereby, all
      of
      which the Company undertakes to file within the applicable time periods. Subject
      to the accuracy of the representations and warranties of each Investor set
      forth
      in Section 5 hereof, the Company has taken all action necessary to exempt (i)
      the issuance and sale of the Securities, (ii) the issuance of the Warrant Shares
      and Note Shares upon due exercise of the Warrants and conversion of the Notes,
      respectively, and (iii) the other transactions contemplated by the Transaction
      Documents from the provisions of any stockholder rights plan or other “poison
      pill” arrangement, any anti-takeover, business combination or control share law
      or statute binding on the Company or to which the Company or any of its assets
      and properties may be subject and any provision of the Company’s Certificate of
      Incorporation or Bylaws that is or could reasonably be expected to become
      applicable to the Investors as a result of the transactions contemplated hereby,
      including without limitation, the issuance of the Securities and the ownership,
      disposition or voting of the Securities by the Investors or the exercise of
      any
      right granted to the Investors pursuant to this Agreement or the other
      Transaction Documents.

    


    4.6 Delivery
      of SEC Filings; Business.
      The
      Company has made available to the Investors through the EDGAR system, true
      and
      complete copies of the Company’s most recent Annual Report on Form 10-KSB for
      the fiscal year ended December 31, 2007 (the “10-KSB”),
      and
      all other reports filed by the Company pursuant to the 1934 Act since the filing
      of the 10-KSB and prior to the date hereof (collectively, the “SEC
      Filings”).
      Except as indicated in the SEC Filings, the SEC Filings are the only filings
      required of the Company pursuant to the 1934 Act for such period. The Company
      and its Subsidiaries are engaged in all material respects only in the business
      described in the SEC Filings and the SEC Filings contain a complete and accurate
      description in all material respects of the business of the Company and its
      Subsidiaries, taken as a whole.

    


    4.7 Use
      of
      Proceeds.
      The net
      proceeds from this Offering will be used for expenses incurred in connection
      with the Merger, the Offering and the Registration Statement (as defined in
      the
      Registration Rights Agreement), and for working capital and general corporate
      purposes.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    


    4.8 No
      Material Adverse Change.
      Since
      December 31, 2007, there has not been:

    


    (a) any
      change in the consolidated assets, liabilities, financial condition or operating
      results of the Company from that reflected in the financial statements included
      in the Company’s Annual Report of Form 10-KSB for the year ended December 31,
      2007, except for changes in the ordinary course of business which have not
      had
      and could not reasonably be expected to have a Material Adverse Effect,
      individually or in the aggregate;

    


    (b) any
      declaration or payment of any dividend, or any authorization or payment of
      any
      distribution, on any of the capital stock of the Company, or any redemption
      or
      repurchase of any securities of the Company;

    


    (c) any
      material damage, destruction or loss, whether or not covered by insurance to
      any
      assets or properties of the Company or its Subsidiaries;

    


    (d) any
      waiver, not in the ordinary course of business, by the Company or any Subsidiary
      of a material right or of a material debt owed to it;

    


    (e) any
      satisfaction or discharge of any lien, claim or encumbrance or payment of any
      obligation by the Company or a Subsidiary, except in the ordinary course of
      business and which is not material to the assets, properties, financial
      condition, operating results or business of the Company and its Subsidiaries
      taken as a whole (as such business is presently conducted and as it is proposed
      to be conducted);

    


    (f) any
      change or amendment to the Company’s Certificate of Incorporation or Bylaws, or
      material change to any material contract or arrangement by which the Company
      or
      any Subsidiary is bound or to which any of their respective assets or properties
      is subject;

    


    (g) any
      material labor difficulties or labor union organizing activities with respect
      to
      employees of the Company or any Subsidiary;

    


    (h) any
      material transaction entered into by the Company or a Subsidiary other than
      in
      the ordinary course of business; 

    


    (i) the
      loss
      of the services of any key employee, or material change in the composition
      or
      duties of the senior management of the Company or any Subsidiary;

    


    (j) the
      loss
      or threatened loss of any customer which has had or could reasonably be expected
      to have a Material Adverse Effect; or

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    


    (k) any
      other
      event or condition of any character that has had or could reasonably be expected
      to have a Material Adverse Effect.

    


    4.9 SEC
      Filings.
      At the
      time of filing thereof, the SEC Filings complied as to form in all material
      respects with the requirements of the 1934 Act and did not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements made therein, in the light of the circumstances
      under which they were made, not misleading.

     

    4.10 No
      Conflict, Breach, Violation or Default.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the issuance and sale of the Securities will not conflict with or result
      in
      a breach or violation of any of the terms and provisions of, or constitute
      a
      default under (i) the Company’s Certificate of Incorporation or the Company’s
      Bylaws, both as in effect on the date hereof (true and complete copies of which
      have been made available to the Investors), or (ii)(a) any statute, rule,
      regulation or order of any governmental agency or body or any court, domestic
      or
      foreign, having jurisdiction over the Company, any Subsidiary or any of their
      respective assets or properties, or (b) any agreement or instrument to which
      the
      Company or any Subsidiary is a party or by which the Company or a Subsidiary
      is
      bound or to which any of their respective assets or properties is
      subject.

    


    4.11 Tax
      Matters.
      The
      Company and each Subsidiary has timely prepared and filed all tax returns
      required to have been filed by the Company or such Subsidiary with all
      appropriate governmental agencies and timely paid all taxes shown thereon or
      otherwise owed by it. The charges, accruals and reserves on the books of the
      Company in respect of taxes for all fiscal periods are adequate in all material
      respects, and there are no material unpaid assessments against the Company
      or
      any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of
      any additional taxes, penalties or interest for any fiscal period or audits
      by
      any federal, state or local taxing authority except for any assessment which
      is
      not material to the Company and its Subsidiaries, taken as a whole. All taxes
      and other assessments and levies that the Company or any Subsidiary is required
      to withhold or to collect for payment have been duly withheld and collected
      and
      paid to the proper governmental entity or third party when due. There are no
      tax
      liens or claims pending or, to the Company’s Knowledge, threatened against the
      Company or any Subsidiary or any of their respective assets or property. There
      are no outstanding tax sharing agreements or other such arrangements between
      the
      Company and any Subsidiary or other corporation or entity.

    


    4.12 Title
      to Properties.
      Except
      as disclosed in Schedule
      4.12,
      the
      Company and each Subsidiary has good and marketable title to all real properties
      and all other properties and assets owned by it, in each case free from liens,
      encumbrances and defects that would materially affect the value thereof or
      materially interfere with the use made or currently planned to be made thereof
      by them; and except as disclosed in Schedule
      4.12,
      the
      Company and each Subsidiary holds any leased real or personal property under
      valid and enforceable leases with no exceptions that would materially interfere
      with the use made or currently planned to be made thereof by them.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    


    4.13 Certificates,
      Authorities and Permits.
      The
      Company and each Subsidiary possess adequate certificates, authorities or
      permits issued by appropriate governmental agencies or bodies necessary to
      conduct the business now operated by it, and neither the Company nor any
      Subsidiary has received any notice of proceedings relating to the revocation
      or
      modification of any such certificate, authority or permit that, if determined
      adversely to the Company or such Subsidiary, could reasonably be expected to
      have a Material Adverse Effect, individually or in the aggregate.

    


    4.14 Labor
      Matters.

     

    (a) The
      Company is not a party to or bound by any collective bargaining agreements
      or
      other agreements with labor organizations. The Company has not violated in
      any
      material respect any laws, regulations, orders or contract terms, affecting
      the
      collective bargaining rights of employees, labor organizations or any laws,
      regulations or orders affecting employment discrimination, equal opportunity
      employment, or employees’ health, safety, welfare, wages and hours.

     

    (b) (i)
      There
      are no labor disputes existing, or to the Company’s Knowledge, threatened,
      involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts
      or any other disruptions of or by the Company’s employees, (ii) there are no
      unfair labor practices or petitions for election pending or, to the Company’s
      Knowledge, threatened before any governmental agency or labor commission
      relating to the Company’s employees, (iii) no demand for recognition or
      certification heretofore made by any labor organization or group of employees
      is
      pending with respect to the Company, and (iv) to the Company’s Knowledge, the
      Company enjoys good labor and employee relations with its employees and labor
      organizations.

     

    (c) The
      Company is, and at all times has been, in compliance in all material respects
      with all applicable laws respecting employment (including laws relating to
      classification of employees and independent contractors) and employment
      practices, terms and conditions of employment, wages and hours, and immigration
      and naturalization.

     

    (d) Except
      as
      disclosed in the SEC Filings, the Company is not a party to, or bound by, any
      employment or other contract or agreement that contains any severance,
      termination pay or change of control liability or obligation, including, without
      limitation, any “excess parachute payment,” as defined in Section 2806(b) of the
      Internal Revenue Code.

    


    (e) To
      the
      Company’s Knowledge, none of the Company’s employees is a Person who is either a
      United States citizen or a permanent resident entitled to work in the United
      States. To the Company’s Knowledge, the Company has no liability for the
      improper classification by the Company of such employees as independent
      contractors or leased employees prior to the Closing.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    


    4.15 Intellectual
      Property. Except
      as
      specified in Schedule
      4.15:

    


    (a) All
      Intellectual Property of the Company and its Subsidiaries is currently in
      compliance with all legal requirements (including timely filings, proofs and
      payments of fees) and is valid and enforceable. No Intellectual Property of
      the
      Company or its Subsidiaries which is necessary for the conduct of Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted or as
      currently proposed to be conducted has been or is now involved in any
      cancellation, dispute or litigation, and, to the Company’s Knowledge, no such
      action is threatened. No patent of the Company or its Subsidiaries has been
      or
      is now involved in any interference, reissue, re-examination or opposition
      proceeding.

    


    (b) All
      of
      the licenses and sublicenses and consents, royalty or other agreements
      concerning Intellectual Property which are necessary for the conduct of the
      Company’s and each of its Subsidiaries’ respective businesses as currently
      conducted or as currently proposed to be conducted to which the Company or
      any
      Subsidiary is a party or by which any of their assets are bound (other than
      generally commercially available, non-custom, off-the-shelf software application
      programs having a retail acquisition price of less than $10,000 per license)
      (collectively, “License
      Agreements”)
      are
      valid and binding obligations of the Company or its Subsidiaries that are
      parties thereto and, to the Company’s Knowledge, the other parties thereto,
      enforceable in accordance with their terms, except to the extent that
      enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
      moratorium, fraudulent conveyance or other similar laws affecting the
      enforcement of creditors’ rights generally, and there exists no event or
      condition which will result in a material violation or breach of or constitute
      (with or without due notice or lapse of time or both) a default by the Company
      or any of its Subsidiaries under any such License Agreement.

    


    (c) The
      Company and its Subsidiaries own or have the valid right to use all of the
      Intellectual Property that is necessary for the conduct of the Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted or as
      currently proposed to be conducted and for the ownership, maintenance and
      operation of the Company’s and its Subsidiaries’ properties and assets, free and
      clear of all liens, encumbrances, adverse claims or obligations to license
      all
      such owned Intellectual Property and Confidential Information, other than
      licenses entered into in the ordinary course of the Company’s and its
      Subsidiaries’ businesses. The Company and its Subsidiaries have a valid and
      enforceable right to use all third party Intellectual Property and Confidential
      Information used or held for use in the respective businesses of the Company
      and
      its Subsidiaries.

    


    (d) To
      the
      Company’s Knowledge, the conduct of the Company’s and its Subsidiaries’
businesses as currently conducted does not infringe or otherwise impair or
      conflict with (collectively, “Infringe”)
      any
      Intellectual Property rights of any third party or any confidentiality
      obligation owed to a third party, and, to the Company’s Knowledge, the
      Intellectual Property and Confidential Information of the Company and its
      Subsidiaries which are necessary for the conduct of Company’s and each of its
      Subsidiaries’ respective businesses as currently conducted or as currently
      proposed to be conducted are not being Infringed by any third party. There
      is no
      litigation or order pending or outstanding or, to the Company’s Knowledge,
      threatened or imminent, that seeks to limit or challenge or that concerns the
      ownership, use, validity or enforceability of any Intellectual Property or
      Confidential Information of the Company and its Subsidiaries and the Company’s
      and its Subsidiaries’ use of any Intellectual Property or Confidential
      Information owned by a third party, and, to the Company’s Knowledge, there is no
      valid basis for the same.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    


    (e) The
      consummation of the transactions contemplated hereby and by the other
      Transaction Documents will not result in the alteration, loss, impairment of
      or
      restriction on the Company’s or any of its Subsidiaries’ ownership or right to
      use any of the Intellectual Property or Confidential Information which is
      necessary for the conduct of Company’s and each of its Subsidiaries’ respective
      businesses as currently conducted or as currently proposed to be
      conducted.

    


    (f) The
      Company and its Subsidiaries have taken reasonable steps to protect the
      Company’s and its Subsidiaries’ rights in their Intellectual Property and
      Confidential Information. Each employee, consultant and contractor who has
      had
      access to Confidential Information which is necessary for the conduct of
      Company’s and each of its Subsidiaries’ respective businesses as currently
      conducted or as currently proposed to be conducted has executed an agreement
      to
      maintain the confidentiality of such Confidential Information and has executed
      appropriate agreements that are substantially consistent with the Company’s
      standard forms thereof, except where the failure to do so has not had and could
      not reasonably be expected to have a Material Adverse Effect, individually
      or in
      the aggregate. Except under confidentiality obligations, there has been no
      material disclosure of any of the Company’s or its Subsidiaries’ Confidential
      Information to any third party.

    


    4.16 Environmental
      Matters.
      To the
      Company’s Knowledge, neither the Company nor any Subsidiary (i) is in violation
      of any statute, rule, regulation, decision or order of any governmental agency
      or body or any court, domestic or foreign, relating to the use, disposal or
      release of hazardous or toxic substances or relating to the protection or
      restoration of the environment or human exposure to hazardous or toxic
      substances (collectively, “Environmental Laws”), (ii) owns or operates any real
      property contaminated with any substance that is subject to any Environmental
      Laws, (iii) is liable for any off-site disposal or contamination pursuant to
      any
      Environmental Laws, or (iv) is subject to any claim relating to any
      Environmental Laws, which violation, contamination, liability or claim has
      had
      or could reasonably be expected to have a Material Adverse Effect, individually
      or in the aggregate; and there is no pending or, to the Company’s Knowledge,
      threatened investigation that might lead to such a claim.

    


    4.17 Litigation.
      There
      are no pending actions, suits or proceedings against or affecting the Company,
      its Subsidiaries or any of its or their properties; and to the Company’s
      Knowledge, no such actions, suits or proceedings are threatened or
      contemplated.

    


    4.18 Financial
      Statements.
      The
      financial statements included in each SEC Filing present fairly, in all material
      respects, the consolidated financial position of the Company as of the dates
      shown and its consolidated results of operations and cash flows for the periods
      shown, and such financial statements have been prepared in conformity with
      United States generally accepted accounting principles applied on a consistent
      basis (“GAAP”)
      (except as may be disclosed therein or in the notes thereto, and, in the case
      of
      quarterly financial statements, as permitted by Form 10-QSB under the 1934
      Act).
      Except as set forth in the financial statements of the Company included in
      the
      SEC Filings filed prior to the date hereof or as described on Schedule
      4.18,
      neither
      the Company nor any of its Subsidiaries has incurred any liabilities, contingent
      or otherwise, except those incurred in the ordinary course of business,
      consistent (as to amount and nature) with past practices since the date of
      such
      financial statements, none of which, individually or in the aggregate, have
      had
      or could reasonably be expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    


    4.19 Insurance
      Coverage.
      Except
      as set forth in Schedule
      4.19,
      the
      Company and each Subsidiary maintains in full force and effect insurance
      coverage that is customary for comparably situated companies for the business
      being conducted and properties owned or leased by the Company and each
      Subsidiary, and the Company reasonably believes such insurance coverage to
      be
      adequate against all liabilities, claims and risks against which it is customary
      for comparably situated companies to insure.

    


    4.20 Brokers
      and Finders.
      No
      Person will have, as a result of the transactions contemplated by the
      Transaction Documents, any valid right, interest or claim against or upon the
      Company, any Subsidiary or an Investor for any commission, fee or other
      compensation pursuant to any agreement, arrangement or understanding entered
      into by or on behalf of the Company, other than as described in Schedule
      4.20.

    


    4.21 No
      Directed Selling Efforts or General Solicitation.
      Neither
      the Company nor any Person acting on its behalf has conducted any general
      solicitation or general advertising (as those terms are used in Regulation
      D) in
      connection with the offer or sale of any of the Securities.

    


    4.22 No
      Integrated Offering.
      Neither
      the Company nor any of its Affiliates, nor any Person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any Company
      security or solicited any offers to buy any security, under circumstances that
      would adversely affect reliance by the Company on Section 4(2) of the 1933
      Act
      or Rule 506 promulgated thereunder, for the exemption from registration for
      the
      transactions contemplated hereby or would require registration of the Securities
      under the 1933 Act.

    


    4.23 Private
      Placement.
      The
      offer and sale of the Securities to the Investors as contemplated hereby is
      exempt from the registration requirements of the 1933 Act.

    


    4.24 Questionable
      Payments.
      Neither
      the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of
      their respective current or former stockholders, directors, officers, employees,
      agents or other Persons acting on behalf of the Company or any Subsidiary,
      has
      on behalf of the Company or any Subsidiary or in connection with their
      respective businesses: (a) used any corporate funds for unlawful contributions,
      gifts, entertainment or other unlawful expenses relating to political activity;
      (b) made any direct or indirect unlawful payments to any governmental officials
      or employees from corporate funds; (c) established or maintained any unlawful
      or
      unrecorded fund of corporate monies or other assets; (d) made any false or
      fictitious entries on the books and records of the Company or any Subsidiary;
      (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or
      other unlawful payment of any nature; or (f) taken any actions that would
      violate the U.S. Foreign Corrupt Practices Act of 1977, as amended.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    


    4.25 Transactions
      with Affiliates.
      Except
      as disclosed in the SEC Filings,
      none of
      the officers or directors of the Company or any Subsidiary and, to the Company’s
      Knowledge, none of the employees of the Company or any Subsidiary is presently
      a
      party to any transaction with the Company or any Subsidiary (other than as
      holders of stock options and/or warrants, and for services as employees,
      officers and directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      officer, director or such employee or, to the Company’s Knowledge, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner.

    


    4.26 Internal
      Controls.
      The
      Company is
      in
      material compliance with the provisions of the Sarbanes-Oxley Act of 2002
      currently applicable to the Company. The Company and
      the
      Subsidiaries maintain a system of internal accounting controls sufficient to
      provide reasonable assurance that (i) transactions are executed in accordance
      with management’s general or specific authorizations, (ii) transactions are
      recorded as necessary to permit preparation of financial statements in
      conformity with GAAP and to maintain asset accountability, (iii) access to
      assets is permitted only in accordance with management’s general or specific
      authorization, and (iv) the recorded accountability for assets is compared
      with
      the existing assets at reasonable intervals and appropriate action is taken
      with
      respect to any differences. The Company has established disclosure controls
      and
      procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) for the Company
      and
      designed such disclosure controls and procedures to ensure that material
      information relating to the Company, including the Subsidiaries, is made known
      to the certifying officers by others within those entities, particularly during
      the period in which the Company’s most recently filed periodic report under the
      1934 Act, as the case may be, is being prepared. The Company’s certifying
      officers have evaluated the effectiveness of the Company’s controls and
      procedures as of the end of the period covered by the most recently filed
      periodic report under the 1934 Act (such date, the “Evaluation
      Date”).
      The
      Company presented in its most recently filed periodic report under the 1934
      Act
      the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no significant
      changes in the Company’s internal controls (as defined in the 1934 Act Rules 13a
      -15 and 15d - 15, or, to the Company’s Knowledge, in other factors that could
      significantly affect the Company’s internal controls. The Company maintains and
      will continue to maintain a standard system of accounting established and
      administered in accordance with GAAP and the applicable requirements of the
      1934
      Act.

    


    4.27 Disclosures.
      Neither
      the Company nor any Person acting on its behalf has provided the Investors
      or
      their agents or counsel with any information that constitutes or might
      constitute material, non-public information. The written materials delivered
      to
      the Investors in connection with the transactions contemplated by the
      Transaction Documents do not contain any untrue statement of a material fact
      or
      omit to state a material fact necessary in order to make the statements
      contained therein, in light of the circumstances under which they were made,
      not
      misleading.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    


    5. Representations
      and Warranties of the Investors.
      Each of
      the Investors hereby severally, and not jointly, represents and warrants to
      the
      Company that:

    


    5.1 Organization
      and Existence.
      Such
      Investor is an individual or a validly existing corporation, limited
      partnership, or limited liability company and has all requisite individual,
      corporate, partnership or limited liability company power and authority to
      invest in the Securities pursuant to this Agreement.

    


    5.2 Authorization.
      The
      execution, delivery and performance by such Investor of the Transaction
      Documents to which such Investor is a party have been duly authorized and will
      each constitute the valid and legally binding obligation of such Investor,
      enforceable against such Investor in accordance with their respective terms,
      subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
      moratorium and similar laws of general applicability, relating to or affecting
      creditors’ rights generally.

    


    5.3 Purchase
      Entirely for Own Account.
      The
      Securities to be received by such Investor hereunder will be acquired for such
      Investor’s own account, not as nominee or agent, and not with a view to the
      resale or distribution of any part thereof in violation of the 1933 Act, and
      such Investor has no present intention of selling, granting any participation
      in, or otherwise distributing the same in violation of the 1933 Act
      without
      prejudice, however, to such Investor’s right at all times to sell or otherwise
      dispose of all or any part of such Securities in compliance with applicable
      federal and state securities laws.
      Nothing
      contained herein shall be deemed a representation or warranty by such Investor
      to hold the Securities for any period of time. Such
      Investor
      is not a broker-dealer registered with the SEC under the 1934 Act or an entity
      engaged in a business that would require it to be so registered.

    


    5.4 Investment
      Experience.
      Such
      Investor acknowledges that it can bear the economic risk and complete loss
      of
      its investment in the Securities and has such knowledge and experience in
      financial or business matters that it is capable of evaluating the merits and
      risks of the investment contemplated hereby.

    


    5.5 Disclosure
      of Information.
      (a)
      Such Investor has had an opportunity to receive all information related to
      the
      Company requested by it and to ask questions of and receive answers from the
      Company regarding the Company, its business and the terms and conditions of
      the
      offering of the Securities. Such Investor acknowledges receipt of copies of
      the
      SEC Filings. Neither such inquiries nor any other due diligence investigation
      conducted by such Investor shall modify, amend or affect such Investor’s right
      to rely on the Company’s representations and warranties contained in this
      Agreement.

    


    (b)
      In
      addition, such Investor has had an opportunity to receive all information
      related to the Target and its subsidiaries requested by it and to ask questions
      of and receive answers from the Target regarding the Target and its
      subsidiaries, their respective businesses and the terms and conditions of the
      Merger (the “Target
      Information”).
      Such
      Investor understands and acknowledges that none of the Target Information has
      been provided by the Company, or its representatives, and agrees that the
      Company shall not be liable for any material misstatements made in the Target
      Information. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    


    5.6 Restricted
      Securities.
      Such
      Investor understands that the Securities are characterized as “restricted
      securities” under the U.S. 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 1933 Act only in certain limited
      circumstances.

    


    5.7 Legends.
      It is
      understood that, except as provided below, certificates evidencing the
      Securities may bear the following or any similar legend:

    


    (a) “The
      securities represented hereby may not be transferred unless (i) such securities
      have been registered for sale pursuant to the 1933 Act, as amended, (ii) such
      securities may be sold pursuant to Rule 144, or (iii) the Company has received
      an opinion of counsel reasonably satisfactory to it that such transfer may
      lawfully be made without registration under the 1933 Act, as amended, or
      qualification under applicable state securities laws.” 

    


    (b) If
      required by the authorities of any state in connection with the issuance of
      sale
      of the Securities, the legend required by such state authority.

    


    5.8 Accredited
      Investor.
      Such
      Investor is an “accredited investor” within the meaning of Rule 501(a) of
      Regulation D promulgated under the 1933 Act, for the reasons checked on
Schedule
      1
      hereto.

    


    5.9 No
      General Solicitation.
      Such
      Investor did not learn of the investment in the Securities as a result of any
      public advertising or general solicitation.

    


    5.10 Brokers
      and Finders.
      No
      Person will have, as a result of the transactions contemplated by the
      Transaction Documents, any valid right, interest or claim against or upon the
      Company, any Subsidiary or an Investor for any commission, fee or other
      compensation pursuant to any agreement, arrangement or understanding entered
      into by or on behalf of such Investor.

    


    5.11 Prohibited
      Transactions.
      During
      the period commencing January 1, 2008 through the date hereof, neither such
      Investor nor any Affiliate of such Investor which (x) had knowledge of the
      transactions contemplated hereby, (y) has or shares discretion relating to
      such
      Investor’s investments or trading or information concerning such Investor’s
      investments, including in respect of the Securities, or (z) is subject to such
      Investor’s review or input concerning such Affiliate’s investments or trading
      (collectively, “Trading
      Affiliates”)
      has,
      directly or indirectly, effected or agreed to effect any short sale, whether
      or
      not against the box, established any “put equivalent position” (as defined in
      Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted
      any
      other right (including, without limitation, any put or call option) with respect
      to the Common Stock or with respect to any security that includes, relates
      to or
      derived any significant part of its value from the Common Stock or otherwise
      sought to hedge its position in the Securities (each, a “Prohibited
      Transaction”).
      Prior
      to the earliest to occur of (i) the termination of this Agreement, (ii) the
      Effective Date or (iii) the Effectiveness Deadline, such Investor shall not,
      and
      shall cause its Trading Affiliates not to, engage, directly or indirectly,
      in a
      Prohibited Transaction. Such Investor acknowledges that the representations,
      warranties and covenants contained in this Section 5.11 are being made for
      the
      benefit of the Investors as well as the Company and that each of the other
      Investors shall have an independent right to assert any claims against such
      Investor arising out of any breach or violation of the provisions of this
      Section 5.11.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    


    5.12 Reliance
      on Exemptions.
      Such
      Investor understands that the Securities are being offered and sold to it in
      reliance upon specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying upon
      the truth and accuracy of, and such Investor’s compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Investor set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Investor to acquire the
      Securities.

    


    6.
       Conditions
      to Closing.

    


    6.1 Conditions
      to the Investors’ Obligations.
      The
      obligation of each Investor to purchase the Units at the Closing is subject
      to
      the fulfillment to such Investor’s satisfaction, on or prior to the Closing
      Date, of the following conditions, any of which may be waived by such Investor
      (as to itself only):

    


    (a) The
      representations and warranties made by the Company in Section 4 hereof qualified
      as to materiality shall be true and correct at all times prior to and on the
      Closing Date, except to the extent any such representation or warranty expressly
      speaks as of a specific date, in which case such representation or warranty
      shall be true and correct as of such date, and, the representations and
      warranties made by the Company in Section 4 hereof not qualified as to
      materiality shall be true and correct in all material respects at all times
      prior to and on the Closing Date, except to the extent any such representation
      or warranty expressly speaks as of a specific date, in which case such
      representation or warranty shall be true and correct in all material respects
      as
      of such specific date. The Company shall have performed in all material respects
      all obligations and covenants herein required to be performed by it on or prior
      to the Closing Date.

    


    (b) The
      Company shall have obtained any and all consents, permits, approvals,
      registrations and waivers necessary
      or appropriate for consummation of the purchase and sale of the Units and the
      consummation of the other transactions contemplated by the Transaction Documents
      to be consummated on or prior to the Closing Date, all of which shall be in
      full
      force and effect.

    


    (c) The
      Company shall have executed and delivered the Registration Rights Agreement
      and
      the Notes and Warrants to be purchased hereunder.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    


    (d) No
      judgment, writ, order, injunction, award or decree of or by any court, or judge,
      justice or magistrate, including any bankruptcy court or judge, or any order
      of
      or by any governmental authority, shall have been issued, and no action or
      proceeding shall have been instituted by any governmental authority, enjoining
      or preventing the consummation of the transactions contemplated hereby or in
      the
      other Transaction Documents.

    


    (e) The
      Company shall have delivered a certificate, executed on behalf of the Company
      by
      its Chief Executive Officer or its Chief Financial Officer, dated as of the
      Closing Date, certifying to the fulfillment of the conditions specified in
      subsections (a) and (b) of this Section 6.1.

    


    (f) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Secretary, dated as of the Closing Date, certifying the resolutions adopted
      by the Board of Directors of the Company approving the transactions contemplated
      by this Agreement and the other Transaction Documents and the issuance of the
      Securities, certifying the current versions of the Certificate of Incorporation
      and Bylaws of the Company and certifying as to the signatures and authority
      of
      persons signing the Transaction Documents and related documents on behalf of
      the
      Company.

    


    (g) The
      Investors shall have received an opinion from Company’s counsel, dated as of the
      Closing Date, in form and substance reasonably acceptable to the Investors
      and
      addressing such legal matters as the Investors may reasonably
      request.

    


    (h) No
      stop
      order or suspension of trading shall have been imposed by the SEC or any other
      governmental or regulatory body with respect to public trading in the Common
      Stock.

    


    (i) The
      Company or its Subsidiary shall contemporaneously with the Closing, have
      consummated the Merger with the Target.

    


    (j) The
      Company shall have received gross proceeds of $1,200,000 from the
      Offering.

    


    6.2 Conditions
      to Obligations of the Company.
      The
      Company’s obligation to sell and issue the Securities at the Closing is subject
      to the fulfillment to the satisfaction of the Company on or prior to the Closing
      Date of the following conditions, any of which may be waived by the
      Company:

    


    (a) The
      representations and warranties made by the Investors in Section 5 hereof, other
      than the representations and warranties contained in Sections 5.3, 5.4, 5.5,
      5.6, 5.7, 5.8 and 5.9 (the “Investment
      Representations”),
      shall
      be true and correct in all material respects when made, and shall be true and
      correct in all material respects on the Closing Date with the same force and
      effect as if they had been made on and as of said date. The Investment
      Representations shall be true and correct in all respects when made, and shall
      be true and correct in all respects on the Closing Date with the same force
      and
      effect as if they had been made on and as of said date. The Investors shall
      have
      performed in all material respects all obligations and covenants herein required
      to be performed by them on or prior to the Closing Date. 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    


    (b) The
      Investors shall have executed and delivered the Registration Rights
      Agreement.

    


    (c) No
      judgment, writ, order, injunction, award or decree of or by any court, or judge,
      justice or magistrate, including any bankruptcy court or judge, or any order
      of
      or by any governmental authority, shall have been issued, and no action or
      proceeding shall have been instituted by any governmental authority, enjoining
      or preventing the consummation of the transactions contemplated hereby or in
      the
      other Transaction Documents.

    


    (d) The
      Investors shall simultaneously deliver the Purchase Price to the Company.


    


    (e) The
      Company shall contemporaneously with the Closing, consummate the Merger with
      the
      Target.

    


    (f) The
      Company shall have received gross proceeds of $1,200,000 from the
      Offering.

    


    6.3 Termination
      of Obligations to Effect Closing; Effects.

    


    (a) The
      outstanding obligations of the Company, on the one hand, and the Investors,
      on
      the other hand, to effect the Closing shall terminate as follows:

    


    (i) Upon
      the
      mutual written consent of the Company and the Investors;

    


    (ii) By
      the
      Company if any of the conditions set forth in Section 6.2 shall have become
      incapable of fulfillment, and shall not have been waived by the
      Company;

    


    (iii) By
      an
      Investor (with respect to itself only) if any of the conditions set forth in
      Section 6.1 shall have become incapable of fulfillment, and shall not have
      been
      waived by the Investor; or

    


    (iv) By
      either
      the Company or any Investor (with respect to itself only) if the Closing of
      the
      sale of the Units has not occurred on or prior to May 30, 2008;

    


    provided,
      however,
      that,
      except in the case of clause (i) above, the party seeking to terminate its
      obligation to effect the Closing shall not then be in breach of any of its
      representations, warranties, covenants or agreements contained in this Agreement
      or the other Transaction Documents if such breach has resulted in the
      circumstances giving rise to such party’s seeking to terminate its obligation to
      effect the Closing.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    


    (b) In
      the
      event of termination by any Investor of its obligations to effect the Closing
      pursuant to this Section 6.3, written notice thereof shall forthwith be given
      to
      the other Investors and the other Investors shall have the right to terminate
      their obligations to effect such Closing upon written notice to the Company
      and
      the other Investors. Nothing in this Section 6.3 shall be deemed to release
      any
      party from any liability for any breach by such party of the terms and
      provisions of this Agreement or the other Transaction Documents or to impair
      the
      right of any party to compel specific performance by any other party of its
      obligations under this Agreement or the other Transaction
      Documents.

    


    7. Covenants
      and Agreements of the Company.

    


    7.1 Reservation
      of Common Stock.
      The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued shares of Common Stock, solely for the purpose of providing for the
      conversion of the Notes and exercise of the Warrants, such number of shares
      of
      Common Stock as shall from time to time equal the Note Shares and Warrant Shares
      issuable from time to time.

    


    7.2 Reports.
      The
      Company will furnish to the Investors and/or their permitted assignees such
      information relating to the Company and its Subsidiaries as from time to time
      may reasonably be requested by the Investors and/or their assignees;
provided,
      however,
      that
      the Company shall not disclose material nonpublic information to the Investors,
      or to advisors to or representatives of the Investors, unless prior to
      disclosure of such information the Company identifies such information as being
      material nonpublic information and provides the Investors, such advisors and
      representatives with the opportunity to accept or refuse to accept such material
      nonpublic information for review and any Investor wishing to obtain such
      information enters into an appropriate confidentiality agreement with the
      Company with respect thereto.

    


    7.3 No
      Conflicting Agreements.
      The
      Company will not take any action, enter into any agreement or make any
      commitment that would conflict or interfere in any material respect with the
      Company’s obligations to the Investors under the Transaction
      Documents.

    


    7.4 Insurance.
      The
      Company shall not materially reduce the insurance coverage described in Section
      4.19.

    


    7.5 Compliance
      with Laws.
      The
      Company will comply in all material respects with all applicable laws, rules,
      regulations, orders and decrees of all governmental authorities.

    


    7.6 Listing
      of Underlying Shares and Related Matters.
      If the
      Company applies to have its Common Stock or other securities traded on any
      stock
      exchange or market, it shall include in such application the Warrant Shares
      and
      the Note Shares and will take such other action as is necessary to cause such
      Common Stock to be so listed. Thereafter, the Company will use commercially
      reasonable efforts to continue the listing and trading of its Common Stock
      on
      such exchange or market and, in accordance, therewith, will use commercially
      reasonable efforts to comply in all respects with the Company’s reporting,
      filing and other obligations under the bylaws or rules of such exchange or
      market, as applicable.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    


    7.7 Termination
      of Covenants.
      The
      provisions of Sections 7.2 through 7.5 shall terminate and be of no further
      force and effect on the date on which the Company’s obligations under the
      Registration Rights Agreement to register or maintain the effectiveness of
      any
      registration covering the Registrable Securities (as such term is defined in
      the
      Registration Rights Agreement) shall terminate.

    


    7.8 Removal
      of Legends; Transfer of Securities.
      (a)
      Upon the earlier of (i) registration for resale pursuant to the Registration
      Rights Agreement or (ii) the shares of Common Stock held by such Investor being
      eligible to be resold pursuant to Rule 144 without regard to the volume
      limitations imposed by such rule, the Company, provided that it receives from
      such Investor the documents (the “Representation
      Documents”)
      as
      applicable, identified in Section 7.8 (a)(1) or (a)(2), shall (A) deliver to
      the
      transfer agent for the Common Stock (the “Transfer
      Agent”)
      irrevocable instructions that the Transfer Agent shall reissue a certificate
      representing shares of Common Stock without legends upon receipt by such
      Transfer Agent of the legended certificates for such shares, together with
      either (1) a representation letter from the Investor customarily required in
      connection with transactions effected pursuant to Rule 144 or (2) a
      representation by the Investor that such Investor has sold the shares of Common
      Stock represented thereby in accordance with the Plan of Distribution contained
      in the Registration Statement, and (B) cause its counsel to deliver to the
      Transfer Agent one or more blanket opinions to the effect that the removal
      of
      such legends in such circumstances may be effected under the 1933 Act. From
      and
      after the earlier of such dates, upon an Investor’s written request, the Company
      shall promptly cause certificates evidencing the Investor’s Securities to be
      replaced with certificates which do not bear such restrictive legends, and
      Warrant Shares and Note Shares subsequently issued upon due exercise of the
      Warrants or conversion of the Notes, as the case may be, shall not bear such
      restrictive legends provided the provisions of either clause (i) or clause
      (ii)
      above, as applicable, are satisfied with respect to such Warrant Shares or
      Note
      Shares, as applicable. When the Company is required to cause unlegended
      certificates to replace previously issued legended certificates, if unlegended
      certificates are not delivered to an Investor within seven Business Days of
      submission by that Investor of legended certificate(s) and the applicable
      Representation Documents to the Transfer Agent as provided above (or to the
      Company, in the case of the Warrants or Notes), the Company shall be liable
      to
      the Investor for liquidated damages in an amount equal to 1.5% of the aggregate
      purchase price of the Securities evidenced by such certificate(s) for each
      thirty (30) day period (or portion thereof) beyond such seven Business Days
      that
      the unlegended certificates have not been so delivered. 

    


    (b)
      In
      the event an Investor wants to transfer its Securities other than as permitted
      pursuant to, or as contemplated by, Section 7.8 (a), the Investor and the
      proposed transferee shall cause to be delivered to the Company (i) an opinion
      of
      counsel in form and substance acceptable to the Company and (ii) such other
      documents with respect to such transfer as the Company may request.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    8. Survival
      and Indemnification.

    


    8.1 Survival.
      The
      covenants and agreements contained in this Agreement shall survive the Closing
      of the transactions contemplated by this Agreement. The representations and
      warranties contained in this Agreement shall survive until the first anniversary
      of the Closing.

    


    8.2 Indemnification.
      Subject
      to Section 8.1, the Company agrees to indemnify and hold harmless each Investor
      and its Affiliates and their respective directors, officers, employees and
      agents from and against any and all losses, claims, damages, liabilities and
      expenses (including without limitation reasonable attorney fees and
      disbursements and other expenses incurred in connection with investigating,
      preparing or defending any action, claim or proceeding, pending or threatened
      and the costs of enforcement thereof) (collectively, “Losses”)
      to
      which such Person may become subject as a result of any breach of
      representation, warranty, covenant or agreement made by or to be performed
      on
      the part of the Company under the Transaction Documents, and will reimburse
      any
      such Person for all such amounts as they are incurred by such
      Person.

    


    8.3 Conduct
      of Indemnification Proceedings.
      Promptly
      after receipt by any Person (the “Indemnified
      Person”)
      of
      notice of any demand, claim or circumstances which would or might give rise
      to a
      claim or the commencement of any action, proceeding or investigation in respect
      of which indemnity may be sought pursuant to Section 8.2, such Indemnified
      Person shall promptly notify the Company in writing and the Company shall assume
      the defense thereof, including the employment of counsel reasonably satisfactory
      to such Indemnified Person, and shall assume the payment of all fees and
      expenses; provided,
      however, that
      the
      failure of any Indemnified Person so to notify the Company shall not relieve
      the
      Company of its obligations hereunder except to the extent that the Company
      is
      materially prejudiced by such failure to notify. In any such proceeding, any
      Indemnified Person shall have the right to retain its own counsel, but the
      fees
      and expenses of such counsel shall be at the expense of such Indemnified Person
      unless: (i) the Company and the Indemnified Person shall have mutually agreed
      to
      the retention of such counsel; or (ii) in the reasonable judgment of counsel
      to
      such Indemnified Person representation of both parties by the same counsel
      would
      be inappropriate due to actual or potential differing interests between them.
      The Company shall not be liable for any settlement of any proceeding effected
      without its written consent, which consent shall not be unreasonably withheld,
      but if settled with such consent, or if there be a final judgment for the
      plaintiff, the Company shall indemnify and hold harmless such Indemnified Person
      from and against any loss or liability (to the extent stated above) by reason
      of
      such settlement or judgment. Without the prior written consent of the
      Indemnified Person, which consent shall not be unreasonably withheld, the
      Company shall not effect any settlement of any pending or threatened proceeding
      in respect of which any Indemnified Person is or could have been a party and
      indemnity could have been sought hereunder by such Indemnified Party, unless
      such settlement includes an unconditional release of such Indemnified Person
      from all liability arising out of such proceeding.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    


    9. Miscellaneous.

    


    9.1 Successors
      and Assigns.
      This
      Agreement may not be assigned by a party hereto without the prior written
      consent of the Company or the Investors, as applicable. The provisions of this
      Agreement shall inure to the benefit of and be binding upon the respective
      permitted successors and assigns of the parties. 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 Counterparts;
      Faxes.
      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. This Agreement may also be executed via facsimile, which shall
      be
      deemed an original.

    


    9.3 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.

    


    9.4 Notices.
      Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given as hereinafter
      described (i) if given by personal delivery, then such notice shall be deemed
      given upon such delivery, (ii) if given by telex or telecopier, then such notice
      shall be deemed given upon receipt of confirmation of complete transmittal,
      (iii) if given by mail, then such notice shall be deemed given upon the earlier
      of (A) receipt of such notice by the recipient or (B) three days after such
      notice is deposited in first class mail, postage prepaid, and (iv) if given
      by
      an internationally recognized overnight air courier, then such notice shall
      be
      deemed given one Business Day after delivery to such carrier. All notices shall
      be addressed to the party to be notified at the address as follows, or at such
      other address as such party may designate by ten days’ advance written notice to
      the other party:

    


    If
      to the
      Company prior to the Closing:

    


    Ardmore
      Holding Corporation

    1608
      West
      2225 South

    Woods
      Cross, UT 84047

    Attention:
      Jeffrey D. Jenson, President

    Fax:
      801-401-7256

    


    If
      to the
      Company after the Closing:

    


    Ardmore
      Holding Corporation

    Xinganguang
      Road No. 9, 

    Northern
      Industrial Park of Zhonbei Town, 

    Xiquing
      District, 

    Tianjin
      City, PRC

    Attn.:
      Liu Li, Chief Executive Officer

    Fax:
      022-27984358

     

    
      With
        a
        copy to:

      


      Hodgson
        Russ LLP

      1540
        Broadway, 24th Floor

      New
        York,
        NY 10036

      Attn:
        Jeffrey A. Rinde, Esq.

      Fax:
        (212) 751-0928

      


      If
        to the
        Investors:

      


      to
        the
        addresses set forth on the signature pages hereto.

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    


    


    9.5 Expenses.
      The
      parties hereto shall pay their own costs and expenses in connection herewith.
      Such expenses shall be paid not later than the Closing. In the event that legal
      proceedings are commenced by any party to this Agreement against another party
      to this Agreement in connection with this Agreement or the other Transaction
      Documents, the party or parties which do not prevail in such proceedings shall
      severally, but not jointly, pay their pro rata share of the reasonable
      attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred
      by the prevailing party in such proceedings.

    


    9.6 Amendments
      and Waivers.
      Any
      term of this Agreement may be amended and the observance of any term of this
      Agreement may be waived (either generally or in a particular instance and either
      retroactively or prospectively), only with the written consent of the Company
      and the Investors. Any amendment or waiver effected in accordance with this
      paragraph shall be binding upon each holder of any Securities purchased under
      this Agreement at the time outstanding, each future holder of all such
      Securities, and the Company.

    


    9.7 Publicity.
      No
      public release or announcement concerning the transactions contemplated hereby
      shall be issued by the Company or the Investors without the prior consent of
      the
      Company (in the case of a release or announcement by the Investors) or the
      Investors (in the case of a release or announcement by the Company) (which
      consents shall not be unreasonably withheld), except as such release or
      announcement may be required by law or the applicable rules or regulations
      of
      any securities exchange or securities market, in which case the Company or
      the
      Investors, as the case may be, shall allow the Investors or the Company, as
      applicable, to the extent reasonably practicable in the circumstances,
      reasonable time to comment on such release or announcement in advance of such
      issuance. 

    


    9.8 Severability.
      Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof but shall be interpreted as if it were written so as to be
      enforceable to the maximum extent permitted by applicable law, and any such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction. To the extent
      permitted by applicable law, the parties hereby waive any provision of law
      which
      renders any provision hereof prohibited or unenforceable in any
      respect.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    


    9.9 Entire
      Agreement.
      This
      Agreement, including the Exhibits and the Disclosure Schedules, and the other
      Transaction Documents constitute the entire agreement among the parties hereof
      with respect to the subject matter hereof and thereof and supersede all prior
      agreements and understandings, both oral and written, between the parties with
      respect to the subject matter hereof and thereof.

    


    9.10 Further
      Assurances.
      The
      parties shall execute and deliver all such further instruments and documents
      and
      take all such other actions as may reasonably be required to carry out the
      transactions contemplated hereby and to evidence the fulfillment of the
      agreements herein contained.

    


    9.11 Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof. Each of the parties hereto irrevocably submits to the exclusive
      jurisdiction of the courts of the State of New York located in New York County
      and the United States District Court for the Southern District of New York
      for
      the purpose of any suit, action, proceeding or judgment relating to or arising
      out of this Agreement and the transactions contemplated hereby. Service of
      process in connection with any such suit, action or proceeding may be served
      on
      each party hereto anywhere in the world by the same methods as are specified
      for
      the giving of notices under this Agreement. Each of the parties hereto
      irrevocably consents to the jurisdiction of any such court in any such suit,
      action or proceeding and to the laying of venue in such court. Each party hereto
      irrevocably waives any objection to the laying of venue of any such suit, action
      or proceeding brought in such courts and irrevocably waives any claim that
      any
      such suit, action or proceeding brought in any such court has been brought
      in an
      inconvenient forum. EACH
      OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
      LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
      CONSULTED SPECIFICALLY AS TO THIS WAIVER.

    


    9.12 Independent
      Nature of Investors’ Obligations and Rights.
      The
      obligations of each Investor under any Transaction Document are several and
      not
      joint with the obligations of any other Investor, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor under any Transaction Document. The decision of each Investor to
      purchase Securities pursuant to the Transaction Documents has been made by
      such
      Investor independently of any other Investor. Nothing contained herein or in
      any
      Transaction Document, and no action taken by any Investor pursuant thereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      Each
      Investor acknowledges that no other Investor has acted as agent for such
      Investor in connection with making its investment hereunder and that no Investor
      will be acting as agent of such Investor in connection with monitoring its
      investment in the Securities or enforcing its rights under the Transaction
      Documents. Each Investor shall be entitled to independently protect and enforce
      its rights, including, without limitation, the rights arising out of this
      Agreement or out of the other Transaction Documents, and it shall not be
      necessary for any other Investor to be joined as an additional party in any
      proceeding for such purpose. The Company acknowledges that each of the Investors
      has been provided with the same Transaction Documents for the purpose of closing
      a transaction with multiple Investors and not because it was required or
      requested to do so by any Investor.

    


    9.13 Acceptance
      of Investment.
      Each
      Investor hereby acknowledges and agrees that at any time prior to the Closing
      Date the Company, in its sole discretion, reserves the right to (i) accept
      or
      reject any Investor’s purchase of the Units in whole or in part, or (ii) allot
      to any Investor a lesser number of Units or Securities than the number of Units
      or Securities set forth on the Investor’s signature page attached
      hereto.

    


    [signature
      page follows]

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      the
      parties have executed this Agreement or caused their duly authorized officers
      to
      execute this Agreement as of the date first above written.

    
      	 	 	 
	 	ARDMORE
              HOLDING CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Jeff
              D. Jenson, President
	 	 


    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

     

    SECURITIES
      PURCHASE AGREEMENT

    COUNTERPART
      SIGNATURE PAGE

     

    By
      signing below, the undersigned agrees to the terms of the Securities Purchase
      Agreement and to purchase the number of Shares and Warrants set forth
      below.

    
      	 	 	 	 
	 	 	INVESTOR:	 
	 	 	 	 
	 	 	 	 
	Number
              of Units being purchased:	 	  	  
	 	 	 	 
	 	 	 	 


    

    
      	 
	 	 	 	 
	 	 	 	 	 
	Number of Warrants to
              be
              received:	 	
            	 	 
	 	 	 	 	 
	 	 	By: 	  	  

	  
	 	
            	Name:	 
	 	 	 	
              Title:

            	 
	Aggregate principal
              amount of
              Notes to be received:	 	 	 	 


    

    
      	
            	 	Address: 	  
	
            	 	 	  
	   	 	
            	  
	
            	 	Facsimile:	  
	Aggregate
              Purchase Price:	 	
            	 


    

    
    

    
      	 	 	 
	  	 	with
              a
              copy to:


    

     

     

    
      	 	
               

              Please
                complete the following:

               

            
	 	
              1.

               

            	
              The
                exact name that your Warrants and Notes are to be registered in (this
                is
                the name that will appear on your Note and Warrant). You may use
                a nominee
                name if appropriate:

            	 
	 	 	 	 
	 	
              2.

               

            	
              The
                relationship between the Investors in the Securities and the Registered
                Holder listed in response to item 1 above:

            	 


    

     

    
      	 	
              3.

            	
              The
                mailing address and facsimile number of the 

            	 	 
	 	 	
              Registered
                Holder listed
                in response to item 1 

            	 
	 
	 	 	
              above
                (if different from above:

            	Facsimile:	 
	 	 	 	 	 
	 	
              4.

            	
              (For
                United States Investors:)
                The Social Security Number or Tax Identification Number of the Registered Holder listed in the response to 
                item
                  1 above:

              

            	 	 


    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    Amendments
      to Purchase Agreement

    


    The
      reference to May 30, 2008 in paragraph C of the Recitals is amended to read
      as
      follows: “June 12, 2008”.

    


    The
      definition in Section 1 of “Purchase Price” is hereby deleted.

    


    The
      reference in Section 2 to “48 Units” is amended to read “not less than 40
      Units.” 

    


    The
      phrase in Section 2: “in exchange for each Investor’s pro rata share of the
      Purchase Price” is replaced with the following: “in exchange for the purchase
      price payable with respect to the Units to be purchased by such
      Investors.”

    


    Deleted
      from Section 2 is the following phrase: “provided,
      however,
      that
      not more than $1.2 million of Units in the aggregate, shall be purchased in
      this
      Offering.”

    


    The
      phrase in the first sentence of Section 3, “only upon payment in full of each
      Investor’s pro rata share of the Purchase Price to the Company by such
      Investors” is replaced with the following: “only upon payment in full to the
      Company by the Investor of the purchase price payable by it.” 

    


    The
      phrase in the penultimate sentence of Section 3, “On the date (the “Closing
      Date”)
      the
      Company receives the Purchase Price from the Investors” is replaced with “On the
      date (the “Closing Date”) the Company receives not less than $1.0 million in
      gross proceeds from the Investors.”

    


    The
      term
“date hereof” in the first sentence of Section 5.11 is hereby amended to read:
“Closing Date.”

    


    Section
      6.2(d) is hereby amended to read as follows: “The Investors shall have
      simultaneously delivered the purchase price payable by them with respect to
      their purchase of the Units to the Company in an aggregate amount of not less
      than $1.0 million.”

    


    The
      reference in Section 6.1(j) and 6.2(f) to “$1.2 million” is amended to read
“$1.0 million.”

    


    The
      reference in Section 6.3(a)(iv) to “May 30, 2008” is amended to read “June 12,
      2008”. 

     

    
      
        
        

      

      
        27