THT Heat Transfer Technology, Inc.: Exhibit 10.1 - Filed by newsfilecorp.com











Exhibit 10.1



Execution Copy 


SECURITIES PURCHASE AGREEMENT 


This Securities Purchase Agreement (this “Agreement”) is dated as of November 2, 2010, by and among THT Heat Transfer Technology, Inc., a Nevada corporation (the “Company”), and the
investors identified on the signature pages hereto and listed on Schedule I attached hereto (each, an “Investor” and collectively, the “Investors”). 


WHEREAS, subject to the terms and conditions set forth in this Agreement and in reliance upon the applicable exemptions from securities registration under the Securities Act (as defined below), the Company
desires to issue and sell to each Investor, and each Investor, severally and not jointly, desires to purchase from the Company certain securities of the Company, as more fully described in this Agreement; and 


WHEREAS, contemporaneous with the sale and purchase of the certain securities the parties hereto will execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit A, pursuant
to which the Company will agree to provide to the Investors certain registration rights under the Securities Act.


NOW THEREFORE, the Company and the Investors agree as follows: 


ARTICLE 1. 

DEFINITIONS 


1.1. Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1: 


“2010 Annual Report” means the Annual Report of the Company for the fiscal year ending December 31, 2010, as filed with the Commission on Form 10-K (or such other form appropriate for such purpose as
promulgated by the Commission). 


“2010 Guaranteed ATNI” has the meaning set forth in Section 4.9(b) . 


“2010 Make Good Shares” has the meaning set forth in Section 4.9(b) . 


“2010 Audited ATNI” shall have the meaning set forth
in Section 4.9(b) . 


“2011 Annual Report” means the Annual Report of the Company for the fiscal year ending December 31, 2011, as filed with the Commission on Form 10-K (or such other form appropriate for such purpose as
promulgated by the Commission). 


“2011 Guaranteed ATNI” has the meaning set forth in Section 4.9(c) . 


“2011 Make Good Shares” has the meaning set forth in Section 4.9(c) . 


“2011 Audited ATNI” shall have the meaning set forth
in Section 4.9(c) . 


“Action” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting
the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading
facility. 











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


“After Tax Net Income” has the meaning set forth in Section 4.9(d) . 


“Business Day” means any day except Saturday, Sunday and any day on which on which banking institutions in the State of New York or the PRC are authorized or required by law or other governmental
action to close. 


“Closing” means the closing of the purchase and sale of the Shares pursuant to Article II. 


“Closing Date” means the Business Day on which all of the conditions set forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date as the parties may agree. 


"Closing Escrow Agreement" means the Closing Escrow Agreement, dated as of the date hereof, between the Company, the Investors and the escrow agent (the “Escrow Agent”) identified therein, in
the form of Exhibit E hereto. 


“Commission” means the Securities and Exchange Commission. 


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


“Company Counsel” means Pillsbury Winthrop Shaw Pittman LLP. 


“Company Deliverables” has the meaning set forth in Section 2.3(a) . 


“Disclosure Materials” has the meaning set forth in Section
3.1(h) . 


“Effective Date” means the date that the Registration Statement required by Section 2(a) of the Registration Rights Agreement is first declared effective by the Commission. 


“Evaluation Date” has the meaning set forth in Section 3.1(r) . 


“Escrow Agent” means Escrow, LLC. 


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


“GAAP” means U.S. generally accepted accounting principles. 


“Intellectual Property Rights” 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; and (iv) registrations,
applications and renewals for any of the foregoing. 


“Investment Amount” means, with respect to each Investor, the Investment Amount indicated on such Investor’s signature page to this Agreement, which is also reflected on the Schedule of
Investors attached hereto as Schedule I. 


2 











“Investor Deliverables” has the meaning set forth in Section 2.3(b) . 


“IRC” means the Internal Revenue Code of 1986, as amended (or any successor statute thereto) and the regulations thereunder. 


“Knowledge” or “knowledge” means the knowledge of the Company’s chairman of the Board, Chief Executive Officer and Chief Financial Officer, after due enquiry. 


“Lead Investor” means Infinity I-China Fund (Cayman) L.P. 


“Lien” means any lien, charge, encumbrance, security interest, right of first refusal or other restrictions of any kind. 


“Lock Up Agreement(s)” means the Lock Up Agreements, dated as of the date of this Agreement, among the Company, its directors and executive officers and the Investors, in the form of Exhibit G
hereto. 


“Make Good Escrow Agent” means Escrow, LLC. 


“Make Good Escrow Agreement” means the Make Good Escrow Agreement, dated as of the date of this Agreement, among the Company, the Make Good Pledgor(s) and the Investors, in the form of Exhibit
F hereto. 


“Make Good Pledgor” means Wisetop International Holdings Limited. 


“Material Adverse Effect” means any of (i) a material and adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the results of
operations, assets, prospects, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material and adverse impairment to the Company’s ability to perform on a timely basis its
obligations under any Transaction Document. 


“New York Courts” means the state and federal courts sitting in the City of New York, Borough of Manhattan. 


“Nevada Counsel” means Holland & Hart. 


“Option Agreement” means an option agreement entered into on June 30, 2009 by and between Ms. Jinhua Zhao, the sole shareholder of Wisetop International Holdings Limited, which holds 92.5% of issued
and outstanding shares of Common Stock of the Company, and Mr. Guohong Zhao, the chairman and president of the Company, pursuant to which Mr. Guohong Zhao was granted an option, exercisable after 180 days, to acquire all of the equity interests of
Wisetop owned by Ms. Jinghua Zhao at an exercise price of $3,246,160. This option expires on June 30, 2011. 


“Outside Date” means the sixtieth (60th) calendar day following the date of this Agreement; provided, that if such day should fall on a day that is not a Business Day, the Outside
Date shall be deemed the next day that is a Business Day. 


“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind. 


3 











“PRC” means for the purpose of this Agreement, the People’s Republic of China, not including Taiwan, Hong Kong and Macau. 


“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.



“Purchase Price” means $3.20 per share. 


“Registrable Securities” means: (i) the Shares and (ii) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar events with respect to, or
in exchange for, or in replacement of the Shares and the Total Make Good Shares. Notwithstanding the foregoing, a security shall cease to be a Registrable Security for purposes of this Agreement from and after such time (x) as the Holder of such
security may resell such security without volume restrictions under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and the
affected holders; or (y) such security has been sold by a Holder pursuant to a registration statement under the Securities Act that has been declared effective and such Registrable Securities have been disposed of pursuant to such effective
registration statement. 


“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of this Agreement, among the Company and the Investors, in the form of Exhibit A hereto. 


“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Investors of the Shares. 


“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule. 


“SEC Reports” has the meaning set forth in Section 3.1(h) . 


“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 


“Shares” means the Common Stock of the Company issued or issuable to the Investors pursuant to this Agreement. 


“Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers. 


“Subsequent Registration Statement” means each registration statement meeting the requirements set forth in the Section 4.10 hereof and covering the resale by the Investors of the 2010 Released Escrow
Shares or the 2011 Released Escrow Shares. 


“Subsidiary” means, as to the Company, any “subsidiary” as defined in Rule 1-02(x) of the Regulation S-X promulgated by the Commission under the Exchange Act. 


4 











“Trading Day” means a day on which the Common Stock is traded on the Trading Market; provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii)
hereof, then Trading Day shall mean a Business Day. 


“Trading Market” means the NASDAQ Capital Market or other trading market on which the Common Stock is listed or quoted for trading on the date in question. 


“Transaction Documents” means this Agreement, the Registration Rights Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder. 


“Transfer Agent” means Securities Transfer Corporation, or any successor transfer agent for the Company.


“Transfer Agent Instructions” means, with respect to the Company, the transfer agent instructions letter, in the form of Exhibit B, executed by the Company and delivered to and acknowledged in
writing by the Transfer Agent. 


“US Counsel” means Pillsbury Winthrop Shaw Pittman LLP. 


ARTICLE 2. 

PURCHASE AND SALE 


2.1. Purchase of Shares. Subject to the terms and conditions set forth in this Agreement, at the Closing, the Company shall issue and sell to each Investor, and each Investor shall, severally and not jointly,
purchase from the Company, the Shares in the respective amounts set forth below the Investors’ names on the signature pages hereto for the Purchase Price.


2.2. Closing. The Closing shall take place at the offices of Pillsbury Winthrop Shaw Pittman, LLP, 2300 N Street, NW, Washington, DC 20037 at 9:30 a.m. local time on the Closing Date or at such other location and
on such other date as the parties may mutually agree. 


2.3. Closing Deliveries.


(a) At the Closing, the Company shall deliver or cause to be delivered to each Investor the following (the “Company Deliverables”): 


(i) a certificate, processed by the Transfer Agent, representing the number of Shares set forth below such Investor’s name on the signature pages hereto, registered in the name of such Investor against payment of
such Investor’s Purchase Price in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company to be wired by the Escrow Agent pursuant to terms of the Closing Escrow Agreement;



(ii) the Make Good Escrow Agreement, duly executed and delivered by the Company; 


(iii) the Lock Up Agreement(s), duly executed and delivered by the Company;


(iv) the Closing Escrow Agreement, duly executed by the Company and delivered by the Company; 


5 











(v) a legal opinion of US Counsel of the Company in the form of Exhibit C, executed by such counsel and delivered to the Investors; 


(vi) a legal opinion of Nevada Counsel of the Company in the form of Exhibit E, executed by such counsel and delivered to the Investors; 


(vii) approval by the Trading Market of an additional shares listing application covering all of the Registrable Securities; 


(viii) 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 the fulfillment of the condition specified in Section
5.1(b);


(ix) a certificate, executed on behalf of the Company by its Secretary or other authorized person, dated as of the Closing Date, certifying the resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by the Transaction Documents, certifying the current versions of the Articles 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;


(x) the Indemnity Agreement, duly executed and delivered by Mr. Guohong Zhao; and 


(xi) an amended Option Agreement, which should extend the option exercise period up until June 30, 2012, duly executed by Mr. Guohong Zhao and Ms. Jinhua Zhao and delivered by the Company.


(b) By the Closing, each Investor, severally and not jointly, shall deliver or cause to be delivered to the Company the following:


(i) the Purchase Price for the Shares in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose; and


(ii) the agreements specified in Section 5.2(d), each duly signed by such Investor (collectively, the “Investor Deliverables”). 


(c) Within fifteen calendar days following the filing of the definitive Schedule 14C Information Statement related to this Agreement with the SEC, each Investor shall deliver to the Escrow Agent for deposit and
disbursement in accordance with the Closing Escrow Agreement, its Investment Amount, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Escrow Agent for such purpose. 


ARTICLE 3. 

REPRESENTATIONS AND WARRANTIES 


3.1. Representations and Warranties of the Company.  The Company hereby makes the following representations and warranties to each of the Investors as of the date hereof and the Closing Date: 


6 











(a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than as specified in the SEC Reports. The Company owns, directly or indirectly, all of the shares or comparable equity interests of each
Subsidiary free and clear of any and all Liens, and all the issued and outstanding shares of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights. 


(b) Organization and Qualification.  The Company and each Subsidiary are duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  The Company and each Subsidiary are duly qualified to conduct its respective businesses and are in good standing as a foreign corporation or
other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not, individually
or in the aggregate, have a Material Adverse Effect. To the Company’s best knowledge, no Proceeding has been instituted in any jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail, such power and authority or
qualification. 


(c) Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of
the Company and any Subsidiary and no further action is required by the Company or any Subsidiary in connection therewith.  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. 


(d) No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company and any of its Subsidiaries and the consummation by the Company of the transactions contemplated thereby do
not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents as in effect on the date hereof, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding contained in the SEC Reports to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii) above, such
as would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. 


(e) Filings, Consents and Approvals.  Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or 7
registration with, any United States or PRC court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company or any of its Subsidiaries of the Transaction
Documents, other than (i) the filing with the Commission of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (ii) filings required by state securities laws, (iii) the filing of a Notice of
Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iv) the filings required in accordance with Section 4 hereof, (v) the filing with NASDAQ of an applicable additional shares listing application relating to
the Shares issuable hereunder, and (vi) those that have been made or obtained prior to the date of this Agreement. 











(f) Issuance of the Shares. The Shares have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free
and clear of all Liens and will not be subject to preemptive or similar rights of shareholders (other than those imposed by the Investors). 


(g) Capitalization.  The number of shares and type of all authorized, issued and outstanding shares of the Company, all shares of Common Stock reserved for issuance under the Company’s various option and
incentive plans and all shares of Common Stock issuable and reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for any shares of the Company, are as specified in the SEC Reports. All of the issued and
outstanding shares of the Common Stock have been duly authorized and validly issued and are fully paid and non-assessable, and have been issued in compliance in all material respects with all applicable federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase any capital stock of the Company. Except as specified in the SEC Reports, no securities of the Company are entitled to preemptive
or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents or with respect to any securities of the
Company. Except as specified in the SEC Reports, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as specified in the SEC Reports, there are no financing statements securing obligations in any material amounts, either singly or in the
aggregate, filed in connection with the Company. Except as specified in the SEC Reports, there are no agreements or arrangements under which the Company is obligated to register the sale of any of their securities under the Securities Act (except
the Registration Rights Agreement). Except as specified in the SEC Reports, there are no outstanding securities or instruments of the Company which contain any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company is or may become bound to redeem a security of the Company. Except as specified in the SEC Reports, there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by
the issuance of the Shares. Except as specified in the SEC Reports, the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. Except as specified in the SEC Reports,
the Company has no liabilities or obligations required to be disclosed in the SEC Reports (as defined herein) but not so disclosed in the SEC Reports, other than those incurred in the ordinary course of the Company's businesses and which,
individually or in the aggregate, do not or would not have a Material Adverse Effect.  Except for customary adjustments as a result of stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or
other similar events, there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) and the issue and sale of the Shares will not, immediately
or with the passage of time, obligate the Company to issue Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under such securities.


8 











(h) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchanges
Act, for the twelve months preceding the date hereof (or such shorter period as the Company was required by law to file such reports) (the foregoing materials being collectively referred to herein as the “SEC Reports” and,
together with the Schedules to this Agreement (if any), the “Disclosure Materials”) on a timely basis or has timely filed a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the
SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which
they were made, not misleading.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. All material agreements to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject are included as part
of or identified in the SEC Reports, to the extent such agreements are required to be included or identified pursuant to the rules and regulations of the SEC. 


(i) Material Changes. Except as specifically disclosed in the SEC Reports, since the date of the latest financial statements included within the SEC Reports, (i) there has been no event, occurrence or development
that has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) neither the Company nor any Subsidiary has incurred any liabilities (direct, indirect, contingent, or otherwise) other than those incurred in the ordinary
course of business consistent with past practice, (iii) the Company has not altered its method of accounting or the identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its
shareholders or purchased, redeemed or made any agreements to purchase or redeem any of its shares, (v) neither the Company nor any Subsidiary has waived any material debt owed to it, (vi) neither the Company nor any Subsidiary has changed or
amended its certificate or articles of incorporation, bylaws or other organizational or charter documents, or change any material contract included as an Exhibit to any of the SEC Reports by which the Company or Subsidiary is bound or to which its
assets or properties is subject, (vii) the Company has not issued any equity securities to any officer, director or Affiliate of the Company or any of its Subsidiaries, except pursuant to existing Company stock option plans or stock option
agreements as disclosed in the Company’s SEC Reports, and (viii) neither the Company nor any Subsidiary has entered into any transaction other than in the ordinary course of business. The Company does not have pending before the Commission any
request for confidential treatment of information. The Company has not taken any steps to seek protection pursuant to PRC or U.S. bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.


9 











(j) Litigation. There is no pending or, to the knowledge of the Company, threatened Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or
the Shares or the Total Make Good Shares or (ii) except as specifically disclosed in the SEC Reports, would, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty, except as specifically disclosed in the SEC Reports. There has not been, and to the knowledge of the Company, there is not pending any investigation by the Commission involving the Company or any current or former
director or officer of the Company (in his or her capacity as such). The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act
or the Securities Act. 


(k) Labor Relations.  Neither the Company nor any Subsidiary is a party to any collective bargaining agreement. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to
any of the employees of the Company or any Subsidiary. To the knowledge of the Company or any such Subsidiary, no executive officer of the Company or any of its Subsidiaries is in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or
any such Subsidiary to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not, individually or in the aggregate, have a Material Adverse Effect. None of the execution, delivery and performance by the
Company of this Agreement and each of the other Transaction Documents to which it is a party and the consummation by the Company of the transactions contemplated hereby or thereby (alone or in conjunction with any other event, including any
termination of employment) will (A) entitle any of the Company’s or its Subsidiaries’ employees to any compensation or benefit, except as required by any statute, rule or regulation of any governmental authority applicable to the
Company, (B) accelerate the time of payment or vesting, or trigger any payment or funding, of any compensation or benefit, including any stock options, restricted stock, or restricted stock units, or trigger any other material obligation or (C)
result in any material breach or violation of, or default under, or limit the Company’s right to amend, modify or terminate, any Company employee compensation or benefit plan, program, policy, agreement or arrangement (each, an
“Employee Transaction Benefit”).  Each Company benefit plan or arrangement that is a “nonqualified deferred compensation plan” within the meaning of Section 409A(d)(1) of the IRC subject to Section 409A of the IRC has
been in operational compliance with Section 409A of the IRC since January 1, 2005, and has been in documentary compliance with Section 409A of the IRC since January 1, 2009, based upon a good faith, reasonable interpretation of Section 409A of the
IRC and the final Treasury Regulations and other guidance issued by the Internal Revenue Service thereunder. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement will (either
alone or upon the occurrence of termination of employment) constitute an event that may result in (either alone or in connection with any other circumstance or event) or give rise directly or indirectly to any “parachute payment” within
the meaning of Section 280G(b)(2) of the IRC.  The Company is not a party to any agreement to compensate any Person for excise taxes payable pursuant to Section 4999 of the IRC.


(l) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument contained in the SEC Reports to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as would not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect. 


10 











(m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, approvals, authorizations and permits issued by the appropriate United States federal, state, local, PRC national, provincial or
local, and other foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, all of which are valid and in full force and effect, except where the failure to possess such certificates, approvals,
authorizations and permits would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. The Company and the Subsidiaries have performed in all material respects all of their obligations with
respect to such certificates, approvals, authorizations and permits and no event has occurred that allows, or after notice or lapse of time, would allow, revocation or termination thereof, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such certificates, approvals, authorizations and permits. 


(n) Title to Assets. The Company and the Subsidiaries have valid land use rights for all real property that is material to their respective businesses and good and marketable title in all personal property owned
by them that is material to their respective businesses, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in
compliance, except as would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. 


(o) Patents and Trademarks.  The Company and its Subsidiaries own, or possess adequate rights or licenses to use, all trademarks, trade names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (the “Intellectual Property Rights”) necessary to conduct their respective businesses
now conducted. Except as set forth in the SEC Reports, all such Intellectual Property Rights are valid and enforceable, there is no existing infringement by another Person of any of the Intellectual Property Rights and no Intellectual Property
Rights are involved in any cancellation, dispute or Action and, to the knowledge of the Company and the Subsidiaries, no such Action is threatened. Neither the Company nor any of its Subsidiaries has received a written or oral notice that the
Intellectual Property Rights used by any of them violates or infringes upon the rights of any Person. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their
intellectual properties, except where failure to do so would not have, either individually or in the aggregate, a Material Adverse Effect. The Company has duly and properly filed or caused to be filed with applicable foreign patent authorities all
patent applications owned by the Company (the “Company Patent Applications”). To the best knowledge of the Company, the Company has made no material misrepresentation in the Company Patent Applications. The Company is not aware of
any information material to a determination of patentability regarding the Company Patent Applications not called to the attention of the foreign patent authority. The Company is not aware of any information not called to the attention of the
foreign patent authority that would preclude the grant of a patent for the Company Patent Applications. The Company has no knowledge of any
information that would preclude the Company from having clear title to the Company Patent Applications. 


11 











(p) Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in
which the Company and the Subsidiaries are engaged. The Company has no reason to believe that it will not be able to renew its and the Subsidiaries’ existing insurance coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business on terms consistent with market for the Company’s and such Subsidiaries’ respective lines of business. 


(q) Transactions With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company
is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has
a substantial interest or is an officer, director, trustee or partner. 


(r) Internal Accounting Controls.  Except as disclosed in the SEC Reports, 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 Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its Subsidiaries, is made known to the certifying officers by
others within those entities, particularly during the period in which the Company’s Form 10-K has been prepared.  The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures in
accordance with Item 307 of Regulation S-K under the Exchange Act for the Company’s most recently ended fiscal quarter or fiscal year-end (such date, the “Evaluation Date”). The Company presented in its most recently filed
Form 10-K 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 such term is defined in Item 308(c) of Regulation S-K under the Exchange Act) or, to the Company’s knowledge, in other factors that could significantly affect the Company’s internal controls. The
books, records and accounts of the Company accurately and fairly reflect the transactions in, and dispositions of, the assets of, and the results of operations of, the Company. 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 Exchange Act.


(s) Certain Fees. Except for fees and compensation payable to Halter Financial Advisory Co., Ltd. or its assigns, and fees payable to Roth Capital Partners, no brokerage or finder’s fees or commissions are
or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Investors shall have no
obligation with respect to any fees or with
respect to any claims (other than such fees or commissions owed by an Investor pursuant to written agreements executed by such Investor which fees or commissions shall be the sole responsibility of such Investor) made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. The Company shall pay, and hold each Investor harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any such claim for fees arising out of the issuance of the Securities pursuant to this Agreement. 


12 











(t) Certain Registration Matters. Assuming the accuracy of the Investors’ representations and warranties set forth in Section 3.2(b) -(e), the offer and sale of the Shares by the Company to the Investors
under the Transaction Documents is exempt from the registration requirements of the Securities Act.. Except as set forth in the SEC Reports and Section 4.10 hereof, the Company has not granted or agreed to grant to any Person any rights (including
“piggy-back” registration rights) to require the Company to register any securities of the Company registered under the Securities Act that have not been satisfied.  Neither the Company nor any of its Affiliates nor, any Person acting on
the Company’s behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of
the exemption from registration under Regulation D or Regulation S under the Securities Act in connection with the offer and sale by the Company of the Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to the
Transaction Documents to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or shareholder approval provisions, including, without limitation, under the rules and regulations of any Trading Market. 


(u) Listing and Maintenance Requirements. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with the listing and maintenance requirements for
continued listing of the Common Stock on the Trading Market on which the Common Stock is currently listed or quoted.  The issuance and sale of the Shares under the Transaction Documents do not contravene the rules and regulations of the Trading
Market on which the Common Stock is currently listed or quoted, and no approval of the shareholders of the Company thereunder is required for the Company to issue and deliver to the Investors the Shares contemplated by Transaction Documents. 


(v) Investment Company. The Company is not, and is not an Affiliate of, and after giving effect to the offer and sale of the Shares will not have become, an “investment company” within the meaning of
the Investment Company Act of 1940, as amended. 


(w) No Additional Agreements. Except for the Indemnity Agreement, the Company does not have any agreement or understanding with any Investor with respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction Documents. 


(x) Tax Matters. The Company and each Subsidiary has timely prepared and filed all tax returns required to have been filed with all appropriate governmental agencies and timely paid all taxes shown thereon or
otherwise owed by it, except as would not have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and each Subsidiary 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. All taxes and other assessments and levies that the Company and each 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 of its assets or property, other than Liens disclosed in the SEC
Reports. There are no tax audits or investigations pending, which if adversely determined would result in a Material Adverse Effect. There are no outstanding tax sharing
agreements or other such arrangements between the Company and any other Person. The Company does not have any deferred compensation arrangements and has not paid or is not required to pay any deferred compensation that would be subject to Section
409A of the IRC. 


13 











(y) 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 under the Securities Act)
in connection with the offer or sale of the Shares. 


(z) Application of Takeover Protections; Rights Agreements. The Company and the Board have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company's charter documents or the laws of the State of Nevada that is or could reasonably be expected to become applicable to any
of the Investors as a result of the Investors and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, the Company's issuance of the Shares and the Investors’
ownership of the Shares. The Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.


(aa) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the
Company in its Exchange Act filings and is not so disclosed or that otherwise would have a Material Adverse Effect. 


(bb) Additional PRC Representations and Warranties.


(i) All material consents, approvals, authorizations or licenses required under PRC law for the due and proper establishment and operation of the Company and the Subsidiaries have been duly obtained from the relevant
PRC governmental authorities and are in full force and effect. 


(ii) The Company and the Subsidiaries have conducted their respective business activities within their permitted scope of business or have otherwise operated their respective businesses in compliance with all relevant
legal requirements and with all requisite licenses and approvals granted by competent PRC governmental authorities other than such non-compliance that do not, and would not, individually or in the aggregate, have a Material Adverse Effect. As to
licenses, approvals and government grants and concessions requisite or material for the conduct of any part of the Company or any Subsidiaries’ business which is subject to periodic renewal, neither the Company nor such Subsidiary has any
knowledge of any grounds on which such requisite renewals will not be granted by the relevant PRC governmental authorities. 


(iii) Mr. Guohong Zhao’s option rights under the Option Agreement are not subject to any consents, approvals, authorizations or licenses required under PRC law.


(cc) Disclosure.  Except for any information provided to an Investor pursuant to a specific due diligence request by such Investor to receive material nonpublic information, the Company confirms that neither it
nor any officers, directors or Affiliates, has provided any of the Investors or their agents or counsel with any information that constitutes or might constitute material, nonpublic information (other than the existence and terms of the issuance of
Securities, as contemplated by this Agreement). The Company understands and confirms that each of the Investors will rely on the foregoing representations in effecting transactions in securities of the Company (other than Excluded Investors). All
disclosure provided by the Company to the Investors regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on the 14
behalf of the Company are true and correct in all material respects and do 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.  To the Company’s knowledge, except for the transactions contemplated by this Agreement, no event or circumstance has occurred or information exists with respect to the Company or any
of its Subsidiaries or its or their business, properties, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or
disclosed. The Company acknowledges and agrees that no Investor (other than Excluded Investors) makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those set forth in the Transaction
Documents.











(dd) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or other Person acting on behalf of the Company or any
of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.


(ee) Indebtedness. Except as disclosed in the SEC Reports, neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is in violation of any term of or in
default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults could not result, individually or in the aggregate, in a Material Adverse Effect, or (iii) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect.  For purposes of this Agreement:  (x) “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course
of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary
obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, and (G) all indebtedness referred to in
clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness.


(ff) PRC Environmental Laws.  Except as set forth on Schedule III hereto, the Company and its Subsidiaries (i) are in compliance in all material respects with any and all PRC Environmental Laws (as hereinafter
defined), (ii) have received all permits, licenses or other approvals required of them under applicable PRC Environmental Laws to conduct their respective businesses and (iii) are in compliance in all material respects with all terms and conditions
of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “PRC Environmental Laws” means all
national, provincial, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or
otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.


15 











(gg) Solvency. As of the Closing Date, each of the Company and its Subsidiaries is and will be Solvent. As used herein, “Solvent” means, with respect to the Company on a particular date,
that on such date, in each case including the fair value of the Company’s Intellectual Property, (a) the fair value of the property of the Company is greater than the total amount of liabilities, including contingent liabilities, of the
Company; (b) the present fair salable value of the assets of the Company is not less than the amount that will be required to pay the probable liability of the Company on its debts as they become absolute and matured; (c) the Company does not intend
to, and does not believe that it will, incur debts or liabilities beyond the Company’s ability to pay as such debts and liabilities mature; (d) the Company is not engaged in a business or transaction, and is not about to engage in a business
or transaction, for which the Company’s property would constitute an unreasonably small capital; and (e) as of the date hereof, the Company is not “insolvent” within the meaning of Section 101(32) of the United States Bankruptcy
Code (11 U.S.C. § 101, et. seq), as amended from time to time (the “Bankruptcy Code”).  The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability. The Company does not intend to incur debts beyond its ability to pay
such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no Knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports set forth as of the date thereof all outstanding secured and unsecured indebtedness of the Company or any Subsidiary,
or for which the Company or any Subsidiary has commitments, which are required to be disclosed in such SEC Reports.


3.2. Representations and Warranties of the Investors. Each Investor hereby, severally and not jointly, represents and warrants to the Company as of the date hereof and the Closing Date: 


(a) Organization; Authority. Such Investor, (i) if an entity, is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or
partnership power and authority and, (ii) if an individual, has full capacity to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations thereunder. The execution,
delivery and performance by such Investor of the transactions contemplated by this Agreement has been duly authorized by all necessary corporate or, if such Investor is not a corporation, such partnership, limited liability company or other
applicable like action, on the part of such Investor. Each of this Agreement and the Registration Rights Agreement has been duly executed by such Investor, and when delivered by such Investor in accordance with the terms hereof, will constitute the
valid and legally binding obligation of such Investor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. 


16 











(b) Investment Intent. Such Investor is acquiring the Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Shares or any part thereof,
without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part of such Shares in compliance with applicable federal and state securities laws. Subject to the immediately preceding sentence,
nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Shares for any period of time. Such Investor is acquiring the Shares hereunder in the ordinary course of its business. Such Investor does not have any
agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares. 


(c) Investor Status. At the time such Investor was offered the Shares, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Investor
is not a registered broker-dealer under Section 15 of the Exchange Act. Such Investor has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the Shares. Such Investor
acknowledges that an investment in the Shares is speculative and involves a high degree of risk. Such Investor has completed and executed the U.S. Accredited Investor Certificate attached as Schedule II to this Agreement.


(d) General Solicitation. Such Investor is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar
media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. 


(e) Access to Information.  Such Investor acknowledges that it has reviewed the Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and the Subsidiaries and their
respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or its
representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in the Transaction
Documents. 


(f) Independent Investment Decision.  Such Investor has independently evaluated the merits of its decision to purchase Shares pursuant to the Transaction Documents, and such Investor confirms that it has not
relied on the advice of any other Investor’s business and/or legal counsel in making such decision.


(g) Certain Trading Activities. Such Investor has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Investor, engaged in any transactions in the
securities of the Company (including, without limitations, any Short Sales involving the Company’s securities) since the earlier to occur of (1) the time that such Investor was first contacted by the Company regarding an investment in the
Company and (2) the 30th day prior to the date of this Agreement. Such Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with it will engage in any transactions in the securities of
the Company (including Short Sales) prior to the time that the transactions contemplated by this Agreement are publicly disclosed.


(h) Regulation S. If such Investor is not a U.S. Person (as such term is defined in Section 902(a) of Regulation S), such Investor (i) acknowledges that the certificate(s) representing or
evidencing the Shares contain a customary restrictive legend restricting the offer, sale or transfer of any Shares except in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act, or pursuant to an
available exemption from registration, (ii) agrees that all offers and sales by such Investor of Shares shall be made pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from, or a transaction not
subject to the registration requirements of, the Securities Act, (iii) represents that the offer to purchase the Shares was made to such Investor outside of the United States, and such Investor was, at the time of the offer and will be, at the time
of the sale and is now, outside the United States, (iv) has not engaged in or directed any unsolicited offers to purchase Shares in the United States, (v) is neither a U.S. Person nor a Distributor (as such terms are defined in Section 902(a) and
902(c), respectively, of Regulation S), (vi) has purchased the Shares for its own account and not for the account or benefit of any U.S. Person, and (vii) is the sole beneficial owner of the Shares specified on the Investor signature page attached
hereto opposite his name and has not pre-arranged any sale with an Investor in the United States., and (ix) is familiar with and understands the terms and conditions and requirements contained in Regulation S, specifically, without limitation, each
Investor understands that the statutory basis for the exemption claimed for the sale of the Shares would not be present if the sale, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions
of the Securities Act.



17 











The Company acknowledges and agrees that no Investor has made or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2. 


ARTICLE 4. 

OTHER COVENANTS AND AGREEMENTS 


4.1. Transfers; Stock Certificates. 


(a) Shares may only be disposed of in compliance with U.S. state and federal securities laws.  In connection with any transfer of the Shares other than pursuant to an effective registration statement, to the Company, to
an Affiliate of an Investor or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. 


(b) Certificates evidencing Shares offered in reliance on Regulation D will contain the following legend, until such time as they are not required under Section 4.1(c): 


THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. 


18 











 Certificates evidencing Shares offered in reliance on Regulation S will contain the following legend, until such time as they are not required under Section 4.1(c): 


THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT. TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. 


The Company acknowledges and agrees that an Investor may from time to time pledge, and/or grant a security interest in some or all of the Shares pursuant to a bona fide margin agreement in connection with a bona fide
margin account and, if required under the terms of such agreement or account, such Investor may transfer pledged or secured Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval or consent of the
Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion may be required in connection with a subsequent transfer following default by the Investor
transferee of the pledge.  No notice shall be required of such pledge.  At the appropriate Investor’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Shares may reasonably request in
connection with a pledge or transfer thereof including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of
selling shareholders thereunder. Except as otherwise provided in Section 4.1(c), any Shares subject to a pledge or security interest as contemplated by this Section 4.1(b) shall continue to bear the legend set forth in this Section 4.1(b) and be
subject to the restrictions on transfer set forth in Section 4.1(a) . 


(c) Certificates evidencing Shares shall not contain any legend (including the legend set forth in Section 4.1(b)): (i) while a registration statement (including the Registration Statement) covering such Shares is then
effective, or (ii) following a sale or transfer of such Shares pursuant to Rule 144 (assuming the transferee is not an Affiliate of the Company), or (iii) while such Shares are eligible for sale by the selling Investor without volume restrictions
under Rule 144.  The Company agrees that following the Effective Date or such other time as legends are no longer required to be set forth on certificates representing Shares under this Section 4.1(c), it will, no longer than three Trading Days
following the delivery by an Investor to the Company or the Transfer Agent of a certificate representing such Shares containing a restrictive legend, deliver or instruct the Transfer Agent to deliver to such investor Shares which are free of all
restrictive and other legends. Fees with respect to the Transfer Agent and Company Counsel associated with the removal of such legend shall be borne by the Company. 


19 











4.2. Furnishing of Information. As long as any Investor owns any Shares or any part of the Total Make Good Shares , the Company covenants to timely file (or obtain extensions in respect thereof and file within
the applicable grace period) all reports required to be filed by the Company with the Commission after the date hereof pursuant to the Exchange Act. As long as any Investor owns Shares or any of the Total Make Good Shares, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to the Investors and make publicly available in accordance with Rule 144(c) such information as is required for the Investors to sell the Shares or any of the Total Make
Good Shares under Rule 144. The Company further covenants that it will take such further action as any holder of Shares and the Total Make Good Shares may reasonably request, including but not limited to providing the Investor with a written
statement confirming that the Company has complied with the reporting requirements set forth in Rule 144, all to the extent required from time to time to enable such Person to sell the Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.


4.3. Integration.  The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the sale of the Shares to the Investors, or that would
be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any Trading Market in a manner that would require shareholder approval of the sale of the securities to the Investors. 


4.4. Securities Laws Disclosure; Publicity.  By 9:30 a.m. (New York City time) on the Trading Day following the execution of this Agreement, and by 9:30 a.m. (New York City time) on the Trading Day following the
Closing Date, the Company shall issue press releases disclosing the transactions contemplated hereby and the Closing. On the Trading Day following the execution of this Agreement the Company will file a Report on Form 8-K disclosing the material
terms of the Transaction Documents (and attach as exhibits thereto the Transaction Documents), and on the Trading Day following the Closing Date the Company will file an additional Report on Form 8-K to disclose the Closing. In addition, the Company
will make such other filings and notices and comply with any other obligations in the manner and time required by the Commission and the Trading Market on which the Common Stock is listed. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Investor, or include the name of any Investor in any filing with the Commission (other than a Registration Statement and any exhibits to filings made in respect of this transaction in accordance with periodic filing
requirements under the Exchange Act) or any regulatory agency or Trading Market, without the prior written consent of such Investor, except to the extent such disclosure is required by law or Trading Market regulations. 


4.5. Limitation on Issuance of Future Priced Securities. During the six months following the Closing Date, the Company shall not issue any “Future Priced Securities” as such term is described by NASD
IM-4350-1. 


4.6. Non-Public Information. The Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Investor or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto such Investor shall have executed a written agreement regarding the confidentiality and use of such information.  The Company understands and confirms that each Investor
shall be relying on the foregoing representations in effecting transactions in securities of the Company. 


4.7. Listing of Shares. The Company agrees that (i) to the extent not already included, it will include the Shares in its application to list the Common Stock for trading on The NASDAQ Capital 20
Market and will take such other action as is necessary or desirable to cause the Shares to be listed on The NASDAQ Stock Market LLC as promptly as possible, and (ii) it will take all action reasonably necessary to continue the listing and trading of
its Common Stock on a Trading Market and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of all applicable Trading Markets. 











4.8. Use of Proceeds. The Company will use the net proceeds from the sale of the Shares hereunder for working capital purposes and not for the satisfaction of any portion of the Company’s debt (other than
payment of trade payables and accrued expenses in the ordinary course of the Company’s business and consistent with prior practices) or to redeem any Common Stock or any securities of the Company or any Subsidiary which entitle the holder
thereof to acquire Common Stock at any time, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock or other securities that entitle the holder to receive, directly or indirectly, Common Stock. 


4.9. Make Good Obligation.


(a) Escrowed Shares. Within five Trading Days following the Closing, the Make Good Pledgor agrees to place 2,000,000 shares of Common Stock owned by such Make Good Pledgor (the “Total Make Good
Shares”) into escrow in accordance with the Make Good Escrow Agreement along with stock powers executed in blank (or such other signed instrument of transfer acceptable to the Company’s transfer agent) to be held in an escrow account
by the Make Good Escrow Agent for the benefit of the Investors and disbursed in accordance with this Section 4.9. Mr. Guohong Zhao and Ms. Jinghua Zhao each undertakes to provide guarantee for the Make Good Pledgor’s performance in accordance
of this Agreement and the Make Good Escrow Agreement. The Company shall notify the Investors as soon as the Escrowed Shares have been deposited with the Make Good Escrow Agent. If within fifteen (15) Trading Days following the Closing, the Make Good
Pledgor shall not have deposited all Total Make Good Shares into escrow in accordance with this Agreement and the Make Good Escrow Agreement along with stock powers executed in blank (or such other signed instrument of transfer acceptable to the
Company’s transfer agent), then, the Lead Investor shall have the right, at its sole discretion and selection, to either (i) cash damages, as liquidated damages and not as a penalty, equal to [0.1% of the aggregate value of the Total Make Good
Shares calculated by the closing price of the Company’s Common Stock on the fifth day following the Closing] on a daily basis during the period between the sixth day following the Closing and the date on which the Total Make Good Shares are
actually deposited into escrow; or (ii) issue a written demand to the Company, upon which the Company shall promptly, and in any event within thirty (30) days from the date of such written demand, pay to Investors as listed on the written demand, as
liquidated damages, an amount equal to those listed Investors’ entire Investment Amount without interest thereon. As a condition to the receipt of such payment, such Investors shall return to the Company for cancellation of the certificates
evidencing the Shares acquired by such Investors under this Agreement.


(b) 2010 Make Good Obligation.  If the Company’s After Tax Net Income as reported in its 2010 Annual Report (the “2010 Audited ATNI”) is less than $8,000,000 (the “2010
Guaranteed ATNI”), the Make Good Pledgor agrees that a portion of the Total Escrowed Shares (calculated based on the formula below) which have been pledged with respect to the 2010 Guarantee ATNI (the “2010 Make Good
Shares”) shall be transferred to the Investors, on a pro rata basis (determined by dividing the number of shares purchased by each Investor hereunder by the sum total number of shares purchased by all Investors hereunder) for no
consideration and without the need of any Investor to take any action with respect thereto. If the Company’s 2010 Audited ATNI is less than the 2010 Guaranteed ATNI, the total number of 2010 Make Good Shares (as equitably adjusted for any
stock
splits, stock combinations, stock dividends or similar transactions) to be transferred to the Investors shall be calculated using the following formula: 


21 











“2010 Make Good Shares” = [(2010 Guaranteed ATNI – 2010 Audited ATNI)/$8,000,000] * 50% of the Total Make Good Shares” 


If the Company’s 2010 Audited ATNI is equal to or greater than the 2010 Guaranteed ATNI, no transfer of any 2010 Make Good Shares shall be required to be made by the Make Good Pledgor(s) to the Investors under this Section 4.9(b) and fifty
percent (50%) of the Total Make Good Shares shall be promptly returned to the Make Good Pledgor(s) without the need of any approval or consent thereto by any Investor. The remaining fifty percent (50%) of the Total Make Good Shares shall continue to
be held in escrow by the Make Good Escrow Agent and shall remain subject to Section 4.9(c) below. 


(c) 2011 Make Good Obligation.  If the Company’s After Tax Net Income as reported in its 2011 Annual Report (the “2011 Audited ATNI”) is less than $12,000,000 (the “2011
Guaranteed ATNI”), the Make Good Pledgor agrees that a portion of the Total Make Good Shares (calculated based on the formula below) which have been pledged with respect to the 2011 Guarantee ATNI (the “2011 Make Good
Shares”) shall be transferred to the Investors on a pro rata basis (determined by dividing the number of shares purchased by each Investor hereunder by the sum total number of shares purchased by all Investors hereunder) for no
consideration and without the need of any Investor to take any action with respect thereto. If the Company’s 2011 Audited ATNI is less than the 2011 Guaranteed ATNI, the total number of 2011 Make Good Shares (as equitably adjusted for any
stock splits, stock combinations, stock dividends or similar transactions) to be transferred to the Investors shall be calculated using the following formula: 


“2011 Make Good Shares” = [(2011 Guaranteed ATNI – 2011 Audited ATNI)/$12,000,000] * 50% of the Total Make Good Shares” 


If the Company’s 2011 Audited ATNI is equal to or greater than the 2011 Guaranteed ATNI, no transfer of any 2011 Make Good Shares shall be required to be made by the Make Good Pledgor to the Investors under this Section 4.9(c), the remaining
fifty percent (50%) of the Total Make Good Shares shall be promptly returned to the Make Good Pledgor without the need of any approval or consent thereto by any Investor. 


(d) For purposes hereof, “After Tax Net Income” shall mean the Company’s net income after taxes for the fiscal year ending December 31, 2010 or December 31, 2011, as the case may be, determined
in accordance with GAAP as reported in the 2010 Annual Report or 2011 Annual Report.


(e) Each of the Investors understands and agrees that the right of each such Investor to receive 2010 Make Good Shares or 2011 Make Good Shares, as the case may be, is a unique and personal right of such Investor which
requires such Investor to continue to own the shares when the 2010 Audited ATNI or 2011 Audited ATNI, as the case may be, is determined for purposes of this Section 4.9. The right of any Investor to receive any 2010 Make Good Shares or 2011 Make
Good Shares, as the case may be, will be proportionately reduced if such Investor does not continue to own the same number of shares on the 2010 Audited ATNI determination date or 2011 Audited ATNI determination date, as the case may be, as are
owned on the date hereof. Furthermore, the right to receive Make Good Shares shall not run to the benefit of any transferee of any Shares transferred by any Investor to a third party, other than an entity affiliated with such Investor.
Notwithstanding the foregoing, the Company covenants and agrees that if any Investor is permitted to transfer, and desires to transfer, any 2010 Make Good Shares or 2011 Make Good Shares (after such 2010 Make Good Shares or 2011 Make Good Shares, as
the case may be, shall be properly transferable to any such Investors in accordance with the terms hereof and the
Make Good Escrow Agreement), the Company shall promptly instruct its Transfer Agent to reissue and deliver such 2010 Make Good Shares or 2011 Make Good Shares in the name of a permitted transferee as directed by an Investor. 


22 











(f) If any term or provision of this Section 4.9 contradicts or conflicts with any term or provision of the Make Good Escrow Agreement, the terms of the Make Good Escrow Agreement shall control. 


4.10. Subsequent Registrations. The Company is obliged to file a Subsequent Registration Statement with the Commission with respect to any securities of the 2010 Make Good Shares and/or the 2011 Make Good Shares
that have been transferred to the Investors (respectively, the “2010 Released Escrow Shares” and the “2011 Released Escrow Shares”). The Company shall cause one Subsequent Registration Statement for each of the
2010 Released Escrow Shares and the 2011 Released Escrow Shares required to be filed under this Agreement to be declared effective under the Securities Act pursuant to this Section 4.10.


(a) The Company shall prepare and file with the Commission a Subsequent Registration Statement covering the resale of the 2010 Released Escrow Shares or the 2011 Released Escrow Shares not already covered by an existing
and effective registration statement for an offering to be made on a continuous basis pursuant to Rule 415. Each initial Subsequent Registration Statement shall be filed within 45 days after the delivery of 2010 Released Escrow Shares or the 2011
Released Escrow Shares to the Investors (the “Filing Date”). Each Subsequent Registration Statement required to be filed under this Agreement shall be filed on Form S-3 (or if the Company is not then eligible to utilize Form S-3,
it shall utilize such other available form appropriate for such purpose) and contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Subsequent Registration Statement, provided however
that no Investor shall be characterized as an underwriter unless such characterization is consistent with written information provided by the Investor in the Selling Holder Questionnaire) the “Plan of Distribution.” 


(b) If: (i) any Subsequent Registration Statement is not filed on or prior to its Filing Date covering the 2010 Released Escrow Shares or the 2011 Released Escrow Shares required under this Agreement to be included
therein, or (ii) the Company fails to file a response letter and an amendment to the Subsequent Registration Statement within 30 days of receiving comments from the SEC, (any such failure or breach being referred to as an “Event,”
and for purposes of clauses (i) or (ii) the date on which such Event occurs, being referred to as “Event Date”), then in addition to any other rights the Investors may have hereunder or under applicable law: on each such Event
Date, and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Investor an amount in cash, as partial liquidated
damages and not as a penalty, equal to 0.5% of the aggregate value of the 2010 Released Escrow Shares or the 2011 Released Escrow Shares (the “Aggregated Value”) calculated by the closing price of the Company’s Common Stock
on the date of the delivery. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event, except for the day of the first Event Date. In no event will the
Company be liable for liquidated damages under this Agreement in excess of 0.5% of the Aggregate Value in any 30-day period. The Company shall not be liable for liquidated damages under this Agreement as to any 2010 Released Escrow Shares or 2011
Released Escrow Shares which are not permitted by the Commission to be included in a Subsequent Registration Statement due solely to Commission Comments from the time that it is determined that such 2010 Released Escrow Shares or 2011 Released
Escrow Shares are not permitted to be registered solely due to Commission Comments until such time as the provisions of this Agreement as to the next applicable Subsequent Registration Statement required to be filed hereunder are triggered. 


23 











4.11. Form D. The Company will timely file a Form D with the Commission with respect to the Shares as required under Regulation D under the Securities Act. 


4.12. 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. 


4.13. Appointment of Director. As long as the Lead Investor along with its Affiliates holds no less than 5% of shares of Common Stock of the Company on a fully diluted basis, (i)the Lead Investor shall have the
right to appoint one director; and (ii) the Company shall appoint an additional independent director upon consultation and consent by the Lead Investor.


4.14. Indemnification.  Each of the directors, agents or officers of the Company shall be indemnified out of the assets of the Company against any liability incurred by him as a result of any act or failure to
act in carrying out his functions other than such liability (if any) that he may incur by his own fraud or willful default. No such Director, agent or officer shall be liable to the Company for any loss or damage in carrying out his functions unless
that liability arises through the fraud or willful default of such Director, agent or officer. In addition to the indemnity provided in the Registration Rights Agreement, the Company agrees to indemnify and hold each Investor and all of their
respective directors, officers, stockholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person
who controls an Investor (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, stockholders, agents, members, partners or employees (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each, an “Investor Party”) harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation (collectively, “Losses”) that any such Investor Party
may suffer or incur whether direct, indirect or consequential, as a result of or arising from or relating to or in connection with (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents, provided that such a claim for indemnification relating to any breach of any of the representations or warranties made by the Company in this Agreement is made within two years from the Closing
or (b) any action instituted against an Investor, or any of their respective Affiliates, by any Person who is not an Affiliate of such Investor, with respect to any of transactions contemplated by the Transaction Documents (unless such action is
based upon any agreements or understanding such Investor may have with any such Person or any violations by the Investor of state or federal securities laws or any conduct by such Investor which constitutes fraud, gross negligence or willful
misconduct). 


4.15. Participation Right. Within 24 months of the Closing, the Lead Investor shall have the right to participate proportionally in the Company’s financing activities, excluding the following: 1)
underwritten offering; 2) issuance related to acquisition; 3) issuance pursuant to stock option plans; and 4) issuance below $500,000. 


4.16. SAFE 75 Filing. The Company covenants to the Investors that Mr. Guohong Zhao will not exercise his option rights under the Option Agreement, as amended, unless (i) he has obtained or completed all
applicable approvals, registrations or filings then required under PRC laws and regulations, including but not limited to the Notice Regarding Certain Administrative Measures on Financing and Round-trip Investments by PRC Residents Through
Offshore Special Purpose Vehicles effective as of November 1, 2005 issued by PRC’s State Administration of Foreign Exchanges (“SAFE 75”). Evidence showing that Mr. Guohong
Zhao has completed SAFE 75 filing, if applicable, shall be provided to the
Investors by the Company prior to Mr. Guohong Zhao’s exercise of his option rights under the Option Agreement. or (ii) Mr. Guohong Zhao has provided the Lead Investor with an alternative solution or assurance which results in the Lead Investor
agreeing to waive Mr. Guohong Zhao’s obligations under 4.16 (i) above, or (iii) the Investors in the transaction contemplated by this Agreement have collectively sold one hundred percent (100%) of the shares purchased under this Agreement and
received under the Make Good Escrow Agreement.



24 











ARTICLE 5. 

CONDITIONS PRECEDENT TO CLOSING 


5.1. Conditions Precedent to the Obligations of the Investors to Purchase Shares.  The obligation of each Investor to acquire Shares at the Closing is subject to the satisfaction, at or before the Closing, of
each of the following conditions, any of which may be waived by such Investor (as to itself only): 


(a) Representations and Warranties.  The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though
made on and as of such date; 


(b) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or
complied with by it at or prior to the Closing; 


(c) No Injunction. 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 statute, rule, regulation, order of or
by any governmental authority, shall have been enacted, promulgated or issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated by the
Transaction Documents; 


(d) Adverse Changes. Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably could have or result in a Material Adverse Effect; 


(e) No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock shall not have been suspended by the Commission, any Trading Market or any governmental or regulatory body (except for any
suspensions of trading of not more than one Trading Day solely to permit dissemination of material information regarding the Company) at any time since the date of execution of this Agreement, the Common Stock shall have been at all times since such
date listed for trading on a Trading Market, and the Company shall not have received notice of any delisting or removal from trading on any Trading Market or that it is in violation of any rule, regulation or interpretation of any Trading Market
that could lead to delisting or removal from trading; 


(f) Company Deliverables.  The Company shall have delivered the Company Deliverables in accordance with Section 2.3(a);


(g) Permits.  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 Shares 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;


(h) Termination. This Agreement shall not have been terminated as to such
Investor in accordance with Section 6.6; 



25 











(i) SEC Form 14C Filing.  The Company shall have duly filed the preliminary Schedule 14C Information Statement and the definitive Schedule 14C Information Statement, and shall cause the definitive Schedule 14C
information Statement to become effective pursuant to relevant SEC rules. Among others, the effectiveness of Schedule 14C Information Statement shall be confirmed by the U.S. legal counsel of the Company. 


5.2. Conditions Precedent to the Obligations of the Company to Sell Shares. The obligation of the Company to sell and issue Shares at the Closing is subject to the satisfaction or waiver by the Company, at or
before the Closing, of each of the following conditions: 


(a) Representations and Warranties.  The representations and warranties of each Investor contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as
though made on and as of such date; 


(b) Performance. Each Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied
or complied with by such Investor at or prior to the Closing; 


(c) No Injunction. 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 statute, rule, regulation, order of or
by any governmental authority, shall have been enacted, promulgated or issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated by the
Transaction Documents; 


(d) Investor Deliverables. Each Investor shall have delivered its Purchase Price in accordance with Section 2.3(b) and the Registration Rights Agreement, duly executed by such Investor. Each Investor shall have
delivered a duly completed certificate in the form attached as Schedule II; and 


(e) Termination. This Agreement shall not have been terminated as to such Investor in accordance with Section 6.6. 


ARTICLE 6. 

MISCELLANEOUS 


6.1. Fees and Expenses.  The fees and expenses of up to $65,000 incurred by the Lead Investor incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents shall
be deducted from the proceeds of the financing. 


6.2. Entire Agreement.  The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all
prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 


6.3. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date
of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading
Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as follows: 


26 







	 	 
	If to the Company: 	THT Heat Transfer Technology, Inc.

	  	THT Industrial Park 
	  	
    No. 5 Nanhuan Road, Tiexi
      District 

	  	Siping, Jilin Province 136000 
	  	People’s Republic of China 
	  	Attn: Jianjun He, Chief Financial
      Officer 
	  	  
	With a copy to: 	Pillsbury Winthrop Shaw Pittman LLP
  
	  	2300 N Street, NW 
	  	Washington, D.C. 20037 
	  	Facsimile: (202) 663-8007 
	 	Attn.: Joseph R. Tiano, Jr.,
      Esq.  
	  	  
	If to an Investor: 	To the address set forth under such Investor’s
      name on the signature pages hereof; 
	  	  
	With a copy to: 	Winston & Strawn LLP 
	 	 Suite 718, China World
      Office 1 
	  	1 Jianguomenwai Avenue 
	  	Beijing, China 100004 
	  	Attn: Jem Li, Esq. 




or such other address as may be designated in writing
hereafter, in the same manner, by such Person. 

6.4. Amendments; Waivers; No
Additional Consideration. No provision of this Agreement may be waived or
amended except in a written instrument signed by the Company and the Investors
purchasing a majority of the Shares issued and sold pursuant hereto. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Investor to amend or consent to a
waiver or modification of any provision of any Transaction Document unless the
same consideration is also offered to all Investors who then hold Shares.

6.5. Termination. This Agreement may be terminated prior
to Closing: 

(a) by written agreement of the
Investors purchasing a majority of the Shares and the Company;

(b) by the Company if any of the
conditions set forth in Section 5.2 shall have become incapable of fulfillment,
and shall not have been waived by the Company; 

27 









(c) by an Investor (with respect to itself only) if any of the conditions set forth in Section 5.1 shall have become incapable of fulfillment, and shall not have been waived by such Investor; or 


(d) by either the Company or an Investor (with respect to itself only) upon written notice to the other parties, if the Closing shall not have taken place by 5:00 p.m. Eastern time on the Outside Date; 


provided, however, that, except in the case of clause (a) above, the right to terminate this Agreement under this Section 6.6(b) shall not be available to any Person whose failure to comply with its obligations under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or before such time. 


 In the event of a termination pursuant to this Section, the Company shall promptly notify all nonterminating Investors. Upon a termination in accordance with this Section 6.6, the Company and the terminating Investor(s) shall not have any further
obligation or liability (including as arising from such termination) to the other and no Investor will have any liability to any other Investor under the Transaction Documents as a result therefrom. 


6.6. Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this
Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents. 


6.7. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investors. Any Investor may assign any or all of its rights under this Agreement to any Person to whom such Investor assigns or transfers any Shares, provided such transferee agrees in
writing to be bound, with respect to the transferred Shares, by the provisions hereof that apply to the “Investors.” 


6.8. No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person. 


6.9. Governing Law and Waiver of Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this
Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New York Courts. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process
being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If either party shall commence a Proceeding
to enforce any provisions of a Transaction Document, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding. 


28 











EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR
THEREOF.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS.  EACH PARTY HERETO HEREBY FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL (WITHOUT A JURY) BY THE COURT. 


6.10. Survival.  The representations, warranties, agreements and covenants contained herein shall survive the Closing and the delivery of the Shares, until the second anniversary of the date hereof. 


6.11. Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. 


6.12. Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in
any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 


6.13. Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Investor exercises a right,
election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Investor may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights. 


29 











6.14. Replacement of Shares.  If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity,
if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Shares. If a replacement certificate or instrument evidencing
any Shares is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement. 


6.15. Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investors and the Company will be entitled to specific
performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any
action for specific performance of any such obligation the defense that a remedy at law would be adequate. 


6.16. 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 Shares 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 Shares 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. 


6.17. Limitation of Liability. Notwithstanding anything herein to the contrary, the Company acknowledges and agrees that the liability of an Investor arising directly or indirectly, under any Transaction Document
of any and every nature whatsoever shall be satisfied solely out of the assets of such Investor, and that no trustee, officer, other investment vehicle or any other Affiliate of such Investor or any investor, shareholder or holder of shares of
beneficial interest of such a Investor shall be personally liable for any liabilities of such Investor. 


6.18. 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. 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOLLOW]


 


30 











IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. 


	
THT HEAT TRANSFER TECHNOLOGY, INC. 
	
	
 
	
By:
	
	
Name:
	
	
Title:
	





[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOR INVESTORS FOLLOW] 


 


S-1 











IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. 


	
INVESTORS:
	
	
 
	
 
	
By:
	
	
Name:
	
	
Title:
	
	
Purchase Price:
	
	
Number of Shares:
	
	
Tax ID No.:
	
	
 
	
ADDRESS FOR NOTICE
	
	
 
	
c/o:
	
	
Street:
	
	
City/State/Zip:
	
	
Attention:
	
	
Tel:
	
	
Fax:
	
	
 
	
DELIVERY INSTRUCTIONS
	
	
(if different from above)
	
	
 
	
c/o:
	
	
Street:
	
	
City/State/Zip:
	
	
Attention:
	
	
Tel:
	





S-2 










	
 
	
 
	
By:
	
	
Name:
	
	
Title:
	
	
Purchase Price:
	
	
Number of Shares:
	
	
Tax ID No.:
	
	
 
	
ADDRESS FOR NOTICE
	
	
 
	
c/o:
	
	
Street:
	
	
City/State/Zip:
	
	
Attention:
	
	
Tel:
	
	
Fax:
	
	
 
	
DELIVERY INSTRUCTIONS
	
	
(if different from above)
	
	
 
	
c/o:
	
	
Street:
	
	
City/State/Zip:
	
	
Attention:
	
	
Tel:
	







S-3 






Schedule I 

SCHEDULE OF INVESTORS 

	
    Investor 
		Address and Facsimile Number 			Investment Amount 			Shares 	
	
    Infinity I-China Fund (Cayman), L.P. 
	 		 	 	2,333,968 	 	 	729,365 	 
	
    Infinity I-China Fund (Israel), L.P. 
	 		 	 	1,191,246 	 	 	372,265 	 
	
    Infinity I-China Fund (Israel 2), L.P. 
	 		 	 	1,018,078 	 	 	318,149 	 
	
    Infinity I-China Fund (Israel 3), L.P. 
	 		 	 	456, 708 	 	 	142,721 	 
	
    Infinity I-China (Suzhou) L.P. 
	 		 	 	3,000,000 	 	 	937,500 	 
	
    Infinity I-China (Changzhou) L.P. 
	 		 	 	1,000,000 	 	 	312,500 	 
	
    MC Capital Asia Pacific Private Equity Fund
    
	 		 	 	3,200,000 	 	 	1,000,000 	 
	
    Zhejiang Jinqiao Hong Kong Limited 
	 		 	 	1,000,000 	 	 	312,500 	 
	
    Chunyan Zhang 
	 	  	 	 	500,000 	 	 	156,250 	 
	
    Haiyu Mao
    
	 	  	 	 	432,000 	 	 	135,000 	 
	
    ACG Investment Partners, Inc. 
	 		 	 	116,000 	 	 	36,250 	 
	
    Naomichi
      Komuro 
	 	  	 	 	1,600 	 	 	500 	 
	
    Shunichi Nawa 
	 	  	 	 	1,600 	 	 	500 	 
	
    Total 
	 	  	 	 	14,251,200 	 	 	4,453,500 	 


Schedule I 




Schedule II 

ACCREDITED INVESTOR CERTIFICATE 

TO: THT HEAT TRANSFER TECHNOLOGY, INC. 

In connection with the proposed purchase of the shares of
Common Stock of THT HEAT TRANSFER TECHNOLOGY, INC. (the “Company”), the
undersigned represents and warrants that the undersigned has read the following
definition of a “U.S. Accredited Investor” and certifies that the undersigned is
a U.S. Accredited Investor as indicated below (check one): 

“U.S. Accredited Investor” shall mean any of (check
one): 


  
	
    A bank, as defined in Section 3(a)(2) of the 1933 Act, or
      savings and loan association or other institution as defined in Section
      3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary
      capacity; 
	[ ] 
	
      
	  
	
    A broker or dealer registered pursuant to section 15 of the
      United States Securities Exchange Act of 1934, as amended; 
	[ ] 
	
      
	  
	
    An insurance company (as defined in Section 2(13) of the
      1933 Act); 
	[ ] 
	
      
	  
	
    An investment company registered under the United States
      Investment Company Act of 1940, as amended (the “1940 Act”); 
	[ ] 
	
      
	  
	
    A business development company (as defined in Section
      2(a)(48) of the 1940 Act); 
	[ ] 
	
      
	  
	
    A Small Business Investment Company licensed by the U.S.
      Small Business Administration under Section 301(c) or (d) of the United
      States Small Business Investment Act of 1958, as amended; 
	[ ] 
	
      
	  
	
    A plan established and maintained by a state, its political
      subdivisions, or any agency or instrumentality of a state or its political
      subdivisions, for the benefit of its employees, if such plan has total
      assets in excess of U.S.$5,000,000; 
	[ ] 
	
      
	  
	
    An employee benefit plan within the meaning of the United
      States Employee Retirement Income Security Act of 1974, as amended
      (“ERISA”), (1) whose investment decision is made by a plan
      fiduciary as defined in Section 3(21) of ERISA, which is either a bank,
      savings and loan association, insurance company or registered investment
      advisor, or (2) having total assets in excess of U.S.$5,000,000, or (3) if
      a self-directed plan, with investment decisions made solely by persons
      that are accredited investors; 
	[ ] 
	
      
	  
	
    A private business development company (as defined in
      Section 202(a)(22) of the United States Investment Advisers Act of 1940);
    
	[ ] 


  


Schedule II 




I 


  
	
    An organization described in Section 501(c)(3) of the
      Internal Revenue Code of 1986 as amended, company, or similar business
      trust, or partnership, not formed for the specific purpose of acquiring
      the securities offered, having total assets in excess of U.S.$5,000,000;
    
	[ ] 
	
      
	  
	
    A director or executive officer of the Company; 
	[ ] 
	
      
	  
	
    A natural person with individual net worth, or joint net
      worth with his or her spouse, at the time of purchase in excess of
      U.S.$1,000,000; 
	[ ] 
	
      
	  
	
    A natural person with an individual income in excess of
      U.S.$200,000 in each of the last two years or joint income with his or her
      spouse in excess of U.S.$300,000 in each of those years, and who
      reasonably expects to reach the same income level in the current year; 
	[ ] 
	
      
	  
	
    A trust, with total assets in excess of U.S.$5,000,000, not
      formed for the specific purpose of acquiring the securities offered, whose
      purchase is directed by a sophisticated person as described in section
      Rule 506 (b)(2)(ii) of the 1933 Act; and 
	[ ] 
	
      
	  
	
    An entity in which all of the equity owners are U.S.
      Accredited Investors. 
	[ ] 


  


TERMS NOT DEFINED HEREIN SHALL
HAVE THE MEANINGS ASCRIBED TO THEM IN THE SECURITIES PURCHASE AGREEMENT TO WHICH
THIS SCHEDULE IS ATTACHED. 

The foregoing representation,
warranty and certificate are true and accurate as of the date of this
certificate. 

	Dated: _______________, 2010. 	
	  	Print name of Purchaser (or person
      signing as agent) 
	  	By: _____________________________________
	  	
    Signature 

	 	
     _____________________________________

	  	
    Title
    

	 	
     _____________________________________

		
    (Please print name of individual whose
      signature appears above, if different from name of Purchaser or agent
      printed above.) 












Exhibit A 



Registration Rights Agreement 



(See attached.)



 



 











Exhibit B 



Transfer Agent Instructions 



(See attached.)



 



 











Exhibit C 


Legal Opinion of US Counsel 


(See attached.)



 



 











 Exhibit D 


Legal Opinion of Nevada Counsel 


(See attached.)



 



 











Exhibit E 


Form of Closing Escrow Agreement 


(See attached.) 



 



 











Exhibit F 


Form of Make Good Escrow Agreement 


(See attached.) 



 



 











 Exhibit G 


Form of Lock Up Agreement 


(See attached.)