ex101.htm


    Exhibit
10.1

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated as of
October 29, 2009, by and among Longwei Petroleum Investment Holding Limited, a
Colorado corporation (collectively with its predecessors, the “Company”), and the investors
listed on the Schedule of Buyers attached hereto as Annex A and
identified on the signature pages hereto (each, an “Investor” and collectively,
the “Investors”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated
thereunder, the Company desires to issue and sell to the Investors and the
Investors desires to purchase for an aggregate  purchase price of up
to Fifteen Million Dollars ($15,000,000) as  more fully described in
this Agreement an aggregate of up to (i) Thirteen Million Six Hundred Thirty
Seven Thousand (13,637,000) shares of the Company’s Series A Convertible
Preferred Stock, no par value per share (“Series A Preferred Stock”),
with each share of Series A Preferred Stock being initially convertible into one
(1) share of the Company’s common stock, no par value per share (“Common Stock”), subject to
adjustment, and (ii)  Common Stock purchase warrants (the “Warrants”) to purchase
Thirteen Million Six Hundred Thirty Seven Thousand (13,637,000) shares of Common
Stock at an exercise equal to one hundred and ten percent (110%)
of  the Closing Market Price (as defined below) of the Common Stock as
of the Closing Date (as defined below).

     

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, 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 June 30, 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” shall
have the meaning set forth in Section 4.11.

     

    “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.

     

     

    
      
        
        

      

      
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    “Affiliate” means any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 405 of the Securities Act.

     

    “After Tax Net Income” shall
mean the Company’s income after taxes for the fiscal year ending June 30, 2010
determined in accordance with GAAP as reported in the 2010 Annual Report, but
excluding (and therefore, adding back) any expense arising from
the  transactions contemplated by this Agreement and the other
Transaction Documents.

     

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

     

    “Buy-In” has the meaning set
forth in Section 4.1(c).

     

    “Certificate of Designation”
shall mean the Certificate of
Designations, Preferences and Rights file to be filed with the Secretary of
State for the state of Colorado relating to the Series A Preferred Stock
substantially in the form of Exhibit A attached
hereto.

     

    “Closing” means the closing of
the purchase and sale of the Securities 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 Escrow Agreement, dated as of the date hereof, among the Company, the
Investors parties thereto and the Closing Escrow Agent in the form of Exhibit B
hereto.

     

    “Closing Escrow Agent” shall
mean Signature Bank.

     

    “Closing Market Price” shall
mean the closing price of the Common Stock on the principal market or exchange
on which the Common Stock is traded or quoted on the day prior to the date as of
which such price is being determined.

     

    “Commission” means the
Securities and Exchange Commission.

     

    “Common Stock” means the
common stock of the Company, no par value per share, and any securities into
which such common stock may hereafter be reclassified or for which they may be
exchanges as a class.

     

    “Common Stock Equivalents”
means 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.

     

     

    
      
        
        

      

      
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    “Company Counsel” means
Sichenzia Ross Friedman Ference 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).

     

    “Dividend Shares” shall have
the meaning set forth in the Certificate of Designation

     

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

     

    “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

     

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

     

    “Intellectual Property Rights”
has the meaning set forth in Section 3.1(p).

     

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

     

    “Investor Party” has the
meaning set forth in Section 4.7.

     

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

     

    “Losses” shall have the
meaning set forth in Section 4.7.

     

    “Make Good Escrow Pledgors”
shall mean Mr. Cai Yongjun and Mr. Xue Yongping.

     

    “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) an adverse impairment to the Company’s ability to perform on a timely
basis its obligations under any Transaction Document.

     

    “Money Laundering Laws” has the
meaning set forth in Section 3.1(ee).

     

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

     

    “Original Purchase Price”
means, with respect to each Investor, the Original Purchase Price indicated on
such Investor’s signature page to this Agreement.

     

    “OFAC” has the meaning set
forth in Section 3.1(dd).

     

    “Outside Date” means October
31 2009, 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.

     

     

    
      
        
        

      

      
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    “Original Purchase Price”
means, with respect to each Investor, the Original Purchase Price indicated on
such Investor’s signature page to this Agreement.

     

    “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.

     

    “PRC” means 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.

     

    “Placement
Agent” shall mean National Securities Corporation.

     

    “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 C
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 and the
Dividend Shares, if any.

     

    “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).

     

    “Security” shall mean,
collectively, one share of Series A Preferred and one Warrant being offered and
sold by the Company hereunder.

     

    “Securities” means,
collectively, the Series A Preferred Stock and the Warrants.

     

    “Securities Act” means the
means Securities Act of 1933, as amended.

     

    “Securities Escrow Agent”
shall mean Signature Bank.

     

    “Securities Escrow Agreement”
means the Securities Escrow Agreement, dated as of the date hereof, among
the Company, the Escrow Agent, the Make Good Pledgors and the Investors, in the
form of Exhibit
D hereto.

     

    “Series A Preferred Stock”
means the shares of Series A Preferred Stock having the rights, preferences and
privileges and subject to the limitations set forth in the Certificate of
Designation.

     

    “Share Delivery Date” has the
meaning set forth in Section 4.1(c).

     

     

    
      
        
        

      

      
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    “Shares” means collectively
the shares of Common Stock issued or issuable (i) on conversion of the Series A
Preferred Stock and (ii) on exercise of the Warrants.

     

    “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.

     

    “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.

     

    “Trading Day” means a day on
which the Common Stock is traded on a Trading Market.

     

     “Trading Market” means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board 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, the Closing Escrow Agreement,
the Securities Escrow Agreement and any other documents or agreements executed
in connection with the transactions contemplated hereunder.

     

     “Warrants” means the warrants
substantially in the form of Exhibit E attached
hereto.

     

    “4.9% Limitation” shall have
the meaning set forth in Section 2.1.

     

    


     

    ARTICLE
2.

     

    PURCHASE
AND SALE

     

    2.1. Purchase and Sale.
Upon the terms and subject to the conditions set forth herein, and in accordance
with applicable law, the Company agrees to sell to the Investors, and each
Investor agrees to purchase from the Company, on the Closing Date, the number of
Securities for the purchase price set forth next to such Investor’s name on
Schedule A attached
hereto (the “Original Purchase
Price).   At or prior to the Closing each Investor shall
wire the portion of the Original Purchase Price set forth opposite such
Investor’s name on Schedule
A to the Closing Escrow Agent, who shall release the Original Purchase
Price to the Company upon receipt of instructions from the Investors and the
Company as provided in the Escrow Agreement.  The Company shall cause
the Securities to be issued to the Investors upon the release of the Original
Purchase Price to the Company by the Closing Escrow Agent pursuant to the terms
of the Escrow Agreement.  Except as expressly provided in the
Certificate of Designation and the Warrants, an Investor shall not be
entitled to convert the Series A Preferred Stock into shares of Common Stock or
to exercise the Warrants to the extent that such conversion or exercise would
result in beneficial ownership by the Investor and its Affiliates of more than
4.9% of the then outstanding number of shares of Common Stock on such date after
giving effect to such conversion or exercise.  For the purposes of
this Agreement beneficial ownership shall be determined in accordance with
Section 13(d) of the 1934 Act, and Regulation 13d-3 thereunder.  The
limitation set forth in this Section 2.1.2 is referred to as the “4.9% Limitation.”

     

     

    
      
        
        

      

      
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    2.2. Closing

     

    .  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 number of
Securities  representing such Investor’s Original Purchase
Price.  The Closing shall take place at the offices of Guzov Ofsink,
LLC, 600 Madison Avenue, New York, New York 10022, on the Closing Date or at
such other location or time as the parties may 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) certificates
evidencing shares of Series A Preferred Stock and Warrants to be issued and sold
at Closing registered in the name of such Investor; and

     

    (ii) the legal
opinion of Company Counsel, in agreed form, addressed to the
Investors.

     

    (b) By the
Closing, each Investor shall deliver or cause to be delivered the agreements
specified in Section 5.2(d), each duly signed by such Investor (collectively,
the “Investor
Deliverables”).

     

    ARTICLE
3.

     

    REPRESENTATIONS
AND WARRANTIES

     

    3.1. Representations and
Warranties of the Company

     

    .  The
Company hereby makes the following representations and warranties to each
Investor:

     

    (a) Subsidiaries.  The
Company has no direct or indirect Subsidiaries other than as specified in the
SEC Reports.  Except as disclosed in Schedule 3.1(a), the
Company owns, directly or indirectly, all of the capital stock of each
Subsidiary free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of any and all Lines and 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, could not, individually or in the aggregate, have or reasonably be expected
to result in a Material Adverse Effect.

     

     

    
      
        
        

      

      
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    (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 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 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,
or (ii) except as set forth in Schedule 3.1(d)(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 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 United States federal
and state securities laws and regulations and PRC national and provincial
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), such as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse
Effect.

     

    (e) Filings, Consents and
Approvals.  Except as set forth in Schedule 3.1(e),
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
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 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 4.5
hereof and (v) those that have been made or obtained prior to the date of this
Agreement.

     

     

    
      
        
        

      

      
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    (f) Issuance of the
Securities.  The Securities  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 nonassessable, free
and clear of all Liens.  The Company has reserved from its duly
authorized capital stock the Shares..

     

    (g) Capitalization.  The
number of shares and type of all authorized, issued and outstanding capital
stock of the Company, and all shares of Common Stock reserved for issuance under
the Company’s various option and incentive plans, is specified in Schedule
3.1(g).  Except as specified in Schedule 3.1(g), 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.  Except as specified in Schedule 3.1(g),
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.  The issue and sale of the Securities will not, immediately or
with the passage of time, obligate the Company to issue shares of 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.

     

    (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) thereof, 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 therein, in 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.

     

     

    
      
        
        

      

      
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    (i) Press
Releases.  The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken as a whole
do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made and
when made, not misleading.

     

    (j) Material
Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that could 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 (A) trade payables,
accrued expenses and other liabilities incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (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 stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities to any Company or Subsidiary officer, director or
Affiliate, except pursuant to existing Company stock option plans. The Company
does not have pending before the Commission any request for confidential
treatment of information.

     

    (k) Litigation.  There
is no Action which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
except as specifically disclosed in the SEC Reports, could, 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.

     

    (l) Labor
Relations.  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.

     

    (m) Indebtedness;
Compliance. Except as disclosed on Schedule 3.1(m),
neither the Company nor any Subsidiary is a party to any indenture, debt, loan
or credit agreement by which it or any of its properties is
bound.  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 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. The Company is in compliance with all
effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the
rules and regulations thereunder, that are applicable to it, except where such
noncompliance would not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.

     

    (n) Regulatory
Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate United States
and PRC federal, state, local or foreign regulatory authorities necessary to
conduct their respective businesses as described in the SEC Reports, except
where the failure to possess such permits could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
permits.

     

    (o) Title to
Assets.  Except as set forth in Schedule 3.1(o), 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 could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.

     

    (p) Patents and
Trademarks.  Schedule 3.1(p) sets
forth all of the patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that the Company and its Subsidiaries owns or has the rights to use
(collectively, the “Intellectual Property
Rights”).  The Intellectual Property Rights constitute all of
the patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and other similar rights that are
necessary for use by the Company and its Subsidiaries in connection with their
respective businesses as described in the SEC Reports. 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.  Except as set forth in Schedule 3.1(p), all
such Intellectual Property Rights are enforceable and to the knowledge of the
Company and its Subsidiaries, there is no existing infringement by another
Person of any of the Intellectual Property Rights.  To the knowledge
of the Company and its Subsidiaries, no former or current employee, no former or
current consultant, and no third-party joint developer of the Company or its
Subsidiaries has any Intellectual Property Rights made, developed, conceived,
created or written by the aforesaid employee, consultant or third-party joint
developer during the period of his or her retention by, or joint venture with,
such Company or Subsidiary which can be asserted against any of the Company or
any such Subsidiary.  The Intellectual Property Rights and the owner
thereof or agreement through which they are licensed to any of the Company or
its Subsidiaries are set forth on Schedule
3.1(p).

     

     

    
      
        
        

      

      
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    (q) Insurance.   Schedule 3.1(q) sets
forth a list of all the insurance policies held by the Company and each
Subsidiary.  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.

     

    (r) Transactions With Affiliates
and Employees; Customers.  Except as set forth in Schedule 3.1(r), 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. No material
customer of the Company or any Subsidiary has indicated its intention to
diminish its relationship with the Company or any Subsidiary and none of them
has any knowledge from which it would reasonably conclude that any such customer
relationship may be adversely affected.

     

    (s) Internal Accounting
Controls.  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 or 10-Q, as the
case may be, is being prepared.  The Company’s certifying officers
have evaluated the effectiveness of the Company’s controls and procedures in
accordance with 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 or Form 10-Q 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 or, to
the Company’s knowledge, in other factors that could significantly affect the
Company’s internal controls.

     

     

    
      
        
        

      

      
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    (t) Solvency.  Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s fair saleable value of
its assets exceeds the amount that will be required to be paid on or in respect
of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid.  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).

     

    (u) Certain
Fees.  Except as described in Schedule 3.1(u), 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 and the other Transaction
Documents.  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.

     

    (v) Certain Registration
Matters. Assuming the accuracy of the Investors’ representations and
warranties set forth in Section 3.2(b)-(e), no registration under the Securities
Act is required for the offer and sale of the Securities  by the
Company to the Investors under the Transaction Documents.  The Company
is eligible to register the Shares for resale by the Investors under Form S-1
promulgated under the Securities Act.  Except as set forth on Schedule 3.1(v), the
Company has not granted or agreed to grant to any Person any rights (including
“piggy-back” registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority that have not
been satisfied.

     

    (w) Listing and Maintenance
Requirements.  Except as specified in the SEC Reports, the
Company has not, in the two years preceding the date hereof, received notice
from any Trading Market to the effect that the Company is not in compliance with
the listing or maintenance requirements thereof.  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 Securities
under the Transaction Documents does 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 Securities contemplated by
Transaction Documents.

     

    (x) Investment
Company.  The Company is not, and is not an Affiliate of, and
immediately following the Closing will not have become, an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended.

     

     

    
      
        
        

      

      
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    (y) No Additional
Agreements.  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.

     

    (z) Consultation with
Auditors.  The Company has consulted its independent auditors
concerning the accounting treatment of the transactions contemplated by the
Transaction Documents, and in connection therewith has furnished such auditors
complete copies of the Transaction Documents.

     

    (aa) Foreign Corrupt Practices
Act.  Neither the Company nor any Subsidiary, nor to the
knowledge of the Company, any agent or other person acting on behalf of any of
the Company or any Subsidiary, has, directly or indirectly, (i) used any funds,
or will use any proceeds from the sale of the Shares, for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company or any Subsidiary (or made
by any Person acting on their behalf of which the Company is aware) which is in
violation of law, or (iv) has violated in any material respect any provision of
the Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder.

     

    (bb) PFIC.  Neither
the Company nor any Subsidiary is or intends to become a “passive foreign
investment company” within the meaning of Section 1297 of the U.S. Internal
Revenue Code of 1986, as amended.

     

    (cc) OFAC. Neither the
Company nor any Subsidiary nor, to the knowledge of the Company, any director,
officer, agent, employee, Affiliate or Person acting on behalf of the Company or
any Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not directly or indirectly use the proceeds of the sale of the Securities, or
lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other Person or entity, towards any sales or operations
in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or
for the purpose of financing the activities of any Person currently subject to
any U.S. sanctions administered by OFAC.

     

    (dd) Money Laundering
Laws. The operations of each of the Company and any Subsidiary are and
have been conducted at all times in compliance with the money laundering
statutes of applicable jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or
enforced by any applicable governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company and/or any Subsidiary
with respect to the Money Laundering Laws is pending or, to the best knowledge
of the Company, threatened.

     

     

    
      
        
        

      

      
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    (ee) Additional PRC
Representations and Warranties.

     

    (i) All
material consents, approvals, authorizations or licenses requisite 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) All
filings and registrations with the PRC governmental authorities required in
respect of the Company and the Subsidiaries and their operations including,
without limitation, the registration with the Ministry of Commerce, the State
Administration of Industry and Commerce, the State Administration for Foreign
Exchange, tax bureau and customs authorities have been duly completed in
accordance with the relevant PRC rules and regulations, except where, the
failure to complete such filings and registrations does not, and would not,
individually or in the aggregate, have a Material Adverse Effect.

     

    (iii) The
Company and the Subsidiaries have complied with all relevant PRC laws and
regulations regarding the contribution and payment of its registered share
capital, the payment schedule of which has been approved by the relevant PRC
governmental authorities.  There are no outstanding rights of, or
commitments made by the Company or any Subsidiary to sell any of their
respective equity interests.

     

    (iv) Neither
the Company nor any Subsidiary is in receipt of any letter or notice from any
relevant PRC governmental authority notifying it of the revocation, or otherwise
questioning the validity, of any licenses or qualifications issued to it or any
subsidy granted to it by any PRC governmental authority for non-compliance with
the terms thereof or with applicable PRC laws, or the need for compliance or
remedial actions in respect of the activities carried out by the Company or such
Subsidiary, except such revocation as does not, and would not, individually or
in the aggregate, have a Material Adverse Effect.

     

    (v) 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.

     

    (vi) With
regard to employment and staff or labor, the Company and the Subsidiaries have
complied with all applicable PRC laws and regulations in all material respects,
including without limitation, laws and regulations pertaining to welfare funds,
social benefits, medical benefits, insurance, retirement benefits, pensions or
the like, other than such non-compliance that do not, and would not,
individually or in the aggregate, have a Material Adverse Effect.

     

     

    
      
        
        

      

      
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    (ff) Disclosure.  The
Company confirms that neither it nor any Person acting on its behalf has
provided any Investor or its respective agents or counsel with any information
that the Company believes constitutes material, non-public information
concerning the Company, the Subsidiaries or their respective businesses that (i)
if disclosed, would reasonably be expected to have a material effect on the
price of the Common Stock or (ii) according to applicable law, rule or
regulation, should have been disclosed publicly by the Company prior to the date
hereof but which has not been so disclosed, except insofar as the existence and
terms of the proposed transactions contemplated hereunder may constitute such
information. The Company understands and confirms that the Investors will rely
on the foregoing representations and covenants in effecting transactions in
securities of the Company.  No representation or warranty made by the
Company in this Agreement and no certificate or document furnished to the
Investors pursuant to this Agreement contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements
contained herein or therein, taken as a whole and in the light of the
circumstances under which they were made herein or therein, not
misleading.

     

    3.2. Representations and
Warranties of the Investors

     

    .  Each
Investor hereby, for itself and for no other Investor, represents and warrants
to the Company as follows:

     

    (a) Organization;
Authority.  Such Investor is an entity 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 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 and the other Transaction Documents (to which it
is a party) 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 other Transaction Documents (to which it is a
party)  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.

     

    (b) Investment
Intent.  Such Investor is acquiring the Securities as principal
for its own account for investment purposes only and not with a view to or for
distributing or reselling the Securities or the 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 Securities and 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 Securities or the Shares
for any period of time.  Such Investor is acquiring the Securities
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 Securities or  the Shares.

     

    (c) Investor
Status.  At the time such Investor was offered the Securities,
it was, and at the date hereof it is, and as of the Closing Date will be, 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.

     

     

    
      
        
        

      

      
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    (d) General
Solicitation.  Such Investor is not purchasing the Securities
as a result of any advertisement, article, notice or other communication
regarding the Securities  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 Securities and the merits and risks of investing in the
Securities; (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) 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 or National Securities Corp. 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 is made public.

     

    (g) Independent Investment
Decision.  Such Investor has independently evaluated the merits
of its decision to purchase Securities 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.  Such Investor has not relied on the business or legal
advice of National Securities Corp. or any of its agents, counsel or Affiliates
in making its investment decision hereunder, and confirms that none of such
Persons has made any representations or warranties to such Investor in
connection with the transactions contemplated by the Transaction
Documents.

     

    (h) Financial Risks. The
Investor acknowledges that the Investor is able to bear the financial risks
associated with an investment in the Securities being purchased by the Investor
from the Company and that it has been given full access to such records of the
Company and to the officers of the Company as it has deemed necessary or
appropriate to conduct its due diligence investigation. The Investor is capable
of evaluating the risks and merits of an investment in the Securities being
purchased by the Investor from the Company by virtue of its experience as an
investor and its knowledge, experience, and sophistication in financial and
business matters and the Investor is capable of bearing the entire loss of its
investment in the Securities being purchased by the Investor from the
Company.

     

     

    
      
        
        

      

      
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    (i) Certain Fees. Except
as set forth on Schedule 3.2(i), no
brokerage or finder’s fees or commissions are or will be payable by any Investor
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 and the other Transaction Documents based upon
arrangements made by or on behalf of the Investor.

     

    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
AGREEMENTS OF THE PARTIES

     

    4.1. (a)

     

    The Securities and the Shares may only
be disposed of in compliance with state and federal securities
laws.  In connection with any transfer of the Securities and 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 securities under the Securities Act.

     

    (b)           Certificates
evidencing Securities will contain the following legend, until such time as they
are not required under Section 4.1(d):

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, 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.

     

     

    
      
        
        

      

      
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    (c)           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 Securities 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 Securities or 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 Securities 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 stockholders thereunder.  Except as otherwise provided in
Section 4.1(c), any Securities 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).

     

    (d) Certificates
evidencing the Securities and the Shares shall not contain any legend (including
the legend set forth in Section 4.1(b)): (i) in the event of a sale of such
Securities or Shares, while a registration statement (including the Registration
Statement) covering such Securities or Shares is then effective and a prospectus
meeting the requirements of Section 10 of the Securities Act is available (provided, however, that the
Company reserves the right to issue stop transfer instructions to the transfer
agent (with a copy to the Investors) with respect to the Securities or Shares in
the event that the Registration Statement with respect to the Securities or
Shares is no longer current) or (ii) following a sale or transfer of such
Securities or Shares pursuant to Rule 144 (assuming the transferee is not an
Affiliate of the Company), or (iii) while such Securities or Shares are eligible
for sale under Rule 144(i)(2).  If an Investor shall make a sale or
transfer of Securities or Shares either (x) pursuant to Rule 144 or (y) pursuant
to a registration statement and in each case shall have delivered to the Company
or the Company’s transfer agent the certificate representing Securities or
Shares containing a restrictive legend which are the subject of such sale or
transfer and a representation letter in customary form (the
date of such sale or transfer and delivery being the “Share Delivery Date”) and (1)
the Company shall fail to deliver or cause to be delivered to such Investor a
certificate representing such Shares that is free from all restrictive or other
legends by the third Trading Day following the Share Delivery Date and (2)
following such five Business Day after the Share Delivery Date and prior to the
time such Shares are received free from restrictive legends, the Investor, or
any third party on behalf of such Investor, purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Investor of such securities (a "Buy-In"), then the Company
shall pay in cash to the Investor (for costs incurred either directly by such
Investor or on behalf of a third party) the amount by which the total purchase
price paid for Common Stock as a result of the Buy-In (including brokerage
commissions, if any) exceed the proceeds received by such Investor as a result
of the sale to which such Buy-In relates.  The Investor shall provide
the Company written notice indicating the amounts payable to the Investor in
respect of the Buy-In.  The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.

     

     

    
      
        
        

      

      
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    4.2. Furnishing of
Information

     

    .  As
long as any Investor owns any Securities or 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 after
the date hereof pursuant to the Exchange Act.  As long as any Investor
owns Securities or 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 Securities or Shares under Rule
144.  The Company further covenants that it will take such further
action as any holder of Securities or Shares may reasonably request, all to the
extent required from time to time to enable such Person to sell the Securities
or 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 Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities  to the Investors, or that would be integrated with
the offer or sale of the Securities  for purposes of the rules and
regulations of any Trading Market in a manner that would require stockholder
approval of the sale of the securities to the Investors.

     

    4.4. Subsequent
Registrations

     

    .  Except
as set forth on Schedule 4.4, the
Company may not file any registration statement (other than on Form S-8) with
the Commission with respect to any securities of the Company prior to the time
that all Shares are registered pursuant to one or more effective Registration
Statement(s), and the prospectuses forming a portion of such Registration
Statement(s) is available for the resale of all Shares

     

    4.5. Securities Laws Disclosure;
Publicity

     

    .   By
9:00 a.m. (New York time) on the Trading Day following the Closing Date, the
Company shall issue a press release disclosing the transactions contemplated
hereby and the Closing (including, without limitation, details with respect to
the make good provision and thresholds contained in Section 4.11
herein).  On the fourth Trading Day following the execution of this
Agreement the Company will file a Current Report on Form 8-K disclosing the
material terms of the Transaction Documents (and attach as exhibits thereto the
Transaction Documents), and on the fourth Trading Day following the Closing Date
the Company will file an additional Current Report on Form 8-K to disclose the
Closing.   In addition, the Company will make such other filings
and notices 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.

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    4.6. 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.

     

    4.7. Indemnification of
Investors

     

    .  In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold the Investors and their directors, officers,
shareholders, partners, employees and agents (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 as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document (including
any schedule thereto).  In addition to the indemnity contained herein,
the Company will reimburse each Investor Party for its reasonable legal and
other expenses (including the cost of any investigation, preparation and travel
in connection therewith) incurred in connection therewith, as such expenses are
incurred.  Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 4.7
shall be the same as those set forth in Section 5 of the Registration Rights
Agreement.

     

    4.8. 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.

     

    4.9. Listing of
Shares

     

    .  The
Company agrees, (i) if the Company applies to have the Common Stock traded on
any other Trading Market, it will include in such application the Shares, and
will take such other action as is necessary or desirable to cause the Shares to
be listed on such other Trading Market 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 the Trading Market.

     

    4.10. Use of
Proceeds

     

    .  The
Company will use the net proceeds from the sale of the Securities 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 Common Stock Equivalents.

     

    4.11. Escrow Shares.

     

    (a) At the
Closing, upon the execution of the Securities Escrow Agreement , the Make Good
Pledgors shall deliver to the Securities Escrow Agent a stock certificate or
stock certificates evidencing an aggregate of 13,499,274 shares of Common Stock
(collectively, the “Escrow
Shares”).  All Escrow Shares shall be accompanied by stock
powers executed in blank with signature medallion guaranteed.

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (i) If the
After Tax Net Income reported in the 2010 Annual Report is less than $23,900,000
(the “2010 Guaranteed
ATNI), then the Investors shall be entitled to receive on a “pro rata”
basis some or all of the Escrow Shares determined according to the following
formula:

     

    


    
      	
              E

            	
              Minus

            	
              C

            
	
              ((A
      / B) X D)

            


    

    


    


    For the
purposes of the foregoing formula:

     
 

    A =
Actual ATNI 2010

    B = 2010
Guaranteed ATNI  ($23,900,000)

    C =
Escrow Shares (13,499,274)

    D =
Initial Conversion Price of Series A Preferred Stock ($1.10)

    E = Total
Investment Amount ($14,849,201.50)

    


    For
example if the actual ATNI was $ 20 million the number of Escrow Shares that
would be distributed prorate to the Investors would be 2,658,491 calculated as
follows:

    


    $14,849,201.50                                                       Minus     13,499,274

    (20,000,000/23,900,000)
X 1.10

    


    


    (ii) Within
five days after the determination of the number of Escrow Shares to which the
Investors are entitled calculated in the manner set forth above  the
Placement Agent and the Company shall give joint written instructions to the
Securities Escrow Agent to, and upon receipt of such written instructions, the
Securities Escrow Agent shall, within five Business Days after receipt of such
instructions deliver to the Investors on a “pro rata” basis such number of
Escrow Shares.  If less than all of the Escrow Shares are delivered to
the Investors, the Securities Escrow Agent shall return the undistributed Escrow
Shares to the Make Good Pledgors pursuant to the joint instructions of the
Placement Agent and the Company.  For purposes of this Section “pro
rata” means the percentage that the number of shares of Series A Preferred held
by a Investor bears to the total outstanding shares of Series A Preferred
Stock.  Notwithstanding anything to the contrary set forth herein, in
the event of the conversion of shares of Series A Preferred, the shares of
Series A Preferred so converted shall remain outstanding for the purpose of
receiving distribution of Escrow Shares pursuant to this Section.

     

    (iii) The
determination regarding the number and the distribution, if any, of the Escrow
Shares to be distributed to the Investors pursuant to this Section shall be made
within five (5) Business Days after the date the Company is required to file its
2010 Annual Report with the Commission (after giving effect to any extension
pursuant to Rule 12b-25 of the Exchange Act).  In the event that the
Company does not file its 2010 Annual Report with the Commission within thirty
(30) days after the date such filing was required, after giving effect to any
extension pursuant to Rule 12b-25 of the Exchange Act, all of the Escrow Shares
shall be delivered to the Investors on a pro rata basis within five (5) Trading
Days following the expiration of such thirty (30) day period.

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (iv) Notwithstanding
anything to the contrary set forth herein, only those Investors who own shares
of Series A Preferred issued hereunder and remain shareholders of the Company at
the time that any Escrow Shares become deliverable hereunder shall be entitled
to their pro rata portion of the Escrow Shares calculated based on their
ownership interest at the time when the applicable Escrow Shares become
deliverable hereunder.

     

    (v)  Notwithstanding
anything to the contrary contained in this Section 4.11 or in the Securities
Escrow Agreement, the parties agree that for purposes of determining whether or
not the 2010 Guaranteed ATNI has been achieved,

     

    (A) the
release of any or all of the Escrow Shares shall not be counted as an expense,
charge, or other deduction from revenues in calculating net income even though
GAAP may require contrary treatment,

     

    (B) any
registration delay payments arising under the Registration Rights Agreement that
are accrued or paid by the Company to any Series A Purchaser will be excluded
from the calculation of After-Tax Net Income, and

     

    (C) so long
as the Escrow Shares remain in escrow, such shares shall not be counted in
calculating a quorum for stockholder voting purposes nor shall such shares be
voted at any meeting of stockholders or included in a shareholders written
consent.

    


     

    (b) The
Company will provide the Placement Agent with (i) the Company’s audited
financial statements for 2010, prepared in accordance with GAAP, on or before
September 30, 2010 (or such later date that the Company files its 2010 Annual
Report so as to allow the Placement Agent the opportunity to evaluate whether
the 2010 Guaranteed ATNI has been attained.

     

    (c) If any
term or provision of this Section 4.11 contradicts or conflicts with any term or
provision of the Securities Escrow Agreement, the terms of the Securities Escrow
Agreement shall control.

     

    


     

    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 Securities at the Closing is subject to
the satisfaction or waiver by such Investor, at or before the Closing, of each
of the following conditions:

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (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 statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any 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 or any Trading Market (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, and the Common Stock shall have been at
all times since such date listed for trading on a Trading Market;

     

    (f) Company
Agreements.  The Company shall have delivered:

     

    (i) The
Closing Escrow Agreement, duly executed by the Company and the Closing Escrow
Agent;

     

    (ii) The
Securities Escrow Agreement, duly executed by the Company, the Make Good
Pledgors and the Securities Escrow Agent; and

     

    (iii) The
Registration Rights Agreement, duly executed by the Company.

     

    (g)           Company
Deliverables.  The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a);

     

    (h)           Deposit of Escrow
Shares.  The Company and the Make Good Pledgors shall have
deposited 13,637,000 shares of Common Stock into escrow in accordance with the
Securities Escrow Agreement along with bank signature stamped stock powers
executed in blank (or such other signed instrument of transfer acceptable to the
Company’s transfer agent); and

     

    (i)           Termination.  This
Agreement shall not have been terminated as to such Investor in accordance with
Section 6.5.

     

    


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    5.2. Conditions Precedent to the
Obligations of the Company to sell Securities

     

    .  The
obligation of the Company to sell Securities 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 statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents;

     

    (d) Investor
Deliverables.  Each Investor shall have executed and delivered
each of the Transaction Documents to which it is a party; and

     

    (e) Termination.  This
Agreement shall not have been terminated as to such Investor in accordance with
Section 6.5.

     

    ARTICLE
6.

     

    MISCELLANEOUS

     

    6.1. Fees and
Expenses

     

    .  Each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of the
Transaction Documents.  The Company shall pay all stamp and other
taxes and duties levied in connection with the issuance of the
Securities.

     

    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:

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              If
      to the Company:

            	
              Longwei
      Petroleum Investment Holding
Limited

            


    

    No. 30,
Guanghua Street, Xiaojingyu Xiang,

    Wanbailin
District,

    Taiyan
City, Shanxi Province 

    People’s
Republic of China 030024

    
      	
               
      

            	
              Attn:
      Chief Executive Officer

            


    

    
      	
               
      

            	
              Facsimile:617-977-8618

            


    

    


    
      	
               
      

            	
              With
      a copy to:

            	
              Sichenzia
      Ross Friedman Ference LLP

            


    

    61
Broadway, 322 Floor

    New York,
NY 10006

    
      	
               
      

            	
              Facsimile:  212
      930-9725

            


    

    
      	
               
      

            	
              Attn.:  Darrin
      M Ocasio, Esq.

            


    

    


    
      	
               
      

            	
              If
      to an Investor:

            	
              To
      the address set forth under such Investor’s name on the signature pages
      hereof;

            


    

     

    
      	
               
      

            	
              With
      a copy to:

            	
              National
      Securities Corporation

            

330
Madison Avenue, 18th
Floor

    New York,
NY 10017

    
      	
               
      

            	
              Facsimile:  (212)
      380 2828

            


    

    
      	
               
      

            	
              Attn.:
      Jonathan C. Rich

            


    

    


     

    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 holding a majority of the
then outstanding Series A Preferred Stock issued this Agreement.  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 Securities and/or Shares.  Without the written consent or the
affirmative vote of each Investor affected thereby, an amendment or waiver under
this Section 6.4 may not waive or amend any Transaction Document the effect of
which would be to permit the Company to (1) name any Investor as an underwriter
in a Registration Statement without such Investor’s specific written consent
thereto, or (2) not include any Registrable Securities (as defined in the
Registration Rights Agreement) of an Investor in a Registration Statement due to
their refusal to be named as an underwriter therein, in each case, other than in
accordance with Article 2 of the Registration Rights Agreement.

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    6.5. Termination

     

    .  This
Agreement may be terminated prior to Closing:

     

    (a) by
written agreement of the Investors and the Company, a copy of which shall be
provided to the Closing Escrow Agent; and

     

    (b)    by
the Company or an Investor (as to itself but no other Investor) upon written
notice to the other and to the Closing Escrow Agent, if the Closing shall not
have taken place by 6:30 p.m. Eastern time on the Outside Date; provided, that the
right to terminate this Agreement under this Section 6.5(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 non-terminating
Investors. Upon a termination in accordance with this Section 6.5, 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
Securities, provided such transferee agrees in writing to be bound, with respect
to the transferred Securities, 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, except as otherwise set forth
in Section 4.7 (as to each Investor Party) and that National Securities Corp. is
a third party beneficiary of the Company's representations and warranties
contained herein.

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    6.9. Governing
Law

     

    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.  Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Agreement or the transactions contemplated
hereby.  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.

     

    6.10. Survival

     

    .  The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Securities.

     

    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.

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    6.14. Replacement of Securities or
Shares

     

    .  If
any certificate or instrument evidencing any Securities or 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 securities.  If a replacement certificate or instrument
evidencing any Securities or 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. Payment Set
Aside

     

    .  To
the extent that the Company makes a payment or payments to any Investor pursuant
to any Transaction Document or an Investor enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.

     

    6.17. Independent Nature of
Investors’ Obligations and Rights

     

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

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    6.18. 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.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

     

    SIGNATURE
PAGES FOLLOW]

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    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.

     

     

     

    LONGWEI
PETROLEUM INVESTMENT HOLDING LIMITED.

     

    
      	
               
      

            	
              By:

            


    

     

    
      	
               
      

            	
              Name:

            


    

     

    
      	
               
      

            	
              Title:

            


    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

     

    SIGNATURE
PAGES FOR INVESTORS FOLLOW]

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    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.

     

    NAME
OF INVESTOR

     

    _________________________________________

     

    
      	
               
      

            	
              By:

            	
               

            	 


    

     

    
      	
               
      

            	
              Name:

            


    

     

    
      	
               
      

            	
              Title:

            


    

     

    Original
Purchase
Price:  $                                                                           

     

    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:

            	 


    

     

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    Annex A

     

    SCHEDULE
OF BUYERS

     

    


    
      	
              (1)

            	
              (2)

            
	
              
                 

                Buyer

              

            	
              
                 

                 

                 

                 

                Address
      and

                Facsimile
      Number