ex10_3.htm


    
       

      
        REGISTRATION RIGHTS
AGREEMENT

         

        THIS REGISTRATION RIGHTS
AGREEMENT (this “Agreement”), dated as
of June 30, 2008, by and among
Environment Ecology Holding Co. of China a Florida corporation, with
headquarters located at 391 Hun Yu Lane, Dong Xin Street, Xi’an, Shaanxi
Province, P.R. China (the “Company”), and Trafalgar Capital Specialized
Investment Fund, Luxembourg (the “Investor”).

         

        WHEREAS:

         

        A.           In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to the
Investor secured convertible redeemable debentures (the “Convertible
Debentures”) which shall be convertible into that number of shares of the
Company’s common stock, par value US$0.001 per share (the “Common Stock”),
pursuant to the terms of the Securities Purchase Agreement for an aggregate
purchase price of up to Six Million U.S.
Dollars ($6,000,000).  Capitalized terms not defined herein shall
have the meaning ascribed to them in the Securities Purchase
Agreement.

         

        B.           To
induce the Investor to execute and deliver the Securities Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations there under,
or any similar successor statute (collectively, the “1933 Act”), and
applicable state securities laws.

         

        NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor hereby agree as
follows:

         

        1. DEFINITIONS.

         

        As used
in this Agreement, the following terms shall have the following
meanings:

         

        (a) “Person” means a
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

         

        (b) “Register,” “registered,” and
“registration”
refer to a registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the 1933 Act and
pursuant to Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a continuous or delayed basis (“Rule 415”), and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the United States Securities and Exchange SEC (the “SEC”).

         

        (c) “Registrable
Securities” means the shares of Common Stock issuable to Investor upon
conversion of the Convertible Debentures pursuant to the Securities Purchase
Agreement.  As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when (a) they have been
effectively registered under the 1933 Act and disposed of in accordance with the
registration statement covering them, (b) they have been sold, or may be sold
without volume restrictions pursuant to Rule 144(b)(1) promulgated by the SEC
under the 1933 Act, or (c) they have been otherwise transferred and new
certificates for them not bearing a restrictive legend have been issued by the
Company and the Company shall not have “stop transfer” instructions against
them.

         

        (d) “Registration
Statement” means a registration statement under the 1933 Act which covers
the Registrable Securities.

         

        (e) “Rule 144” means Rule
144 promulgated under the 1933 Act or any similar rule or regulation of the SEC
that may at any time permit the Investor to sell securities of the Company to
the public without registration.

         

        2. REGISTRATION.

         

        (a) Subject
to the terms and conditions of this Agreement, the Company shall prepare and
file, no later than thirty (30) days from the date hereof (the “Scheduled Filing
Deadline”),  with the SEC a registration statement on Form S-1
(or, if the Company is then eligible, on Form S-3) under the 1933 Act (the
“Initial Registration
Statement”) for the registration for the resale by the Investor at least
five (5) times the number of shares which are anticipated to be issued upon
conversion of the Convertible Debentures issued pursuant to the Securities
Purchase Agreement (subject to Rule 415 restrictions).  The Company
shall cause the Registration Statement to remain effective until all of the
Registrable Securities have been sold by the Investor.  Prior to the
filing of the Registration Statement with the SEC, the Company shall furnish a
copy (which may be in electronic form) of the Initial Registration Statement to
the Investor and The Law Office of James G. Dodrill II, P.A. for their review
and comment.  The Investor and James G. Dodrill II, P.A. shall furnish
comments on the Initial Registration Statement to the Company by the later of:
(a) seventy-two (72) hours of the receipt thereof from the Company and (b) the
close of the second business day following receipt thereof from the
Company.

         

        (b) Effectiveness of the Initial
Registration Statement.  The Company shall use its best its
best efforts (i) to have the Initial Registration Statement declared effective
by the SEC no later than one hundred twenty (120) days after the First Closing
Date (the “Scheduled
Effective Deadline”) and (ii) to insure that the Initial Registration
Statement and any subsequent Registration Statement remains in effect until all
of the Registrable Securities have been sold, subject to the terms and
conditions of this Agreement.

         

        (c) Failure to File or Obtain
Effectiveness of the Registration Statement.  In the event the
Registration Statement is not filed with the SEC by the Scheduled Filing
Deadline or is not declared effective by the SEC on or before the Scheduled
Effective Date, or if after the Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to the Registration
Statement (whether because of a failure to keep the Registration Statement
effective, failure to disclose such information as is necessary for sales to be
made pursuant to the Registration Statement, failure to register sufficient
shares of Common Stock or otherwise then as partial relief for the damages to
any holder of Registrable Securities by reason of any such delay in or reduction
of its ability to sell the underlying shares of Common Stock (which remedy shall
not be exclusive of any other remedies at law or in equity), the Company will
pay as liquidated damages (the “Liquidated Damages”)
to the holder, at the holder’s option, either a cash amount or shares of the
Company’s Common Stock within three (3) business days, after demand therefore,
equal to two percent (2%) of the liquidated value of the Convertible Debentures
outstanding as Liquidated Damages for each thirty (30) day period (or any part
thereof) after the Scheduled Filing Deadline or the Scheduled Effective Date as
the case may be.  Notwithstanding anything herein to the contrary, to
the extent that the registration of any or all of the Registrable Securities by
the Company on a registration statement is prohibited (the “Non-Registered
Shares”) as a result of rules, regulations, positions or releases issued
or actions taken by the SEC pursuant to its authority with respect to Rule 415
under the 1933 Act and the Company has registered at such time the maximum
number of Registrable Securities permissible upon consultation with the SEC,
then the liquidated damages described herein shall not be applicable to such
Non-Registered Shares.  The Liquidated Damages payable hereunder shall
not be required provided that: (a) the Registration Statement is filed by the
Scheduled Filing Deadline, (b) the Company is current in its cash payments to
the Investor and (c) when shares of Common Stock are being issued to Investor in
lieu of cash (as agreed by the Investor), the Company is able to and does
deliver to Investor shares of Common Stock that are freely transferable by the
Investor.

         

        (d) Liquidated
Damages.  The Company and the Investor hereto acknowledge and
agree that the sums payable under subsection 2(c) above shall constitute
liquidated damages and not penalties and are in addition to all other rights of
the Investor, including the right to call a default.  The parties
further acknowledge that (i) the amount of loss or damages likely to be incurred
is incapable or is difficult to precisely estimate, (ii) the amounts specified
in such subsections bear a reasonable relationship to, and are not plainly or
grossly disproportionate to, the probable loss likely to be incurred in
connection with any failure by the Company to obtain or maintain the
effectiveness of a Registration Statement, (iii) one of the reasons for the
Company and the Investor reaching an agreement as to such amounts was the
uncertainty and cost of litigation regarding the question of actual damages, and
(iv) the Company and the Investor are sophisticated business parties and have
been represented by sophisticated and able legal counsel and negotiated this
Agreement at arm’s length.

         

        (e) Choice of law firm.
The Company shall use a law firm recommended by the Buyers.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        3. RELATED
OBLIGATIONS.

         

        (a) The
Company shall keep the Registration Statement effective pursuant to
Rule 415 at all times until all Registrable Securities covered by such
Registration Statement have been sold  (the “Registration
Period”), which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.

         

        (b) The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement.  In the case of amendments and
supplements to a Registration Statement which are required to be filed pursuant
to this Agreement (including pursuant to this Section 3(b)) by reason of the
Company’s filing a report on Form 10-K, Form 10-Q, or Form 8-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the
Company shall incorporate such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement the Registration
Statement.

         

        (c) The
Company shall furnish to the Investor, (i) such number of copies of the
Registration Statement as declared effective by the SEC and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, all exhibits and each preliminary prospectus
as Investor may reasonably request, (ii) such number of copies of the final
prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as such Investor may
reasonably request in writing) as Investor may reasonably request and (iii) such
other documents as such Investor may reasonably request in writing from time to
time in order to facilitate the disposition of the Registrable Securities owned
by such Investor.  Unless otherwise specified by the Investor, the
Company may furnish copies of all such documents to the Investor in electronic
form.  The Investor acknowledges that any obligation under section
5(b)(2) of the 1933 Act to have a prospectus that satisfies the requirements of
section 10(a) of the 1933 Act precede or accompany the carrying or delivery of a
security in a registered offering is satisfied if the conditions in Rule 172(c)
under the 1933 Act have been met.

         

        (d) The
Company shall use its best efforts to (i) register and qualify the Registrable
Securities covered by a Registration Statement under such other securities or
“blue sky” laws of such jurisdictions in the United States as any Investor
reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its certificate of incorporation or by-laws, (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction.  The Company shall promptly notify the Investor of the
receipt by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

         

        (e) As
promptly as practicable after becoming aware of such event or development, the
Company shall notify the Investor in writing of the happening of any event as a
result of which the prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to the Investor.  The
Company shall also promptly notify the Investor in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to the Investor
by facsimile on the same day of such effectiveness), (ii) of any request by the
SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.

         

        (f) The
Company shall use its best efforts to prevent the issuance of any stop order or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction within the United States of America and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.

         

        (g) Upon
written request, the Company shall make available for inspection by (i) any
Investor and (ii) one (1) firm of accountants or other agents retained by
the Investor (collectively, the “Inspectors”) all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall
be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request in writing; provided, however, that each Inspector shall
agree, and the Investor hereby agrees, to hold in strict confidence and shall
not make any disclosure (except to an Investor) or use  any Record or
other information which the Company determines in good faith to be confidential,
and of which determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required under the 1933
Act, (b) the release of such Records is ordered pursuant to a final,
non-appealable subpoena or order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement of which the Inspector and the Investor has
knowledge.  The Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential.

         

        (h) The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement.  The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

         

        (i) The
Company shall use its best efforts either to cause all the Registrable
Securities covered by a Registration Statement (i) to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii) the
inclusion for quotation on the OTC Bulletin Board for such Registrable
Securities.  The Company shall pay all fees and expenses in connection
with satisfying its obligation under this Section 3(j).

         

        (j) The
Company shall cooperate with the Investor, to the extent applicable, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Investor may reasonably
request in writing and registered in such names as the Investor may
request.

         

        (k) The
Company shall use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.

         

        (l) The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the 1933 Act) covering a twelve (12) month period beginning not
later than the first day of the Company’s fiscal quarter next following the
effective date of the Registration Statement.

         

        (m) The
Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC in connection with any registration
hereunder.

         

        (n) Within
two (2) business days after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent for
such Registrable Securities (with copies to the Investor) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.

         

        (o) The
Company shall take all other reasonable actions necessary to expedite and
facilitate the lawful disposition by the Investor of Registrable Securities
pursuant to a Registration Statement.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        4. OBLIGATIONS OF THE
INVESTOR.

         

        The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required.  Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended certificates for shares of Common Stock to a transferee of an
Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor’s receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(f) or the first sentence of 3(e) and for which the Investor has not
yet settled.

         

        5. EXPENSES OF
REGISTRATION.

         

        All
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers, legal and accounting fees shall be
paid by the Company.

         

        6. INDEMNIFICATION.

         

        With
respect to Registrable Securities which are included in a Registration Statement
under this Agreement:

         

        (a) To the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend the Investor, Investor’s directors, officers, partners,
employees, agents, representatives of, and each Person, if any, who controls the
Investor within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation there under relating to the
offer or sale of the Registrable Securities pursuant to a Registration Statement
(the matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”).  The
Company shall reimburse the Investor and each such controlling person promptly
as such expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim.  Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained in
this Section 6(a): (x) shall not apply to a Claim by an Indemnified Person
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto; (y)
shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company, if such prospectus was timely made available by the Company
pursuant to Section 3(c); and (z) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investor pursuant to Section 9
hereof.

         

        (b) In
connection with a Registration Statement, the Investor agrees to indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers,
employees, representatives, or agents and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or is based upon any Violation, in each case to
the extent, and only to the extent, that such Violation occurs in reliance upon
and in conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement; and,
subject to Section 6(d), such Investor will reimburse any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.  Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any prospectus shall not inure to the benefit of
any Indemnified Party if the untrue statement or omission of material fact
contained in the prospectus was corrected and such new prospectus was delivered
to the Investor prior to the Investor’s use of the prospectus to which the Claim
relates.

         

        (c) Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of not
more than one (1) counsel for such Indemnified Person or Indemnified Party to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing  interests between
such Indemnified Person or Indemnified Party and any other party represented by
such counsel in such proceeding.  The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
claim.  The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto.  No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its prior written consent; provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent.  No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation.  Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

         

        (d) The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

         

        (e) The
indemnity agreements contained herein shall be in addition to (i) any cause
of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

         

        7. CONTRIBUTION.

         

        To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that:  (i) no
seller of Registrable Securities guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        8. REPORTS UNDER THE 1934
ACT.

         

        With a
view to making available to the Investor the benefits of Rule 144 the Company
agrees to:

         

        (a) make and
keep public information available, as those terms are understood and defined in
Rule 144;

         

        (b) file with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company’s obligations under Section 4(c) of the Securities Purchase
Agreement) and the filing of such reports and other documents as are required by
the applicable provisions of Rule 144; and

         

        (c) furnish
to the Investor so long as the Investor owns Registrable Securities, promptly
upon written request, (i) a written statement by the Company that it has
complied with the public information requirements of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Investor to
sell such securities pursuant to Rule 144(b)(1) without
registration.

         

        9. AMENDMENT OF REGISTRATION
RIGHTS.

         

        Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
Investor.  Any amendment or waiver effected in accordance with this
Section 9 shall be binding upon the Investor and the Company.  No
such amendment shall be effective to the extent that it applies to fewer than
all of the holders of the Registrable Securities.  No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this
Agreement.

         

        10. MISCELLANEOUS.

         

        (a) A Person
is deemed to be a holder of Registrable Securities whenever such Person owns or
is deemed to own of record such Registrable Securities.  If the
Company receives conflicting instructions, notices or elections from two (2) or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.

         

        (b) Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered:  (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one (1) business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same.  The addresses and facsimile numbers for such
communications shall be:

         

        
          	
                  If
      to the Company, to:

                	
                  Environment
      Ecology Holding Co. of China

                
	 
      	
                  391
      Hun Yu Lane, Dong Xin Street

                
	 
      	
                  Xi’an
      Shaanxi Province, P.R. China

                
	 
      	
                  Attention:  Mr.
      Liu Sheng Li, President

                
	 
      	
                  Telephone:

                
	 
      	
                  Facsimile:

                
	 
      	 
      
	
                  With
      a copy to:

                	
                  JPF
      Securities Law, LLC

                
	 
      	
                  17111
      Kenton Drive, Suite 100B

                
	 
      	
                  Cornelius,
      NC 28031

                
	 
      	
                  Attention:  Jared
      P. Febbroriello, Esq. LLM

                
	 
      	
                  Telephone:
      (704) 897-8334

                
	 
      	
                  Facsimile:  (888)
      606-5705

                
	 
      	 
      
	
                  If
      to Investor, to:

                	
                  Trafalgar
      Capital Specialized Investment Fund

                
	 
      	
                  8-10
      Rue Mathias Hardt

                
	 
      	
                  BP
      3023

                
	 
      	
                  L-1030
      Luxembourg

                
	 
      	
                  Attention:  Andrew
      Garai, Chairman of the Board of

                
	 
      	
                  Trafalgar
      Capital Sarl, General Partner

                
	 
      	
                  Facsimile:   011-44-207-405-0161
      and

                                   001-786-323-1651

                
	 
      	 
      
	
                  With
      a copy to:

                	
                  James
      G. Dodrill II, P.A.

                
	 
      	
                  5800
      Hamilton Way

                
	 
      	
                  Boca
      Raton, FL  33496

                
	 
      	
                  Attention:      James
      Dodrill Esq.

                
	 
      	
                  Telephone:   
      (561) 862-0529

                
	 
      	
                  Facsimile:    
       (561) 892-7787

                
	 
      	 
      
	 
      	 
      


        

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        or to
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such
change.  Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a courier or overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

         

        (c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

         

        (d) The laws
of the State of Florida shall govern all issues concerning the relative rights
of the Company and the Investor as its stockholders.  All other
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of Florida
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Florida  Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the State Courts of the State of Florida sitting in Broward
County, Florida and federal courts for the Southern District of Florida for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof.  Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law.  If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.

         

        (e) This
Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
Agreement and related documents including the Convertible Debenture and the
Escrow Agreement dated the date hereof by and among the Company, the Investor,
and The Law Office of James G. Dodrill II, P.A. (the “Escrow Agreement”)
and the Security Agreement dated the date hereof (the “Security Agreement”)
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof.  There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein.  This Agreement, the Irrevocable Transfer Agent
Instructions, the Securities Purchase Agreement and related documents including
the Convertible Debenture, the Escrow Agreement and the Security Agreement
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

         

        (f) This
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

         

        (g) The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

         

        (h) This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

         

        (i) Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.

         

        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.

         

        (j) This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

        


        IN WITNESS WHEREOF, the
parties have caused this Registration Rights Agreement to be duly executed as of
day and year first above written.

         

        


        
          	 
      	
                  COMPANY:

                
	 
      	
                  ENVIRONMENT
      ECOLOGY HOLDING CO. OF CHINA

                
	 
      	 
      
	 
      	
                  By:                                                                

                
	 
      	
                  Name:     Liu
      Sheng Li

                
	 
      	
                  Title:        President

                
	 
      	 
      


        

        


        
          	 
      	
                  BUYER:

                
	 
      	
                  TRAFALGAR
      CAPITAL SPECIALIZED

                
	 
      	
                  INVESTMENT
      FUND, LUXEMBOURG

                
	 
      	
                  By:           Trafalgar
      Capital Sarl

                
	 
      	
                  Its:           General
      Partner

                
	 
      	 
      
	 
      	
                  By:                                                                

                
	 
      	
                  Name: 
      Andrew Garai

                
	 
      	
                  Title:    Chairman
      of the Board

                


        

        


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        


        EXHIBIT
A

         

        FORM
OF NOTICE OF EFFECTIVENESS

         

         

        OF REGISTRATION
STATEMENT

         

        


        Attention:

        


        
          	
                   
      

                	
                  Re:

                	
                  Environment
      Ecology Holding Co. of China

                


        

        


        Ladies
and Gentlemen:

        


        We are
counsel to Environment Ecology Holding Co. of China, a ________________
corporation (the “Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities Purchase
Agreement”) entered into by and among the Company and Trafalgar Capital
Specialized Investment Fund, Luxembourg (the “Investor”) pursuant
to which the Company issued to the Investor shares of its Common Stock, par
value US$_______ per share (the “Common
Stock”).  Pursuant to the Purchase Agreement, the Company also
has entered into a Registration Rights Agreement with the Investor (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the “1933
Act”).  In connection with the Company’s obligations under the
Registration Rights Agreement, on ____________ ____, the Company filed a
Registration Statement on Form ________ (File No. 333-_____________) (the
“Registration
Statement”) with the Securities and Exchange SEC (the “SEC”) relating to the
Registrable Securities which names each of the Investor as a selling stockholder
there under.

         

        In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS]
on [ENTER DATE OF
EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a
member of the SEC’s staff, that any stop order suspending its effectiveness has
been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and the Registrable Securities are available for resale
under the 1933 Act pursuant to the Registration Statement.

         

        Very
truly yours,

        


        [INSERT
NAME OF COMPANY COUNSEL]

        


        By:                                                                 

        


        cc:           
Trafalgar Capital Specialized Investment Fund, Luxembourg