EXHIBIT
10.1

      


      [FORM
OF SECURITIES PURCHASE AGREEMENT]

       

      SECURITIES
PURCHASE AGREEMENT

       

      This
SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of
January 19, 2011, is by and among China Shen Zhou Mining & Resources, Inc.,
a Nevada corporation with headquarters located at No. 166 Fushi Road, Zeyang
Tower, Shijingshan District, Beijing, China 100043,  86-010-8890-6927
(the “Company”),
and each of the investors listed on the Schedule of Buyers attached hereto
(individually, a “Buyer”
and collectively, the “Buyers”).

       

      RECITALS

       

      A.           The
Company and each Buyer desire to enter into this transaction to purchase the
Common Shares (as defined below) and related Warrants (as defined below) set
forth herein pursuant to a currently effective shelf registration statement on
Form S-3, which has at least $25,000,000 of unallocated securities, including
common stock, $0.001 par value per share, of the Company (the “Common Stock”) and warrants
registered thereunder (Registration Number 333-171243) (the “Registration Statement”),
which Registration Statement has been declared effective in accordance with the
Securities Act of 1933, as amended (the “1933 Act”), by the United
States Securities and Exchange Commission (the “SEC”).

       

      B.           Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms stated
in this Agreement, (i) the aggregate number of shares of Common Stock set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers (which
aggregate amount for all Buyers shall be 2,836,883 shares of Common Stock and
shall collectively be referred to herein as the “Common Shares”), and (ii) a
warrant to initially acquire up to the aggregate number of shares of Common
Stock set forth opposite such Buyer’s name in column (4) on the Schedule of
Buyers, in the form attached hereto as Exhibit
A (the “Warrants”) (as exercised,
collectively, the “Warrant
Shares”).

       

      C.           The
Common Shares, the Warrants and the Warrant Shares are collectively referred to
herein as the “Securities.”

       

      AGREEMENT

       

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

       

      
        	
                1.

              	
                PURCHASE
      AND SALE OF COMMON SHARES AND
WARRANTS.

              


      

       

      
        (a)         
Common Shares and
Warrants. The
Company shall issue and sell to each Buyer, and each Buyer severally, but not
jointly, shall purchase from the Company on the Closing Date (as defined below),
the aggregate number of Common Shares, as is set forth opposite such Buyer’s
name in column (3) on the Schedule of Buyers, along with a Warrant to
initially acquire up to the aggregate number of Warrant Shares as is set forth
opposite such Buyer’s name in column (4) on the Schedule of Buyers.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      
        (b)        
 Closing. The
closing (the “Closing”)
of the purchase of the Common Shares and the Warrants by the Buyers shall occur
at the offices of Greenberg Traurig, LLP, MetLife Building, 200 Park Avenue, New
York, NY 10166. The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York time, on the third (3rd)
Trading Day (as defined in the Warrants) after the date hereof (or such earlier
date as is mutually agreed to by the Company and each Buyer). As used herein
“Business Day” means any
day other than a Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by law to remain
closed.

      

       

      (c)           Purchase
Price. The
aggregate purchase price for the Common Shares and the Warrants to be purchased
by each Buyer (the “Purchase
Price”) shall be the amount set forth opposite such Buyer’s name in
column (5) on the Schedule of Buyers.

       

      (d)           Payment of Purchase Price;
Deliveries. On the
Closing Date, (i) each Buyer shall pay its respective Purchase Price to the
Company for the Common Shares and the Warrants to be issued and sold to such
Buyer at the Closing, by wire transfer of immediately available funds in
accordance with the Company’s written wire instructions, (less, in the case of
a, the amounts withheld pursuant to Section 4(g)) and (ii) the Company
shall (A) cause Standard Registrar & Transfer, Inc. (together with any
subsequent transfer agent, the “Transfer Agent”) through the
Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program, to credit such aggregate number of Common Shares
that such Buyer is purchasing as is set forth opposite such Buyer’s name in
column (3) of the Schedule of Buyers to such Buyer’s or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian system, (B) deliver
to each Buyer a Warrant to initially acquire up to the aggregate number of
Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the
Schedule of Buyers, duly executed on behalf of the Company and registered in the
name of such Buyer or its designee and (C) deliver to each such Buyer the other
documents, instruments and certificates set forth in Section 6 duly executed on
behalf of the Company.

       

      
        	
                2.

              	
                BUYER’S
      REPRESENTATIONS AND WARRANTIES.

              


      

       

      Each
Buyer, severally and not jointly, represents and warrants to the Company with
respect to only itself that:

       

      (a)          Organization;
Authority. Such
Buyer is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with the requisite power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents (as defined below) to which it is a party and otherwise to
carry out its obligations hereunder and thereunder.

       

      (b)          Validity;
Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of such Buyer and constitutes the legal, valid
and binding obligations of such Buyer enforceable against such Buyer in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.


      
        
           


        

        
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      (c)          No
Conflicts.  The
execution, delivery and performance by such Buyer of this Agreement and the
consummation by such Buyer of the transactions contemplated hereby will not (i)
result in a violation of the organizational documents of such Buyer, (ii)
conflict with, or constitute a default (or an event which 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 of, any agreement,
indenture or instrument to which such Buyer is a party or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Buyer, except, in the case
of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of such Buyer to
perform its obligations hereunder.

       

      (d)          Certain Trading
Activities.  Such Buyer has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such Buyer,
engaged in any transactions in the securities of the Company (including, without
limitation, any Short Sales (as defined below) involving the Company’s
securities) during the period commencing as of the time that such Buyer was
first contacted by the Placement Agent (as defined below) regarding the specific
investment in the Company contemplated by this Agreement and ending immediately
prior to the execution of this Agreement by such Buyer. “Short Sales” means all “short
sales” as defined in Rule 200 promulgated under Regulation SHO under the
Securities Exchange Act of 1934, as amended (the “1934 Act”) (but shall not be
deemed to include the location and/or reservation of borrowable shares of Common
Stock).

       

      
        	
                3.

              	
                REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

              


      

       

      The
Company represents and warrants to each of the Buyers that:

       

      (a)          Organization and
Qualification. Each of
the Company and each of its Subsidiaries are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in which they
are formed, and have the requisite power and authorization to own their
properties and to carry on their business as now being conducted and as
presently proposed to be conducted. Each of the Company and each of its
Subsidiaries is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means
any material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition (financial or
otherwise) or prospects of the Company or any Subsidiary, either individually or
taken as a whole, (ii) the transactions contemplated hereby or in any of the
other Transaction Documents or (iii) the authority or ability of the Company to
perform any of its obligations under any of the Transaction Documents. Other
than the Persons (as defined below) set forth in the SEC Documents (as defined
below) the Company has no Subsidiaries. “Subsidiaries” means any Person
in which the Company, directly or indirectly, (I) owns any of the outstanding
capital stock or holds any equity or similar interest of such Person or (II)
controls or operates all or any part of the business, operations or
administration of such Person, and each of the foregoing, is individually
referred to herein as a “Subsidiary.”


      
        
           


        

        
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      (b)          Authorization; Enforcement;
Validity. The
Company has the requisite power and authority to enter into and perform its
obligations under this Agreement and the other Transaction Documents and to
issue the Securities in accordance with the terms hereof and
thereof.  The execution and delivery of this Agreement and the other
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Common Shares, the issuance of the Warrants and the reservation
for issuance and issuance of the Warrant Shares issuable upon exercise of the
Warrants) have been duly authorized by the Company’s board of directors and
(other than the filing with the SEC of the prospectus supplement required by the
Registration Statement pursuant to Rule 424(b) under the 1933 Act (the “Prospectus Supplement”)
supplementing the base prospectus forming part of the Registration Statement
(the “Prospectus”) and
any other filings as may be required by any state securities agencies) no
further filing, consent or authorization is required by the Company, its board
of directors or its stockholders or other governing body. This Agreement has
been, and the other Transaction Documents will be prior to the Closing, duly
executed and delivered by the Company, and each constitutes the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies and except as rights to indemnification and to contribution may be
limited by federal or state securities law. “Transaction Documents” means,
collectively, this Agreement, the Warrants, the Irrevocable Transfer Agent
Instructions (as defined below) and each of the other agreements and instruments
entered into or delivered by any of the parties hereto in connection with the
transactions contemplated hereby and thereby, as may be amended from time to
time.


      
        
           


        

        
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      (c)          Issuance of Securities;
Registration Statement. The
issuance of the Common Shares and the Warrants are duly authorized and, upon
issuance in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and non-assessable and free from all preemptive or
similar rights, taxes, liens, charges and other encumbrances with respect to the
issue thereof. As of the Closing, the Company shall have reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable
upon exercise of the Warrants (without taking into account any limitations on
the exercise of the Warrants set forth therein). The issuance of the Warrant
Shares is duly authorized, and upon exercise in accordance with the Warrants,
the Warrant Shares, when issued, will be validly issued, fully paid and
non-assessable and free from all preemptive or similar rights, taxes, liens,
charges and other encumbrances with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. The
issuance by the Company of the Securities has been registered under the 1933
Act, the Securities are being issued pursuant to the Registration Statement and
all of the Securities are freely transferable and freely tradable by each of the
Buyers without restriction. The Registration Statement is effective and
available for the issuance of the Securities thereunder and the Company has not
received any notice that the SEC has issued or intends to issue a stop-order
with respect to the Registration Statement or that the SEC otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened in writing to do so.
The “Plan of Distribution” section under the Registration Statement permits the
issuance and sale of the Securities hereunder and as contemplated by the other
Transaction Documents. Upon receipt of the Securities, each of the Buyers will
have good and marketable title to the Securities. The Registration Statement and
any prospectus included therein, including the Prospectus and the Prospectus
Supplement, complied in all material respects with the requirements of the 1933
Act and the 1934 Act and the rules and regulations of the SEC promulgated
thereunder and all other applicable laws and regulations. At the time the
Registration Statement and any amendments thereto became effective, at the date
of this Agreement and at each deemed effective date thereof pursuant to Rule
430B(f)(2) of the 1933 Act, the Registration Statement and any amendments
thereto complied and will comply in all material respects with the requirements
of the 1933 Act and did not and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The Prospectus and
any amendments or supplements thereto (including, without limitation the
Prospectus Supplement), at the time the Prospectus or any amendment or
supplement thereto was issued and at the Closing Date, complied, and will
comply, in all material respects with the requirements of the 1933 Act and did
not, and will not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading.  The Company meets all of the requirements for the use of
Form S-3 under the 1933 Act for the offering and sale of the Securities
contemplated by this Agreement and the other Transaction Documents, and the SEC
has not notified the Company of any objection to the use of the form of the
Registration Statement pursuant to Rule 401(g)(1) under the 1933 Act. The
Registration Statement meets the requirements set forth in Rule 415(a)(1)(x)
under the 1933 Act. At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) under the 1933 Act) relating to any
of the Securities, the Company was not and is not an “Ineligible Issuer” (as
defined in Rule 405 under the 1933 Act). The Company (i) has not distributed any
offering material in connection with the offer or sale of any of the Securities
and (ii) until no Buyer holds any of the Securities, shall not distribute any
offering material in connection with the offer or sale of any of the Securities
to, or by, any of the Buyers (if required), in each case, other than the
Registration Statement, the Prospectus or the Prospectus
Supplement.

       

      (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 hereby and
thereby (including, without limitation, the issuance of the Common Shares, the
Warrants and Warrant Shares and the reservation for issuance of the Warrant
Shares) will not (i) result in a violation of the Articles of Incorporation (as
defined below) (including, without limitation, any certificates of designation
contained therein) or other organizational documents of the Company or any of
its Subsidiaries, any capital stock of the Company, or Bylaws (as defined
below), (ii) conflict with, or constitute a default (or an event which 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 of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, foreign,
federal and state securities laws and regulations and the rules and regulations
of the NYSE Amex (the “Principal Market”) and
including all applicable federal and provincial laws, rules and regulations of
The People’s Republic of China) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, except, in the case of clause (ii) or (iii)
above, to the extent such violations that could not reasonably be expected to
have a Material Adverse Effect.


      
        
           


        

        
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      (e)          Consents.  Except
as disclosed in the Prospectus, the Company is not required to obtain any
consent from, authorization or order of, or make any filing or registration with
(other than the filing with the SEC of the Prospectus Supplement and any other
filings as may be required by any state securities agencies), any court,
Governmental Entity or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its obligations
under, or contemplated by, the Transaction Documents, in each case, in
accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain at or
prior to the Closing have been obtained or effected on or prior to the Closing
Date, and neither the Company nor any of its Subsidiaries are aware of any facts
or circumstances which might prevent the Company from obtaining or effecting any
of the registration, application or filings contemplated by the Transaction
Documents. The Company is not in violation of the requirements of the Principal
Market and has no knowledge of any facts or circumstances which could reasonably
lead to delisting or suspension of the Common Stock in the foreseeable
future.

       

      (f)           Acknowledgment Regarding
Buyer’s Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto)
(collectively, “Rule
144”)) of the Company or any of its Subsidiaries or (iii) to its
knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further
acknowledges that no Buyer is acting as a financial advisor or fiduciary of the
Company or any of its Subsidiaries (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer’s purchase of the
Securities. The Company further represents to each Buyer that the Company’s
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.

       

      (g)          Placement Agent’s
Fees. The
Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or brokers’ commissions (other than for Persons engaged
by any Buyer or its investment advisor) relating to or arising out of the
transactions contemplated hereby. Other than FT Global Capital, Inc. (the “Placement Agent”), neither the
Company nor any of its Subsidiaries has engaged any placement agent or other
agent in connection with the offer or sale of the Securities.

       

      (h)          No Integrated
Offering. None of
the Company, its Subsidiaries or any of their affiliates,
nor any Person acting on their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Securities to require
approval of stockholders of the Company under any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated for
quotation.  None of the Company, its Subsidiaries, their affiliates
nor any Person acting on their behalf will take any action or steps that would
cause the offering of any of the Securities to be integrated with other
offerings of securities of the Company.

       

      
        
          
          

        

        
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      (i)           Dilutive
Effect. The
Company understands and acknowledges that the number of Warrant Shares will
increase in certain circumstances. The Company further acknowledges that its
obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants is absolute and unconditional,
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.

       

      (j)           Application of Takeover
Protections; Rights Agreement. The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, interested
stockholder, business combination, poison pill (including, without limitation,
any distribution under a rights agreement) or other similar anti-takeover
provision under the Articles of Incorporation, Bylaws or other organizational
documents or the laws of the jurisdiction of its incorporation or otherwise
which is or could become applicable to any Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and any Buyer’s ownership of the Securities. The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of shares of Common Stock or a
change in control of the Company or any of its Subsidiaries.

       

      (k)          SEC Documents; Financial
Statements. During
the two (2) years prior to the date hereof,
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC
Documents”).  True, correct and complete copies of each of the
SEC Documents are available on the EDGAR system. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, 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 the light of the circumstances under
which they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as in effect as
of the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). No other information
provided by or on behalf of the Company to any of the Buyers which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein not misleading, in the light of the circumstance under which they are or
were made.

       

      
        
          
          

        

        
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      (l)           Absence of Certain
Changes. Since
the date of the Company’s most recent audited financial statements contained in
a Form 10-K, except as disclosed in the SEC Documents filed subsequent to such
Form 10-K, there has been no material adverse change and no material adverse
development in the business, assets, liabilities, properties, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Company or any of its Subsidiaries. Since the date of the Company’s most
recent audited financial statements contained in a Form 10-K, neither the
Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii)
sold any assets, individually or in the aggregate, outside of the ordinary
course of business or (iii) made any material capital expenditures, individually
or in the aggregate. Neither the Company nor any of its Subsidiaries has taken
any steps to seek protection pursuant to any law or statute relating to
bankruptcy, insolvency, reorganization, receivership, liquidation or winding up,
nor does the Company or any Subsidiary have any knowledge or reason to believe
that any of their respective creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a
creditor to do so. The Company and its Subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect to
the transactions contemplated hereby to occur at the Closing will not be,
Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent” means, (I) with
respect to the Company and its Subsidiaries, on a consolidated basis, (i) the
present fair saleable value of the Company’s and its Subsidiaries’ assets is
less than the amount required to pay the Company’s and its Subsidiaries’ total
Indebtedness (as defined below), (ii) the Company and its Subsidiaries are
unable to pay their debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured or (iii)
the Company and its Subsidiaries intend to incur or believe that they will incur
debts that would be beyond their ability to pay as such debts mature; and (II)
with respect to the Company and each Subsidiary, individually, (i) the present
fair saleable value of the Company’s or such Subsidiary’s (as the case may be)
assets is less than the amount required to pay its respective total
Indebtedness, (ii) the Company or such Subsidiary (as the case may be) is unable
to pay its respective debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured or (iii)
the Company or such Subsidiary (as the case may be) intends to incur or believes
that it will incur debts that would be beyond its respective ability to pay as
such debts mature. Neither the Company nor any of its Subsidiaries has engaged
in any business or in any transaction, and is not about to engage in any
business or in any transaction, for which the Company’s or such Subsidiary’s
remaining assets constitute unreasonably small capital.

       

      (m)         No Undisclosed Events,
Liabilities, Developments or Circumstances. Except
as set forth in the SEC Documents, no event, liability, development or
circumstance has occurred or exists, or is reasonably expected to occur or exist
with respect to the Company, any of its Subsidiaries or any of their respective
businesses, properties, liabilities, prospects, operations (including results
thereof) or condition (financial or otherwise) that (i) would be required to be
disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the
Company of its Common Stock and which has not been publicly announced, (ii)
could have a material adverse effect on any Buyer’s investment hereunder or
(iii) could have a Material Adverse Effect.


      
        
           


        

        
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      (n)          Conduct of Business;
Regulatory Permits. Neither
the Company nor any of its Subsidiaries is in violation of any term of or in
default under its Articles of Incorporation, any certificate of designation,
preferences or rights of any other outstanding series of preferred stock of the
Company or any of its Subsidiaries or Bylaws or their organizational charter,
certificate of formation or certificate of incorporation or bylaws,
respectively. Neither the Company nor any of its Subsidiaries is in violation of
any judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries, and neither the Company
nor any of its Subsidiaries will conduct its business in violation of any of the
foregoing, except in all cases for possible violations which could not,
individually or in the aggregate, have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company is not in violation of any
of the rules, regulations or requirements of the Principal Market and has no
knowledge of any facts or circumstances that could reasonably lead to delisting
or suspension of the Common Stock by the Principal Market in the foreseeable
future. Since January 1, 2009, (i) the Common Stock has been listed or
designated for quotation on the Principal Market, (ii) trading in the Common
Stock has not been suspended by the SEC or the Principal Market and (iii) the
Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from
the Principal Market. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.

       

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

       

      (p)          Sarbanes-Oxley
Act. The
Company and each Subsidiary is in compliance with all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and all
applicable rules and regulations promulgated by the SEC thereunder that are
effective as of the date hereof.

       

      (q)           Transactions With
Affiliates. Other
than the grant of stock options disclosed in the SEC
Documents, none of the officers, directors or employees of the Company or any of
its Subsidiaries is presently a party to any transaction with the Company or any
of its Subsidiaries (other than for ordinary course services as employees,
officers or 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
such officer, director or employee or, to the knowledge of the Company or any of
its Subsidiaries, any corporation, partnership, trust or other Person in which
any such officer, director or employee has a substantial interest or is an
employee, officer, director, trustee or partner.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      (r)           Equity
Capitalization.  As
of the date hereof, the authorized capital stock of the Company
consists of (i) 50,000,000 shares of Common Stock, of which, 27,974,514 are
issued and outstanding and no shares are reserved for issuance pursuant to
securities (other than the Common Shares and the Warrants) exercisable or
exchangeable for, or convertible into, shares of Common Stock and (ii) 5,000,000
shares of preferred stock, of which none are issued and outstanding. No shares
of Common Stock are held in treasury.  All of such outstanding shares
are duly authorized and have been, or upon issuance will be, validly issued and
are fully paid and non-assessable. 17,583,700 shares of the Company’s issued and
outstanding Common Stock on the date hereof are owned by Persons who are
“affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the
assumption that only officers, directors and holders of at least 10% of the
Company’s issued and outstanding Common Stock are “affiliates” without conceding
that any such Persons are “affiliates” for purposes of federal securities laws)
of the Company or any of its Subsidiaries. To the Company’s knowledge and except
as set forth in the SEC Documents, no Person owns 10% or more of the Company’s
issued and outstanding shares of Common Stock (calculated based on the
assumption that all Convertible Securities (as defined below), whether or not
presently exercisable or convertible, have been fully exercised or
converted (as the case may be) taking account of any limitations on
exercise or conversion (including “blockers”) contained therein without
conceding that such identified Person is a 10% stockholder for purposes of
federal securities laws).  (i) Except as set forth in the SEC
Documents, none of the Company’s or any Subsidiary’s capital stock is subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company or any Subsidiary; (ii) except as set forth
in the SEC Documents, there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, or exercisable or exchangeable for,
any capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
capital stock of the Company or any of its Subsidiaries; (iii) except as set
forth in the SEC Documents, there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of the Company or any of its Subsidiaries or
by which the Company or any of its Subsidiaries is or may become bound; (iv)
except as set forth in the SEC Documents, there are no financing statements
securing obligations in any amounts filed in connection with the Company or any
of its Subsidiaries; (v) except as set forth in the SEC Documents, there are no
agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the 1933 Act
(except pursuant to this Agreement); (vi) except as set forth in the SEC
Documents, there are no outstanding securities or instruments of the Company or
any of its Subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (vii) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (viii) neither the Company nor any
Subsidiary has any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement; and (ix) neither the Company nor
any of its Subsidiaries have any liabilities or obligations required to be
disclosed in the SEC Documents which are not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company’s or its
Subsidiaries’ respective businesses and which, individually or in the aggregate,
do not or could not have a Material Adverse Effect. The Company has furnished to
the Buyers true, correct and complete copies of the Company’s Articles of
Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”),
and the Company’s bylaws, as amended and as in effect on the date hereof (the
“Bylaws”), and the terms
of all securities convertible into, or exercisable or exchangeable for, shares
of Common Stock and the material rights of the holders thereof in respect
thereto.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (s)          Indebtedness and Other
Contracts. Neither
the Company nor any of its Subsidiaries
(i) except as set forth in the SEC Documents, has any outstanding Indebtedness
(as defined below), (ii) is a party to any contract, agreement or instrument,
the violation of which, or default under which, by the other party(ies) to such
contract, agreement or instrument could reasonably be expected to result in a
Material Adverse Effect, (iii) is in violation of any term of, or in default
under, any contract, agreement or instrument relating to any Indebtedness,
except where such violations and defaults would not result, individually or in
the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which,
in the judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, “capital leases” in
accordance with generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, claim, lien, tax, right of first
refusal, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means,
as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (t)           Absence of
Litigation. There
is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any Governmental Entity or other self-regulatory organization
or body pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries, the Common Stock or any of the
Company’s or its Subsidiaries’ officers or directors which is outside of the
ordinary course of business or individually or in the aggregate material to the
Company or any of its Subsidiaries. There has not been, and to the knowledge of
the Company, there is not pending or contemplated, any investigation by the SEC
involving the Company, any of its Subsidiaries or any current or former director
or officer of the Company or any of its Subsidiaries. The SEC has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the 1933 Act or the 1934 Act, including,
without limitation, the Registration Statement.

       

      (u)          Insurance. The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor
any such Subsidiary has been refused any insurance coverage sought or applied
for, and neither the Company nor any such Subsidiary has any reason to believe
that it will be unable to renew its 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 at a cost that would not have a Material
Adverse Effect.

       

      (v)          Employee
Relations.  Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. The Company believes that its and
its Subsidiaries’ relations with their respective employees are
good.  No executive officer (as defined in Rule 501(f) promulgated
under the 1933 Act) or other key employee of the Company or any of its
Subsidiaries has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such
officer’s employment with the Company or any such Subsidiary. No executive
officer or other key employee of the Company or any of its Subsidiaries is, or
is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer or other
key employee (as the case may be) does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing
matters.  The Company and its Subsidiaries are in compliance with all
federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.


      
        
           


        

        
          12

          
            

          

        

        
           


        

      


      (w)         Title. The
Company and its Subsidiaries have land use rights as permitted under the law of
the People’s Republic of China with respect to all real property controlled by
them, and have good and marketable title to all personal property, owned by them
which is material to the business of the Company and its Subsidiaries, in each
case, free and clear of all liens, encumbrances and defects except such as do
not materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company or any of its Subsidiaries.

       

      (x)          Intellectual Property
Rights. The
Company and its Subsidiaries own or possess adequate rights or licenses to use
all trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, original works, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual
property rights and all applications and registrations therefor (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted and as
presently proposed to be conducted. None of the Company’s or its Subsidiaries’
Intellectual Property Rights have expired, terminated or been abandoned, or are
expected to expire, terminate or be abandoned, within three years from the date
of this Agreement. The Company has no knowledge of any infringement by the
Company or any of its Subsidiaries of Intellectual Property Rights of others.
There is no claim, action or proceeding being made or brought, or to the
knowledge of the Company or any of its Subsidiaries, being threatened, against
the Company or any of its Subsidiaries regarding their Intellectual Property
Rights. The Company is not aware of any facts or circumstances which might give
rise to any of the foregoing infringements or claims, actions or proceedings.
The Company and each of its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their Intellectual
Property Rights.

       

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

       

      (z)          Subsidiary
Rights. The
Company or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.


      
        
           


        

        
          13

          
            

          

        

        
           


        

      


      (aa)        Tax
Status. The
Company and each of its Subsidiaries (i) has timely made or filed all foreign,
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has timely paid all
taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company and its
Subsidiaries know of no basis for any such claim. The Company is not operated in
such a manner as to qualify as a passive foreign investment company, as defined
in Section 1297 of the U.S. Internal Revenue Code of 1986, as
amended.

       

      (bb)       Internal Accounting and
Disclosure Controls. The
Company and each of its Subsidiaries maintains internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is
effective to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, including 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 generally accepted
accounting principles and to maintain asset and liability accountability, (iii)
access to assets or incurrence of liabilities is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded
accountability for assets and liabilities is compared with the existing assets
and liabilities at reasonable intervals and appropriate action is taken with
respect to any difference. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that
are effective in ensuring that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is recorded,
processed, summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is
accumulated and communicated to the Company’s management, including its
principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required
disclosure. Neither the Company nor any of its Subsidiaries has received any
notice or correspondence from any accountant or other Person relating to any
potential material weakness or significant deficiency in any part of the
internal controls over financial reporting of the Company or any of its
Subsidiaries.

       

      (cc)       
Off Balance Sheet
Arrangements. There
is no transaction, arrangement, or other relationship between the Company or any
of its Subsidiaries and an unconsolidated or other off balance sheet entity that
is required to be disclosed by the Company in its 1934 Act filings and is not so
disclosed or that otherwise could be reasonably likely to have a Material
Adverse Effect.

       

      (dd)       Investment Company
Status. The
Company is not, and upon consummation of the sale of the Securities will not be,
an “investment company,” an affiliate of an “investment company,” a company
controlled by an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of  1940, as
amended.


      
        
           


        

        
          14

          
            

          

        

        
           


        

      


      (ee)        Acknowledgement Regarding
Buyers’ Trading Activity. It is
understood and acknowledged by the Company that (i) following the public
disclosure of the transactions contemplated by the Transaction Documents, in
accordance with the terms thereof, none of the Buyers have been asked by the
Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the
Company or any of its Subsidiaries, to desist from effecting any transactions in
or with respect to (including, without limitation, purchasing or selling, long
and/or short) any securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold any of the Securities for any
specified term; (ii) any Buyer, and counterparties in “derivative” transactions
to which any such Buyer is a party, directly or indirectly, presently may have a
“short” position in the Common Stock which was established prior to such Buyer’s
knowledge of the transactions contemplated by the Transaction Documents; and
(iii) each Buyer shall not be deemed to have any affiliation with or control
over any arm’s length counterparty in any “derivative” transaction. The Company
further understands and acknowledges that following the public disclosure of the
transactions contemplated by the Transaction Documents pursuant to the Press
Release (as defined below) one or more Buyers may engage in hedging and/or
trading activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value
and/or number of the Warrant Shares deliverable with respect to the Securities
are being determined and (b) such hedging and/or trading activities, if any, can
reduce the value of the existing stockholders’ equity interest in the Company
both at and after the time the hedging and/or trading activities are being
conducted. The Company acknowledges that such aforementioned hedging and/or
trading activities do not constitute a breach of this Agreement or any other
Transaction Document or any of the documents executed in connection herewith or
therewith.

       

      (ff)         Manipulation of
Price. Neither
the Company nor any of its Subsidiaries has, and, to the knowledge of the
Company, no Person acting on their behalf has, directly or indirectly, (i) taken
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company or any of its Subsidiaries to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities (other than the Placement Agent), or (iii) paid or agreed to pay to
any Person any compensation for soliciting another to purchase any other
securities of the Company or any of its Subsidiaries.

       

      (gg)       U.S. Real Property Holding
Corporation. Neither
the Company nor any of its Subsidiaries is, or has ever been, and so long as any
of the Securities are held by any of the Buyers, shall become, a U.S. real
property holding corporation within the meaning of Section 897 of the Internal
Revenue Code of 1986, as amended, and the Company and each Subsidiary shall so
certify upon any Buyer’s request.

       

      (hh)       Registration
Eligibility. The Company is eligible to register the issuance and sale of
the Securities to the Buyers using Form S-3 promulgated under the 1933
Act.

       

      (ii)         Transfer Taxes. On
the Closing Date, all stock transfer or other taxes (other than income or
similar taxes) which are required to be paid in connection with the issuance and
sale of the Securities to be sold to each Buyer hereunder will be, or will have
been, fully paid or provided for by the Company, and all laws imposing such
taxes will be or will have been complied with.


      
        
           


        

        
          15

          
            

          

        

        
           


        

      


      (jj)          Bank Holding Company
Act.  Neither the Company nor any of its Subsidiaries is
subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by
the Board of Governors of the Federal Reserve System (the “Federal
Reserve”).  Neither the Company nor any of its Subsidiaries or
affiliates owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any equity that is
subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

       

      (kk)        Public Utility Holding
Act.  None of the Company nor any of its Subsidiaries is a
“holding company,” or an “affiliate” of a “holding company,” as such terms are
defined in the Public Utility Holding Act of 2005.

       

      (ll)          Federal Power
Act.  None of the Company nor any of its Subsidiaries is
subject to regulation as a “public utility” under the Federal Power Act, as
amended.

       

      (mm)      No Additional
Agreements. The Company does not have any agreement or understanding with
any Buyer with respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction Documents.

       

      (nn)    
   Non-Oil, Gas and Mineral
Real Property.  Each of the Company and its Subsidiaries holds
valid use rights to all real property, leases in real property, or other
interests in real property owned or held by the Company or any of its
Subsidiaries (other than any property included in the Interests (as defined
below)) (the “Other Real
Property”) owned by the Company or any of its Subsidiaries, as
applicable. The Other Real Property is free and clear of all Encumbrances and is
not subject to any rights of way, building use restrictions, exceptions,
variances, reservations, or limitations of any nature except for (a) liens for
current taxes not yet due, and (b) zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject
thereto.

       

      (oo)  
     Non-Oil, Gas and Mineral
Fixtures and Equipment. Each of the Company and its Subsidiaries, as
applicable, has good title to, or a valid leasehold interest in, the tangible
personal property, equipment, improvements, fixtures, and other personal
property and appurtenances that are used by the Company or its Subsidiary in
connection with the conduct of its business (the “Company Fixtures and
Equipment”), except that the Company Fixtures and Equipment do not
include any property included in the Interests.  The Company Fixtures
and Equipment are structurally sound, are in good operating condition and
repair, are adequate for the uses to which they are being put, are not in need
of maintenance or repairs except for ordinary, routine maintenance and repairs
and are sufficient for the conduct of the Company's and/or its Subsidiaries’
businesses, as applicable, in the manner as conducted prior to the
Closing.  Each of the Company and its Subsidiaries owns all of its
Company Fixtures and Equipment free and clear of all Encumbrances except for (a)
liens for current taxes not yet due, and (b) zoning laws and other land use
restrictions that do not impair the present or anticipated use of the property
subject thereto.

       

      (pp)       Oil, Gas and Mineral
Interests.

       

      
        	
                 
      

              	
                (i)

              	
                For
      the purpose of this Agreement, the following definitions shall
      apply:

              


      

       

      
        
           


        

        
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      (1)           “Appurtenant Rights” means,
with respect to the Properties (as defined below), in each case, insofar as they
may relate to the Properties, the Company’s or any of its Subsidiaries’, as
applicable, interest in (a) all presently existing and valid unitization and
pooling declarations, agreements, and/or orders relating to or affecting the
Properties and all
rights in the Properties covered by the Units (as defined below) created
thereby; (b) all wells, well and leasehold equipment, pipelines, platforms,
facilities, improvements, goods and other personal property located on or used
in connection with the Properties; (c) all presently existing production sales
contracts, operating and other contracts or agreements which relate to the
Properties; and (d) all permits, licenses, easements, rights-of-way, rights of
use, and similar agreements pertaining to the Properties.

       

      (2)           “Basic Documents” means all of
the following documents and instruments, including those that are recorded and
unrecorded, with respect to the Company or any of its Subsidiaries:

       

      a.           All
material contracts and agreements comprising any part of, or relating or
pertaining to, the Interests, including but not limited to farm-in agreements,
farm-out agreements, joint operating agreements, Unit agreements and contracts
by which the Interests were acquired;

       

      b.           All
agreements or arrangements for the sale, gathering, transportation, compression,
treating, processing or other marketing of a material volume of production from
the Interests (including calls on, or other rights to purchase, production,
whether or not the same are currently being exercised), comprising any part of
or otherwise relating or pertaining to the Interests; and

       

      c.           All
documents and instruments evidencing the Interests.

       

      (3)           “Consent” means any consents,
approvals, orders, authorizations, notifications, notices, estoppel
certificates, releases, registrations, ratifications, declarations, filings,
waivers, exemptions or variances.

       

      (4)           “Good and Defensible Title”
means, as to the Interest in question, (i) title to such Interest by virtue of
which the Company or any of its Subsidiaries, as applicable, can successfully
defend against a claim to the contrary made by a third party, based upon
industry standards in the acquisition of oil and gas properties, and in the
exercise of reasonable judgment and in good faith; and, (ii) in the case of the
Wells (as defined below) or Mines (as defined below), title that entitles the
Company or such Subsidiary, as applicable, to receive not less than the Net
Revenue Interest (as defined below) for each of the Wells or Mines, as
applicable, and obligates the Company or such Subsidiary, as applicable, to bear
not more than the Working Interest for each of the Wells or Mines, as applicable
(unless there is a corresponding increase in the Net Revenue
Interest  for a respective Well or Mine, as applicable); and (iii)
such Interest is subject to no liens, encumbrances, obligations or
defects.


      
        
           


        

        
          17

          
            

          

        

        
           


        

      

       

      (5)           “Governmental Authorizations”
means any approval, consent, license, permit, waiver, or other authorization
issued, granted, given, or otherwise made available by or under the authority of
any Governmental Entity or pursuant to any Legal Requirement.

       

      (6)           “Governmental Entity” means
any:

       

      a.           nation,
state, county, city, town, village, district, or other political jurisdiction of
any nature;

       

      b.           federal,
state, local, municipal, foreign, or other government;

       

      c.           governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal);

       

      d.           multi-national
organization or body; or

       

      e.           body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any
nature.

       

      (7)           “Interests” means the
Properties and the
Appurtenant Rights of the Company and its Subsidiaries.

       

      (8)           “Legal Requirement” means any
federal, state, local, municipal, foreign, international, multinational, or
other administrative order, constitution, law, ordinance, principle of common
law, regulation, statute, or treaty.

       

      (9)           “Mine” or “Mines” means all of the
Company's and its Subsidiaries' mines and interest in mineral reserves and
resources.

       

      (10)          “Net Revenue Interest” means a
share, expressed as a decimal, of the oil, gas and other minerals (or the
proceeds of sale thereof) produced and saved from or otherwise attributable to
an Interest and the zones, horizons and reservoirs produced therefrom, after the
deduction of all royalties, overriding royalties and other burdens on
production.

       

      (11)          "Over-produced" means to have
taken more production from an Interest (or the Units in which the Interest
participates) or any product thereof, than the ownership of the Company or any
of its Subsidiaries and the Company's or any of its Subsidiaries’ predecessors
in the Interest would entitle the Company or any of its Subsidiaries and/or the
Company's or any of its Subsidiaries’ predecessors (absent any balancing
agreement or arrangement) to receive.

       

      (12)          “Preferential Right” means any
preferential right or option to purchase or otherwise to acquire an Interest or
any interest therein, held by another party to a Basic Document, which arises as
a result of the transactions contemplated by this Agreement.


      
        
           


        

        
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      (13)         “Properties” means all of the
Company's and its Subsidiaries’ rights, titles and interests in and to the
following oil and gas and/or mineral properties:

       

      a.           All
oil, gas and/or mineral leases and other mineral interests, including, but not
limited to, all of the Company's operating rights, record title interests,
working interests, and overriding royalty interests, without depth or other
restrictions or exclusions;

       

      b.           All
Wells and Mines of the Company and its Subsidiaries;

       

      c.           All
surface leases, rights-of-way, easements, servitudes and other rights-of-use
(whether surface, subsurface or subsea); and

       

      d.           All
licenses and servitudes.

       

      (14)         “Routine Governmental
Approvals” means Governmental Authorizations required to be obtained from
any Governmental Entity that are customarily obtained after consummation of a
transaction.

       

      (15)         "Under-produced" means to have
taken less production from an Interest (or the Units in which the Interest
participates) or any product thereof, than the ownership of the Company or any
of its Subsidiaries and the Company's or any of its Subsidiaries’ predecessors
in the Interest would entitle the Company or any of its Subsidiaries and/or the
Company's or any of its Subsidiaries’ predecessors (absent any balancing
agreement or arrangement) to receive.

       

      (16)         “Units” means oil, gas and
other mineral production, proration, or other types of units, and any ownership
interests therein.

       

      (17)         “Well” or “Wells” means all of the
Company's and any of its Subsidiaries' oil, gas and condensate wells, (whether
producing, not producing or abandoned or temporarily abandoned).

       

      (18)         “Working Interest” means a
share, expressed as a decimal, of the costs of exploring, drilling, developing
and operating an Interest and producing oil, gas and other minerals from the
zones, horizons and reservoirs therein and thereunder.

       

      (ii)           Except
as disclosed in Schedule 3(pp), the Company holds Good and Defensible Title to
the Interests.

       

      (iii)          Except
as disclosed in Schedule 3(pp), the Basic Documents are in full force and effect
and constitute valid and binding obligations of the parties
thereto.


      
        
           


        

        
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      (iv)          Except
as disclosed in Schedule 3(pp), neither the Company nor any of its Subsidiaries
is in material breach or default (and no situation exists which with the passing
of time or giving of notice would give rise to such a breach or default) of its
obligations under any Basic Document, and no breach or default by any other
party to any Basic Document (or situation which with the passage of time or
giving of notice would give rise to such a breach or default) exists, to the
extent such breach or default (whether by the Company, any Subsidiary or another
party to any Basic Document) could adversely affect any of the
Interests.

       

      (v)          All
payments (including, without limitation, all delay rentals, royalties, excess
royalties, minimum royalties, overriding royalty interests, shut in royalties
and valid calls for payment or prepayment under operating agreements) owing
under the Basic Documents have been and are being made timely and properly, and
before the same became delinquent (by the Company or the applicable Subsidiary
where the non payment of same by another party to any Basic Document could
adversely affect any of the Interests) have been and are being made by such
other party in all material respects.

       

      (vi)          All
conditions necessary to maintain the Basic Documents in force have been duly
performed.

       

      (vii)         No
non-consent operations exist with respect to any of the Interests that have
resulted or will result in a temporary or permanent increase or decrease in
either the Company’s or any of its Subsidiaries’ Net Revenue Interest or Working
Interest in such Interest.

       

      (viii)       Except
as disclosed in Schedule 3(pp), all expenses payable under the terms of the
Basic Documents have been properly and timely paid except for such expenses as
are being currently paid or will be paid prior to delinquency. Except for
budgeted capital expenditures disclosed in the SEC Documents, no proposals
calling for expenditures in excess of $250,000 for any one project are currently
outstanding (whether made by the Company, any of its Subsidiaries, or by any
other party) to drill additional wells, or to deepen, plug back, sidetrack,
abandon, or rework existing Wells or Mines, as applicable, or to conduct other
operations for which consent is required under the applicable operating
agreement, or to conduct any other operations, other than normal operation of
existing Wells or Mines, as applicable, on the Interests.

       

      (ix)          Neither
the Company nor any of its Subsidiaries has received prepayments (including, but
not limited to, payments for oil and gas not taken pursuant to “take or pay”
arrangements) for any oil or gas produced from the Interests as a result of
which the obligation does (or may) exist (i) to deliver oil, gas or minerals
produced from the Interests without then receiving payment therefor, or (ii) to
make repayments in cash.  There is no Interest with respect to which
the Company has taken an Over-Produced or Under-Produced position to the extent
such Over-produced or Under-produced position has not, as of the day immediately
preceding the date hereof been fully made up or otherwise
extinguished.  No pipeline imbalances have arisen and remain
outstanding due to the failure of nominations made by the Company or any of its
Subsidiaries to match actual deliveries of production from any one or more of
the Interests. None of the purchasers under any production sales contracts
relating to an Interest has (i) exercised any economic out provision; (ii)
curtailed its takes of natural gas in violation of such contracts; or (iii)
given notice that it desires to amend the production sales contracts with
respect to price or quantity of deliveries under take-or-pay provisions or
otherwise.


      
        
           


        

        
          20

          
            

          

        

        
           


        

      

       

      (x)           To
the Company’s knowledge, except as disclosed in Schedule 3(pp), no delinquent
unpaid bills or past due charges exist for any labor and materials incurred by
or on behalf of the Company or any of its Subsidiaries’ related to the
exploration, development or operation of the Interests.

       

      (xi)          Except
as may be provided for by a Basic Document, neither the Company nor any of its
Subsidiaries nor any of the Interests is subject to (i) any area of mutual
interest agreements, (ii) any farm out or farm in agreement under which any
party thereto is entitled to receive assignments of any Interest or any interest
therein not yet made, or could earn additional assignments of any Interest or
any interest therein after the date hereof, (iii) any tax partnership or (iv)
any agreement, contract or commitment relating to the disposition or acquisition
of the assets of, or any interest in, any other entity.

       

      (xii)         All
severance, production, ad valorem and other similar taxes based on or measured
by ownership or operation of, or production from, the Interests have been, and
are being, paid (properly and timely, and before the same become delinquent) by
the Company or the applicable Subsidiary in all respects.

       

      (xiii)        (i)
The ownership and operation of the Interests has, to the extent that non
conformance could adversely affect the Interests, been conducted in conformity
with all applicable material Legal Requirements of all Governmental Entities
having jurisdiction over the Interests or the Company, and (ii) the Company has
not received any notice of noncompliance with regard to any material Legal
Requirement of any Governmental Entity having jurisdiction over the Interests or
the Company.

       

      (xiv)        There
are no Preferential Rights or Consents, other than Routine Governmental
Approvals that affect any of the Interests and that will be triggered by the
transactions contemplated by the Transaction Documents.

       

      (xv)         There
exist no agreements or other arrangements under which the Company or any of its
Subsidiaries undertakes to perform gathering, transportation, processing or
other marketing services for any other party for a fee or other consideration
that is now, or may hereafter be, unrepresentative of commercial rates being
received by other parties in comparable, arm’s length transactions.

       

      (xvi)        Except
as disclosed in Schedule 3(pp), there are no Wells or Mines, as applicable,
located on the Interests that (i) the Company or any of its Subsidiaries is
currently obligated by law or contract to currently plug and abandon or to cease
development or exploration, (ii) the Company or any of its Subsidiaries will be
obligated by law or contract to plug and abandon with the lapse of time or
notice or both because the Well or Mines, as applicable, is not currently
capable of producing severed crude oil, natural gas, casinghead gas, drip
gasoline, natural gasoline, petroleum, natural gas liquids, condensate,
products, liquids, other hydrocarbons or other minerals or materials in paying
quantities or otherwise currently being used in normal operations, (iii) are
subject to exceptions to a requirement to plug and abandon issued by a
Governmental Entity, or (iv) to the Company’s knowledge, have been plugged and
abandoned, but have not been plugged in accordance in all material respects with
all applicable requirements of any Governmental Entity.


      
        
           


        

        
          21

          
            

          

        

        
           


        

      

       

      (xvii)       Except
as disclosed in Schedule 3(pp), no suit, action or proceeding (including,
without limitation, tax or environmental demands proceedings) is pending or
threatened, which might result in material impairment or loss of title to any of
the Interests or the material value thereof.

       

      (xviii)      All
proceeds from the sale of hydrocarbons produced from the Company’s or the
applicable Subsidiaries’ proportionate share of the Interests are currently
being paid to the Company or such Subsidiary in all material respects, and no
portion of such proceeds is currently being held in suspense by any purchaser
thereof or any other party by whom proceeds are paid except for immaterial
amounts.

       

      (qq)         Illegal or Unauthorized
Payments; Political Contributions.  Neither the Company nor any
of its Subsidiaries nor, to the best of the Company’s knowledge (after
reasonable inquiry of its officers and directors), any of the officers,
directors, employees, agents or other representatives of the Company or any of
its Subsidiaries or any other business entity or enterprise with which the
Company or any Subsidiary is or has been affiliated or associated, has, directly
or indirectly, made or authorized any payment, contribution or gift of money,
property, or services, whether or not in contravention of applicable law, (a) as
a kickback or bribe to any Person or (b) to any political organization, or the
holder of or any aspirant to any elective or appointive public office except for
personal political contributions not involving the direct or indirect use of
funds of the Company or any of its Subsidiaries.

       

      (rr)        
Money
Laundering. The Company and its Subsidiaries are in compliance with, and
have not previously violated, the USA Patriot Act of 2001 and all other
applicable U.S. and non-U.S. anti-money laundering laws and regulations,
including, without limitation, the laws, regulations and Executive Orders and
sanctions programs administered by the U.S. Office of Foreign Assets Control,
including, without limitation, (i) Executive Order 13224 of September 23, 2001
entitled, “Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001));
and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter
V.

       

      (ss)        Registration
Rights.  No holder of securities of the Company has rights to
the registration of any securities of the Company because of the filing of the
Registration Statement or the issuance of the Securities hereunder that could
expose the Company to material liability or any Buyer to any liability or that
could impair the Company’s ability to consummate the issuance and sale of the
Securities in the manner, and at the times, contemplated hereby, which rights
have not been waived by the holder thereof as of the date
hereof.


      
        
           


        

        
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      (tt)          
Disclosure.  The
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Buyers or their agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, non-public
information concerning the Company or any of its Subsidiaries, other than the
existence of the transactions contemplated by this Agreement and the other
Transaction Documents. The Company understands and confirms that each of the
Buyers will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Buyers regarding the
Company and its Subsidiaries, their businesses and the transactions contemplated
hereby, including the schedules to this Agreement, furnished by or on behalf of
the Company or any of its Subsidiaries is true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each press release
issued by the Company or any of its Subsidiaries during the twelve (12) months
preceding the date of this Agreement did not at the time of release 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 the
light of the circumstances under which they are made, not
misleading.  No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including results
thereof) or conditions (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly disclosed. The
Company acknowledges and agrees that no Buyer makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.

       

      
        	
                4.

              	
                COVENANTS.

              


      

       

      (a)           Maintenance of Registration
Statement  For
so long as any of the Warrants remain outstanding, the Company shall use its
best efforts to maintain the effectiveness of the Registration Statement for the
issuance thereunder of the Warrant Shares, provided that if at any time while
the Warrants are outstanding the Company shall be ineligible to utilize Form S-3
(or any successor form) for the purpose of issuance of the Warrant Shares, the
Company shall promptly amend the Registration Statement on such other form as
may be necessary to maintain the effectiveness of the Registration Statement for
this purpose. If at any time following the date hereof the Registration
Statement is not effective or is not otherwise available for the issuance of the
Securities or any prospectus contained therein is not available for use, the
Company shall immediately notify the holders of the Securities in writing that
the Registration Statement is not then effective or a prospectus contained
therein is not available for use and thereafter shall promptly notify such
holders when the Registration Statement is effective again and available for the
issuance of the Securities or such prospectus is again available for
use.

       

      (b)           Prospectus Supplement and
Blue Sky. Immediately prior to execution of this Agreement, the Company
shall have delivered, and as soon as practicable after execution of this
Agreement the Company shall file, the Prospectus Supplement with respect to the
Securities as required under, and in conformity with, the 1933 Act, including
Rule 424(b) thereunder. If required, the Company, on or before the Closing Date,
shall take such action as the Company shall reasonably determine is necessary in
order to obtain an exemption for, or to, qualify the Securities for sale to the
Buyers at the Closing pursuant to this Agreement under applicable securities or
“Blue Sky” laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date. Without limiting any other
obligation of the Company under this Agreement, the Company shall timely make
all filings and reports relating to the offer and sale of the Securities
required under all applicable securities laws (including, without limitation,
all applicable federal securities laws and all applicable “Blue Sky” laws), and
the Company shall comply with all applicable federal, state and local laws,
statutes, rules, regulations and the like relating to the offering and sale of
the Securities to the Buyers.


      
        
           


        

        
          23

          
            

          

        

        
           


        

      

       

      (c)           Reporting
Status. Until
the date on which no Warrants are outstanding (the “Reporting Period”), the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would no longer require or otherwise permit such
termination.

       

      (d)           Use of
Proceeds. The
Company shall use the proceeds from the sale of the Securities solely for (i)
general corporate purposes and working capital (including for general and
administrative expenses) (ii) potential ordinary course acquisitions that
complement the Company’s business (provided that $5,000,000 of such proceeds
received at the Closing shall be used for the acquisition and renovation of the
mining facilities of Xinyi Fluorite Company, Ltd.) and (iii) the payment of the
fees and expenses described in Section 4(g) below. Without limiting the
foregoing, none of such proceeds shall be used for (i) the repayment of any
outstanding Indebtedness of the Company or any of its Subsidiaries, (ii) the
redemption or repurchase of any securities of the Company or any of its
Subsidiaries or (iii) the settlement of any outstanding litigation.

       

      (e)           Financial
Information. The
Company agrees to send the following to each Buyer during the Reporting Period
(i) unless the following are filed with the SEC through EDGAR and are available
to the public through the EDGAR system, within one (1) Business Day after the
filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance
sheets, income statements, stockholders’ equity statements and/or cash flow
statements for any period other than annual, any Current Reports on Form 8-K and
any registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act, (ii) unless filed with the SEC through EDGAR and are
available to the public through the EDGAR system, on the same day as the release
thereof, facsimile copies of all press releases issued by the Company or any of
its Subsidiaries and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.

       

      (f)           Listing. The
Company shall promptly secure the listing or designation for quotation (as the
case may be) of all of the Common Shares and Warrant Shares upon each national
securities exchange and automated quotation system, if any, upon which the
Common Stock is then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) (but in no event later than the Closing
Date) and shall maintain such listing or designation for quotation (as the case
may be) of all the shares of Common Stock from time to time issuable under the
terms of the Transaction Documents on such national securities exchange or
automated quotation system. The Company shall maintain the Common Stock’s
listing or designation for quotation (as the case may be) on the Principal
Market, The  New York Stock Exchange, the Nasdaq Capital Market, the
Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible Market”). Neither the
Company nor any of its Subsidiaries shall take any action which could be
reasonably expected to result in the delisting or suspension of the Common Stock
on an Eligible Market. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section 4(f).


      
        
           


        

        
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    (g)          Fees. The
Company shall reimburse Greenberg Traurig, LLP (counsel to the lead investor)
for all reasonable, documented costs and expenses incurred by it in connection
with preparing and delivering the Transaction Documents (including, without
limitation, all reasonable, documented legal fees and disbursements in
connection therewith, and due diligence in connection with the transactions
contemplated thereby, and all fees and costs arising under Section 4(u) below),
which amount may be withheld by a Buyer (at the request of Greenberg Traurig,
LLP) from its Purchase Price at the Closing or paid by the Company upon
termination of this Agreement on demand by Greenberg Traurig, LLP, less $25,000
which was previously advanced to Greenberg Traurig, LLP by the Company,
provided, however, that the amount payable by the Company to Greenberg Traurig,
LLP under any and all of the Transaction Documents shall not exceed $50,000 in
the aggregate unless agreed to in writing by the Company.  The Company
shall be responsible for the payment of any placement agent’s fees, financial
advisory fees, transfer agent fees, DTC (as defined below) fees or broker’s
commissions (other than for Persons engaged by any Buyer) relating to or arising
out of the transactions contemplated hereby (including, without limitation, any
fees payable to the Placement Agent, who is the Company’s sole placement agent
in connection with the transactions contemplated by this Agreement). The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys’ fees and out-of-pocket
expenses) arising in connection with any claim relating to any such payment.
Except as otherwise set forth in the Transaction Documents, each party to this
Agreement shall bear its own expenses in connection with the sale of the
Securities to the Buyers.

     

    (h)          Pledge of
Securities.
Notwithstanding anything to the contrary contained in this Agreement, the
Company acknowledges and agrees that the Securities may be pledged by a Buyer in
connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities. The pledge of Securities shall
not be deemed to be a transfer, sale or assignment of the Securities hereunder,
and no Buyer effecting a pledge of Securities shall be required to provide the
Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document. The Company hereby
agrees to execute and deliver such documentation as a pledgee of the Securities
may reasonably request in connection with a pledge of the Securities to such
pledgee by a Buyer.

     

    
      
         


      

      
        25

        
          

        

      

      
         


      

    


    (i)           Disclosure of Transactions
and Other Material Information. The
Company shall, on or before 9:30 a.m. (but in no event prior to 9:15 a.m.),
New York time, on the date of this Agreement, (x) issue a press release (the
“Press Release”)
reasonably acceptable to the Buyers disclosing all the material terms of the
transactions contemplated by the Transaction Documents and (y) file a Current
Report on Form 8-K describing all the material terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934 Act
and attaching all the material Transaction Documents (including, without
limitation, this Agreement (and all schedules to this Agreement) and the form of
Warrants) (including all attachments, the “8-K Filing”). From and after
the issuance of the Press Release, the Company shall have disclosed all
material, non-public information (if any) delivered to any of the Buyers by the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents. The Company shall not, and the Company shall cause
each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents, not to, provide any Buyer with any material,
non-public information regarding the Company or any of its Subsidiaries from and
after the issuance of the Press Release without the express prior written
consent of such Buyer. In the event of a breach of any of the foregoing
covenants or any of the covenants contained in Section 4(n) by the Company, any
of its Subsidiaries, or any of its or their respective officers, directors,
employees and agents (as determined in the reasonable good faith judgment of
such Buyer), in addition to any other remedy provided herein or in the
Transaction Documents, such Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such breach or such material, non-public information, as applicable, without
the prior approval by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees or agents. No Buyer shall have
any liability to the Company, any of its Subsidiaries, or any of its or their
respective officers, directors, employees, stockholders or agents, for any such
disclosure. Subject to the foregoing, neither the Company, its Subsidiaries nor
any Buyer shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, the Company
shall be entitled, without the prior approval of any Buyer, to make any press
release or other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously therewith and
(ii) as is required by applicable law and regulations (provided that in the case
of clause (i) each Buyer shall be consulted by the Company in connection with
any such press release or other public disclosure prior to its release). Without
the prior written consent of the applicable Buyer, the Company shall not (and
shall cause each of its Subsidiaries and affiliates to not) disclose the name of
such Buyer in any filing (other than the 8-K Filing), announcement, release or
otherwise. Notwithstanding anything contained in this Agreement to the contrary
and without implication that the contrary would otherwise be true, the Company
expressly acknowledges and agrees that no Buyer has had, and no Buyer shall have
(unless expressly agreed to by a particular Buyer after the date hereof in a
written definitive and binding agreement executed by the Company and such
particular Buyer (it being understood and agreed that no Buyer may bind any
other Buyer with respect thereto)), any duty of confidentiality with respect to,
or a duty not to trade on the basis of, any information regarding the Company or
any of its Subsidiaries.

     

    
      
         


      

      
        26

        
          

        

      

      
         


      

    


    (j)           Additional Issuance of
Securities. The
Company agrees that for the period commencing on the date hereof and ending on
the date immediately following the ninety (90) day anniversary of the Closing
Date (provided that such period shall be extended by the number of days during
such period and any extension thereof contemplated by this proviso on which the
Registration Statement is not effective or any prospectus contained therein is
not available for use) (the “Restricted Period”), neither the Company
nor any of its Subsidiaries shall directly or indirectly issue, offer, sell,
grant any option or right to purchase, or otherwise dispose of (or announce any
issuance, offer, sale, grant of any option or right to purchase or other
disposition of) any equity security or any equity-linked or related security
(including, without limitation, any “equity security” (as that term is defined
under Rule 405 promulgated under the 1933 Act), any Convertible Securities, any
debt, any preferred stock or any purchase rights) (any such issuance, offer,
sale, grant, disposition or announcement (whether occurring during the
Restricted Period or at any time thereafter) is referred to as a “Subsequent Placement”).
Notwithstanding the foregoing, this Section 4(j) shall not apply in respect of
(i) the issuance of (A) shares of Common Stock or standard options to purchase
Common Stock to directors, officers or employees of the Company in their
capacity as such pursuant to an Approved Share Plan (as defined below); (B)
shares of Common Stock issued upon the conversion or exercise of Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Share Plan that are covered by clause (A) above) issued prior to
the date hereof, provided that the conversion price of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Share Plan that are covered by clause (A) above) is not lowered,
none of such Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Share Plan that are covered by
clause (A) above) are amended to increase the number of shares issuable
thereunder and none of the terms or conditions of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Share Plan that are covered by clause (A) above) are otherwise
materially changed in any manner that adversely affects any of the Buyers; (C)
the Common Shares, (D) the Warrant Shares and (E) shares of Common Stock or
Convertible Securities issued or issuable in connection with strategic or
commercial alliances, acquisitions, mergers, and strategic partnerships,
provided, that (x) the primary purpose of such issuance is not to raise capital
as determined in good faith by the board of directors of the Company, (y) the
purchaser or acquirer of the securities in such issuance solely consists of
either (I) the actual participants in such strategic or commercial alliance or
strategic or commercial partnership, (II) the actual owners of such assets or
securities acquired in such acquisition or merger or (III) the stockholders,
partners or members of the foregoing Persons and (z) the number or amount of
securities issued to such Person by the Company shall not be disproportionate to
such Person’s actual participation in such strategic or commercial alliance or
strategic or commercial partnership or ownership of such assets or securities to
be acquired by the Company, as applicable (each of the foregoing in clauses (A)
through (E), collectively the “Excluded Securities”) and (ii)
solely during the last thirty calendar days of the Restricted Period, shares of
Common Stock or Convertible Securities issued or issuable in connection with
pursuant to a bona fide retail firm commitment underwritten public offering with
a nationally recognized underwriter which generates gross proceeds to the
Company in excess of $30,000,000 (other than an "at-the-market offering" as
defined in Rule 415(a)(4) under the 1933 Act, "equity lines", “confidential
market public offerings”, “unregistered direct offerings”, “wall-crossed
offerings”, “pre-marketed offerings” and such other public offerings that are
announced after confidential marketing to investors).  “Approved Share Plan” means any
employee benefit plan which has been approved by the board of directors of the
Company prior to or subsequent to the date hereof pursuant to which shares of
Common Stock and standard options to purchase Common Stock may be issued to any
employee, officer or director for services provided to the Company or any of its
Subsidiaries in their capacity as such. “Convertible Securities” means
any capital stock or other security of the Company or any of its Subsidiaries
that is at any time and under any circumstances directly or indirectly
convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any capital stock or other security of the
Company (including, without limitation, Common Stock) or any of its
Subsidiaries.

     

    (k)           Reservation of
Shares. So long
as any of the Warrants remain outstanding, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, the maximum number of shares of Common Stock issuable upon exercise of
all the Warrants (without regard to any limitations on the exercise of the
Warrants set forth therein).

     

    (l)           Conduct of
Business.  The
business of the Company and its Subsidiaries shall not be conducted in violation
of any law, ordinance or regulation of any Governmental Entity, except where
such violations would not result, either individually or in the aggregate, in a
Material Adverse Effect.

     

    
      
         


      

      
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    (m)          Variable Rate
Transaction. Until none of the Warrants are outstanding, the Company and
each Subsidiary shall be prohibited from effecting or entering into an agreement
to effect any Subsequent Placement involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company or any Subsidiary (i) issues or sells
any Convertible Securities either (A) at a conversion, exercise or exchange rate
or other price that is based upon and/or varies with the trading prices of, or
quotations for, the shares of Common Stock at any time after the initial
issuance of such Convertible Securities, or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the
initial issuance of such Convertible Securities or upon the occurrence of
specified or contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock, other than pursuant to a
customary “weighted average” anti-dilution provision or (ii) enters into any
agreement (including, without limitation, an “equity line of credit” or an
“at-the-market offering”) whereby the Company or any Subsidiary may sell
securities at a future determined price (other than standard and customary
“preemptive” or “participation” rights). Each Buyer shall be entitled to obtain
injunctive relief against the Company and its Subsidiaries to preclude any such
issuance, which remedy shall be in addition to any right to collect
damages.

     

    (n)    
     Participation Right.
From the date hereof through the twelve (12) month anniversary of the Closing
Date, neither the Company nor any of its Subsidiaries shall, directly or
indirectly, effect any Subsequent Placement unless the Company shall have first
complied with this Section 4(n). The Company acknowledges and agrees that the
right set forth in this Section 4(n) is a right granted by the Company,
separately, to each Buyer.

     

    (i)           At
least five (5) Trading Days prior to any proposed or intended Subsequent
Placement, the Company shall deliver to each Buyer a written notice of its
proposal or intention to effect a Subsequent Placement (each such notice, a
“Pre-Notice”), which
Pre-Notice shall not contain any information (including, without limitation,
material, non-public information) other than: (i) a statement that the Company
proposes or intends to effect a Subsequent Placement, (ii) a statement that the
statement in clause (i) above does not constitute material, non-public
information and (iii) a statement informing such Buyer that it is entitled to
receive an Offer Notice (as defined below) with respect to such Subsequent
Placement upon its written request. Upon the written request of a Buyer
within three (3) Trading Days after the Company’s delivery to such Buyer of such
Pre-Notice, and only upon a written request by such Buyer, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver to
such Buyer an irrevocable written notice (the “Offer Notice”) of any proposed
or intended issuance or sale or exchange (the “Offer”) of the securities
being offered (the “Offered
Securities”) in a Subsequent Placement, which Offer Notice shall (w)
identify and describe the Offered Securities, (x) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the number or
amount of the Offered Securities to be issued, sold or exchanged, (y) identify
the Persons (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or
exchange with such Buyer in accordance with the terms of the Offer 50% of the
Offered Securities, provided that the number of Offered Securities which such
Buyer shall have the right to subscribe for under this Section 4(n) shall be (a)
based on such Buyer’s pro rata portion of the aggregate number of Common Shares
purchased hereunder by all Buyers (the “Basic Amount”), and (b) with
respect to each Buyer that elects to purchase its Basic Amount, any additional
portion of the Offered Securities attributable to the Basic Amounts of other
Buyers as such Buyer shall indicate it will purchase or acquire should the other
Buyers subscribe for less than their Basic Amounts (the “Undersubscription
Amount”).


    
      
         


      

      
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    (ii)          To
accept an Offer, in whole or in part, such Buyer must deliver a written notice
to the Company prior to the end of the fifth (5th)
Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth
the portion of such Buyer’s Basic Amount that such Buyer elects to purchase and,
if such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the “Notice of
Acceptance”). If the Basic Amounts subscribed for by all Buyers are less
than the total of all of the Basic Amounts, then such Buyer who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled to
purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, if the Undersubscription
Amounts subscribed for exceed the difference between the total of all the Basic
Amounts and the Basic Amounts subscribed for (the “Available Undersubscription
Amount”), such Buyer who has subscribed for any Undersubscription Amount
shall be entitled to purchase only that portion of the Available
Undersubscription Amount as the Basic Amount of such Buyer bears to the total
Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts,
subject to rounding by the Company to the extent it deems reasonably necessary.
Notwithstanding the foregoing, if the Company desires to modify or amend the
terms and conditions of the Offer prior to the expiration of the Offer Period,
the Company may deliver to each Buyer a new Offer Notice and the Offer Period
shall expire on the fifth (5th)
Business Day after such Buyer’s receipt of such new Offer Notice.

    


    (iii)         The
Company shall have five (5) days from the expiration of the Offer Period above
(i) to offer, issue, sell or exchange all or any part of such Offered Securities
as to which a Notice of Acceptance has not been given by a Buyer (the “Refused Securities”) pursuant
to a definitive agreement(s) (the “Subsequent Placement
Agreement”), but only to the offerees described in the Offer Notice (if
so described therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to the
acquiring Person or Persons or less favorable to the Company than those set
forth in the Offer Notice and (ii) to publicly announce (a) the execution of
such Subsequent Placement Agreement, and (b) either (x) the consummation of the
transactions contemplated by such Subsequent Placement Agreement or (y) the
termination of such Subsequent Placement Agreement, which shall be filed with
the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement
and any documents contemplated therein filed as exhibits thereto.

    


    (iv)         In
the event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in Section
4(n)(iii) above), then such Buyer may, at its sole option and in its sole
discretion, reduce the number or amount of the Offered Securities specified in
its Notice of Acceptance to an amount that shall be not less than the number or
amount of the Offered Securities that such Buyer elected to purchase pursuant to
Section 4(n)(ii) above multiplied by a fraction, (i) the numerator of which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Buyers pursuant to this Section 4(n) prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered
Securities. In the event that any Buyer so elects to reduce the number or amount
of Offered Securities specified in its Notice of Acceptance, the Company may not
issue, sell or exchange more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Buyers in accordance with Section 4(n)(i) above.


    
      
         


      

      
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    (v)          Upon
the closing of the issuance, sale or exchange of all or less than all of the
Refused Securities, such Buyer shall acquire from the Company, and the Company
shall issue to such Buyer, the number or amount of Offered Securities specified
in its Notice of Acceptance. The purchase by such Buyer of any Offered
Securities is subject in all cases to the preparation, execution and delivery by
the Company and such Buyer of a separate purchase agreement relating to such
Offered Securities reasonably satisfactory in form and substance to such Buyer
and its counsel.

    


    (vi)         Any
Offered Securities not acquired by a Buyer or other Persons in accordance with
this Section 4(n) may not be issued, sold or exchanged until they are again
offered to such  Buyer under the procedures specified in this
Agreement.

    


    (vii)        The
Company and each Buyer agree that if any Buyer elects to participate in the
Offer, neither the Subsequent Placement Agreement with respect to such Offer nor
any other transaction documents related thereto (collectively, the “Subsequent Placement
Documents”) shall include any term or provision whereby such Buyer shall
be required to agree to any restrictions on trading as to any securities of the
Company or be required to consent to any amendment to or termination of, or
grant any waiver, release or the like under or in connection with, any agreement
previously entered into with the Company or any instrument received from the
Company.

    


    (viii)       Notwithstanding
anything to the contrary in this Section 4(n) and unless otherwise agreed to by
such Buyer, the Company shall either confirm in writing to such Buyer that the
transaction with respect to the Subsequent Placement has been abandoned or shall
publicly disclose its intention to issue the Offered Securities, in either case
in such a manner such that such Buyer will not be in possession of any material,
non-public information, by the fifth (5th)
Business Day following delivery of the Offer Notice. If by such fifth (5th)
Business Day, no public disclosure regarding a transaction with respect to the
Offered Securities has been made, and no notice regarding the abandonment of
such transaction has been received by such Buyer, such transaction shall be
deemed to have been abandoned and such Buyer shall not be in possession of any
material, non-public information with respect to the Company or any of its
Subsidiaries. Should the Company decide to pursue such transaction with respect
to the Offered Securities, the Company shall provide such Buyer with another
Offer Notice in accordance with, and subject to, the terms of this Section 4(n)
and such Buyer will again have the right of participation set forth in this
Section 4(n). The Company shall not be permitted to deliver more than one Offer
Notice to such Buyer in any sixty (60) day period, except as expressly
contemplated by the last sentence of Section 4(n)(ii).

     

    (ix)         The
restrictions contained in this Section 4(n) shall not apply in connection with
the issuance of any Excluded Securities. The Company shall not circumvent the
provisions of this Section 4(n) by providing terms or conditions to one Buyer
that are not provided to all.

     

    
      
         


      

      
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    (o)          Passive Foreign Investment
Company. The Company shall conduct its business in such a manner as will
ensure that the Company will not be deemed to constitute a passive foreign
investment company within the meaning of Section 1297 of the U.S. Internal
Revenue Code of 1986, as amended.

     

    (p)          Restriction on Redemption
and Cash Dividends. So long as any Warrants are outstanding, the Company
shall not, directly or indirectly, redeem, or declare or pay any cash dividend
or distribution on, any securities of the Company without the prior express
written consent of the Buyers.

     

    (q)          Corporate Existence.
So long as any Buyer owns any Warrants, the Company shall not be party to any
Fundamental Transaction (as defined in the Warrants) unless the Company is in
compliance with the applicable provisions governing Fundamental Transactions set
forth in the Warrants.

     

    (r)           Closing
Documents.  On or prior to fourteen (14) calendar days after
the Closing Date, the Company agrees to deliver, or cause to be delivered, to
each Buyer and Greenberg Traurig, LLP executed copies of the Transaction
Documents, Securities and other document required to be delivered to any party
pursuant to Section 7 hereof.

     

    
      	
              5.

            	
              REGISTER;
      TRANSFER AGENT INSTRUCTIONS;
LEGEND.

            


    

     

    (a)           Register. The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Common Shares and the Warrants in which the
Company shall record the name and address of the Person in whose name the Common
Shares and the
Warrants have been issued (including the name and address of each transferee),
the number of Common Shares held by such Person and the number of Warrant Shares
issuable upon exercise of the Warrants held by such Person. The Company shall
keep the register open and available at all times during business hours for
inspection of any Buyer or its legal representatives.

     

    (b)           Transfer Agent
Instructions. The
Company shall issue irrevocable instructions to the Transfer Agent in the form
previously provided to the Company (the “Irrevocable Transfer Agent
Instructions”) to issue certificates or credit shares to the applicable
balance accounts at DTC, registered in the name of each Buyer or its respective
nominee(s), for the Common Shares and the Warrant Shares in such amounts as
specified from time to time by each Buyer to the Company upon delivery of the
Common Shares or the exercise of the Warrants (as the case may be). The Company
represents and warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5(b) will be given by the Company
to the Transfer Agent with respect to the Securities, and that the Securities
shall otherwise be freely transferable on the books and records of the Company.
If a Buyer effects a sale, assignment or transfer of the Securities, the Company
shall permit the transfer and shall promptly instruct the Transfer Agent to
issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to each
Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach
of its obligations under this Section 5(b) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 5(b), that each Buyer shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required. The Company
shall cause its counsel to issue the legal opinion referred to in the
Irrevocable Transfer Agent Instructions to the Transfer Agent to the extent
required or requested by the Transfer Agent. Any fees (with respect to the
Transfer Agent, counsel to the Company or otherwise) associated with the
issuance of such opinion shall be borne by the Company.

     

    
      
         


      

      
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    (c)           Legends.
Certificates and any other instruments evidencing the Securities shall not bear
any restrictive or other legend.

     

    
      	
              6.

            	
              ADDITIONAL
      CLOSING DELIVERIES OF THE COMPANY.

            


    

     

    (a)          Deliveries. The
Company shall deliver to each Buyer on the Closing Date each of the
following:

     

    (i)           The
opinion of Cadwalader, Wickersham & Taft LLP, the
Company’s counsel, dated as of the Closing Date, in the form previously provided
to the Company.

     

    (ii)          The
opinion of Lionel Sawyer & Collins, the
Company’s Nevada counsel, dated as of the Closing Date, in the form previously
provided to the Company.

     

    (iii)         A
copy of the Irrevocable Transfer Agent Instructions, in the form previously
provided to the Company, that have been delivered to and acknowledged in writing
by the Transfer Agent.

     

    (iv)         A
certificate evidencing the formation and good standing of the Company and each
of its Subsidiaries in each such entity’s jurisdiction of formation issued by
the Secretary of State (or comparable office) of such jurisdiction of formation
as of a date within ten (10) days of the Closing Date.

     

    (v)          A
certificate evidencing the Company’s qualification as a foreign corporation and
good standing issued by the Secretary of State (or comparable office) of each
jurisdiction, if any, in which the Company conducts business and is required to
so qualify, as of a date within ten (10) days of the Closing Date.

     

    (vi)         A
certified copy of the Articles of Incorporation as certified by the Secretary of
State of the Company’s jurisdiction of formation within ten (10) days of the
Closing Date.

     

    (vii)        A
certificate, in the form previously provided to the Company, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company’s board of
directors in a form reasonably acceptable to such Buyer, (ii) the Articles of
Incorporation and (iii) the Bylaws, each as in effect at the
Closing.

     

    
      
         


      

      
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    (viii)       A
letter from the Transfer Agent certifying the number of shares of Common Stock
outstanding on the Closing Date immediately prior to the Closing.

     

    (ix)         Such
other documents, instruments or certificates relating to the transactions
contemplated by this Agreement as such Buyer or its counsel may reasonably
request.

     

    
      	
              7.

            	
              TERMINATION.

            


    

     

    In the
event that the Closing shall not have occurred with respect to a Buyer within
five (5) days after the date hereof, then such Buyer shall have the right to
terminate its obligations under this Agreement with respect to itself at any
time on or after the close of business on such date without liability of such
Buyer to any other party; provided, however, (i) the right to terminate this
Agreement under this Section 7 shall not be available to such Buyer if the
failure of the transactions contemplated by this Agreement to have been
consummated by such date is the result of such Buyer’s breach of this Agreement
and (ii) the abandonment of the sale and purchase of the Common Shares and the
Warrants shall be applicable only to such Buyer providing such written notice,
provided further that no such termination shall affect any obligation of the
Company under this Agreement to reimburse such Buyer for the expenses described
in Section 4(g) above, except if (x) such breach is caused by such Buyer and (y)
solely to the extent of any such reimbursement amounts in excess of
$25,000.  Nothing contained in this Section 7 shall be deemed to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction
Documents.

    


    
      	
              8.

            	
              MISCELLANEOUS.

            


    

     

    (a)           Governing Law; Jurisdiction;
Jury Trial. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, 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.
The Company hereby appoints CT Corporation System, with offices at 111 Eighth
Avenue, New York, New York 10011, as its agent for service of process in New
York.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

     

    
      
         


      

      
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    (b)          Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
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. In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page 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 signature page were an original
thereof.

     

    (c)          Headings;
Gender. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement. Unless the context
clearly indicates otherwise, each pronoun herein shall be deemed to include the
masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,” “includes,” “include” and words of like import shall be construed
broadly as if followed by the words “without limitation.”  The terms
“herein,” “hereunder,” “hereof” and words of like import refer to this entire
Agreement instead of just the provision in which they are found.

     

    (d)          Severability. If any
provision of this Agreement is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s).


    
      
         


      

      
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    (e)          Entire Agreement;
Amendments. This
Agreement, the other Transaction Documents and the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
supersede all other prior oral or written agreements between the Buyers, the
Company, their affiliates and Persons acting on their behalf solely with respect
to the matters contained herein and therein, and this Agreement, the other
Transaction Documents, the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein contain the entire
understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other
Transaction Document shall (or shall be deemed to) (i) have any effect on any
agreements any Buyer has entered into with the Company or any of its
Subsidiaries prior to the date hereof with respect to any prior investment made
by such Buyer in the Company or (ii) waive, alter, modify or amend in any
respect any obligations of the Company or any of its Subsidiaries, or any rights
of or benefits to any Buyer or any other Person, in any agreement entered into
prior to the date hereof between or among the Company and/or any of its
Subsidiaries and any Buyer and all such agreements shall continue in full force
and effect. Except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. For clarification purposes, the
Recitals are part of this Agreement. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and each of
the Buyers. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party. 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 the Transaction Documents unless the same consideration
also is offered to all of the parties to the Transaction Documents, all holders
of Common Shares or all holders of the Warrants (as the case may be). The
Company has not, directly or indirectly, made any agreements with any Buyers
relating to the terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction Documents. Without
limiting the foregoing, the Company confirms that, except as set forth in this
Agreement, no Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company, any Subsidiary or otherwise.
As a material inducement for each Buyer to enter into this Agreement, the
Company expressly acknowledges and agrees that (i) no due diligence or other
investigation or inquiry conducted by a Buyer, any of its advisors or any of its
representatives shall affect such Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other
Transaction Document, (ii) nothing contained in the Registration Statement, the
Prospectus or the Prospectus Supplement shall affect such Buyer’s right to rely
on, or shall modify or qualify in any manner or be an exception to any of, the
Company’s representations and warranties contained in this Agreement or any
other Transaction Document and (iii) unless a provision of this Agreement or any
other Transaction Document is expressly preceded by the phrase “except as
disclosed in the SEC Documents,” nothing contained in any of the SEC Documents
shall affect such Buyer’s right to rely on, or shall modify or qualify in any
manner or be an exception to any of, the Company’s representations and
warranties contained in this Agreement or any other Transaction
Document.

     

    (f)           Notices. 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 an overnight courier service
with next day delivery specified, 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:

     

    China
Shen Zhou Mining & Resources, Inc.

    No. 166
Fushi Road

    Zeyang
Tower

    Shijingshan
District

    Beijing,
China 100043

    86-010-8890-6927

    Telephone:  +86-010-8890-9976

    Facsimile:
+86-010-8890-6927

    Attention:  Ms.
Xiaojing Yu


    
      
         


      

      
        35

        
          

        

      

      
         


      

    

     

    With a
copy (for informational purposes only) to:

     

    Cadwalader,
Wickersham & Taft LLP

    2301
China Central Place Tower 2

    No. 79
Jianguo Road

    Beijing
100025, China

    Telephone:  +86-010-6599-7270

    Facsimile:  +86-010-6599-7300

    Attention:  Jiannan
Zhang, Esq.

     

    If to the
Transfer Agent:

     

    Standard
Registrar & Transfer

    12528
South 1840 East

    Draper,
UT 84020

    Telephone:  801-571-8844

    Facsimile:  801-571-2551

    


    If to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
with copies to such Buyer’s representatives as set forth on the Schedule of
Buyers,

     

    with a
copy (for informational purposes only) to:

     

    Greenberg
Traurig, LLP

    MetLife
Building

    200 Park
Avenue

    New York,
NY 10166

    Telephone:  (212)
801-9200

    Facsimile:  (212)
805-9222

    Attention:  Michael
A. Adelstein, Esq.

     

    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 an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.

     

    (g)           Successors and
Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including, as contemplated below, any
assignee of any of the Securities. The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of each
of the Buyers, including, without limitation, by way of a Fundamental
Transaction (as defined in the Warrants) (unless the Company is in compliance
with the applicable provisions governing Fundamental Transactions set forth in
the Warrants). A Buyer may assign some or all of its rights hereunder in
connection with any transfer of any of its Securities without the consent of the
Company, in which event such assignee shall be deemed to be a Buyer hereunder
with respect to such assigned rights.

     

    
      
         


      

      
        36

        
          

        

      

      
         


      

    

     

    (h)          No Third Party
Beneficiaries. 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, other than the Indemnitees
referred to in Section 8(k).

     

    (i)           Survival. The
representations, warranties, agreements and covenants shall survive the Closing.
Each Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.

     

    (j)           Further
Assurances. 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 any 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.

     

    (k)          Indemnification

     

    (i)           In
consideration of each Buyer’s execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each holder of any
Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons’ agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against
any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in any of the Transaction Documents, (b) any breach of any covenant,
agreement or obligation of the Company contained in any of the Transaction
Documents or (c) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting from (i) the
execution, delivery, performance or enforcement of any of the Transaction
Documents, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities,
(iii) any disclosure properly made by such Buyer pursuant to Section 4(i), or
(iv) the status of such Buyer or holder of the Securities as an investor in the
Company pursuant to the transactions contemplated by the Transaction Documents.
To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.

     

    
      
         


      

      
        37

        
          

        

      

      
         


      

    

     

    (ii)   
      Promptly after receipt by an Indemnitee
under this Section 8(k) of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving an
Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is
to be made against the Company under this Section 8(k), deliver to the Company a
written notice of the commencement thereof, and the Company shall have the right
to participate in, and, to the extent the Company so desires, to assume control
of the defense thereof with counsel mutually satisfactory to the Company and the
Indemnitee; provided, however, that an Indemnitee shall have the right to retain
its own counsel with the fees and expenses of such counsel to be paid by the
Company if: (i) the Company has agreed in writing to pay such fees and expenses;
(ii) the Company shall have failed promptly to assume the defense of such
Indemnified Liability and to employ counsel reasonably satisfactory to such
Indemnitee in any such Indemnified Liability; or (iii) the named parties to any
such Indemnified Liability (including any impleaded parties) include both such
Indemnitee and the Company, and such Indemnitee shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnitee and the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate counsel at the
expense of the Company, then the Company shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Company),
provided further, that in the case of clause (iii) above the Company shall not
be responsible for the reasonable fees and expenses of more than one (1)
separate legal counsel for such Indemnitee. The Indemnitee shall reasonably
cooperate with the Company in connection with any negotiation or defense of any
such action or Indemnified Liability by the Company and shall furnish to the
Company all information reasonably available to the Indemnitee which relates to
such action or Indemnified Liability. The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. The Company shall not be liable
for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company shall not, without the
prior written consent of the Indemnitee, 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
Indemnitee of a release from all liability in respect to such Indemnified
Liability or litigation, and such settlement shall not include any admission as
to fault on the part of the Indemnitee. Following indemnification as provided
for hereunder, the Company shall be subrogated to all rights of the Indemnitee
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 Company within a reasonable time of the commencement of any such action
shall not relieve the Company of any liability to the Indemnitee under this
Section 8(k), except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action.

     

    (iii)         The
indemnification required by this Section 8(k) 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 Liabilities are
incurred.


    
      
         


      

      
        38

        
          

        

      

      
         


      

    

     

    (iv)         The
indemnity agreement contained herein shall be in addition to (A) any cause of
action or similar right of the Indemnitee against the Company or others, and (B)
any liabilities the Company may be subject to pursuant to the law.

     

    (l)           Construction. 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. No specific representation or warranty shall limit
the generality or applicability of a more general representation or warranty.
Each and every reference to share prices, shares of Common Stock and any other
numbers in this Agreement that relate to the Common Stock shall be automatically
adjusted for stock splits, stock dividends, stock combinations and other similar
transactions that occur with respect to the Common Stock after the date of this
Agreement.

     

    (m)         Remedies.  Each
Buyer and each holder of any Securities shall have all rights and remedies set
forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law. Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. Furthermore, the Company recognizes
that in the event that it fails to perform, observe, or discharge any or all of
its obligations under the Transaction Documents, any remedy at law may prove to
be inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek specific performance and/or temporary, preliminary and
permanent injunctive or other equitable relief from any court of competent
jurisdiction in any such case without the necessity of proving actual damages
and without posting a bond or other security.

     

    (n)          Withdrawal
Right.
Notwithstanding anything to the contrary contained in (and without limiting any
similar provisions of) the Transaction Documents, whenever any Buyer 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 Buyer 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.

     

    (o)          Payment Set Aside;
Currency. To the
extent that the Company makes a payment or payments to any Buyer hereunder or
pursuant to any of the other Transaction Documents or any of the Buyers enforce
or exercise their rights hereunder or 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, foreign, 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. Until the Warrants
are no longer outstanding, the Company shall not effect any stock combination,
reverse stock split or other similar transaction (or make any public
announcement or disclosure with respect to any of the foregoing) without the
prior written consent of each of the Buyers. Unless otherwise expressly
indicated, all dollar amounts referred to in this Agreement and the other
Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts
owing under this Agreement and all other Transaction Documents shall be paid in
U.S. Dollars. All amounts denominated in other currencies (if any) shall be
converted into the U.S. Dollar equivalent amount in accordance with the Exchange
Rate on the date of calculation. “Exchange Rate” means, in relation to
any amount of currency to be converted into U.S. Dollars pursuant to this
Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal
on the relevant date of calculation.

     

    
      
         


      

      
        39

        
          

        

      

      
         


      

    


    (p)         Judgment
Currency.

     

    (i)          If
for the purpose of obtaining or enforcing judgment against the Company in
connection with this Agreement or any other Transaction Document in any court in
any jurisdiction it becomes necessary to convert into any other currency (such
other currency being hereinafter in this Section 8(p) referred to as the “Judgment Currency”) an amount
due in US Dollars under this Agreement, the conversion shall be made at the
Exchange Rate prevailing on the Trading Day immediately preceding:

     

    
      	
               
      

            	
              (1)

            	
              the
      date actual payment of the amount due, in the case of any proceeding in
      the courts of New York or in the courts of any other jurisdiction that
      will give effect to such conversion being made on such date:
      or

            


    

     

    
      	
               
      

            	
              (2)

            	
              the
      date on which the foreign court determines, in the case of any proceeding
      in the courts of any other jurisdiction (the date as of which such
      conversion is made pursuant to this Section 8(p)(i)(2) being hereinafter
      referred to as the “Judgment Conversion
      Date”).

            


    

     

    (ii)         If
in the case of any proceeding in the court of any jurisdiction referred to in
Section 8(p)(i)(2) above, there is a change in the Exchange Rate prevailing
between the Judgment Conversion Date and the date of actual payment of the
amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of U.S. Dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date.

     

    (iii)        Any
amount due from the Company under this provision shall be due as a separate debt
and shall not be affected by judgment being obtained for any other amounts due
under or in respect of this Agreement.

     

    
      
         


      

      
        40

        
          

        

      

      
         


      

    


    (q)          Independent Nature of
Buyers’ Obligations and Rights.  The
obligations of each Buyer under the Transaction Documents are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document.  Nothing contained herein or in any other
Transaction Document, and no action taken by any Buyer pursuant hereto or
thereto, shall be deemed to constitute the Buyers as, and the Company
acknowledges that the Buyers do not so constitute, a partnership, an
association, a joint venture or any other kind of group or entity, or create a
presumption that the Buyers are in any way acting in concert or as a group or
entity with respect to such obligations or the transactions contemplated by the
Transaction Documents or any matters, and the Company acknowledges that the
Buyers are not acting in concert or as a group, and the Company shall not assert
any such claim, with respect to such obligations or the transactions
contemplated by the Transaction Documents. The decision of each Buyer to
purchase Securities pursuant to the Transaction Documents has been made by such
Buyer independently of any other Buyer. Each Buyer acknowledges that no other
Buyer has acted as agent for such Buyer in connection with such Buyer making its
investment hereunder and that no other Buyer will be acting as agent of such
Buyer in connection with monitoring such Buyer’s investment in the Securities or
enforcing its rights under the Transaction Documents. The Company and each Buyer
confirms that each Buyer has independently participated with the Company in the
negotiation of the transaction contemplated hereby with the advice of its own
counsel and advisors. Each Buyer shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Buyer to be joined as an additional party in any
proceeding for such purpose.  The use of a single agreement to
effectuate the purchase and sale of the Securities contemplated hereby was
solely in the control of the Company, not the action or decision of any Buyer,
and was done solely for the convenience of the Company and not because it was
required or requested to do so by any Buyer.  It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company and a Buyer, solely, and
not between the Company and the Buyers collectively and not between and among
the Buyers.

     

    
      	
               
      

            	
              (r)

            	
              Taxes.

            


    

     

    (i)           Without
limiting any other provision of this Agreement, any and all payments by the
Company hereunder shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto (collectively referred to
as “Taxes”) unless the
Company is required to withhold or deduct any amounts for, or on account of
Taxes pursuant to any applicable law. If the Company shall be required to deduct
any Taxes from or in respect of any sum payable hereunder to any Buyer, (i) the
sum payable shall be increased by the amount by which the sum payable would
otherwise have to be increased (the “make-whole amount”) to ensure
that after making all required deductions (including deductions applicable to
the make-whole amount) such Buyer would receive an amount equal to the sum it
would have received had no such deductions been made, (ii) the Company shall
make such deductions and (iii) the Company shall pay the full amount withheld or
deducted to the relevant governmental authority within the time
required.

     

    (ii)          In
addition, the Company agrees to pay to the relevant governmental authority in
accordance with applicable law any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies that arise from
any payment made hereunder or in connection with the execution, delivery,
registration or performance of, or otherwise with respect to, this Agreement
(“Other
Taxes”).

     

    (iii)         The
Company shall deliver to each Buyer official receipts, if any, in respect of any
Taxes and Other Taxes payable hereunder promptly after payment of such Taxes and
Other Taxes or other evidence of payment reasonably acceptable to each such
Buyer.

     


    
      
         


      

      
        41

        
          

        

      

      
         


      

    

     

    (iv)         If
the Company fails to pay any amounts in accordance with this Section 8(r), the
Company shall indemnify each Buyer within ten (10) calendar days after written
demand therefor, for the full amount of any Taxes or Other Taxes, plus any
related interest or penalties, that are paid by the applicable Buyer to the
relevant governmental authority or other relevant governmental authority as a
result of such failure.

     

    (v)    
     The obligations of the Company under this Section
8(r) shall survive the termination of this Agreement and the payment of all
amounts payable hereunder.

     

    [signature pages
follow]
 

    
      
         


      

      
        42

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, Buyer and
the Company have caused their respective signature page to this Agreement to be
duly executed as of the date first written above.

    


    
      
        
          
            
              	 
      	
                      COMPANY:

                    
	 	 
	 
      	
                      CHINA
      SHEN ZHOU MINING & RESOURCES,

                      INC.

                    
	 	 
	 
      	
                      By:

                    	 
        
	 
      	 
      	
                      Name:

                    
	 
      	 
      	
                      Title

                    


            

          

        

      

    

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

    


    IN WITNESS WHEREOF, Buyer and
the Company have caused their respective signature page to this Agreement to be
duly executed as of the date first written above.

    


    
      
        
          	 
      	
                  BUYER:

                
	 
      	 
      
	 
      	
                  HUDSON
      BAY MASTER FUND LTD.

                
	 
      	 
      
	 
      	
                  By:

                	  
        
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title:

                


        

      

    

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, Buyer and
the Company have caused their respective signature page to this Agreement to be
duly executed as of the date first written above.

     

    
      
        
          	 
      	
                  BUYER:

                
	 
      	 
      
	 
      	
                  [OTHER
      BUYERS]

                
	 
      	 
      
	 
      	
                  By:

                	  
        
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title:

                


        

      

    

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    SCHEDULE
OF BUYERS