SECURITIES
      PURCHASE AGREEMENT

     

    Dated
      as of July 18, 2008

     

    among

     

    SOUTHERN
      SAUCE COMPANY, INC.

     

    and

     

    THE
      PURCHASER LISTED ON EXHIBIT A 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Table
      of
      Contents

     

    
      	 	 	
              Page

            
	 	 	 
	
              ARTICLE
                I

            	
              Purchase
                and Sale of Preferred Stock

            	
              1

            
	 	 	 
	
              Section
                1.1

            	
              Purchase
                and Sale of Stock

            	
              1

            
	 	 	 
	
              Section
                1.2

            	
              Warrants

            	
              1

            
	 	 	 
	
              Section
                1.3

            	
              Conversion
                Shares

            	
              1

            
	 	 	 
	
              Section
                1.4

            	
              Purchase
                Price and Closing

            	
              2

            
	 	 	 
	
              Section
                1.5

            	
              Reverse
                Merger Transaction

            	
              2

            
	 	 	 
	
              ARTICLE
                II

            	
              Representations
                and Warranties

            	
              3

            
	 	 	 
	
              Section
                2.1

            	
              Representations
                and Warranties of the Company

            	
              3

            
	 	 	 
	
              Section
                2.2

            	
              Representations
                and Warranties of the Purchaser

            	
              14

            
	 	 	 
	
              ARTICLE
                III

            	
              Covenants

            	
              17

            
	 	 	 
	
              Section
                3.1

            	
              Securities
                Compliance

            	
              17

            
	 	 	 
	
              Section
                3.2

            	
              Registration
                and Listing

            	
              17

            
	 	 	 
	
              Section
                3.3

            	
              Inspection
                Rights

            	
              17

            
	 	 	 
	
              Section
                3.4

            	
              Compliance
                with Laws

            	
              18

            
	 	 	 
	
              Section
                3.5

            	
              Keeping
                of Records and Books of Account

            	
              18

            
	 	 	 
	
              Section
                3.6

            	
              Reporting
                Requirements

            	
              18

            
	 	 	 
	
              Section
                3.7

            	
              Amendments

            	
              18

            
	 	 	 
	
              Section
                3.8

            	
              Other
                Agreements

            	
              19

            
	 	 	 
	
              Section
                3.9

            	
              Distributions

            	
              19

            
	 	 	 
	
              Section
                3.10

            	
              Use
                of Proceeds

            	
              19

            
	 	 	 
	
              Section
                3.11

            	
              Reservation
                of Shares

            	
              19

            
	 	 	 
	
              Section
                3.12

            	
              Transfer
                Agent Instructions

            	
              19

            
	 	 	 
	
              Section
                3.13

            	
              Disposition
                of Assets

            	
              20

            
	 	 	 
	
              Section
                3.14

            	
              Reporting
                Status

            	
              20

            


    

     

    
      
        
        

      

      
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    Table
      of
      Contents

     

    
      	 	 	
              Page

            
	 	 	 
	
              Section
                3.15

            	
              Disclosure
                of Transaction

            	
              20

            
	 	 	 
	
              Section
                3.16

            	
              Disclosure
                of Material Information

            	
              20

            
	 	 	 
	
              Section
                3.17

            	
              Pledge
                of Securities

            	
              20

            
	 	 	 
	
              Section
                3.18

            	
              Reserved.

            	
              21

            
	 	 	 
	
              Section
                3.19

            	
              Lock-Up
                Agreement

            	
              21

            
	 	 	 
	
              Section
                3.20

            	
              Investor
                and Public Relations Escrow

            	
              21

            
	 	 	 
	
              Section
                3.21

            	
              Reserved.

            	
              21

            
	 	 	 
	
              Section
                3.22

            	
              DTC

            	
              21

            
	 	 	 
	
              Section
                3.23

            	
              Subsequent
                Financings

            	
              22

            
	 	 	 
	
              Section
                3.24

            	
              Sarbanes-Oxley
                Act

            	
              23

            
	 	 	 
	
              Section
                3.25

            	
              Exchange
                Listing

            	
              23

            
	 	 	 
	
              Section
                3.26

            	
              No
                Commissions in Connection with Conversion of Preferred
                Shares

            	
              24

            
	 	 	 
	
              Section
                3.27

            	
              Financial
                Public Relations Firm and Appearances

            	
              24

            
	 	 	 
	
              ARTICLE
                IV

            	
              CONDITIONS

            	
              24

            
	 	 	 
	
              Section
                4.1

            	
              Conditions
                Precedent to the Obligation of the Company to Sell the
                Shares

            	
              24

            
	 	 	 
	
              Section
                4.2

            	
              Conditions
                Precedent to the Obligation of the Purchaser to Purchase the
                Units

            	
              25

            
	 	 	 
	
              ARTICLE
                V

            	
              Stock
                Certificate Legend

            	
              28

            
	 	 	 
	
              Section
                5.1

            	
              Legend

            	
              28

            
	 	 	 
	
              ARTICLE
                VI

            	
              Indemnification

            	
              29

            
	 	 	 
	
              Section
                6.1

            	
              General
                Indemnity

            	
              29

            
	 	 	 
	
              Section
                6.2

            	
              Indemnification
                Procedure

            	
              30

            
	 	 	 
	
              ARTICLE
                VII

            	
              Miscellaneous

            	
              30

            
	 	 	 
	
              Section
                7.1

            	
              Fees
                and Expenses

            	
              30

            


    

     

    
      
        
        

      

      
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    Table
      of
      Contents

     

    
      	 	 	
              Page

            
	 	 	 
	
              Section
                7.2

            	
              Capital
                Contribution

            	
              31

            
	 	 	 
	
              Section
                7.3

            	
              Transfer
                of Vehicles

            	
              31

            
	 	 	 
	
              Section
                7.4

            	
              Reserved.

            	
              31

            
	 	 	 
	
              Section
                7.5

            	
              Specific
                Enforcement, Consent to Jurisdiction

            	
              31

            
	 	 	 
	
              Section
                7.6

            	
              Entire
                Agreement; Amendment

            	
              32

            
	 	 	 
	
              Section
                7.7

            	
              Notices

            	
              32

            
	 	 	 
	
              Section
                7.8

            	
              Waivers

            	
              33

            
	 	 	 
	
              Section
                7.9

            	
              Headings

            	
              33

            
	 	 	 
	
              Section
                7.10

            	
              Successors
                and Assigns

            	
              33

            
	 	 	 
	
              Section
                7.11

            	
              No
                Third Party Beneficiaries

            	
              33

            
	 	 	 
	
              Section
                7.12

            	
              Governing
                Law

            	
              33

            
	 	 	 
	
              Section
                7.13

            	
              Survival

            	
              33

            
	 	 	 
	
              Section
                7.14

            	
              Counterparts

            	
              33

            
	 	 	 
	
              Section
                7.15

            	
              Publicity

            	
              33

            
	 	 	 
	
              Section
                7.16

            	
              Severability

            	
              33

            
	 	 	 
	
              Section
                7.17

            	
              Further
                Assurances

            	
              34

            


    

     

    
      
        
        

      

      
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    SECURITIES
      PURCHASE AGREEMENT

     

    This
      SECURITIES PURCHASE AGREEMENT (the “Agreement”)
      is
      dated as of July 18, 2008 by and among Southern Sauce Company, Inc., a Florida
      corporation (the “Company”),
      and
      the Purchaser of Units whose name is set forth on Exhibit
      A
      hereto
      (the “Purchaser”).

     

    The
      parties hereto agree as follows:

     

    ARTICLE
      I

     

    Purchase
      and Sale of Preferred Stock

     

    Section
      1.1 Purchase
      and Sale of Stock.
      Upon
      the following terms and conditions, the Company shall issue and sell to the
      Purchaser and the Purchaser shall purchase from the Company, Units (the
“Units”),
      each
      consisting of one share of the Company’s Series A Convertible Preferred Stock,
      par value $0.001 per share (the “Preferred
      Shares”),
      convertible into one share of the Company’s common stock, par value $0.001 per
      share (the “Common
      Stock”)
      and
      one Series A Warrant (as defined below) to purchase Common Stock in the amounts
      set forth opposite the Purchaser’s name on Exhibit
      A
      hereto.
      The designation, rights, preferences and other terms and provisions of the
      Series A Convertible Preferred Stock are set forth in the Series A Certificate
      of Designation of the Relative Rights and Preferences of the Series A
      Convertible Preferred Stock as filed with Secretary of State of Florida on
      June
      10, 2008, attached hereto as Exhibit
      B
      (the
“Series
      A Certificate of Designation”).
      The
      Company and the Purchaser are executing and delivering this Agreement in
      accordance with and in reliance upon the exemption from securities registration
      afforded by Rule 506 of Regulation D (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“Commission”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”)
      or
      Section 4(2) of the Securities Act.

     

    Section
      1.2 Warrants.
      Upon
      the following terms and conditions and for no additional consideration, the
      Purchaser shall be issued Series A Warrants, in substantially the form attached
      hereto as Exhibit
      C
      (the
“Warrants”),
      to
      purchase the number of shares of Common Stock equal to One Hundred Twenty (120%)
      of the number of shares of Common Stock issuable upon conversion of the
      Preferred Shares purchased by the Purchaser pursuant to the terms of this
      Agreement, as set forth opposite the Purchaser’s name on Exhibit
      A
      hereto.
      The Warrants shall expire five (5) years following the Closing Date. The
      Warrants shall have an exercise price per share equal to the Warrant Price
      (as
      defined in the Warrant).

     

    Section
      1.3 Conversion
      Shares.
      The
      Company has authorized and has reserved and covenants to continue to reserve,
      free of preemptive rights and other similar contractual rights of stockholders,
      a number of shares of Common Stock equal to one hundred fifty percent (150%)
      of
      the number of shares of Common Stock as shall from time to time be sufficient
      to
      effect the conversion of all of the Preferred Shares and exercise of the
      Warrants then outstanding. Any shares of Common Stock issuable upon conversion
      of the Preferred Shares and exercise of the Warrants (and such shares when
      issued) are herein referred to as the “Conversion
      Shares”
and
      the
“Warrant
      Shares”,
      respectively. The Preferred Shares, the Conversion Shares and the Warrant Shares
      are sometimes collectively referred to as the “Shares”.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
      1.4 Purchase
      Price and Closing.
      Subject
      to the terms and conditions hereof, the Company agrees to issue and sell to
      the
      Purchaser and, in consideration of and in express reliance upon the
      representations, warranties, covenants, terms and conditions of this Agreement,
      the Purchaser, severally but not jointly, agree to purchase the Units for an
      aggregate purchase price of up to $5,000,000 (the “Maximum
      Offering Amount”),
      or
      $2.5357 per Unit (the “Purchase
      Price”).
      The
      closing of the purchase and sale of the Units to be acquired by the Purchaser
      from the Company under this Agreement shall take place at the offices of
      Sichenzia Ross Friedman Ference LLP, 61 Broadway, New York, NY 10006 (the
“Closing”).
      Subject to the terms and conditions set forth in this Agreement, the date and
      time of the Closing shall be the Closing Date (or such later date as is mutually
      agreed to by the Company and the Purchaser), provided,
      that
      all of the conditions set forth in Article IV hereof and applicable to the
      Closing shall have been fulfilled or waived in accordance herewith (the
“Closing
      Date”).
      Subject to the terms and conditions of this Agreement, at the Closing the
      Company shall deliver or cause to be delivered to the Purchaser or its
      nominee(s) (x) a certificate for the number of Preferred Shares set forth
      opposite the name of the Purchaser or its nominee(s) on Exhibit
      A
      hereto,
      (y) its Warrants to purchase such number of shares of Common Stock as is set
      forth opposite the name of the Purchaser or its nominee(s) on Exhibit
      A
      attached
      hereto and (z) any other documents required to be delivered pursuant to Article
      IV hereof. At the Closing, the Purchaser shall deliver its Purchase Price by
      wire transfer to Company and its nominees as so directed. In addition, the
      parties acknowledge that Five Hundred Thousand Dollars ($500,000) have been
      deposited in an escrow account pursuant to an Escrow General Agreement and
      related amendment entered into as of June 2, 2008 and June 4, 2008 respectively,
      by and between the Company, Shen Kun International Limited, Vision Opportunity
      China LP (“Vision”), and Loeb & Loeb LLP, to be used by the Company in
      connection with investor and public relations.

     

    Section
      1.5 Reverse
      Merger Transaction.
      The
      parties acknowledge that prior to the consummation of the transactions
      contemplated by this Agreement, the Company issued shares of its Common Stock
      to
      Shen Kun International Limited, a company organized in the British Virgin
      Islands (the “BVI”)
      (“Shen
      Kun”),
      pursuant to that certain Merger Agreement dated as of June 9, 2008 by and among
      the Company, Shen Kun Acquisition Sub Limited, a BVI company which is a wholly
      owned subsidiary of the Company (“Acquisition
      Subsidiary”),
      Shen
      Kun, Parent Controlling Shareholders (as that term is defined in the Merger
      Agreement), Shen Kun Shareholders (as that term is defined in the Merger
      Agreement), and Shengkai (Tianjin) Ceramic Valves Co., Ltd., a PRC wholly
      foreign-owned enterprise (“WFOE”)
      organized under the laws of the People’s Republic of China (the “PRC”),
      and
      Tianjin Shengkai Industrial Technology Development Co., Ltd., a PRC company,
      (the “Merger Agreement”), and upon the consummation of the transactions
      contemplated by the Merger Agreement, WFOE, a direct wholly-owned subsidiary
      of
      Shen Kun immediately prior to the consummation of the transactions contemplated
      by the Merger Agreement, on June 9, 2008 became an indirect wholly-owned
      subsidiary of the Company (the “Reverse
      Merger Transaction”).


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    ARTICLE
      II

    


    Representations
      and Warranties

     

    Section
      2.1 Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Purchaser, as of the date hereof
      (except as set forth on the Schedule of Exceptions attached hereto with each
      numbered Schedule corresponding to the section number herein), as
      follows:

     

    (a) Organization,
      Good Standing and Power.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Florida and has the requisite corporate
      power to own, lease and operate its properties and assets and to conduct its
      business as it is now being conducted. The Company does not have any
      subsidiaries except as set forth in the Company’s Form 10-KSB for the year ended
      December 31, 2007, including the accompanying financial statements (the
“Form
      10-KSB”),
      in
      the Quarterly Reports on Form 10-QSB for its fiscal quarters ended March 31,
      2007, June 30, 2007, September 30, 2007 and March 31, 2008 (collectively, the
      “Form
      10-QSBs”)
      or as
      set forth in Schedule 2.1(g). Except as set forth on Schedule
      2.1(a),
      the
      Company and each such subsidiary is duly qualified as a foreign corporation
      to
      do business and is in good standing in every jurisdiction in which the nature
      of
      the business conducted or property owned by it makes such qualification
      necessary except for any jurisdiction(s) (alone or in the aggregate) in which
      the failure to be so qualified will not have a Material Adverse Effect (as
      defined in Section 2.1(c) hereof) on the Company’s financial
      condition.

     

    (b) Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and
      perform this Agreement, the Registration Rights Agreement in the form attached
      hereto as Exhibit
      D
      (the
“Registration
      Rights Agreement”),
      the
      Securities Escrow Agreement by and among the Company, the Purchaser and the
      escrow agent named therein, dated as of the date hereof, substantially in the
      form of Exhibit
      F
      attached
      hereto (the “Securities
      Escrow Agreement”)
      and,
      together with the Securities Escrow Agreement, the “Escrow Agreements”), the
      Irrevocable Transfer Agent Instructions (as defined in Section 3.13), the Series
      A Certificate of Designation, and the Warrants (collectively, the “Transaction
      Documents”)
      and to
      issue and sell the Units, the Shares and the Warrants in accordance with the
      terms hereof. The execution, delivery and performance of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby have been duly and validly authorized by all
      necessary corporate action, and no further consent or authorization of the
      Company or its Board of Directors or stockholders is required. This Agreement
      has been duly executed and delivered by the Company. The other Transaction
      Documents will have been duly executed and delivered by the Company at the
      Closing. Each of the Transaction Documents constitutes, or shall constitute
      when
      executed and delivered, a valid and binding obligation of the Company
      enforceable against the Company in accordance with its terms, except as such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation, conservatorship, receivership or
      similar laws relating to, or affecting generally the enforcement of, creditor’s
      rights and remedies or by other equitable principles of general
      application.


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (c) Capitalization.
      The
      authorized capital stock of the Company and the shares thereof currently issued
      and outstanding as of the date hereof are set forth on Schedule
      2.1(c)
      hereto.
      All of the outstanding shares of the Common Stock and the Preferred Shares
      have
      been duly and validly authorized. Except as contemplated by the Transaction
      Documents, the Securities Purchase Agreement dated as of June 10, 2008, by
      and
      between the Company and Vision in connection with a financing transaction closed
      on June 11, 2008 (the “June 2008 Purchase Agreement”), all other “Transaction
      Documents” (as such term is defined in the June 2008 Purchase Agreement) (the
      June 2008 Purchase Agreement and other “Transaction Documents” collectively
      defined hereto as the “June 2008 Transaction Documents”), or as set forth on
Schedule
      2.1(c)
      hereto,
      no shares of Common Stock are entitled to preemptive rights or registration
      rights and there are no outstanding options, warrants, scrip, rights to
      subscribe to, call or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company. Except as contemplated by the Transaction Documents or the June 2008
      Transaction Documents there are no contracts, commitments, understandings,
      or
      arrangements by which the Company is or may become bound to issue additional
      shares of the capital stock of the Company or options, securities or rights
      convertible into shares of capital stock of the Company. Except as contemplated
      by the Transaction Documents or the June 2008 Transaction Documents or as set
      forth on Schedule
      2.1(c)
      hereto,
      the Company is not a party to any agreement granting registration or
      anti-dilution rights to any person with respect to any of its equity or debt
      securities. The Company is not a party to, and it has no knowledge of, any
      agreement restricting the voting or transfer of any shares of the capital stock
      of the Company. The offer and sale of all capital stock, convertible securities,
      rights, warrants, or options of the Company issued prior to the Closing complied
      with all applicable federal and state securities laws, and no stockholder has
      a
      right of rescission or claim for damages with respect thereto which would have
      a
      Material Adverse Effect (as defined below). The Company has furnished or made
      available to the Purchaser true and correct copies of the Company’s Articles of
      Incorporation as in effect on the date hereof (the “Articles”),
      and
      the Company’s Bylaws as in effect on the date hereof (the “Bylaws”).
      For
      the purposes of this Agreement, “Material
      Adverse Effect”
means
      any material adverse effect on the business, operations, properties, or
      financial condition of the Company and its subsidiaries and/or any condition,
      circumstance, or situation that would prohibit or otherwise interfere with
      the
      ability of the Company to perform any of its obligations under this Agreement
      in
      any material respect.

     

    (d) Issuance
      of Shares.
      The
      Units, the Preferred Shares and the Warrants to be issued at the Closing have
      been duly authorized by all necessary corporate action and the Preferred Shares,
      when paid for or issued in accordance with the terms hereof, shall be validly
      issued and outstanding, fully paid and nonassessable and entitled to the rights
      and preferences set forth in the Series A Certificate of Designation. When
      the
      Conversion Shares and the Warrant Shares are issued in accordance with the
      terms
      of the Series A Certificate of Designation and the Warrants, respectively,
      such
      shares will be duly authorized by all necessary corporate action and validly
      issued and outstanding, fully paid and nonassessable, and the holders shall
      be
      entitled to all rights accorded to a holder of Common Stock.


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (e) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated herein
      and
      therein do not and will not (i) violate any provision of the Company’s Articles
      or Bylaws, (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, mortgage, deed of trust, indenture, note, bond, license, lease
      agreement, instrument or obligation to which the Company is a party or by which
      it or its properties or assets are bound, (iii) create or impose a lien,
      mortgage, security interest, charge or encumbrance of any nature on any property
      of the Company under any agreement or any commitment to which the Company is
      a
      party or by which the Company is bound or by which any of its respective
      properties or assets are bound, or (iv) result in a violation of any federal,
      state, local or foreign statute, rule, regulation, order, judgment or decree
      (including federal and state securities laws and regulations) applicable to
      the
      Company or any of its subsidiaries or by which any property or asset of the
      Company or any of its subsidiaries are bound or affected, except, in all cases
      other than violations pursuant to clauses (i) and (iv) above, for such
      conflicts, defaults, terminations, amendments, accelerations, cancellations
      and
      violations as would not, individually or in the aggregate, have a Material
      Adverse Effect. The business of the Company and its subsidiaries is not being
      conducted in violation of any laws, ordinances or regulations of any
      governmental entity, except for possible violations which singularly or in
      the
      aggregate do not and will not have a Material Adverse Effect. The Company is
      not
      required under federal, state or local law, rule or regulation to obtain any
      consent, authorization or order of, or make any filing or registration with,
      any
      court or governmental agency in order for it to execute, deliver or perform
      any
      of its obligations under the Transaction Documents, or issue and sell the
      Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares
      in
      accordance with the terms hereof or thereof (other than (x) any consent,
      authorization or order that has been obtained as of the date hereof, (y) any
      filing or registration that has been made as of the date hereof or (z) any
      filings which may be required to be made by the Company with the Commission
      or
      state securities administrators subsequent to the Closing; provided,
      that,
      for purposes of the representation made in this sentence, the Company is
      assuming and relying upon the accuracy of the relevant representations and
      agreements of the Purchaser herein.

     

    (f) Commission
      Documents, Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by it with the Commission pursuant to the reporting
      requirements of the Securities Exchange Act of 1934, as amended (the
“Exchange
      Act”,
      including material filed pursuant to Section 13(a) or 15(d) of the Exchange
      Act
      (all of the foregoing including filings incorporated by reference therein being
      referred to herein as the “Commission
      Documents”).
      At
      the request of the Purchaser, the Company has delivered or made available to
      the
      Purchaser true and complete copies of the Commission Documents. The Company
      has
      not provided to the Purchaser any material non-public information or other
      information which, according to applicable law, rule or regulation, was required
      to have been disclosed publicly by the Company but which has not been so
      disclosed, other than with respect to the transactions contemplated by this
      Agreement. At the times of their respective filings, the Form 10-KSBs, Form
      10-QSBs and Form 10Q and the current report on Form 8-K/A filed with the
      Commission on June 23, 2008 to disclose the transactions contemplated under
      the
      June 2008 Transaction Documents and the transactions contemplated by the Merger
      Agreement and the Restructuring Agreements (as defined in Section 2.1(gg)
      hereof) (the “Form
      8-K/A”),
      complied in all material respects with the requirements of the Exchange Act
      and
      the rules and regulations of the Commission promulgated thereunder and other
      federal, state and local laws, rules and regulations applicable to such
      documents, and, as of respective dates, neither the Form 10-KSB, the Form
      10-QSBs and 10Q, nor the Form 8-K/A contained any untrue statement of a material
      fact or omitted to state a material fact required to be stated therein or
      necessary in order to make the statements therein, in light of the circumstances
      under which they were made, not misleading. The financial statements of the
      Company included in the Commission Documents comply as to form in all material
      respects with applicable accounting requirements and the published rules and
      regulations of the Commission or other applicable rules and regulations with
      respect thereto. Such financial statements have been prepared in accordance
      with
      United States generally accepted accounting principles (“GAAP”)
      applied on a consistent basis 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 not include
      footnotes or may be condensed or summary statements), and fairly present in
      all
      material respects the financial position of the Company and its subsidiaries
      as
      of the dates thereof and the results of operations and cash flows for the
      periods then ended (subject, in the case of unaudited statements, to normal
      year-end audit adjustments). The Shen Kun Financial Statements (as defined
      in
      Section 4.2(t) hereof) comply in all material respects with applicable
      accounting requirements and the rules and regulations of the Commission with
      respect thereto as in effect at the time of filing. The Shen Kun Financial
      Statements have been prepared in accordance with GAAP applied on a consistent
      basis during the periods involved and fairly present in all material respects,
      the financial conditions and results of Shen Kun has defined in Section 4.2(t)
      hereof and its subsidiaries as of the dates thereof and the results of
      operations and cash flows for the periods then ended. 


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (g) Subsidiaries.
      Schedule
      2.1(g)
      hereto
      sets forth each subsidiary of the Company, showing the jurisdiction of its
      incorporation or organization and showing the percentage of each person’s
      ownership. For the purposes of this Agreement, “subsidiary”
shall
      mean any corporation or other entity of which at least a majority of the
      securities or other ownership interest having ordinary voting power (absolutely
      or contingently) for the election of directors or other persons performing
      similar functions are at the time owned directly or indirectly by the Company
      and/or any of its other subsidiaries. All of the outstanding shares of capital
      stock of each subsidiary have been duly authorized and validly issued, and
      are
      fully paid and nonassessable. Other than as contemplated by the Transaction
      Documents, there are no outstanding preemptive, conversion or other rights,
      options, warrants or agreements granted or issued by or binding upon any
      subsidiary for the purchase or acquisition of any shares of capital stock of
      any
      subsidiary or any other securities convertible into, exchangeable for or
      evidencing the rights to subscribe for any shares of such capital stock. Other
      than as contemplated by the Transaction Documents or the June 2008 Transaction
      Documents, neither the Company nor any subsidiary is subject to any obligation
      (contingent or otherwise) to repurchase or otherwise acquire or retire any
      shares of the capital stock of any subsidiary or any convertible securities,
      rights, warrants or options of the type described in the preceding sentence.
      Neither the Company nor any subsidiary is party to, nor has any knowledge of,
      any agreement restricting the voting or transfer of any shares of the capital
      stock of any subsidiary, with the exception of the Restructuring Agreements
      (as
      defined in Section 2.1(gg)(i) below).

     

    (h) No
      Material Adverse Effect.
      Other
      than as disclosed in the Company’s Commission Documents, since March 31, 2008,
      neither the Company nor any of its subsidiaries has experienced or suffered
      any
      Material Adverse Effect. 

     

    (i) No
      Undisclosed Liabilities.
      Except
      as disclosed in the Form 10-KSB, the Form 10-QSBs, the Form 10-Q and the Form
      8-K/A, neither the Company nor any of its subsidiaries has any liabilities,
      obligations, claims or losses (whether liquidated or unliquidated, secured
      or
      unsecured, absolute, accrued, contingent or otherwise) other than those incurred
      in the ordinary course of the Company’s or its subsidiaries respective
      businesses since March 31, 2008 and which, individually or in the aggregate,
      do
      not or would not have a Material Adverse Effect on the Company or its
      subsidiaries.


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (j) No
      Undisclosed Events or Circumstances.
      To the
      Company’s knowledge, no event or circumstance has occurred or exists with
      respect to the Company or its subsidiaries or their respective businesses,
      properties, prospects, operations or financial condition, which, under
      applicable law, rule or regulation, requires public disclosure or announcement
      by the Company but which has not been so publicly announced or
      disclosed.

     

    (k) Indebtedness.
      The
      Form 10-KSB, Form 10-QSBs, Form 10-Q and the Form 8-K/A set forth all
      outstanding secured and unsecured Indebtedness of the Company or any subsidiary,
      or for which the Company or any subsidiary has commitments. For the purposes
      of
      this Agreement, “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      Indebtedness of others, whether or not the same are or should be reflected
      in
      the Company’s balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments in excess of $25,000 due under leases required to be
      capitalized in accordance with GAAP. Except as set forth in Schedule
      2.1(k),
      neither
      the Company nor any subsidiary is in default with respect to any
      Indebtedness.

     

    (l) Title
      to Assets.
      Each of
      the Company and its subsidiaries has good and marketable title to all of its
      real and personal property reflected in the Form 10-KSB, the Form 10-QSBs,
      the
      Form 10-Q and the Form 8-K/A free and clear of any mortgages, pledges, charges,
      liens, security interests or other encumbrances, all properties and assets
      (i)
      purportedly owned or used by them as reflected in the Form 10-KSB, Form 10-QSBs,
      Form 10-Q and the Form 8-K/A or (ii) necessary for the conduct of their business
      as currently conducted except for those disclosed in the Form 10-KSB, Form
      10-QSBs, Form 10-Q and the Form 8-K/A. All leases of the Company and each of
      its
      subsidiaries are valid and subsisting and in full force and effect.

     

    (m) Actions
      Pending.
      There
      is no action, suit, claim, investigation, arbitration, alternate dispute
      resolution proceeding or any other proceeding pending or, to the knowledge
      of
      the Company, threatened against the Company or any subsidiary which questions
      the validity of this Agreement or any of the other Transaction Documents or
      the
      transactions contemplated hereby or thereby or any action taken or to be taken
      pursuant hereto or thereto. There is no action, suit, claim, investigation,
      arbitration, alternate dispute resolution proceeding or any other proceeding
      pending or, to the knowledge of the Company, threatened, against or involving
      the Company, any subsidiary or any of their respective properties or assets.
      There are no outstanding orders, judgments, injunctions, awards or decrees
      of
      any court, arbitrator or governmental or regulatory body against the Company
      or
      any subsidiary or any executive officers or directors of the Company or
      subsidiary in their capacities as such.


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (n) Compliance
      with Law.
      The
      business of the Company and each of its subsidiaries has been and is presently
      being conducted in material compliance with all applicable federal, state and
      local governmental laws, rules, regulations and ordinances. The Company and
      each
      of its subsidiaries have all franchises, permits, licenses, consents and other
      governmental or regulatory authorizations and approvals necessary for the
      conduct of its business in all material respects as now being conducted by
      it
      unless the failure to possess such franchises, permits, licenses, consents
      and
      other governmental or regulatory authorizations and approvals, individually
      or
      in the aggregate, could not reasonably be expected to have a Material Adverse
      Effect.

     

    (o) Taxes.
      The
      Company and each of its subsidiaries has accurately prepared and filed all
      federal, state and other tax returns required by law to be filed by it, has
      paid
      or made provisions for the payment of all taxes shown to be due and all
      additional assessments, and adequate provisions have been and are reflected
      in
      the financial statements of the Company and the subsidiaries for all current
      taxes and other charges to which the Company or any subsidiary is subject and
      which are not currently due and payable. None of the federal income tax returns
      of the Company or any subsidiary have been audited by the Internal Revenue
      Service. The Company has no knowledge of any additional assessments, adjustments
      or contingent tax liability (whether federal or state) of any nature whatsoever,
      whether pending or threatened against the Company or any subsidiary for any
      period, nor of any basis for any such assessment, adjustment or
      contingency.

     

    (p) Certain
      Fees.
      Except
      as set forth in the June 2008 Transaction Documents and on Schedule
      2.1(p)
      hereto,
      no brokers, finders or financial advisory fees or commissions will be payable
      by
      the Company or any subsidiary or to the Purchaser with respect to the
      transactions contemplated by this Agreement and the other Transaction
      Documents.

     

    (q) Disclosure.
      Except
      as set forth in Schedule
      2.1(q),
      neither
      this Agreement nor the Schedules hereto nor any other documents, certificates
      or
      instruments furnished to the Purchaser by or on behalf of the Company or any
      subsidiary in connection with the transactions contemplated by this Agreement
      contain any untrue statement of a material fact or omit to state a material
      fact
      necessary in order to make the statements made herein or therein, taken as
      a
      whole and in the light of the circumstances under which they were made herein
      or
      therein, not false or misleading.

     

    (r) Operation
      of Business.
      The
      Company and each of its subsidiaries owns or possesses all patents, trademarks,
      domain names (whether or not registered) and any patentable improvements or
      copyrightable derivative works thereof, websites and intellectual property
      rights relating thereto, service marks, trade names, copyrights, licenses and
      authorizations, and all rights with respect to the foregoing, which are
      necessary for the conduct of its business as now conducted without any conflict
      with the rights of others, except where the failure to so own or possess would
      not have a Material Adverse Effect.


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (s) Environmental
      Compliance.
      Since
      their inception, neither the Company, nor any of its subsidiaries have been,
      in
      violation of any applicable law relating to the environment or occupational
      health and safety, where such violation would have a Material Adverse Effect
      on
      the business or financial condition of any of the Company and its subsidiaries.
      Each of Company and its subsidiaries has operated all facilities and properties
      owned, leased or operated by it in material compliance with the Environmental
      Laws. “Environmental
      Laws”
shall
      mean all applicable laws relating to the protection of the environment
      including, without limitation, all requirements pertaining to reporting,
      licensing, permitting, controlling, investigating or remediating emissions,
      discharges, releases or threatened releases of hazardous substances, chemical
      substances, pollutants, contaminants or toxic substances, materials or wastes,
      whether solid, liquid or gaseous in nature, into the air, surface water,
      groundwater or land, or relating to the manufacture, processing, distribution,
      use, treatment, storage, disposal, transport or handling of hazardous
      substances, chemical substances, pollutants, contaminants or toxic substances,
      material or wastes, whether solid, liquid or gaseous in nature. The Company
      and
      each of its subsidiaries have all necessary governmental approvals required
      under all Environmental Laws and used in its business or in the business of
      any
      of its subsidiaries. The Company and each of its subsidiaries are also in
      compliance with all other limitations, restrictions, conditions, standards,
      requirements, schedules and timetables required or imposed under all
      Environmental Laws. There are no past or present events, conditions,
      circumstances, incidents, actions or omissions relating to or in any way
      affecting the Company or its subsidiaries that violate or may violate any
      Environmental Law after the Closing Date or that may give rise to any
      environmental liability, or otherwise form the basis of any claim, action,
      demand, suit, proceeding, hearing, study or investigation (i) under any
      Environmental Law, or (ii) based on or related to the manufacture, processing,
      distribution, use, treatment, storage (including without limitation underground
      storage tanks), disposal, transport or handling, or the emission, discharge,
      release or threatened release of any hazardous substance.

     

    (t) Books
      and Record Internal Accounting Controls.
      Except
      as otherwise disclosed in the Form 10-KSB, the Form 10-QSBs, the Form 10-Q
      or
      the Form 8-K/A, the books and records of the Company and its subsidiaries
      accurately reflect in all material respects the information relating to the
      business of the Company and its subsidiaries, the location and collection of
      their assets, and the nature of all transactions giving rise to the obligations
      or accounts receivable of the Company or any subsidiary. The Company and each
      of
      its subsidiaries maintain a system of internal accounting controls sufficient,
      in the judgment of the Company, to provide reasonable assurance that (i)
      transactions are executed in accordance with management’s general or specific
      authorizations, (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with GAAP and to maintain
      asset accountability, (iii) access to assets is permitted only in accordance
      with management’s general or specific authorization and (iv) the recorded
      accountability for assets is compared with the existing assets at reasonable
      intervals and appropriate actions are taken with respect to any
      differences.

     

    (u) Material
      Agreements.
      Neither
      the Company nor any subsidiary is a party to any written or oral contract,
      instrument, agreement, commitment, obligation, plan or arrangement, a copy
      of
      which would be required to be filed with the Commission as an exhibit to a
      registration statement on Form S-1 (collectively, the “Material
      Agreements”)
      if the
      Company or any subsidiary were registering securities under the Securities
      Act.
      The Company and each of its subsidiaries has in all material respects performed
      all the obligations required to be performed by them to date under the foregoing
      agreements, have received no notice of default and are not in default under
      any
      Material Agreement now in effect the result of which would cause a Material
      Adverse Effect. Except as restricted under applicable laws and regulations,
      the
      incorporation documents, certificates of designations or the Transaction
      Documents, no written or oral contract, instrument, agreement, commitment,
      obligation, plan or arrangement of the Company or of any subsidiary limits
      or
      shall limit the payment of dividends on the Company’s Preferred Shares, other
      preferred stock, if any, or its Common Stock.


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (v) Transactions
      with Affiliates.
      Except
      as set forth in the Commission Documents, the Transaction Documents or the
      Restructuring Agreements (as defined in Section 2.1(gg)(i) below) there are
      no
      loans, leases, agreements, contracts, royalty agreements, management contracts
      or arrangements or other continuing transactions between (a) the Company or
      any
      subsidiary on the one hand, and (b) on the other hand, any officer, employee,
      consultant or director of the Company, or any of its subsidiaries, or any person
      owning any capital stock of the Company or any subsidiary or any member of
      the
      immediate family of such officer, employee, consultant, director or stockholder
      or any corporation or other entity controlled by such officer, employee,
      consultant, director or stockholder, or a member of the immediate family of
      such
      officer, employee, consultant, director or stockholder.

     

    (w) Securities
      Act of 1933.
      Assuming the accuracy of the representations of the Purchaser set forth in
      Section 2.2 (d)-(h) hereof, the Company has complied and will comply with all
      applicable federal and state securities laws in connection with the offer,
      issuance and sale of the Shares and the Warrants hereunder. Neither the Company
      nor anyone acting on its behalf, directly or indirectly, has or will sell,
      offer
      to sell or solicit offers to buy any of the Units, the Shares, the Warrants
      or
      similar securities to, or solicit offers with respect thereto from, or enter
      into any preliminary conversations or negotiations relating thereto with, any
      person, or has taken or will take any action so as to bring the issuance and
      sale of any of the Units, the Shares and the Warrants in violation of the
      registration provisions of the Securities Act and applicable state securities
      laws, and neither the Company nor any of its affiliates, nor any person acting
      on its or their behalf, has engaged in any form of general solicitation or
      general advertising (within the meaning of Regulation D under the Securities
      Act) in connection with the offer or sale of any of the Units, the Shares and
      the Warrants.

     

    (x) Governmental
      Approvals.
      Except
      for the filing of any notice prior or subsequent to the Closing Date that may
      be
      required under applicable state and/or federal securities laws (which if
      required, shall be filed on a timely basis), including the filing of a Form
      D
      and a registration statement or statements pursuant to the Registration Rights
      Agreement, no authorization, consent, approval, license, exemption of, filing
      or
      registration with any court or governmental department, commission, board,
      bureau, agency or instrumentality, domestic or foreign, is or will be necessary
      for, or in connection with, the execution or delivery of the Units, the
      Preferred Shares and the Warrants, or for the performance by the Company of
      its
      obligations under the Transaction Documents.

     

    (y) Employees.
      Except
      as disclosed in the Commission Documents or the Form 8-K/A, neither the Company
      nor any subsidiary has any collective bargaining arrangements or agreements
      covering any of its employees. Except as disclosed in the Commission Documents
      or the Form 8-K/A, neither the Company nor any subsidiary has any employment
      contract, agreement regarding proprietary information, non-competition
      agreement, non-solicitation agreement, confidentiality agreement, or any other
      similar contract or restrictive covenant, relating to the right of any officer,
      employee or consultant to be employed or engaged by the Company or such
      subsidiary required to be disclosed in the Commission Documents on the Form
      8-K/A that is not so disclosed. Since March 31, 2008, no officer, consultant
      or
      key employee of the Company or any subsidiary whose termination, either
      individually or in the aggregate, would have a Material Adverse Effect, has
      terminated or, to the knowledge of the Company, has any present intention of
      terminating his or her employment or engagement with the Company or any
      subsidiary.


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (z) Absence
      of Certain Developments.
      Since
      March 31, 2008, neither the Company nor any subsidiary has:

     

    (i) issued
      any stock, bonds or other corporate securities or any rights, options or
      warrants with respect thereto;

     

    (ii) borrowed
      any amount or incurred or become subject to any liabilities (absolute or
      contingent) except current liabilities incurred in the ordinary course of
      business which are comparable in nature and amount to the current liabilities
      incurred in the ordinary course of business during the comparable portion of
      its
      prior fiscal year, as adjusted to reflect the current nature and volume of
      the
      Company’s or such subsidiary’s business;

     

    (iii) discharged
      or satisfied any lien or encumbrance or paid any obligation or liability
      (absolute or contingent), other than current liabilities paid in the ordinary
      course of business;

     

    (iv) declared
      or made any payment or distribution of cash or other property to stockholders
      with respect to its stock, or purchased or redeemed, or made any agreements
      so
      to purchase or redeem, any shares of its capital stock;

     

    (v) sold,
      assigned or transferred any other tangible assets, or canceled any debts or
      claims, except in the ordinary course of business;

     

    (vi) sold,
      assigned or transferred any patent rights, trademarks, trade names, copyrights,
      trade secrets or other intangible assets or intellectual property rights, or
      disclosed any proprietary confidential information to any person except to
      customers in the ordinary course of business or to the Purchaser or their
      representatives;

     

    (vii) suffered
      any substantial losses or waived any rights of material value, whether or not
      in
      the ordinary course of business, or suffered the loss of any material amount
      of
      prospective business;

     

    (viii) made
      any
      changes in employee compensation except in the ordinary course of business
      and
      consistent with past practices;

     

    (ix) made
      capital expenditures or commitments therefor that aggregate in excess of
      $50,000;

     

    (x) entered
      into any other transaction other than in the ordinary course of business, or
      entered into any other material transaction, whether or not in the ordinary
      course of business;


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (xi) made
      charitable contributions or pledges in excess of $10,000;

     

    (xii) suffered
      any material damage, destruction or casualty loss, whether or not covered by
      insurance;

     

    (xiii) experienced
      any material problems with labor or management in connection with the terms
      and
      conditions of their employment;

     

    (xiv) effected
      any two or more events of the foregoing kind which in the aggregate would be
      material to the Company or its subsidiaries; or

     

    (xv) entered
      into an agreement, written or otherwise, to take any of the foregoing
      actions.

     

    (aa) Public
      Utility Holding Company Act and Investment Company Act Status.
      The
      Company is not a “holding company” or a “public utility company” as such terms
      are defined in the Public Utility Holding Company Act of 1935, as amended.
      The
      Company is not, and as a result of and immediately upon the Closing will not
      be,
      an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
      amended.

     

    (bb) ERISA.
      No
      liability to the Pension Benefit Guaranty Corporation has been incurred with
      respect to any Plan (as defined below) by the Company or any of its subsidiaries
      which is or would be materially adverse to the Company and its subsidiaries.
      The
      execution and delivery of this Agreement and the other Transaction Documents
      and
      the issuance and sale of the Units, the Preferred Shares and the Warrants will
      not involve any transaction which is subject to the prohibitions of Section
      406
      of ERISA or in connection with which a tax could be imposed pursuant to Section
      4975 of the Internal Revenue Code of 1986, as amended, provided, that, if any
      of
      the Purchaser, or any person or entity that owns a beneficial interest in any
      of
      the Purchaser, is an “employee pension benefit plan” (within the meaning of
      Section 3(2) of ERISA) with respect to which the Company is a “party in
      interest” (within the meaning of Section 3(14) of ERISA), the requirements of
      Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in
      this
      Section 2.1(bb), the term “Plan”
shall
      mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which
      is or has been established or maintained, or to which contributions are or
      have
      been made, by the Company or any subsidiary or by any trade or business, whether
      or not incorporated, which, together with the Company or any subsidiary, is
      under common control, as described in Section 414(b) or (c) of the
      Code.

     

    (cc) Dilutive
      Effect.
      The
      Company understands and acknowledges that it has an obligation to issue
      Conversion Shares upon conversion of the Preferred Shares in accordance with
      this Agreement and the Series A Certificate of Designation and to issue the
      Warrant Shares upon the exercise of the Warrants in accordance with this
      Agreement and the Warrants regardless of the dilutive effect that such issuance
      may have on the ownership interest of other stockholders of the
      Company.

     

    (dd) No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offering of the Shares pursuant to this Agreement to be integrated with
      prior offerings by the Company for purposes of the Securities Act which would
      prevent the Company from selling the Shares pursuant to Rule 506 under the
      Securities Act, or any applicable exchange-related stockholder approval
      provisions, nor will the Company or any of its affiliates or subsidiaries take
      any action or steps that would cause the offering of the Shares to be integrated
      with other offerings. The Company does not have any registration statement
      pending before the Commission or currently under the Commission’s review and
      since January 1, 2007, except as contemplated under the Transaction Documents
      or
      the June 2008 Transaction Documents, the Company has not offered or sold any
      of
      its equity securities or debt securities convertible into shares of Common
      Stock.


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (ee) Independent
      Nature of Purchaser.
      The
      Company acknowledges that the obligations of the Purchaser under the Transaction
      Documents are several and not joint with the obligations of any third party,
      and
      no Purchaser shall be responsible in any way for the performance of the
      obligations of any other party under the Transaction Documents. The Company
      acknowledges that the decision of the Purchaser to purchase securities pursuant
      to this Agreement has been made by the Purchaser independently of any third
      party and independently of any information, materials, statements or opinions
      as
      to the business, affairs, operations, assets, properties, liabilities, results
      of operations, condition (financial or otherwise) or prospects of the Company
      or
      of its subsidiaries which may have made or given by any third party, and no
      third party or any of its agents or employees shall have any liability to the
      Purchaser (or any other person) relating to or arising from any such
      information, materials, statements or opinions. The Company acknowledges that
      nothing contained herein, or in any Transaction Document, and no action taken
      by
      the Purchaser pursuant hereto or thereto, shall be deemed to constitute the
      Purchaser and any third party as a partnership, an association, a joint venture
      or any other kind of entity, or create a presumption that the Purchaser and
      any
      third party are in any way acting in concert or as a group with respect to
      such
      obligations or the transactions contemplated by the Transaction Documents.
      The
      Company acknowledges that the Purchaser shall be entitled to independently
      protect and enforce its rights, including without limitation, the rights arising
      out of this Agreement or out of the other Transaction Documentsand it shall
      not
      be necessary for any third party to be joined as an additional party in any
      proceeding for such purpose. 

     

    (ff) Transfer
      Agent. The name, address, telephone
      number, fax number, contact person and email address of the Company’s current
      transfer agent is set forth on Schedule
      2.1(ff)
      hereto.

     

    (gg) WFOE.
      The
      Company represents on behalf of WFOE, an indirect wholly-owned subsidiary of
      the
      Company:

     

    (i) that
      WFOE
      has the legal right, power and authority (corporate and other) to enter into
      and
      perform its obligations under each of agreements as set forth on Schedule
      2.1(gg)
      (collectively, the “Restructuring
      Agreements”)
      to
      which it is a party and has taken all necessary corporate action to authorize
      the execution, delivery and performance of, and has authorized, executed and
      delivered, each of the Restructuring Agreements to which it is a party; and
      each
      of the Restructuring Agreements to which WFOE is a party constitutes a valid
      and
      legally binding obligation of WFOE, enforceable in accordance with its terms,
      subject, as to enforceability, to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors’ rights and to general equity
      principles.


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (ii) that
      WFOE
      does not own or lease properties or conduct any business outside of the PRC
      and
      that WFOE does not need to be duly qualified as a foreign corporation for the
      transaction of business under the laws of any jurisdiction in which it is not
      now so qualified.

     

    (iii) that
      the
      execution and delivery by WFOE of, and the performance by WFOE of its
      obligations under, each of the Restructuring Agreements to which it is a party
      and the consummation by WFOE of the transactions contemplated therein will
      not:
      (A) conflict with or result in a breach or violation of any of the terms or
      provisions of, or constitute a default under, any indenture, mortgage, deed
      of
      trust, loan agreement or other agreement or instrument to which WFOE is a party
      or by which WFOE is bound or to which any of the properties or assets of WFOE
      is
      subject; (B) result in any violation of the provisions of the articles of
      association or business license of WFOE; and (C) will not result in any
      violation of any laws, regulations, rules, orders, decrees, guidelines or
      notices of the PRC, except that, with respect to (A) and (C), such conflict,
      breach or violation would not reasonably be expected to have a Material Adverse
      Effect on WFOE.

     

    (iv) that
      each
      of the Restructuring Agreements is in proper and enforceable legal form under
      the laws of the PRC and to ensure the legality, validity, enforceability or
      admissibility in evidence of each of the Restructuring Agreements in the PRC,
      it
      is not necessary that any such document be filed or recorded with any court
      or
      other authority in the PRC or that any stamp or similar tax be paid on or in
      respect of any of the Restructuring Agreements, except as set forth on
Schedule
      2.1(gg)(iv).

     

    Section
      2.2 Representations
      and Warranties of the Purchaser.
      The
      Purchaser hereby makes the following representations and warranties to the
      Company as of the date hereof and Closing Date, with respect solely to itself
      and not with respect to any other Purchaser:

     

    (a) Organization
      and Good Standing of the Purchaser.
      The
      Purchaser is a corporation, partnership or limited liability company duly
      incorporated or organized, validly existing and in good standing under the
      laws
      of the jurisdiction of its incorporation or organization.

     

    (b) Authorization
      and Power.
      The
      Purchaser has the requisite power and authority to enter into and perform this
      Agreement and each of the other Transaction Documents to which the Purchaser
      is
      a party and to purchase the Preferred Shares and Warrants being sold to it
      hereunder. The execution, delivery and performance of this Agreement and each
      of
      the other Transaction Documents to which the Purchaser is a party by the
      Purchaser and the consummation by it of the transactions contemplated hereby
      and
      thereby have been duly authorized by all necessary corporate or partnership
      action, and no further consent or authorization of the Purchaser or its Board
      of
      Directors, stockholders, or partners, as the case may be, is required. This
      Agreement and each of the other Transaction Documents to which the Purchaser
      is
      a party has been duly authorized, executed and delivered by the Purchaser and
      constitutes, or shall constitute when executed and delivered, a valid and
      binding obligation of the Purchaser enforceable against the Purchaser in
      accordance with the terms thereof.


    
      
        
        

      

      
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    (c) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and each of the other
      Transaction Documents to which the Purchaser is a party and the consummation
      by
      the Purchaser of the transactions contemplated hereby and thereby or relating
      hereto do not and will not (i) result in a violation of the Purchaser’s charter
      documents, bylaws, operating agreement, partnership agreement or other
      organizational documents or (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 or obligation to which
      the Purchaser is a party or by which its properties or assets are bound, or
      result in a violation of any law, rule, or regulation, or any order, judgment
      or
      decree of any court or governmental agency applicable to the Purchaser or its
      properties (except for such conflicts, defaults and violations as would not,
      individually or in the aggregate, have a Material Adverse Effect on the
      Purchaser). The Purchaser is not required to obtain any consent, authorization
      or order of, or make any filing or registration with, any court or governmental
      agency in order for it to execute, deliver or perform any of its obligations
      under this Agreement or any other Transaction Document to which the Purchaser
      is
      a party or to purchase the Preferred Shares or acquire the Warrants in
      accordance with the terms hereof, provided, that for purposes of the
      representation made in this sentence, the Purchaser is assuming and relying
      upon
      the accuracy of the relevant representations and agreements of the Company
      herein.

     

    (d) Acquisition
      for Investment.
      The
      Purchaser is acquiring the Units, and the underlying Preferred Shares and the
      Warrants solely for its own account for the purpose of investment and not with
      a
      view to or for sale in connection with distribution. The Purchaser does not
      have
      a present intention to sell the Preferred Shares or the Warrants, nor a present
      arrangement (whether or not legally binding) or intention to effect any
      distribution of the Shares or the Warrants to or through any person or entity;
      provided,
      however,
      that by
      making the representations herein and subject to Section 2.2(h) below, the
      Purchaser does not agree to hold the Shares or the Warrants for any minimum
      or
      other specific term and reserves the right to dispose of the Shares or the
      Warrants at any time in accordance with federal and state securities laws
      applicable to such disposition. The Purchaser acknowledges that it is able
      to
      bear the financial risks associated with an investment in the Shares and the
      Warrants and that it has been given full access to such records of the Company
      and the subsidiaries and to the officers of the Company and the subsidiaries
      and
      received such information as it has deemed necessary or appropriate to conduct
      its due diligence investigation and has sufficient knowledge and experience
      in
      investing in companies similar to the Company in terms of the Company’s stage of
      development so as to be able to evaluate the risks and merits of its investment
      in the Company. The Purchaser further acknowledges that the Purchaser
      understands the risks of investing in companies domiciled and/or which operate
      primarily in the People’s Republic of China and that the purchase of the Shares
      and Warrants involves substantial risks.

     

    (e) Status
      of Purchaser.
      The
      Purchaser is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act. The Purchaser is not required to be registered as
      a
      broker-dealer under Section 15 of the Exchange Act and the Purchaser is not
      a
      broker-dealer.

     

    (f) Opportunities
      for Additional Information.
      The
      Purchaser acknowledges that the Purchaser has had the opportunity to ask
      questions of and receive answers from, or obtain additional information from,
      the executive officers of the Company concerning the financial and other affairs
      of the Company. In making the decision to invest in the Company and its
      business, the Purchaser hereby acknowledges that the Purchaser has relied solely
      upon the Shen Kun Financial Statements, the Form 8-K/A (defined in Section
      2.1(f) hereto) and other written information provided to the Purchaser by the
      Company and Shen Kun.


    
      
        
        

      

      
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    (g) No
      General Solicitation.
      The
      Purchaser acknowledges that the Units were not offered to the Purchaser by
      means
      of any form of general or public solicitation or general advertising, or
      publicly disseminated advertisements or sales literature, including (i) any
      advertisement, article, notice or other communication published in any
      newspaper, magazine, or similar media, or broadcast over television or radio,
      or
      (ii) any seminar or meeting to which the Purchaser was invited by any of the
      foregoing means of communications.

     

    (h) Rule
      144.
      The
      Purchaser understands that the Shares must be held indefinitely unless such
      Shares are registered under the Securities Act or an exemption from registration
      is available. The Purchaser acknowledges that the Purchaser is familiar with
      Rule 144 of the rules and regulations of the Commission, as amended, promulgated
      pursuant to the Securities Act (“Rule
      144”),
      and
      that such person has been advised that Rule 144 permits resales only under
      certain circumstances. The Purchaser understands that to the extent that Rule
      144 is not available, the Purchaser will be unable to sell any Shares without
      either registration under the Securities Act or the existence of another
      exemption from such registration requirement.

     

    (i) General.
      The
      Purchaser understands that the Shares are being offered and sold in reliance
      on
      a transactional exemption from the registration requirement of federal and
      state
      securities laws and the Company is relying upon the truth and accuracy of the
      representations, warranties, agreements, acknowledgments and understandings
      of
      the Purchaser set forth herein in order to determine the applicability of such
      exemptions and the suitability of the Purchaser to acquire the
      Shares.

     

    (j) Independent
      Investment.
      Except
      as may be disclosed in any filings with the Commission by the Purchaser under
      Section 13 and/or Section 16 of the Exchange Act, the Purchaser has not agreed
      to act with any third party for the purpose of acquiring, holding, voting or
      disposing of the Shares purchased hereunder for purposes of Section 13(d) under
      the Exchange Act, and the Purchaser is acting independently with respect to
      its
      investment in the Shares.

     

    (k) Trading
      Activities.
      The
      Purchaser agrees that it shall not, directly or indirectly, engage in any short
      sales with respect to the Common Stock for a period of one (1) year following
      the Closing.

     

    (l) Brokers.
      Other
      than to Mass Harmony Asset Management Limited and Aegis Capital Corp., the
      Purchaser has no knowledge of any brokerage or finder’s fees or commissions that
      are or will be payable by the Company or any subsidiary to any broker, financial
      advisor or consultant, finder, placement agent, investment banker, bank or
      other
      person or entity with respect to the transactions contemplated by this
      Agreement.


    
      
        
        

      

      
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    ARTICLE
      III

     

    Covenants

     

    The
      Company covenants with the Purchaser as follows, which covenants are for the
      benefit of the Purchaser and their permitted assignees (as defined
      herein).

     

    Section
      3.1 Securities
      Compliance.
      The
      Company shall notify the Commission in accordance with their rules and
      regulations, of the transactions contemplated by any of the Transaction
      Documents, including filing a Form D with respect to the Units, the Preferred
      Shares, Warrants, Conversion Shares and Warrant Shares as required under
      Regulation D and applicable “blue sky” laws, and shall take all other necessary
      action and proceedings as may be required and permitted by applicable law,
      rule
      and regulation, for the legal and valid issuance of the Units, the Preferred
      Shares, the Warrants, the Conversion Shares and the Warrant Shares to the
      Purchaser or subsequent holders.

     

    Section
      3.2 Registration
      and Listing.
      The
      Company shall (a) comply in all respects with its reporting and filing
      obligations under the Exchange Act, (b) comply with all requirements related
      to
      any registration statement filed pursuant to this Agreement or the Registration
      Rights Agreement, and (c) not take any action or file any document (whether
      or
      not permitted by the Securities Act or the rules promulgated thereunder) to
      terminate or suspend such registration or to terminate or suspend its reporting
      and filing obligations under the Exchange Act or Securities Act except as
      permitted under the Transaction Documents. The Company will take all action
      necessary to continue the quotation or listing of its Common Stock on the OTC
      Bulletin Board or other exchange or market on which the Common Stock is trading
      or may be traded in the future. Subject to the terms of the Transaction
      Documents, the Company further covenants that it will take such further action
      as the Purchaser may reasonably request, all to the extent required from time
      to
      time to enable the Purchaser to sell the Shares without registration under
      the
      Securities Act within the limitation of the exemptions provided by Rule 144
      promulgated under the Securities Act, as amended. Upon the request of the
      Purchaser, the Company shall deliver to the Purchaser a written certification
      of
      a duly authorized officer as to whether it has complied with such
      requirements.

     

    Section
      3.3 Inspection
      Rights.
      The
      Company shall permit, during normal business hours and upon reasonable request
      and reasonable notice, the Purchaser or any employees, agents or representatives
      thereof, so long as the Purchaser shall (i) be obligated hereunder to purchase
      the Units, or (ii) shall beneficially own Preferred Shares or Warrants which,
      in
      the aggregate, are convertible into or exercisable for securities representing
      more than 5% of the total combined voting power of all voting securities then
      outstanding on a fully diluted basis, or (iii) shall own Shares which, in the
      aggregate, represent more than 5% of the total combined voting power of all
      voting securities then outstanding on a fully diluted basis (“Information Rights
      Purchaser”), for purposes reasonably related to the Purchaser’s interests as a
      stockholder to examine and make reasonable copies of and extracts from the
      records and books of account of, and visit and inspect the properties, assets,
      operations and business of the Company and any subsidiary, and to discuss the
      affairs, finances and accounts of the Company and any subsidiary with any of
      its
      officers, consultants, directors, and key employees. The Purchaser agrees that
      the Purchaser and its employees, agents and representatives will keep
      confidential and will not disclose, divulge or use (other than for purposes
      of
      monitoring its investment in the Company) any confidential information which
      the
      Purchaser may obtain from the Company pursuant to financial statements, reports
      and other materials submitted by the Company to the Purchaser pursuant to this
      Agreement or pursuant to inspection rights granted hereunder, unless such
      information is known to the public through no fault of the Purchaser or his
      or
      its employees or representatives; provided, however, that a Purchaser may
      disclose such information (i) to its attorneys, accountants and other
      professionals in connection with their representation of the Purchaser in
      connection with the Purchaser’s investment in the Company, (ii) to any
      prospective permitted transferee of the Preferred Shares, so long as the
      prospective transferee agrees to be bound by the provisions of this Section
      3.3,
      (iii) to any general partner or affiliate of the Purchaser. The Company may
      require the Purchaser to execute a separate confidentiality agreement in form
      and substance reasonably acceptable to the Company as a prerequisite to the
      exercise of the Purchaser’s inspection rights pursuant to this Section
      3.3.


    
      
        
        

      

      
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    Section
      3.4 Compliance
      with Laws.
      The
      Company shall comply, and cause each subsidiary to comply in all material
      respects, with all applicable laws, rules, regulations and orders.

     

    Section
      3.5 Keeping
      of Records and Books of Account.
      The
      Company shall keep and cause each subsidiary to keep adequate records and books
      of account, in which complete entries will be made in accordance with GAAP
      consistently applied, reflecting all financial transactions of the Company
      and
      its subsidiaries, and in which, for each fiscal year, all proper reserves for
      depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
      purposes in connection with its business shall be made.

     

    Section
      3.6 Reporting
      Requirements.
      If the
      Commission ceases making periodic reports filed under the Exchange Act available
      via the Internet, then at a Purchaser’s request the Company shall furnish the
      following to the Purchaser so long as the Purchaser shall beneficially own
      any
      Shares:

     

    (a) Quarterly
      Reports filed with the Commission on Form 10-QSB or Form 10-Q as soon as
      practicable after the document is filed with the Commission, and in any event
      within five (5) days after the document is filed with the
      Commission;

     

    (b) Annual
      Reports filed with the Commission on Form 10-KSB or Form 10-K as soon as
      practicable after the document is filed with the Commission, and in any event
      within five (5) days after the document is filed with the Commission;
      and

     

    (c) Copies
      of
      all notices and information, including without limitation notices and proxy
      statements in connection with any meetings, that are provided to holders of
      shares of Common Stock, contemporaneously with the delivery of such notices
      or
      information to such holders of Common Stock.

     

    Section
      3.7 Amendments.
      The
      Company shall not amend or waive any provision of the Articles or Bylaws of
      the
      Company in any way that would adversely affect the liquidation preferences,
      dividends rights, conversion rights, voting rights or redemption rights of
      the
      Preferred Shares; provided,
      however,
      that
      while the Preferred Shares are outstanding, any creation and issuance of another
      series of Junior Stock (as defined in the Series A Certificate of Designation)
      shall not be deemed to materially and adversely affect such rights, preferences
      or privileges.


    
      
        
        

      

      
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    Section
      3.8 Other
      Agreements.
      The
      Company shall not enter into any agreement in which the terms of such agreement
      would restrict or impair the right or ability to perform of the Company or
      any
      subsidiary under any Transaction Document.

     

    Section
      3.9 Distributions.
      So long
      as any Preferred Shares remain outstanding, the Company agrees that it shall
      not
      (i) declare or pay any dividends or make any distributions to any holder(s)
      of
      Common Stock unless such dividends or distributions are also simultaneously
      paid
      or made to the holders of the Preferred Shares on an as-converted basis or
      (ii)
      purchase or otherwise acquire for value, directly or indirectly, any Common
      Stock or other equity security of the Company.

     

    Section
      3.10 Use
      of
      Proceeds.
      The net
      proceeds from the sale of the Units hereunder shall be used by the Company
      for
      working capital and general corporate purposes and not to redeem any Common
      Stock or securities convertible, exercisable or exchangeable into Common Stock
      or to settle any outstanding litigation.

     

    Section
      3.11 Reservation
      of Shares.
      So long
      as any of the Preferred Shares or Warrants remain outstanding, the Company
      shall
      take all action necessary to at all times have authorized, and reserved for
      the
      purpose of issuance, no less than one hundred fifty percent (150%) of the
      aggregate number of shares of Common Stock needed to provide for the issuance
      of
      the Conversion Shares and the Warrant Shares.

     

    Section
      3.12 Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates, registered in the name of
      the
      Purchaser or its nominee(s), for the Conversion Shares and the Warrant Shares
      in
      such amounts as specified from time to time by the Purchaser to the Company
      upon
      conversion of the Preferred Shares or exercise of the Warrants in the form
      of
Exhibit
      G
      attached
      hereto (the “Irrevocable
      Transfer Agent Instructions”).
      Prior
      to registration of the Conversion Shares and the Warrant Shares under the
      Securities Act, all such certificates shall bear the restrictive legend
      specified in Section 5.1 of this Agreement. The Company warrants that no
      instruction other than the Irrevocable Transfer Agent Instructions referred
      to
      in this Section 3.12 will be given by the Company to its transfer agent and
      that
      the Shares shall otherwise be freely transferable on the books and records
      of
      the Company as and to the extent provided in this Agreement and the Registration
      Rights Agreement. If a Purchaser provides the Company with an opinion of
      counsel, in a generally acceptable form, to the effect that a public sale,
      assignment or transfer of the Shares may be made without registration under
      the
      Securities Act or the Purchaser provides the Company with reasonable assurances
      that such Shares can be sold pursuant to Rule 144 without any restriction as
      to
      the number of securities acquired as of a particular date that can then be
      immediately sold, the Company shall permit the transfer, and, in the case of
      the
      Conversion Shares and the Warrant Shares, promptly instruct its transfer agent
      to issue one or more certificates in such name and in such denominations as
      specified by the Purchaser and without any restrictive legend. The Company
      acknowledges that a breach by it of its obligations under this Section 3.12
      will
      cause irreparable harm to the Purchaser by vitiating the intent and purpose
      of
      the transaction contemplated hereby. Accordingly, the Company acknowledges
      that
      the remedy at law for a breach of its obligations under this Section 3.12 will
      be inadequate and agrees, in the event of a breach or threatened breach by
      the
      Company of the provisions of this Section 3.12, that the Purchaser 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.


    
      
        
        

      

      
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    Section
      3.13 Disposition
      of Assets.
      So long
      as any Preferred Shares remain outstanding, neither the Company nor any
      subsidiary shall sell, transfer or otherwise dispose of any of its properties,
      assets and rights including, without limitation, its software and intellectual
      property, to any person except for (i) sales to customers in the ordinary course
      of business (ii) sales or transfers between the Company and its subsidiaries
      or
      between subsidiaries of the Company, (iii) sales or transfers between the
      Company, any of its subsidiaries or (iv) otherwise with the prior written
      consent of the holders of a majority of the Preferred Shares then
      outstanding.

     

    Section
      3.14 Reporting
      Status.
      So long
      as a Purchaser beneficially owns any of the Shares, the Company shall timely
      file all reports required to be filed with the Commission pursuant to the
      Exchange Act, and the Company shall not terminate its status as an issuer
      required to file reports under the Exchange Act even if the Exchange Act or
      the
      rules and regulations thereunder would permit such termination.

     

    Section
      3.15 Disclosure
      of Transaction.
      The
      Company shall file with the Commission a Form 8-K describing the material terms
      of the transactions contemplated hereby (and attaching as exhibits thereto
      this
      Agreement, the Registration Rights Agreement, the Series A Certificate of
      Designation, the Securities Escrow Agreement, and a form of Warrant) as soon
      as
      practicable following the Closing Date but in no event more than four (4)
      Trading Days following the Closing Date, which the Form 8-K shall be subject
      to
      prior review and comment by counsel for the Purchaser. “Trading
      Day”
means
      any day during which the OTC Bulletin Board (or other quotation venue or
      principal exchange on which the Common Stock is traded) shall be open for
      trading.

     

    Section
      3.16 Disclosure
      of Material Information.
      The
      Company covenants and agrees that neither it nor any other person acting on
      its
      behalf has provided or will provide any Purchaser or its agents or counsel
      with
      any information that the Company believes constitutes material non-public
      information (other than with respect to the transactions contemplated by this
      Agreement), unless prior thereto the Purchaser shall have executed a written
      agreement regarding the confidentiality and use of such information. The Company
      understands and confirms that the Purchaser shall be relying on the foregoing
      representations in effecting transactions in securities of the
      Company.

     

    Section
      3.17 Pledge
      of Securities.
      The
      Company acknowledges and agrees that the Shares may be pledged by a Purchaser
      in
      connection with a bona fide
      margin
      agreement or other loan or financing arrangement that is secured by the Common
      Stock. The pledge of Common Stock shall not be deemed to be a transfer, sale
      or
      assignment of the Common Stock hereunder, and no Purchaser effecting a pledge
      of
      Common Stock 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; provided,
      that a
      Purchaser and its pledgee shall be required to comply with the provisions of
      Article V hereof in order to effect a sale, transfer or assignment of Common
      Stock to such pledgee. At the Purchaser’s expense, the Company hereby agrees to
      execute and deliver such documentation as a pledgee of the Common Stock may
      reasonably request in connection with a pledge of the Common Stock to such
      pledgee by a Purchaser.


    
      
        
        

      

      
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    Section
      3.18 Reserved.

     

    Section
      3.19 Lock-Up
      Agreement.
      The
      persons listed on Schedule
      3.19
      attached
      hereto are subject to the terms and provisions of the lock-up agreement executed
      on June 10, 2008, attached under Exhibit
      E
      hereto
      (collectively, the “Lock-Up
      Agreements”),
      which
      provides the manner in which such persons will sell, transfer or dispose of
      their shares of Common Stock. The Company hereby covenants and agrees that
      it
      will diligently and timely enforce the terms and conditions of each Lock-up
      Agreement.

     

    Section
      3.20 Investor
      and Public Relations Escrow.
      The
      Company shall have caused to be deposited pursuant to the terms of the Investor
      and Public Relations Escrow Agreement dated June 10, 2008 entered into by and
      between the Company, Vision, and Sichenzia Ross Friedman Ference LLP, as escrow
      agent (the “Investor and Public Relations Escrow Agreement”), Five Hundred
      Thousand Dollars ($500,000) in an escrow account to be used by the Company
      in
      connection with investor and public relations. One Hundred Fifty Thousand
      Dollars ($150,000) of the Five Hundred Thousand Dollars ($500,000) shall be
      released from escrow once the Company appoints a Chief Financial Officer or
      Vice
      President of Investor Relations pursuant to Section 4.2(x) hereto.  In
      addition, an additional One Hundred Fifty Thousand Dollars ($150,000) will
      be
      released to the Company after the Company engages a new independent accounting
      firm that is listed as one of the top 20 firms by stock market client number
      as
      calculated by Hemscott Group Limited, a division of Morningstar,
      Inc.

     

    Section
      3.21 Reserved.

     

    Section
      3.22 DTC.
      Not
      later than the effective date of the Registration Statement (as defined in
      the
      Registration Rights Agreement), the Company shall cause its Common Stock to
      be
      eligible for transfer with its transfer agent pursuant to the Depository Trust
      Company Automated Securities Transfer Program.


    
      
        
        

      

      
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    Section
      3.23 Subsequent
      Financings.
      

     

    (a) For
      a
      period of two (2) years following the effective date of the initial Registration
      Statement (as defined in the Registration Rights Agreement), the Company
      covenants and agrees to promptly notify (in no event later than ten (10) days
      after making or receiving an applicable offer) in writing (a “Rights
      Notice”)
      each
      holder of Preferred Shares (each, a “Preferred
      Stockholder”
and
      collectively the “Preferred
      Stockholders”)
      of the
      terms and conditions of any proposed offer or sale to, or exchange with (or
      other type of distribution to) any third party, of Common Stock, any debt or
      equity securities convertible, exercisable or exchangeable into Common Stock
      or
      any debt securities (a “Subsequent
      Financing”);
      provided,
      however,
      prior
      to delivering to each Preferred Stockholder a Rights Notice, the Company shall
      first deliver to each Preferred Stockholder a written notice of its intention
      to
      effect a Subsequent Financing (“Pre-Notice”)
      within
      three (3) Trading Days of receiving an applicable offer, which Pre-Notice shall
      ask such Preferred Stockholder if it wants to review the details of such
      financing. Upon the request of a Preferred Stockholder, and only upon a request
      by such Preferred Stockholder within three (3) Trading Days of receipt of a
      Pre-Notice, the Company shall promptly, but no later than two (2) Trading Days
      after such request, deliver a Rights Notice to such Preferred Stockholder.
      The
      Rights Notice shall describe, in reasonable detail, the proposed Subsequent
      Financing, the names and investment amounts of all investors participating
      in
      the Subsequent Financing (if known), the proposed closing date of the Subsequent
      Financing, which shall be no earlier than ten (10) Trading Days from the date
      of
      the Rights Notice, and all of the terms and conditions thereof and proposed
      definitive documentation to be entered into in connection therewith. The Rights
      Notice shall provide each Preferred Stockholder an option (the “Rights
      Option”)
      during
      the ten (10) Trading Days following delivery of the Rights Notice (the
“Option
      Period”)
      to
      inform the Company whether such Preferred Stockholder will purchase up to its
      pro rata portion of all or a portion of the securities being offered in such
      Subsequent Financing on the same, absolute terms and conditions as contemplated
      by such Subsequent Financing. If any Preferred Stockholder elects not to
      participate in such Subsequent Financing, the other Preferred Stockholders
      may
      participate on a pro-rata basis. For purposes of this Section, all references
      to
“pro rata” means, for any Preferred Stockholder electing to participate in such
      Subsequent Financing, the percentage obtained by dividing (x) the number of
      Preferred Shares held by such Preferred Stockholder by (y) the total number
      of
      all of the Preferred Shares issued hereunder. Delivery of any Rights Notice
      constitutes a representation and warranty by the Company that there are no
      other
      material terms and conditions, arrangements, agreements or otherwise except
      for
      those disclosed in the Rights Notice, to provide additional compensation to
      any
      party participating in any proposed Subsequent Financing, including, but not
      limited to, additional compensation based on changes in the Purchase Price
      or
      any type of reset or adjustment of a purchase or conversion price or to issue
      additional securities at any time after the closing date of a Subsequent
      Financing. If the Company does not receive notice of exercise of the Rights
      Option from the Preferred Stockholder within the Option Period, the Company
      shall have the right to close the Subsequent Financing on the scheduled closing
      date with a third party; provided,
      that
      all of the material terms and conditions of the closing are the same as those
      provided to the Preferred Stockholder in the Rights Notice. If the closing
      of
      the proposed Subsequent Financing does not occur that date, any closing of
      the
      contemplated Subsequent Financing or any other Subsequent Financing shall be
      subject to all of the provisions of this Section 3.23(a), including, without
      limitation, the delivery of a new Rights Notice. The provisions of this Section
      3.23(a) shall not apply to issuances of securities in a Permitted
      Financing.

     

    (b) For
      purposes of this Agreement, a Permitted Financing (as defined hereinafter)
      shall
      not be considered a Subsequent Financing. A “Permitted
      Financing”
shall
      mean (i) securities issued (other than for cash) in connection with a merger,
      acquisition, or consolidation, (ii) securities issued pursuant to the conversion
      or exercise of convertible or exercisable securities issued or outstanding
      on or
      prior to the date of this Agreement or issued pursuant to this Agreement or
      any
      of the other Transaction Documents (so long as the conversion or exercise price
      in such securities are not amended to lower such price and/or adversely affect
      the Purchaser), (iii) securities issued in connection with bona fide strategic
      license agreements or other partnering arrangements so long as such issuances
      are not for the purpose of raising capital, (iv) Common Stock issued or the
      issuance or grants of options to purchase Common Stock pursuant to the Company’s
      stock option plans and employee stock purchase plans outstanding as they exist
      on the date of this Agreement, and (v) any warrants issued to the placement
      agent, financial advisors and their respective designees for the transactions
      contemplated by the Transaction Documents.


    
      
        
        

      

      
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    (c) Nothing
      herein shall prohibit the Company from establishing an employee stock option,
      restricted stock or other form of equity incentive plan. The Company agrees
      that
      as long as Vision, the Purchaser or any of their respective affiliates hold
      five
      percent (5%) of the aggregate total number of shares of Common Stock and Shares
      of the Company on a fully diluted basis, such plan may not exceed in the
      aggregate ten percent (10%) of the total number of then issued and outstanding
      shares of Common Stock and Conversion Shares issuable upon conversion of all
      outstanding Preferred Stock, for employees, officers or directors of the
      Company, and any awards made under such plan or exercises of such awards by
      the
      recipients thereof shall be deemed to be a Permitted Financing. Notwithstanding
      the foregoing, in the event that the Company’s Common Stock is listed on Nasdaq,
      as defined below, and Vision, the Purchaser or any of their respective
      affiliates hold five percent (5%) of the aggregate total number of shares of
      Common Stock and Shares of the Company on a fully diluted basis, such plan
      may
      not exceed in the aggregate fifteen percent (15%) of the total number of then
      issued and outstanding shares of Common Stock and Conversion Shares issuable
      upon conversion of all outstanding Preferred Stock.

     

    Section
      3.24 Sarbanes-Oxley
      Act.
      The
      Company shall be in compliance with the applicable provisions of the
      Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations
      promulgated thereunder, as required under such Act.

     

    Section
      3.25 Exchange
      Listing.
      The
      Company shall list and trade its shares of Common Stock on the Nasdaq Capital
      Market or the Nasdaq Global Market or any successor market thereto
      (collectively, “Nasdaq”),
      or
      American Stock Exchange or any successor market thereto (together with Nasdaq,
      each a “National
      Stock Exchange”)
      at the
      earliest possible time and shall take all commercially reasonable actions to
      fulfill the said requirement by no later than the date which is eighteen months
      after the Closing Date. In the event the shares of Common Stock are not listed
      and trading on a National Stock Exchange by the date which is eighteen months
      from the Closing Date and the Purchaser and Vision believe, using reasonable
      judgment, that commercially reasonable actions have not been taken to meet
      such
      requirement, the stockholder of the Company as listed on Schedule
      3.25
      (the
“Principal
      Stockholder”)
      shall
      transfer such number of shares of Common Stock held by such Principal
      Stockholder as set forth opposite such Principal Stockholder’s name on
Schedule
      3.25
      (the
“Listing
      Penalty Shares”)
      to the
      Purchaser to be distributed to the Purchaser and Vision on a pro rata basis.
      The
      number of Listing Penalty Shares to be transferred by the Principal Stockholder
      to the Purchaser and Vision shall, in the aggregate, be equal to 1,000,000
      shares of Common Stock times a fraction, the numerator of which is the number
      of
      shares of Common Stock held by such Principal Stockholder and the denominator
      of
      which is the total number of shares of Common Stock held by the Principal
      Stockholder. In the event the Principal Stockholder fails to transfer the
      Listing Penalty Shares by the date which is nineteen months after the Closing
      Date, the Purchaser may elect, at the Purchaser’s sole discretion and upon
      notice to the Company, Escrow Agent and Principal Stockholder (each as defined
      in the Securities Escrow Agreement), to receive a portion of the Escrow Shares
      (as defined in the Securities Escrow Agreement) in such amount as set forth
      in
      the preceding sentence. In the event a Purchaser elects to receive shares of
      Common Stock from the Escrow Shares pursuant to the foregoing and if the Escrow
      Shares then remaining are insufficient to satisfy the Principal Stockholder’s
      obligations under Sections 1.3 and 1.4 of the Securities Escrow Agreement,
      the
      Principal Stockholder shall deliver to the Escrow Agent additional shares of
      Common Stock it owns in the amounts released to the Purchaser within five (5)
      days of the release of such shares from escrow. Notwithstanding the foregoing
      to
      the contrary, the Principal Stockholder shall not be required to transfer such
      Listing Penalty Shares pursuant to this Section 3.25 if the Company has taken
      commercially reasonable actions to list and trade its Common Stock on a National
      Stock Exchange. 


    
      
        
        

      

      
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    Section
      3.26 No
      Commissions in Connection with Conversion of Preferred Shares.
      In
      connection with the conversion of the Preferred Shares into Conversion Shares,
      neither the Company nor any Person acting on its behalf will take any action
      that would result in the Conversion Shares being exchanged by the Company other
      than with the then existing holders of the Preferred Shares exclusively where
      no
      commission or other remuneration is paid or given directly or indirectly for
      soliciting the exchange in compliance with Section 3(a)(9) of the Securities
      Act.

     

    Section
      3.27 Financial
      Public Relations Firm and Appearances.
      Within
      three (3) months from the Closing Date, the Company shall retain a financial
      public relations firm (the “Firm”) reasonably acceptable to the Purchaser and to
      Vision Capital Advisors, LLC, the advisor to Vision, for a term to be agreed
      upon by the Company, the Purchaser and Vision Capital Advisors, LLC. The Company
      agrees that, for so long as the Purchaser, Vision or any of their respective
      affiliates hold five percent (5%) of the aggregate total number of shares of
      Common Stock and Shares of the Company on a fully diluted basis, it shall
      provide for its management to visit the United States no fewer than four times
      during every twelve month period following the Closing Date for the purpose
      of
      introductions by the Firm with the investment community. Such visits shall
      also
      include attendance at no fewer than two industry conferences reasonably
      acceptable to Vision Capital Advisors, LLC and the Purchaser. Further, as set
      forth in Section 1.4, Five Hundred Thousand Dollars ($500,000) shall have been
      deposited in an escrow account pursuant to the Investor and Public Relations
      Escrow Agreement to be used by the Company in connection with investor and
      public relations in its discretion.

     

    ARTICLE
      IV

     

    CONDITIONS

     

    Section
      4.1 Conditions
      Precedent to the Obligation of the Company to Sell the Shares.
      The
      obligation hereunder of the Company to issue and sell the Units, and the
      underlying Preferred Shares and the Warrants to the Purchaser is subject to
      the
      satisfaction or waiver, at or before each Closing, of each of the conditions
      set
      forth below. These conditions are for the Company’s sole benefit and may be
      waived by the Company at any time in its sole discretion.


    
      
        
        

      

      
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    (a) Accuracy
      of The Purchaser’s Representations and Warranties.
      The
      representations and warranties of the Purchaser in this Agreement and each
      of
      the other Transaction Documents to which the Purchaser is a party shall be
      true
      and correct in all material respects as of the date when made and as of the
      Closing Date as though made at that time, except for representations and
      warranties that are expressly made as of a particular date, which shall be
      true
      and correct in all material respects as of such date.

     

    (b) Performance
      by the Purchaser.
      The
      Purchaser shall have performed, satisfied and complied in all respects with
      all
      covenants, agreements and conditions required by this Agreement to be performed,
      satisfied or complied with by the Purchaser at or prior to the respective
      Closing.

     

    (c) No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (d) Delivery
      of Purchase Price.
      The
      Purchase Price for the Units has been delivered to the Company and the Preferred
      Shares and Warrants have been delivered to the Purchaser or its
      nominee(s).

     

    (e) Delivery
      of Transaction Documents.
      The
      Transaction Documents to which the Purchaser is a party have been duly executed
      and delivered by the Purchaser to the Company.

     

    Section
      4.2 Conditions
      Precedent to the Obligation of the Purchaser to Purchase the
      Units.
      The
      obligation hereunder of the Purchaser to acquire and pay for the Units is
      subject to the satisfaction or waiver, at or before the Closing, of each of
      the
      conditions set forth below. These conditions are for the Purchaser’s sole
      benefit and may be waived by the Purchaser at any time in its sole
      discretion.

     

    (a) Accuracy
      of the Company’s Representations and Warranties.
      Each of
      the representations and warranties of the Company in this Agreement and the
      other Transaction Documents shall be true and correct in all respects as of
      the
      date when made and as of the Closing Date as though made at that time, except
      for representations and warranties that are expressly made as of a particular
      date, which shall be true and correct in all respects as of such
      date.

     

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

     

    (c) No
      Suspension, Etc.
      Quotation of the Common Stock shall not have been suspended by the Commission
      or
      the OTC Bulletin Board (except for any suspension of trading of limited duration
      agreed to by the Company, which suspension shall be terminated prior to the
      Closing), and, at any time prior to the Closing Date, trading in securities
      generally as reported by Bloomberg Financial Markets (“Bloomberg”)
      shall
      not have been suspended or limited, or minimum prices shall not have been
      established on securities whose trades are reported by Bloomberg, or on the
      New
      York Stock Exchange, nor shall a banking moratorium have been declared either
      by
      the United States or New York State authorities, nor shall there have occurred
      any material outbreak or escalation of hostilities or other national or
      international calamity or crisis of such magnitude in its effect on, or any
      material adverse change in any financial market which, in each case, in the
      judgment of the Purchaser, makes it impracticable or inadvisable to purchase
      the
      Preferred Shares.


    
      
        
        

      

      
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    (d) No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (e) No
      Proceedings or Litigation.
      No
      action, suit or proceeding before any arbitrator or any governmental authority
      shall have been commenced, and no investigation by any governmental authority
      shall have been threatened, against the Company or any subsidiary, or any of
      the
      officers, directors or affiliates of the Company or any subsidiary seeking
      to
      restrain, prevent or change the transactions contemplated by this Agreement,
      or
      seeking damages in connection with such transactions.

     

    (f) Series
      A Certificate of Designation of Rights and Preferences.
      Prior
      to the Closing, the Articles of Amendment to the Articles of Incorporation
      including the Series A Certificate of Designation attached as Exhibit
      B
      hereto
      shall have been filed with the Secretary of State of Florida. 

     

    (g) Opinions
      of Counsel, Etc.
      At
      Closing, the Purchaser shall have received an opinion of U.S. counsel to the
      Company, and an opinion of British Virgin Islands counsel to the Company, dated
      the date of the Closing, in substantially the form of Exhibit
      H
      hereto,
      and such other certificates and documents as the Purchaser or its counsel shall
      reasonably require incident to the Closing. Four (4) days prior to Closing,
      the
      Purchaser shall have received an opinion of PRC counsel to Shen Kun, dated
      the
      date of the Closing with respect to the Restructuring Agreements and such other
      matters as the Purchaser may reasonably request. 

     

    (h) Registration
      Rights Agreement.
      At the
      Closing, the Company shall have executed and delivered the Registration Rights
      Agreement to the Purchaser.

     

    (i) Certificates.
      The
      Company shall have executed and delivered to the Purchaser the certificates
      (in
      such denominations as the Purchaser shall request) for the Preferred Shares
      and
      the Warrants being acquired by the Purchaser at the Closing (in such
      denominations as the Purchaser shall request) to such address set forth next
      to
      the Purchaser’s name on Exhibit
      A
      hereto.

     

    (j) Resolutions.
      The
      Board of Directors of the Company shall have adopted resolutions consistent
      with
      Section 2.1(b) hereof in a form reasonably acceptable to the Purchaser (the
      “Resolutions”).

     

    (k) Reservation
      of Shares.
      As of
      the Closing Date, the Company shall have reserved out of its authorized and
      unissued Common Stock, solely for the purpose of effecting the conversion of
      the
      Preferred Shares and the exercise of the Warrants, a number of shares of Common
      Stock equal to one hundred fifty percent (150%) of the aggregate number of
      Conversion Shares issuable upon conversion of the Preferred Shares issued or
      to
      be issued pursuant to this Agreement and the number of Warrant Shares issuable
      upon exercise of the number of Warrants issued or to be issued pursuant to
      this
      Agreement.


    
      
        
        

      

      
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    (l) Transfer
      Agent Instructions.
      As of
      the Closing Date, the Irrevocable Transfer Agent Instructions, in the form
      of
Exhibit
      G
      attached
      hereto, shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

     

    (m) Lock-Up
      Agreement.
      As of
      the Closing Date, the persons listed on Schedule
      3.19
      hereto
      shall have delivered to the Purchaser a fully executed Lock-Up Agreement as
      provided in Section 3.19, and the Company shall affirm that the Lock-Up
      Agreement for each such person is in full force and effect.

     

    (n) Secretary’s
      Certificate.
      The
      Company shall have delivered to the Purchaser a secretary’s certificate, dated
      as of the Closing Date, as to (i) the Resolutions, (ii) the Articles, (iii)
      the
      Bylaws, (iv) the Series A Certificate of Designation, each as in effect at
      Closing, and (v) the authority and incumbency of the officers of the Company
      executing the Transaction Documents and any other documents required to be
      executed or delivered in connection therewith.

     

    (o) Officer’s
      Certificate.
      The
      Company shall have delivered to the Purchaser a certificate of an executive
      officer of the Company, dated as of the Closing Date, confirming the accuracy
      of
      the Company’s representations, warranties and covenants as of such Closing Date
      and confirming the compliance by the Company with the conditions precedent
      set
      forth in this Section 4.2 as of the Closing Date.

     

    (p) Securities
      Escrow Agreement.
      At
      Closing, the Securities Escrow Agreement shall have been executed by the parties
      thereto and the Escrow Shares (as defined in the Securities Escrow Agreement)
      shall have been deposited into the escrow account pursuant to the terms of
      the
      Securities Escrow Agreement in the form of Exhibit
      F
      attached
      hereto.

     

    (q) Material
      Adverse Effect.
      No
      Material Adverse Effect shall have occurred at or before the Closing
      Date.

     

    (r) Financial
      Statements.
      No
      later than the fifth Business Day prior to the Closing Date, the Company shall
      have delivered to the Purchaser the audited financial statements of Shen Kun
      for
      the fiscal years ended June 30, 2006 and 2007 audited by Albert Wong & Co.,
      Certified Public Accountants (the “Shen
      Kun Financial Statements”),
      which
      Shen Kun Financial Statements shall be acceptable to the Purchaser.


     

    (s) Capitalization
      Table.
      No later
      than the third Business Day prior to the Closing Date, the Company shall have
      delivered to the Purchaser a capitalization table setting forth (i) its
      capitalization, on a fully diluted basis immediately prior to the Closing and
      (ii) its pro forma capitalization, on a fully diluted basis, giving effect
      to
      the consummation of the transactions contemplated by this Agreement. In each
      case, the table shall list all outstanding options, warrants and other
      securities convertible into equity of the Company. 

     

    (t) Draft
      Form 8-K.
      No later
      than four (4) Business Days prior to the Closing Date, the Company shall have
      delivered to the Purchaser, a draft of the Form 8-K (the “Draft
      Form 8-K”),
      in
      substantially final form, that it proposes to file with the Securities and
      Exchange Commission, which Draft Form 8-K shall be reasonably acceptable to
      the
      Purchaser.


    
      
        
        

      

      
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    (u) Chief
      Financial Officer/Vice President of Investor Relations.
      As soon
      as possible following the Closing, the Company shall use its best efforts to
      appoint an individual to serve as Chief Financial Officer and/or Vice President
      of Investor Relations of the Company who is fluent in English (individually,
      an
“English Speaking Officer”), which English Speaking Officer shall be acceptable
      to Vision and the Purchaser.

     

    ARTICLE
      V

     

    Stock
      Certificate Legend

     

    Section
      5.1 Legend.
      Each
      certificate representing the Preferred Shares and the Warrants, and, if
      appropriate, securities issued upon conversion thereof, shall be stamped or
      otherwise imprinted with a legend substantially in the following form (in
      addition to any legend required by applicable state securities or “blue sky”
laws):

     

    THESE
      SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
      OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
      THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
      PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

     

    The
      Company agrees to reissue certificates representing any of the Conversion Shares
      and the Warrant Shares, without the legend set forth above if at such time,
      prior to making any transfer of any such securities, such holder thereof shall
      give written notice to the Company describing the manner and terms of such
      transfer and removal as the Company may reasonably request. Such proposed
      transfer and removal will not be effected until: (a) either (i) the Company
      has
      received an opinion of counsel reasonably satisfactory to the Company, to the
      effect that the registration of the Conversion Shares or the Warrant Shares
      under the Securities Act is not required in connection with such proposed
      transfer, (ii) a registration statement under the Securities Act covering such
      proposed disposition has been filed by the Company with the Commission and
      has
      become effective under the Securities Act, (iii) the Company has received other
      evidence reasonably satisfactory to the Company that such registration and
      qualification under the Securities Act and state securities laws are not
      required, or (iv) the holder provides the Company with reasonable assurances
      that such security can be sold pursuant to Rule 144 under the Securities Act;
      and (b) either (i) the Company has received an opinion of counsel reasonably
      satisfactory to the Company, to the effect that registration or qualification
      under the securities or “blue sky” laws of any state is not required in
      connection with such proposed disposition, or (ii) compliance with applicable
      state securities or “blue sky” laws has been effected or a valid exemption
      exists with respect thereto. The Company will respond to any such notice from
      a
      holder within five (5) business days. In the case of any proposed transfer
      under
      this Section 5.1, the Company will use reasonable efforts to comply with any
      such applicable state securities or “blue sky” laws, but shall in no event be
      required, (x) to qualify to do business in any state where it is not then
      qualified, (y) to take any action that would subject it to tax or to the general
      service of process in any state where it is not then subject, or (z) to comply
      with state securities or “blue sky” laws of any state for which registration by
      coordination is unavailable to the Company. The restrictions on transfer
      contained in this Section 5.1 shall be in addition to, and not by way of
      limitation of, any other restrictions on transfer contained in any other section
      of this Agreement. Whenever a certificate representing the Conversion Shares
      or
      Warrant Shares is required to be issued to a Purchaser without a legend, in
      lieu
      of delivering physical certificates representing the Conversion Shares or
      Warrant Shares (provided that a registration statement under the Securities
      Act
      providing for the resale of the Warrant Shares and Conversion Shares is then
      in
      effect), the Company may cause its transfer agent to electronically transmit
      the
      Conversion Shares or Warrant Shares to a Purchaser by crediting the account
      of
      the Purchaser or the Purchaser’s Prime Broker with the Depository Trust Company
      (“DTC”)
      through its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      (to the extent not inconsistent with any provisions of this
      Agreement).

     

    
      
        
        

      

      
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    ARTICLE
      VI

     

    Indemnification

     

    Section
      6.1 General
      Indemnity.
      The
      Company agrees to indemnify and hold harmless the Purchaser (and their
      respective directors, officers, managers, partners, members, shareholders,
      affiliates, agents, successors and assigns) from and against any and all losses,
      liabilities, deficiencies, costs, damages and expenses (including, without
      limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
      the Purchaser as a result of any inaccuracy in or breach of the representations,
      warranties or covenants made by the Company herein. The Purchaser severally
      but
      not jointly agrees to indemnify and hold harmless the Company and its directors,
      officers, affiliates, agents, successors and assigns from and against any and
      all losses, liabilities, deficiencies, costs, damages and expenses (including,
      without limitation, reasonable attorneys’ fees, charges and disbursements)
      incurred by the Company as a result of any inaccuracy in or breach of the
      representations, warranties or covenants made by the Purchaser herein. The
      maximum aggregate liability of the Purchaser pursuant to its indemnification
      obligations under this Article VII shall not exceed the portion of the Purchase
      Price paid by the Purchaser hereunder.


    
      
        
        

      

      
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    Section
      6.2 Indemnification
      Procedure.
      Any
      party entitled to indemnification under this Article VI (an “indemnified party”)
      will give written notice to the indemnifying party of any matters giving rise
      to
      a claim for indemnification; provided,
      that
      the failure of any party entitled to indemnification hereunder to give notice
      as
      provided herein shall not relieve the indemnifying party of its obligations
      under this Article VI except to the extent that the indemnifying party is
      actually prejudiced by such failure to give notice. In case any action,
      proceeding or claim is brought against an indemnified party in respect of which
      indemnification is sought hereunder, the indemnifying party shall be entitled
      to
      participate in and, unless in the reasonable judgment of the indemnified party
      a
      conflict of interest between it and the indemnifying party may exist with
      respect of such action, proceeding or claim, to assume the defense thereof
      with
      counsel reasonably satisfactory to the indemnified party. In the event that
      the
      indemnifying party advises an indemnified party that it will contest such a
      claim for indemnification hereunder, or fails, within thirty (30) days of
      receipt of any indemnification notice to notify, in writing, such person of
      its
      election to defend, settle or compromise, at its sole cost and expense, any
      action, proceeding or claim (or discontinues its defense at any time after
      it
      commences such defense), then the indemnified party may, at its option, defend,
      settle or otherwise compromise or pay such action or claim. In any event, unless
      and until the indemnifying party elects in writing to assume and does so assume
      the defense of any such claim, proceeding or action, the indemnified party’s
      costs and expenses arising out of the defense, settlement or compromise of
      any
      such action, claim or proceeding shall be losses subject to indemnification
      hereunder. The indemnified party shall cooperate fully with the indemnifying
      party in connection with any negotiation or defense of any such action or claim
      by the indemnifying party and shall furnish to the indemnifying party all
      information reasonably available to the indemnified party which relates to
      such
      action or claim. The indemnifying party shall keep the indemnified party fully
      apprised at all times as to the status of the defense or any settlement
      negotiations with respect thereto. If the indemnifying party elects to defend
      any such action or claim, then the indemnified party shall be entitled to
      participate in such defense with counsel of its choice at its sole cost and
      expense. The indemnifying party shall not be liable for any settlement of any
      action, claim or proceeding effected without its prior written consent.
      Notwithstanding anything in this Article VI to the contrary, the indemnifying
      party shall not, without the indemnified party’s prior written consent, settle
      or compromise any claim or consent to entry of any judgment in respect thereof
      which imposes any future obligation on the indemnified party or which does
      not
      include, as an unconditional term thereof, the giving by the claimant or the
      plaintiff to the indemnified party of a release from all liability in respect
      of
      such claim. The indemnification required by this Article VI shall be made by
      periodic payments of the amount thereof during the course of investigation
      or
      defense, as and when bills are received or expense, loss, damage or liability
      is
      incurred, so long as the indemnified party irrevocably agrees to refund such
      moneys if it is ultimately determined by a court of competent jurisdiction
      that
      such party was not entitled to indemnification. The indemnity agreements
      contained herein shall be in addition to (a) any cause of action or similar
      rights of the indemnified party against the indemnifying party or others, and
      (b) any liabilities the indemnifying party may be subject to pursuant to the
      law.

     

    ARTICLE
      VII

     

    Miscellaneous

     

    Section
      7.1 Fees
      and Expenses.
      Except
      as otherwise set forth in this Agreement and the other Transaction Documents,
      each party shall pay the fees and expenses of its advisors, counsel, accountants
      and other experts, if any, and all other expenses, incurred by such party
      incident to the negotiation, preparation, execution, delivery and performance
      of
      this Agreement, provided that the Company shall pay all actual and reasonable
      attorneys’ fees and expenses (including disbursements and out-of-pocket
      expenses) up to a maximum of $25,000 incurred by the Purchaser in connection
      with the preparation, negotiation, execution and delivery of this Agreement
      and
      the other Transaction Documents and the consummation of the transactions and
      the
      review of the Restructuring Agreements. The Company shall also pay all
      reasonable fees and expenses incurred by the Purchaser in connection with the
      enforcement of this Agreement or any of the other Transaction Documents,
      including, without limitation, all reasonable attorneys’ fees and expenses but
      only if the Purchaser are successful in any litigation or arbitration relating
      to such enforcement.


    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    


    Section
      7.2 Capital
      Contribution.
      Within
      fifteen (15) days of the Closing, the Company will cause Shen Kun to contribute
      one hundred percent (100%) of the net proceeds from the sale of the Units in
      the
      Closing to WFOE. The Company will cause Shen Kun to contribute one hundred
      percent (100%) of the registered capital of WFOE within two years from the
      date
      of issuance of the business license of WFOE.

     

    Section
      7.3 Transfer
      of Vehicles.
      The
      Company covenants and agrees to, as soon as legally possible after the Closing,
      effect the change of title owner for the vehicles listed on Schedule 7.3 from
      the individuals listed as title owners on Schedule 7.3 to Tianjin Shengkai
      Industrial Technology Development Co., Ltd.

     

    Section
      7.4 Reserved.

     

    Section
      7.5 Specific
      Enforcement, Consent to Jurisdiction.
      

     

    (a) The
      Company and the Purchaser acknowledge and agree that irreparable damage would
      occur in the event that any of the provisions of this Agreement or the other
      Transaction Documents were not performed in accordance with their specific
      terms
      or were otherwise breached. It is accordingly agreed that the parties shall
      be
      entitled to an injunction or injunctions to prevent or cure breaches of the
      provisions of this Agreement or the other Transaction Documents and to enforce
      specifically the terms and provisions hereof or thereof, this being in addition
      to any other remedy to which any of them may be entitled by law or
      equity.

     

    (b) Each
      of
      the Company and the Purchaser (i) hereby irrevocably submits to the jurisdiction
      of the United States District Court sitting in the Southern District of New
      York
      and the courts of the State of New York located in New York county for the
      purposes of any suit, action or proceeding arising out of or relating to this
      Agreement or any of the other Transaction Documents or the transactions
      contemplated hereby or thereby and (ii) hereby waives, and agrees not to assert
      in any such suit, action or proceeding, any claim that it is not personally
      subject to the jurisdiction of such court, that the suit, action or proceeding
      is brought in an inconvenient forum or that the venue of the suit, action or
      proceeding is improper. Each of the Company and the Purchaser consents to
      process being served in any such suit, action or proceeding by mailing a copy
      thereof to such party at the address in effect for notices to it under this
      Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing in this Section 7.5 shall affect
      or limit any right to serve process in any other manner permitted by
      law.


    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    


    Section
      7.6 Entire
      Agreement; Amendment.
      This
      Agreement and the other Transaction Documents contains the entire understanding
      and agreement of the parties with respect to the matters covered hereby and
      thereby and, except as specifically set forth herein or in the Transaction
      Documents, neither the Company nor any of the Purchaser makes any
      representations, warranty, covenant or undertaking with respect to such matters
      and they supersede all prior understandings and agreements with respect to
      said
      subject matter, all of which are merged herein. No provision of this Agreement
      nor any of the Transaction Documents may be waived or amended other than by
      a
      written instrument signed by the Company and the holders of at least fifty
      percent (50%) of the Preferred Shares then outstanding, and no provision hereof
      may be waived other than by an a written instrument signed by the party against
      whom enforcement of any such amendment or waiver is sought. No such amendment
      shall be effective to the extent that it applies to less than all of the holders
      of the Preferred Shares then outstanding. 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
      is
      also offered to all of the parties to the Transaction Documents or holders
      of
      Preferred Shares, as the case may be. The June 2008 Purchase Agreement and
      all
      other June 2008 Transaction Documents contain the entire understanding and
      agreement of the parties thereto with respect to the matters covered thereby,
      and there are no other understandings or agreements with respect to said subject
      matter, all of which are merged therein.

     

    Section
      7.7 Notices.
      Any
      notice, demand, request, waiver or other communication required or permitted
      to
      be given hereunder shall be in writing and shall be effective (a) upon hand
      delivery by telex (with correct answer back received), telecopy or facsimile
      at
      the address or number designated below (if delivered on a business day during
      normal business hours where such notice is to be received), or the first
      business day following such delivery (if delivered other than on a business
      day
      during normal business hours where such notice is to be received) or (b) on
      the
      second business day following the date of mailing by express courier service,
      fully prepaid, addressed to such address, or upon actual receipt of such
      mailing, whichever shall first occur. The addresses for such communications
      shall be:

     

    If
      to the
      Company:  

    


    Southern
      Sauce Company, Inc.

    No.
      27,
      Wang Gang Road

    Jin
      Nan
      (Shuang Gang) Development Area

    Tianjin,
      People’s Republic of China 300350

    Attention:
      Wang Chen  

    Tel.
      No.:
      86-22-2858-8899

    Fax
      No.:
      86-22-2859-0003

     

    with
      copies to: 

    Sichenzia
      Ross Friedman Ference LLP

    61
      Broadway, 32nd Floor

    New
      York,
      NY 10006

    Attention:
      Marc J. Ross, Esq.

    Tel.
      No.:
      (212) 930-9700

    Fax
      No.:
      (212) 930-9725

     

    If
      to any
      Purchaser:  At
      the
      address of the Purchaser set forth on Exhibit
      A
      to this
      Agreement, as the case may be, with copies to Purchaser’s counsel as set forth
      on Exhibit A or as specified in writing by the Purchaser.

     

    Any
      party
      hereto may from time to time change its address for notices by giving at least
      ten (10) days written notice of such changed address to the other party
      hereto.


    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    


    Section
      7.8 Waivers.
      No
      waiver by any party of any default with respect to any provision, condition
      or
      requirement of this Agreement shall be deemed to be a continuing waiver in
      the
      future or a waiver of any other provisions, condition or requirement hereof,
      nor
      shall any delay or omission of any party to exercise any right hereunder in
      any
      manner impair the exercise of any such right accruing to it
      thereafter.

     

    Section
      7.9 Headings.
      The
      article, section and subsection headings in this Agreement are for convenience
      only and shall not constitute a part of this Agreement for any other purpose
      and
      shall not be deemed to limit or affect any of the provisions
      hereof.

     

    Section
      7.10 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns.

     

    Section
      7.11 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.

     

    Section
      7.12 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York, without giving effect to any of the conflicts
      of
      law principles which would result in the application of the substantive law
      of
      another jurisdiction. This Agreement shall not be interpreted or construed
      with
      any presumption against the party causing this Agreement to be
      drafted.

     

    Section
      7.13 Survival.
      The
      representations and warranties of the Company and the Purchaser shall survive
      the execution and delivery hereof and the Closing hereunder for a period of
      two
      years following the Closing Date.

     

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

     

    Section
      7.15 Publicity.
      The
      Company agrees that it will not disclose, and will not include in any public
      announcement, the name of the Purchaser without the consent of the Purchaser
      unless and until such disclosure is required by law or applicable regulation,
      and then only to the extent of such requirement.

     

    Section
      7.16 Severability.
      The
      provisions of this Agreement and the Transaction Documents are severable and,
      in
      the event that any court of competent jurisdiction shall determine that any
      one
      or more of the provisions or part of the provisions contained in this Agreement
      or the Transaction Documents shall, for any reason, be held to be invalid,
      illegal or unenforceable in any respect, such invalidity, illegality or
      unenforceability shall not affect any other provision or part of a provision
      of
      this Agreement or the Transaction Documents and such provision shall be reformed
      and construed as if such invalid or illegal or unenforceable provision, or
      part
      of such provision, had never been contained herein, so that such provisions
      would be valid, legal and enforceable to the maximum extent
      possible.


    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    


    Section
      7.17 Further
      Assurances.
      From
      and after the date of this Agreement, upon the request of any Purchaser or
      the
      Company, each of the Company and the Purchaser shall execute and deliver such
      instrument, documents and other writings as may be reasonably necessary or
      desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this Agreement, the Preferred Shares, the Conversion Shares, the
      Warrants, the Warrant Shares, the Series A Certificate of Designation, the
      Registration Rights Agreement and the other Transaction Documents.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]


    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    


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

    


    
      	
              SOUTHERN
                SAUCE COMPANY, INC.

            
	 	 
	
              By:

            	
              /s/
                Wang Chen

            
	
              Name:

            	
              Wang
                Chen

            
	
              Title:

            	
              Chief
                Executive Officer

            
	 
	
              PURCHASER

            
	 
	
              BLUE
                RIDGE INVESTMENTS, LLC

            
	 	 
	
              By:

            	
              /s/
                John Hiebendahl

            
	
              Name:

            	
              John
                Hiebendahl

            
	
              Title:

            	
              Vice
                President

            
	 	 
	
              ACKNOWLEDGED
                AND AGREED FOR PURPOSES OF SECTION 3.25

            
	 
	
              LONG
                SUNNY LIMITED

            
	 	 
	
              By:

            	
              /s/
                Wang Chen

            
	
              Name:

            	
              Wang
                Chen

            
	
              Title:

            	
              Chief
                Executive Officer

            


    


    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A TO THE

    SECURITIES
      PURCHASE AGREEMENT

     

      
        

      

    

     

    LIST
      OF PURCHASER

    


    
      	
              Purchaser and Address

            	 	
              Investment

            	 	
              Units

              Purchased

            	 	
              Shares of

              Preferred Stock

            	 	
              Series A

              Warrants

            	 
	
              Hare &
                Co., as custodian for Blue Ridge Investments, LLC 

              Attn:
                John Hiebendahl

              214
                N. Tryon Street

              Charlotte,
                NC 28255

              Mailcode:
                NC1-027-14-01

            	 	
              $

            	
              5,000,000

            	 	 	
              1,971,842

            	 	 	
              1,971,842

            	 	 	
              2,366,211

            	 


    


    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B TO THE 

    SECURITIES
      PURCHASE AGREEMENT

     

      
        
 

    

    SERIES
      A CERTIFICATE OF DESIGNATION


     

    Incorporated
      by reference to our Form 8-K/A filed with the SEC on June 23,
      2008.


    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C TO THE

    SECURITIES
      PURCHASE AGREEMENT 

     

    
      
  

    FORM
      OF SERIES A WARRANT

     

    Please
      refer to Exhibit 4.1 of this 8-K.


    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      D TO THE 

     

    SECURITIES
      PURCHASE AGREEMENT

     

    
      
 

    FORM
      OF REGISTRATION RIGHTS AGREEMENT

     

    Please
      refer to Exhibit 4.5 of this 8-K.


    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      E TO THE 

    SECURITIES
      PURCHASE AGREEMENT

     

    
      
 

    LOCK-UP
      AGREEMENTS

     

    Incorporated
      by reference to our Form 8-K/A filed with the SEC on June 23,
      2008.


    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      F TO THE 

    SECURITIES
      PURCHASE AGREEMENT

     

    
      
   

    FORM
      OF SECURITIES ESCROW AGREEMENT

     

    Please
      refer to Exhibit 10.1 of this 8-K.


    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      G TO THE 

    SECURITIES
      PURCHASE AGREEMENT

     

    
      
  


    FORM
      OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

     

    
      
  

    as
      of
      ____________, 2008

     

    [Name
      and address of Transfer Agent]

     

    Attn:
      _____________

     

    Ladies
      and Gentlemen:

     

    Reference
      is made to that certain Securities Purchase Agreement (the “Purchase
      Agreement”),
      dated
      as of July 18, 2008, by and among by and among Southern Sauce Company, Inc.,
      a
      Florida corporation (the “Company”),
      and
      the Purchaser of Units whose name is set forth on Exhibit
      A
      hereto
      (the “Purchaser”).
      pursuant to which the Company is issuing to the Purchaser shares of its Series
      A
      Convertible Preferred Stock, par value $0.001 per share, (the “Preferred
      Shares”)
      and
      warrants (the “Warrants”)
      to
      purchase shares of the Company’s common stock, par value $0.001 per share (the
“Common
      Stock”).
      This
      letter shall serve as our irrevocable authorization and direction to you
      provided that you are the transfer agent of the Company at such time) to issue
      shares of Common Stock upon conversion of the Preferred Shares (the
“Conversion
      Shares”)
      and
      exercise of the Warrants (the “Warrant
      Shares”)
      to or
      upon the order of a Purchaser from time to time upon (i) surrender to you
      of a properly completed and duly executed Conversion Notice or Exercise Notice,
      as the case may be, in the form attached hereto as Exhibit I and Exhibit II,
      respectively, (ii) in the case of the conversion of Preferred Shares, a
      copy of the certificates (with the original certificates delivered to the
      Company) representing Preferred Shares being converted or, in the case of
      Warrants being exercised, a copy of the Warrants (with the original Warrants
      delivered to the Company) being exercised (or, in each case, an indemnification
      undertaking with respect to such share certificates or the warrants in the
      case
      of their loss, theft or destruction), and (iii) delivery of a treasury
      order or other appropriate order duly executed by a duly authorized officer
      of
      the Company. So long as you have previously received (x) written confirmation
      from counsel to the Company that a registration statement covering resales
      of
      the Conversion Shares or Warrant Shares, as applicable, has been declared
      effective by the Securities and Exchange Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”),
      and
      no subsequent notice by the Company or its counsel of the suspension or
      termination of its effectiveness and (y) a copy of such registration statement,
      and if the Purchaser represents in writing that the Conversion Shares or the
      Warrant Shares, as the case may be, were sold pursuant to the Registration
      Statement, then certificates representing the Conversion Shares and the Warrant
      Shares, as the case may be, shall not bear any legend restricting transfer
      of
      the Conversion Shares and the Warrant Shares, as the case may be, thereby and
      should not be subject to any stop-transfer restriction. Provided, however,
      that
      if you have not previously received those items and representations listed
      above, then the certificates for the Conversion Shares and the Warrant Shares
      shall bear the following legend:

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    


    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT”), OR ANY STATE
      SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
      REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR
      THE
      COMPANY SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF
      SUCH
      SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
      STATE
      SECURITIES LAWS IS NOT REQUIRED.”

     

    and,
      provided, further, that the Company may from time to time notify you to place
      stop-transfer restrictions on the certificates for the Conversion Shares and
      the
      Warrant Shares in the event a registration statement covering the Conversion
      Shares and the Warrant Shares is subject to amendment for events then
      current.

     

    A
      form of
      written confirmation from counsel to the Company that a registration statement
      covering resales of the Conversion Shares and the Warrant Shares has been
      declared effective by the SEC under the 1933 Act is attached hereto as Exhibit
      III.

     

    Please
      be
      advised that the Purchaser is relying upon this letter as an inducement to
      enter
      into the Purchase Agreement and, accordingly, the Purchaser is a third party
      beneficiary to these instructions.

     

    Please
      execute this letter in the space indicated to acknowledge your agreement to
      act
      in accordance with these instructions. Should you have any questions concerning
      this matter, please contact me at ___________.

    


    
      	
              Very
                truly yours,

            
	 
	
              [__________________________________________________________]

            
	 	 
	
              By:
                

            	       
	 	 
	
              Name:
                  

            	      
	 	 
	
              Title:
                

            	      



    


    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

    


    
      	
              ACKNOWLEDGED
                AND AGREED:

            
	 
	
              [TRANSFER
                AGENT]

            
	 	 
	
              By:

            	     
	 	 
	
              Name:  

            	      
	 	 
	
              Title:

            	        
	 	 
	
              Date:

            	      



    


    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    


    EXHIBIT
      I

     

      
        
 CONVERSION
        NOTICE

    

     

    Reference
      is made to the Series A Certificate of Designation of the Relative Rights and
      Preferences of the Series A Convertible Preferred Stock of Southern Sauce
      Company, Inc. (the “Series A Certificate of Designation”). In accordance with
      and pursuant to the Series A Certificate of Designation, the undersigned hereby
      elects to convert the number of shares of Series A Convertible Preferred Stock,
      par value $________ per share (the “Preferred Shares”) of Southern Sauce
      Company, Inc., a Florida corporation (the “Company”), indicated below into
      shares of Common Stock, par value $_________ per share (the “Common Stock”), of
      the Company, by tendering the stock certificate(s) representing the share(s)
      of
      Preferred Shares specified below as of the date specified below.

     

    Date
      of
      Conversion:  ______________________________________

     

    Number
      of
      Preferred Shares to be converted:  _________

     

    Stock
      certificate no(s). of Preferred Shares to be converted:  _______

     

    The
      Common Stock have been sold pursuant to the Registration Statement (as defined
      in the Registration Rights Agreement): YES _______ NO______

     

    Please
      confirm the following information:

     

    Conversion
      Price:  _______________________________________

     

    Number
      of
      shares of Common Stock

     

    to
      be
      issued:  _______________________________________

     

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the Date of Conversion: _____________________

     

    Please
      issue the Common Stock into which the Preferred Shares are being converted
      and,
      if applicable, any check drawn on an account of the Company in the following
      name and to the following address:

     

    Issue
      to:     _________________________________

     

    _________________________________

     

    Facsimile
      Number:    ___________________________________


    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    


    
      	
              Authorization:   

            	      


    

     

    
      	
              By:
                

            	        
	 	 
	
              Title:
                

            	   
              
	 	 
	
              Dated:

            


    


    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      II

     

    FORM
      OF EXERCISE NOTICE

     

    EXERCISE
      FORM

     

    
      
        

      

    

     

    The
      undersigned____________, pursuant to the provisions of the within Warrant,
      hereby elects to purchase ______ shares of Common Stock of
      ______________________________________ covered by the within
      Warrant.

     

    
      	
              Dated:
                

            	
              Signature
                

            	     
	 	 	 
	 	
              Address

            	       
	 	      
               


    

     

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the date of Exercise: _______________________

     

    ASSIGNMENT

     

    FOR
      VALUE
      RECEIVED, ________________ hereby sells, assigns and transfers unto
      _______________ the within Warrant and all rights evidenced thereby and does
      irrevocably constitute and appoint ______________, attorney, to transfer the
      said Warrant on the books of the within named corporation.

     

    
      	
              Dated:
                

            	
              Signature
                

            	     
	 	 	 
	 	
              Address

            	       
	 	      
               


    

     

    PARTIAL
      ASSIGNMENT

     

    FOR
      VALUE
      RECEIVED, ________________ hereby sells, assigns and transfers unto
      _______________ the right to purchase ___________ shares of Warrant Stock
      evidenced by the within Warrant together with all rights therein, and does
      irrevocably constitute and appoint __________________, attorney, to transfer
      that part of the said Warrant on the books of the within named
      corporation.

     

    
      	
              Dated:
                

            	
              Signature
                

            	     
	 	 	 
	 	
              Address

            	       
	 	      
               


    


    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    FOR
      USE
      BY THE ISSUER ONLY:

     

    This
      Warrant No. W-_________ canceled (or transferred or exchanged) this _______
      day
      of __________, _______, shares of Common Stock issued therefor in the name
      of
      _______________, Warrant No. W-______ issued for _______ shares of Common Stock
      in the name of ________________.


    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      III

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    [Name
      and address of Transfer Agent]

    Attn:
      _________

     

    Re:
      [__________________________________]

     

    Ladies
      and Gentlemen:

     

    We
      are
      counsel to Southern Sauce Company, Inc., a Florida corporation (the
“Company”),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the “Purchase
      Agreement”),
      dated
      as of July 18, 2008, by and among the Company and the Purchaser named therein
      (the “Purchaser”)
      pursuant to which the Company issued to the Purchaser shares of its Series
      A
      Convertible Preferred Stock, par value $0.001 per share, (the “Preferred
      Shares”)
      and
      warrants (the “Warrants”)
      to
      purchase shares of the Company’s common stock, par value $0.001 per share (the
“Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company has also entered into a
      Registration Rights Agreement with the Purchaser (the “Registration
      Rights Agreement”),
      dated
      as of July 18, 2008, pursuant to which the Company agreed, among other things,
      to register the Registrable Securities (as defined in the Registration Rights
      Agreement), including the shares of Common Stock issuable upon conversion of
      the
      Preferred Shares and exercise of the Warrants, under the Securities Act of
      1933,
      as amended (the “1933
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on [ ], 2008, the Company filed a Registration Statement on Form
      S-1
      (File No. 333-________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the resale of the Registrable Securities which names the present
      Purchaser as a selling stockholder thereunder.

     

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

     

    
      	
              Very
                truly yours,

            
	 
	
              Sichenzia
                Ross Friedman Ference LLP

            
	 	 
	
              By:

            	
               

            


    

     

    cc:
      [LIST
      NAMES OF PURCHASER]


    
      
        
        

      

      
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    EXHIBIT
      H TO THE 

    SECURITIES
      PURCHASE AGREEMENT

     

    
      
        

      

       

      FORM
        OF OPINION OF COUNSEL

    

     

    1. The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Florida and has the requisite corporate
      power to own, lease and operate its properties and assets, and to carry on
      its
      business as presently conducted. The Company is duly qualified as a foreign
      corporation to do business and is in good standing in every jurisdiction in
      which the nature of the business conducted or property owned by it makes such
      qualification necessary.

     

    2. The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under the Transaction Documents and to issue the
      Preferred Stock, the Warrants and the Common Stock issuable upon conversion
      of
      the Preferred Stock and exercise of the Warrants. The execution, delivery and
      performance of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      and
      validly authorized by all necessary corporate action and no further consent
      or
      authorization of the Company or its Board of Directors or stockholders is
      required. Each of the Transaction Documents have been duly executed and
      delivered, and the Preferred Stock and the Warrants have been duly executed,
      issued and delivered by the Company and each of the Transaction Documents
      constitutes a legal, valid and binding obligation of the Company enforceable
      against the Company in accordance with its respective terms. The Common Stock
      issuable upon conversion of the Preferred Stock and exercise of the Warrants
      are
      not subject to any preemptive rights under the Articles or the
      Bylaws.

     

    3. The
      Preferred Stock and the Warrants have been duly authorized and, when delivered
      against payment in full as provided in the Purchase Agreement, will be validly
      issued, fully paid and nonassessable. The shares of Common Stock issuable upon
      conversion of the Preferred Stock, have been duly authorized and reserved for
      issuance, and, when delivered upon conversion or against payment in full as
      provided in the Series A Certificate of Designation will be validly issued,
      fully paid and nonassessable.

     

    4. The
      execution, delivery and performance of and compliance with the terms of the
      Transaction Documents and the issuance of the Preferred Stock, the Warrants
      and
      the Common Stock issuable upon conversion of the Preferred Stock and exercise
      of
      the Warrants do not (i) violate any provision of the Articles or Bylaws, (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 material agreement,
      mortgage, deed of trust, indenture, note, bond, license, lease agreement,
      instrument or obligation to which the Company is a party, (iii) create or impose
      a lien, charge or encumbrance on any property of the Company under any agreement
      or any commitment to which the Company is a party or by which the Company is
      bound or by which any of its respective properties or assets are bound, or
      (iv)
      result in a violation of any federal, state, local or foreign statute, rule,
      regulation, order, judgment, injunction or decree (including federal and state
      securities laws and regulations) applicable to the Company or by which any
      property or asset of the Company is bound or affected, except, in all cases
      other than violations pursuant to clauses (i) and (iv) above, for such
      conflicts, default, terminations, amendments, acceleration, cancellations and
      violations as would not, individually or in the aggregate, have a Material
      Adverse Effect.


    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    


    5. No
      consent, approval or authorization of or designation, declaration or filing
      with
      any governmental authority on the part of the Company is required under federal,
      state or local law, rule or regulation in connection with the valid execution
      and delivery of the Transaction Documents, or the offer, sale or issuance of
      the
      Preferred Stock, the Warrants or the Common Stock issuable upon conversion
      of
      the Preferred Stock and exercise of the Warrants other than the Series A
      Certificate of Designation and the Registration Statement.

     

    6. To
      our
      knowledge, there is no action, suit, claim, investigation or proceeding pending
      or threatened against the Company which questions the validity of this Agreement
      or the transactions contemplated hereby or any action taken or to be taken
      pursuant hereto or thereto. To our knowledge, there is no action, suit, claim,
      investigation or proceeding pending, or to our knowledge, threatened, against
      or
      involving the Company or any of its properties or assets and which, if adversely
      determined, is reasonably likely to result in a Material Adverse Effect. There
      are no outstanding orders, judgments, injunctions, awards or decrees of any
      court, arbitrator or governmental or regulatory body against the Company or
      any
      officers or directors of the Company in their capacities as such.

     

    7. Based
      upon the representations of the Purchaser, the offer, issuance and sale of
      the
      Preferred Stock and the Warrants and the offer, issuance and sale of the shares
      of Common Stock issuable upon conversion of the Preferred Stock and exercise
      of
      the Warrants pursuant to the Purchase Agreement, the Series A Certificate of
      Designation and the Warrants, as applicable, are exempt from the registration
      requirements of the Securities Act.

     

    8. The
      Company is not, and as a result of and immediately upon Closing will not be,
      an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
      amended.

     

    Very
      truly yours,


    
      
        
        

      

      
        51