EXHIBIT
10.1

     

    SECURITIES
PURCHASE AGREEMENT


     

    Dated
as of August 21, 2009

     

    among

     

    CHINANET
ONLINE HOLDINGS, INC.

     

    and

     

    THE
PURCHASERS LISTED ON EXHIBIT A

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    Table of
Contents

     

    
      
        
          
            
              
                
                  	
                          ARTICLE
      I Purchase and Sale of the Units

                        	 	
                          1

                        
	 
      	 	 
      
	
                          Section
      1.1

                        	 	
                          Purchase
      and Sale of Stock

                        	 	      
                          1

                        
	 
      	 	 
      	 	 
      
	
                          Section
      1.2

                        	 	
                          Warrants

                        	 	      
                          1

                        
	 
      	 	 
      	 	 
      
	
                          Section
      1.3

                        	 	
                          Conversion
      and Warrant Shares

                        	 	      
                          2

                        
	 
      	 	 
      	 	 
      
	
                          Section
      1.4

                        	 	
                          Purchase
      Price and Closing

                        	 	      
                          2

                        
	 
      	 	 
      	 	 
      
	
                          ARTICLE
      II Representations and Warranties

                        	 	      
                          2

                        
	 
      	 	 
      
	
                          Section
      2.1

                        	 	
                          Representations
      and Warranties of the Company, its Subsidiaries and the PRC Operating
      Entities

                        	 	      
                          2

                        
	 
      	 	 
      	 	 
      
	
                          Section
      2.2

                        	 	
                          Representations
      and Warranties of the Purchasers

                        	 	      
                          14

                        
	 
      	 	 
      	 	 
      
	
                          ARTICLE
      III Covenants

                        	 	      
                          16

                        
	 
      	 	 
      
	
                          Section
      3.1

                        	 	
                          Securities
      Compliance

                        	 	      
                          16

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.2

                        	 	
                          Registration
      and Listing

                        	 	      
                          17

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.3

                        	 	
                          Confidential
      Information

                        	 	      
                          17

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.4

                        	 	
                          Compliance
      with Laws

                        	 	      
                          17

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.5

                        	 	
                          Keeping
      of Records and Books of Account

                        	 	      
                          17

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.6

                        	 	
                          Reporting
      Requirements

                        	 	      
                          17

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.7

                        	 	
                          Amendments

                        	 	      
                          18

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.8

                        	 	
                          Other
      Agreements

                        	 	      
                          18

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.9

                        	 	
                          Distributions

                        	 	      
                          18

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.10

                        	 	
                          Reservation
      of Shares

                        	 	      
                          18

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.11

                        	 	
                          Transfer
      Agent

                        	 	      
                          18

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.12

                        	 	
                          Disposition
      of Assets

                        	 	      
                          19

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.13

                        	 	
                          Reporting
      Status

                        	 	      
                          19

                        
	 
      	 	 
      	 	 
      
	
                          Section
      3.14

                        	 	
                          Disclosure
      of Transaction

                        	 	      
                          19

                        


                

              

            

          

        

      

      
        
          
            
               

              
                
                  
                  

                

                
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                            Section
      3.15

                          	 	
                            Disclosure
      of Material Information

                          	 	      
                            19

                          
	 
      	 	 
      	 	 
      
	
                            Section
      3.16

                          	 	
                            Pledge
      of Securities

                          	 	      
                            20

                          
	 
      	 	 
      	 	 
      
	
                            Section
      3.17

                          	 	
                            Lock-Up
      Agreements

                          	 	      
                            20

                          
	 
      	 	 
      	 	 
      
	
                            Section
      3.18

                          	 	
                            DTC

                          	 	      
                            20

                          
	 
      	 	 
      	 	 
      
	
                            Section
      3.19

                          	 	
                            Sarbanes-Oxley
      Act

                          	 	      
                            20

                          
	 
      	 	 
      	 	 
      
	
                            Section
      3.20

                          	 	
                            No
      Integrated Offerings

                          	 	      
                            20

                          
	 
      	 	 
      	 	 
      
	
                            Section
      3.21

                          	 	
                            No
      Commissions in Connection with Conversion of Preferred
    Shares

                          	 	      
                            20

                          
	 
      	 	 
      	 	 
      
	
                            Section
      3.22

                          	 	
                            No
      Manipulation of Price

                          	 	      
                            21

                          
	 
      	 	 
      	 	 
      
	
                            ARTICLE
      IV CONDITIONS

                          	 	      
                            21

                          
	 
      	 	 
      
	
                            Section
      4.1

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

                          	 	      
                            21

                          
	 
      	 	 
      	 	 
      
	
                            Section
      4.2

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

                          	 	      
                            21

                          
	 
      	 	 
      	 	 
      
	
                            ARTICLE
      V Stock Certificate Legend

                          	 	      
                            24

                          
	 
      	 	 
      
	
                            Section
      5.1

                          	 	
                            Legend

                          	 	      
                            24

                          
	 
      	 	 
      	 	 
      
	
                            ARTICLE
      VI Indemnification

                          	 	      
                            25

                          
	 
      	 	 
      
	
                            Section
      6.1

                          	 	
                            General
      Indemnity

                          	 	      
                            25

                          
	 
      	 	 
      	 	 
      
	
                            Section
      6.2

                          	 	
                            Indemnification
      Procedure

                          	 	      
                            26

                          
	 
      	 	 
      	 	 
      
	
                            ARTICLE
      VII Miscellaneous

                          	 	      
                            27

                          
	 
      	 	 
      
	
                            Section
      7.1

                          	 	
                            Fees
      and Expenses

                          	 	      
                            27

                          
	 
      	 	 
      	 	 
      
	
                            Section
      7.2

                          	 	
                            Specific
      Enforcement, Consent to Jurisdiction

                          	 	      
                            27

                          
	 
      	 	 
      	 	 
      
	
                            Section
      7.3

                          	 	
                            Entire
      Agreement; Amendment

                          	 	      
                            28

                          
	 
      	 	 
      	 	 
      
	
                            Section
      7.4

                          	 	
                            Notices

                          	 	      
                            28

                          
	 
      	 	 
      	 	 
      
	
                            Section
      7.5

                          	 	
                            Waivers

                          	 	      
                            30

                          
	 
      	 	 
      	 	 
      
	
                            Section
      7.6

                          	 	
                            Headings

                          	 	      
                            30

                          


                  

                

              

               

              
                
                  
                  

                

                
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                                      Section
      7.7

                                    	 	
                                      Successors
      and Assigns

                                    	 	      
                                      30

                                    
	 
      	 	 
      	 	 
      
	
                                      Section
      7.8

                                    	 	
                                      No
      Third Party Beneficiaries

                                    	 	      
                                      30

                                    
	 
      	 	 
      	 	 
      
	
                                      Section
      7.9

                                    	 	
                                      Governing
      Law

                                    	 	      
                                      30

                                    
	 
      	 	 
      	 	 
      
	
                                      Section
      7.10

                                    	 	
                                      Survival

                                    	 	      
                                      30

                                    
	 
      	 	 
      	 	 
      
	
                                      Section
      7.11

                                    	 	
                                      Counterparts

                                    	 	      
                                      31

                                    
	 
      	 	 
      	 	 
      
	
                                      Section
      7.12

                                    	 	
                                      Publicity

                                    	 	      
                                      31

                                    
	 
      	 	 
      	 	 
      
	
                                      Section
      7.13

                                    	 	
                                      Severability

                                    	 	      
                                      31

                                    
	 
      	 	 
      	 	 
      
	
                                      Section
      7.14

                                    	 	
                                      Further
      Assurances

                                    	 	      
                                      31

                                    
	 
      	 	 
      	 	 
      
	
                                      Section
      7.15

                                    	 	
                                      Currency

                                    	 	      
                                      31

                                    
	 	 	 	 	 
	
                                      Section 7.16

                                    	 	
                                      Termination

                                    	 	      
                                      31

                                    


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


    EXHIBIT
LIST

    


    
      
        
          
            
              
                	
                        Exhibit
      A

                      	 	
                        List
      of Purchasers

                      	 	      
                        36

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      B

                      	 	
                        Definition
      of Accredited Investor

                      	 	      
                        37

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      B-1

                      	 	
                        Accredited
      Investor Representations

                      	 	      
                        39

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      B-2

                      	 	
                        Non-US
      Persons Representations

                      	 	      
                        41

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      C

                      	 	
                        Form
      of Series A Preferred Stock Certificate of Designation

                      	 	      
                        43

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      D-1

                      	 	
                        Form
      of Series A-1 Warrant

                      	 	      
                        44

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      D-2

                      	 	
                        Form
      of Series A-2 Warrant

                      	 	      
                        45

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      E

                      	 	
                        Form
      of Registration Rights Agreement

                      	 	      
                        46

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      F

                      	 	
                        Form
      of Lock-up Agreement

                      	 	      
                        47

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      G

                      	 	
                        Form
      of Closing Escrow Agreement

                      	 	      
                        48

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      H

                      	 	
                        Form
      of Securities Escrow Agreement

                      	 	      
                        49

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      I

                      	 	
                        Irrevocable
      Transfer Agent Instructions

                      	 	      
                        50

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      J

                      	 	
                        Form
      of Opinion of Lewis & Roca LLP Nevada Counsel

                      	 	      
                        53

                      
	 
      	 	 
      	 	 
      
	
                        Exhibit
      K

                      	 	
                        Form
      of Opinion of Loeb & Loeb LLP, Securities Counsel

                      	 	      
                        55

                      


              

            

          

        

      

    

     

    
      
        
        

      

      
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    SECURITIES
PURCHASE AGREEMENT

     

    This
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated
as of August 21, 2009 by and among ChinaNet Online Holdings, Inc. (f/k/a
E-mazing Interactive, Inc.), a Nevada corporation (the “Company”), and each
of the Purchasers whose names are set forth on Exhibit A hereto
(individually, a “Purchaser” and
collectively, the “Purchasers”).

     

    RECITALS

     

    WHEREAS,
the Company and the Purchasers are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Section 4(2) of the Securities Act and/or 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
Regulation S (“Regulation S”) as
promulgated under the Securities Act; and

     

    WHEREAS,
the Company is offering units (the “Units”), each
consisting of (i) one (1) share of the Company’s 10% Series A Convertible
Preferred Stock, par value $0.001 per share (the “Preferred Shares”),
initially convertible into one (1) share of the Company’s common stock, par
value $0.001 per share (the “Common Stock”)
(subject to adjustment), and (ii) a Series A-1 Warrant (the “Series A Warrant”)
and Series A-2 Warrant (the “Series A-2 Warrant”,
collectively the “Warrants”), with each
Warrant exercisable to purchase the number of shares of Common Stock equal to
fifty percent (50%) of the number of Units purchased by each
Purchaser.

     

    AGREEMENT

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchasers hereby agree as
follows:

     

    ARTICLE
I

     

    Purchase
and Sale of the Units

     

    Section
1.1           Purchase and Sale of
Units. Upon the following terms and conditions, the Company is offering
to each Purchaser the number of Units set forth opposite such Purchaser’s name
as Exhibit A
hereto consisting of (i) one (1) share of the Company’s Preferred Shares,
initially convertible into one (1) share of the Company’s Common Stock (subject
to adjustment), (ii) a Series A-1 Warrant, and (iii) a Series A-2 Warrant. The
designation, rights, preferences and other terms and provisions of the Preferred
Shares are set forth in the Series A Certificate of Designation, substantially
in the form attached hereto as Exhibit C (the “Series A Certificate of
Designation”).

     

    Section
1.2           Warrants. Each of the
Purchasers shall be issued, as part of the Units, two series of warrants, each
Warrant to purchase the number of shares of Common Stock equal to fifty percent
(50%) of the number of Units purchased by each Purchaser, as set forth opposite
such Purchaser’s name on Exhibit A hereto. The
Series A-1 Warrant, in substantially the form attached hereto as Exhibit D-1, shall
expire three (3) years following the Closing Date, and have an initial exercise
price of $3.00.  The Series B Warrant, in substantially the form
attached hereto as Exhibit D-2, shall
expire five (5) years following the Closing Date, and have an initial exercise
price of $3.75.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
1.3           Conversion and Warrant
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
ten percent (110%) of the number of shares of Common Stock as shall from time to
time be sufficient to effect 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 Purchasers and, in consideration of and in express
reliance upon the representations, warranties, covenants, terms and conditions
of this Agreement, the Purchasers, severally but not jointly, agree to purchase
the Units for $2.50 per Unit (the “Purchase Price”) for
an aggregate purchase price of no less than $3,000,000 (“Minimum Offering
Amount”) and no more than $7,500,000 (the “Maximum Offering
Amount”), provided, however that the Company, in its sole discretion,
shall have the right to increase the Maximum Offering Amount to
$15,000,000.  Provided that the Minimum Offering shall have been
subscribed for, funds representing the sale thereof shall have cleared, and all
conditions to closing have been satisfied or waived, the closing of the purchase
and sale of the Units shall take place at the offices of Loeb & Loeb, LLP,
345 Park Avenue, New York, NY 10154 (the “Closing”) no later
than August 31, 2009, which date may be extended for an additional 30 days at
the sole discretion of the Company if the Minimum Offering Amount is not
achieved (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 each
Purchaser (x) a certificate for the number of Preferred Shares set forth
opposite the name of such Purchaser on Exhibit A hereto, (y)
the Warrants to purchase such number of shares of Common Stock as is set forth
opposite the name of such Purchaser on Exhibit A attached
hereto, and (z) any other documents required to be delivered pursuant to Article
IV hereof.  At the time of the Closing, each Purchaser shall have
delivered its Purchase Price by wire transfer to the escrow account pursuant to
the Closing Escrow Agreement (as hereafter defined).  The Company may
also, in its sole discretion, terminate the Offering if the Minimum Offering
Amount is not achieved and return the funds deposited in escrow, in accordance
with the Closing Escrow Agreement.

     

    ARTICLE
II


     

    Representations
and Warranties

     

    Section
2.1           Representations and
Warranties of the Company, its Subsidiaries and the PRC Operating
Entities. The Company hereby represents and warrants to the Purchasers on
behalf of itself, its Subsidiaries (as hereinafter defined) and the PRC
Operating Entities (as hereinafter defined), 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:

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (a)           Organization, Good Standing
and Power. Each of the Company, its Subsidiaries and the PRC Operating
Entities is a corporation or other entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization (as applicable) 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.  Except as
set forth on Schedule
2.1(a), each of the Company, its Subsidiaries and the PRC Operating
Entities is duly qualified 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
consolidated financial condition.

     

    (b)           Corporate Power; Authority
and 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 E (the “Registration Rights
Agreement”), the Lock-Up Agreement (as defined in Section 3.17 hereof) in
the form attached hereto as Exhibit F, the Escrow
Agreement by and among the Company, the Purchasers and the escrow agent named
therein, dated as of the date hereof, substantially in the form of Exhibit G attached
hereto (the “Closing
Escrow Agreement”), the Securities Escrow Agreement by and among the
Company, the Purchasers, the Principal Stockholder (as hereinafter defined) and
the escrow agent named therein, dated as of the date hereof, substantially in
the form of Exhibit H
attached hereto (the “Securities Escrow
Agreement,” and together with the Closing Escrow Agreement and the
Securities Escrow Agreement the “Escrow Agreements”),
the Irrevocable Transfer Agent Instructions (as defined in Section 3.11), the
Series A Certificate of Designation, and the Warrants (collectively, the “Transaction
Documents”) and to issue and sell the Units 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.  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.

     

    (c)           Capitalization. The
authorized capital stock of the Company and the shares thereof currently issued
and outstanding as of the date hereof is set forth on Schedule 2.1(c)
hereto.  All of the issued and outstanding shares of the Common Stock
have been duly and validly authorized. Except as contemplated by the Transaction
Documents or as set forth on Schedule 2.1(c)
hereto:

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (i)           no
shares of Common Stock are entitled to preemptive, conversion or other 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;

     

    (ii)          there
are no contracts, commitments, understandings, or arrangements by which the
Company is or may become bound to issue additional shares of  capital
stock of the Company or options, securities or rights convertible into shares of
capital stock of the Company;

     

    (iii)         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;
and

     

    (iv)         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.  The Company has furnished or made
available to the Purchasers true and correct copies of the Company’s Articles of
Incorporation, as amended and in effect on the date hereof (the “Articles”), and the
Company’s Bylaws, as amended and in effect on the date hereof (the “Bylaws”).  Except
as restricted under applicable federal, state, local or foreign laws and
regulations, the Articles, the Series A Certificate of Designation or the
Transaction Documents, or as set forth on Schedule 2.1 (c), no
written or oral contract, instrument, agreement, commitment, obligation, plan or
arrangement of the Company shall limit the payment of dividends on the Company’s
Preferred Shares, or its Common Stock.

     

    (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, will 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 and,
immediately after the Closing, the Purchasers will be the record and beneficial
owners of all of such securities and have good and valid title to all of such
securities, free and clear of all encumbrances. 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 will be entitled to
all rights accorded to a holder of Common Stock and will be the record and
beneficial owners of all of such securities and have good and valid title to all
of such securities, free and clear of all encumbrances.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (e)           Subsidiaries. Schedule 2.1(e)
hereto sets forth each Subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of ownership of
each Subsidiary. 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. 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. Except as filed as
exhibits to the Commission Documents, 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.  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 interests 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 has been duly authorized and validly issued, and are
fully paid and nonassessable.

     

    (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”).  The Company has not provided to the Purchasers
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 (i) with respect
to the transactions contemplated by this Agreement, or (ii) pursuant to a
non-disclosure or confidentiality agreement signed by the
Purchasers.  At the time of the respective filings, the Form 10-K’s
and the Form 10-Q’s 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.  As of their respective filing dates,
none of the Form 10-K’s or Form 10-Q’s contained any untrue statement of a
material fact; and none 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 (the “Financial
Statements”) 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. The
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 the 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 consolidated financial position of the Company 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).

     

    (g)           No Material Adverse
Effect. Since June 30, 2009, neither the Company, the Subsidiaries, nor
the PRC Operating Entities has experienced or suffered any Material Adverse
Effect. 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, its Subsidiaries, the PRC
Operating Entities, individually, or in the aggregate and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to perform any of its obligations under this
Agreement in any material respect.

     

    
      
        
        

      

      
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    (h)           No Undisclosed
Liabilities.  Other than as disclosed on Schedule 2.1(h) or
set forth in the Commission Documents to the knowledge of the Company, neither
the Company, the Subsidiaries, nor the PRC Operating Entities 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, the Subsidiaries’ and
the PRC Operating Entities’ respective businesses since June 30, 2009 and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company, the Subsidiaries or the PRC Operating
Entities.

     

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

     

    (j)           Indebtedness. The
Financial Statements set forth all outstanding secured and unsecured
Indebtedness of the Company on a consolidated basis, or for which the Company,
the Subsidiaries or the PRC Operating Entities have commitments as of the date
of Financial Statements or any subsequent period that would require disclosure.
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 should be reflected in the
Company’s consolidated 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.  Neither the Company, the
Subsidiaries nor the PRC Operating Entities is in default with respect to any
Indebtedness.

     

    (k)           Title to Assets. Each
of the Company, the Subsidiaries and the PRC Operating Entities has good and
marketable title to (i) all properties and assets purportedly owned or used by
them as reflected in the Financial Statements, (ii) all properties and assets
necessary for the conduct of their business as currently conducted, and (iii)
all of the real and personal property reflected in the Financial Statements free
and clear of any Lien. All leases are valid and subsisting and in full force and
effect.

     

    (l)           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 or involving the Company, any Subsidiary or any
PRC Operating Entity (i) 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 or (ii)
involving any of their respective properties or assets.  To the
knowledge of the Company, there are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company, the Subsidiaries or the PRC Operating
Entities or any of their respective executive officers or directors in their
capacities as such.

     

    
      
        
        

      

      
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    (m)           Compliance with
Law.  The Company, the Subsidiaries and the PRC Operating
Entities have all material franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of their respective business 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.

     

    (n)           No
Violation.  The business of the Company, the Subsidiaries and
the PRC Operating Entities is not being conducted in violation of any Federal,
state, local or foreign governmental laws, or rules, regulations and ordinances
of any of any governmental entity, except for possible violations which
singularly or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. The Company is not required under Federal, state, local
or foreign 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 Units, 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).

     

    (o)           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
Certificate 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, pledge, charge or encumbrance
(collectively, “Lien”) 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, provided, however, that,
excluded from the foregoing in all cases are such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect.

     

    
      
        
        

      

      
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    (p)           Taxes. Each of the
Company, the Subsidiaries and the PRC Operating Entities, to the extent its
applicable, 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 consolidated financial
statements of the Company for all current taxes and other charges to which the
Company, the Subsidiaries or the PRC Operating Entities, if any, is subject and
which are not currently due and payable. None of the federal income tax returns
of the Company have been audited by the Internal Revenue Service. The Company
has no knowledge of any additional assessments, adjustments or contingent tax
liability (whether federal, state or foreign) 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.

     

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

     

    (r)           Disclosure. Neither
this Agreement nor the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchasers by or on behalf of the Company, the
Subsidiaries or the PRC Operating Entities 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.

     

    (s)           Intellectual
Property. Each of the Company, the Subsidiaries and the PRC Operating
Entities, owns or has the lawful right to use 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, if any, and all rights with respect to the foregoing, if any,
which are necessary for the conduct of their respective 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.

     

    (t)           Books and Record Internal
Accounting Controls. Except as may have otherwise been disclosed in the
Commission Documents, the books and records of the Company, the Subsidiaries and
the PRC Operating Entities accurately reflect in all material respects the
information relating to the business of the Company, the Subsidiaries and the
PRC Operating Entities, the location and collection of their assets, and the
nature of all transactions giving rise to the obligations or accounts receivable
of the Company, the Subsidiaries or the PRC Operating
Entities.  Except as disclosed on Schedule 2.1(t), the
Company, the Subsidiaries and the PRC Operating Entities  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.

     

    
      
        
        

      

      
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    (u)           Material Agreements.
Any and all written or oral contracts, instruments, agreements, commitments,
obligations, plans or arrangements, the Company, the Subsidiaries and the PRC
Operating Entities is a party to, that 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 has previously been publicly filed with the Commission in the
Commission Documents.  Each of the Company, the Subsidiaries and the
PRC Operating Entities 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.

     

    (v)           Transactions with
Affiliates. Except as set forth in the Financial Statements or in the
Commission Documents, 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 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 Purchasers set
forth in Section 2.2 (d)-(i) 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 Units 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 Preferred 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 Preferred 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 Preferred 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, and the filing of the Series A Certificate of
Designation with the Secretary of State for the State of Nevada, 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.

     

    
      
        
        

      

      
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    (y)           Employees. Except as
disclosed on Schedule
2.1(y), neither the Company nor any subsidiary has any collective
bargaining arrangements covering any of its employees.  Schedule 2.1(y) sets
forth a list of the employment contracts, agreements regarding proprietary
information, non-competition agreements, non-solicitation agreements,
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. Since June 30, 2009, 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.

     

    (z)           Absence of Certain
Developments. Except as disclosed on Schedule 2.1(z),
since June 30, 2009, neither the Company, the Subsidiaries, nor any of the PRC
Operating Entities have:

     

    (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 Purchasers 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;

     

    
      
        
        

      

      
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    (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;

     

    (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; Investment Company Act and U.S. Real Property Holding Corporation
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.  The Company is not and has never been a U.S. real
property holding corporation within the meaning of Section 897 of the Internal
Revenue Code of 1986, 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 Purchasers, or any person or entity that owns a beneficial interest in any
of the Purchasers, 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.

     

    
      
        
        

      

      
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    (cc)           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, nor will the Company or any of
its affiliates 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 June 26, 2009, other than as contemplated under
the Transaction Documents, the Company has not offered or sold any of its equity
securities or debt securities convertible into shares of Common
Stock.

     

    (dd)           Sarbanes-Oxley Act.
The Company is in compliance with the applicable provisions of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”),
and the rules and regulations promulgated thereunder, that are effective and for
which compliance by the Company is required as of the date hereof.

     

    (ee)           Additional PRC
Representations and Warranties.

     

    (i)           Schedule 2.1(ee)
hereto sets forth each PRC Operating Entity. All material consents, approvals,
authorizations or licenses requisite under PRC law for the due and proper
establishment and operation of the PRC Operating Entities have been duly
obtained from the relevant PRC governmental authorities and are in full force
and effect.

     

    (ii)           All
filings and registrations with the PRC governmental authorities required in
respect of the PRC Operating Entities and their capital structure and operations
including, without limitation, to the extent applicable, tax bureau and customs
authorities, have been duly completed in accordance with the relevant PRC rules
and regulations, except where the failure to complete such filings and
registrations does not, and would not, individually or in the aggregate, have a
Material Adverse Effect.

     

    (iii)           Neither
the Company, the Subsidiaries, nor any PRC Operating Entity or affiliated entity
is in receipt of any letter or notice from any relevant PRC governmental or
quasi-governmental authority notifying it of the revocation, or otherwise
questioning the validity, of any licenses or qualifications issued to it or any
subsidy granted to it by any PRC governmental authority, or the need for
compliance or remedial actions in respect of the activities carried out by the
Company or such subsidiary.

     

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

     

    
      
        
        

      

      
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    (v)           The
PRC Operating Entities have complied with all applicable PRC laws and
regulations in all material respects, including without limitation, laws and
regulations pertaining to welfare fund contributions, social benefits, medical
benefits, insurance, retirement benefits, pensions or the like.

     

    (ff)          No Additional
Agreements.  Neither the Company nor any of its affiliates has
any agreement or understanding with any Purchaser with respect to the
transactions contemplated by the Transaction Documents other than as specified
in the Transaction Documents.

     

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

     

    (hh)        PFIC.  None
of the Company or any of its Subsidiaries is or intends to become a “passive
foreign investment company” within the meaning of Section 1297 of the U.S.
Internal Revenue Code of 1986, as amended.

     

    (ii)           OFAC. None of the
Company or any of its Subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee, affiliate or person acting on behalf of any
of the Company or any of its Subsidiaries, is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the sale of the
Units, or lend, contribute or otherwise make available such proceeds to any
subsidiary of the Company, joint venture partner or other Person or entity,
towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any
other country sanctioned by OFAC or for the purpose of financing the activities
of any Person currently subject to any U.S. sanctions administered by
OFAC.

     

    (jj)           Money Laundering
Laws. The operations of each of the Company, the Subsidiaries and the PRC
Operating Entities have been conducted at all times in compliance with the money
laundering requirements of all applicable governmental authorities and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental authority (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or governmental
authority or any arbitrator involving any of the Company, the Subsidiaries or
the PRC Operating Entities with respect to the Money Laundering Laws is pending
or, to the best knowledge of the Company, threatened.

     

    
      
        
        

      

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

     

    (a)           Organization and Good
Standing of the Purchasers. If the Purchaser is an entity, such 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. Each Purchaser has the requisite power and authority to enter into
and perform this Agreement and each of the other Transaction Documents to which
such Purchaser is a party and to purchase the Units, consisting of 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 such Purchaser is a party by such Purchaser and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate, partnership or limited liability company action, and no
further consent or authorization of such Purchaser or its Board of Directors,
stockholders, partners, members, or managers, as the case may be, is required.
This Agreement and each of the other Transaction Documents to which such
Purchaser is a party has been duly authorized, executed and delivered by such
Purchaser and constitutes, or shall constitute when executed and delivered, a
valid and binding obligation of such Purchaser enforceable against such
Purchaser in accordance with the terms hereof.

     

    (c)           No Conflicts. The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which such Purchaser is a party and the consummation by
such Purchaser of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such 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
such 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 such 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 such
Purchaser). Such 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 such Purchaser
is a party or to purchase the Units, Preferred Shares or acquire the Warrants in
accordance with the terms hereof, provided, that for purposes of the
representation made in this sentence, such Purchaser is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.

     

    
      
        
        

      

      
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    (d)           Status of Purchasers.
Each Purchaser is an “accredited investor” as defined in Regulation D, or a
“non-US person” as defined in Regulation S. Such Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act and such
Purchaser is not a broker-dealer, nor an affiliate of a
broker-dealer.

     

    (e)           Acquisition for
Investment. Each 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 a distribution.
The Purchaser does not have a present intention to sell the Units, Preferred
Shares or the Warrants, nor a present arrangement (whether or not legally
binding) or intention to effect any distribution of the Units, Preferred 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, such
Purchaser does not agree to hold the Units, Preferred Shares or the Warrants for
any minimum or other specific term and reserves the right to dispose of the
Units, Preferred Shares or the Warrants at any time in accordance with Federal
and state securities laws applicable to such disposition. Each Purchaser
acknowledges that it is able to bear the financial risks associated with an
investment in the Units, Preferred Shares and the Warrants and that it has been
given full access to such records of the Company, the Subsidiaries and the PRC
Operating Entities and to the officers of the Company, the Subsidiaries and the
PRC Operating Entities 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. Each Purchaser further
acknowledges that such Purchaser understands the risks of investing in companies
domiciled and/or which operate primarily in the PRC and that the purchase of the
Units, Preferred Shares and Warrants involves substantial risks.

     

    (f)           Additional Representations
and Warranties of Accredited Investors.  Each Purchaser
indicating that such Purchaser is an Accredited Investor on its signature page
to this Agreement, severally and not jointly, further makes the representations
and warranties to the Company set forth on Exhibit
B-1.

     

    (g)           Additional Representations
and Warranties of Non-U.S. Persons.  Each Purchaser indicating
that it is not a U.S. person on its signature page to this Agreement, severally
and not jointly, further makes the representations and warranties to the
Acquiror Company set forth on Exhibit
B-2.

     

    (h)           Opportunities for Additional
Information. Each Purchaser acknowledges that such 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.

     

    (i)           No General
Solicitation. Each Purchaser acknowledges that the Units were not offered
to such 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 such
Purchaser was invited by any of the foregoing means of
communications.

     

    
      
        
        

      

      
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    (j)           Rule 144. Such
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. Such Purchaser acknowledges that such 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. Such Purchaser understands that to the extent that Rule 144 is
not available, such 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.

     

    (k)           General. Such
Purchaser understands that the Units are being offered and sold in reliance on a
transactional exemption from the registration requirements 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
such Purchaser set forth herein in order to determine the applicability of such
exemptions and the suitability of such Purchaser to acquire the
Units.

     

    (l)           Independent
Investment. Except as may be disclosed in any filings with the Commission
by the Purchasers under Section 13 and/or Section 16 of the Exchange Act, no
Purchaser has agreed to act with any other Purchaser 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 each Purchaser is acting
independently with respect to its investment in the Shares.

     

    (m)           Brokers. Other than
Tripoint Global Equities and selected dealers of Tripoint Global Equities, no
Purchaser has any knowledge of any brokerage or finder’s fees or commissions
that are or will be payable by the Company 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.

     

    ARTICLE
III


     

    Covenants

     

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

     

    Section
3.1            Securities
Compliance. The Company shall notify the Commission in accordance with
its 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, the 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, Conversion Shares and the Warrant Shares to the
Purchasers or subsequent holders.

     

    
      
        
        

      

      
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    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 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. Subject to the terms of the
Transaction Documents, the Company further covenants that it will take such
further action as the Purchasers may reasonably request, all to the extent
required from time to time to enable the Purchasers 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.

     

    Section
3.3            Confidential
Information.  Each Purchaser agrees that such 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 such Purchaser may obtain
from the Company pursuant to financial statements, reports and other materials
submitted by the Company to such Purchaser pursuant to this Agreement, unless
such information is known to the public through no fault of such 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 such Purchaser in
connection with such Purchaser’s investment in the Company, (ii) to any
prospective permitted transferee of the Shares, so long as the prospective
transferee agrees to be bound by the provisions of this Section 3.3, or (iii) to
any general partner or affiliate of such Purchaser.

     

    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 and each PRC
Operating Entity 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, the Subsidiaries and the
PRC Operating Entities, 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 EDGAR system, then at a Purchaser’s
request the Company shall furnish the following to such Purchaser so long as
such Purchaser shall beneficially own any Shares:

     

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

     

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

     

    
      
        
        

      

      
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    (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.

     

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

     

    Section
3.9            Distributions. So
long as any Preferred Shares remain outstanding, the Company agrees that it
shall not 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.

     

    Section
3.10          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
ten percent (110%) of the aggregate number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares and the Warrant
Shares.

     

    Section
3.11          Transfer
Agent.  The Company has engaged the transfer agent and
registrar listed on Schedule 2.1(gg) (the
“Transfer
Agent”) with respect to its Common Stock, who is DTC and DWAC eligible
and who will recognize, execute and honor the Irrevocable Transfer Agent
Instructions (as defined below).  As a condition to Closing, the
Company shall issue irrevocable instructions to its transfer agent, and any
subsequent transfer agent, to issue certificates, registered in the name of each
Purchaser or its respective nominee(s), for the Conversion Shares and the
Warrant Shares in such amounts as specified from time to time by each Purchaser
to the Company upon conversion of the Preferred Shares or exercise of the
Warrants in the form of Exhibit I 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 3.11 will be given by the Company to
its transfer agent with respect to the Conversion Shares and Warrant Shares 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, in compliance
with applicable law 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 such Purchaser and without any
restrictive legend. The Company acknowledges that a breach by it of its
obligations under this Section 3.11 will cause irreparable harm to the
Purchasers 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 3.11 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 3.11, that the Purchasers 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
3.12          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, the
Subsidiaries and the PRC Operating Entities, or (iii) otherwise with the prior
written consent of the holders of a majority of the Preferred Shares then
outstanding.

     

    Section
3.13          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
3.14          Disclosure of
Transaction. The Company shall issue a press release describing the
material terms of the transactions contemplated hereby (the “Press Release”) as
soon as practicable after the Closing but in no event later than 9:00 A.M.
Eastern Time on the first Business Day following the Closing. The Company shall
also file with the Commission, the 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 Lock-Up Agreements, the Escrow Agreements, the form of Warrant
and the Press Release) within four (4) Business Days following the Closing
Date.  The Press Release and Form 8-K shall be subject to prior review
and comment by counsel for the Purchasers. “Business Day” means
any day during which the NYSE AMEX (“AMEX”) (or other
principal exchange) shall be open for trading.

     

    Section
3.15          Disclosure of Material
Information. The Company, the Subsidiaries and the PRC Operating Entities
covenant and agree that neither it nor any other person acting on its or their
behalf has provided or, from and after the filing of the Press Release, 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 such Purchaser shall have executed a specific written agreement
regarding the confidentiality and use of such information.  The
Company understands and confirms that each Purchaser shall be relying on the
foregoing covenants in effecting transactions in securities of the
Company.  At the time of the filing of the Press Release, no Purchaser
shall be in possession of any material, nonpublic information received from the
Company, any of its subsidiaries or any of its respective officers, directors,
employees or agents, that is not disclosed in the Press Release.  The
Company shall not disclose the identity of any Purchaser in any filing with the
Commission except as required by the rules and regulations of the Commission
thereunder.  In the event of a breach of the foregoing covenant by the
Company, any of its subsidiaries, or any of its or their respective officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, a Purchaser may notify the Company, and the
Company shall make public disclosure of such material nonpublic information
within two (2) trading days of such notification.

     

    
      
        
        

      

      
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    Section
3.16          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 a 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, in accordance with applicable laws relating to the
transfer of the securities.

     

    Section
3.17          Lock-Up Agreements.
The persons listed on Schedule 3.17
attached hereto shall be subject to the terms and provisions of the Lock-Up
Agreement (the “Lock-Up Agreement”),
which shall provide the manner in which certain stockholders of the Company may
sell, transfer or dispose of their shares of Common Stock.

     

    Section
3.18          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.

     

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

     

    Section
3.20          No Integrated
Offerings. The Company shall not make any offers or sales of any security
(other than the securities being offered or sold hereunder) under circumstances
that would require registration of the securities being offered or sold
hereunder under the Securities Act.

     

    Section
3.21          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.

     

    
      
        
        

      

      
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    Section
3.22          No Manipulation of
Price.  The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.

     

    ARTICLE
IV


     

    CONDITIONS

     

    Section
4.1            Conditions Precedent to the
Obligation of the Company to Sell the Units. The obligation hereunder of
the Company to issue and sell the Units, and the underlying Preferred Shares and
the Warrants to the Purchasers 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 Company’s sole benefit and may be waived by the Company at any time
in its sole discretion.

     

    (a)           Accuracy of Each Purchaser’s
Representations and Warranties. The representations and warranties of
each Purchaser in this Agreement and each of the other Transaction Documents to
which such 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
Purchasers. Each 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 such Purchaser at or
prior to the Closing.

     

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

     

    (d)           Delivery of Purchase
Price. The Purchase Price for the Units shall have been delivered to the
escrow agent pursuant to the Closing Escrow Agreement.  The Minimum
Offering Price shall have been delivered to the escrow agent.

     

    (e)           Delivery of Transaction
Documents. The Transaction Documents to which the Purchasers are parties
shall have been duly executed and delivered by the Purchasers to the
Company.

     

    Section
4.2            Conditions Precedent to the
Obligation of the Purchasers to Purchase the Units. The obligation
hereunder of each 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 each Purchaser’s sole benefit and may be
waived by such Purchaser at any time in its sole discretion.

     

    
      
        
        

      

      
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    (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 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)           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.

     

    (e)           Series A Certificate of
Designation of Rights and Preferences. Prior to the Closing, the Articles
of Amendment to the Articles, including the Series A Certificate of Designation
shall have been filed with the Secretary of State of Nevada.

     

    (f)           Opinions of Counsel,
Etc. At the Closing, the Purchasers shall have received an opinion of (i)
Lewis & Roca LLP, Nevada legal counsel to the Company, dated the date of the
Closing, in substantially the form of Exhibit J hereto, and
such other certificates and documents as the Purchasers or its counsel shall
reasonably require incident to the Closing, (ii) Loeb & Loeb LLP, securities
counsel to the Company, dated the date of the Closing, in substantially the form
of Exhibit K;
and (iii) Han Kun Ltd., PRC counsel to the PRC Operating Entities, dated the
date of the Closing with respect to the restructuring of the Subsidiaries and
the PRC Operating Entities and such other matters as the Purchasers may
reasonably request.

     

    (g)           Registration Rights
Agreement. On the Closing Date, the Company shall have executed and
delivered the Registration Rights Agreement to each Purchaser.

     

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

     

    
      
        
        

      

      
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    (i)           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 such Purchaser (the
“Resolutions”).

     

    (j)           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 ten percent (110%) 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.

     

    (k)           Lock-Up Agreements.
As of the Closing Date, the persons listed on Schedule 3.18 shall
have delivered to the Purchasers fully executed Lock-Up Agreements.

     

    (l)           Secretary’s
Certificate. The Company shall have delivered to such Purchaser a
secretary’s certificate, dated as of the Closing Date, as to (i) the resolutions
adopted by the Board of Directors of the Company consistent with Section 2.1(b),
(ii) the Articles, (iii) the Bylaws, (iv) the Series A Certificate of
Designation, each as in effect at the 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.

     

    (m)           Officer’s
Certificate. The Company shall have delivered to the Purchasers 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 the 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.

     

    (n)           Closing Escrow
Agreement. On the Closing Date, the Company and the escrow agent shall
have executed and delivered the Closing Escrow Agreement to each
Purchaser.

     

    (o)           Securities Escrow
Agreement. On the Closing Date, 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.

     

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

     

    (q)           Draft Form 8-K. The
Company shall have delivered to each of the Purchasers, a draft of the Form 8-K
(the “Draft Form
8-K”), in substantially final form, that it proposes to file with the
Commission, which Draft Form 8-K, subject only to Purchaser’s comments, if any,
shall be reasonably acceptable to the Purchasers.

     

    
      
        
        

      

      
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    ARTICLE
V

     

    Stock
Certificate Legend

     

    Section
5.1            Legend. Each
certificate representing the Preferred Shares, the Warrants and Warrant Shares
and if appropriate, securities issued upon conversion or exercise 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.”

     

    Each
certificate representing the Preferred Shares, the Warrants and Warrant Shares
and if appropriate, securities issued upon conversion or exercise thereof, if
such securities are being offered to Purchasers in reliance upon Regulation S,
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):

     

    “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 NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES
ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE
BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER
CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.”

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    The
Company agrees to reissue certificates representing any of the Conversion Shares
or 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 sale 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(i)  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 the Warrant Shares is required to be issued to a Purchaser without a
legend, in lieu of delivering physical certificates representing the Conversion
Shares or the 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 such Purchaser or such Purchaser’s prime broker with
the DTC through its DWAC system (to the extent not inconsistent with any
provisions of this Agreement).

     

    ARTICLE
VI

     

    Indemnification

     

    Section
6.1            General Indemnity.
The Company agrees to indemnify and hold harmless the Purchasers (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 Purchasers as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company herein. Each
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 such Purchaser
herein. The maximum aggregate liability of each Purchaser pursuant to its
indemnification obligations under this Article VI shall not exceed the portion
of the Purchase Price paid by such Purchaser hereunder. In no event shall any
“Indemnified Party” (as defined below) be entitled to recover consequential or
punitive damages resulting from a breach or violation of this
Agreement.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    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, provided, however, that the
indemnifying party shall be liable for any settlement if the indemnifying party
is advised of the settlement but fails to respond to the settlement within
thirty (30) days of receipt of such notification. 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.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    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 [$40,000] incurred by the Purchasers
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Transaction Documents.  The Company shall also
pay all reasonable fees and expenses incurred by the Purchasers 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 Purchasers are successful in any litigation or
arbitration relating to such enforcement.  Any such fees and expenses
that remain outstanding shall be paid out of the escrow account pursuant to the
Closing Escrow Agreement, prior to the release of the Purchase Price to the
Company.

     

    Section
7.2            Specific Enforcement,
Consent to Jurisdiction.

     

    (a)           The
Company and the Purchasers 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 Purchasers (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 Purchasers
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing in this Section
7.3 shall affect or limit any right to serve process in any other manner
permitted by law.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  The
Company hereby appoints Loeb & Loeb LLP, with offices at 345 Park Avenue,
New York, NY 10153 as its agent for service of process in New
York.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    Section
7.3            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, except as specifically set forth herein or in the
Transaction Documents, neither the Company nor any of the Purchasers 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 (the “Majority Holders”),
and no provision hereof may be waived other than by a written instrument signed
by the party against whom enforcement of any such 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.

     

    Section
7.4            Notices. All notices,
demands, consents, requests, instructions and other communications to be given
or delivered or permitted under or by reason of the provisions of this Agreement
or in connection with the transactions contemplated hereby shall be in writing
and shall be deemed to be delivered and received by the intended recipient as
follows: (i) if personally delivered, on the business day of such delivery (as
evidenced by the receipt of the personal delivery service), (ii) if mailed
certified or registered mail return receipt requested, two (2) business days
after being mailed, (iii) if delivered by overnight courier (with all charges
having been prepaid), on the business day of such delivery (as evidenced by the
receipt of the overnight courier service of recognized standing), or (iv) if
delivered by facsimile transmission, on the business day of such delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding business day (as evidenced by the printed confirmation of
delivery generated by the sending party’s telecopier machine). If any notice,
demand, consent, request, instruction or other communication cannot be delivered
because of a changed address of which no notice was given (in accordance with
this Section 4), or the refusal to accept same, the notice, demand, consent,
request, instruction or other communication shall be deemed received on the
second business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile numbers as
applicable:

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    
 

    If to the
Company:

    


    ChinaNet
Online Holdings, Inc.

    c/o China
Net Online Media Group Limited

    No. 3 Min
Zhuang Road, Building 6, Yu Quan Hui Gu

    Tuspark,
Haidian District, Beijing, 100195 China

    Attention:  Mr.
Cheng Handong

    Tel. No.:
+86-10-5160006

    Fax No.:
+86-10-51600328

    


    with
copies (which shall not constitute notice) to:

    


    Loeb
& Loeb LLP

    345 Park
Avenue

    New York,
NY 10154

    Attention:
Mitchell S. Nussbaum, Esq.

    Tel. No.:
(212) 407-4000

    Fax No.:
(212) 407-4990

    


    If to any
Purchaser:  At the address of such 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 such Purchaser.

    


    with
copies (which shall not constitute notice) to:

    


    ROPES
& GRAY LLP

    1211
Avenue of the Americas

    New York,
NY 10036-8704

     

    Attention:  Richard
Gluckselig

    Tel:  212-841-0445

    Fax:  646-728-1685

    
       

      Attention:  Laurel
FitzPatrick

    

    
      Tel. No.:
212-497-3610 _

    

    Fax No:
646-728-1591

     

    
      ROPES
& GRAY LLP

    

    
      One
International Place

    

    
      Boston,
MA 02110-2624

    

    
       

      Attention:  Christopher
J. Austin

    

    
      Tel.
No.  617-951-7303

    

    Fax No.:
617-235-0449

    


    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.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    Section
7.5            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
7.6            Headings. The section
headings contained in this Agreement (including, without limitation, section
headings and headings in the exhibits and schedules) are inserted for reference
purposes only and shall not affect in any way the meaning, construction or
interpretation of this Agreement. Any reference to the masculine, feminine, or
neuter gender shall be a reference to such other gender as is appropriate.
References to the singular shall include the plural and vice versa.

     

    Section
7.7            Successors and
Assigns.  This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Purchasers, as
applicable, provided, however, that,
subject to federal and state securities laws and as otherwise provided in the
Transaction Documents, a Purchaser may assign its rights and delegate its duties
hereunder in whole or in part (i) to a third party acquiring all or
substantially all of its Shares or Warrants in a private transaction or (ii) to
an affiliate, in each case, without the prior written consent of the Company or
the other Purchasers, after notice duly given by such Purchaser to the Company
provided, that
no such assignment or obligation shall affect the obligations of such Purchaser
hereunder and that such assignee agrees in writing to be bound, with respect to
the transferred securities, by the provisions hereof that apply to the
Purchasers.  The provisions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties.  Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. If any Purchaser transfers Preferred Shares purchased
hereunder, any such penalty shares or liquidated damages, as the case may be,
pursuant to this Agreement shall similarly transfer to such transferee with no
further action required by the purchaser or the Company.

     

    Section
7.8            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
7.9            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
7.10          Survival. The
representations and warranties of the Company and the Purchasers shall survive
the execution and delivery hereof and the Closing hereunder for a period of
three (3) years following the Closing Date.

     

    
      
        
        

      

      
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    Section
7.11          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
7.12          Publicity. The
Company agrees that it will not disclose, and will not include in any public
announcement, the name of the Purchasers without the consent of the Purchasers
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement.

     

    Section
7.13          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.

     

    Section
7.14          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 Purchasers 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.

     

    Section
7.15          Currency.  Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
United States Dollars.  All amounts owing under this Agreement or any
Transaction Document shall be paid in US dollars.  All amounts
denominated in other currencies shall be converted in the US dollar equivalent
amount in accordance with the Exchange Rate on the date of
calculation.  “Exchange Rate” means, in relation to any amount of
currency to be converted into US dollars pursuant to this Agreement, the US
dollar exchange rate as published in The Wall Street Journal on the relevant
date of calculation.

     

    Section
7.16          Termination.  This
Agreement may be terminated prior to Closing:

     

    (a)           by
mutual written agreement of the Purchasers and the Company, a copy of which
shall be provided to the escrow agent appointed under the Closing Escrow
Agreement (the “Escrow
Agent”); and

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    (b)           by
the Company or a Purchaser (as to itself but no other Purchaser) upon written
notice to the other, with a copy to the Escrow Agent, if the Closing shall not
have taken place by 5:00 p.m. Eastern time on August 31, 2009, unless extended
for a period of no more than thirty (30) calendar days by the Company, in which
case the Closing shall not have taken place by 5:00 p.m. Eastern time on
September 30, 2009; provided, that the right to terminate this Agreement under
this Section 7.18(b) shall not be available to any person whose failure to
comply with its obligations under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or before such
time.

     

    (c)           In
the event of a termination pursuant to Section 7.18(a) or 7.18(b), each
Purchaser shall have the right to a return of up to its entire Purchase Price
deposited with the Escrow Agent pursuant to this Agreement, without interest or
deduction.  The Company covenants and agrees to cooperate with such
Purchaser in obtaining the return of its Purchase Price, and shall not
communicate any instructions to the contrary to the Escrow Agent.

     

    (d)           In
the event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with
this Section 7.18, the Company and the terminating Purchaser(s) shall not have
any further obligation or liability (including as arising from such termination)
to the other and no Purchaser will have any liability to any other Purchaser
under the Transaction Documents as a result therefrom.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    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.

    
      
        
          
            
              
                
                  	 
      	 
      
	 
      	 
      	
                          CHINANET
      ONLINE HOLDINGS, INC.

                        
	 	 	 
	 
      	
                          By:

                        	
                          /s/
      Handong Cheng

                        
	 
      	
                          Name:
      Handong Cheng

                          Title:   Chief
      Executive Officer and
President

                        


                

              

            

          

        

      

    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    
      COUNTERPART
SIGNATURE PAGE

       

      (FOR
ISSUANCES TO AN ENTITY PURSUANT TO SECTION 4(2))

       

      By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of August 21, 2009 by and ChinaNet Online Holdings,
Inc. and the Purchasers (as defined therein), as to the number of Units set
forth below, and authorizes this signature page to be attached to the Purchase
Agreement or counterparts thereof and for its name, address and number of Units
purchased to be added to Exhibit A of the
Securities Purchase Agreement.

       

      
        
          
            	 
      	
                    [ENTITY
      NAME]

                  
	 
      	 
      
	 
      	
                    By:

                  	 
      
	 
      	 
      	
                    Name:

                  
	 
      	 
      	
                    Title:

                  


          

        

      

       

      Circle
the category under which you are an “accredited investor” pursuant to Exhibit
B:

       

      1           2           3           4           5           6           7           8

       

        
          

        

      

      PRINT
EXACT NAME IN WHICH YOU WANT

      THE
SECURITIES TO BE REGISTERED

       

      
        
          
            
              
                
                  
                    
                      	
                              Attn:

                            	 
      
	 
      	 
      
	
                              Address:

                            	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                              Phone
      No.

                            	 
      
	 
      	 
      
	
                              Facsimile
      No.

                            	 
      


                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      COUNTERPART
SIGNATURE PAGE

       

      (FOR
ISSUANCES TO AN ENTITY PURSUANT TO REGULATION S)

       

      By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of August 21, 2009 by and ChinaNet Online Holdings,
Inc. and the Purchasers (as defined therein), as to the number of Units set
forth below, and authorizes this signature page to be attached to the Purchase
Agreement or counterparts thereof and for its name, address and number of Units
purchased to be added to Exhibit A of the
Securities Purchase Agreement.

      


      
        
          
            	 
      	
                    [ENTITY
      NAME]

                  
	 
      	 
      
	 
      	
                    By:

                  	 
      
	 
      	 
      	
                    Name:

                  
	 
      	 
      	
                    Title:

                  


          

        

      

       

      OFFSHORE DELIVERY
INSTRUCTIONS:

       

      
        
          

        

      

      PRINT
EXACT NAME IN WHICH YOU WANT

      THE
SECURITIES TO BE REGISTERED

      


      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Attn:

                                	 
      
	 
      	 
      
	
                                  Address:

                                	 
      
	 
      	 
      
	 
      	 
      
	 	 
	 	 
	 
      	 
      
	
                                  Phone
      No.

                                	 
      
	 
      	 
      
	
                                  Facsimile
      No.

                                	 
      


                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

    

    EXHIBIT
A TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
        

      

       

      LIST OF
PURCHASERS

    


    
      
         


      

      
        36

        
          

        

      

      
         


      

    


     EXHIBIT
B TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      

    

     

    DEFINITION
OF “ACCREDITED INVESTOR”

     

    The term
“accredited investor” means:

     

    
      	
            	
              1)

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

            


    

     

    
      	
            	
              2)

            	
              A
      private business development company as defined in Section 202(a)(22) of
      the Investment Advisers Act of
1940.

            


    

     

    
      	
            	
              3)

            	
              An
      organization described in Section 501(c)(3) of the Internal Revenue Code,
      corporation, Massachusetts or similar business trust, or partnership, not
      formed for the specific purpose of acquiring the securities offered, with
      total assets in excess of US
$5,000,000.

            


    

     

    
      	
            	
              4)

            	
              A
      director or executive officer of the
Company.

            


    

     

    
      	
            	
              5)

            	
              A
      natural person whose individual net worth, or joint net worth with that
      person’s spouse, at the time of his or her purchase exceeds US
      $1,000,000.

            


    

     

    
      	
            	
              6)

            	
              A
      natural person who had an individual income in excess of US $200,000 in
      each of the two most recent years or joint income with that person’s
      spouse in excess of US $300,000 in each of those years and has a
      reasonable expectation of reaching the same income level in the current
      year.

            


    

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              7)

            	
              A
      trust, with total assets in excess of US $5,000,000, not formed for the
      specific purpose of acquiring the securities offered, whose purchase is
      directed by a sophisticated person as described in Rule 506(b)(2)(ii)
      (i.e., a person who has such knowledge and experience in financial and
      business matters that he is capable of evaluating the merits and risks of
      the prospective investment).

            


    

     

    
      	
            	
              8)

            	
              An
      entity in which all of the equity owners are accredited
      investors.  (The Shareholder must identify each equity owner and
      provide statements signed by each demonstrating how each is qualified as
      an accredited investor.)

            


    


    
      
         


      

      
        38

        
          

        

      

      
         


      

    


    EXHIBIT
B-1 TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      

    

     

    EXHIBIT
B-1

     

    ACCREDITED
INVESTOR REPRESENTATIONS

     

    Each
Purchaser indicating that it is an Accredited Investor, severally and not
jointly, further represents and warrants to the Company as follows:

     

    
      	
               
      

            	
              1.

            	
              Such
      person or entity qualifies as an Accredited Investor on the basis set
      forth on its signature page to this
Agreement.

            


    

     

    
      	
               
      

            	
              2.

            	
              Such
      person or entity has sufficient knowledge and experience in finance,
      securities, investments and other business matters to be able to protect
      such Shareholder’s interests in connection with the transactions
      contemplated by this Agreement.

            


    

     

    
      	
               
      

            	
              3.

            	
              Such
      person or entity has consulted, to the extent that it has deemed
      necessary, with its tax, legal, accounting and financial advisors
      concerning its investment in the
Units.

            


    

     

    
      	
               
      

            	
              4.

            	
              Such
      person or entity understands the various risks of an investment in the
      Units and can afford to bear such risks for an indefinite period of time,
      including, without limitation, the risk of losing its entire investment in
      the Units.

            


    

     

    
      	
               
      

            	
              5.

            	
              Such
      person or entity has had access to the Company’s publicly filed reports
      with the Commission and has been furnished during the course of the
      transactions contemplated by this Agreement with all other public
      information regarding the Company that such person or entity has requested
      and all such public information is sufficient for such person or entity to
      evaluate the risks of investing in the
Units.

            


    

     

    
      	
               
      

            	
              6.

            	
              Such
      person or entity has been afforded the opportunity to ask questions of and
      receive answers concerning the Company and the terms and conditions of the
      issuance of the Units.

            


    

     

    
      	
               
      

            	
              7.

            	
              Such
      person or entity is not relying on any representations and warranties
      concerning the Company made by the Company or any officer, employee or
      agent of the Company, other than those contained in this
      Agreement.

            


    

     

    
      	
               
      

            	
              8.

            	
              Such
      person or entity is acquiring the Units for such person’s or entity’s, as
      the case may be, own account, for investment and not for distribution or
      resale to others.

            


    

     

    
      	
              10.

            	
              Such
      person or entity will not sell or otherwise transfer the Units, unless
      either (a) the transfer of such securities is registered under the
      Securities Act or (b) an exemption from registration of such securities is
      available.

            


    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    
      	
              12.

            	
              Such
      person or entity consents to the placement of a legend on any certificate
      or other document evidencing the Units substantially in the form set forth
      in Section 5.1.

            


    

     

    
      	
              14.

            	
              Such
      person or entity understands and acknowledges that the Units have not been
      recommended by any federal or state securities commission or regulatory
      authority, that the foregoing authorities have not confirmed the accuracy
      or determined the adequacy of any information concerning the Company that
      has been supplied to such person or entity and that any representation to
      the contrary is a criminal offense.

            


    

     

    
      
         


      

      
        40

        
          

        

      

      
         


      

    


    EXHIBIT
B-2 TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
 

    NON
U.S. PERSON REPRESENTATIONS

     

    Each
Purchaser indicating that it is not a U.S. person, severally and not jointly,
further represents and warrants to the Company as follows:

     

    
      	
               
      

            	
              1.

            	
              At
      the time of (a) the offer by the Company and (b) the acceptance of the
      offer by such person or entity, of the Units, such person or entity was
      outside the United States.

            


    

     

    
      	
               
      

            	
              2.

            	
              Such
      person or entity is acquiring the Units for such Shareholder’s own
      account, for investment and not for distribution or resale to others and
      is not purchasing the Units for the account or benefit of any U.S. person,
      or with a view towards distribution to any U.S. person, in violation of
      the registration requirements of the Securities
  Act.

            


    

     

    
      	
               
      

            	
              3.

            	
              Such
      person or entity will make all subsequent offers and sales of the Units
      either (x) outside of the United States in compliance with Regulation S;
      (y) pursuant to a registration under the Securities Act; or (z) pursuant
      to an available exemption from registration under the Securities
      Act.  Specifically, such person or entity will not resell the
      Units to any U.S. person or within the United States prior to the
      expiration of a period commencing on the Closing Date and ending on the
      date that is one year thereafter (the “Distribution Compliance
      Period”), except pursuant to registration under the Securities Act
      or an exemption from registration under the Securities
  Act.

            


    

     

    
      	
               
      

            	
              4.

            	
              Such
      person or entity has no present plan or intention to sell the Units in the
      United States or to a U.S. person at any predetermined time, has made no
      predetermined arrangements to sell the Units and is not acting as a
      Distributor of such securities.

            


    

     

    
      	
               
      

            	
              5.

            	
              Neither
      such person or entity, its affiliates nor any person acting on behalf of
      such person or entity, has entered into, has the intention of entering
      into, or will enter into any put option, short position or other similar
      instrument or position in the U.S. with respect to the Units at any time
      after the Closing Date through the Distribution Compliance Period except
      in compliance with the Securities
Act.

            


    

     

    
      	
               
      

            	
              6.

            	
              Such
      person or entity consents to the placement of a legend on any certificate
      or other document evidencing the Units substantially in the form set forth
      in Section 5.1.

            


    

     

    
      	
               
      

            	
              7.

            	
              Such
      person or entity is not acquiring the Units in a transaction (or an
      element of a series of transactions) that is part of any plan or scheme to
      evade the registration provisions of the Securities
  Act.

            


    

     

    
      	
               
      

            	
              8.

            	
              Such
      person or entity has sufficient knowledge and experience in finance,
      securities, investments and other business matters to be able to protect
      such person’s or entity’s interests in connection with the transactions
      contemplated by this Agreement.

            


    

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              9.

            	
              Such
      person or entity has consulted, to the extent that it has deemed
      necessary, with its tax, legal, accounting and financial advisors
      concerning its investment in the
Units.

            


    

     

    
      	
            	
              10.

            	
              Such
      person or entity understands the various risks of an investment in the
      Units and can afford to bear such risks for an indefinite period of time,
      including, without limitation, the risk of losing its entire investment in
      the Units.

            


    

     

    
      	
            	
              11.

            	
              Such
      person or entity has had access to the Company’s publicly filed reports
      with the Commission and has been furnished during the course of the
      transactions contemplated by this Agreement with all other public
      information regarding the Company that such person or entity has requested
      and all such public information is sufficient for such person or entity to
      evaluate the risks of investing in the
Units.

            


    

     

    
      	
            	
              12.

            	
              Such
      person or entity has been afforded the opportunity to ask questions of and
      receive answers concerning the Company and the terms and conditions of the
      issuance of the Units.

            


    

     

    
      	
            	
              13.

            	
              Such
      person or entity is not relying on any representations and warranties
      concerning the Company made by the Company or any officer, employee or
      agent of the Company, other than those contained in this
      Agreement.

            


    

     

    
      	
            	
              14.

            	
              Such
      person or entity will not sell or otherwise transfer the Shares unless
      either (A) the transfer of such securities is registered under the
      Securities Act or (B) an exemption from registration of such securities is
      available.

            


    

     

    
      	
            	
              15.

            	
              Such
      person or entity represents that the address furnished on its signature
      page to this Agreement and in Exhibit A is
      the principal residence if he is an individual or its principal business
      address if it is a corporation or other
entity.

            


    

     

    
      	
            	
              16.

            	
              Such
      person or entity understands and acknowledges that the Units have not been
      recommended by any federal or state securities commission or regulatory
      authority, that the foregoing authorities have not confirmed the accuracy
      or determined the adequacy of any information concerning the Company that
      has been supplied to such person or entity and that any representation to
      the contrary is a criminal offense.

            


    

     

    
      
         


      

      
        42

        
          

        

      

      
         


      

    


    EXHIBIT
C TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      

    

     

    FORM
OF SERIES A CERTIFICATE OF DESIGNATION


    
      
         


      

      
        43

        
          

        

      

      
         


      

    


    EXHIBIT
D-1 TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      

    

    


    FORM
OF SERIES A-1 WARRANT



    
      
         


      

      
        44

        
          

        

      

      
         


      

    


    EXHIBIT
D-2 TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      

    

    


    FORM
OF SERIES A-2 WARRANT


    
      
         


      

      
        45

        
          

        

      

      
         


      

    


    EXHIBIT
E TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      
        

      

    

    


    FORM
OF REGISTRATION RIGHTS AGREEMENT


    
      
         


      

      
        46

        
          

        

      

      
         


      

    


    


    EXHIBIT
F TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      
        

      

    

    


    FORM
OF LOCK-UP AGREEMENT


    
      
         


      

      
        47

        
          

        

      

      
         


      

    


    EXHIBIT
G TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      
        

      

    

    


    FORM
OF CLOSING ESCROW AGREEMENT


    
      
         


      

      
        48

        
          

        

      

      
         


      

    


    EXHIBIT
H TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      
        

      

    

     

    FORM
OF SECURITIES ESCROW AGREEMENT


    
      
         


      

      
        49

        
          

        

      

      
         


      

    


    EXHIBIT
I TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      
        

      

    

    


    IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS


    


    as of
____________, 2009

     

    [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 __________, 2009, by and among ChinaNet Online Holdings, Inc., a
Nevada corporation (the “Company”), and each
of the Purchasers of Units whose names are set forth on Exhibit A hereto
(individually, a “Purchaser” and
collectively, the “Purchasers”),
pursuant to which the Company is issuing to the Purchasers units (the “Units”),
consisting of (i) shares of its Series A Convertible Preferred Stock, par value
$0.001 per share, (the “Preferred Shares”)
and (ii) Series A and Series B  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, (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 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
(i) the certificates to each Purchaser that are not designated with an asterisk
as “Non-U.S. Investor” listed on Exhibit A for the
Conversion Shares and the Warrant Shares shall bear the following
legend:

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    “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

    


    (ii) the
certificates to each Purchaser that are designated with an asterisk as “Non-U.S.
Investors” listed on Exhibit A for the
Conversion Shares and the Warrant Shares shall bear the following
legend:

    


    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS
OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF
COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY,
THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN
WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN
OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.  HEDGING TRANSACTIONS INVOLVING THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.”

     

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

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    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:

                          	 
      


                  

                

              

            

          

        

      

    

     

    ACKNOWLEDGED
AND AGREED:

     

    [TRANSFER
AGENT]

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  By:

                                	 
      	 
      
	 
      	 
      	 
      
	
                                  Name: 

                                	 
      	 
      
	 
      	 
      	 
      
	
                                  Title:

                                	 
      	 
      
	 
      	 
      	 
      
	
                                  Date:

                                	 
      	 
      


                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         


      

      
        52

        
          

        

      

      
         


      

    

    


    EXHIBIT
J TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      
        

      

    

    


    FORM
OF OPINION OF LEWIS & ROCA LLP

    


    1.           The
Company is duly incorporated and validly existing and in good standing as a
corporation under the laws of the State of Nevada and has the corporate power
under Nevada law to own, lease and operate its properties and assets and to
carry on its business as presently conducted so long as such activities do not
violate any applicable laws, rules or regulations.

     

    2.           The
Company has the corporate power and authority under Nevada law to enter into and
perform its obligations under the Transaction Documents and to issue the
Preferred Shares, the Warrants and the Common Stock issuable upon 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.  Each of the Transaction Documents has
been duly executed and delivered, and the Warrants have been duly executed,
issued and delivered by the Company.  The Common Stock issuable upon
exercise of the Warrants is not subject to any preemptive rights under the
Articles or the Bylaws and will not have been issued in violation of or subject
to statutory preemptive rights or, to our knowledge, any contractual preemptive
or similar rights that entitle or will entitle any person or entity to acquire
any shares of Common Stock or other securities of the Company upon issuance or
sale thereof.

     

    3.           The
Preferred Shares 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.

     

    4.           The
execution, delivery and performance of and compliance with the terms of the
Transaction Documents and the issuance of the Preferred Shares, the Warrants and
the Common Stock issuable upon exercise of the Warrants do not (i) violate any
provision of the Articles or Bylaws, (ii) to our knowledge, 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, or to which, to our knowledge, the Company is a party, or (iii)
result in a violation of any Nevada statute, rule, regulation, or, to our
knowledge, order, judgment, injunction or decree applicable to the Company or by
which any property or asset of the Company is bound or
affected.


     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    5.           To
our knowledge, there is no action, suit, claim, investigation or proceeding
pending or threatened against the Company which questions the validity of the
Purchase Agreement or the transactions contemplated thereby or any action taken
or to be taken pursuant 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.  To our knowledge, 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.

     

    Very
truly yours,


    
      
         


      

      
        54

        
          

        

      

      
         


      

    


    EXHIBIT
K TO THE

    SECURITIES
PURCHASE AGREEMENT

    


    
      
        

      

    

     

    FORM
OF LOEB & LOEB LLP OPINION

     

    1.         
 Each of the Transaction Documents to which it is a party constitutes a
valid and legally binding obligation of the Company enforceable against the
Company in accordance with its terms.

     

    2.           Based
upon the representations of the Purchasers in the Purchase Agreement, and the
Placement Agent in their certificate delivered to us today, 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 securities 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 Shares,
the Warrants, the Conversion Shares or the Warrant Shares, subject to any
required filings under state securities laws and a Form D filing with the
Commission.

     

    3.           Based
upon the representations of the Purchasers in the Purchase Agreement, and the
Placement Agent in their certificate delivered to us today, the offer, issuance
and sale of the Units, Preferred Shares and the Warrants and the issuance and
sale of the Conversion Shares and the Warrant Shares, are exempt from the
registration requirements of the Securities Act of 1933, as
amended.

     

    4.           The
Company is not, and immediately following the Closing will not be, required to
be registered as an “investment company” under the Investment Company Act of
1940, as amended.

     

    5.           The
execution, delivery and performance of and compliance with the terms of the
Transaction Documents and the issuance of the Preferred Shares, the Warrants and
the Common Stock issuable upon exercise of the Warrants do not (i) 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 filed by the Company with the Commission, solely to the extent any of
the foregoing is governed by the laws of the State of New York, or (ii) result
in a violation of any U.S. federal securities laws or New York statute, rule,
regulation. .

     

    Very
truly yours,


    
      
         


      

      
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