China Packaging Group Inc.: Exhibit 10.1 - Filed by newsfilecorp.com






Exhibit 10.1

SECURITIES PURCHASE AGREEMENT 

This Securities Purchase Agreement (this “Agreement”) is
dated as of April 29, 2010, by and among China Packaging Group Inc., a Nevada
corporation (collectively with its predecessors, the “Company”), the
investors listed on the Schedule of Buyers attached hereto as Annex A and
identified on the signature pages hereto (each, an “Investor” and
collectively, the “Investors”). 

BACKGROUND 

Subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule
506 promulgated thereunder, the Company desires to issue and sell to each
Investor, and each Investor, severally and not jointly, desires to purchase from
the Company certain securities of the Company, as more fully described in this
Agreement (the “Transaction”). 

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
Investors agree as follows: 

ARTICLE 1. 
DEFINITIONS 

1.1. 

 Definitions. In addition to the terms defined
elsewhere in this Agreement, for all purposes of this Agreement, the following
terms shall have the meanings indicated in this Section 1.1: 

“Action” means any action, suit, inquiry, notice of
violation, proceeding (including any partial proceeding such as a deposition) or
investigation pending or threatened in writing against or affecting the Company,
any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock exchange or
trading facility. 

“Affiliate” means any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with a Person, as such terms are used in and construed
under Rule 144. 

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

“Closing” means the closing of the purchase and sale of
the Shares pursuant to Article II. 




“Closing Date” means the Business Day on which all of
the conditions set forth in Sections 5.1 and 5.2 hereof are satisfied, or such
other date as the parties may agree. 

“Commission” means the Securities and Exchange
Commission. 

“Common Stock” means the common stock of the Company,
par value $0.001 per share, and any securities into which such common stock may
hereafter be reclassified. 

“Common Stock Equivalents” means any securities of the
Company or any Subsidiary which entitle the holder thereof to acquire Common
Stock at any time, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock. 

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

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

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

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

“Lead Investor” means Envision Capital Partners, L.P.


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

“Material Adverse Effect” means any of (i) a material
and adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material and adverse effect on the results of
operations, assets, prospects, business or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) an adverse
impairment to the Company’s ability to perform on a timely basis its obligations
under any Transaction Document. 

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

“Next Underwritten Public Offering” means an
underwritten public offering conducted by the Company in which it raises gross
proceeds of at least $30 million at a price per share of no less than $6.86
within 12 months following the Closing and is listed concurrently or prior
thereto on a U.S. national securities exchange. 

“Outside Date” means the thirtieth (30th)
calendar day following the date of this Agreement; provided, that if such
day should fall on a day that is not a Business Day, the Outside Date shall be
deemed the next day that is a Business Day. 

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“Per Share Purchase Price” equals $3.433. 

“Person” means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind. 

“PRC” means the People’s Republic of China, not
including Taiwan, Hong Kong and Macau. 

“Proceeding” means an action, claim, suit, investigation
or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened. 

“Registration Rights Agreement” means the Registration
Rights Agreement, dated as of the date hereof, among the Company and the
Investors, in the form of Exhibit A hereto. 

“Registration Statement” means a registration statement
meeting the requirements set forth in the Registration Rights Agreement.

“Requisite Holders” means the holders of a majority of
the Shares. 

“Rule 144” means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule. 

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

“Shares” means the shares of Common Stock issued or
issuable to the Investors pursuant to this Agreement. 

“Short Sales” include, without limitation, all “short
sales” as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act and all types of direct and indirect stock pledges, forward sale
contracts, options, puts, calls, swaps and similar arrangements (including on a
total return basis), and sales and other transactions through non-US broker
dealers or foreign regulated brokers. 

“Subsidiary” means, as to the Company, any “subsidiary”
as defined in Rule 1-02(x) of the Regulation S-X promulgated by the Commission
under the Exchange Act. 

“Trading Day” means (i) a day on which the Common Stock
is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if
the Common Stock is not listed on a Trading Market (other than the OTC Bulletin
Board), a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is
not quoted on any Trading Market, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting
prices); provided, that in the event that the Common Stock is not listed or
quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
Business Day.


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“Trading Market” means whichever of the New York Stock
Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the
NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which
the Common Stock is listed or quoted for trading on the date in question. 

“Transaction Documents” means this Agreement, the
Registration Rights Agreement, and any other documents or agreements executed in
connection with the transactions contemplated hereunder. 

ARTICLE 2. 
PURCHASE AND SALE 

2.1. 

 Closing. Subject to the terms and conditions set
forth in this Agreement, at the Closing the Company shall issue and sell to each
Investor, and each Investor shall, severally and not jointly, purchase from the
Company, the Shares representing such Investor’s Investment Amount, calculated
as the quotient of such Investor’s Investment Amount divided by the Per Share
Purchase Price. The Closing shall take place at the offices of Pillsbury
Winthrop Shaw Pittman LLP, 2300 N Street, N.W., Washington, DC, on the Closing
Date or at such other location or time as the parties may agree. 

2.2. 

 Closing Deliveries. (a) At the Closing, the Company
shall deliver or cause to be delivered to each Investor the following (the
“Company Deliverables”): a certificate evidencing a number of Shares
equal to such Investor’s Investment Amount divided by the Per Share Purchase
Price, registered in the name of such Investor; and 

(a) 

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

(b)  

Within three (3) Business Days following the Closing Date,
each Investor shall cause to be delivered to the Company, its Investment Amount,
in United States dollars or the equivalent in Chinese RMB calculated at the
exchange rate on the Closing Date, and in immediately available funds, by wire
transfer to an account designated in writing by the Company for such purpose.
The wire instructions for the Company’s account are attached hereto as Annex
B.

ARTICLE 3. 
REPRESENTATIONS AND WARRANTIES 

3.1. 

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

(a) Subsidiaries. The Company has no direct or indirect
Subsidiaries other than as specified in the SEC Reports. Except as specified in
Schedule 3.1 (a),the Company owns, directly or indirectly, all of the capital stock of each
Subsidiary free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights. 

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(b) 

 Organization and Qualification. The Company and each
Subsidiary are duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. The Company and each Subsidiary are
duly qualified to conduct its respective businesses and are in good standing as
a foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect. 

(c) 

 Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company or any Subsidiary in connection therewith. Each Transaction Document has
been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application. 

(d) 

 No Conflicts. The execution, delivery and
performance of the Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated thereby do not and will not (i)
conflict with or violate any provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. 

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(e) 

 Filings, Consents and Approvals. Neither the Company
nor any Subsidiary is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any
United States or PRC court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than (i) the
filing with the Commission of one or more Registration Statements in accordance
with the requirements of the Registration Rights Agreement, (ii) filings
required by state securities laws, (iii) the filing of a Notice of Sale of
Securities on Form D with the Commission under Regulation D of the Securities
Act, (iv) the filings required in accordance with Section 4.5 hereof and (v)
those that have been made or obtained prior to the date of this Agreement. 

(f) 

 Issuance of the Shares. The Shares have been duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Company has reserved from its duly authorized
capital stock the shares of Common Stock issuable pursuant to this Agreement in
order to issue the Shares. 

(g) 

 Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock of the Company, and all shares
of Common Stock reserved for issuance under the Company’s various option and
incentive plans, is specified in Schedule 3.1(g). Except as
specified in Schedule 3.1(g), no securities of the Company are entitled
to preemptive or similar rights, and no Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents. Except as specified
in Schedule 3.1(g), there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issue and sale of the Shares will
not, immediately or with the passage of time, obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Investors) and will not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under such
securities.

(h) 

 SEC Reports; Financial Statements. The Company has
filed all reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
twelve months preceding the date hereof (or such shorter period as the Company
was required by law to file such reports) (the foregoing materials being
collectively referred to herein as the “SEC Reports” and, together with
the Schedules to this Agreement (if any), the “Disclosure Materials”) on
a timely basis or has timely filed a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements
of the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. 

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(i) 

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

(j) 

 Material Changes. Since the date of the latest
audited financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports, (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) neither the Company nor any Subsidiary
has incurred any liabilities (direct, indirect, contingent, or otherwise) other
than (A) trade payables, accrued expenses and other liabilities incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to
GAAP or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the identity of its
auditors, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock, and (v) the
Company has not issued any equity securities to any Company or Subsidiary
officer, director or Affiliate, except pursuant to existing Company stock option
plans. The Company does not have pending before the Commission any request for
confidential treatment of information. 

(k) 

 Litigation. There is no Action which (i) adversely
affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Shares or (ii) except as specifically disclosed in
the SEC Reports, could, if there were an unfavorable decision, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof (in his or her capacity as such), is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty, except as specifically
disclosed in the SEC Reports. There has not been, and to the knowledge of the
Company, there is not pending any investigation by the Commission involving the
Company or any current or former director or officer of the Company (in his or
her capacity as such). The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the
Company or any Subsidiary under the Exchange Act or the Securities Act. 

7 




(l) 

 Labor Relations. No material labor dispute exists
or, to the knowledge of the Company, is imminent with respect to any of the
employees of the Company or any Subsidiary. 

(m) 

 Compliance. Neither the Company nor any Subsidiary
(i) is in default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect. The Company is in compliance
with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended,
and the rules and regulations thereunder, that are applicable to it, except
where such noncompliance could not have or reasonably be expected to result in a
Material Adverse Effect. 

(n) 

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

(o) 

 Title to Assets. Except as specified in Schedule
3.1(o), the Company and the Subsidiaries have valid land use rights or valid and
binding leases for all real property that is material to their respective
businesses and good and marketable title in or valid and binding leases for all
personal property owned or leased by them, as applicable, that is material to
their respective businesses, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries are
in compliance, except as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. 

(p)


 Patents and Trademarks. Schedule 3.1(p) sets
forth all of the patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that the Company and its Subsidiaries owns or has the rights to use
(collectively, the “Intellectual Property Rights”). The Intellectual
Property Rights constitute all of the patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary for use by the Company and its
Subsidiaries in connection with their respective businesses as described in the SEC Reports. Neither the Company nor any of its Subsidiaries
has received a written or oral notice that the Intellectual Property Rights used
by any of them violates or infringes upon the rights of any Person. Except as
set forth in Schedule 3.1(p), all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights. To the knowledge of the Company and its
Subsidiaries, no former or current employee, no former or current consultant,
and no third-party joint developer of the Company or its Subsidiaries has any
Intellectual Property Rights made, developed, conceived, created or written by
the aforesaid employee, consultant or third-party joint developer during the
period of his or her retention by, or joint venture with, such Company or
Subsidiary which can be asserted against any of the Company or any such
Subsidiary. The Intellectual Property Rights and the owner thereof or agreement
through which they are licensed to any of the Company or its Subsidiaries are
set forth on Schedule 3.1(p). By the Closing, the Company shall have
entered into agreements by which it is granted irrevocable, exclusive,
royalty-free licenses on all Intellectual Property Rights that are registered to
or owned by any Person other than the Company or its predecessor. Such
agreements together with the agreements referenced in Schedule 3.1(p) are
collectively the “Intellectual Property Rights Licensing Agreements.”
The Company and its Subsidiaries will take such action as may be required,
including making and maintaining the filings set forth in Schedule 3.1(p)
and shall cause any such transfers of Intellectual Property Rights to the
Company to be granted as is required in order for the Company to become the
registered owner (in its current name) of all such Intellectual Property Rights
(including, without limitation, the entering into of any Intellectual Property
Rights Licensing Agreements as may be necessary and the filing and maintaining
of any information with the relevant PRC authority which relate to the change of
name for those Intellectual Property Rights currently in the name of an entity
other than the Company).


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(q) 

 Insurance. The Company does not carry any business
interruption insurance or third-party liability insurance or other insurance to
cover risks associated with its business, so if the company suffers losses,
damages or liabilities and are unable to make a claim again a third party, the
Company will be required to bear all such losses from its own funds.

(r) 

 Transactions With Affiliates and Employees. Except
as set forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner. 

(s) 

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

9 




(t) 

 Certain Fees. No brokerage or finder’s fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement. The
Investors shall have no obligation with respect to any fees or with respect to
any claims (other than such fees or commissions owed by an Investor pursuant to
written agreements executed by such Investor which fees or commissions shall be
the sole responsibility of such Investor) made by or on behalf of other Persons
for fees of a type contemplated in this Section that may be due in connection
with the transactions contemplated by this Agreement.

(u) 

 Listing and Maintenance Requirements. Except as
specified in the SEC Reports, the Company has not, in the two years preceding
the date hereof, received notice from any Trading Market to the effect that the
Company is not in compliance with the listing or maintenance requirements
thereof. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with the listing and
maintenance requirements for continued listing of the Common Stock on the
Trading Market on which the Common Stock is currently listed or quoted. The
issuance and sale of the Shares under the Transaction Documents does not
contravene the rules and regulations of the Trading Market on which the Common
Stock is currently listed or quoted, and no approval of the shareholders of the
Company thereunder is required for the Company to issue and deliver to the
Investors the Shares contemplated by Transaction Documents. 

(v) 

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

(w) 

 Application of Takeover Protections. The Company has
taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company’s Articles of Incorporation (or similar charter documents) or the laws
of its state of incorporation that is or could become applicable to the
Investors as a result of the Investors and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation the Company’s issuance of the Shares and the
Investors’ ownership of the Shares. 

(x) 

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

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(y) 

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

(z) 

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

(aa) 

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

(bb) 

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

(cc) 

 Additional PRC Representations and Warranties.

(i) 

All material consents, approvals, authorizations or
licenses requisite under PRC law for the due and proper establishment and
operation of the Company and the Subsidiaries have been duly obtained from the
relevant PRC governmental authorities and are in full force and effect. 

(ii)


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


11 




(iii) 

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

(iv) 

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

(v) 

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

(vi) 

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

(dd) 

 Disclosure. The Company confirms that neither it
nor any Person acting on its behalf has provided any Investor or its respective
agents or counsel with any information that the Company believes constitutes
material, non-public information concerning the Company, the Subsidiaries or
their respective businesses, except insofar as the existence and terms of the
proposed transactions contemplated hereunder may constitute such information.
The Company understands and confirms that the Investors will rely on the
foregoing representations and covenants in effecting transactions in securities
of the Company. All disclosure provided to the Investors regarding the Company,
the Subsidiaries or their respective businesses and the transactions
contemplated hereby, furnished by or on behalf of the Company (including the
Company’s representations and warranties set forth in this Agreement and any
business plan or investor presentation provided by the Company or any Person
acting on the Company's behalf) are true and correct and do not contain any
untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. 

12 




3.2. 

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

(a)


 Organization; Authority. Such Investor is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out
its obligations thereunder. The execution, delivery and performance by such
Investor of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or, if such Investor is not a corporation,
such partnership, limited liability company or other applicable like action, on
the part of such Investor. Each of this Agreement and the Registration Rights
Agreement has been duly executed by such Investor, and when delivered by such
Investor in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Investor, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.


(b) 

 Investment Intent. Such Investor is acquiring the
Shares as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Shares or any part thereof,
without prejudice, however, to such Investor’s right at all times to sell or
otherwise dispose of all or any part of such Shares in compliance with
applicable federal and state securities laws. Subject to the immediately
preceding sentence, nothing contained herein shall be deemed a representation or
warranty by such Investor to hold the Shares for any period of time. Such
Investor is acquiring the Shares hereunder in the ordinary course of its
business. Such Investor does not have any agreement or understanding, directly
or indirectly, with any Person to distribute any of the Shares. 

(c) 

 Investor Status. At the time such Investor was
offered the Shares, it was, and at the date hereof it is, an “accredited
investor” as defined in Rule 501(a) under the Securities Act. Such Investor is
not a registered broker-dealer under Section 15 of the Exchange Act. 

(d) 

 General Solicitation. Such Investor is not
purchasing the Shares as a result of any advertisement, article, notice or other
communication regarding the Shares published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement. 

(e) Access to Information. Such Investor acknowledges
that it has reviewed the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Shares and the merits and risks of investing in the
Shares; (ii) access to information about the Company and the Subsidiaries and
their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its investment; and (iii)
the opportunity to obtain such additional information that the Company possesses
or can acquire without unreasonable effort or expense that is necessary to make
an informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such Investor
or its representatives or counsel shall modify, amend or affect such Investor’s
right to rely on the truth, accuracy and completeness of the Disclosure
Materials and the Company’s representations and warranties contained in the
Transaction Documents. 

13 




(f) 

 Certain Trading Activities. Such Investor has not
directly or indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Investor, engaged in any transactions in the
securities of the Company (including, without limitations, any Short Sales
involving the Company’s securities) since the earlier to occur of (1) the time
that such Investor was first contacted by the Company regarding an investment in
the Company and (2) the 30th day prior to the date of this Agreement.
Such Investor covenants that neither it nor any Person acting on its behalf or
pursuant to any understanding with it will engage in any transactions in the
securities of the Company (including Short Sales) prior to the time that the
transactions contemplated by this Agreement are publicly disclosed. 

(g) 

 Independent Investment Decision. Such Investor has
independently evaluated the merits of its decision to purchase Shares pursuant
to the Transaction Documents, and such Investor confirms that it has not relied
on the advice of any other Investor’s business and/or legal counsel in making
such decision. Such Investor confirms that none of such Persons has made any
representations or warranties to such Investor in connection with the
transactions contemplated by the Transaction Documents. 

The Company acknowledges and agrees that no Investor has made
or makes any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.


ARTICLE 4. 
OTHER AGREEMENTS OF THE PARTIES 

4.1. 

(a) 

Shares may only
be disposed of in compliance with state and federal securities laws. In
connection with any transfer of the Shares other than pursuant to an effective
registration statement, to the Company, to an Affiliate of an Investor or in
connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Shares under the Securities Act. 

(b) 

Certificates
evidencing Shares (as defined in Section 4.1(c)) will contain a legend that is
substantially similar to the following legend, until such time as they are not
required under Section 4.1(c): 

14 




THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.


The Company acknowledges and agrees that an Investor may from
time to time pledge, and/or grant a security interest in some or all of the
Shares pursuant to a bona fide margin agreement in connection with a bona fide
margin account and, if required under the terms of such agreement or account,
such Investor may transfer pledged or secured Shares to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval or consent
of the Company and no legal opinion of legal counsel to the pledgee, secured
party or pledgor shall be required in connection with the pledge, but such legal
opinion may be required in connection with a subsequent transfer following
default by the Investor transferee of the pledge. No notice shall be required of
such pledge. At the appropriate Investor’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Shares
may reasonably request in connection with a pledge or transfer thereof including
the preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of selling stockholders thereunder. Except
as otherwise provided in Section 4.1(c), any Shares subject to a pledge or
security interest as contemplated by this Section 4.1(b) shall continue to bear
the legend set forth in this Section 4.1(b) and be subject to the restrictions
on transfer set forth in Section 4.1(a) . 

(c) 

Certificates evidencing Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)): (i) while a registration
statement covering such Shares is then effective, or (ii) following a sale or
transfer of such Shares pursuant to Rule 144 (assuming the transferee is not an
Affiliate of the Company), or (iii) while such Shares are eligible for sale by
the selling Investor without volume restrictions under Rule 144. The Company
agrees that following the Effective Date or such other time as legends are no
longer required to be set forth on certificates representing Shares under this
Section 4.1(c), it will, no longer than three Trading Days following the
delivery by an Investor to the Company or the Transfer Agent of a certificate
representing such Shares containing a restrictive legend, deliver or cause to be
delivered to such investor Shares which are free of all restrictive and other
legends. If the Company is then eligible, certificates for Shares subject to
legend removal hereunder shall be transmitted by the Transfer to an Investor by crediting the prime brokerage
account of such Investor with the Depository Trust Company System as directed by
such Investor.

15 




4.2.


 Furnishing of Information. As long as any Investor
owns any Shares, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Investor owns Shares, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares under Rule 144.
The Company further covenants that it will take such further action as any
holder of Shares may reasonably request, all to the extent required from time to
time to enable such Person to sell the Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.


4.3. 

 Furnishing of Financial Information. The Company
agrees that before its next underwritten public offering of securities (the
“Next Underwritten Public Offering”), it will provide the Lead Investor in this
offering, with the following information: (a) its monthly financial statements
and related materials on or before 15th of the following month, (b)
its quarterly financial information on or before 20 days after the end of the
quarter, and (c) its audited financial statements and related materials of a
fiscal year on or before the 90th day after the end of the fiscal
year. Envision agrees to keep all of the nonpublic information that it receives
pursuant to this Section 4.3 as strictly confidential until such information
becomes publicly available through a source other than Envision or other than
through a breach of this Section 4.3 by Envision.. 

4.4. 

 Integration. The Company shall not, and shall use
its best efforts to ensure that no Affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Shares in a manner that would require
the registration under the Securities Act of the sale of the Shares to the
Investors, or that would be integrated with the offer or sale of the Shares for
purposes of the rules and regulations of any Trading Market in a manner that
would require stockholder approval of the sale of the securities to the
Investors. 

4.5. 

 Securities Laws Disclosure; Publicity. By 9:00 a.m.
(New York City time) on the Trading Day following the execution of this
Agreement, and by 9:00 a.m. (New York City time) on the Trading Day following
the Closing Date, the Company shall issue press releases disclosing the
transactions contemplated hereby and the Closing. On or before the fourth
Trading Day following the execution of this Agreement the Company will file a
Current Report on Form 8-K disclosing the material terms of the Transaction
Documents (and attach as exhibits thereto the Transaction Documents), and on or
before the fourth Trading Day following the Closing Date the Company will file
an additional Current Report on Form 8-K to disclose the Closing. In addition,
the Company will make such other filings and notices in the manner and time
required by the Commission and the Trading Market on which the Common Stock is
listed.

4.6. 

 Indemnification of Investors. The Company will
indemnify and hold the Investors and their directors, officers, shareholders,
partners, employees and agents (each, an “Investor Party”) harmless from
any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation (collectively, “Losses”) that any such
Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred.

16 




4.7. 

 Non-Public Information. The Company covenants and
agrees that neither it nor any other Person acting on its behalf will provide
any Investor or its agents or counsel with any information that constitutes
material non-public information, unless prior thereto such Investor shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Investor shall be
relying on the foregoing representations in effecting transactions in securities
of the Company. 

4.8.


 Listing of Shares. The Company agrees, (i) if the
Company applies to have the Common Stock traded on any other Trading Market, it
will include in such application the Shares, and will take such other action as
is necessary or desirable to cause the Shares to be listed on such other Trading
Market as promptly as possible, and (ii) it will take all action reasonably
necessary to continue the listing and trading of its Common Stock on a Trading
Market and will comply in all material respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading Market.


4.9. 

 Use of Proceeds. The Company will use the net
proceeds from the sale of the Shares hereunder for working capital purposes and
not for the satisfaction of any portion of the Company’s debt (other than
payment of trade payables and accrued expenses in the ordinary course of the
Company’s business and consistent with prior practices), or to redeem any Common
Stock or Common Stock Equivalents. 

4.10. 

 Protective Provisions. So long as the Lead
Investor continues to hold at least 1/3 of the Shares issued to it at the
Closing (as adjusted for any stock dividends, combinations or splits with
respect to such shares), the Company shall not, without first obtaining the
written consent of the Lead Investor: 

(a) 

Acquire through
stock or asset purchase, or through any business combination, including a
merger, share exchange or other transaction, a Person that has net assets that
are equal to or greater than thirty percent (30%) of the Company’s net assets;

(b)


Sell or otherwise
dispose of assets of the Company, including through the sale of stock of a
Subsidiary or through a business combination, including a merger, share exchange
or other transaction, that are equal to or greater than thirty percent (30%) of
the Company’s net assets, and


(c) 

Issue any shares
of preferred stock or issue any promissory notes or bonds that are convertible
into Common Stock. 

17 




4.11. 

 Board Designee. For so long as the Lead Investor
continues to hold at least 1/3 of the Shares issued at the Closing (as adjusted
for any stock dividends, combinations or splits with respect to such shares),
the Lead Investor shall be entitled to nominate one member of the Company’s
Board of Directors (the “Designee”). The Designee shall: (i) have experience
serving on the board of directors of a public company or have comparable
experience, (ii) be qualified to serve on the audit committee of the Company’s
Board of Directors, (iii) be able, consistent with his or her other business
activities, to dedicate reasonably sufficient time to the fulfillment of his or
her duties to the Company and (iv) shall be an “independent” director as defined
under Nasdaq Marketplace Rules. The Lead Investor will have the right to remove
the Designee and to fill any vacancy resulting from a Designee ceasing to be a
member of the Company’s Board of Directors for any reason. The Company shall
enter into a customary indemnification agreement with the Designee and shall
reimburse the designee for all reasonable costs incurred by the Designee in
connection with his or her activities as a member of the board of directors of
the Company. For so long as the Lead Investor is entitled to appoint a Designee,
the board of directors shall meet at least once per quarter.

4.12. 

 Acquisition of Real Estate. On or before the
180th day following the Next Underwritten Public Offering, the Lead
Investor may deliver a written request to the Company requesting the Company to
acquire the land use rights and property rights at No. 2 Beitang Rd, Xiaoshan
Economic and Technology Development Zone (the “Real Estate”) from Hangzhou Xin
Shengda Investment Co., Ltd. (“Xin Shengda”), an entity controlled by Mr.
Nengbin Fang, the Company’s Chairman. Upon receipt of such written request, in
exchange for such land use and property rights, the Company shall issue to Xin
Shengda within six months following the Next Underwritten Public Offering, the
lesser of (a) 3,750,000 shares of the Company’s Common Stock, and (b) an number
of shares that are equal to the value of the Real Estate evaluated by a third
party appraiser approved by the Leader Investor and the Company within two
months of the transfer divided by the per share price of the Next Underwritten
Public Offering. The Company shall not be obligated to acquire the Real Estate
if the Lead Investor does not make the written request contemplated by this
Section 4.12 on or before the 180th day following the Next
Underwritten Public Offering.

4.13. 

 Chief Financial Officer. If the Company fails to
consummate the Next Underwritten Public Offering within the twelve month period
following the Closing, then the Lead Investor shall have the right to notify the
Company in writing to terminate the Chief Financial Officer of the Company. The
Company shall agree to terminate the Chief Financial Officer. Upon receipt of
such written notice, the Company covenants and agrees that no later than 90 days
following receipt of such notice, the Company will hire a new chief financial
officer. The Lead Investor shall have the right to veto the appointment of the
Company’s CFO.

4.14.


 Co-Sale Rights. When the Company conducts any
equity-related finance above $10,000,000, the investors shall have the right to
sell 50% of their shares in such finances. When Mr. Nengbin Fang sells his
shares, the Investors shall have the right to sell the same amount of shares.


4.15. 

 Negative Claw Back.

18 




(a) 

If in connection
with any financing transactions in which the Company sells Common Stock or
Common Stock Equivalents, including, without limitation the Next Underwritten
Public Offering (an “Equity Financing”), the gross sales price per share of
common stock (or Common Stock Equivalent) sold in the Equity Financing (the
“Financing Price Per Share”) is less than $6.86 (as appropriately adjusted for
any stock split, stock combination, recapitalization or similar transaction)
(the “Trigger Price”), then the Company shall be obligated to issue to the
Investors on a pro rata basis, for no additional consideration, that number of
shares of Common Stock as is equal to

$5,000,000/(Financing Price Per Share/2) – (1,456,311 + any
shares already issued to the Investors prior to the current Equity Financing
pursuant to this Section 4.15)

The parties hereto agree that the hypothetical example set
forth in Section 4.15(d) is a valid example of the operation of the negative
claw back provided for in this Section 4.15. If the Financing Price Per Share
equals or exceeds the Trigger Price, then the Investors shall not be entitled to
any additional shares of Common Stock under this Section 4.15. 

(b) 

If the Financing
Price Per Share is less than the Trigger Price, then on or before the second
Business Day following the Equity Financing, the Company shall give to the
Investors a notice (the “Financing Notice”), setting forth the Financing Price
Per Share, a statement as to the adjustment to be made pursuant to this Section
4.15 and the number of shares of Common Stock to be delivered to the Investors.
The Company shall deliver to the Investors a certificate evidencing the
appropriate number of shares of Common Stock deliverable to the Investors as a
result of this Section 4.15 within 5 Business Days following the Equity
Financing.

(c) 

The rights of the
Investors under this Section 4.15 shall automatically terminate upon the
occurrence of the Closing of our next underwritten public offering with gross
proceeds greater than $30 million.

(d) 

On the date
hereof, the Investors are being issued 1,456,311 Shares in the aggregate,
pursuant to this Agreement at a price per Share equal to $3.433. Assume that the
Company completes an Equity Financing three months from today at a price of
$6.00. Assume that no adjustment to the Trigger Price was required as a result
of a stock split, stock combination, recapitalization or similar transaction.
Based upon the foregoing assumptions, the Financing Price Per Share would be
$6.00 and the number of additional shares the Investors, in the aggregate, would
be entitled to under this Section 4.15 is calculated as follows: 

Applicable Formula 

$5,000,000/(Financing Price Per Share/2) – 1,456,311 

Calculation Based Upon Hypothetical Example 

$5,000,000/($6.00/2) – 1,456,311 = 210,355.67 

Therefore, based upon the foregoing hypothetical example, the
Company would issue an additional 210,355.67 shares to the Investors in the
aggregate. The shares would be issued to the investors on a pro rata basis based
on their respective Investment Amounts. 

19 




In the event that the Company fails to issue such shares as
stated above, the founder of the Company, Mr. Nengbin Fang shall transfer the
equivalent shares owned by him to the Investors on a pro rata based on their
respective Investment Amounts. 

ARTICLE 5. 
CONDITIONS PRECEDENT TO CLOSING 

5.1. 

 Conditions Precedent to the Obligations of the
Investors to Purchase Shares. The obligation of each Investor to acquire
Shares at the Closing is subject to the satisfaction or waiver by such Investor,
at or before the Closing, of each of the following conditions: 

(a) 

 Representations and Warranties. The representations
and warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
on and as of such date; 

(b) 

 Performance. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by it at or prior to the Closing; 

(c) 

 No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents; 

(d) 

 Adverse Changes. Since the date of execution of this
Agreement, no event or series of events shall have occurred that reasonably
could have or result in a Material Adverse Effect; 

(e) 

 No Suspensions of Trading in Common Stock; Listing.
Trading in the Common Stock shall not have been suspended by the Commission or
any Trading Market (except for any suspensions of trading of not more than one
Trading Day solely to permit dissemination of material information regarding the
Company) at any time since the date of execution of this Agreement, and the
Common Stock shall have been at all times since such date listed for trading on
a Trading Market; 

(f) 

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

(g) 

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

5.2. 

 Conditions Precedent to the Obligations of the Company
to Sell Shares. The obligation of the Company to sell Shares at the Closing
is subject to the satisfaction or waiver by the Company, at or before the
Closing, of each of the following conditions: 

(a) 

 Representations and Warranties. The representations
and warranties of each Investor contained herein shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made on and as of such date; 

20 




(b) 

 Performance. Each Investor shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by such Investor at or prior to the Closing; 

(c) 

 No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents; 

(d)


 Investor Deliverables.
Each Investor shall have delivered the Registration Rights Agreement, duly
executed by such Investor; and


(e) 

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

ARTICLE 6. 
MISCELLANEOUS 

6.1. 

 Fees and Expenses. Each Party shall bear its own
expenses in connection with the transactions contemplated hereby; provided,
however, that the Company shall reimburse the Lead Investor for expenses
incurred by the Lead Investor up to a cap of US$50,000. 

6.2. 

 Entire Agreement. The Transaction Documents,
together with the Exhibits and Schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings, discussions and representations,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules. 

6.3. 

 Notices. Any and all notices or other
communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earliest of
(a) the date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of
successful transmission) at the facsimile number specified in this Section prior
to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day
after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(c) the Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as follows: 

21 




	If to the Company: 	China Packaging Group Inc. 
	  	No. 2 Beitang Road 
	  	Xiaoshan Economic and Technological Development
      Zone 
	 	Hangzhou, Zhejiang Province
      311215  
	  	People’s Republic of China 
	  	  
	  	Attn: Chief Executive Officer



	  	Facsimile: 86-571-82838769 
	  	  
	With a copy to: 	Pillsbury Winthrop Shaw Pittman LLP 
	  	2300 N Street, N.W. 
	  	Washington, D.C. 20037 
	  	Facsimile: (202) 663-8007 
	  	Attn.: Louis A. Bevilacqua, Esq. 
	  	  
	If to an Investor: 	To the address set forth under such Investor’s
      name on the 
	  	signature pages hereof; 


or such other address as may be designated in writing
hereafter, in the same manner, by such Person. 

6.4. 

 Amendments; Waivers; No Additional Consideration.
No provision of this Agreement may be waived or amended except in a written
instrument signed by the Company and the Requisite Holders. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Investor to amend or consent to a
waiver or modification of any provision of any Transaction Document unless the
same consideration is also offered to all Investors who then hold Shares.

6.5. 

 Termination. This Agreement may be terminated prior
to Closing: 

(a)


by written
agreement of the Investors and the Company; or


(b) 

by the Company or an Investor (as to itself but no other
Investor) upon written notice to the other, if the Closing shall not have taken
place by 6:30 p.m. Eastern time on the Outside Date; provided, that the
right to terminate this Agreement under this Section 6.5(b) shall not be
available to any Person whose failure to comply with its obligations under this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or before such time. 

In the event of a termination pursuant to this Section, the
Company shall promptly notify all non-terminating Investors. Upon a termination
in accordance with this Section 6.5, the Company and the terminating Investor(s)
shall not have any further obligation or liability (including as arising from
such termination) to the other and no Investor will have any liability to any
other Investor under the Transaction Documents as a result therefrom. 

6.6. 

 Construction. The headings herein are for
convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof. The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party. This Agreement shall be construed as if drafted jointly by
the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provisions of this Agreement or any of the
Transaction Documents. 

22 




6.7. 

 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investors. Any
Investor may assign any or all of its rights under this Agreement to any Person
to whom such Investor assigns or transfers any Shares, provided such transferee
agrees in writing to be bound, with respect to the transferred Shares, by the
provisions hereof that apply to the “Investors.” 

6.8. 

 No Third-Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person. 

6.9. 

 Governing Law. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective Affiliates, employees or agents) shall be commenced exclusively in
the New York Courts. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of the any
of the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such Proceeding. 

6.10. 

 Survival. The representations, warranties,
agreements and covenants contained herein shall survive the Closing and the
delivery of the Shares for a period of 18 months, provided, however, that the
representations contained in Sections 3.1(c) and (g) shall survive for a period
equal to the applicable statute of limitations. 

23 




6.11. 

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

6.12. 

 Severability. If any provision of this Agreement
is held to be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision that is a reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in this
Agreement. 

6.13. 

 Rescission and Withdrawal Right. Notwithstanding
anything to the contrary contained in (and without limiting any similar
provisions of) the Transaction Documents, whenever any Investor exercises a
right, election, demand or option under a Transaction Document and the Company
does not timely perform its related obligations within the periods therein
provided, then such Investor may rescind or withdraw, in its sole discretion
from time to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its future actions
and rights. 

6.14. 

 Replacement of Shares. If any certificate or
instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Shares. If a replacement
certificate or instrument evidencing any Shares is requested due to a mutilation
thereof, the Company may require delivery of such mutilated certificate or
instrument as a condition precedent to any issuance of a replacement. 

6.15. 

 Remedies. In addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, each of the Investors and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and hereby agrees to
waive in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate. 

6.16. 

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

24 




6.17. 

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

6.18. 

 Limitation of Liability. Notwithstanding anything
herein to the contrary, the Company acknowledges and agrees that the liability
of an Investor arising directly or indirectly, under any Transaction Document of
any and every nature whatsoever shall be satisfied solely out of the assets of
such Investor, and that no trustee, officer, other investment vehicle or any
other Affiliate of such Investor or any investor, shareholder or holder of
shares of beneficial interest of such a Investor shall be personally liable for
any liabilities of such Investor. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES
FOLLOW] 

25 




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

COMPANY: 

CHINA PACKAGING GROUP INC. 

By:___________________________
     
Name: Nengbin Fang 
      Title: Chairman 

As to Sections 4.14 and 4.15 only.


NENGBIN FANG 

_____________________________

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOR
INVESTORS FOLLOW] 

26 




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


	NAME OF INVESTOR 
	
	By: 
	         Name: 
	         Title: 
	Investment Amount:
      $ 
	Tax ID No.: 
	ADDRESS FOR NOTICE 
	c/o: 
	Street: 
	City/State/Zip:
  
	Attention: 
	Tel: 
	Fax: 
	DELIVERY INSTRUCTIONS 
	(if different from above) 
	c/o: 
	Street: 
	City/State/Zip:
  
	Attention: 
	Tel:




27 




Annex A 

SCHEDULE OF BUYERS 

	  	  	Address and 
	Buyer 	Investment Amount 	Facsimile Number 
	  	  	c/o Ryan Xia 
	  	  	  
	Envision Capital 	$2,500,000 	Room1303, BEA Tower, 66 Hua Yuan Shi Qiao
      Road, 
	Partners, L.P. 	  	Pudong New Area 
	  	  	Shanghai, China 
	  	  	  
	  	  	  
	ABH Capital 	$500,000 	5306 Hollister 
	Management LLC 	  	Houston, TX 77040 
	  	  	  
	Newberg Road 	  	5306 Hollister 
	Partners, L.P. 	$500,000 	Houston, TX 77040 
	Beekman 514, Ltd 	  	  
	  	  	  
	Palm Springs 	  	  
	International Holding 	$500,000 	Unit 503, 5/F, Silvercord Tower, 30 Canton
      Road, 
	Limited 	  	TSIMSHATSUI, KOWLOON, Hong Kong 
	  	  	c/o Mr. Yuwei Zhou 
	  	  	CSV Capital Partners 
	China Seed Ventures, 	  	800 Huashan Road, Building 18, Room 104

	L.P. 	$1,000,000 	Shanghai, China 200050 
	  	  	  
	  	  	  
	Total 	$5,000,000 	 
    


28 




ANNEX B 

WIRE INSTRUCTIONS 

US DOLLAR: 
ACCOUNT NAME: EVERCHARM HOLDINGS
LIMITED 
ACCOUNT NO: 19085014040013863 
Beneficiary Bank SWIFT BIC:
ABOCCNBJ 
Beneficiary Bank Name: AGRICULTURAL BANK OF CHINA HEAD
OFFICE 
Message: ACC/ABC HANGZHOU XIAOSHAN BR 
Beneficiary
Bank Address: NO 156 RENMIN RD XIAOSHAN DISTRICT , HANGZHOU, ZHEJIANG, CHINA

Intermediary Bank BIC: IRVTUS3N 
Intermediary Bank Name:
BANK OF NEW YORK, N.Y. 

RMB: 
ACCOUNT NAME: 
浙江大胜达包装有限公司
ACCOUNT NO:
803028719408093001 
Beneficiary Bank Name: 
中国银行杭州市萧山支行
Beneficiary Bank
Address: 
中国浙江省杭州市萧山区人民路288
号

29 




EXHIBIT A 

REGISTRATION RIGHTS AGREEMENT 

30