Exhibit
10.1




SECURITIES
PURCHASE AGREEMENT





This
SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated May 20,
2010, is between China Broadband, Inc., a Nevada corporation (the “Company”), and each purchaser
identified on Schedule
A hereto (each, including their respective successors and assigns, an
“Investor” and
collectively, the “Investors”) and, with respect
to certain sections hereof, Chardan Capital Markets, LLC (the “Lead Placement
Agent”).




WHEREAS, this Agreement has
been entered into pursuant to the terms of the Company’s Confidential Private
Placement Memorandum, dated May 18, 2010 (together with any and all amendments
and/or supplements thereto, the “Memorandum”);





WHEREAS, the Investors wish to
purchase from the Company, and the Company wishes to sell and issue to the
Investors, upon the terms and conditions stated in this Agreement, a maximum of
300,000,000 Units (the “Maximum
Amount”) at a purchase price of $0.05 per unit (each, a “Unit”);




WHEREAS, each Unit shall
consist of: (i) one (1) share (collectively, the “Shares”) of the Company’s
common stock, par value $0.001 per share (the “Common Stock”) and (ii) a
common stock purchase warrant (each a “Warrant,” and, collectively,
the “Warrants”) to
purchase one (1) share (collectively, the “Warrant Shares”) of Common
Stock at an exercise price of $0.05 per share (subject to adjustment as set
forth in the Warrants), which Warrants shall be in the form attached hereto as
ExhibitA , upon the terms
and conditions set forth in this Agreement;




WHEREAS, at the Closing,
the parties hereto will execute and deliver a Registration Rights Agreement,
substantially in the form attached hereto as ExhibitB (the “Registration Rights
Agreement”), pursuant to which the Company will agree to provide certain
registration rights with respect to the Shares and the Warrant Shares under the
Securities Act and the rules and regulations promulgated thereunder, and
applicable state securities laws; and




WHEREAS, the Company and the
Investors are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the rules and regulations as
promulgated by the SEC under the Securities Act.





NOW, THEREFORE, in
consideration of the mutual terms, conditions and other agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby agree to the sale and purchase of the Units as
set forth herein.





1.           DEFINITIONS.  In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms have the meanings indicated in this Section
1.





“Affiliate” means, with respect
to any specified Person: (i) if such Person is an individual, the spouse of that
Person and, if deceased or disabled, his heirs, executors, or legal
representatives, if applicable, or any trusts for the benefit of such individual
or such individual’s spouse and/or lineal descendants, or (ii) otherwise,
another Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Person
specified. As used in this definition, “control” shall mean the possession,
directly or indirectly, of the power to cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities or by contract or other written instrument.




1




“Business Day” means any day on
which banks located in New York City are not required or authorized by law to
remain closed.





“Closing” means each of the
First Closing and any Subsequent Closing.





“Closing Date” means each of
the First Closing Date and any Subsequent Closing Date.





“Closing EscrowAgreement” means the Closing
Escrow Agreement, dated May 20, 2010, by and among the Company, the Lead
Placement Agent and the Escrow Agent.





“Company’s knowledge” means the
information and/or other items that the executive officers of the Company have
actual knowledge of after due inquiry.





“Disclosure Schedules” means the disclosure
schedules issued by the Company to the Investors, which schedules correspond to
the representations and warranties of the Company in Section 5
hereof.





“Escrow Account” means the
escrow account established by the Escrow Agent pursuant to the Closing Escrow
Agreement where funds representing the Investors’ aggregate Purchase Price shall
be held pending the First Closing.





“Escrow Agent” means Collateral
Agents, LLC.





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





“First Closing Date” means the
date of the First Closing; provided, however, that such
date shall not be prior to the date the stockholders of the Company approve the
issuance of the Shares and Warrant Shares pursuant to the Offering.





“Governmental Body” means any:
(a) nation, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign or other government; or (c) governmental or
quasi-governmental authority of any nature (including any governmental or
administrative division, department, agency, commission, instrumentality,
official, organization, unit, body or entity) and any court or other
tribunal.





“Intellectual Property” means
the Company’s patents, patent applications, provisional patents, trademarks,
service marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, formulae, mask works, customer lists, internet domain
names, know-how and other intellectual property, including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems, procedures or registrations or applications relating to the
same.




2




“Indebtedness” means, with
respect to any Person, without duplication, all obligations of such Person: (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases, and (v) in the nature of guarantees of the
obligations described above in clauses (i) through (iv).





“Legal Requirement”means any federal,
state, local, municipal, foreign or other law, statute, constitution, principle
of common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Body (or
under the authority of any national securities exchange upon which the Common
Stock is then listed or traded).  Reference to any Legal Requirement
means such Legal Requirement as amended, modified, codified, replaced or
reenacted, in whole or in part, and in effect from time to time, and reference
to any section or other provision of any Legal Requirement means that provision
of such Legal Requirement from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or reenactment of
such section or other provision.




“Lien(s)” means any interest in
Property securing an obligation owed to a Person whether such interest is based
on the common law, statute or contract, and including but not limited to a
security interest arising from a mortgage, lien, title claim, assignment,
encumbrance, adverse claim, contract of sale, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes.  The
term “Lien” includes but is not limited to mechanics’, materialmens’,
warehousemens’ and carriers’ liens and other similar encumbrances. For the
purposes hereof, a Person shall be deemed to be the owner of Property which it
has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.





“Material Adverse Effect” means
a material adverse effect on, and a “Material Adverse Change ”
means a material adverse change in: (i) the assets, liabilities, results of
operations, condition (financial or otherwise) or business of the Company taken
as a whole; or (ii) the ability of the Company to perform its obligations under
the Transaction Documents, but, to the extent applicable, shall exclude any
circumstance, change or effect to the extent resulting or arising from: (w) any
change in general economic conditions in the industries or markets in which the
Company and its Subsidiaries operate so long as the Company and its Subsidiaries
are not disproportionately (in a material manner) affected by such changes; (x)
national or international political conditions, including any engagement in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack so long as the
Company and its Subsidiaries are not disproportionately (in a material manner)
affected by such changes; (y) changes in United States generally accepted
accounting principles, or the interpretation thereof; or (z) the entry into or
announcement of this Agreement, actions contemplated by this Agreement, or the
consummation of the transactions contemplated hereby.





“OTCBB” means the
Over-the-Counter Bulletin Board system or any successor system, entity or
organization performing the same or a substantially similar
function.





“Offering” means the offering
and sale of the Units pursuant to this Agreement and the
Memorandum.




3




“Person” means an individual,
entity, corporation, partnership, association, limited liability company,
limited liability partnership, joint-stock company, trust or unincorporated
organization.





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





“Property” means any interest
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible.





“Purchase Price” means an
amount equal to $0.05 per Unit multiplied by the number of Units being purchased
by each Investor.





“SEC” means the United States
Securities and Exchange Commission.





“SEC Reports” means the
reports, documents and other filings and information made by the Company with
the SEC, including the Company’s last annual report on Form 10-K.





“Securities” means the Units,
the Shares, the Warrants and the Warrant Shares.





“Securities Act”meansthe Securities Act of
1933, as amended.





“Subsequent Closing Date” means
the date of any Subsequent Closing.





“Subsidiaries” shall mean any
corporation or other entity or organization, whether incorporated or
unincorporated, in which the Company owns, directly or indirectly, any
controlling equity or other controlling ownership interest or otherwise controls
through contract or otherwise, including, without limitation, any variable
interest entity of the Company.





“Trading Day” means: (i) a day
on which the Common Stock is traded on a Trading Market (other than the OTCBB),
or (ii) if the Common Stock is not listed on a Trading Market (other than the
OTCBB), a day on which the Common Stock is traded in the over the counter
market, as reported by the OTCBB, 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.





“Trading Market” means
whichever of the New York Stock Exchange, the NYSE AMEX, the NASDAQ Global
Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, or, with
respect to the foregoing exchanges, any successor exchange, entity or
organization performing the same a substantially similar function, or the OTCBB
on which the Common Stock is listed or quoted for trading on the date in
question.





“Transaction Documents” means
this Agreement, the Memorandum, the Warrants, the Registration Rights Agreement,
and the Closing Escrow Agreement.




4




“Transfer” means any sale,
transfer, assignment, conveyance, charge, pledge, mortgage, encumbrance,
hypothecation, security interest or other disposition, or to make or effect any
of the above.





“WFOE” means Beijing China
Broadband Network Technology Co., Ltd., the Company’s wholly foreign owned
entity, located in the PRC.





2.          
  SALE AND PURCHASE OF UNITS.





2.1.           Purchase ofUnits by Investors.
 Subject to the terms and conditions of this Agreement, on the Closing
Date, each of the Investors shall severally, and not jointly, purchase, and the
Company shall sell and issue to each Investor, the number of Units specified by
it on its respective signature page attached hereto as consideration for payment
of the applicable Purchase Price by such Investor.





2.2.           Closings.





(a)           FirstClosing.  Subject
to the terms and conditions set forth in this Agreement, the Company shall issue
and sell to each Investor listed on ScheduleA, and each such
Investor shall, severally and not jointly, purchase from the Company on the
First Closing Date, such number of Units set forth on the respective signature
pages attached hereto, which will be reflected opposite such Investor’s name on
ScheduleA (the “First Closing”).





(b)           Subsequent
Closing(s).  In the event that the Maximum Amount is not raised
at the First Closing, the Company and the Lead Placement Agent may mutually
agree to have one or more subsequent closings of the Offering (each, a “Subsequent Closing”) until the
Maximum Amount is raised.  At each Subsequent Closing, the Company
agrees to issue and sell to each Investor who executes a signature page hereto,
and each such Investor agrees, severally and not jointly, to purchase from the
Company such number of Units set forth on such Investor’s signature pages
attached hereto.  There may be more than one Subsequent Closing; provided, however, that the
final Subsequent Closing shall take place within the time periods set forth in
the Memorandum.





(c)           Closing.  Each
Closing shall occur with the time periods set forth in the Memorandum at the
offices of Pillsbury Winthrop Shaw Pittman LLP, 2300 N Street, N.W., Washington,
DC  20037, or remotely via the exchange of documents and
signatures.





2.3.           Closing Deliveries. At each
Closing, the Company shall deliver to the Investors purchasing Units at such
Closing, against delivery by the Investor of the Purchase Price (as provided
below), the Shares and the Warrants.  At each Closing, each Investor
purchasing Units at such Closing shall deliver or cause to be delivered to the
Company the Purchase Price set forth in its counterpart signature page annexed
hereto by paying United States dollars via bank, certified or personal check
which has cleared prior to the applicable Closing or in immediately available
funds, by wire transfer to the Escrow Account pursuant to the Closing Escrow
Agreement.




5




2.4.           The Warrants.  The
Warrantsshall have
the terms and conditions and be in the form attached hereto as ExhibitA.





2.5.           The Registration Rights
Agreement. 
The Registration Rights Agreement shall contain the terms and conditions and be
in the form attached hereto as ExhibitB.





2.6.           Use of
Proceeds.  The Company hereby covenants and agrees that the
proceeds from the sale of Units shall be used as provided for in the
Memorandum.





3.           ACKNOWLEDGEMENTS
OF THE INVESTORS.





Each
Investor, severally and not jointly, acknowledges that:





3.1.           Resale
Restrictions.  None of the Securities have been registered
under the Securities Act, or under any state securities or “blue sky” laws of
any state of the United States, and, unless so registered, none of the
Securities may be offered or sold by the Investor except pursuant to an
effective registration statement under the Securities Act, or pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and in each case only in accordance with
applicable state securities laws.





3.2.           Agreements.  Such
Investor has received, carefully read and acknowledges the terms of the
Transaction Documents, including the Risk Factors set forth in the
Memorandum.





3.3.           Books and Records. The books
and records of the Company were available upon reasonable notice for
inspection, subject to certain confidentiality restrictions, by the Investor
during reasonable business hours at its principal place of business, that all
documents, records and books in connection with the sale of the Securities
hereunder have been made available for inspection by it and its attorney and/or
advisor(s) and that the Investor and/or its advisor has reviewed all such
documents, records and books to its full satisfaction and all questions it
and/or its advisor may have had been answered to their respective full
satisfaction.





3.4.           Independent Advice. The Investor has been
advised to consult the Investor’s own legal, tax and other advisors with respect
to the merits and risks of an investment in the Securities and with respect to
applicable resale restrictions, and it is solely responsible (and neither the
Company nor the Lead Placement Agent is in any way, directly and/or indirectly,
responsible) for compliance with:





(a)           any
applicable laws of the jurisdiction in which the Investor is resident in
connection with the distribution of the Securities hereunder, and





(b)           applicable
resale restrictions.





3.5.           NoGovernmental Review orInsurance.  Neither
the SEC nor any other securities commission, securities regulator or similar
regulatory authority has reviewed or passed on the merits of the Securities or
on any of the documents reviewed or executed by the Investor in connection with
the sale of the Securities, including the Transaction Documents, and there is no
government or other insurance covering any of the Securities.




6




4.           REPRESENTATIONS,
WARRANTIES AND ACKNOWLEDGMENTS OF THE INVESTORS.





Each
Investor, severally and not jointly, represents and warrants to the Company
solely as to such Investor that:





4.1.           Capacity.  The
Investor: (i) if a natural person, represents that the Investor has reached the
age of 21 and has full authority, legal capacity and competence to enter into,
execute and deliver this Agreement and the Transaction Documents to which the
Investor is a party and all other related agreements or certificates and to take
all actions required pursuant hereto and thereto and to carry out the provisions
hereof and thereof; (ii) if a corporation, partnership, or limited liability
company or partnership, or association, joint stock company, trust,
unincorporated organization or other entity, represents that such entity was not
formed for the specific purpose of acquiring the Units, such entity is duly
organized, validly existing and in good standing under the laws of the state of
its organization, such entity has full power and authority to execute and
deliver this Agreement, the Transaction Documents to which it is a party and all
other related agreements or certificates and to take all actions required
pursuant hereto and thereto and to carry out the provisions hereof and thereof
and to purchase and hold the Units, the execution and delivery of this Agreement
and the Transaction Documents to which it is a Party have been duly authorized
by all necessary action; or (iii) if executing this Agreement in a
representative or fiduciary capacity, represents that it has full power and
authority to execute and deliver this Agreement and the Transaction Documents to
which it is a Party in such capacity and on behalf of the subscribing
individual, ward, partnership, trust, estate, corporation, or limited liability
company or partnership, or other entity for whom the Investor is executing this
Agreement and the Transaction Documents, and such individual, partnership, ward,
trust, estate, corporation, or limited liability company or partnership, or
other entity has full right and power to perform pursuant to this Agreement and
the Transaction Documents to which it is a Party and make an investment in the
Company.





4.2.           No Violation of Corporate Governance
Documents. If the Investor is a corporation, partnership, or limited
liability company or partnership, or association, joint stock company, trust,
unincorporated organization or other entity, the entering into of this Agreement
and the other Transaction Documents to which it is a party and the transactions
contemplated hereby and thereby do not and will not result in the violation of
any of the terms and provisions of any law applicable to, or the charter or
other organizational documents, bylaws or other governing documents of, the
Investor or of any agreement, written or oral, to which the Investor may be a
party or by which the Investor is or may be bound.





4.3.           Binding Agreement. The
Investor has duly executed and delivered this Agreement and the other
Transaction Documents to which it is a party, and this Agreement and the other
Transaction Documents to which it is a party constitute a valid and binding
agreement of the Investor enforceable against the Investor in accordance with
their respective terms, except as such enforceability may be limited by general
principals of equity, or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors’ rights and
remedies.




7




4.4.           Purchase Entirely for Own
Account.  The Securities are being acquired for such Investor’s own
account, not as nominee or agent, for investment purposes only and not with a
view to the resale or distribution of any part thereof in violation of the
Securities Act, and such Investor has no present intention of selling, granting
any participation in, or otherwise distributing the same in violation of the
Securities Act, without prejudice, however, to such Investor’s right at all
times to sell or otherwise dispose of all or any part of such Securities in
compliance with applicable federal and state securities laws.





4.5.           Not a Broker-Dealer. Such
Investor is neither a registered representative under the Financial Industry
Regulatory Authority (“FINRA”), a member of FINRA or
associated or Affiliated with any member of FINRA, nor a broker-dealer
registered with the SEC under the Exchange Act or engaged in a business that
would require it to be so registered, nor is it an Affiliate of a such a
broker-dealer or any Person engaged in a business that would require it to be
registered as a broker-dealer.  In the event such Investor is a member of
FINRA, or associated or Affiliated with a member of FINRA, such Investor agrees,
if requested by FINRA, to sign a lock-up, the form of which shall be
satisfactory to FINRA with respect to the Securities.





4.6.           Not an
Underwriter.  Such Investor is not an underwriter of the
Securities, nor is it an Affiliate of an underwriter of the
Securities.





4.7.           Investment Experience. Such
Investor acknowledges that the purchase of the Securities is a highly
speculative investment and that it can bear the economic risk and complete loss
of its investment in the Securities and has such knowledge and experience in
financial and/or business matters that it is capable of evaluating the merits
and risks of the investment contemplated hereby.





4.8.           Disclosure of Information.
 Such Investor has had an opportunity to receive, and fully and carefully
review, all information related to the Company and the Securities requested by
it and to ask questions of and receive answers from the Company regarding the
Company and its business and the terms and conditions of the offering of the
Securities.  Neither such inquiries nor any other due diligence
investigation conducted by such Investor shall modify, amend or affect such
Investor’s right to rely on the Company’s representations and warranties
contained in this Agreement.  Such Investor acknowledges that it has
received, and fully and carefully reviewed and understands all of the
Transaction Documents, including, but not limited to, the Memorandum describing,
among other items, the Company, its businesses and risks, the Securities and the
Offering of the Securities.  Investor acknowledges that it has received,
and fully and carefully reviewed and understands, copies of the SEC Reports,
either in hard copy or electronically through the SEC’s Electronic Data
Gathering Analysis and Retrieval system.  Such Investor understands that
its investment in the Securities involves a high degree of risk.  Such
Investor’s decision to enter into this Agreement and the Transaction Documents
to which it is a party, including the Registration Rights Agreement, has been
made based solely on the independent evaluation of the Investor and its
representatives.  Such Investor has received such accounting, tax and legal
advice from Persons (other than the Company) as it has considered necessary to
make an informed investment decision with respect to the acquisition of the
Securities.




8




4.9.           Restricted Securities.
 Such Investor understands that, except as provided in the Registration
Rights Agreement, the sale or re-sale of the Securities has not been and is not
being registered under the Securities Act or any applicable state securities
laws, and the Securities, as applicable, may not be transferred
unless:





(a)           they
are sold pursuant to an effective registration statement under the Securities
Act; or





(b)           they
are being sold pursuant to a valid exemption from the registration requirements
of the Securities Act; or





(c)           they
are sold or transferred to an “affiliate” (as defined in Rule 144, or any
successor rule, promulgated under the Securities Act (“Rule 144”) of such Investor
who agrees to sell or otherwise transfer the Securities only in accordance with
this Section 4.9 and who is an accredited investor, or





(d)           they
are validly sold pursuant to Rule 144.





Such
Investor shall provide the Company with no less than three (3) Trading Days
notice of its intention to dispose of any Securities and agrees that such
Investor shall only dispose of any Securities in accordance with all applicable
Legal Requirements.  Such Investors further understands that any sale
of the Securities made in reliance on Rule 144 may be made only in accordance
with the terms of Rule 144 and other than as provided in the Transaction
Documents, neither the Company nor any other Person is under any obligation to
register the Securities under the Securities Act or any state securities laws.
 Notwithstanding the foregoing or anything else contained herein to the
contrary, the Securities may be pledged as collateral in connection with abona fide margin account or
other lending arrangement.





4.10.       Accredited Investor. Such
Investor is an “accredited investor” as defined in Rule 501(a) of Regulation D,
as amended, under the Securities Act (“Regulation D”).





4.11.       No General Solicitation.
 Such Investor did not learn of the investment in the Securities as a
result of any public advertising or general solicitation, and is not aware of
any public advertisement or general solicitation in respect of the Company or
its securities.





4.12.       Brokers and Finders.  No
Investor will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or any other Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of such Investor.




9




4.13.       Prohibited Transactions.
 Other than with respect to the transactions contemplated herein, since the
earlier to occur of: (i) the time that such Investor was first contacted by the
Company, or any other Person regarding an investment in the Company and (ii) the
thirtieth (30th) day
prior to the date hereof, neither the Investor nor any Affiliate of the Investor
which (x) had knowledge of the transactions contemplated hereby, (y) has or
shares discretion relating to the Investor’s investments or trading or
information concerning such Investor’s investments, including in respect of the
Securities, or (z) is subject to the Investor’s review or input concerning such
Affiliate’s investments or trading decisions (collectively, “Trading Affiliates”) has,
directly or indirectly, nor has any Person acting on behalf of, or pursuant to,
any understanding with such Investor or Trading Affiliate effected or agreed to
effect any transactions in the securities of the Company or involving the
Company’s securities (a “Prohibited
Transaction”).




4.14.       Residency.  Such Investor is a
resident of the jurisdiction set forth on such Investor’s signature page
hereto.





4.15.       Reliance on Exemptions.
 The Investor understands that the Securities are being offered and sold to
it in reliance upon specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Investor’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Investor set forth herein in order to determine the availability of such
exemptions and the eligibility of the Investor to acquire the Securities. All of
the information which the Investor has provided to the Company is true, correct
and complete as of the date this Agreement is signed, and if there should be any
change in such information prior to the Closing, the Investor will immediately
provide the Company with such information.





5.           REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.





Except as
set forth in: (i) the SEC Reports, (ii) the Memorandum or (iii), if so stated
below, the corresponding section of the Disclosure Schedules, the Company hereby
makes the following representations and warranties as of the date hereof and as
of the Closing Date to each Investor:





5.1.         Subsidiaries.  A
true and correct structure chart of the Company and its wholly-owned and
consolidated Subsidiaries is included as Schedule 5.1 to the
Disclosure Schedules.  Except as disclosed in Schedule 5.1 to the
Disclosure Schedules, the Company owns, directly or indirectly, all of the
capital stock, or other equity interests, of each Subsidiary free and clear of
any 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.





5.2.         Organization and
Qualification.  Each of the Company and the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, 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, charter or governing
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is 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, would not
have or reasonably be expected to result in a Material Adverse
Effect.




10




5.3.           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 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: (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other laws of general application
relating to or affecting enforcement of creditors’ rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.





5.4.           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, charter or governing documents; (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 would not have or reasonably be expected to result in a Material Adverse
Effect.





5.5.           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 court or other foreign, 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 (a) the filing with the SEC of the Registration Statement,
the application(s) to each Trading Market for the listing of the Shares and
Warrant Shares for trading thereon in the time and manner required thereby, and
applicable “blue sky” or other securities law filings, (b) such as have already
been obtained or such exemptive filings as are required to be made under
applicable securities laws, or (c) such other filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws which the Company undertakes to
file within the applicable time periods.  Subject to the accuracy of
the representations and warranties of each Investor set forth in Section 4
hereof, the Company has taken all action necessary to exempt: (i) the issuance
and sale of the Securities, (ii) the issuance of the Warrant Shares upon due
exercise of the Warrants, and (iii) the other transactions contemplated by the
Transaction Documents from the provisions of any stockholder rights plan or
other “poison pill” arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Company’s Articles of Incorporation or Bylaws that is or could reasonably be
expected to become applicable to the Investors as a result of the transactions
contemplated hereby, including without limitation, the issuance of the
Securities and the ownership, disposition or voting of the Securities by the
Investors or the exercise of any right granted to the Investors pursuant to this
Agreement or the other Transaction Documents.




11




5.6.           Issuance of the
Securities.  The Shares are 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 Warrants have been duly and validly
authorized.  Upon the due exercise of the Warrants, the Warrant Shares
will be validly issued, fully paid and non-assessable free and clear of all
Liens.  The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable pursuant to this
Agreement and the Warrants; provided, however, with respect
to the Warrants, the Company has only reserved from its duly authorized capital
stock the shares of Common Stock issuable as of the Closing Date, assuming the
valid exercise of all of the Warrants by the Investors and the Lead Placement
Agent.





5.7.           Capitalization.  Schedule 5.7 to the
Disclosure Schedules sets forth as of the date hereof (a) the authorized capital
stock of the Company; (b) the number of shares of capital stock issued and
outstanding; (c) the number of shares of capital stock issuable pursuant to the
Company’s stock plans; and (d) the number of shares of capital stock issuable
and reserved for issuance pursuant to securities (other than the Warrants)
exercisable for, or convertible into or exchangeable for any shares of capital
stock of the Company.  All of the issued and outstanding shares of the
Company’s capital stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights and were issued in full
compliance with applicable state and federal securities law and any rights of
third parties.  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
described on Schedule
5.7 to the Disclosure Schedules, there are no outstanding options,
warrants, script 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, other than in connection with the
Company’s stock option plans.  The issue and sale of the Securities
will not 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.  Except as described on
Schedule 5.7 to
the Disclosure Schedules and except for the Registration Rights Agreement, there
are no voting agreements, buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among the Company and any of the
securityholders of the Company relating to the securities of the Company held by
them.  Except as described on Schedule 5.7 to the
Disclosure Schedules, and except as provided in the Registration Rights
Agreement, no Person has the right to require the Company to register any
securities of the Company under the Securities Act, whether on a demand basis or
in connection with the registration of securities of the Company for its own
account or for the account of any other Person.




12




5.8.           SEC Reports; Financial
Statements.  The Company has filed with the SEC all SEC Reports
for the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) on a timely basis or has
received 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, as applicable, and the
rules and regulations 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 SEC with respect thereto as in
effect at the time of filing.  Such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, 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.





5.9.           Material
Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, the Company and its Subsidiaries
have not:





(a)           suffered
any Material Adverse Change;




(b)           suffered
any damage, destruction or loss, whether or not covered by insurance, in an
amount in excess of $100,000;




(c)           granted or
agreed to make any increase in the compensation payable or to become payable by
the Company or any of its Subsidiaries to any officer or employee, except for
normal raises for nonexecutive personnel made in the ordinary course of business
that are usual and normal in amount;




(d)           declared,
set aside or paid any dividend or made any other distribution on or in respect
of the shares of capital stock of the Company or any of its Subsidiaries, or
declared or agreed to any direct or indirect redemption, retirement, purchase or
other acquisition by the Company or any of its Subsidiaries of such
shares;




(e)           issued any
shares of capital stock of the Company or any of its Subsidiaries, or any
warrants, rights or options thereof, or entered into any commitment relating to
the shares of capital stock of the Company or any of its
Subsidiaries;




13




(f)           adopted or
proposed the adoption of any change in the Company’s charter, bylaws or other
organizational or governing documents;




(g)           made any
change in the accounting methods or practices they follow, whether for general
financial or tax purposes, or any change in depreciation or amortization
policies or rates adopted therein, or any tax election;




(h)           sold,
leased, abandoned or otherwise disposed of any real property or any machinery,
equipment or other operating property other than in the ordinary course of their
business;




(i)           sold,
assigned, transferred, licensed or otherwise disposed of any of the Company’s
Intellectual Property or interest thereunder or other intangible asset except in
the ordinary course of their business;




(j)           been
involved in any dispute involving any employee which would reasonably be
expected to result in a Material Adverse Change;




(k)           entered
into, terminated or modified any employment, severance, termination or similar
agreement or arrangement with, or granted any bonuses (or bonus opportunity) to,
or otherwise increased the compensation of any executive officer;




(l)           entered
into any material commitment or transaction (including without limitation any
borrowing or capital expenditure);




(m)           amended or
modified, or waived any default under, any Material Contract;




(n)           to the
Company’s knowledge, incurred any material liabilities, contingent or otherwise,
either matured or unmatured (whether or not required to be reflected in
financial statements in accordance with GAAP, and whether due or to become due),
except for accounts payable or accrued salaries that have been incurred by the
Company since the date of the latest audited financial statements included
within the SEC Reports, in the ordinary course of its business and consistent
with the Company’s past practices;




(o)           permitted
or allowed any of their material property or assets to be subjected to any
Lien;




(p)           settled any
claim, litigation or action, whether now pending or hereafter made or
brought;




(q)           made any
capital expenditure or commitment for additions to property, plant or equipment
individually in excess of $100,000, or in the aggregate, in excess of
$250,000;




(r)           paid,
loaned or advanced any amount to, or sold, transferred or leased any properties
or assets to, or entered into any agreement or arrangement with any of their
Affiliates, officers, directors or stockholders or, to the Company’s knowledge,
any Affiliate or associate of any of the foregoing;




14




(s)           made any
amendment to, or terminated any agreement that, if not so amended or terminated,
would be material to the business, assets, liabilities, operations or financial
performance of the Company or any of its Subsidiaries;




(t)           compromised
or settled any claims relating to taxes, any tax audit or other tax proceeding,
or filed any amended tax returns;




(u)           merged or
consolidated with any other Person, or acquired a material amount of assets of
any other Person;




(v)           entered
into any agreement in contemplation of the transactions specified herein other
than this Agreement and the other Transaction Documents; or




(w)           agreed to
take any action described in this Section 5.9 or which would reasonably be
expected to otherwise constitute a breach of any of the representations or
warranties contained in this Agreement or any other Transaction
Documents.




5.10.        Litigation.  Except
as described on Schedule 5.10 to the
Disclosure Schedules, there is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the Company’s knowledge, threatened
against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which: (i) adversely
affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.  Neither the Company nor any Subsidiary, nor any
director or officer thereof, 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.  There has not been, and to the
Company’s knowledge, there is not pending or contemplated, any investigation by
the SEC involving the Company or any current or former director or officer of
the Company.  The SEC 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.





5.11.        Labor
Relations.  Except as set forth on Schedule 5.11 to the
Disclosure Schedules, neither the Company nor any Subsidiary is a party to or
bound by any collective bargaining agreements or other agreements with labor
organizations.  Neither the Company nor any Subsidiary has violated in
any material respect any laws, regulations, orders or contract terms, affecting
the collective bargaining rights of employees, labor organizations or any laws,
regulations or orders affecting employment discrimination, equal opportunity
employment, or employees’ health, safety, welfare, wages and
hours.  No material labor dispute exists or, to the Company’s
knowledge, is imminent with respect to any of the employees of the Company which
could reasonably be expected to result in a Material Adverse
Effect.




15




5.12.        Compliance.  Except
as set forth on Schedule 5.12 to the
Disclosure Schedules, 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
applicable to its business, except in the case of clauses (i), (ii) and (iii) as
would not have or reasonably be expected to result in a Material Adverse
Effect.





5.13.        Regulatory
Permits.  Except as disclosed in Schedule 5.13 to the
Disclosure Schedules, the Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses
as described in the SEC Reports and the Memorandum, except where the failure to
possess such permits would not have or reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.





5.14.        Title to
Assets.  Except as set forth on Schedule 5.14 to the
Disclosure Schedules, the Company and the Subsidiaries have good and marketable
title in fee simple or the right under PRC law, as the case may be, to all real
property owned by them that is material to the business of the Company and the
Subsidiaries and good and marketable title in all personal property owned by
them that is material to the business of the Company and the Subsidiaries, 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 and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties.  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.





5.15.        Contracts.





(a)         Neither the Company nor
any of its Subsidiaries is party or subject to, or bound by:




(i)           any
agreements, contracts or commitments that call for prospective fixed and/or
contingent payments or expenditures by or to the Company or any of its
Subsidiaries of more than $100,000, or which is otherwise material and not
entered into in the ordinary course of business;




(ii)           any
contract, lease or agreement involving payments in excess of $100,000, which is
not cancelable by the Company or any of its Subsidiaries, as applicable, without
penalty on not less than sixty (60) days notice;




(iii)           any
contract, including any distribution agreements, containing covenants directly
or explicitly limiting the freedom of the Company or any of its Subsidiaries to
compete in any line of business or with any Person or to offer any of its
products or services;




16




(iv)          any
indenture, mortgage, promissory note, loan agreement, guaranty or other
agreement or commitment for the borrowing of money or pledging or granting a
security interest in any assets;




(v)           any
employment contracts, non-competition agreements, invention assignments,
severance or other agreements with officers, directors, employees, stockholders
or consultants of the Company or any of its Subsidiaries or Persons related to
or affiliated with such Persons;




(vi)          any
stock redemption or purchase agreements or other agreements affecting or
relating to the capital stock of the Company or any of its Subsidiaries,
including, without limitation, any agreement with any stockholder of the Company
or any of its Subsidiaries which includes, without limitation, antidilution
rights, voting arrangements or operating covenants;




(vii)         any
pension, profit sharing, retirement, stock option or stock ownership
plans;




(viii)       
any royalty, dividend or similar arrangement based on the revenues or profits of
the Company or any of its Subsidiaries or based on the revenues or profits
derived from any Material Contract;




(ix)           any
acquisition, merger, asset purchase or other similar agreement;




(x)           any
sales agreement which entitles any customer to a right of set-off, or right to a
refund after acceptance thereof;




(xi)          any
agreement with any supplier or licensor containing any provision permitting such
supplier or licensor to change the price or other terms upon a breach or failure
by the Company or any of its Subsidiaries, as applicable, to meet its
obligations under such agreement; or




(xii)         any
agreement under which the Company or any of its Subsidiaries has granted any
Person registration rights for securities.





(b)           Schedule 5.15(b) to
the Disclosure Schedules contains a listing or description of all agreements,
contracts or instruments, including all amendments thereto, to which the Company
or its Subsidiaries are bound which meet the criteria set forth in Section
5.15(a) (such agreements, contracts or instruments, collectively, the “Material
Contracts”).  The Company has made available to the Investors
copies of the Material Contracts.  Neither the Company nor any of its
Subsidiaries has entered into any oral contracts which, if written, would
qualify as a Material Contract.  Each of the Material Contracts is
valid and in full force and effect, is enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or similar laws affecting creditors’ rights generally and
general principles of equity, and will continue to be so immediately following
the Closing Date.




17




(c)           Actions
with Respect to Material Contracts.




(i)           Neither
the Company nor any of its Subsidiaries has violated or breached, or committed
any default under, any Material Contract in any material respect, and, to the
Company’s knowledge, no other Person has violated or breached, or committed any
default under any Material Contract, except for violations, breaches of defaults
which would not have a Material Adverse Effect; and




(ii)           To
the Company’s knowledge, no event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) will, or would reasonably
be expected to: (A) result in a material violation or breach of any of the
provisions of any Material Contract, (B) give any Person the right to declare a
default or exercise any remedy under any Material Contract, (C) give any Person
the right to accelerate the maturity or performance of any Material Contract or
(D) give any Person the right to cancel, terminate or modify any Material
Contract, except, in each case, as would not have a Material Adverse
Effect.





5.16.        Taxes.





(a)           The
Company and its Subsidiaries have timely and properly filed all tax returns
required to be filed by them for all years and periods (and portions thereof)
for which any such tax returns were due, except where the failure
to so file would not have aMaterial Adverse
Effect.  All such filed tax returns are accurate in all
material respects.  The Company has timely paid all taxes due and
payable (whether or not shown on filed tax returns), except where the failure
to so pay would not have aMaterial Adverse
Effect.  There are no pending assessments, asserted
deficiencies or claims for additional taxes that have not been
paid.  The reserves for taxes, if any, reflected in the SEC Reports or
in the Memorandum are adequate, and there are no Liens for taxes on any property
or assets of the Company and any of its Subsidiaries (other than Liens for taxes
not yet due and payable).  There have been no audits or examinations
of any tax returns by any Governmental Body, and the Company or its Subsidiaries
have not received any notice that such audit or examination is pending or
contemplated.  No claim has been made by any Governmental Body in a
jurisdiction where the Company or any of its Subsidiaries does not file tax
returns that it is or may be subject to taxation by that
jurisdiction.  To the Company’s knowledge, no state of facts exists or
has existed which would constitute grounds for the assessment of any penalty or
any further tax liability beyond that shown on the respective tax
returns.  There are no outstanding agreements or waivers extending the
statutory period of limitation for the assessment or collection of any
tax.





(b)           Neither
the Company nor any of its Subsidiaries is a party to any tax-sharing agreement
or similar arrangement with any other Person.





(c)           The
Company has made all necessary disclosures required by Treasury Regulation
Section 1.6011-4.  The Company has not been a participant in a
“reportable transaction” within the meaning of Treasury Regulation Section
1.6011-4(b).





(d)           No
payment or benefit paid or provided, or to be paid or provided, to current or
former employees, directors or other service providers of the Company will fail
to be deductible for federal income tax purposes under Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”).




18




5.17.        Employees.





(a)           The
Company and its Subsidiaries are not party to any collective bargaining
agreements and, to the Company’s knowledge, there are no attempts to organize
the employees of the Company or any of its Subsidiaries.




(b)           Except
as set forth on Schedule 5.17 to the
Disclosure Schedules, the Company and its Subsidiaries have no policy, practice,
plan or program of paying severance pay or any form of severance compensation in
connection with the termination of employment services.




(c)           Each
Person who performs services for the Company or any of its Subsidiaries has
been, and is, properly classified by the Company or its Subsidiaries as an
employee or an independent contractor (or its PRC equivalent).




(d)           To
the Company’s knowledge, no employee or advisor of the Company or any of its
Subsidiaries is or is alleged to be in violation of any term of any employment
contract, disclosure agreement, proprietary information and inventions agreement
or any other contract or agreement or any restrictive covenant or any other
common law obligation to a former employer relating to the right of any such
employee to be employed by the Company or any of its Subsidiaries because of the
nature of the business conducted or to be conducted by the Company or any of its
Subsidiaries or to the use of trade secrets or proprietary information of
others, and the employment of the employees of the Company and its Subsidiaries
does not subject the Company or the Company's stockholders to any
liability.  There is neither pending nor, to the Company’s knowledge,
threatened any actions, suits, proceedings or claims, or, to the Company’s
knowledge, any basis therefor or threat thereof with respect to any contract,
agreement, covenant or obligation referred to in the preceding
sentence.





5.18.       Employee Benefit
Plans.  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 issuance and sale of the Securities will not involve any
transaction which is subject to the prohibitions of Section 406 of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), or in connection with
which a tax could be imposed pursuant to Section 4975 of the Code, provided
that, if any of the Investors, or any person or entity that owns a beneficial
interest in any of the Investors, 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(ac), 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.




19




5.19.       Patents and
Trademarks.  Except as set forth on Schedule 5.19 to the
Disclosure Schedules, to the Company’s knowledge and each Subsidiary, the
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material for
use in connection with their respective businesses as described in the SEC
Reports and the Memorandum and which the failure to so have could have or
reasonably be expected to result in a Material Adverse Effect (collectively, the
“Intellectual Property
Rights”).  Neither the Company nor any Subsidiary has received
a written notice that the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any
Person.  To the Company’s knowledge, all such Intellectual Property
Rights are enforceable.  The Company and its Subsidiaries have taken
reasonable steps to protect the Company’s and its Subsidiaries’ rights in their
Intellectual Property Rights and confidential information (the “Confidential
Information”).  Each employee, consultant and contractor who
has had access to Confidential Information which is necessary for the conduct of
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted has executed an agreement to
maintain the confidentiality of such Confidential Information and has executed
appropriate agreements that are substantially consistent with the Company’s
standard forms thereof.  Except under confidentiality obligations,
there has been no material disclosure of any of the Company’s or its
Subsidiaries’ Confidential Information to any third party.





5.20.       Environmental
Matters.  Neither the Company nor any Subsidiary is in
violation of any statute, rule, regulation, decision or order of any
Governmental Body relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), owns or
operates any real property contaminated with any substance that is subject to
any Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim has had
or could reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate; and there is no pending or, to the Company’s knowledge,
threatened investigation that might lead to such a claim.





5.21.       Insurance.  The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged as described in the SEC Reports and/or the
Memorandum.  Neither the Company nor any Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant increase in
cost.





5.22.       Transactions With Affiliates and
Employees.  Except as set forth on Schedule 5.22 to the
Disclosure Schedules, none of the officers or directors of the Company and, to
the Company’s knowledge, 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
Company’s knowledge, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $120,000 other than (a) for payment of salary
or consulting fees for services rendered, (b) reimbursement for expenses
incurred on behalf of the Company and (c) for other employee benefits, including
stock option agreements under any stock option plan of the Company.




20




5.23.       Private Placement. Assuming
the accuracy of each of the Investors’ representations and warranties set forth
in Section 4, no registration under the Securities Act is required for the offer
and sale of the Securities by the Company to the Investors as contemplated
hereby.





5.24.       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 this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market on which any
of the securities of the Company are listed or designated.





5.25.       Brokers and
Finders.  No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company.





5.26.       No Directed Selling Efforts or
General Solicitation.  Neither the Company nor any Person
acting on its behalf has conducted any general solicitation or general
advertising (as those terms are used in Regulation D) in connection with the
offer or sale of any of the Securities.





5.27.       Questionable Payments.Neither
the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any of
their respective current or former stockholders, directors, officers, employees,
agents or other Persons acting on behalf of the Company or any Subsidiary, has
on behalf of the Company or any Subsidiary or in connection with their
respective businesses: (a) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity;
(b) made any direct or indirect unlawful payments to any governmental officials
or employees from corporate funds; (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; (d) made any false or
fictitious entries on the books and records of the Company or any Subsidiary; or
(e) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment of any nature.





5.28.       Disclosures.  Neither
the Company nor any Person acting on its behalf has provided the Investors or
their agents or counsel with any information that constitutes or might
constitute material, non-public information, other than the terms of the
transactions contemplated hereby.  The written materials delivered to
the Investors in connection with the transactions contemplated by the
Transaction Documents do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading





5.29.       Solvency.  The
Company has not: (a) made a general assignment for the benefit of creditors; (b)
filed any voluntary petition in bankruptcy or suffered the filing of any
involuntary petition by its creditors; (c) suffered the appointment of a
receiver to take possession of all, or substantially all, of its assets; (d)
suffered the attachment or other judicial seizure of all, or substantially all,
of its assets; (e) admitted in writing its inability to pay its debts as they
come due; or (f) made an offer of settlement, extension or composition to its
creditors generally.




21




5.30.       Related
Party Transactions.  Except as set
forth inSchedule
5.30to the
Disclosure Schedules: (a) none of the Company or any of its Affiliates,
officers, directors, stockholders or employees, or any Affiliate of any of such
Person, has any material interest in any property, real or personal, tangible or
intangible, including the Company’s Intellectual Property used in or pertaining
to the business of the Company, except for the normal rights of a stockholder,
or, to the Company’s knowledge, any supplier, distributor or customer of the
Company; (b)there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, employees,
Affiliates, or, to the Company’s knowledge, any Affiliate thereof; (c) to the Company’s
knowledge, no employee, officer or director of the Company or any of its
Subsidiaries has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation that competes with the
Company; (d) to the Company’s
knowledge, no member of the immediate family of any officer or director of the
Company is directly or indirectly interested in any Material Contract; or (e)
there are no amounts owed (cash and stock) to officers, directors and
consultants (salary, bonuses or other forms of compensation).





5.31.       Foreign Corrupt Practices
Act.  None of the Company or any of its Subsidiaries, nor to
the Company’s knowledge, any agent or other person acting on behalf of the
Company or any of its Subsidiaries, has, directly or indirectly: (a) 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; (b) 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; (c) failed to disclose
fully any contribution made by the Company or any of its Subsidiaries (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 Legal
Requirement; or (d) 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.





5.32.       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 Code of
1986.





5.33.       OFAC. None of the Company or
any of its Subsidiaries nor, to the Company’s knowledge, any director, officer,
agent, employee, Affiliate or Person acting on behalf 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 of the Company’s
Subsidiaries, 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.




22




5.34.       Money Laundering
Laws.  The operations of each of the Company or any of its
Subsidiaries are and have been conducted at all times in compliance with the
money laundering Legal Requirements of all applicable Governmental Bodies of the
PRC and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any PRC Governmental Body (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any PRC court or PRC Governmental Body
or any arbitrator involving the Company or any of its Subsidiaries with respect
to the Money Laundering Laws is pending or, to the best of the Company’s
knowledge, threatened.





5.35.       Other Representations and Warranties
Relating to WFOE.





(a)           All
material consents, approvals, authorizations or licenses requisite under PRC
Legal Requirements for the due and proper establishment and operation of WFOE
have been duly obtained from the relevant PRC Governmental Bodies and are in
full force and effect.





(b)           All
filings and registrations with the PRC Governmental Bodies required in respect
of WFOE and its capital structure and operations including, without limitation,
the registration with the PRC Ministry of Commerce or its local counterpart, the
PRC the State Administration of Industry and Commerce or its local counterpart,
the PRC State Administration of Foreign Exchange and applicable PRC tax bureau
and customs authorities have been duly completed in accordance with the relevant
PRC Legal Requirements, 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.





(c)           WFOE
has complied with all relevant PRC Legal Requirements regarding the contribution
and payment of its registered share capital, the payment schedule of which has
been approved by the relevant PRC Governmental Bodies.  There are no
outstanding commitments made by the Company or any Subsidiary (or any of their
shareholders) to sell any equity interest in WFOE.





(d)           WFOE
has not received any letter or notice from any relevant PRC Governmental Body
notifying it of revocation of any licenses or qualifications issued to it or any
subsidy granted to it by any PRC Governmental Body for non-compliance with the
terms thereof or with applicable PRC Legal Requirements, or the lack of
compliance or remedial actions in respect of the activities carried out by WFOE,
except such revocation as does not, and would not, individually or in the
aggregate, have a Material Adverse Effect.





(e)           WFOE
has conducted its business activities within the permitted scope of business or
has otherwise operated its business in compliance with all relevant Legal
Requirements and with all requisite licenses and approvals granted by competent
PRC Governmental Bodies 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 material part of WFOE’s
business which is subject to periodic renewal, to the Company’s knowledge, there
is no reason related to the WFOE for which such requisite renewals will not be
granted by the relevant PRC Governmental Bodies.




23




(f)           With
regard to employment and staff or labor, WFOE has complied with all applicable
PRC Legal Requirements in all material respects, including without limitation,
those 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.





6.           CONDITIONS
TO EACH CLOSING OF THE INVESTORS.





The
obligation of the Investors to purchase the Units at any Closing is subject to
the fulfillment to the satisfaction of the Lead Placement Agent, on or prior to
such applicable Closing Date, of the following conditions, any of which may be
waived by the Lead Placement Agent:





6.1.           Representations and
Warranties. The representations and warranties made by the Company in
Section 5 hereof qualified as to materiality shall be true and correct at all
times prior to and on the applicable Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier
date, and, the representations and warranties made by the Company in Section 5
hereof not qualified as to materiality shall be true and correct in all material
respects at all times prior to and on the applicable Closing Date, except to the
extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct in
all material respects as of such earlier date.





6.2.           Performanceof Agreements.  The
Company shall have performed in all material respects all obligations and
covenants herein required to be performed by it on or prior to the applicable
Closing Date.





6.3.           Approvals. The Company shall
have obtained any and all consents, permits, approvals, registrations and
waivers necessary or appropriate for consummation of the purchase and sale of
the Securities and the consummation of the other transactions contemplated by
the Transaction Documents, all of which shall be in full force and
effect.





6.4.           Judgments,etc. No judgment, writ, order,
injunction, award or decree of or by any court, or judge, justice or magistrate,
including any bankruptcy court or judge, or any order of or by any governmental
authority, shall have been issued, and no action or proceeding shall have been
instituted by any governmental authority, enjoining or preventing the
consummation of the transactions contemplated hereby or in the other Transaction
Documents.





6.5.           Stop Orders.  No stop
order or suspension of trading shall have been imposed by the SEC or any other
governmental or regulatory body having jurisdiction over the Company or the
market(s) where the Common Stock is listed or quoted, with respect to public
trading in the Common Stock.





6.6.           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 or a material adverse change with respect to
the Company or any of its Subsidiaries;




24




6.7.           CompanyOfficerCertificate. The Company
shall have delivered a certificate, executed on behalf of the Company by its
Chief Executive Officer or its Chief Financial Officer, dated as of the
applicable Closing Date, certifying to the fulfillment of the conditions
specified in this Section 6.





6.8.           Company Secretary Certificate.
The Company shall have delivered a certificate, executed on behalf of the
Company by its Secretary, dated as of the First Closing Date, certifying the
resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by this Agreement and the other Transaction Documents
and the issuance of the Securities, certifying the current versions of the
charter and bylaws of the Company, as the same may be amended and/or restated,
and certifying as to the signatures and authority of persons signing the
Transaction Documents and related documents on behalf of the Company.  The
foregoing certificate shall only be required to be delivered on the First
Closing Date, unless any material information contained in the certificate has
changed.





6.9.           Opinion of Counsel.  The
Investors and the Lead Placement Agent shall have received an opinion from
Pillsbury Winthrop Shaw Pittman, LLP, the Company’s U.S. legal counsel, dated as
of each Closing Date, in such form and substance as agreed to by the Company and
the Lead Placement Agent (it being agreed that such counsel shall not be
required to deliver a “10b-5” or negative assurances letter or
opinion).





6.10.         Common Stockand Warrants.  The
Company shall have delivered the Shares and Warrants being sold at the
applicable Closing.





6.11.         Registration Rights Agreement.
 The Company shall have executed and delivered the Registration Rights
Agreement.





6.12.         Amendment to Articles of
Incorporation.  The Company shall have filed with the Secretary
of State of the State of Nevada an amendment to its Articles of Incorporation
increasing the number of authorized shares of Common Stock of the Company from
95,000,000 to 1,500,000,000.





6.13.         Joint Venture Operating
Agreements.  The Company shall have entered into definitive
operating agreements with its partners in the PRC with respect to the operation
and funding of two joint ventures in the PRC.





6.14.         Consummation of Series A
Financing.The
consummation of the sale of 7,000,000 shares of Series A Preferred Stock of the
Company to Shane McMahon shall occur simultaneous with the First
Closing.





6.15.         Consummation of Series B
Financing.The
consummation of the sale of 6,000,000 shares of Series B Preferred Stock of the
Company to Steven Oliviera shall occur simultaneous with the First
Closing.




25




7.           CONDITIONS
TO EACH CLOSING OF THE COMPANY.





The
obligations, with respect to each Investor, of the Company to effect the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the applicable Closing Date of the conditions listed
below.





7.1.           Representations and
Warranties. The representations and warranties in Section 4 hereof made
by such Investor shall be true and correct in all material respects at the time
of Closing as if made on and as of such date.





7.2.           Corporate Proceedings. All
corporate and other proceedings required to be undertaken by such Investor in
connection with the transactions contemplated hereby shall have occurred and all
documents and instruments incident to such proceedings shall be reasonably
satisfactory in substance and form to the Company.





7.3.           Agreements.  Such
Investor shall have completed and executed this Agreement, the Registration
Rights Agreement and an investor questionnaire as provided by the Lead Placement
Agent, and delivered the same to the Company.





7.4.           Purchase Price.  Such
Investor shall have delivered or caused to be delivered the Purchase Price to
the Escrow Account.





8.           OTHER
AGREEMENTS





8.1.           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 Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities to the Investors, or that would be integrated with the offer
or sale of the Securities 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.





8.2.           Securities Laws Disclosure;
Publicity.  By 9:00 a.m. (New York City time) on the Trading
Day following the First Closing Date, the Company shall issue a press release
disclosing the transactions contemplated hereby and the Closing.  By
no later than the fourth Trading Day following the First Closing Date (and on
each Subsequent Closing Date if required by applicable law) the Company will
file a Current Report on Form 8-K disclosing the material terms of this
Agreement and the other Transaction Documents (and attach as exhibits thereto
the Transaction Documents) and the Closing.  In addition, the Company
will make such other filings and notices in the manner and time required by the
SEC and the Trading Market on which the Common Stock is
listed.  Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Investor, or include the name of any Investor in any
filing with the SEC (other than the Registration Statement and any exhibits to
filings made in respect of this transaction in accordance with periodic filing
requirements under the Exchange Act) or any regulatory agency or Trading Market,
without the prior written consent of the Investor Representative, except to the
extent such disclosure is required by law or Trading Market
regulations.




26




8.3.           Limitation on Issuance of Future
Priced Securities.  During the six months following the Closing
Date, the Company shall not issue any “Future Priced Securities” as such term is
described by the rules and regulations of FINRA.





8.4.           Reservation of
Shares.  The Company shall maintain a reserve from its duly
authorized shares of Common Stock to comply with its obligations to issue the
Warrant Shares upon exercise of the Warrants.





9.           FURTHER
ASSURANCES.  The Company will, and will cause all of its
Subsidiaries to, and their management to, use their best efforts to satisfy all
of the closing conditions under Section 7, and will not take any action which
could frustrate or delay the satisfaction of such conditions.  In
addition, either prior to or following the Closing, the Company will, and will
cause each of its Subsidiaries to, and its and their management to, perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as any other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.





10.           MISCELLANEOUS.





10.1.        Compensation of Lead Placement Agent,
Brokers, etc. Each Investor acknowledges that it is fully aware that the
Lead Placement Agent will receive from the Company, in consideration of its
services as placement agent in respect of the offer and sale of the Units
contemplated hereby:





(a)           a
commission of ten percent (10%) of the aggregate Purchase Price of the
Units sold at each Closing, payable in cash; and





(b)           a
Warrant to purchase an aggregate of ten percent (10%) of the Units sold in the
Offering.





It is
acknowledged that the Lead Placement Agent may share such fees and compensation
with other placement agents or brokers participating in the transactions
contemplated hereby.  In addition, each Investor acknowledges that it
is aware that the Lead Placement Agent will receive from the Company payment of
all of its accountable fees and expenses including, but not limited to, all
legal fees and expenses incurred in connection with the Offering.





10.2.        Notices. All notices,
requests, demands and other communications provided in connection with this
Agreement shall be in writing and shall be deemed to have been duly given at the
time when hand delivered, delivered by express courier, or sent by facsimile
(with receipt confirmed by the sender’s transmitting device) in accordance with
the contact information provided below or such other contact information as the
parties may have duly provided by notice.




27




(a)                             The Company:
  c/o China Broadband Inc.
 1900 Ninth Street, 3rd Floor
 Boulder, Colorado 80302
 Attention:  Marc Urbach
 Fax Number: (303) 449.7799
  With a copy to:
 
 Pillsbury Winthrop Shaw Pittman LLP
 2300 N Street, N.W.
 Washington, DC  20037
 Attention: Louis A. Bevilacqua, Esq.
 Fax
Number: (202) 663.8007
  (b)                            
The Investors:
 
 As per the contact information provided on the signature page
hereof.
 
 (c)                            
The Lead Placement Agent:
 
 Chardan
Capital Markets, LLC
 17 State
Street, Suite 1600
 New York,
NY 10004
 Attention:
646-465-9000
 Fax
Number: 646-465-9039


10.3.         Amendments;
Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Investor Representative or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought (and if such party
is the Investors, then by the Investor Representative).  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.





10.4.         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.




28




10.5.         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 Investor
Representative.  Any Investor may assign any or all of its rights
under this Agreement to any Person to whom such Investor assigns or transfers
any Securities, provided such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions hereof that apply to
the “Investors”.





10.6.         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.





10.7.         Governing Law, Consent to
Jurisdiction, etc.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents 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 legal 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, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York.  Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, New York 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 suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper.  Each party hereto 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 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 (INCLUDING ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES)
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.





10.8.         Survival.  The
representations, warranties, agreements and covenants contained herein shall
survive for two (2) years after the Closing of the transactions contemplated by
this Agreement.





10.9.         Indemnification.





(a)           The Company
agrees to indemnify and hold harmless each Investor and its Affiliates and their
respective directors, officers, employees and agents from and against any and
all losses, claims, damages, liabilities and expenses (including without
limitation reasonable attorney fees and disbursements and other expenses
incurred in connection with investigating, preparing or defending any action,
claim or proceeding, pending or threatened and the costs of enforcement thereof)
(collectively, “Losses”)
to which such Person may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Company under the Transaction Documents, and will reimburse any
such Person for all such amounts as they are incurred by such
Person.




29




(b)           Promptly
after receipt by any Person (the “Indemnified Person”) of notice
of any demand, claim or circumstances which would or might give rise to a claim
or the commencement of any action, proceeding or investigation in respect of
which indemnity may be sought pursuant to this Section 10.9, such Indemnified
Person shall promptly notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Person, and shall assume the payment of all fees and
expenses; provided, however,that the failure of any
Indemnified Person so to notify the Company shall not relieve the Company of its
obligations hereunder except to the extent that the Company is materially
prejudiced by such failure to notify.  In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the Company and the Indemnified Person shall have mutually agreed to
the retention of such counsel; or (ii) in the reasonable judgment of counsel to
such Indemnified Person representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between
them.  The Company shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.  Without the prior
written consent of the Indemnified Person, which consent shall not be
unreasonably withheld, the Company shall not effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such
proceeding.





10.10.       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 or other electronic 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
or other electronic signature page were an original thereof.





10.11.       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.




30




10.12.       Replacement of
Securities.  If any certificate or instrument evidencing any
Securities 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 Securities.





10.13.       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.





10.14.       Payment Set
Aside.  To the extent that the Company makes a payment or
payments to any Investor pursuant to any Transaction Document or a 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.





10.15.       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.  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 Document.  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.  Each Investor has been represented by its own separate legal
counsel in their review and negotiation of the Transaction
Documents.  The Company has elected to provide all Investors with the
same terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Investors.





10.16.       Irrevocable
Offer.  Each Investor agrees that this Agreement constitutes an
irrevocable offer to purchase the Securities of the Company and that Investor
cannot cancel, terminate or revoke this Agreement or any agreement of Investor
made hereunder.  This Agreement shall survive the death or legal
disability of Investor and shall be binding upon Investor’s heirs, executors,
administrators and successors.




31




[Signature
Pages Follow]




32





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
      BROADBAND INC.By:
                                                            _________________________________Name:Title:INVESTORS:The
      Investors executing the Signature Page in the form attached hereto as
      Annex A
      and delivering the same to the Company or its agents shall be deemed to
      have executed this Agreement and agreed to the terms
    hereof.LEAD
      PLACEMENT AGENT:CHARDAN
      CAPITAL MARKETS, LLCBy:
                                                            _________________________________Name:Title:





Signature
Page


Securities
Purchase Agreement









Annex
A





Securities
Purchase Agreement


Investor
Counterpart Signature Page





The
undersigned, desiring to: (i) enter into this Securities Purchase Agreement,
dated as of _________________, 2010 (the “Agreement”), between the
undersigned, China Broadband, Inc., a Nevada corporation (the “Company”), and the other
parties thereto, in or substantially in the form furnished to the undersigned
and (ii) purchase the securities of the Company appearing below, hereby agrees
to purchase such securities from the Company as of the Closing and further
agrees to join the Agreement as a party thereto, with all the rights and
privileges appertaining thereto, and to be bound in all respects by the terms
and conditions thereof.  Capitalized terms used herein but not
otherwise defined shall have the meaning as set forth in the
Agreement.





IN WITNESS WHEREOF, the
undersigned has executed the Agreement as of _____________________,
2010.





Name
      and Address, Fax No. and Social Security No./EIN of
    Investor:________________________________________________
                        
                        ________________________________________________
                        
                        ________________________________________________
                        
                        Fax
      No.: _________________________________________
                        
                        Soc.
      Sec. No./EIN: _________________________________If
      a partnership, corporation, trust or other business entity:By:
      __________________________________Name:Title:If
      an individual:__________________________
                        SignatureTotal Purchase Price:_________________________Number of Units:___________________________Number of Warrants:
      ______________________









Schedule
A





Schedule
of Investors





Investor
                                                            
                                                            Shares
                                                            
                                                            Warrants
                                                            
                                                            Total Purchase PriceTOTAL:
                                                            
                                                            $









Exhibit
A





Form
of Warrant





[attached
hereto]









Exhibit
B





Form
of Registration Rights Agreement





[attached
hereto]