China Information Technology, Inc.-(0001552670) BVI: Exhibit 10.1 - Filed by newsfilecorp.com






Execution Version 

SECURITIES PURCHASE AGREEMENT 

This SECURITIES PURCHASE AGREEMENT (this
“Agreement”), dated as of May 20, 2015, is by and among China Information
Technology, Inc., a company incorporated under the laws of the British Virgin
Islands with headquarters located at 21st Floor, Everbright Bank Building,
Zhuzilin, Futian District, Shenzhen, Guangdong 518040, People’s Republic of
China (the “Company”), and each of the investors listed on the Schedule
of Buyers attached hereto (individually, a “Buyer” and collectively, the
“Buyers”). 

RECITALS 

A.     The Company and each Buyer desire to
enter into this transaction to purchase (i) the New Ordinary Shares (as defined
below), and (ii) Warrants (as defined below) pursuant to a currently effective
shelf registration statement on Form F-3, which has at least $15,000,000 of
unallocated securities, including Ordinary Shares (as defined below) and
warrants to purchase Ordinary Shares registered thereunder (Registration Number
333-196755) (the “Registration Statement”), which Registration Statement
has been declared effective in accordance with the Securities Act of 1933, as
amended (the “1933 Act”), by the United States Securities and Exchange
Commission (the “SEC”). 

B.     Each Buyer wishes to purchase, and
the Company wishes to sell, upon the terms and conditions stated in this
Agreement, (i) such aggregate number of Ordinary Shares as set forth opposite
such Buyer’s name in column (3) on the Schedule of Buyers (which aggregate
amount for all Buyers shall be 2,102,484 Ordinary Shares and shall collectively
be referred to herein as the “New Ordinary Shares”), (ii) a Series A
Warrant to initially acquire up to such aggregate number of Ordinary Shares set
forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, as
evidenced by a certificate in the form attached hereto as Exhibit
A-1 (the “Series A Warrants”) (as exercised, collectively, the
“Series A Warrant Shares”) and (iii) a Series B Warrant to initially
acquire up to such aggregate number of Ordinary Shares set forth opposite such
Buyer’s name in column (5) on the Schedule of Buyers, as evidenced by a
certificate in the form attached hereto as Exhibit A-2 (the
“Series B Warrants”, and together with the Series A Warrants, the
“Warrants”) (as exercised, collectively, the “Series B Warrant
Shares”, and together with the Series A Warrant Shares, the “Warrant
Shares”). 

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

AGREEMENT 

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

	1. 	
      PURCHASE AND SALE OF NEW ORDINARY SHARES AND
      WARRANTS.



(a)     Purchase of New Ordinary Shares
and Warrants. Subject to the satisfaction (or waiver) of the conditions set
forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees
to purchase from the Company on the Closing Date (as defined below) (A) such
aggregate number of New Ordinary Shares as is set forth opposite such Buyer’s
name in column (3) on the Schedule of Buyers, (B) Series A Warrants to initially
acquire up to such aggregate number of Series A Warrant Shares as is set forth
opposite such Buyer’s name in column (4) on the Schedule of Buyers and (C)
Series B Warrants to initially acquire up to such aggregate number of Series B
Warrant Shares as is set forth opposite such Buyer’s name in column (5) on the
Schedule of Buyers. 





(b)     Closing. The closing (the
“Closing”) of the purchase of the New Ordinary Shares and the Warrants by
the Buyers shall occur at the offices of Kelley Drye & Warren LLP, 101 Park
Avenue, New York, NY 10178. The date and time of the Closing (the “Closing
Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day
(as defined below) on which the conditions to the Closing set forth in Sections
6 and 7 below are satisfied or waived (or such other date as is mutually agreed
to by the Company and each Buyer). As used herein “Business Day” means
any day other than a Saturday, Sunday or other day on which commercial banks in
New York, New York are authorized or required by law to remain closed. 

(c)     Purchase Price. The
aggregate purchase price for the New Ordinary Shares and the Warrants to be
purchased by each Buyer (the “Purchase Price”) shall be the amount set
forth opposite such Buyer’s name in column (6) on the Schedule of Buyers. 

(d)     Form of Payment; Deliveries.
On the Closing Date, (i) each Buyer shall pay its respective Purchase Price to
the Company for the New Ordinary Shares and the Warrants to be issued and sold
to such Buyer at the Closing, by wire transfer of immediately available funds in
accordance with the Flow of Funds Letter (as defined below) (less, in the case
of the lead Buyer, the amounts withheld pursuant to Section 4(j)) and (ii) the
Company shall (A) cause Island Stock Transfer (together with any subsequent
transfer agent, the “Transfer Agent”) through the Depository Trust
Company (“DTC”) Fast Automated Securities Transfer Program, to credit
such aggregate number of New Ordinary Shares that each Buyer is purchasing as is
set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers to
such Buyer’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system, (B) update the register of members of
the Company to appropriately record such issuance, and (C) deliver to each Buyer
(x) a Series A Warrant pursuant to which such Buyer shall have the right to
initially acquire up to such aggregate number of Series A Warrant Shares as is
set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers and
(y) a Series B Warrant pursuant to which such Buyer shall have the right to
initially acquire up to such aggregate number of Series B Warrant Shares as is
set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers, in
each case, duly executed on behalf of the Company and registered in the name of
such Buyer or its designee. 

	2. 	
      BUYER’S REPRESENTATIONS AND
  WARRANTIES.



Each Buyer, severally and not jointly, represents and warrants
to the Company with respect to only itself that, as of the date hereof and as of
the Closing Date: 
  (a) Organization; Authority. Such Buyer is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents (as defined below) to
which it is a party and otherwise to carry out its obligations hereunder and
thereunder. 

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

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

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

	3. 	
      REPRESENTATIONS AND WARRANTIES OF THE
    COMPANY.



The Company represents and warrants to each of the Buyers that,
as of the date hereof and as of the Closing Date: 
 (a) Organization and
Qualification. Each of the Company and each of its Subsidiaries are entities
duly organized and validly existing and in good standing under the laws of the
jurisdiction in which they are formed, and have the requisite power and
authority to own their properties and to carry on their business as now being
conducted and as presently proposed to be conducted. Each of the Company and
each of its Subsidiaries is duly qualified as a foreign entity to do business
and is in good standing in every jurisdiction in which its ownership of property
or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in good
standing would not reasonably be expected to have a Material Adverse Effect (as
defined below). As used in this Agreement, “Material Adverse Effect”
means any material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition (financial or
otherwise) or prospects of the Company or any Subsidiary, individually or taken
as a whole, (ii) the transactions contemplated hereby or in any of the other
Transaction Documents or any other agreements or instruments to be entered into
in connection herewith or therewith or (iii) the authority or ability of the
Company or any of its Subsidiaries to perform any of their respective
obligations under any of the Transaction Documents (as defined below). Other
than the Persons (as defined below) set forth on Schedule 3(a) the Company has
no Subsidiaries. “Subsidiaries” means any Person in which the Company,
directly or indirectly, (A) owns any of the outstanding share capital or holds
any equity or similar interest of such Person or (B) controls or operates all or
any part of the business, operations or administration of such Person, and each
of the foregoing, is individually referred to herein as a “Subsidiary”. 

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


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(c)     Issuance of Securities;
Registration Statement. The issuance of the New Ordinary Shares and the
Warrants are duly authorized and, upon issuance and payment in accordance with
the terms of the Transaction Documents shall be validly issued, fully paid and
non-assessable and free from all preemptive or similar rights, mortgages,
defects, claims, liens, pledges, charges, taxes, rights of first refusal,
encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance
thereof. As of the Closing, the Company shall have reserved from its duly
authorized share capital not less than 200% of the maximum number of Ordinary
Shares issuable upon exercise of the Warrants (without taking into account any
limitations on the exercise of the Warrants set forth in the Warrants). Upon
exercise in accordance with the Warrants, the Warrant Shares, when issued, will
be validly issued, fully paid and nonassessable and free from all preemptive or
similar rights or Liens with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Ordinary Shares. The
issuance by the Company of the Securities has been registered under the 1933
Act, the Securities are being issued pursuant to the Registration Statement and
all of the Securities are freely transferable and freely tradable by each of the
Buyers without restriction, whether by way of registration or some exemption
therefrom. The Registration Statement is effective and available for the
issuance of the Securities thereunder and the Company has not received any
notice that the SEC has issued or intends to issue a stop-order with respect to
the Registration Statement or that the SEC otherwise has suspended or withdrawn
the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened in writing to do so. The “Plan of
Distribution” section under the Registration Statement permits the issuance and
sale of the Securities hereunder and as contemplated by the other Transaction
Documents. Upon receipt of the Securities, each of the Buyers will have good and
marketable title to the Securities. The Registration Statement and any
prospectus included therein, including the Prospectus and the Prospectus
Supplement, complied in all material respects with the requirements of the 1933
Act and the 1934 Act and the rules and regulations of the SEC promulgated
thereunder and all other applicable laws and regulations. At the time the
Registration Statement and any amendments thereto became effective, at the date
of this Agreement and at each deemed effective date thereof pursuant to Rule
430B(f)(2) of the 1933 Act, the Registration Statement and any amendments
thereto complied and will comply in all material respects with the requirements
of the 1933 Act and did not and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The Prospectus and
any amendments or supplements thereto (including, without limitation the
Prospectus Supplement), at the time the Prospectus or any amendment or
supplement thereto was issued and at the Closing Date, complied, and will
comply, in all material respects with the requirements of the 1933 Act and did
not, and will not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company meets all of the requirements for the use of Form F-3 under the 1933 Act
for the offering and sale of the Securities contemplated by this Agreement and
the other Transaction Documents, and the SEC has not notified the Company of any
objection to the use of the form of the Registration Statement pursuant to Rule
401(g)(1) under the 1933 Act. The Registration Statement meets the requirements
set forth in Rule 415(a)(1)(x) under the 1933 Act. At the earliest time after
the filing of the Registration Statement that the Company or another offering
participant made a bona fide offer (within the meaning of Rule 164(h)(2) under
the 1933 Act) relating to any of the Securities, the Company was not and is not
an “Ineligible Issuer” (as defined in Rule 405 under the 1933 Act). The Company
(i) has not distributed any offering material in connection with the offer or
sale of any of the Securities and (ii) until no Buyer holds any of the
Securities, shall not distribute any offering material in connection with the
offer or sale of any of the Securities to, or by, any of the Buyers (if
required), in each case, other than the Registration Statement, the Prospectus
or the Prospectus Supplement. In accordance with Rule 5110(b)(7)(C)(i) of the
Financial Industry Regulatory Authority Manual, the offering of the Securities
has been registered with the SEC on Form F-3 under the 1933 Act pursuant to the
standards for Form F-3 in effect prior to October 21, 1992, and the Securities
are being offered pursuant to Rule 415 promulgated under the 1933 Act. 

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(d)     No Conflicts. The execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the New Ordinary Shares, the
Warrants and the Warrant Shares and the reservation for issuance of the Warrant
Shares) will not (i) result in a violation of the Certificate of Incorporation
(as defined below) (including, without limitation, any certificate of
designation contained therein), Bylaws (as defined below), certificate of
formation, memorandum of association, articles of association, bylaws or other
organizational documents of the Company or any of its Subsidiaries, or any share
capital or other securities of the Company or any of its Subsidiaries, (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) in any respect under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, foreign,
federal and state securities laws and regulations and the rules and regulations
of the Nasdaq Global Select Market (the “Principal Market”) and including
all applicable foreign, federal and state laws, rules and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected, except, in
the case of clause (ii) or (iii) above, to the extent such violations would not
reasonably be expected to have a Material Adverse Effect.

(e)     Consents. Neither the
Company nor any Subsidiary is required to obtain any consent from, authorization
or order of, or make any filing or registration with (other than the filing with
the SEC of the Prospectus Supplement and any other filings as may be required by
any federal or state securities agencies), any Governmental Entity (as defined
below) or any regulatory or self-regulatory agency or any other Person in order
for it to execute, deliver or perform any of its respective obligations under or
contemplated by the Transaction Documents, in each case, in accordance with the
terms hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company or any Subsidiary is required to obtain pursuant
to the preceding sentence have been or will be obtained or effected on or prior
to the Closing Date, and neither the Company nor any of its Subsidiaries are
aware of any facts or circumstances which might prevent the Company or any of
its Subsidiaries from obtaining or effecting any of the registration,
application or filings contemplated by the Transaction Documents. The Company is
not in violation of the requirements of the Principal Market and has no
knowledge of any facts or circumstances which would reasonably lead to delisting
or suspension of the Ordinary Shares in the foreseeable future. “Governmental
Entity” means any nation, state, county, city, town, village, district, or
other political jurisdiction of any nature, federal, state, local, municipal,
foreign, or other government, governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal), multi-national organization or body; or
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of
the foregoing, including any entity or enterprise owned or controlled by a
government or a public international organization or any of the foregoing. 

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

(g)     Placement Agent’s Fees. The
Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or brokers’ commissions (other than for Persons engaged
by any Buyer or its investment advisor) relating to or arising out of the
transactions contemplated hereby, including, without limitation, placement agent
fees payable to FT Global Capital, Inc., as placement agent (the
“Placement Agent”) in connection with the sale of the Securities. The
fees and expenses of the Placement Agent to be paid by the Company or any of its
Subsidiaries are as set forth on Schedule 3(g) attached hereto. The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, attorney's fees and out-of-pocket expenses)
arising in connection with any claim for such Placement Agent’s fees. The
Company acknowledges that it has engaged the Placement Agent in connection with
the sale of the Securities. Other than the Placement Agent, neither the Company
nor any of its Subsidiaries has engaged any placement agent or other agent in
connection with the offer or sale of the Securities. 

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

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

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

(k)     SEC Documents; Financial
Statements. During the two (2) years prior to the date hereof, the Company
has timely filed all reports, schedules, forms, proxy statements, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the 1934 Act (all of the foregoing filed prior to the
date hereof and all exhibits and appendices included therein and financial
statements, notes and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”). The
Company has delivered or has made available to the Buyers or their respective
representatives true, correct and complete copies of each of the SEC Documents
not available on the EDGAR system. As of their respective dates, the SEC
Documents complied as to form in all material respects with the requirements of
the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as in effect as
of the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles (“GAAP”),
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material, either individually or in the
aggregate). The reserves, if any, established by the Company or the lack of
reserves, if applicable, are reasonable based upon facts and circumstances known
by the Company on the date hereof and there are no loss contingencies that are
required to be accrued by the Statement of Financial Accounting Standard No. 5
of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise. No
other information provided by or on behalf of the Company to any of the Buyers
which is not included in the SEC Documents (including, without limitation,
information in the disclosure schedules to this Agreement) contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein not misleading, in the light of the
circumstance under which they are or were made. The Company is not currently
contemplating to amend or restate any of the financial statements (including,
without limitation, any notes or any letter of the independent accountants of
the Company with respect thereto) included in the SEC Documents (the
“Financial Statements”), nor is the Company currently aware of facts or
circumstances which would require the Company to amend or restate any of the
Financial Statements, in each case, in order for any of the Financials
Statements to be in compliance with GAAP and the rules and regulations of the
SEC. The Company has not been informed by its independent accountants that they
recommend that the Company amend or restate any of the Financial Statements or
that there is any need for the Company to amend or restate any of the Financial
Statements. 

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(l)     Absence of Certain Changes.
Since the date of the Company’s most recent audited financial statements
contained in a Form 20-F, there has been no material adverse change and no
material adverse development in the business, assets, liabilities, properties,
operations (including results thereof), condition (financial or otherwise) or
prospects of the Company or any of its Subsidiaries. Since the date of the
Company’s most recent audited financial statements contained in a Form 20-F,
neither the Company nor any of its Subsidiaries has (i) declared or paid any
dividends other than disclosed in schedule 3(l), (ii) sold any material assets,
individually or in the aggregate, outside of the ordinary course of business or
(iii) made any material capital expenditures, individually or in the aggregate,
outside of the ordinary course of business. Neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any law or
statute relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up, nor does the Company or any Subsidiary have any
knowledge or reason to believe that any of their respective creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact
which would reasonably lead a creditor to do so. The Company and its
Subsidiaries, individually and on a consolidated basis, are not as of the date
hereof, and after giving effect to the transactions contemplated hereby to occur
at the Closing, will not be Insolvent (as defined below). For purposes of this
Section 3(l), “Insolvent” means, (I) with respect to the Company and its
Subsidiaries, on a consolidated basis, (i) the present fair saleable value of
the Company’s and its Subsidiaries’ assets is less than the amount required to
pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below),
(ii) the Company and its Subsidiaries are unable to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (iii) the Company and its
Subsidiaries intend to incur or believe that they will incur debts that would be
beyond their ability to pay as such debts mature; and (II) with respect to the
Company and each Subsidiary, individually, (i) the present fair saleable value
of the Company’s or such Subsidiary’s (as the case may be) assets is less than
the amount required to pay its respective total Indebtedness, (ii) the Company
or such Subsidiary (as the case may be) is unable to pay its respective debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (iii) the Company or such Subsidiary
(as the case may be) intends to incur or believes that it will incur debts that
would be beyond its respective ability to pay as such debts mature. Neither the
Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in
any business or in any transaction, for which the Company’s or such Subsidiary’s
remaining assets constitute unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted. 

9





(m)     No Undisclosed Events,
Liabilities, Developments or Circumstances. No event, liability, development
or circumstance has occurred or exists, or is reasonably expected to exist or
occur with respect to the Company, any of its Subsidiaries or any of their
respective businesses, properties, liabilities, prospects, operations (including
results thereof) or condition (financial or otherwise), that (i) would be
required to be disclosed by the Company under applicable securities laws on a
registration statement on Form F-3 filed with the SEC relating to an issuance
and sale by the Company of its Ordinary Shares and which has not been publicly
announced, (ii) would reasonably be expected to have a material adverse effect
on any Buyer’s investment hereunder or (iii) would reasonably be expected to
have a Material Adverse Effect. 

(n)     Conduct of Business; Regulatory
Permits. Neither the Company nor any of its Subsidiaries is in violation of
any term of or in default under its Certificate of Incorporation, any
certificate of designation, preferences or rights of any other outstanding
series of preferred shares of the Company or any of its Subsidiaries or Bylaws
or their organizational charter, certificate of formation, memorandum of
association, articles of association, Certificate of Incorporation or
certificate of incorporation or bylaws, respectively. Neither the Company nor
any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all cases for
possible violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Company is not in violation of any of the
rules, regulations or requirements of the Principal Market and has no knowledge
of any facts or circumstances that would reasonably lead to delisting or
suspension of the Ordinary Shares by the Principal Market in the foreseeable
future. During the two years prior to the date hereof, (i) the Ordinary Shares
have been listed or designated for quotation on the Principal Market, (ii)
trading in the Ordinary Shares has not been suspended by the SEC or the
Principal Market and (iii) the Company has received no communication, written or
oral, from the SEC or the Principal Market regarding the suspension or delisting
of the Ordinary Shares from the Principal Market. The Company and each of its
Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the Company or
any of its Subsidiaries or to which the Company or any of its Subsidiaries is a
party which has or would reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company or any
of its Subsidiaries, any acquisition of property by the Company or any of its
Subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which have not
had and would not reasonably be expected to have a Material Adverse Effect on
the Company or any of its Subsidiaries. 

10





(o)     Foreign Corrupt Practices.
Neither the Company, the Company’s subsidiary or any director, officer, agent,
employee, nor any other person acting for or on behalf of the foregoing
(individually and collectively, a “Company Affiliate”) have
violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other
applicable anti-bribery or anti-corruption laws, nor has any Company Affiliate
offered, paid, promised to pay, or authorized the payment of any money, or
offered, given, promised to give, or authorized the giving of anything of value,
to any officer, employee or any other person acting in an official capacity for
any Governmental Entity to any political party or official thereof or to any
candidate for political office (individually and collectively, a “Government
Official”) or to any person under circumstances where such Company Affiliate
knew or was aware of a high probability that all or a portion of such money or
thing of value would be offered, given or promised, directly or indirectly, to
any Government Official, for the purpose of: 

(i)     (A) influencing any act or decision
of such Government Official in his/her official capacity, (B) inducing such
Government Official to do or omit to do any act in violation of his/her lawful
duty, (C) securing any improper advantage, or (D) inducing such Government
Official to influence or affect any act or decision of any Governmental Entity,
or 

(ii)     assisting the Company or its
Subsidiaries in obtaining or retaining business for or with, or directing
business to, the Company or its Subsidiaries. 

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

(q)     Transactions With
Affiliates. Except as disclosed in the SEC Documents, no current or former
employee, partner, director, officer or shareholder (direct or indirect) of the
Company or its Subsidiaries, or any associate, or, to the knowledge of the
Company, any affiliate of any thereof, or any relative with a relationship no
more remote than first cousin of any of the foregoing, is presently, or has ever
been, (i) a party to any transaction with the Company or its Subsidiaries
(including any contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property from, or
otherwise requiring payments to, any such director, officer or shareholder or
such associate or affiliate or relative Subsidiaries (other than for ordinary
course services as employees, officers or directors of the Company or any of its
Subsidiaries)) or (ii) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a competitor,
supplier or customer of the Company or its Subsidiaries (except for a passive
investment (direct or indirect) in less than 5% of the common stock of a company
whose securities are traded on or quoted through an Eligible Market (as defined
below)), nor does any such Person receive income from any source other than the
Company or its Subsidiaries which relates to the business of the Company or its
Subsidiaries or should properly accrue to the Company or its Subsidiaries.
Except as disclosed in the SEC Documents, no employee, officer, shareholder or
director of the Company or any of its Subsidiaries or member of his or her
immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the
Company or any of its Subsidiaries indebted (or committed to make loans or
extend or guarantee credit) to any of them, other than (i) for payment of salary
for services rendered, (ii) reimbursement for reasonable expenses incurred on
behalf of the Company, and (iii) for other standard employee benefits made
generally available to all employees or executives (including share option
agreements outstanding under any share option plan approved by the Board of
Directors of the Company). 

11





(r)     Equity Capitalization. 

(i)     Definitions:

(A)     “Ordinary Shares” means
(x) the Company’s ordinary shares, $0.01 par value per share, and (y) any share
capital into which such ordinary shares shall have been changed or any share
capital resulting from a reclassification of such ordinary shares.

(ii)     Authorized and
Outstanding Share Capital. As of the date hereof, the authorized share
capital of the Company consists of 100,000,000 Ordinary Shares, of which,
32,263,875 are issued and outstanding, 619,740 are reserved for issuance
pursuant to the Approved Share Plan and no shares are reserved for issuance
pursuant to Convertible Securities (as defined below) (other than the New
Ordinary Shares and the Warrants) exercisable or exchangeable for, or
convertible into, Ordinary Shares. 717,448 Ordinary Shares are held in the
treasury of the Company and Schedule 3(r)(ii) sets forth the number of Ordinary
Shares that the Company has agreed to purchase from its employees.

 (iii)     Valid Issuance;
Available Shares; Affiliates. All of such outstanding shares are duly
authorized and have been, or upon issuance will be, validly issued and are fully
paid and nonassessable. Schedule 3(r)(iii) sets forth the number of
Ordinary Shares that are (A) reserved for issuance pursuant to Convertible
Securities (as defined below) (other than the Warrants) and (B) that are, as of
the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405
of the 1933 Act and calculated based on the assumption that only officers,
directors and holders of at least 10% of the Company’s issued and outstanding
Ordinary Shares are “affiliates” without conceding that any such Persons are
“affiliates” for purposes of federal securities laws) of the Company or any of
its Subsidiaries. To the Company’s knowledge, except for Jiang Huai Lin, the
Chief Executive Officer of the Company, no Person owns 10% or more of the
Company’s issued and outstanding Ordinary Shares (calculated based on the
assumption that all Convertible Securities (as defined below), whether or not
presently exercisable or convertible, have been fully exercised or converted (as
the case may be) taking account of any limitations on exercise or conversion
(including “blockers”) contained therein without conceding that such identified
Person is a 10% shareholder for purposes of federal securities laws).

 (iv)     Existing Securities;
Obligations. Except as disclosed in the SEC Documents: (A) none of the
Company’s or any Subsidiary’s shares, interests or share capital is subject to
preemptive rights or any other similar rights or Liens suffered or 12 permitted by the Company or any Subsidiary; (B) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares, interests or
share capital of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares, interests or
share capital of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares, interests or share capital of the Company or any
of its Subsidiaries; (C) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except pursuant to this Agreement); (D)
there are no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (E) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; and (F) neither the Company nor any Subsidiary has
any share appreciation rights or “phantom share” plans or agreements or any
similar plan or agreement. 





(v)     Organizational Documents.
The Company has furnished to the Buyers true, correct and complete copies of the
Company’s Memorandum of Association, as amended and as in effect on the date
hereof (the “Certificate of Incorporation”), and the Company’s
Articles of Association, as amended and as in effect on the date hereof (the
“Bylaws”), and the terms of all Convertible Securities and the material
rights of the holders thereof in respect thereto.

(s)     Indebtedness and Other
Contracts. Neither the Company nor any of its Subsidiaries, (i) except as
set forth in the SEC Documents, has any outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of the Company or any of its Subsidiaries or
by which the Company or any of its Subsidiaries is or may become bound, (ii) is
a party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) has any financing statements securing obligations in any amounts filed in
connection with the Company or any of its Subsidiaries; (iv) is in violation of
any term of, or in default under, any contract, agreement or instrument relating
to any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (v) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries have any liabilities or obligations required to be disclosed in the
SEC Documents which are not so disclosed in the SEC Documents, other than those
incurred in the ordinary course of the Company’s or its Subsidiaries’ respective
businesses and which, individually or in the aggregate, do not or would not
reasonably be expected to have a Material Adverse Effect. For purposes of this
Agreement: 

13




(x)     “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, “capital leases” in
accordance with GAAP) (other than trade payables entered into in the ordinary
course of business consistent with past practice), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with GAAP, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in any property or assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; (y) “Contingent
Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any Indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; and (z) “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and any
Governmental Entity or any department or agency thereof.

(t)     Litigation. There is no
action, suit, arbitration, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, other Governmental Entity,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
the Ordinary Shares or any of the Company’s or its Subsidiaries’ officers or
directors, whether of a civil or criminal nature or otherwise, in their
capacities as such, which is outside of the ordinary course of business or
individually or in the aggregate material to the Company or any of its
Subsidiaries. No director, officer or employee of the Company or any of its
subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in
reasonable anticipation of litigation. Without limitation of the foregoing,
there has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the SEC involving the Company, any of its
Subsidiaries or any current or former director or officer of the Company or any
of its Subsidiaries. The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
under the 1933 Act or the 1934 Act, including, without limitation, the
Registration Statement. After reasonable inquiry of its employees, the Company
is not aware of any fact which might result in or form the basis for any
14 such action, suit, arbitration, investigation, inquiry or other
proceeding. Neither the Company nor any of its Subsidiaries is subject to any
order, writ, judgment, injunction, decree, determination or award of any
Governmental Entity.





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

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

(w)     Title.

(i)     Real Property. Each of the
Company and its Subsidiaries holds good title to all real property, leases in
real property, facilities or other interests in real property owned or held by
the Company or any of its Subsidiaries (the “Real Property”) owned by the
Company or any of its Subsidiaries (as applicable). The Real Property is free
and clear of all Liens and is not subject to any rights of way, building use
restrictions, exceptions, variances, reservations, or limitations of any nature
except for (a) Liens for current taxes not yet due and (b) zoning laws and other
land use restrictions that do not impair the present or anticipated use of the
property subject thereto. Any Real Property held under lease by the Company or
any of its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
or any of its Subsidiaries.

15




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

(x)     Intellectual Property
Rights. The Company and its Subsidiaries own or possess adequate rights or
licenses to use all trademarks, trade names, service marks, service mark
registrations, service names, original works of authorship, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights and all
applications and registrations therefor (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted. Except as set
forth in Schedule 3(x), none of the Company's Intellectual Property Rights have
expired or terminated or have been abandoned or are expected to expire or
terminate or are expected to be abandoned, within three years from the date of
this Agreement. The Company does not have any knowledge of any infringement by
the Company or its Subsidiaries of Intellectual Property Rights of others. There
is no claim, action or proceeding being made or brought, or to the knowledge of
the Company or any of its Subsidiaries, being threatened, against the Company or
any of its Subsidiaries regarding its Intellectual Property Rights. Neither the
Company nor any of its Subsidiaries is aware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or
proceedings. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
Intellectual Property Rights. 

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

16





(ii)     No Hazardous Materials: 

(A)     have been disposed of or otherwise
released into any Real Property (as defined below) in violation of any
Environmental Laws; or 
 (B) are present on, over, beneath, in or upon any Real
Property or any portion thereof in quantities that would constitute a violation
of any Environmental Laws. No prior use by the Company or any of its
Subsidiaries of any Real Property has occurred that violates any Environmental
Laws, which violation would have a material adverse effect on the business of
the Company or any of its Subsidiaries. 

(iii)     Neither the Company nor any of
its Subsidiaries knows of any other person who or entity which has stored,
treated, recycled, disposed of or otherwise located any Hazardous Materials on
any Real Property, including, without limitation, such substances as asbestos
and polychlorinated biphenyls. 

(iv)     None of the Real Properties are on
any federal or state “Superfund” list or Liability Information System
(“CERCLIS”) list or any state environmental agency list of sites under
consideration for CERCLIS, nor subject to any environmental related Liens. 
 (z)
Subsidiary Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary. 

(aa)     Tax Status. The Company and
each of its Subsidiaries (i) has timely made or filed all foreign, federal and
state income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (ii) has timely paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company and its Subsidiaries know of
no basis for any such claim. The Company is not operated in such a manner as to
qualify as a passive foreign investment company, as defined in Section 1297 of
the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The net
operating loss carryforwards (“NOLs”) for United States federal income
tax purposes of the consolidated group of which the Company is the common
parent, if any, shall not be adversely effected by the transactions contemplated
hereby. The transactions contemplated hereby do not constitute an “ownership
change” within the meaning of Section 382 of the Code, thereby preserving the
Company’s ability to utilize such NOLs.

17




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

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

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

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

18





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

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

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

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

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

19




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

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

(mm)     Management. Except as set
forth in Schedule 3(mm) hereto, during the past five year period, no
current or former officer or director or, to the knowledge of the Company, no
current ten percent (10%) or greater shareholder of the Company or any of its
Subsidiaries has been the subject of: 

(i)     a petition under bankruptcy laws or
any other insolvency or moratorium law or the appointment by a court of a
receiver, fiscal agent or similar officer for such Person, or any partnership in
which such person was a general partner at or within two years before the filing
of such petition or such appointment, or any corporation or business association
of which such person was an executive officer at or within two years before the
time of the filing of such petition or such appointment; 

(ii)     a conviction in a criminal
proceeding or a named subject of a pending criminal proceeding (excluding
traffic violations that do not relate to driving while intoxicated or driving
under the influence); 

(iii)     any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining any such person from, or
otherwise limiting, the following activities: 

(1)     Acting as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant, any other person
regulated by the United States Commodity Futures Trading Commission or an
associated person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank,
savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; 

20




(2)     Engaging in any particular
type of business practice; or 

(3)     Engaging in any activity in
connection with the purchase or sale of any security or commodity or in
connection with any violation of securities laws or commodities laws; 

(iv)     any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any authority
barring, suspending or otherwise limiting for more than sixty (60) days the
right of any such person to engage in any activity described in the preceding
sub paragraph, or to be associated with persons engaged in any such activity;


(v)     a finding by a court of
competent jurisdiction in a civil action or by the SEC or other authority to
have violated any securities law, regulation or decree and the judgment in such
civil action or finding by the SEC or any other authority has not been
subsequently reversed, suspended or vacated; or 

(vi)     a finding by a court of
competent jurisdiction in a civil action or by the Commodity Futures Trading
Commission to have violated any federal commodities law, and the judgment in
such civil action or finding has not been subsequently reversed, suspended or
vacated.

(nn)     Share Option Plans.
The Company has not granted any options, from any Approved Share Plan (as
defined below) or otherwise, to any Person. 

(oo)     No Disagreements with
Accountants and Lawyers. There are no material disagreements of any kind
presently existing, or reasonably anticipated by the Company to arise, between
the Company and the accountants and lawyers formerly or presently employed by
the Company and the Company is current with respect to any fees owed to its
accountants and lawyers which could adversely affect the Company's ability to
perform any of its obligations under any of the Transaction Documents. In
addition, on or prior to the date hereof, the Company had discussions with its
accountants about its financial statements previously filed with the SEC. Based
on those discussions, the Company has no reason to believe that it will need to
restate any such financial statements or any part thereof.

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

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

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

21




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

(tt)     Disclosure. The
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Buyers or their agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, non-public
information concerning the Company or any of its Subsidiaries, other than the
existence of the transactions contemplated by this Agreement and the other
Transaction Documents. The Company understands and confirms that each of the
Buyers will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Buyers regarding the
Company and its Subsidiaries, their businesses and the transactions contemplated
hereby, including the schedules to this Agreement, furnished by or on behalf of
the Company or any of its Subsidiaries is true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. All of the written
information furnished after the date hereof by or on behalf of the Company or
any of its Subsidiaries to each Buyer pursuant to or in connection with this
Agreement and the other Transaction Documents, taken as a whole, will be true
and correct in all material respects as of the date on which such information is
so provided and will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each press release issued by the Company or any of its Subsidiaries
during the twelve (12) months preceding the date of this Agreement did not at
the time of release contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including results
thereof) or conditions (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly disclosed. All
financial projections and forecasts that have been prepared by or on behalf of
the Company or any of its Subsidiaries and made available to each Buyer have
been prepared in good faith based upon reasonable assumptions and represented,
at the time each such financial projection or forecast was delivered to each
Buyer, the Company’s best estimate of future financial performance (it being
recognized that such financial projections or forecasts are not to be viewed as
facts and that the actual results during the period or periods covered by any
such financial projections or forecasts may differ from the projected or
forecasted results). The Company acknowledges and agrees that no Buyer makes or
has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 2.

22





	4. 	
      COVENANTS.



(a)     Best Efforts. Each
Buyer shall use its best efforts to timely satisfy each of the covenants
hereunder and conditions to be satisfied by it as provided in Section 5(d) of
this Agreement. The Company shall use its best efforts to timely satisfy each of
the covenants hereunder and conditions to be satisfied by it as provided in
Section 7 of this Agreement.

(b)     Amendments to the
Registration Statement; Prospectus Supplements; Free Writing
Prospectuses.

(i)     Amendments to the
Registration Statement; Prospectus Supplements; Free Writing
Prospectuses. Except as provided in this Agreement and other than periodic
reports required to be filed pursuant to the 1934 Act, the Company shall not
file with the SEC any amendment to the Registration Statement that relates to
the Buyer, this Agreement or the transactions contemplated hereby or thereby or
file with the SEC any Prospectus Supplement that relates to the Buyer, this
Agreement or the transactions contemplated hereby or thereby with respect to
which (a) the Buyer shall not previously have been advised, (b) the Company
shall not have given due consideration to any comments thereon received from the
Buyer or its counsel, or (c) the Buyer shall reasonably object after being so
advised, unless the Company reasonably has determined that it is necessary to
amend the Registration Statement or make any supplement to the Prospectus to
comply with the 1933 Act or any other applicable law or regulation, in which
case the Company shall promptly (but in no event later than 24 hours) so inform
the Buyer, the Buyer shall be provided with a reasonable opportunity to review
and comment upon any disclosure relating to the Buyer and the Company shall
expeditiously furnish to the Buyer an electronic copy thereof. In addition, for
so long as, in the reasonable opinion of counsel for the Buyer, the Prospectus
(or in lieu thereof, the notice referred to in Rule 173(a) under the 1933 Act)
is required to be delivered in connection with any acquisition or sale of
Securities by the Buyer, the Company shall not file any Prospectus Supplement
with respect to the Securities without delivering or making available a copy of
such Prospectus Supplement, together with the Prospectus, to the Buyer promptly.


(ii)     The Company has not made, and
agrees that unless it obtains the prior written consent of the Buyer it will not
make, an offer relating to the Securities that would constitute an “issuer free
writing prospectus” as defined in Rule 433 promulgated under the 1933 Act (an
“Issuer Free Writing Prospectus”) or that would otherwise constitute a
“free writing prospectus” as defined in Rule 405 promulgated under the 1933 Act
(a “Free Writing Prospectus”) required to be filed by the Company or the
Buyer with the SEC or retained by the Company or the Buyer under Rule 433 under
the 1933 Act. The Buyer has not made, and agrees that unless it obtains the
prior written consent of the Company it will not make, an offer relating to the
Securities that would constitute a Free Writing Prospectus required to be filed
by the Company with the SEC or retained by the Company under Rule 433 under the
1933 Act. Any such Issuer Free Writing Prospectus or other Free Writing
Prospectus consented to by the Buyer or the Company is referred to in this
Agreement as a “Permitted Free Writing Prospectus.” The Company agrees
that (x) it has treated and will treat, as the case may be, each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus and (y) it has complied
and will comply, as the case may be, with the requirements of Rules 164 and 433
under the 1933 Act applicable to any Permitted Free Writing Prospectus,
including in respect of timely filing with the SEC, legending and record
keeping. 

23




(c)     Prospectus Delivery.
Immediately prior to execution of this Agreement, the Company shall have
delivered to the Buyer, and as soon as practicable after execution of this
Agreement the Company shall file, Prospectus Supplements with respect to the
Securities to be issued on the Closing Date, as required under, and in
conformity with, the 1933 Act, including Rule 424(b) thereunder. The Company
shall provide the Buyer a reasonable opportunity to comment on a draft of each
Prospectus Supplement and any Issuer Free Writing Prospectus, shall give due
consideration to all such comments and, subject to the provisions of Section
4(a) hereof, shall deliver or make available to the Buyer, without charge, an
electronic copy of each form of Prospectus Supplement, together with the
Prospectus, and any Permitted Free Writing Prospectus on the Closing Date. The
Company consents to the use of the Prospectus (and of any Prospectus Supplements
thereto) in accordance with the provisions of the 1933 Act and with the
securities or “blue sky” laws of the jurisdictions in which the Securities may
be sold by the Buyer, in connection with the offering and sale of the Securities
and for such period of time thereafter as the Prospectus (or in lieu thereof,
the notice referred to in Rule 173(a) under the 1933 Act) is required by the
1933 Act to be delivered in connection with sales of the Securities. If during
such period of time any event shall occur that in the judgment of the Company
and its counsel is required to be set forth in the Registration Statement or the
Prospectus or any Permitted Free Writing Prospectus or should be set forth
therein in order to make the statements made therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading, or if it is necessary to amend the Registration Statement or
supplement or amend the Prospectus or any Permitted Free Writing Prospectus to
comply with the 1933 Act or any other applicable law or regulation, the Company
shall forthwith prepare and, subject to Section 4(a) above, file with the SEC an
appropriate amendment to the Registration Statement or Prospectus Supplement to
the Prospectus (or supplement to the Permitted Free Writing Prospectus) and
shall expeditiously furnish or make available to the Buyer an electronic copy
thereof.

(d)     Stop Orders. The
  Company shall advise the Buyer promptly (but in no event later than 24 hours)
  and shall confirm such advice in writing: (i) of the Company’s receipt of notice
  of any request by the SEC for amendment of or a supplement to the Registration
  Statement, the Prospectus, any Permitted Free Writing Prospectus or for any
  additional information; (ii) of the Company’s receipt of notice of the issuance
  by the SEC of any stop order suspending the effectiveness of the Registration
  Statement or prohibiting or suspending the use of the Prospectus or any
  Prospectus Supplement, or of the suspension of qualification of the Securities
  for offering or sale in any jurisdiction, or the initiation or contemplated
  initiation of any proceeding for such purpose; (iii) of the Company becoming
  aware of the happening of any event, which makes any statement of a material
  fact made in the Registration Statement, the Prospectus or any Permitted Free
  Writing Prospectus untrue or which requires the making of any additions to or
  changes to the statements then made in the Registration Statement, the
  Prospectus or any Permitted Free Writing Prospectus in order to state a material
  fact required by the 1933 Act to be stated therein or necessary in order to make
  the statements then made therein (in the case of the Prospectus, in light of the
  circumstances under which they were made) not misleading, or of the necessity to
  amend the Registration Statement or supplement the Prospectus or any Permitted
  Free Writing Prospectus to comply with the 1933 Act or any other law or (iv) if
at any time following the date hereof the Registration Statement is not effective or is not
otherwise available for the issuance of the Securities or any Prospectus
contained therein is not available for use for any other reason. Thereafter, the
Company shall promptly notify such holders when the Registration Statement, the
Prospectus, any Permitted Free Writing Prospectus and/or any amendment or
supplement thereto, as applicable, is effective and available for the issuance
of the Securities. If at any time the SEC shall issue any stop order suspending
the effectiveness of the Registration Statement or prohibiting or suspending the
use of the Prospectus or any Prospectus Supplement, the Company shall use best
efforts to obtain the withdrawal of such order at the earliest possible
time.

24




(e)     Blue Sky. The Company
shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to,
qualify the Securities for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to the Buyers on or prior to the
Closing Date. Without limiting any other obligation of the Company under this
Agreement, the Company shall timely make all filings and reports relating to the
offer and sale of the Securities required under all applicable securities laws
(including, without limitation, all applicable federal securities laws and all
applicable “Blue Sky” laws), and the Company shall comply with all applicable
foreign, federal, state and local laws, statutes, rules, regulations and the
like relating to the offering and sale of the Securities to the Buyers.

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

(g)     Use of Proceeds. The
Company will use the proceeds from the sale of the Securities for working
capital and general corporate purposes, and not, directly or indirectly, for (i)
the satisfaction of any indebtedness of the Company or any of its Subsidiaries
(other than payment of trade payables incurred in the ordinary course of
business of the Company and its Subsidiaries and consistent with prior
practices), (ii) the redemption or repurchase of any securities of the Company
or any of its Subsidiaries, or (iii) the settlement of any outstanding
litigation.

(h)     Financial Information.
The Company agrees to send the following to each holder of Warrants, as
applicable, (each, an “Investor”) during the Reporting Period (i) unless
the following are filed with the SEC through EDGAR and are available to the
public through the EDGAR system, within one (1) Business Day after the filing
thereof with the SEC, a copy of its Annual Reports on Form 20-F, any interim
reports or any consolidated balance sheets, income statements, shareholders’
equity statements and/or cash flow statements for any period other than annual,
any Reports on Form 6-K and any registration statements (other than on Form S-8)
or amendments filed pursuant to the 1933 Act, (ii) unless the following are
either filed with the SEC through EDGAR or are otherwise widely disseminated via
a recognized news release service (such as PR Newswire), on the same day as the
release thereof, facsimile copies of all press releases issued by the Company or
any of its Subsidiaries and (iii) unless the following are filed with the SEC
through EDGAR, copies of any notices and other information made available or given to the shareholders of the Company generally,
contemporaneously with the making available or giving thereof to the
shareholders.

25




(i)     Listing. The Company
shall promptly secure the listing or designation for quotation (as the case may
be) of all of the Underlying Securities (as defined below) upon each national
securities exchange and automated quotation system, if any, upon which the
Ordinary Shares are then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) and shall maintain such listing or
designation for quotation (as the case may be) of all Underlying Securities from
time to time issuable under the terms of the Transaction Documents on such
national securities exchange or automated quotation system. The Company shall
maintain the Ordinary Shares’ listing or authorization for quotation (as the
case may be) on the Principal Market, The New York Stock Exchange, the NYSE MKT,
the Nasdaq Capital Market, or the Nasdaq Global Market (each, an “Eligible
Market”). Neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Ordinary Shares on an Eligible Market. The Company shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 4(i). “Underlying Securities” means the (i) the New Ordinary
Shares, (ii) the Warrant Shares and (iii) any share capital of the Company
issued or issuable with respect to the New Ordinary Shares, the Warrant Shares,
or the Warrants, respectively, including, without limitation, (1) as a result of
any share split, share dividend, recapitalization, exchange or similar event or
otherwise and (2) shares of share capital of the Company into which the Ordinary
Shares are converted or exchanged and shares of share capital of a Successor
Entity (as defined in the Warrants) into which the Ordinary Shares are converted
or exchanged, in each case, without regard to any limitations on exercise of the
Warrants.

(j)     Fees. The Company shall
  reimburse the lead Buyer a non-accountable fee of $50,000 for all costs and
  expenses incurred by it or its affiliates in connection with the structuring,
  documentation, negotiation and closing of the transactions contemplated by the
  Transaction Documents (including, without limitation, as applicable, all
  reasonable legal fees of outside counsel and disbursements of Kelley Drye &
  Warren, LLP, counsel to the lead Buyer, any other reasonable fees and expenses
  in connection with the structuring, documentation, negotiation and closing of
  the transactions contemplated by the Transaction Documents and due diligence and
  regulatory filings in connection therewith) (the “Transaction Expenses”)
  and shall be withheld by the lead Buyer from its Purchase Price at the Closing,
  less $25,000 previously paid by the Company; provided, that the Company shall
  promptly reimburse Kelley Drye & Warren, LLP on demand for all Transaction
  Expenses not so reimbursed through such withholding at the Closing. In addition
  to the Transaction Expenses, the Company shall be responsible for the payment of
  any placement agent’s fees, financial advisory fees, transfer agent fees, DTC
  fees or broker’s commissions (other than for Persons engaged by any Buyer)
  relating to or arising out of the transactions contemplated hereby (including,
  without limitation, any fees or commissions payable to the Placement Agent, who
  is the Company’s sole placement agent in connection with the transactions
  contemplated by this Agreement). The Company shall pay, and hold each Buyer
  harmless against, any liability, loss or expense (including, without limitation,
  reasonable attorneys’ fees and out-of-pocket expenses) arising in connection
  with any claim relating to any such payment. Except as otherwise set forth in
  the Transaction Documents, each party to this Agreement shall bear its own
expenses in connection with the sale of the Securities to the Buyers.

26




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

(l)     Disclosure of Transactions
and Other Material Information.

(i)     Disclosure of
Transaction. The Company shall, on or before 8:30 a.m., New York time, on
the first (1st) Business Day after the date of this Agreement, issue
a press release (the “Press Release”) reasonably acceptable to the Buyers
disclosing all the material terms of the transactions contemplated by the
Transaction Documents. On or before 8:30 a.m., New York time, on the first
(1st) Business Day after the date of this Agreement, the Company
shall file a Report on Form 6-K describing all the material terms of the
transactions contemplated by the Transaction Documents in the form required by
the 1934 Act and attaching all the material Transaction Documents (including,
without limitation, this Agreement (and all schedules to this Agreement), and
the form of the Warrants) (including all attachments, the “6-K Filing”).
From and after the filing of the 6-K Filing, the Company shall have disclosed
all material, non-public information (if any) provided to any of the Buyers by
the Company or any of its Subsidiaries or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents. In addition, effective upon the filing of the 6-K
Filing, the Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral, between the
Company, any of its Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and any of the Buyers or any
of their affiliates, on the other hand, shall terminate.

(ii)     Limitations on
Disclosure. The Company shall not, and the Company shall cause each of its
Subsidiaries and each of its and their respective officers, directors, employees
and agents not to, provide any Buyer with any material, non-public information
regarding the Company or any of its Subsidiaries from and after the date hereof
without the express prior written consent of such Buyer (which may be granted or
withheld in such Buyer’s sole discretion). In the event of a breach of any of
the foregoing covenants, including, without limitation, Section 4(q) of this
Agreement, or any of the covenants or agreements contained in any other
Transaction Document, by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees and agents (as determined in the
reasonable good faith judgment of such Buyer), in addition to any other remedy
provided herein or in the Transaction Documents, such Buyer shall have the right
to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such breach or such material, non- 27 public information, as applicable, without the prior approval
by the Company, any of its Subsidiaries, or any of its or their respective
officers, directors, employees or agents; provided, however, that the Buyer
shall first give the Company at least twenty-four hours’ advance written notice
of such intended public disclosure to allow the Company an opportunity to
release such information itself. No Buyer shall have any liability to the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees, affiliates, shareholders or agents, for any such
disclosure. To the extent that the Company delivers any material, non-public
information to a Buyer without such Buyer's consent, the Company hereby
covenants and agrees that such Buyer shall not have any duty of confidentiality
with respect to, or a duty not to trade on the basis of, such material,
non-public information. Subject to the foregoing, neither the Company, its
Subsidiaries nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, the Company shall be entitled, without the prior approval of any Buyer,
to make the Press Release and any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the 6-K Filing
and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written consent of
the applicable Buyer (which may be granted or withheld in such Buyer’s sole
discretion), the Company shall not (and shall cause each of its Subsidiaries and
affiliates to not) disclose the name of such Buyer in any filing, announcement,
release or otherwise. Notwithstanding anything contained in this Agreement to
the contrary and without implication that the contrary would otherwise be true,
the Company expressly acknowledges and agrees that no Buyer shall have (unless
expressly agreed to by a particular Buyer after the date hereof in a written
definitive and binding agreement executed by the Company and such particular
Buyer (it being understood and agreed that no Buyer may bind any other Buyer
with respect thereto)), any duty of confidentiality with respect to, or a duty
not to trade on the basis of, any material, non-public information regarding the
Company or any of its Subsidiaries.




(iii)     Other Confidential
Information. Disclosure Failures; Disclosure Delay Payments. In
addition to other remedies set forth in this Section 4(l), and without limiting
anything set forth in any other Transaction Document, at any time after the
Closing Date if the Company, any of its Subsidiaries, or any of their respective
officers, directors, employees or agents, provides any Buyer with material
non-public information relating to the Company or any of its Subsidiaries (each,
the “Confidential Information”), the Company shall, on or prior to the
applicable Required Disclosure Date (as defined below), publicly disclose such
Confidential Information on a Report on Form 6-K or otherwise (each, a
“Disclosure”). From and after such Disclosure, the Company shall have
disclosed all Confidential Information provided to such Buyer by the Company or
any of its Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the
Transaction Documents. In addition, effective upon such Disclosure, the Company
acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors, affiliates, employees or
agents, on the one hand, and any of the Buyers or any of their affiliates, on
the other hand, shall terminate. In the event that the Company fails to effect
such Disclosure on or prior to the Required Disclosure Date and such Buyer shall
have possessed Confidential Information for at least ten (10) consecutive
Trading Days (as defined in the Warrants) (each, a “Disclosure Failure”),
then, as partial relief for the damages to such Buyer by reason of any such
delay in, or reduction of, its ability to buy or sell Ordinary Shares after such
Required Disclosure Date (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to such Buyer an
amount in cash equal to the greater of (I) two percent (2%) of the aggregate
Purchase Price and (II) the applicable Disclosure Restitution Amount, on each of
the following dates (each, a “Disclosure Delay Payment Date”): (i) on the
date of such Disclosure Failure and (ii) on every thirty (30) day anniversary
such Disclosure Failure until the earlier of (x) the date such Disclosure
Failure is cured and (y) such time as all such non-public information provided
to such Buyer shall cease to be Confidential Information (as evidenced by a
certificate, duly executed by an authorized officer of the Company to the
foregoing effect) (such earlier date, as applicable, a “Disclosure Cure
Date”). Following the initial Disclosure Delay Payment for any particular
Disclosure Failure, without limiting the foregoing, if a Disclosure Cure Date
occurs prior to any thirty (30) day anniversary of such Disclosure Failure, then
such Disclosure Delay Payment (prorated for such partial month) shall be made on
the third (3rd) Business Day after such Disclosure Cure Date. The payments to
which an Investor shall be entitled pursuant to this Section 4(l)(iii) are
referred to herein as “Disclosure Delay Payments.” In the event the
Company fails to make Disclosure Delay Payments in a timely manner in accordance
with the foregoing, such Disclosure Delay Payments shall bear interest at the
rate of two percent (2%) per month (prorated for partial months) until paid in
full.

28




(iv) For the purpose of this Agreement the following
definitions shall apply: 

(1)     “Disclosure Failure Market
  Price” means, as of any Disclosure Delay Payment Date, the price computed as
  the quotient of (I) the sum of the five (5) highest VWAPs (as defined in the
  Warrants) of the Ordinary Shares during the applicable Disclosure Restitution
  Period (as defined below), divided by (II) five (5) (such period, the
  “Disclosure Failure Measuring Period”). All such determinations to be
  appropriately adjusted for any share dividend, share split, share combination,
  reclassification or similar transaction that proportionately decreases or
  increases the Ordinary Shares during such Disclosure Failure Measuring Period.


(2)     “Disclosure Restitution
Amount” means, as of any Disclosure Delay Payment Date, the product of (x)
difference of (I) the Disclosure Failure Market Price less (II) the lowest
purchase price, per Ordinary Share, of any Ordinary Shares issued or issuable to
such Buyer pursuant to this Agreement or any other Transaction Documents,
multiplied by (y) 10% of the aggregate daily dollar trading volume (as reported
on Bloomberg (as defined in the Warrants)) of the Ordinary Shares on the
Principal Market for each Trading Day either (1) with respect to the initial
Disclosure Delay Payment Date, during the period 29 commencing on the applicable Required Disclosure Date through
and including the Trading Day immediately prior to the initial Disclosure Delay
Payment Date or (2) with respect to each other Disclosure Delay Payment Date,
during the period commencing the immediately preceding Disclosure Delay Payment
Date through and including the Trading Day immediately prior to such applicable
Disclosure Delay Payment Date (such applicable period, the “Disclosure
Restitution Period”). 




(3)     “Required Disclosure
Date” means (x) if such Buyer authorized the delivery of such Confidential
Information, either (I) if the Company and such Buyer have mutually agreed upon
a date (as evidenced by an e-mail or other writing) of Disclosure of such
Confidential Information, such agreed upon date or (II) otherwise, the seventh
(7th) calendar day after the date such Buyer first received any
Confidential Information or (y) if such Buyer did not authorize the delivery of
such Confidential Information, the first (1st) Business Day after
such Buyer’s receipt of such Confidential Information. 

(m)     Additional Issuance of
  Securities. So long as any Buyer beneficially owns any Securities, the
  Company will not, without the prior written consent of the Required Holders
  issue any other securities that would cause a breach or default under the
  Warrants. The Company agrees that, without the prior written consent of the
  Required Holders, for the period commencing on the date hereof and ending on the
  date immediately following the 90th calendar day after the Closing
  Date (the “Restricted Period”), neither the Company nor any of its
Subsidiaries shall directly or indirectly: 

(i)     file a registration statement
under the 1933 Act relating to securities that are not the Underlying Securities
(other than a registration statement on Form S-8 or such supplements or
amendments to registration statements that are outstanding and have been
declared effective by the SEC as of the date hereof (solely to the extent
necessary to keep such registration statements effective and available and not
with respect to any Subsequent Placement)); 

(ii)     amend or modify (whether by
an amendment, waiver, exchange of securities, or otherwise) any of the Company’s
warrants to purchase Ordinary Shares that are outstanding as of the date hereof;
or 

(iii)     issue, offer, sell, grant
any option or right to purchase, or otherwise dispose of (or announce any
issuance, offer, sale, grant of any option or right to purchase or other
disposition of) any equity security or any equity-linked or related security
(including, without limitation, any “equity security” (as that term is defined
under Rule 405 promulgated under the 1933 Act)), any Convertible Securities (as
defined below), any debt, any preferred shares or any purchase rights (any such
issuance, offer, sale, grant, disposition or announcement (whether occurring
during the Restricted Period or at any time thereafter) is referred to as a
“Subsequent Placement”). Notwithstanding the foregoing, this Section
4(l)(iii) shall not apply in respect of the issuance of (A) Ordinary Shares or
standard options to purchase Ordinary Shares to directors, officers, consultants
or employees of the Company in their capacity as such pursuant to an Approved
Share Plan (as defined below), provided that (x) all such issuances
(taking into account the Ordinary Shares issuable upon exercise of such options)
after the date hereof pursuant to this clause (A) do not, in the aggregate,
exceed more than 10% of the Ordinary Shares issued and outstanding immediately
prior to the date hereof and (y) the exercise price of any such options is not
lowered, none of such options are amended to increase the number of shares
issuable thereunder and none of the terms or conditions of any such options are
otherwise materially changed in any manner that adversely affects any of the
Buyers; (B) Ordinary Shares issued upon the conversion or exercise of
Convertible Securities (other than standard options to purchase Ordinary Shares
issued pursuant to an Approved Share Plan that are covered by clause (A) above)
issued prior to the date hereof, provided that the conversion, exercise or other
method of issuance (as the case may be) of any such Convertible Security is made
solely pursuant to the conversion, exercise or other method of issuance (as the
case may be) provisions of such Convertible Security that were in effect on the
date immediately prior to the date of this Agreement, the conversion, exercise
or issuance price of any such Convertible Securities (other than standard
options to purchase Ordinary Shares issued pursuant to an Approved Share Plan
that are covered by clause (A) above) is not lowered, none of such Convertible
Securities (other than standard options to purchase Ordinary Shares issued
pursuant to an Approved Share Plan that are covered by clause (A) above) are
amended to increase the number of shares issuable thereunder and none of the
terms or conditions of any such Convertible Securities (other than standard
options to purchase Ordinary Shares issued pursuant to an Approved Share Plan
that are covered by clause (A) above) are otherwise materially changed in any
manner that adversely affects any of the Buyers; (C) the New Ordinary Shares,
(D) the Warrant Shares and (E) Ordinary Shares issued in connection with
strategic alliances, strategic mergers and acquisitions and strategic
partnerships, provided that (x) the primary purpose of such issuance is not to
raise capital as determined in good faith by the Buyers, (y) the purchaser or
acquirer of such Ordinary Shares in such issuance solely consists of either (1)
the actual participants in such strategic alliance or strategic partnership, (2)
the actual owners of such assets or securities acquired in such merger or
acquisition or (3) the shareholders, partners or members of the foregoing
Persons, and (z) the number or amount (as the case may be) of such Ordinary
Shares issued to such Person by the Company shall not be disproportionate to
such Person’s actual participation in such strategic alliance or strategic
partnership or ownership of such assets or securities to be acquired by the
Company (as applicable) (each of the foregoing in clauses (A) through (E),
collectively the “Excluded Securities”). “Approved Share Plan”
means any employee benefit plan which has been approved by the board of
directors of the Company prior to or subsequent to the date hereof pursuant to
which Ordinary Shares and standard options to purchase Ordinary Shares may be
issued to any employee, officer, director or consultant for services provided to
the Company in their capacity as such. “Convertible Securities” means any
share capital or other security of the Company or any of its Subsidiaries that
is at any time and under any circumstances directly or indirectly convertible
into, exercisable or exchangeable for, or which otherwise entitles the holder
thereof to acquire, any share capital or other security of the Company
(including, without limitation, Ordinary Shares) or any of its Subsidiaries.

30




(n)     Reservation of Shares.
So long as any of the Warrants remain outstanding, the Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than 200% of the
sum of the maximum number of Warrant Shares issuable upon exercise of all the
Warrants then outstanding (without regard to any limitations on the exercise of
the Warrants set forth therein) (collectively, the “Required Reserve
Amount”); provided that at no time shall the number of Ordinary Shares
reserved pursuant to this Section 4(n) be reduced other than proportionally in
connection with any exercise of the Warrants. If at any time the number of
Ordinary Shares authorized and reserved for issuance is not sufficient to meet
the Required Reserve Amount, the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of shareholders to authorize
additional shares to meet the Company's obligations pursuant to the Transaction
Documents, in the case of an insufficient number of authorized shares, obtain
shareholder approval of an increase in such authorized number of shares, and
voting the management shares of the Company in favor of an increase in the
authorized shares of the Company to ensure that the number of authorized shares
is sufficient to meet the Required Reserve Amount.

31




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

(p)     Variable Securities.
Until the twelve month anniversary of the Closing Date, the Company and
each Subsidiary shall be prohibited from effecting or entering into an agreement
to effect any Subsequent Placement involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company or
any Subsidiary (i) issues or sells any Convertible Securities either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Ordinary Shares at any
time after the initial issuance of such Convertible Securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such Convertible Securities or upon
the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Ordinary Shares, other than
pursuant to a customary “weighted average” anti-dilution provision or (ii)
enters into any agreement (including, without limitation, an equity line of
credit or an “at-the-market” offering) whereby the Company or any Subsidiary may
sell securities at a future determined price (other than standard and customary
“preemptive” or “participation” rights). Each Buyer shall be entitled to obtain
injunctive relief against the Company and its Subsidiaries to preclude any such
issuance, which remedy shall be in addition to any right to collect damages.

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

(i)     At least five (5) Trading Days
prior to any proposed or intended Subsequent Placement, the Company shall
deliver to each Buyer a written notice (each such notice, a
“Pre-Notice”), which Pre-Notice shall not contain any information
 (including, without limitation, material, non-public
information) other than: (A) if the proposed Offer Notice (as defined below)
constitutes or contains material, non-public information, a statement asking
whether the Investor is willing to accept material non-public information or (B)
if the proposed Offer Notice does not constitute or contain material, non-public
information, (x) a statement that the Company proposes or intends to effect a
Subsequent Placement, (y) a statement that the statement in clause (x) above
does not constitute material, non-public information and (z) a statement
informing such Buyer that it is entitled to receive an Offer Notice (as defined
below) with respect to such Subsequent Placement upon its written request. Upon
the written request of a Buyer within three (3) Trading Days after the Company’s
delivery to such Buyer of such Pre-Notice, and only upon a written request by
such Buyer, the Company shall promptly, but no later than two (2) Trading Days
after such request, deliver to such Buyer an irrevocable written notice (the
“Offer Notice”) of any proposed or intended issuance or sale or exchange
(the “Offer”) of the securities being offered (the “Offered
Securities”) in a Subsequent Placement, which Offer Notice shall (A)
identify and describe the Offered Securities, (B) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the number or
amount of the Offered Securities to be issued, sold or exchanged, (C) identify
the Persons (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (D) offer to issue and sell to or
exchange with such Buyer in accordance with the terms of the Offer such Buyer’s
pro rata portion of 40% of the Offered Securities, provided that the number of
Offered Securities which such Buyer shall have the right to subscribe for under
this Section 4(q) shall be (x) based on such Buyer’s pro rata portion of the
aggregate number of New Ordinary Shares purchased hereunder by all Buyers (the
“Basic Amount”), and (y) with respect to each Buyer that elects to
purchase its Basic Amount, any additional portion of the Offered Securities
attributable to the Basic Amounts of other Buyers as such Buyer shall indicate
it will purchase or acquire should the other Buyers subscribe for less than
their Basic Amounts (the “Undersubscription Amount”), which process shall
be repeated until each Buyer shall have an opportunity to subscribe for any
remaining Undersubscription Amount.

32




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

33




(iii)     The Company shall have five
(5) Business Days from the expiration of the Offer Period above (A) to offer,
issue, sell or exchange all or any part of such Offered Securities as to which a
Notice of Acceptance has not been given by a Buyer (the “Refused
Securities”) pursuant to a definitive agreement(s) (the “Subsequent
Placement Agreement”), but only to the offerees described in the Offer
Notice (if so described therein) and only upon terms and conditions (including,
without limitation, unit prices and interest rates) that are not more favorable
to the acquiring Person or Persons or less favorable to the Company than those
set forth in the Offer Notice and (B) to publicly announce (x) the execution of
such Subsequent Placement Agreement, and (y) either (I) the consummation of the
transactions contemplated by such Subsequent Placement Agreement or (II) the
termination of such Subsequent Placement Agreement, which shall be filed with
the SEC on a Report on Form 6-K with such Subsequent Placement Agreement and any
documents contemplated therein filed as exhibits thereto.

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

(v)     Upon the closing of the
issuance, sale or exchange of all or less than all of the Refused Securities,
such Buyer shall acquire from the Company, and the Company shall issue to such
Buyer, the number or amount of Offered Securities specified in its Notice of
Acceptance, as reduced pursuant to Section 4(q)(iv) above if such Buyer has so
elected, upon the terms and conditions specified in the Offer. The purchase by
such Buyer of any Offered Securities is subject in all cases to the preparation,
execution and delivery by the Company and such Buyer of a separate purchase
agreement relating to such Offered Securities reasonably satisfactory in form
and substance to such Buyer and its counsel.

34




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

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

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

(ix)     The restrictions contained in
this Section 4(q) shall not apply in connection with (A) the issuance of any
Excluded Securities or (B) a firm commitment public offering of the Company with
a nationally recognized underwriter resulting in gross proceeds to the Company
of at least $15 million. The Company shall not circumvent the provisions of this
Section 4(q) by providing terms or conditions to one Buyer that are not provided
to all.

(r)     Dilutive Issuances. For
so long as any Warrants remain outstanding, the Company shall not, in any
manner, enter into or affect any Dilutive Issuance (as defined in the Warrants)
if the effect of such Dilutive Issuance is to cause the Company to be required
to issue upon exercise of any Warrant any Ordinary Shares in excess of that
number of Ordinary Shares which the Company may issue upon exercise of the
Warrants without breaching the Company’s obligations under the rules or
regulations of the Principal Market.

(s)     Passive Foreign Investment
Company. The Company shall conduct its business, and shall cause its
Subsidiaries to conduct their respective businesses, in such a manner as will
ensure that the Company will not be deemed to constitute a
passive foreign investment company within the meaning of Section 1297 of the
Code.

35




(t)     Restriction on Redemption
and Cash Dividends. So long as any Warrants remain outstanding, except for
such redemptions as described on Schedule 4(t) attached hereto, the Company
shall not, directly or indirectly, redeem, or declare or pay any cash dividend
or distribution on, any securities of the Company without the prior express
written consent of the Buyers, which consent shall not be unreasonably withheld.

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

(v)     Share Splits. So long
as any Warrants remain outstanding, the Company shall not effect any share
combination, reverse share split or other similar transaction (or make any
public announcement or disclosure with respect to any of the foregoing) without
the prior written consent of the Required Holders (as defined below), which
consent shall not be unreasonably withheld.

(w)     Exercise Procedures.
The form of Exercise Notice (as defined in the Warrants) included in the
Warrants sets forth the totality of the procedures required of the Buyers in
order to exercise the Warrants. No legal opinion or other information or
instructions shall be required of the Buyers to exercise their Warrants. The
Company shall honor exercises of the Warrants and shall deliver the Warrant
Shares in accordance with the terms, conditions and time periods set forth in
the Warrants. Without limiting the preceding sentences, no ink-original Exercise
Notice shall be required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any Exercise Notice form be required in order to
exercise the Warrants. 

(x)     Regulation M. The
Company will not take any action prohibited by Regulation M under the 1934 Act,
in connection with the distribution of the Securities contemplated hereby. 

(y)     No Net Short Sales.
Until the six month anniversary of the Closing Date, neither such Investor nor
any Person acting on behalf of or pursuant to any understanding with such
Investor (collectively, the “Restricted Persons” and each of the
foregoing is referred to herein as a “Restricted Person”) shall maintain,
in the aggregate, a Net Short Position. For purposes hereof, a “Net Short
Position” by a Restricted Person means a position whereby such Restricted
Person has executed one or more sales of Ordinary Shares that is marked as a
short sale (but not including any sale marked “short exempt”) and that is
executed at a time when such Restricted Person does not have an equivalent
offsetting long position in the Ordinary Shares (or is deemed not to have a long
position hereunder or otherwise in accordance with Regulation SHO under the 1934
Act); provided, further that no “Short Sale” shall be deemed to exist as a
result of any failure by the Company (or its agents) to deliver Warrant Shares
upon exercise of the Warrants to any Restricted Person exercising such Warrants.
For purposes of determining whether a Restricted Person has an equivalent
offsetting long position in Ordinary Shares, such Restricted Person shall be
deemed to hold “long” all Ordinary Shares that is either (i) then owned by such
Restricted Person, if any, or (ii) then issuable to such Restricted Person upon
exercise of the Warrants then held by such Restricted Person, if any, (without
regard to any limitation on exercise set forth in the Warrants and giving effect
to any exercise price adjustments that would take effect given only the passage
of time). Notwithstanding the foregoing, nothing contained herein shall (without
implication that the contrary would otherwise be true) prohibit any Restricted
Person from selling “long” (as defined under Rule 200 promulgated under
Regulation SHO under the 1934 Act) the Securities or any other Ordinary Shares
then owned by such Restricted Person. 

36




(z)     Closing Documents. On
or prior to fourteen (14) calendar days after the Closing Date, the Company
agrees to deliver, or cause to be delivered, to each Buyer and Kelley Drye &
Warren, LLP a complete closing set of the executed Transaction Documents,
Securities and any other document required to be delivered to any party pursuant
to Section 7 hereof or otherwise.

	5. 	
      REGISTER; TRANSFER AGENT INSTRUCTIONS;
    LEGEND.



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

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

37




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

(d)     FAST Compliance. While
  any Warrants remain outstanding, the Company shall maintain a transfer agent
that participates in the DTC Fast Automated Securities Transfer Program. 

	6. 	
      CONDITIONS TO THE COMPANY’S OBLIGATION TO
    SELL.



The obligation of the Company hereunder to issue and sell the
New Ordinary Shares and the related Warrants to each Buyer at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole discretion by
providing each Buyer with prior written notice thereof: 

(a)     Such Buyer shall have executed
each of the Transaction Documents to which it is a party and delivered the same
to the Company.

(b)     Such Buyer and each other
Buyer shall have delivered to the Company the Purchase Price for the New
Ordinary Shares and the related Warrants being purchased by such Buyer at the
Closing by wire transfer of immediately available funds in accordance with the
Flow of Funds Letter (as defined below). 

(c)     The representations and
warranties of such Buyer shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though originally made at
that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specific date), and such Buyer
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the Closing Date. 

	7. 	
      CONDITIONS TO EACH BUYER’S OBLIGATION TO
      PURCHASE.



The obligation of each Buyer hereunder to purchase its New
Ordinary Shares and its related Warrants at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer’s sole benefit and
may be waived by such Buyer at any time in its sole discretion by providing the
Company with prior written notice thereof: 

38




(a)     The Company shall have duly
executed and delivered to such Buyer each of the Transaction Documents and the
Company shall have duly executed and delivered to such Buyer (x) such aggregate
number of New Ordinary Shares set forth across from such Buyer’s name in column
(3) of the Schedule of Buyers, (y) Series A Warrants (initially for such
aggregate number of Series A Warrant Shares as is set forth across from such
Buyer’s name in column (4) of the Schedule of Buyers) and (z) Series B Warrants
(initially for such aggregate number of Series B Warrant Shares as is set forth
across from such Buyer’s name in column (5) of the Schedule of Buyers), in each
case, as being purchased by such Buyer at the Closing pursuant to this
Agreement. 

(b)     Such Buyer shall have received
the opinion from each of Pillsbury Winthrop Shaw Pittman LLP, the Company’s US
securities counsel and Maples and Calder, the Company’s British Virgin Islands
counsel, dated as of the Closing Date, in the form acceptable to such Buyer.


(c)     The Company shall have
delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions,
in the form acceptable to such Buyer, which instructions shall have been
delivered to and acknowledged in writing by the Company’s transfer agent. 

(d)     The Company shall have
delivered to such Buyer a certificate evidencing the formation and good standing
of the Company and, to the extent obtainable, each of its Subsidiaries in each
such entity’s jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction of formation as of a date within ten
(10) days of the Closing Date. 

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

(f)     The Company shall have
delivered to such Buyer a certificate, in the form acceptable to such Buyer,
executed by the Secretary of the Company and dated as of the Closing Date, as to
(i) the resolutions consistent with Section 3(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Buyer, (ii) the
Certificate of Incorporation of the Company and (iii) the Bylaws of the Company,
each as in effect at the Closing. 

(g)     Each and every representation
and warranty of the Company shall be true and correct as of the date when made
and as of the Closing Date as though originally made at that time (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such specific date) and the Company shall have performed,
satisfied and complied in all respects with the covenants, agreements and
conditions required to be performed, satisfied or complied with by the Company
at or prior to the Closing Date. Such Buyer shall have received a certificate,
duly executed by the Chief Executive Officer of the Company, dated as of the
Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Buyer in the form acceptable to such Buyer. 

39




(h)     The Company shall have
delivered to such Buyer a letter from the Company’s transfer agent certifying
the number of Ordinary Shares outstanding on the Closing Date immediately prior
to the Closing. 

(i)     The Ordinary Shares (A) shall
be designated for quotation or listed (as applicable) on the Principal Market
and (B) shall not have been suspended, as of the Closing Date, by the SEC or the
Principal Market from trading on the Principal Market nor shall suspension by
the SEC or the Principal Market have been threatened, as of the Closing Date,
either (I) in writing by the SEC or the Principal Market or (II) by falling
below the minimum maintenance requirements of the Principal Market.

(j)     The Company shall have
obtained all governmental, regulatory or third party consents and approvals, if
any, necessary for the sale of the Securities, including without limitation,
those required by the Principal Market, if any.

(k)     No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or Governmental Entity of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.

(l)     Since the date of execution of
this Agreement, no event or series of events shall have occurred that reasonably
would have or result in a Material Adverse Effect.

(m)     The Company shall have
obtained approval of the Principal Market to list or designate for quotation (as
the case may be) the New Ordinary Shares and the Warrant Shares. 

(n)     Such Buyer shall have received
a letter on the letterhead of the Company, duly executed by the Chief Executive
Officer of the Company, setting forth the wire amounts of each Buyer and the
wire transfer instructions of the Company (the “Flow of Funds Letter”).


(o)     From the date hereof to the
Closing Date, (i) trading in the Ordinary Shares shall not have been suspended
by the SEC or the Principal Market (except for any suspension of trading of
limited duration agreed to by the Company, which suspension shall be terminated
prior to the Closing), and, (ii) at any time prior to the Closing Date, trading
in securities generally as reported by Bloomberg L.P. shall not have been
suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on the Principal
Market, nor shall a banking moratorium have been declared either by the United
States or New York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material adverse change in,
any financial market which, in each case, in the reasonable judgment of each
Buyer, makes it impracticable or inadvisable to purchase the Securities at the
Closing. 

(p)     The Registration Statement
shall be effective and available for the issuance and sale of the Securities
hereunder and the Company shall have delivered to such Buyer the Prospectus and
the Prospectus Supplement as required thereunder. 

40




(q)     The Company and its Subsidiaries shall have delivered to
such Buyer such other documents, instruments or certificates relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may
reasonably request. 

	8. 	
      TERMINATION.



In the event that the Closing shall not have occurred with
respect to a Buyer within five (5) days of the date hereof, then such Buyer
shall have the right to terminate its obligations under this Agreement with
respect to itself at any time on or after the close of business on such date
without liability of such Buyer to any other party; provided, however, (i) the
right to terminate this Agreement under this Section 8 shall not be available to
such Buyer if the failure of the transactions contemplated by this Agreement to
have been consummated by such date is the result of such Buyer’s breach of this
Agreement and (ii) the abandonment of the sale and purchase of the New Ordinary
Shares and the Warrants shall be applicable only to such Buyer providing such
written notice, provided further that no such termination shall affect any
obligation of the Company under this Agreement to reimburse such Buyer for the
expenses described in Section 4(j) above. Nothing contained in this Section 8
shall be deemed to release any party from any liability for any breach by such
party of the terms and provisions of this Agreement or the other Transaction
Documents or to impair the right of any party to compel specific performance by
any other party of its obligations under this Agreement or the other Transaction
Documents. 

	9. 	
      MISCELLANEOUS.



(a)     Governing Law; Jurisdiction; Jury Trial. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York. The Company hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or under any of the other Transaction Documents or with any transaction
contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. The Company hereby
appoints Corporation Service Company, 80 State Street, Albany, New York
12207-2543, as its agent for service of process in New York. If service of
process is effected pursuant to the above sentence, such service will be deemed
sufficient under New York law and the Company shall not assert otherwise.
Nothing contained herein shall be deemed to limit in any way any right of any
Buyer or the Company to serve process in any manner permitted by law. Nothing
contained herein shall be deemed or operate to preclude any Buyer from bringing
suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor of such
Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY. The choice of the laws of the State of New
York as the governing law of this Agreement is a valid choice of law and would
be recognized and given effect to in any action brought before a court of
competent jurisdiction in the British Virgin Islands, except for those laws (i)
which such court considers to be procedural in nature, (ii) which are revenue or
penal laws or (iii) the application of which would be inconsistent with public
policy, as such term is interpreted under the laws of the British Virgin
Islands. The choice of laws of the State of New York as the governing law of
this Agreement will be honored by competent courts in the People’s Republic of
China, subject to compliance with relevant People’s Republic of China civil
procedural requirements. The Company or any of their respective properties,
assets or revenues does not have any right of immunity under British Virgin
Islands, the People’s Republic of China or New York law, from any legal action,
suit or proceeding, from the giving of any relief in any such legal action, suit
or proceeding, from set-off or counterclaim, from the jurisdiction of any
British Virgin Islands and the People’s Republic of China, New York or United
States federal court, from service of process, attachment upon or prior to
judgment, or attachment in aid of execution of judgment, or from execution of a
judgment, or other legal process or proceeding for the giving of any relief or
for the enforcement of a judgment, in any such court, with respect to its
obligations, liabilities or any other matter under or arising out of or in
connection with this Agreement; and, to the extent that the Company, or any of
its properties, assets or revenues may have or may hereafter become entitled to
any such right of immunity in any such court in which proceedings may at any
time be commenced, the Company hereby waives such right to the extent permitted
by law and hereby consents to such relief and enforcement as provided in this
Agreement and the other Transaction Documents. 

41




(b)     Counterparts. This Agreement may be executed in two
or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof. 

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

 

42




(d)     Severability; Maximum Payment Amounts. If any
provision of this Agreement is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair
the respective expectations or reciprocal obligations of the parties or the
practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s). Notwithstanding anything to the contrary contained
in this Agreement or any other Transaction Document (and without implication
that the following is required or applicable), it is the intention of the
parties that in no event shall amounts and value paid by the Company and/or any
of its Subsidiaries (as the case may be), or payable to or received by any of
the Buyers, under the Transaction Documents (including without limitation, any
amounts that would be characterized as “interest” under applicable law) exceed
amounts permitted under any applicable law. Accordingly, if any obligation to
pay, payment made to any Buyer, or collection by any Buyer pursuant the
Transaction Documents is finally judicially determined to be contrary to any
such applicable law, such obligation to pay, payment or collection shall be
deemed to have been made by mutual mistake of such Buyer, the Company and its
Subsidiaries and such amount shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by the applicable law. Such adjustment shall
be effected, to the extent necessary, by reducing or refunding, at the option of
such Buyer, the amount of interest or any other amounts which would constitute
unlawful amounts required to be paid or actually paid to such Buyer under the
Transaction Documents. For greater certainty, to the extent that any interest,
charges, fees, expenses or other amounts required to be paid to or received by
such Buyer under any of the Transaction Documents or related thereto are held to
be within the meaning of “interest” or another applicable term to otherwise be
violative of applicable law, such amounts shall be pro-rated over the period of
time to which they relate.

 

43




(e)     Entire Agreement; Amendments. This Agreement, the
other Transaction Documents and the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein supersede all other
prior oral or written agreements between the Buyers, the Company, its
Subsidiaries, their affiliates and Persons acting on their behalf, including,
without limitation, any transactions by any Buyer with respect to Ordinary
Shares or the Securities, and the other matters contained herein and therein,
and this Agreement, the other Transaction Documents, the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
contain the entire understanding of the parties solely with respect to the
matters covered herein and therein; provided, however, nothing contained in this
Agreement or any other Transaction Document shall (or shall be deemed to) (i)
have any effect on any agreements any Buyer has entered into with, or any
instruments any Buyer has received from, the Company or any of its Subsidiaries
prior to the date hereof with respect to any prior investment made by such Buyer
in the Company or (ii) waive, alter, modify or amend in any respect any
obligations of the Company or any of its Subsidiaries, or any rights of or
benefits to any Buyer or any other Person, in any agreement entered into prior
to the date hereof between or among the Company and/or any of its Subsidiaries and any
Buyer, or any instruments any Buyer received from the Company and/or any of its
Subsidiaries prior to the date hereof, and all such agreements and instruments
shall continue in full force and effect. Except as specifically set forth herein
or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. For
clarification purposes, the Recitals are part of this Agreement. No provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and the Required Holders (as defined below), and any amendment to
any provision of this Agreement made in conformity with the provisions of this
Section 9(e) shall be binding on all Buyers and holders of Securities, as
applicable, provided that no such amendment shall be effective to the extent
that it (A) applies to less than all of the holders of the Securities then
outstanding or (B) imposes any obligation or liability on any Buyer without such
Buyer’s prior written consent (which may be granted or withheld in such Buyer’s
sole discretion). No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party, provided that the
Required Holders may waive any provision of this Agreement, and any waiver of
any provision of this Agreement made in conformity with the provisions of this
Section 9(e) shall be binding on all Buyers and holders of Securities, as
applicable, provided that no such waiver shall be effective to the extent that
it (1) applies to less than all of the holders of the Securities then
outstanding (unless a party gives a waiver as to itself only) or (2) imposes any
obligation or liability on any Buyer without such Buyer’s prior written consent
(which may be granted or withheld in such Buyer’s sole discretion). No
consideration (other than reimbursement of legal fees) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision
of any of the Transaction Documents unless the same consideration also is
offered to all of the parties to the Transaction Documents, all holders of the
New Ordinary Shares, or all holders of the Warrants (as the case may be). From
the date hereof and while any Warrants are outstanding, the Company shall not be
permitted to receive any consideration from a Buyer or a holder of Warrants that
is not otherwise contemplated by the Transaction Documents in order to, directly
or indirectly, induce the Company or any Subsidiary (i) to treat such Buyer or
holder of Warrants in a manner that is more favorable than to other similarly
situated Buyers or holders of Warrants, as applicable, or (ii) to treat any
Buyer(s) or holder(s) of Warrants in a manner that is less favorable than the
Buyer or holder of Warrants that is paying such consideration; provided,
however, that the determination of whether a Buyer has been treated more or less
favorably than another Buyer shall disregard any securities of the Company
purchased or sold by any Buyer. The Company has not, directly or indirectly,
made any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, no Buyer has made any commitment or
promise or has any other obligation to provide any financing to the Company, any
Subsidiary or otherwise. As a material inducement for each Buyer to enter into
this Agreement, the Company expressly acknowledges and agrees that (x) no due
diligence or other investigation or inquiry conducted by a Buyer, any of its
advisors or any of its representatives shall affect such Buyer’s right to rely
on, or shall modify or qualify in any manner or be an exception to any of, the
Company’s representations and warranties contained in this Agreement or any
other Transaction Document and (y) unless a provision of this Agreement or any
other Transaction Document is expressly preceded by the phrase “except as
disclosed in the SEC Documents,” nothing contained in any of the SEC Documents
shall affect such Buyer’s right to rely on, or shall modify or qualify in any
manner or be an exception to any of, the Company’s representations and
warranties contained in this Agreement or any other Transaction Document.
“Required Holders” means (I) prior to the Closing Date, Buyers entitled
to purchase, in the aggregate, at least 67% of the number of New Ordinary Shares
at the Closing and (II) on or after the Closing Date, holders of, in the
aggregate, at least 67% of the Underlying Securities as of such time (excluding
any Underlying Securities held by the Company or any of its Subsidiaries as of
such time) issued or issuable hereunder or pursuant to the Warrants. 

44




(f)     Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party) or electronic mail; or (iii)
one (1) Business Day after deposit with an overnight courier service with next
day delivery specified, in each case, properly addressed to the party to receive
the same. The addresses, facsimile numbers and e-mail addresses for such
communications shall be: 

If to the Company: 

	 	China Information Technology, Inc. 
	 	21st Floor 
	 	Everbright Bank Building 
	 	Zhuzilin, Futian District 
	 	Shenzhen, Guangdong 518040 
	 	People’s Republic of China 
	 	Telephone: +86-755-8831-9888 
	 	Facsimile: +86-755-8370-9333 
	 	Attention: Chief Executive Officer 
	 	E-Mail: ir@chinacnit.com 


With a copy (for informational
purposes only) to: 

	 	Pillsbury Winthrop Shaw Pittman LLP 
	 	Suite 4201, Bund Center, 222 Yan An Road East 
	 	Shanghai, China 200002 
	 	Telephone: +86.21.6137.7999 
	 	Facsimile: +86.21.6137.7900 
	 	Attention: Woon-Wah Siu, Esq. 
	 	E-Mail: woonwah.siu@pillsburylaw.com 


If to the Transfer Agent: 

	 	Island Stock Transfer 
	 	15500 Roosevelt Blvd., Suite 301 
	 	Clearwater, FL 33760 
	 	Telephone: 	+1 (727) 289-0010 
	 	Facsimile: 	+1 (727) 289-0069 


45





	 	Attention: Chief Executive Officer 
	 	E-Mail: info@islandstocktransfer.com 


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

with a copy (for informational
purposes only) to: 

	 	Kelley Drye & Warren LLP 
	 	101 Park Avenue 
	 	New York, NY 10178 
	 	Telephone: 	(212) 808-7540 
	 	Facsimile: 	(212) 808-7897 
	 	Attention: Michael A. Adelstein, Esq. 
	 	E-mail: madelstein@kelleydrye.com
  


or to such other address, e-mail address and/or facsimile
number and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change, provided that Kelley Drye & Warren LLP shall
only be provided copies of notices sent to the lead Buyer. Written confirmation
of receipt (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender’s
facsimile machine or e-mail containing the time, date, recipient facsimile
number and, with respect to each facsimile transmission, an image of the first
page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from
an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively. 

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

(h)     No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person, other than the Indemnitees referred to
in Section 9(k). 

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

46




(j)     Further Assurances. Each party shall do and perform,
or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as any other party may reasonably request in order to carry out the

intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby. 

(k)     Indemnification. 

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

(ii)     Promptly after receipt by an Indemnitee under this Section
9(k) of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such
Indemnitee shall, if a claim in respect thereof is to be made against the
Company under this Section 9(k), deliver to the Company a written notice of the
commencement thereof, and the Company shall have the right to participate in,
and, to the extent the Company so desires, to assume control of the defense
thereof with counsel mutually satisfactory to the Company and the Indemnitee;
provided, however, that an Indemnitee shall have the right to
retain its own counsel with the fees and expenses of such counsel to be paid by
the Company if: (A) the Company has agreed in writing to pay such fees and
expenses; (B) the Company shall have failed promptly to assume the defense of
such Indemnified Liability and to employ counsel reasonably satisfactory to such
Indemnitee in any such Indemnified Liability; or (C) the named parties to any
such Indemnified Liability (including any impleaded parties) include both such
Indemnitee and the Company, and such Indemnitee shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnitee and the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate counsel at the
expense of the Company, then the Company shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Company),
provided further, that in the case of clause (C) above the Company shall not be
responsible for the reasonable fees and expenses of more than one (1) separate
legal counsel for the Indemnitees. The Indemnitee shall reasonably cooperate
with the Company in connection with any negotiation or defense of any such
action or Indemnified Liability by the Company and shall furnish to the Company
all information reasonably available to the Indemnitee which relates to such
action or Indemnified Liability. The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. The Company shall not be liable
for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company shall not, without the
prior written consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified
Liability or litigation, and such settlement shall not include any admission as
to fault on the part of the Indemnitee. Following indemnification as provided
for hereunder, the Company shall be subrogated to all rights of the Indemnitee
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the Company within a reasonable time of the commencement of any such action
shall not relieve the Company of any liability to the Indemnitee under this
Section 9(k), except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action. 

47




(iii)     The indemnification required by this Section 9(k) shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, within ten (10) days after bills are received or
Indemnified Liabilities are incurred. 

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

(l)     Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty.
Each and every reference to share prices, Ordinary Shares and any other numbers
in this Agreement that relate to the Ordinary Shares shall be automatically
adjusted for any share splits, share dividends, share combinations,
recapitalizations or other similar transactions that occur with respect to the
Ordinary Shares after the date of this Agreement. It is expressly understood and
agreed that for all purposes of this Agreement, and without implication that the
contrary would otherwise be true, neither transactions nor purchases nor sales
shall include the location and/or reservation of borrowable Ordinary Shares.

48




 

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

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

(o)     Payment Set Aside; Currency. To the extent that the
Company makes a payment or payments to any Buyer hereunder or pursuant to any of
the other Transaction Documents or any of the Buyers enforce or exercise their
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, foreign, state or federal law, common law or
equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred. Unless otherwise expressly
indicated, all dollar amounts referred to in this Agreement and the other
Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement
and all other Transaction Documents shall be paid in U.S. Dollars. All amounts
denominated in other currencies (if any) shall be converted into the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of
calculation. “Exchange Rate” means, in relation to any amount of
currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S.
Dollar exchange rate as published in the Wall Street Journal on the relevant
date of calculation.  

49




(p)     Judgment Currency. 

(i)     If for the purpose of obtaining or enforcing judgment
against the Company in connection with this Agreement or any other Transaction
Document in any court in any jurisdiction it becomes necessary to convert into
any other currency (such other currency being hereinafter in this Section 9(p)
referred to as the “Judgment Currency”) an amount due in US Dollars under
this Agreement, the conversion shall be made at the Exchange Rate prevailing on
the Trading Day immediately preceding: 

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

(2)     the date on which the foreign court determines, in the case
of any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 9(p)(i)(1) being hereinafter
referred to as the “Judgment Conversion Date”). 

(ii)     If in the case of any proceeding in the court of any
jurisdiction referred to in Section 9(p)(i)(1) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of
actual payment of the amount due, the applicable party shall pay such adjusted
amount as may be necessary to ensure that the amount paid in the Judgment
Currency, when converted at the Exchange Rate prevailing on the date of payment,
will produce the amount of US Dollars which could have been purchased with the
amount of Judgment Currency stipulated in the judgment or judicial order at the
Exchange Rate prevailing on the Judgment Conversion Date.

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

 

50




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

[signature pages follow] 

51




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


	COMPANY: 
	 
	CHINA INFORMATION TECHNOLOGY, INC.






	By: 	
	 	Name: 
	 	Title: 






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


	BUYER: 





	By: 	
	 	Name: 
	 	Title: 








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


	
BUYER:
	
	 
	
[OTHER BUYERS]
	






	By: 	
	 	Name: 
	 	Title: 








SCHEDULE OF BUYERS 


	(1) 	 	 	(2)	 	 	(3) 		 	(4) 		 	(5) 		 	(6) 		 	(7) 	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	 	  	 	 	Aggregate 	 	 	Aggregate 	 	 	Aggregate 	 	 	  	 	 	  	 
	  	 	 	  	 	 	Number of 	 	 	Number of 	 	 	Number of 	 	 	  	 	 	  	 
	  	 	 	  	 	 	New Ordinary 	 	 	Series A 	 	 	Series B 	 	 	  	 	 	Legal
      Representative’s 	 
	Buyer 	 	 	Address and Facsimile Number 	 	 	Shares 	 	 	Warrant Shares 	 	 	Warrant Shares 	 	 	Purchase Price 	 	 	Address and Facsimile Number 	 
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	 	  	 	 	 	 	 	 	 	 		 	 	[             
       ]1 	 	 	  	 



____________________________________________
1
Insert aggregate purchase price calculated on a per New Ordinary Share basis
equal to 90% of the closing bid price of the Ordinary Shares as of the Trading
Day ended immediately prior to the time of execution of this Agreement. 







Disclosure Schedule 


May 20, 2015 


This Disclosure Schedule (this “Disclosure Schedule”), and any schedules attached hereto, are being delivered pursuant to Sections 3 and 4 of the Securities Purchase Agreement dated as of May 20, 2015 (the
“Agreement”), by and among China Information Technology, Inc., a company incorporated under the laws of the British Virgin Islands with headquarters located in Shenzhen, China (the “Company”) and each
of the investors named therein. 


Exceptions identify the Section and subsection of the Agreement, as applicable, to which such exception relates; provided that to the extent it is reasonably apparent from the actual text of the disclosures without reference to extrinsic
documentation or any independent knowledge on the part of the reader regarding the matter disclosed that any such exception would qualify any other section or subsection of a representation or warranty in Sections 3 and 4 of the Agreement, such
exception shall be deemed disclosed and incorporated into such other section or subsection of this Disclosure Schedule.


The headings contained in this Disclosure Schedule are included for convenience only and are not intended to limit the effect of the disclosures contained in this Disclosure Schedule or to expand the scope of the information required to be disclosed
in this Disclosure Schedule. References to sections and subsections, unless otherwise noted, are to sections and subsections in the Agreement. All capitalized terms used herein shall have the meanings given to them in the Agreement, unless otherwise
indicated in this Disclosure Schedule. 






Schedule 3(a) 

LIST OF SUBSIDIARIES 

	
      
	
    Jurisdiction of 
	
      

	
      
	
    Incorporation or 
	
    Percentage of 

	
    Name of Subsidiary 
	
    Organization 
	
    Ownership 

	
    China Information
      Technology Holdings Limited 
	
    British
      Virgin Islands 
	
    100% 

	
    Information Security Software
      Investment Limited 
	
    Hong Kong 
	
    100% 

	
    Information
      Security Tech. International Co., Limited 
	
    Hong Kong 
	
    100% 

	
    Information Security International
      Investment & Development Ltd. 
	
    Hong Kong 
	
    100% 

	
    HPC Electronics
      (China) Co., Ltd. 
	
    Hong Kong 
	
    100% 

	
    Dongguan Information Security
      Technology Co., Ltd. 
	
    PRC 
	
    100% 

	
    TopCloud Software
      Co., Ltd. 
	
    PRC 
	
    100% 

	
    Information Security Technology
      (China) Co., Ltd. 
	
    PRC 
	
    100% 

	
    Information
      Security IoT Tech. Co., Ltd. 
	
    PRC 
	
    100% 

	
    iASPEC Geo Information Technology
      Co., Ltd. (“iASPEC) 
	
    PRC 
	
    Variable interest entity
  

	
    Shenzhen Biznest
      Internet Tech. Co., Ltd. 
	
    PRC 
	
    100% by
      iASPEC 

	
    Shenzhen Taoping Internet Tech
      Co., Ltd. 
	
    PRC 
	
    100% by iASPEC 

	
    iASPEC Bocom IoT
      Tech. Co., Ltd. 
	
    PRC 
	
    100% by
      iASPEC 

	
    Wuda Geoinformatics Co., Ltd. 
	
    PRC 
	
    54.89% by iASPEC 

	
    Shenzhen iASPEC
      Zhongtian Software Co., Ltd. 
	
    PRC 
	
    99.99% by
      iASPEC 












Schedule 3(g) 


PLACEMENT AGENT’S FEES 


The Company has agreed to pay the Placement Agent a fee equal to 5% of the gross proceeds from the sale of the Ordinary Shares. 


 


3 











Schedule 3(l) 


ABSENCES OF CERTAIN CHANGES 


On March 28, 2015, Wuda Geo, a subsidiary owned 54.89% by iAspec, a variable interest entity (VIE) of the Company, declared a cash dividend of RMB 1.5 million.


 


4 











Schedule 3(r)(iii) 


AUTHORIZED AND OUTSTANDING CAPITAL 


The Company has agreed to purchase a total of 685,000 Ordinary Shares of the Company from its employees at a price of $4.188 per share. 


 


5 











Schedule 3(r)(iii) 


VALID ISSUANCE; AVAILABLE SHARES; AFFILIATES 


None. 


 


6 











Schedule 3(x) 


INTELLECTUAL PROPERTY RIGHTS 


None. 


7 











Schedule 3(nn) 


MANAGEMENT 


None.


 


8 











Schedule 4(t) 


RESTRICTION ON REDEMPTION AND CASH DIVIDENDS


The Company has agreed to purchase a total of 685,000 Ordinary Shares of the Company from its employees at a price of $4.188 per share. 


 


9