Document:

Exhibit
      10.1 - Securities Purchase Agreement - April 28, 2008

    

    

    

    

    SECURITIES
      PURCHASE AGREEMENT

    

    

    NF
      Energy
      Saving Corporation of America

    

    And

    

    South
      World Ltd.

    Oriental
      United Resources Ltd. 

    

    And

    

    Mr.
      Gang
      Li

    Ms.
      Lihua
      Wang

    Pelaria
      International Ltd. 

    Cloverbay
      International Ltd.

    

    

    

    

    

    April
      28,
      2008

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
      SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of
      the 28th day of April, 2008 among the following parties:

    

    Party
      A:
      

    South
      World Ltd.,
      a
      British Virgin Island registered corporation, registered address is P.O. Box
      958, Offshore Incorporations Centre, Road Town, Tortola, British Virgin
      Islands.

     

    Party
      B:
      

    Oriental
      United Resources Ltd.,
      a
      British Virgin Island registered corporation, registered address is P.O. Box
      958, Offshore Incorporations Centre, Road Town, Tortola, British Virgin
      Islands.

    (Party
      A
      and Party B are referred to as “the Investors”)

     

    Party
      C:
      

    Mr.
      Gang
      Li, Miss Lihua Wang, Pelaria International Ltd. and Cloverbay International
      Ltd.
      (Detailed information are listed in Appendix 1, referred to as “the Guarantors”);

    

    Party
      D:
      

    NF
      Energy Saving Corporation of America,
      a
      United States Delaware registered corporation (Detailed information is listed
      in
      Appendix 2, referred to as “the
      Company”).

    

    (The
      Company, the Investors and the Guarantors will be referred individually as
“One
      Party”, together as “Each Party”)

    

    Whereas,

    

    
      	
              1)

            	
              The
                Company is an energy saving technology product and service company,
                a
                corporation incorporated in the State of Delaware in the United States,
                and is publicly traded on the OTCBB. At the time of this agreement,
                the
                Company is authorized to issue 33,227,328 shares of common stock
                with the
                par value of $0.001 USD. At the time of signing this agreement, the
                Company has issued 25,811,429 shares that were purchased with full
                price
                and legally owned by the Guarantors.

            

    

    

    
      	
              2)

            	
              Each
                investor agrees to abide by the terms and conditions of purchase
                set forth
                in this agreement, the Company agrees to abide by the terms and conditions
                in this agreement to issue the subscribed shares. The subscribed
                shares
                will constitute 16.666% of the total number of shares issued by the
                Company after the subscription, including, Party A will own 8.333%,
                and
                Party B will own 8.333%.

            

    

    

    
      	
              3)

            	
              At
                the time of signing this agreement, the Company owns 100% of the
                shares of
                Liaoning Nengfa Weiye Energy Technology Company Ltd. (“Nengfa Energy”), a
                limited liability corporation registered in Liaoning Province, China;
                Nengfa Energy owns 99% of the shares of Liaoning Nengfa Weiye Tie
                Fa
                Valves Sales Company Ltd.
                (“Sales Company”), a limited liability corporation registered in Liaoning
                Province, China. The Company’s stock ownership structure at this time is
                presented in Appendix 3.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              4)

            	
              The
                Investors agree to abide by the terms and conditions in this agreement
                to
                provide investment to purchase the Company’s stocks, the Guarantors and
                the Company agree to fulfill their responsibilities specified in
                this
                agreement and to provide guarantees
                respectively.

            

    

    

    
      	
              5)

            	
              Each
                party agrees and signs this agreement to ensure the conditions for
                the
                subscription of shares by the investors, also agrees that on the
                date of
                signing this agreement will also sign the stockholders’ agreement and
                after the signing of this agreement will immediately establish the
                terms
                of the Group’s management
                operations.

            

    

    

    Each
      Party Agrees to the Following:

    

    
      	
              1.

            	
              Definitions

            

    

    

    
      	
              1.1

            	
              Unless
                there is other agreed definition in the text of this agreement, this
                agreement (including the preceding portion), the definition of terms
                are
                as follows: 

            

    

    

    
      	Financial
              Statements:	
              means
                audited consolidated financial statements, including audited Balance
                Sheet
                on the date of the audit, the income statement and related footnotes
                for
                five months preceding the date of the
                audit;

            

    

    

    
      	Base
              Date of Audit:	
              means
                December 31, 2007;

            

    

    

    
      	Affiliated
              Company:	
              means related
                to the Company, or
                through stock ownership can individually or join other companies
                to
                directly or indirectly exercise 30% or above 30% votes at the
                stockholders’ meeting or can control the exercise of the aforementioned
                votes, or can control the majority seats of the board of directors
                of a
                company;

            

    

    

    
      	Board
              of Directors:	
              means
                the Company’s board of directors at any
                time;

            

    

    

    
      	Business
              Days:	
              means
                any day of the normal business days (Monday to Friday) of the People’s
                Republic of China; 

            

    

    

    
      	BVI:	
              means
                British Virgin Islands;

            

    

    

    
      	Conditions:	
              means
                the preconditions in term no. 4.1;

            

    

    

    
      	Completion:	
              means
                according to term no. 5, completing the issuance of subscribed shares
                to
                the investors;

            

    

    

    
      	Completion
              Date:	
               means
                the actual date of completion, according to each party’s understanding,
                and upon satisfying all the conditions, the first choice of completion
                date is April 28, 2008 or a date prior to this
                date;

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	Agree:	
              means
                agree, approve, authorize, permit, forfeit rights, agreement, allow,
                waive
                etc;

            

    

    

    
      	Disclosure
              Information:
              	
              means
                the company discloses financial statements and all other items to
                the
                investors through disclosure
                letter;

            

    

    

    
      	Disclosure
              letter:	
              the
                Company and the Guarantors on a specified date according to agreed
                terms
                provide a letter to the investors;

            

    

    

    
      	Limitation
              in Rights:	
              means
                any mortgage, asset collateral, lien, guarantee, reserve ownership,
                transfer of mortgage, selection rights, purchase rights, preemptive
                rights
                to purchase, cancellation rights, counterclaim, trust or other
                arrangements, preferential rights etc., third party rights or limitations
                (except legal lien);

            

    

    

    
      	Group:	
              means
                the Company and its China subsidiary
                companies;

            

    

    

    
      	China
              Subsidiary Company:	
              means
                the Liaoning Nengfa Weiye Energy Technology Co. Ltd. (“Nengfa Energy”) and
                Liaoning Nengfa Weiye Tie Fa Sales Co. Ltd. established in the People’s
                Republic of China (PRC);

            

    

    

    
      	Transfer
              to Main Exchange:	
              means
                the company will transfer its trading on the OTCBB Exchange to become
                a
                company listed on the main exchange, NASDAQ or US New York Stock
                Exchange
                or other designated Stock Exchange;

            

    

    

    
      	Important
              Unfavorable Change/Impact:	
              means
                the group as a whole on economic or other conditions, operating results,
                management, finance, asset, revenues, forecasts and or operations,
                have
                significant unfavorable change (or impact), regardless whether the
                change
                is caused by a change in executives or other
                reasons;

            

    

    

    
      	China:	
              means
                People’s Republic of China, for the purpose of this agreement, not
                including Hong Kong, Macau and Taiwan
                areas;

            

    

    

    
      	Business
              Facilities:	
               means
                any business facilities occupied by the Group’s China subsidiary
                companies;

            

    

    

    
      	Designated
              Stock Exchange:	
              means
                designated Hong Kong, Japan, London, New York or Australia Stock
                Exchange
                or other similar stock exchange agreed upon in writing by each
                party;

            

    

    

    
      	RMB:	
              means
                China’s legal currency;

            

    

    

    
      
        	Stock:	
                means
                  the Company’s common stock, the par value per share is $0.001
                  USD;

              

      

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	Stockholders
              Agreement:	
              means
                on the signing date of this agreement, the Company, the Company’s entire
                shareholders and investors sign the Company’s shareholders’
                agreement;

            

    

    

    
      	Subscription
              Price : 	
              means
                term no. 3 the purchase price for the purchased shares, total $2,000,000
                USD;

            

    

    

    
      	Per
              Share Subscription Price:	
              means
                per “Subscription Share” price, which is $0.30096
                USD;

            

    

    

    
      	Subscription
              Shares:	
              means
                according to this agreement will issue 6,645,376 new shares to investors;
                will constitute 16.666% of all shares issued by the company after
                the
                subscription;

            

    

    

    
      	USD:	
              means
                United States legal currency;

            

    

    

    
      	Guarantee:	
              means
                the statements and guarantees listed in Appendix 4 of this
                agreement.

            

    

    

    
      	
              1.2

            	
              All
                the laws and regulations referred to in this agreement should be
                interpreted as including these often changing regulations, reestablished
                regulations or its applications changed due to the revision of other
                regulations (whether they be before or after the signing of this
                agreement).

            

    

    

    
      	
              1.3

            	
              The
                “Conditions” and “Appendix” referred to in this agreement are conditions
                and appendices of this agreement. Unless otherwise indicated in the
                text,
                the appendices of this agreement should be viewed as an integral
                part of
                this agreement.

            

    

    

    
      	
              1.4

            	
              The
                headings are for the convenience of reading, they do not affect the
                understanding of this agreement.

            

    

    

    
      	
              1.5

            	
              Unless
                otherwise indicated in the text, singular forms include plural forms
                and
                vice versa. Singular sex forms include all sex
                forms.

            

    

    

    
      	
              1.6

            	
              This
                agreement indicates according to “Agreeing Method” means all parties agree
                to (an alternative should be each party agrees to for differentiation,
                each party will use its initials as designation for signing) or the
                way it
                is shown in the appendices of this
                agreement.

            

    

    

    
      	
              2.

            	
              Agreement
                and Subscription

            

    

    

    According
      to this agreement’s agreed upon conditions and terms, investors agree to
      subscribe, the Company agrees to distribute to the investors the subscribed
      shares, such shares shall not have any limitation in rights, and will possess
      the completion date and after the completion date all the rights resulting
      from
      these shares, including but not limited to the rights of receiving dividends
      and
      distribution of profits.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    
      	
              3.

            	
              Prices

            

    

    

    
      	
              3.1

            	
              According
                to the agreed conditions and terms in this agreement, each investor
                should
                pay USD $1,000,000 (per share USD $0.30096) for a total price of
                USD
                $2,000,000. The Company should distribute according to term No. 2
                in this
                agreement the subscribed shares at this
                price.

            

    

    

    
      	
              4.

            	
              Preconditions
                before the Completion

            

    

    

    4.1 The
      completion of this agreement depends on satisfying the following
      conditions:

    

    
      	 	
              (a)

            	
              To
                provide a legal opinion letter to the satisfaction of investors for
                opinions on NFES’s adjusted legal structure, the Company as one party
                signing this agreement and signing stockholders agreement and matters
                regarding the enforceability and
                execution;

            

    

    
      	 	
              (b)

            	
              According
                to attorney’s opinion, investors, corporation’s major controlling
                shareholders and the Company have signed stockholders’ agreement according
                to the agreeing method;

            

    

    
      	 	
              (c)

            	
              Provide
                past two fiscal years’ unqualified audited financial statements, by the
                CPA firm agreed upon by both parties, audited according to US generally
                accepted accounting principles (GAAP, or other internationally accepted
                accounting principles); 

            

    

    
      	 	
              (d)

            	
              Since
                the base date of audit, there was no significant unfavorable changes
                or
                impacts;

            

    

    
      	 	
              (e)

            	
              Provide
                to the satisfaction of investors, the Company’s executable business plan
                for the next three years;

            

    

    
      	 	
              (f)

            	
              Guarantors,
                the Group have received all required approvals that will make this
                stock
                subscription agreement and other agreements effective (including
                government approval and other related
                approval);

            

    

    
      	 	
              (g)

            	
              All
                major contents of the guarantee by Guarantors at the completion date
                are
                true and accurate.

            

    

    

    4.2 Each
      party should make their best effort to guarantee the terms in 4.1 will be
      satisfied as soon as possible. Under any circumstances it should be no later
      than each party’s agreed upon date in writing (abbreviated as “the deadline
      date”). If any terms at the deadline date can not be satisfied or was given up,
      then any party has the right to go according to his wishes to inform the other
      parties in writing to terminate this agreement. After the termination of this
      agreement, this agreement (including term No. 4.2) will no longer be binding.
      But the preexisting noncompliant behavior or the agreed upon compensation
      according to terms No. 6, 12 and 15 of this agreement will still be
      effective.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              5.

            	
              Responsibilities
                On or After the Subscription Completion
                Date

            

    

     

    
      	
              5.1

            	
              According
                to term no. 4, after all preconditions in term No. 4 are satisfied
                (or
                given up according to agreement), the subscription of shares should
                be
                completed in five working days. The Company and the Guarantors will
                issue
                confirmation letter in writing. But it can not be later than the
                12 pm of
                the second day after the satisfaction of all the condition in term
                no. 4,
                or another time agreed upon in writing by each
                party;

            

    

    
      	
              5.2

            	
              The
                following documents should be transferred at the completion
                date:

            

    

     

    
      	
            	5.2.1	
              The
                Company shall provide the following
                documents:

            

    

    
      	 	
              (a)

            	
              Distribute
                to investors “Subscription Shares”, issue properly signed document
                confirming the receipt of investment for the subscription shares,
                also add
                investors to the list of stockholders according to
                law;

            

    

    
      	 	
              (b)

            	
              Provide
                investors a copy of the list of stockholders that includes the investors,
                the truthfulness of this copy of the list of stockholders should
                be
                verified by an U.S. attorney;

            

    

    
      	 	
              (c)

            	
              Provide
                investors the original of a copy of the properly signed shareholders’
                agreement;

            

    

    
      	 	
              (d)

            	
              Provide
                investors a copy of the Board of Directors’ Resolution according to term
                5.2.2 (b), the truthfulness of the copy of this document should be
                verified by an U.S. attorney;

            

    

    
      	 	
              (e)

            	
              Provide
                investors the document for the completion of the receipt of total
                investment;

            

    

    
      	 	
              (f)

            	
              Provide
                investors the guaranteed items and related
                documents.

            

    

    

    
      	
            	5.2.2	
              The
                Guarantors shall provide the following
                documents:

            

    

    
      	 	
              (a)

            	
              Provide
                investors the guaranteed items and related
                documents;

            

    

    
      	 	
              (b)

            	
              Provide
                investors and the Company the original of a copy of the properly
                signed
                stockholders’ agreement;

            

    

    
      	 	
              (c)

            	
              Call
                for Board of Directors’ meeting, and urge the Board to approve this
                agreement and the related items in the stockholders’
                agreement;

            

    

     

    
      	
            	5.2.3	
              Investors
                shall provide the following
                documents:

            

    

    
      	 	
              (a)

            	
              Provide
                an application letter to the Company requesting the Company for the
                subscription of shares;

            

    

    
      	 	
              (b)

            	
              Provide
                the Company an original letter from the investors’ Board of Directors,
                verifying that investors’ board of directors has approved the signing of
                this agreement and its related
                business;

            

    

    
      	 	
              (c)

            	
              Provide
                the Company and the Guarantors each an original copy of properly
                signed
                shareholders’ agreement;

            

    

    

    
      	 	
              5.2.4

            	
              Investors
                at the completion date shall use non-cancellable wire transfer to
                wire to
                the Company’s designated account the payment for the prices of all
                subscriptions. 

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              6.

            	
              Expenses

            

    

    

    
      	
              6.1

            	
              Unless
                otherwise specified in this agreement, each party shall bear all
                its
                attorneys’ and other special consultants’ expenses and other expenditures
                related to the subscription, the negotiation, signing and execution
                of
                this agreement and related supplemental or other agreement or
                documents.

            

    

    
      	
              6.2

            	
              To
                avoid difference in opinions, the Company and/or Guarantors shall
                bear the
                expenses for obtaining item 4.1(a), (c) and (e) investors approved
                attorney’s legal opinion letter, auditor’s reports and business
                plans.

            

    

    

    
      	
              7.

            	
              Promises,
                Statements and Guarantees

            

    

    

    
      	
              7.1

            	
              Except
                for conditions that have been disclosed, the Company and the Guarantors
                together and separately provide statements, promises and guarantees
                to
                investors (listed in Appendix 4 of this agreement), also guarantee
                that at
                present time and at the completion date every guaranteed item is
                true and
                accurate.

            

    

    
      	
              7.2

            	
              Guarantees
                are separate and independent, unless otherwise stated, shall not
                be
                limited by any items in this
                agreement.

            

    

    
      	
              7.3

            	
              Investors
                can take actions for any non-compliant or non-execution of the guarantees
                after the completion of the subscriptions, even if investors know
                or
                discover such non-compliant or non-execution actions before the completion
                date.

            

    

    
      	
              7.4

            	
              Investors
                state, guarantee and promise:

            

    

    (1)
      Investors have properly established an effective, ongoing and well managed
      company according to the laws of its legal jurisdiction, have full authority
      and
      authorization to utilize its assets and to manage its current business
      operations;

    (2)
      Investors possess all required authorization and authority to sign and execute
      this agreement, and according to this agreement execute their
      responsibilities;

    (3)
      The
      signing of this agreement and other supplemental agreements representing
      investors’ interests’ have been authorized, and investors’ responsibilities
      resulting from this agreement shall be legal, effective and enforceably binding
      on investors; 

    (4)
      To
      sign or execute the responsibilities stated in this agreement do not require
      the
      consent or approval from a third party;

    (5)
      Investors’ signing, payment, execution and following the responsibilities in
      this agreement and other related agreements do not result or will not result
      in
      violating any binding judgments, orders or court orders, trust, collateral
      agreements or other arrangements;

    (6)
      Investors are not under bankruptcy, liquidation or other similar process, not
      planning to enter into liquidation process, not having an application for
      dissolution, not having the possibility of requesting or applying for
      dissolution or having their assets in designated trust.

    

    
      	
              7.5

            	
              One
                party has the right to receive compensation according to law if the
                other
                party violates the guarantee. 

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              8.

            	
              Limit
                on Responsibility

            

    

    

    
      	
              8.1

            	
              Even
                if this agreement has contrary agreed terms, the Company and the
                Guarantors’ total responsibility in this agreement shall not exceed the
                “Subscription Price” except for item no.
                12.

            

    

    

    
      	
              9.

            	
              Business
                Operations

            

    

    

    
      	
              9.1

            	
              The
                Company and Guarantors separately promise that from the signing date
                of
                this agreement until the completion date, the Group will conduct
                its daily
                normal business operations
                carefully.

            

    

    
      	
              9.2

            	
              Not
                violating term no. 9’s general requirements, before “Completion”, the
                Guarantors shall guarantee that the companies within the Group will
                not
                engage in or approve others to engage in the following activities
                without
                the written approval of the investors before the event (such written
                agreement should not be unreasonably
                limiting):

            

    

    
      	 	
              (1)

            	
              Adjust,
                change or substitute the memorandums, charters and other company
                formation
                documents for any company within the
                group;

            

    

    
      	 	
              (2)

            	
              Issue
                or agree to issue any class of stocks, other securities with a price
                or
                issue any option plans (to avoid difference in opinion, if investors
                pre-approve the total number of shares under such option plan, then
                following such stock option plan to issue or to grant options to
                individuals according to the terms in the approved stock option plan,
                are
                not considered as issue stock options, the terms in this section
                shall not
                apply), or the company will issue convertible stock rights or guarantees
                for stock purchase rights, or other rights or new loans or changes
                to the
                rights to the company stocks or other
                securities;

            

    

    
      	 	
              (3)

            	
              Whether
                it be through merger or other method, to sell to a company outside
                the
                Group, or business brands and entire or partial assets exceeding
                $100,000
                USD (including important intellectual property and the company’s direct or
                indirect rights in other affiliated
                company);

            

    

    
      	 	
              (4)

            	
              Significant
                changes or modifications to the business areas, or any company within
                the
                Group receives or engage in a new business exceeding $100,000 USD
                outside
                its current business;

            

    

    
      	 	
              (5)

            	
              Whether
                completing any decision by any company within the Group, or proceeding
                with liquidation or reorganization for any company within the Group,
                or
                apply for a designated trustee, a manager, a legal administrator
                or
                similar government official, or within its related jurisdiction apply
                to
                the court for a meeting or all creditors, or approval to have settlement
                arrangement;

            

    

    
      	 	
              (6)

            	
              Signing,
                approve, adjust or change business terms, one party to the business
                shall
                be a company within the group, the other party shall be the board
                of
                directors and/or company shareholders, business shall be related
                to the
                director or shareholder’s rights to a company within the Group (except
                director’s service agreement or business in routine operations), and the
                amount of the business shall exceed $100,000
                USD;

            

    

    
      	 	
              (7)

            	
              Any
                company within the group to announce or pay any dividends or distribution
                of assets;

            

    

    
      	 	
              (8)

            	
              Any
                borrowing exceeding $1,000,000 USD, provide any guarantee or collateral,
                establish collateral using entire, partial assets or debts on the
                financial statements for any company within the Group, lien or any
                form of
                the rights as encumbrance; this term will be adjusted when the board
                of
                directors implement the authorization
                process;

            

    

    
      	 	
              (9)

            	
              The
                Company or any company within the Group to acquire a company outside
                the
                group, or to obtain the stocks, bonds, or credit bonds, or securities
                with
                a price for any company outside the Group exceeding the price of
                $100,000
                USD.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	10.	
              Business
                Reorganization and Development
                Plan

            

    

    

    
      	
              10.1

            	
              Each
                party agrees to make their best effort to come to agreement regarding
                the
                Company’s future reorganization and development plan through consultation.
                The contents include but not limited
                to:

            

    

    

    (1)The
      Company shall step by step develop the energy saving and emission reduction
      as
      its core business and to be an energy saving and emission reduction products
      and
      service provider;

    (2)
      The
      Company shall avoid doing business with current stockholder’s owned and
      affiliated companies;

    (3)
      Establish good corporate governance;

    (4)
      Establish good financing channels, and implement good operating cash
      flows.

    

    
      	11.	
              Performance
                Guarantee and Stock Ownership Ratios
                Adjustment

            

    

    

    
      	
              11.1

            	
              Guarantors
                will guarantee the Company’s operating performance from 2007 to 2009 as
                follows ( “Promised Performance”):

            

    

     

    
      	
               Year

            	 	
               Audited
                after Tax Target Net Income (in USD)

            	 
	
               2007

            	 	
              $2,000,000

            	 
	
               2008

            	 	
              $4,000,000

            	 
	
               2009

            	 	
              $8,000,000

            	 

    

     

    
      11.2        If
        the
        Company’s actual performance is lower than the promised performance, Guarantors
        agree to use the following formula to compensate each investor by transferring
        certain percentage of the Company’s stocks:

    

    

    Investors’
      percentage of stock ownership x [1 - (Actual Net Income/Promised
      performance)]

    

    
      	12.	
              Buy
                Back

            

    

    

    
      12.1       The
        Company and the Guarantors guarantee the investors; the Company will transfer
        to
        a main US Stock Exchange no later than December 31, 2009. If the Company
        does
        not move to the main US Stock Exchange by the above date, the Guarantors
        will be
        obligated to buy back from investors all investors’ stocks in the Company. The
        buy back price will be the initial subscription price plus no less than 10%
        return on investment. 

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	13.	
              Confidentiality

            

    

    

    
      	13.1	
              The
                investment and the stock subscription (including but not limited
                to the
                existence of this investment, the agreed terms and conditions in
                this
                agreement and other documents referred to) should be viewed as
                confidential information (“Confidential Information”), no party shall
                disclose it.

            

    

    

    13.2
       Even
      though there is term no. 13.1, the obligation and promise for confidentiality
      of
      this agreement shall not be applied to the following situations:

    
      	 	
              13.2.1

            	
              Not
                violating any terms in this agreement, at present or in the future
                when
                the confidential information enters into public domain;
                or

            

    

    
      	 	
              13.2.2

            	
              Any
                party can use actual written document to prove that the other party
                before
                providing the confidential information, has already possessed such
                confidential information, and the source of such confidential information
                are not limited by the signed confidential agreement, trust or other
                similar confidential obligation with other party;
                or

            

    

    
      	 	
              13.2.3

            	
              Any
                party can disclose confidential information to its employees, investors,
                lenders, accountant, attorneys and other special consultants, directors,
                shareholders, holding company, subsidiary companies or parent company,
                but
                all these informed persons should properly keep confidentiality
                obligation; or

            

    

    
      	 	
              13.2.4

            	
              After
                disclosing confidential information to another party or its employees,
                representatives or advisers, they become publicly obtainable information
                and confidential information by third parties, or through one party,
                its
                directors, managers, employees, representatives or advisers to disclose
                the information using methods not violating this agreement;
                or

            

    

    
      	 	
              13.2.5

            	
              According
                to applicable laws of China, U.S., British Virgin Islands and other
                legal
                jurisdictions, or regulations of any regulatory organizations, or
                regulations of China , U.S., British Virgin Islands’ Stock Exchanges, any
                party ( referred to as “Disclosing Party”), its representative, adviser or
                employee are required by law (or there is a reason to believe that
                the
                party, its representative, adviser, employees will be required by
                law) to
                disclose any confidential information, then the disclosing party
                shall
                distribute the notice of this fact to the other party (referred to
                as
                “Non-disclosing Party) before the disclosure, to allow non-disclosing
                party to seek proper strategies to stop such disclosure or to give
                up
                following the terms in this agreement (expenses will be born by the
                non-disclosing party). If any non-disclosing party decides to challenge
                the effectiveness of the request, and/or bears the expenses to take
                actions, reasonably request to avoid and limit this disclosure, then
                the
                disclosing party, its representative, adviser or employees shall
                coordinate with the non-disclosing party (Under the premises that
                non-disclosing party will compensate reasonable
                expenses).

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	14.	
              Time
                Importance

            

    

    

    Any
      date
      or deadline referred to in any term can be postponed after written consent
      by
      each party. But the initial confirmed dates or deadlines, or any dates and
      deadlines after postponement, these times are of utmost importance.

    

    
      	15.	
              Notice
                

            

    

    

    According
      to this agreement, every notice, request or other communication documents shall
      be done in written format, and according to the following address or fax number
      (or the recipient has notified the other party its other address or fax number
      five business days prior to the notice) to distribute to the other
      party:

    

    The
      Company and/or Guarantors:

    Fax
      Number: 8624-25609750

    Recipient:
      Mr. Gang Li

    

    Investors:

    Fax
      Number: 0852-21807306

    Recipient:
      Lily Tang

    

    All
      communications to the other party, request or other communicative documents
      will
      be considered delivered at the following times: (1) deliver in person to the
      above address; (2) if to deliver through postal mail, then the fourth day after
      mailing will be considered delivered; (3) if deliver by fax, then the fax report
      is the evidence for delivery. Any notices if delivered on non-business days,
      will be considered delivered on the following business day.

    

    16.
      Governing Law and Conflict Resolution

    

    
      	
              16.1

            	
              This
                agreement is governed by the laws of the People’s Republic of China and
                will be interpreted according to the laws of
                PRC.

            

    

    
      	
              16.2

            	
              Any
                conflict or disputes or claims resulting from this agreement or related
                to
                this agreement, or this agreement’s violation, termination or being
                invalid should be resolved according to the effective or the changes
                under
                this arbitration principle of the China
                International Economic Trade Arbitration Committee.
                Designated arbitration organization is China
                International Economic Trade Arbitration Committee Beijing Office.
                The arbitration location will be in Beijing, China. Any such arbitration
                shall go according to China International Economic Trade Arbitration
                Committee’s arbitration procedures and arbitration principles within the
                effective dates of this agreement. The arbitration language will
                be
                Chinese.

            

    

    
      	
              16.3

            	
              The
                decision of the arbitration is final, will be binding on both parties.
                Both parties agree to be bound by the arbitration and will execute
                the
                arbitration accordingly.

            

    

    
      	
              16.4

            	
              Arbitration
                fees will be born by the losing party, unless arbitrators determine
                otherwise. 

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    17.
      Other Matters

    

    
      	
              17.1

            	
              This
                agreement shall be signed by each party on a separate original. All
                signed
                originals together will constitute the entire
                agreement.

            

    

    
      	
              17.2

            	
              This
                agreement shall be binding upon each party’s successor and approved
                assigns. Any party without the other party’s written consent, can not
                transfer or try to transfer the rights in this
                agreement.

            

    

    
      	
              17.3

            	
              This
                agreement constitutes the entire agreement concerning this matter
                by both
                parties (any party did not rely on what is not included in this agreement,
                or the statements or guarantees by the other party), and unless through
                signed written document by both parties, any revision to this agreement
                will not be valid. This agreement replaces all previous agreements,
                arrangements or memorandums. All previous agreements, arrangements
                or
                memorandums (if existed), shall no longer be effective after the
                signing
                of this agreement.

            

    

    
      	
              17.4

            	
              Unless
                otherwise required by laws, otherwise any offset, counterclaim or
                other
                discounts of any party’s entire payment under this agreement shall be
                eliminated.

            

    

    
      	
              17.5

            	
              Any
                party did not exercise or postpone the exercise of any rights, authorities
                or special rights under this agreement are not viewed as give up
                the
                rights, individually or partially exercise any rights, authorities
                or
                special rights are not viewed as precluding the exercise of rights
                in the
                future.

            

    

    
      	
              17.6

            	
              If
                any term or several terms became invalid, illegal or not executable,
                or
                can not be carried out, it will not affect or reduce the effectiveness,
                legality, enforceability and execution of the remaining
                parts.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Hereto,
      the parties have signed the agreement on the date listed on the cover page
      of
      this agreement and on this signature page.

    

     

    /s/
      Gang
      Li         

    Gang
      Li,
      Chairman and CEO

    NF
      Energy
      Saving Corporation of America 

    

    

    

    /s/
      Wei Lang                                                                   

    Wei
      Lang,
      CEO

    South
      World Ltd. 

    

    

    

    /s/
      Jun
      Wang                                                                                        
     

    Jun
      Wang,
      CEO

    Oriental
      United Resources Ltd. 

    

    

    

    /s/
      Gang Li                                                                      

    Mr.
      Gang
      Li 

    

    

    

    /s/
      Lihua
      Wang                                                                                     

    Ms.
      Lihua
      Wang 

    

    

    

    /s/
      Gang
      Li                                                                                             

    Gang
      Li,
      CEO

    Pelaria
      International Ltd.

    

    
 

    /s/
      Lihua
      Wang                                                                                     

    Lihua
      Wang, CEO

    Cloverbay
      International Ltd.

    

    

    April
      28,
      2008                                                                                         

    Date
       

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Appendix
      1

    

    Basic
      Description of Guarantors

    

    1.
      Copy
      of ID Cards

    

    2.
      Copy
      of BVI Corporations

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Appendix
      2

    

    Basic
      Description of the Company

     

    
      	1.	
              Name:

            	
            	NF
              Energy Saving Corporation of America
	 	 	 	 
	2.	
              Place
                of Incorporation:

            	 	State
              of Delaware
	 	 	 	 
	3.	
              Date
                of Incorporation:

            	 	October
              31, 2000
	 	 	 	 
	4.	
              Federal
                ID Number:

            	 	02-0563302
	 	 	 	 
	5.	
              Registration
                Address:

            	 	Delaware
	 	 	 	 
	6.	
              Authorized
                number of shares:

            	 	50,000,000
	 	 	 	 
	7.	
              Number
                of Shares Issued:

            	 	33,227,328
	 	 	 	 
	
              8.

            	
              Shareholders:

            	 	See
              list of shareholders
	 	 	 	 
	9.	
              Directors:

            	 	Gang
              Li, Lihua Wang, Hong Li

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Appendix
      3

    

    NF
      Energy
      Saving Corporation of America

    Stock
      Ownership Structure

     

      

    

    
      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    

    

    Appendix
      4

    

    PART
      I 

    The
      Company and Guarantors’ Statements and Guarantees

    

    
      
        
          	1.	
                  Authority

                  The
                    Company and the Guarantors have the full authority to sign and
                    execute
                    this agreement. This agreement once signed will be binding on
                    both the
                    Company and the
                    Guarantors.

                

        

      

    

     

    
      
        	2.	
                Approve,
                  Agree and Permit

                According
                  to the knowledge of the Company and the Guarantors, except the
                  approval,
                  agreement and permission that the Company and guarantors have received,
                  the signing, payment, execution and other related matters of this
                  agreement do not require authorization from China, U.S., or British
                  Virgin
                  Islands’ governments, public organizations, administrative organizations
                  and other bureaus in the form of order, consent, approval, permission,
                  authorization, making effective or waiver.

              

      

    

     

    
      
        	3.	
                Impact
                  of the Agreement

              

      

    

    

    
      
        	3.1	
                No
                  one from any company within the Group is authorized to receive
                  any
                  discounts or commissions to issue stocks to
                  investors.

              

      

    

    
      
        	
                3.2

              	
                There
                  does not exist any company within the group being one party to
                  any
                  agreements or arrangements (whether written or verbal), this agreement
                  and
                  arrangement is determined by the terms in this agreement, or will
                  be or
                  can be determined by the execution or completion of this
                  agreement.

              

      

    

    
      
        	
                3.3

              	
                The
                  Company and the Guarantors for the signing , payment and execution
                  of the
                  terms in this agreement shall
                  not:

              

      

    

    
      
        
          
            
              
                	
                        3.3.1

                      	
                        Cause
                          the companies within the group, the Company or the Guarantors
                          to violate
                          or cause to violate or conflict with the following terms,
                          provisions and
                          conditions:

                      

              

            

          

        

      

    

    
      
        	
              	
                3.3.1.1

              	
                Any
                  agreement;

              

      

      
        	
              	3.3.1.2	
                Any
                  laws, promises or any court judgments, prohibited matters or legal
                  orders;

              

      

    

    
      
        	
              	
                3.3.1.3

              	
                Any
                  companies within the Group’s memorandums, articles and other system’s
                  documents (if any); 

              

      

    

    
      	
              3.3.2

            	
              Waive
                any person of any company within the Group’s responsibility or other
                 responsibilities
                or authorize others to terminate this
                agreement;

            

    

    
      	3.3.3	
              Terminate
                or cause to terminate or from the perspective of any company within
                 the
                Group judge to have significant unfavorable impact on the implementation
                of  present
                interests or special rights;

            

    

    
      	3.3.4	
              According
                to the knowledge of the Company and the Guarantors, cause any  company
                within the group’s any customer or supplier to terminate or drastically
                 reduce
                its business with any company within the
                group;

            

    

    
      	3.3.5	
              Cause
                any company within the group in the implementation of their existing
                debt
                 to
                be paid immediately or to be paid before maturity;
                or

            

    

    
      	3.3.6	
              Cause
                any company within the Group to have responsibility for any agreement
                or
                 other
                responsibilities, or authorize anyone to request any company within
                the
                 group
                to fulfill responsibilities or other responsibilities under any existing
                 agreements.
                

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    PART
      II

    China
      Subsidiary Company’s Statements and Guarantees

    

    
      
        	1.	
                Organization
                  of the Company

              

      

    

    
      
        	
              	
                1.1.

              	
                Each
                  China subsidiary company of the Group is organized and existing
                  under the
                  laws of the People’s Republic of China. According to disclosed
                  information, China subsidiary companies do not have subsidiaries
                  or branch
                  offices.

              

      

    

    
      
        	
              	
                1.2.

              	
                Each
                  China subsidiary company has obtained required permits from related
                  persons, government regulatory organizations and other supervisory
                  organizations and agrees to operate according to the businesses
                  listed in
                  the current business licenses and has operated
                  accordingly.

              

      

    

    
      
        	
              	
                1.3.

              	
                According
                  to the knowledge of the Company and the Guarantors, there does
                  not exist
                  any violation of any terms or conditions under currently existing
                  effective permits or agreements for each China subsidiary company,
                  and
                  there does not exist any potential to harm the continuity or extension
                  of
                  the above permits or
                  agreements.

              

      

    

    

    
      
        	2.	
                Capital
                  and the Company’s Basic Description

                 

                China
                  subsidiary companies have been registered according to law, shareholders
                  legally own beneficial shares. There are no encumbrances to their
                  rights.

              

      

    

     

    
      
        	3.	
                Finance

              

      

    

    
      
        	
              	
                3.1.

              	
                Bank
                  Borrowings and Other
                  Borrowings

              

      

    

    
      
        	
              	
                3.1.1.

              	
                Each
                  China subsidiary company does not have any bank borrowings or bank
                  overdraft opportunities.

              

      

    

    
      
        	
              	
                3.1.2.

              	
                Each
                  China subsidiary company does not have any unpaid debt, did not
                  agree
                  to establish or issue such debt, there does not exist any unpaid
                  borrowings.
                  But the exception is the debt not exceeding that has been recorded
                  in the financial statements of the China subsidiary
                  company.

              

      

    

    
      
        	
              	
                3.2.

              	
                China
                  Subsidiary Company’s Loans to Others and Rights

                Each
                  China subsidiary company does not have any uncollected loans outstanding,
                  does not own beneficiary rights to any debts (whether they are
                  mature and
                  should be paid off), except the rights to debts in its normal course
                  of
                  operations. Each China subsidiary company did not provide any loan
                  or
                  lending that violates the related laws of the
                  PRC.

              

      

    

    
      	
            	
              3.3.

            	
              Liabilities

              Except
                the liabilities disclosed in the financial statements, “disclosed”
                liability since the date of audit until present resulting from normal
                course of business, there does not exist any liability for each China
                subsidiary company (including contingent
                liability).

            

    

     

    
      	4.	
              Taxes

            

    

    
      
        	
              	4.1.	
                Tax
                  Reserves 

                According
                  to the knowledge of the Company and the Guarantors, the tax reserves
                  on
                  the financial statements are adequate (based on the current laws),
                  sufficient to pay all assessed taxes or taxes that will be assessed,
                  or
                  until the date of audit each China subsidiary company’s taxes related
                  their profits, revenues, transfer or
                  businesses.

              

      

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	4.2.	
                Reporting
                  Responsibility

                According
                  to the knowledge of the Company and the Guarantors, each China
                  subsidiary
                  company has properly reported to the China Tax Authorities or other
                  government authorities all amount of taxes due or potential taxes
                  due
                  according to “Tax Laws”.

              

      

    

     

    
      
        	
              	4.3.	
                Tax
                  Refunds and Final Settlement

                According
                  to the knowledge of the Company and the
                  Guarantors:

              

      

    

    
      
        	
              	4.3.1.	
                Each
                  China subsidiary company has properly taken care of the tax refunds,
                  and
                  China subsidiary company has followed proper procedures to completely
                  disclose their responsibilities regarding all tax
                  assessments.

              

      

    

    
      
        	
              	
                4.3.2.

              	
                Such
                  tax refunds do not have potential for disputes, there does not
                  exist
                  any
                  potential leading to disputes, or tax claims, or to deprive China
                  subsidiary
                  company’s preferential tax treatment or reduced tax status according
                  to related laws and regulations.

              

      

    

    
      
        	
              	
                4.4.

              	
                Disclosure

                According
                  to the knowledge of the Company and the Guarantors, there does
                  not exist
                  any condition with China Tax Authority or other related tax authorities
                  to
                  cause them to reassess taxes, regardless whether the taxes have
                  been paid,
                  how to proceed with such disputes or which method will the disputes
                  be
                  heard. 

              

      

    

    
      
        	
              	4.5.	
                Tax
                  Exemption

                The
                  tax exemption enjoyed by China subsidiary company has been disclosed.
                  According to the knowledge of the Company and the Guarantors, there
                  does
                  not exist any potential to cause the China subsidiary company to
                  be
                  deprived of such tax
                  exemption.

              

      

    

     

    
      
        	5.	
                Assets

              

      

    

    
      
        	
              	
                5.1.

              	
                Assets
                  Ownership 

              

      

    

    
      
        	
              	
                5.1.1.

              	
                Up
                  to the date of audit, each China subsidiary company has the complete
                  ownership
                  of all the assets recorded in the financial statements of the China
                  subsidiary company. At present we have the ownership rights and
                  have
                  the control of all these assets (not including the disposed assets
                  under
                  the
                  normal operating process). Based on the disclosed information,
                  each
                  China
                  subsidiary company’s assets and assets acquired after the date of
                  audit
                  are not used for collateral and liens etc. as encumbrances, also
                  other
                  parties
                  do not have rights or claims at such
                  assets.

              

      

    

    
      
        	
              	
                5.1.2.

              	
                All
                  China subsidiary company owns and controls its operating fixed
                  assets,
                  or
                  movable installations, plant, equipment, vehicles and other movable
                  assets.
                  They have complete ownership. Such assets do not have liens, collaterals,
                  encumbrances, lease financing, leased out or lease agreement or
                  include delayed payment agreement. Such assets are under good operation
                  condition (except normal wear and
                  tear).

              

      

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	5.2.	
                Retention
                  of Title

                Any
                  China subsidiary company did not use the retention of titles until
                  the
                  entire amount or all debts have been paid as payment condition
                  to purchase
                  or agree to purchase stocks, merchandise, raw materials or
                  assets.

              

      

    

     

    
      
        	
              	5.3.	
                Insurance

                The
                  detail information regarding the insurance policies owned by all
                  the China
                  subsidiary companies have been disclosed. According to the knowledge
                  of
                  the Company and Guarantors, there does not exist any unsettled
                  claims or
                  potential to cause claims, there does not exist any actions or
                  with the
                  potential to cause the insurance policy to be invalid or insurance
                  fees to
                  be increased.

              

      

       

    

    
      
        	
              	
                5.4.

              	
                Basic
                  Condition of Plant and Maintenance 

                The
                  recorded assets in the financial statements of the China subsidiary
                  company  and its operating machinery, equipment, installations and
                  vehicles are all:

              

      

    

    
      	
            	5.4.1.	
              In
                proper working and safe condition (except normal wear and
                tear);

            

    

    
      
        	
              	5.4.2.	
                Owned
                  and controlled by China subsidiary company that has complete ownership
                  of
                  the above equipment.

              

      

    

     

    
      
        	6.	
                Intellectual
                  Property

              

      

    

    
      
        	
              	
                6.1.

              	
                China
                  subsidiary company has been authorized to follow current methods
                  in
                  operating its current business. According to the knowledge of the
                  Company
                  and Guarantors, such businesses do not infringe or not possible
                  to
                  infringe or conflict with others’ intellectual property
                  rights.

              

      

    

    
      
        	
              	
                6.2.

              	
                China
                  subsidiary company’s related, owned or used trademarks, patents, designs,
                  trade names, business names and copyrights have been disclosed.
                  Each China
                  subsidiary company owns the sole beneficiary rights to their intellectual
                  properties. The intellectual property rights originally created
                  by the
                  China subsidiary company are all effective and are enforceable.
                  According
                  to the knowledge of the Company and Guarantors, the above intellectual
                  property rights are not used, claimed, opposed or attacked by others.
                  There does not exist any potential that will result in the termination
                  of
                  the above intellectual property rights’ effectiveness and enforceability,
                  or the above mentioned conditions of being used, claimed, opposed
                  or
                  attacked by others.

              

      

    

    
      
        	
              	
                6.3.

              	
                China
                  subsidiary company did not approve or agree to approve any permission
                  or
                  authorization, authorize and permit others to use any means to
                  engage in
                  that will infringe or with the potential to infringe its intellectual
                  property rights.

              

      

    

    
      
        	
              	
                6.4.

              	
                According
                  to disclosed information, each China subsidiary company that uses
                  others’
                  intellectual property rights all owns legally, effective permission
                  or
                  authorization. According to the knowledge of the Company and Guarantors,
                  there does not exist any China subsidiary company violating the
                  terms and
                  conditions of such permission or authorization and does not have
                  the
                  potential condition that will result in such permission or authorization
                  to be terminated or cancelled before the end of the
                  agreement.

              

      

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	7.	
              Promises
                and Agreements

            

    

    
      
        	
              	7.1.	
                Except
                  for what has been disclosed, not a China subsidiary company is
                  a party to
                  any agreement or arrangement or bear the responsibilities or such
                  agreement or arrangement, or sign any non-routine business needed
                  or
                  unusual, complicated, long-term or unfair
                  agreements.

              

      

    

    
      
        	
              	
                7.2.

              	
                Each
                  China subsidiary company’s raw materials and merchandise purchase, and
                  service agreements and each China subsidiary company’s merchandise supply
                  or service agreements are all non-affiliated
                  businesses.

              

      

    

    
      
        	
              	
                7.3.

              	
                Each
                  China subsidiary company did not agree to be bound by any debenture,
                  guarantee, contract indemnity, or as a guarantor, did not engage
                  in
                  significant guarantee or contract indemnity for China subsidiary
                  company’s
                  loans and other obligations.

              

      

    

    
      
        	
              	
                7.4.

              	
                Each
                  China subsidiary company did not grant any authorization that is
                  still
                  effective. (except the authorization within normal operating
                  processes);

              

      

    

    
      
        	
              	
                7.5.

              	
                Each
                  China subsidiary company did not sign or agreed to sign agreements
                  or
                  arrangements to sell, purchase, produce, or authorize, or agreements
                  or
                  arrangements to limit its entire or partial operations to operate
                  freely
                  in the world.

              

      

    

    
      
        	
              	
                7.6.

              	
                According
                  to disclosed information, each China subsidiary company has not
                  incurred
                  debt or borrowings toward its shareholders, directors or other
                  affiliated
                  persons (based on the definitions of Hong Kong Stock Exchange’s listing
                  requirements);

              

      

    

    
      
        	
              	
                7.7.

              	
                According
                  to disclosed information and according to the knowledge of the
                  Company and
                  the Guarantors, each China subsidiary company did not violate any
                  third
                  party’s agreement, are not knowledgeable of or foresee the conditions
                  of
                  such third party violation of
                  agreement.

              

      

       

    

    
      
        	
                8.

              	
                Business
                  facilities

              

      

    

    
      
        	
              	
                8.1.

              	
                Ownership

              

      

    

    
      
        	
              	
                8.1.1.

              	
                Each
                  China subsidiary company according to lease agreement or terms
                  of
                  permission possesses and utilizes the following business facility:
                  No.
                  118
                  Guangyu Street, Yinzhou District, Tieling City, Liaoning Province
                  and
                  4th
                  Floor, No. 7, Huanghe Nan Da Jie, Huanggu District, Shenyang City,
                  Liaoning Province. 

              

      

      
        The
          above
          business facilities are the total fixed assets occupied or used by China
          subsidiary companies. 

      

      
        
          
            	
                  	
                    8.2.

                  	
                    Utilization

                    According
                      to the knowledge of the Company and the Guarantors, each China
                      subsidiary
                      company at present utilizes the above business facilities according
                      to the
                      regulations of the related and effective
                      laws.

                  

          

        

      

    

    
      
        	
              	8.3.	
                Lease
                  Requirements

              

      

    

    
      
        	
              	
                8.3.1.

              	
                Each
                  China subsidiary company have paid the lease payment (if required),
                  followed and executed lessee’s contract and the terms of the lease
                  contract for these business facilities (including sublet agreement).
                  Such
                  lease contracts are all legal and
                  valid.

              

      

    

    
      
        	
              	
                8.3.2.

              	
                Have
                  obtained all permissions, consent and approval contained in the
                  lease
                  contract
                  from the landlord or the original landlord and all the requirements
                  for
                  the lessee under such permission, consent and approval have been
                  properly
                  followed and executed.

              

      

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      
        	9.	
                Employment

              

      

    

    
      
        	
              	
                9.1.

              	
                Employment
                  and Terms of Employment

              

      

    

    
      
        	
              	
                9.1.1.

              	
                Each
                  China subsidiary company did not establish any legally or non-legally
                  binding agreements or other arrangements with workers unions or
                  other
                  organizations representing
                  employees.

              

      

    

    
      
        	
              	
                9.1.2.

              	
                According
                  to the knowledge of the Company and the Guarantors, each China
                  subsidiary company has followed related laws or the requirements
                  of
                  contracts to properly withhold, deduct or remit all income taxes,
                  unemployment
                  insurance and other taxes and insurance to government agencies
                  or foundations;

              

      

    

    
      
        	
              	
                9.1.3.

              	
                According
                  to the knowledge of the Company and the
                  Guarantors,

              

      

    

    
      
        	
              	
                (a)

              	
                Each
                  China subsidiary company has according to laws fully implemented
                  and
                  followed the employee welfare obligations, paid for their current
                  employees the pension insurance, unemployment insurance, health
                  insurance
                  and other employee benefits.

              

      

    

    
      
        	
              	
                (b)

              	
                According
                  to the knowledge of China subsidiary companies, there does not
                  exist any
                  claims, lawsuit or penalty or such threats resulting from not executing
                  the above employee welfare obligations for current or past employees,
                  administrative personnel, directors or government
                  organizations,

              

      

    

    
      
        	
              	
                (c)

              	
                According
                  to the knowledge of China subsidiary companies, there does not
                  exist any
                  fact or condition to cause the above claims or
                  lawsuits.

              

      

    

    
      
        	
              	
                9.2.

              	
                Termination
                  of Workers’
Contract

              

      

    

    
      
        	
              	
                9.2.1.

              	
                All
                  current effective workers’ contract that each China subsidiary
                  company
                  participates as one party can be terminated by giving a 30 day
                  notice
                  prior to the termination and there is no need to pay any compensation.

              

      

    

    
      
        	
              	
                9.3.

              	
                Workers’ Salary
                  Disputes and Employee
                  Claims

              

      

    

    
      
        	
              	
                9.3.1.

              	
                Each
                  China subsidiary company and its employees are not involved in
                  any
                  salary
                  disputes, each China subsidiary company. According to the knowledge
                  of the Company, Guarantors, directors, there does not exist any
                  facts
                  that will cause salary disputes. The terms of this agreement will
                  not
                  cause
                  such salary disputes.

              

      

    

    

    
      
        	10.	
                Lawsuits,
                  Disputes and
                  Resolutions

              

      

    

    
      
        	
              	
                10.1.

              	
                Claims

                
                  There
                    does not exist any claim as a resolution for the delay in fulfilling
                    contracts or other matters related to China subsidiary company’s providing
                    service or receiving service. According to the knowledge of the
                    Company
                    and the Guarantors, there do not exist such claims, threat of
                    claims or
                    foreseeing such claims. Outside the normal business operations
                    of each
                    China subsidiary company, any company within the group did not
                    provide any
                    guarantee or assurance for the services provided or will provide.
                    

                

              

      

    

    
       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	
              	10.2.	
                Lawsuits

              

      

    

    
      
        	
              	
                10.2.1.

              	
                No
                  China subsidiary company was a plaintiff or a defendant involved
                  in
                  any
                  lawsuit or arbitration process. There
                  are no proceedings pending or threatened
                  either by or against any of the China Subsidiary Companies. According
                  to the knowledge of the Company and the Guarantors, there are no
                  circumstances that will cause or with the potential to give rise
                  to any
                  lawsuits
                  or arbitration.

              

      

    

    

    
      
        	11.	
                Other
                  Operations

              

      

    

    
      
        	
              	
                11.1.

              	
                Each
                  China subsidiary company did not participate in or agree with another
                  organization to jointly operate any partnership, joint operation,
                  cooperation
                  or similar arrangements.

              

      

    

    
      
        	
              	
                11.2.

              	
                The
                  Company and the Guarantors did not directly or indirectly operate
                  those
                  businesses that are closely related to the businesses of China
                  subsidiary
                  companies or according to the knowledge of the Company and the
                  Guarantors to potentially result in competing in the same businesses
                  with
                  the China subsidiary
                  companies.

              

      

    

    

    
      
        
        

      

      
        24Loan and Security
              Agreement 	
              

            
	 	 
	 	
              LOAN
                NO.:
                04940

            

    

     

    THIS
      LOAN AND SECURITY AGREEMENT (the
      “Agreement”)
      is
      entered into as of this 24th day of April, 2008, by and between LCA-VISION
      INC. (“Borrower”)
      with an
      address at 7840 Montgomery Rd., Cincinnati, OH 45236 and PNC
      EQUIPMENT FINANCE, LLC
      (“Lender”),
      with
      an address at 1000 Westlakes Dr., Suite 200, Berwyn, PA 19312.

    

    1.   LOAN.
      

    (a)
      Agreement
      to Lend.
      Lender
      hereby agrees, subject to the conditions set forth herein, to make a loan or
      loans (collectively, the “Loan”)
      to
      Borrower, the respective principal amounts, interest rates, repayment terms
      and
      other provisions relating to which are set forth on the applicable Request
      For
      Advance (as hereinafter defined). The proceeds of each Loan will be used for
      the
      purpose of financing the personal property listed on the applicable Request
      For
      Advance (the “Collateral”).
      

    (b)
      Repayment
      of Loan; Evidence of Debt.
      Borrower hereby unconditionally promises to pay to the order of Lender the
      unpaid principal amount of each Loan, together with interest thereon. Lender
      shall maintain in accordance with its usual practice an account or accounts
      evidencing the indebtedness of Borrower to Lender resulting from each Loan
      made
      by Lender, including the amounts of principal and interest payable and paid
      to
      Lender from time to time hereunder. The entries made in the accounts maintained
      pursuant to the preceding sentence shall be prima facie evidence of the
      existence and amounts of the obligations recorded therein; provided that
      Lender’s failure to maintain such accounts or any error therein shall not in any
      manner affect Borrower’s obligation to repay each Loan in accordance with the
      terms of this Agreement. In the event of any default by Borrower in payment
      or
      performance of any of the Obligations (as hereinafter defined), Lender may
      declare this Agreement and any other note, schedule, supplement, lease,
      guaranty, agreement, instrument or document executed in conjunction herewith
      (collectively, the “Loan
      Documents”)
      to be
      in default hereunder and Lender may proceed with its remedies against Borrower
      in accordance with paragraph 26, below, with respect to any or all of the Loan
      Documents.

    (c)
      Lender’s
      Discretion.
      The
      Loan is not a committed line of credit. Borrower acknowledges and agrees that
      Loans made under this Agreement, if any, shall be made at Lender’s sole
      discretion. Lender may decline to make any Loan requested by Borrower pursuant
      to any Request For Advance hereunder at any time and for any reason without
      prior notice to Borrower. 

    

    2.  SECURITY.
      The
      security for the repayment of the Obligations shall be the Collateral,
      guaranties and other documents heretofore, contemporaneously or hereafter
      executed and delivered to Lender, which shall secure the repayment of the Loan,
      all amounts set forth on each Request For Advance and all other advances,
      obligations, covenants solely related to the Loan Documents and any amendments,
      extensions, renewals and increases of or to any of the foregoing, and all costs
      and expenses of Lender incurred in any way in connection therewith, including
      but not limited to reasonable attorneys’ fees and expenses (collectively, the
“Obligations”).

    

    3.  GRANT
      OF SECURITY INTEREST.
      To
      secure the Obligations, Borrower, as debtor, hereby assigns and grants to
      Lender, as secured party, a continuing lien on and security interest in the
      Collateral.

    

    4.  TERMS.
      The
      obligations of the parties under this Agreement shall commence upon the written
      acceptance hereof by Lender and shall end upon full performance and observation
      of each and every term, condition and covenant set forth in this Agreement
      and
      any extensions, modifications or amendments hereto. The payment terms for the
      respective Loan listed on the applicable Request For Advance shall commence
      on
      the date indicated on such Request For Advance and shall terminate upon payment
      in full of such Loan. Any interim payments shall also be set forth in such
      Request For Advance.

    

    5.  PAYMENTS.
      All
      payments, including any interim payments, in respect of the Loan as described
      in
      the applicable Request For Advance shall be in the amount stated in such Request
      For Advance. Payments are an absolute obligation of Borrower due and payable
      as
      set forth on the applicable Request For Advance irrespective of any claims,
      demands, set-offs, actions, suits or proceedings that Borrower may have or
      assert against Lender or any vendor of any of the Collateral. Payments shall
      be
      made to Lender at P.O. Box 640306, Pittsburgh, PA 15264-0306, or at such other
      place as Lender or its successors or assigns may designate in writing to
      Borrower from time to time.

    

    6.  DELINQUENT
      PAYMENT PENALTY.
      If any
      payment or other amount due hereunder is not paid when due, Borrower agrees
      to
      pay a delinquent payment penalty of five percent (5%) of, and in addition to,
      the amount of such payment or other amount due hereunder, but not exceeding
      the
      lawful maximum, if any. Delinquent interest at a rate per annum equal to the
      then current Prime Rate (as hereinafter defined) shall be payable upon demand
      with respect to all such delinquent amounts. Interest shall accrue at said
      rate
      whether or not judgment hereon has been entered. As used herein, “Prime Rate”
shall mean the rate publicly announced by PNC Bank, National Association, from
      time to time as its prime rate. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.  ADVANCES.
      Lender
      may, at Borrower’s request, subject to the conditions set forth in this
      paragraph 7, make such advances, deposits and reimbursements as may be required
      for payment for, and financing of, the Collateral and each such advance, deposit
      or reimbursement shall be an advance of principal of the Loan. The Lender’s
      obligation to make any such advance, deposit or reimbursement is subject to
      the
      conditions that as of the date of such advance, deposit or
      reimbursement:

    (a)
      No
      Event of Default.
      No
      Event of Default (as hereinafter defined) or event which with the passage of
      time, the giving of notice or both would constitute an Event of Default shall
      have occurred and be continuing;

    (b)
      Authority
      Documents.
      Lender
      shall have received certified copies of resolutions, incumbency certificates,
      opinions of counsel and other proof of authorization satisfactory to Lender;
      and

    (c)
      Receipt
      of Loan Documents.
      Lender
      shall have received a Request For Advance in form and substance satisfactory
      to
      Lender which shall have been completed and executed by Borrower (each, a
“Request
      For Advance”)
      which,
      upon delivery to and acceptance by Lender, will become part of the Loan
      Documents, and such other instruments and documents which the Lender may
      reasonably request in connection with the transactions provided for in this
      Agreement, all in form and substance satisfactory to Lender and duly executed
      by
      the Borrower. 

    

    8.  DELIVERY
      AND INSTALLATION.
      Borrower will select the Collateral and the supplier, and will order the
      Collateral from such supplier. Lender shall not be liable for loss or damage
      for
      any reason such as failure of or delay in delivery, delivery to wrong location,
      delivery of improper Collateral or property other than the Collateral, defects
      in or damage to the Collateral, governmental regulations, strikes, embargoes
      or
      other causes, circumstances or events. If the cost of any item of Collateral
      differs from the price set forth in the purchase order or the applicable Request
      For Advance, the payments due on the applicable Loan shall be changed to fully
      reflect any such difference.

    

    9.  WARRANTY
      OF BORROWER'S QUIET POSSESSION.
      Lender
      covenants, subject to the disclaimer of warranties set forth immediately below,
      that so long as Borrower faithfully performs this Agreement, Borrower may
      quietly possess and use the Collateral without interference by Lender, or by
      any
      party claiming by or through Lender.

    

    10.  DISCLAIMER
      OF WARRANTIES.
      BORROWER ACKNOWLEDGES AND AGREES THAT (i) THE COLLATERAL AND EACH PART THEREOF
      IS OF A SIZE, DESIGN, CAPACITY, AND MANUFACTURE SELECTED BY AND ACCEPTABLE
      TO
      BORROWER, (ii) BORROWER IS SATISFIED THAT THE COLLATERAL AND EACH PART THEREOF
      IS SUITABLE FOR ITS RESPECTIVE PURPOSE, (iii) LENDER IS NOT A MERCHANT,
      MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, (iv) THE COLLATERAL AND
      EACH
      PART THEREOF IS ENCUMBERED HEREUNDER, SUBJECT TO ALL APPLICABLE LAWS AND
      GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED AND IN THE STATE
      AND
      CONDITION WHEN THE SAME FIRST BECAME SUBJECT TO THIS AGREEMENT, WITHOUT
      REPRESENTATION OR WARRANTY OF ANY KIND BY LENDER, AND (v) LENDER MAKES NO
      WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO THE COLLATERAL,
      (A)
      THE CONDITION, FITNESS, DESIGN, QUALITY, CAPACITY, WORKMANSHIP, OPERATION,
      AND
      MERCHANTABILITY OF THE COLLATERAL, (B) ANY OTHER MATTER WHATSOEVER, IT BEING
      AGREED THAT ALL SUCH RISKS, AS BETWEEN LENDER AND BORROWER, ARE TO BE BORNE
      BY
      BORROWER, AND THE BENEFITS OF ANY AND ALL IMPLIED WARRANTIES AND REPRESENTATIONS
      OF LENDER ARE HEREBY WAIVED BY BORROWER. Lender is not responsible or liable
      for
      any direct, indirect, incidental, or consequential damage to, or loss resulting
      from, the installation, operation, or use of the Collateral or any product
      manufactured thereby. Borrower's recourse for breach of any representation
      or
      warranty of the vendor or supplier is limited to such vendor or supplier.
      Notwithstanding the foregoing, Borrower’s obligations to make payment or
      otherwise under this Agreement shall be and are absolute and unconditional.
      All
      proceeds of any such warranty recovery from the manufacturer or supplier of
      the
      Collateral shall first be used to repair the affected Collateral. 

    

    11.  NATURE
      OF COLLATERAL.
      The
      Collateral shall remain personal property, notwithstanding the manner in which
      it may be affixed to any real property. Borrower, at its expense, will protect
      and defend the title to the Collateral and will otherwise take all action
      required to keep the Collateral free and clear of all claims, levies, liens
      and
      encumbrances except for the security interest of Lender. Lender assumes no
      liability and makes no representation as to the treatment by Borrower of this
      Agreement, the Collateral, or the payments due hereunder for financial,
      accounting or tax purposes.

    

    12.  LENDER'S
      RIGHT OF INSPECTION.
      Lender,
      or its authorized agents, shall have the right during normal business hours
      to
      enter upon the premises where the Collateral is located (to the extent Borrower
      can permit) for the purpose of inspection. Provided no Event of Default has
      occurred and is continuing, Lender shall provide Borrower prior notice of such
      inspection. Lender shall work with Borrower to ensure inspection does not
      interrupt the business operation of Borrower

    

    13.  USE
      OF COLLATERAL.
      Borrower represents that it is using the Collateral for a business or commercial
      purpose and not for personal, family or household use. Borrower must use the
      Collateral in a careful and proper manner in conformity with (i) all statutes
      and regulations of each governmental authority having jurisdiction over Borrower
      or the Collateral and its use; and (ii) all policies of insurance relating
      to
      the Collateral or its use. In addition, Borrower shall not (i) use the
      Collateral in any manner that would impair the applicability of manufacturer's
      warranties or render the Collateral unfit for its originally intended use;
      (ii)
      permit anyone other than authorized and competent personnel to operate the
      Collateral.

    

    
      
         

      

      
        -
          2 -

        
          

        

      

      
         

      

    

    14.  ALTERATIONS.
      Without
      Lender’s prior written consent, Borrower shall make no alterations,
      modifications or attachments to the Collateral which impair its economic value,
      economic and useful life, or functional utility. Except for improvements
      provided by the manufacturer, all alterations, modifications and attachments
      of
      whatsoever kind or nature made to the Collateral must be removed without
      damaging the functional capabilities or economic value of the affected
      Collateral upon the termination of the Agreement. Under no circumstances shall
      any such alteration, modification or attachment be encumbered by Borrower or
      result in the creation of a mechanic's or materialman's lien, excepting as
      may
      arise by operation of law pending payment within ordinary business
      terms.

    

    15.  MAINTENANCE
      AND REPAIRS.
      At its
      expense Borrower shall maintain, operate, repair and make all modifications
      to
      the Collateral in a manner consistent with Borrower’s general practice and in
      accordance with good industry practice, manufacturer’s warranty requirements and
      specifications and Borrower’s established operation, maintenance and repair
      programs, without discrimination as to such Collateral, so as to keep the
      Collateral in good working order, and so as to comply with all applicable laws
      or applicable governmental actions and so as not to incur liability (whether
      or
      not there is a lack of compliance) under any environmental law or otherwise
      account for any release of, or exposure to, any hazardous material. Lender
      shall
      not be required to maintain, repair or replace the Collateral or part thereto
      and Borrower hereby waives the right, however arising, to (i) require Lender
      to
      maintain, repair or replace any of the Collateral or part thereto, or (ii)
      make
      repairs at the expense of Lender pursuant to any applicable law. Lender may
      review Borrower's established operating procedures and maintenance records
      to
      assure compliance with this section. Upon installation, any replacement parts
      shall be deemed part of the Collateral.

    

    16.  RISK
      OF LOSS, DAMAGE AND THEFT.

    (a)
      Borrower will bear all risk of loss, damage, theft or destruction, partial
      or
      complete, to the Collateral from and after delivery of the Collateral to a
      carrier FOB point of origin, whether the terms of shipment require or authorize
      the Collateral to be shipped by carrier, to be delivered to Borrower's place
      or
      places of business, or provide that Borrower accept possession of or title
      to
      the Collateral at any other location. Borrower shall promptly notify Lender
      of
      any theft of or loss or damage to the Collateral.

    (b)
      Neither total nor partial loss of use or possession of the Collateral shall
      abate the requirement to make the payments set forth on the applicable Request
      For Advance.

    (c)
      The
      Collateral shall be deemed subjected to total loss (i) if it has disappeared
      regardless of the reason for disappearance or (ii) if it has sustained physical
      damage and the estimated cost of repair exceeds 75% of its fair market value
      on
      the date of damage. Borrower's duty to make the payment on the Loan secured
      by
      the Collateral subjected to total loss shall be discharged by paying to Lender,
      on demand, all sums due hereunder. The amount of applicable insurance proceeds,
      if any, actually received by Lender shall be subtracted from the amount for
      which Borrower is liable under this paragraph 16.

    (d)
      Borrower shall cause the Collateral subjected to partial loss to be restored
      to
      original capability. Lender shall, upon receiving satisfactory evidence of
      restoration, promptly pay to Borrower, or such other party as Borrower shall
      direct, the proceeds of any insurance or compensation received by Lender, by
      reason of such partial loss.

    (e)
      Lender shall not be obligated to undertake the collection of any claim against
      any person for either total or partial loss of the Collateral. After Borrower
      discharges its obligations to Lender under either paragraph 16(c) or 16(d)
      above, Borrower may, for Borrower's own account, proceed to recover from third
      parties and shall be entitled to retain any amount recovered. Lender shall
      supply Borrower with any necessary assignment of claim.

    

    17.  INDEMNIFICATION.

    (a) Non-Tax
      Liability.
       Borrower
      agrees to indemnify each of Lender, its directors, officers and employees and
      each legal entity, if any, which controls Lender (the “Indemnified
      Parties”)
      and to
      hold each Indemnified Party harmless from and against any and all claims,
      damages, losses, liabilities and expenses (including all fees and charges of
      internal or external counsel with whom any Indemnified Party may consult and
      all
      expenses of litigation and preparation therefor) which any Indemnified Party
      may
      incur or which may be asserted against any Indemnified Party in connection
      with
      or arising out of the matters referred in this Agreement or any related document
      by any person, entity or governmental authority; whether (i) arising from or
      incurred in connection with any breach of a representation, warranty or covenant
      by Borrower; (ii) the manufacture, installation, use, condition (including,
      but
      not limited to, patent or other defects and whether or not discoverable by
      Borrower or Lender), operation, ownership, selection, delivery, leasing, removal
      or return of the Collateral, regardless of where, how or by whom operated;
      or
      (iii) arising out of or resulting from any suit, action, claim, proceeding
      or
      governmental investigation, pending or threatened, whether based on statute,
      regulation or order, or tort, or contract or otherwise, before any court or
      governmental authority, which arises out of or relates to this Agreement or
      any
      related document; provided, however, that the foregoing indemnity agreement
      shall not apply to claims, damages, losses, liabilities and expenses solely
      attributable to an Indemnified Party’s gross negligence or willful misconduct.
      The indemnity agreement contained in this Paragraph shall survive the
      termination of this Agreement, prepayment of any amounts due and assignment
      of
      any rights hereunder. Borrower may participate at its expense in the defense
      of
      any such action or claim.

     

    
      
         

      

      
        -
          3 -

        
          

        

      

      
         

      

    

    (b)
      Direct
      Tax Costs. Borrower
      agrees to indemnify, protect, and hold harmless each Indemnified Party, from
      and
      against any and all taxes, license fees, assessments and other governmental
      charges, fees, fines or penalties of whatsoever kind or character and by
      whomsoever payable, which are levied, assessed, imposed or incurred during
      the
      term of this Agreement, (i) on or relating to the Collateral, including any
      tax
      on the sale, ownership, use, leasing, shipment, transportation, delivery or
      operation thereof, (ii) on the exercise of any option, election or performance
      of any obligation by Borrower hereunder, (iii) of the kind generally referred
      to
      in items (i) and (ii) above which may remain unpaid as of the date of delivery
      of the Collateral to Borrower irrespective of when the same may have been
      levied, assessed, imposed or incurred, and (iv) by reason of all gross receipts
      and like taxes on or measured by rents payable hereunder levied by any state
      or
      local taxing authority having jurisdiction where the Collateral is located.
      Borrower agrees to comply with all state and local laws requiring the filing
      of
      ad valorem tax returns relating to the Collateral. Any statements for such
      taxes
      received by Lender shall be promptly forwarded to Borrower. This subparagraph
      shall not be deemed to obligate Borrower to pay (i) any taxes, fees, assessments
      and charges which may have been included in the Loan amount financed by Lender
      as set forth in the related Request For Advance, other than as payable pursuant
      to the terms of such Request For Advance, or (ii) any income or like taxes
      against Lender on or measured by the net income from the payments hereunder.
      Borrower shall not be obligated to pay any amount under this subparagraph so
      long as it shall, at its expense and in good faith and by appropriate
      proceedings, contest the validity or the amount thereof unless such contest
      would adversely affect the lien or security interest of Lender on the Collateral
      or would subject the Collateral to forfeiture or sale. Borrower agrees to
      indemnify each Indemnified Party against any loss, claim, demand and expense
      including legal expense resulting from such nonpayment or contest.

    (c)
      Indemnity
      Payment.
      The
      amount payable pursuant to subparagraphs 17(a) and 17(b) shall be payable upon
      demand of Lender accompanied by a statement describing in reasonable detail
      such
      loss, liability, injury, claim, expense or tax and setting forth the computation
      of the amount so payable.

    (d)
      Survival.
      The
      indemnities and assumptions of liabilities and obligations provided for in
      this
      paragraph 17 shall continue in full force and effect notwithstanding the
      expiration or other termination of this Agreement.

    

    18.  BORROWER'S
      ASSIGNMENT.
      Without
      Lender’s prior written consent, Borrower shall not assign, bail, lease,
      hypothecate, encumber, transfer or dispose of the Collateral or any interest
      in
      this Agreement nor impair Lender's security interest on the Collateral. Any
      attempted assignment without Lender’s written consent shall be void and of no
      effect. Borrower shall not assign this Agreement, nor shall this Agreement
      or
      any rights under this Agreement or in the Collateral inure to the benefit of
      any
      trustee in bankruptcy, receiver, creditor, or other successor of Borrower
      whether by operation of law or otherwise.

    

    19.  LENDER'S
      ASSIGNMENT.
      All
      rights of Lender hereunder, in the payments and in the Collateral may be
      assigned, pledged, mortgaged, transferred, or otherwise disposed of, either
      in
      whole or in part, with ten (10) day advance written notice to Borrower. No
      such
      assignee shall be obligated to perform any duty, covenant, or condition required
      to be performed by Lender under the terms of this Agreement unless such assignee
      expressly assumes such obligations. Lender shall remain liable to Borrower
      hereunder to perform such duty, covenant, and condition unless such assignee
      expressly assumes Lender's obligations, in which event Borrower hereby releases
      Lender from such obligations. Such assignee shall have all rights, powers and
      remedies given to Lender by this Agreement, and shall be named as lender loss
      payee or co-insured under all policies of insurance maintained pursuant to
      paragraph 20 hereof. If Lender assigns this Agreement or the monies due or
      to
      become due hereunder or any other interest herein, Borrower agrees not to assert
      against Lender's assignee any defense, set-off, recoupment, claim or
      counterclaim which Borrower may have against Lender, whether arising under
      this
      Agreement or any other transaction between Lender and Borrower. Subject to
      paragraph 18 hereof and this paragraph 19, this Agreement inures to the benefit
      of, and is binding upon, the heirs, legatees, personal representatives,
      successors and assigns of the parties hereto.

    

    20.  INSURANCE.
      Borrower will at its own expense insure the Collateral in compliance with the
      terms and conditions of the applicable Request For Advance, in form and in
      an
      amount satisfactory to Lender with insurance carriers approved by Lender. The
      proceeds of any insurance claim due to the theft or loss of or damage to the
      Collateral shall be applied as provided in paragraph 16 hereof. In addition
      to
      the compliance with the terms and conditions of the applicable Schedule and
      the
      other terms and conditions of this paragraph 20, Borrower shall comply with
      the
      following conditions:

    (a)
      Borrower, prior to the inception of the term of this Agreement, shall deliver
      to
      Lender all required policies of insurance or, in the alternative, other proper
      evidence of insurance, which shall be sufficiently detailed to advise Lender
      of
      all types of coverage and inclusions;

    (b)
      Borrower shall cause each insurer to agree by endorsement to the policies that
      each insurer will give at minimum thirty (30) days' written notice to Lender
      before any policy will be altered or canceled for any reason, including, without
      limitation, failure of the Borrower to pay premiums;

    (c)
      All
      coverage must be in effect upon delivery, or when Borrower assumes the risk
      of
      loss, whichever is earlier, and will provide coverage without geographic
      limitation;

    (d)
      All
      policies must provide that Lender is an additional insured for all aspects
      of
      general liability insurance, and is lender loss payee for all aspects of
      insurance relating to the theft or loss of or damage to the
      Collateral;

    (e)
      Borrower will furnish renewal policies or renewal evidence of insurance listing
      Lender as an additional insured and lender loss payee, as required by this
      Agreement, no later than thirty (30) days prior to the expiration of any
      insurance required hereby;

    (f)
      Borrower appoints Lender its attorney-in-fact to apply any insurance proceeds
      received with respect to the Collateral. 

    

    
      
         

      

      
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          4 -

        
          

        

      

      
         

      

    

    21.  FURTHER
      ASSURANCES.
      Borrower agrees that if the location of any Collateral changes from the location
      listed in the applicable Request For Advance, or if Borrower changes its name
      or
      form or jurisdiction of organization (or if a natural person or general
      partnership, changes his, her or its principal residence), or establishes a
      name
      in which it may do business, Borrower will immediately notify Lender of the
      additions or changes. If Lender shall so request, Borrower shall execute and
      deliver to Lender such documents, including UCC financing and continuation
      statements as Lender shall deem necessary or desirable for purposes of
      continuing this Agreement or recording or filing to protect the interest of
      Lender in the Collateral. By its signature hereon, Borrower hereby authorizes
      Lender to execute and file against Borrower any such UCC financing, amendment
      and continuation statements. All filing fees and expenses shall be borne by
      Borrower. Borrower shall also execute such other agreements, documents and
      instruments including schedules, supplements and assignments as may be required
      by Lender to further set forth the terms hereof and secure the repayment of
      the
      Loan and protect Lender’s interest in the Collateral.

    

    22.  FURNISHING
      FINANCIAL INFORMATION.
      During
      the term of this Agreement and any extensions or renewals hereof, Borrower
      will
      furnish to Lender:

    (a)
      Within forty five (45) days of the quarter end of Borrower's first three fiscal
      quarters, a balance sheet, statement of cash flows and a statement of income
      of
      Borrower (“Financial
      Statements”)
      as of
      the close of such period from the beginning of the fiscal year to the date
      of
      such statement, prepared in accordance with generally accepted accounting
      principles, consistently applied, and in such reasonable detail as Lender may
      request, certified as true, complete and correct by an authorized officer of
      Borrower.

    (b)
      As
      soon as practicable, but in any event within ninety (90) days after the end
      of
      each fiscal year, a copy of its annual audited Financial Statements certified
      without qualification by an independent certified public accountant of
      recognized standing.

    (c)
      In a
      timely manner such Financial Statements, reports and other information as the
      Borrower shall send from time to time to its stockholders and/or file with
      the
      Securities and Exchange Commission and/or other materials which Lender shall
      reasonably request.

    

    23.  PARAGRAPH
      INTENTIONALLY LEFT BLANK

    

    24.  PERFORMANCE
      OF OBLIGATIONS OF BORROWER BY LENDER.
      If
      Borrower fails to promptly perform any of its obligations under this Agreement,
      Lender may perform the same for the account of Borrower without waiving
      Borrower's failure as a default. All sums paid or expense or liability incurred
      by Lender in such performance (including reasonable legal fees) together with
      interest thereon at the highest contract rate enforceable against Borrower,
      but
      never at a higher rate than fifteen percent (15%) per annum simple interest,
      shall be payable by Borrower upon demand as additional sums due as an
      Obligation.

    

    25.  EVENTS
      OF DEFAULT.
      Any of
      the following events or conditions shall constitute an event of default
      (“Event
      of Default”)
      hereunder and entitle the Lender, at its option, to avail itself of the remedies
      more fully set forth in paragraph 26 hereof:

    (a)
      Non-payment by the Borrower of any payment or other amount provided for in
      this
      Agreement which continues for a period of ten (10) days following the date
      when
      due;

    (b)
      Borrower shall (i) fail to perform any covenant or requirement relating to
      insurance or environmental matters;
      (ii) fail to keep the Collateral free of any claims, levies, liens and
      encumbrances; (iii) fail to prevent the Collateral from being subject to a
      foreclosure or forfeiture proceeding, execution or attachment; or (iv) terminate
      this Agreement or any other Loan Document prior to payment in full of all
      amounts due hereunder; 

    (c)
      Death
      or judicial declaration of incompetency of Borrower, if an individual, or death
      or judicial declaration of incompetency of an individual partner or member
      if
      Borrower is a partnership or a limited liability company;

    (d)
      The
      filing by or against Borrower of any proceeding in bankruptcy, receivership,
      insolvency, reorganization, liquidation, conservatorship, or similar proceeding
      (and in the case of any such proceeding instituted against Borrower, such
      proceeding is not dismissed or stayed within thirty (30) days of the
      commencement thereof, provided that Lender shall not be obligated to advance
      additional funds during such period); 

    (e)
      Borrower shall make an assignment for the benefit of creditors, or any levy,
      garnishment, attachment or similar proceedings instituted against any property
      of Borrower held by or deposited with Lender; 

    (f)
      A
      final judgment for the payment of money in excess of $150,000 is rendered
      against Borrower, or any attachment proceedings is instituted with respect
      to
      any significant portion of Borrower's assets or property, and such judgment
      or
      attachment remains undischarged for a period of sixty (60) days during which
      execution shall not be effectively stayed;

    (g)
      Borrower shall make any material change in the nature of its business as carried
      on as of the date hereof or in
      the
      composition of its current executive management, or in its
      equity
      ownership;

    (h)
      Any
      event described in subparagraphs 25(c) through 25(g) hereof shall occur with
      respect to any guarantor or any other party liable for payment or performance
      of
      this Agreement;

     

    
      
         

      

      
        -
          5 -

        
          

        

      

      
         

      

    

    (i)
      Any
      certificate, statement, representation, warranty or financial statement
      heretofore or hereafter furnished pursuant to or in connection with this
      Agreement by or on behalf of Borrower or any guarantor or other party liable
      for
      payment or performance of this Agreement is false in any material respect at
      the
      time as of which the facts therein set forth were stated or certified, or omits
      any substantial contingent or unliquidated liability or claim against Borrower
      or any such guarantor or other party, or, upon the date of execution of this
      Agreement or any Request For Advance, there shall have been any materially
      adverse change in any of the facts disclosed by any such certificate, statement,
      representation or warranty, which shall not have been disclosed in writing
      to
      Lender at or prior to the time of execution of this Agreement or such Request
      For Advance; 

    (j)
      The
      Borrower shall fail to perform any non-monetary covenant, obligation, term
      or
      condition of this Agreement or any other Loan Document not described in this
      Paragraph 25 which failure continues for a period of thirty (30) days following
      the earlier of the date when the responsible Officer of the Borrower became
      aware of such failure or the date of written notice thereof to Borrower by
      Lender.

    

    26.  REMEDIES.
      Upon
      the happening of any Event of Default hereunder, the rights and duties of the
      parties shall be as set forth in this Section. Lender may elect, in its sole
      discretion, to do one or more of the following upon the occurrence of an Event
      of Default, and at any time thereafter:

    (a)
      Lender may demand that Borrower deliver the Collateral to Lender whereupon
      Borrower shall promptly deliver the Collateral to Lender at that place or those
      places designated by Lender. If Borrower does not so deliver the Collateral,
      Borrower shall make the Collateral available for retaking and authorizes Lender,
      its employees and agents to enter the premises of Borrower and any other
      premises (insofar as Borrower can permit) for the purpose of retaking. In the
      event of retaking, Borrower expressly waives all rights to possession. Any
      repossession accomplished under this paragraph 26 shall not release Borrower
      from liability for damages of Lender sustained by reason of Borrower's default
      hereunder.

    (b)
      Lender may revoke Borrower's privilege of making payments in installments
      causing acceleration of all remaining payments through the remaining term of
      this Agreement, and, upon Lender's demand, as liquidated damages, and not as
      a
      penalty, Borrower shall promptly pay to Lender the aggregate of (i) all
      payments, principal and interest, accrued and unpaid prior to the date of such
      Event of Default, (ii) all future payment due through the end of the term of
      this Agreement or through the end of any extension thereof, as the case may
      be,
      (iii) all costs and expenses incurred by Lender in the repossession, recovery,
      storage, repair, inspection, appraisal, refurbishing, sale, release or other
      disposition of the Collateral, (iv) reasonable attorney's fees and costs,
      including any fees or costs incurred by Lender in defending any action relating
      to this Agreement or participating in any bankruptcy or insolvency proceeding
      to
      which Borrower is a party, or otherwise incurred due to Borrower's default,
      and
      (v) any claim for indemnity, if any, in favor of Lender hereunder. In the event
      that any court having jurisdiction shall determine that in calculating damages
      hereunder as a result of a default by Borrower that sums payable in the future
      under the Agreement must be discounted to present value, the discount rate
      to be
      applied in such case shall equal the discount rate of the Federal Reserve Bank
      of Cleveland then in effect on the earlier of the date of entry of judgment
      on
      such claim or the date of payment of such sum by Borrower.

    (c)
      In
      its sole discretion, Lender may sell the Collateral or any part thereof, at
      public auction or by private sale or lease at such time or times and upon such
      terms as Lender may determine, free and clear of any rights of Borrower and
      notice shall be given in writing of such sale or Agreement by Lender to Borrower
      given not less than fifteen (15) days prior to the date thereof shall constitute
      reasonable notice thereof to Borrower. All proceeds of the sale less (i) all
      expenses incurred in retaking the Collateral, making necessary repairs to the
      Collateral and enforcing this Agreement, (ii) all damages that Lender shall
      have
      sustained by reason of Borrower's default, and (iii) reasonable attorney's
      fees
      and expenses shall be credited against Borrower's liability hereunder as and
      when received by Lender. Sums in excess of Borrower's liability shall belong
      to
      Borrower. Borrower shall be liable for any deficiency.

    (d)
      The
      provisions of this paragraph 26 shall not prejudice Lender's right to recover
      or
      prove damages for unpaid amounts accrued prior to default, or bar an action
      for
      a deficiency as herein provided, and the bringing of an action with an entry
      of
      judgment against Borrower shall not bar Lender's right to repossess any or
      all
      of the Collateral.

    (e)
      Lender's remedies shall be available to Lender's successors and assigns, shall
      be in addition to all other remedies provided to it under the Uniform Commercial
      Code (specifically, the remedies set forth in 13 Pa. C.S. §§ 2A523(a), (b) and
      (c)) or by any other applicable law, and may be exercised concurrently or
      consecutively. 

    

    27.  BORROWER
      REPRESENTATIONS AND WARRANTIES.
      In
      order to induce Lender to enter into this Agreement and to make the Loan to
      Borrower, Borrower represents and warrants, as of the date hereof, and as of
      the
      date of execution of any Request For Advance hereunder, that:

    (a)
      If
      not a natural person, Borrower is an entity duly organized, validly existing
      and
      in good standing under the laws of the jurisdiction of its organization with
      full power and authority to conduct its business as such business is presently
      being conducted, to own or hold property to enter into and perform its
      obligations under this Agreement. Borrower is duly qualified to do business
      and
      is in good standing as a foreign entity in all states where its failure to
      so
      qualify would have a material adverse effect on its ability to perform its
      obligations under this Agreement.

    (b)
      Borrower has full power and authority to enter into the transactions provided
      for in this Agreement and has been duly authorized to do so by all necessary
      and
      appropriate action, and, when executed and delivered by Borrower, this Agreement
      will constitute the legal, valid and binding obligations of Borrower,
      enforceable in accordance with its terms.

    (c)
      The
      execution, delivery, and performance by Borrower of this Agreement and all
      related instruments and the consummation by Borrower of the transactions
      contemplated hereby: (i) do not require any stockholder approval or the consent
      of any trustee or holder of any indebtedness or obligation of Borrower or any
      consent, authorization, or approval or filing of or registration with, or other
      actions in respect to any federal, state, governmental authority or agency
      (or,
      if so required, such approval or consent has been obtained), (ii) do not and
      will not result in any material violation of any term of any agreement,
      instrument, judgment, decree, franchise, permit, order, law, statute, rule,
      or
      governmental regulation presently applicable to it, (iii) are not in conflict
      with and do not constitute a default under any of the terms or provisions of,
      or
      subject the Collateral or any part thereof to any lien of, any indenture,
      mortgage, lease, contract, or other agreement or instrument (other than this
      Agreement) to which Borrower is a party or by which it or its property is bound
      or affected, and (iv) do not and will not contravene Borrower's organizational
      documents.

     

    
      
         

      

      
        -
          6 -

        
          

        

      

      
         

      

    

    (d)
      Except as disclosed in the LCA-Vision Inc. 2007 form 10K, there are no pending
      actions or proceedings to which Borrower is a party, and there are no other
      pending or threatened actions or proceedings of which Borrower has knowledge,
      before any court, arbitrator, or administrative agency, which either
      individually or in the aggregate, would materially adversely affect the
      financial condition of Borrower, the ability of Borrower to perform its
      obligation hereunder. Further, Borrower is not in default under any material
      obligations for the payment of borrowed money, for the deferred purchase price
      of property or for the payment of any rent which, either individually or in
      the
      aggregate, would have the same such effect.

    (f)
      Under
      the laws of the state(s) in which the Collateral is to be located, the
      Collateral consists solely of personal property.

    (g)
      The
      financial statements of Borrower (copies of which have been furnished to Lender)
      have been prepared in accordance with generally accepted accounting principles
      consistently applied, and accurately and completely present Borrower's financial
      condition and the results of its operations as of the date of and for the period
      covered by such statements, and since the date of such statements there has
      been
      no material adverse change in such conditions or operations.

    (h)
      The
      address stated on page one of this Agreement is the chief place of business
      and
      chief executive office of Borrower and the place where all books and records
      concerning the Collateral are kept; the address set forth on the applicable
      Request For Advance is the location at which the applicable Collateral is kept;
      and Borrower does not conduct business under a trade, assumed, or fictitious
      name other than Lasik Plus.

    

    28.  GOVERNING
      LAW AND JURISDICTION.
      This
      Agreement has been delivered and accepted and will be deemed to be made in
      the
      State where Lender’s office indicated above is located. THIS AGREEMENT AND ALL
      AGREEMENTS, INSTRUMENTS AND DOCUMENTS HERETOFORE, NOW OR HEREAFTER EXECUTED
      BY
      BORROWER AND DELIVERED TO LENDER RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
      CONTEMPLATED HEREBY WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
      PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE
      LENDER’S OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT OF LAWS
      RULES. Borrower hereby irrevocably consents to the exclusive jurisdiction of
      any
      state or federal court in the county or judicial district where Lender’s office
      indicated above is located; provided that nothing contained in this Agreement
      will prevent Lender from bringing any action, enforcing any award or judgment
      or
      exercising any rights against Borrower individually, against any security or
      against any of Borrower’s property within any other county, state or foreign or
      domestic jurisdiction. Lender and Borrower agree that the venue provided above
      is the most convenient forum for both parties. Borrower waives any objection
      to
      venue and any objection based on a more convenient forum in any action
      instituted under this Agreement. 

    

    29.  NOTICES.
      All
      notices, demands, requests, consents, approvals and other communications
      required or permitted hereunder (“Notices”)
      must be
      in writing and will be effective upon receipt. Notices may be given in any
      manner to which the parties may separately agree, including electronic mail;
      provided that Notices relating to any Event of Default shall not be given by
      electronic mail. Without limiting the foregoing, first-class mail, facsimile
      transmission and commercial courier service are hereby agreed to as acceptable
      methods for giving Notices. Regardless of the manner in which provided, Notices
      may be sent to a party’s address as set forth above or to such other address as
      any party may give to the other for such purpose in accordance with this
      paragraph.

    

    30.  MISCELLANEOUS  

    (a)
      In
      this Agreement, unless Lender and Borrower otherwise agree in writing, the
      neuter gender includes the masculine and feminine; the singular includes the
      plural and the plural the singular; the word “or” shall be deemed to include
“and/or”; and the words “including”, “includes” and “include” shall be deemed to
      be followed by the words “without limitation”. Whenever the word Lender is used
      herein, it shall include all assignees of Lender. If there is more than one
      Borrower named in this Agreement, the liability of each shall be joint and
      several.

    (b)
      Reference to agreements and other contractual instruments shall be deemed to
      include all subsequent amendments and other modifications to such instruments,
      but may to the extent such amendments and other modifications are not prohibited
      by the terms of this Agreement. Section headings in this Agreement are included
      for convenience of reference only and shall not constitute a part of this
      Agreement for any other purpose. Unless otherwise specified by this Agreement,
      all accounting terms shall be interpreted and all accounting determinations
      shall be in accordance with GAAP.

    (c)
      Time
      is of the essence in the performance of this Agreement and each and all of
      its
      provisions.

    (d)
      If
      any provision of this Agreement is held invalid or unenforceable, the remaining
      provisions will not be affected thereby, and to this end, the provisions of
      this
      Agreement are declared severable.

    (e)
      If
      there is any conflict between the terms of any Request For Advance and this
      document, or between any Request For Advance and any other documents, the terms
      of the Request For Advance shall control. 

    (f)
      Borrower will reimburse Lender for Lender’s expenses (including the reasonable
      fees and expenses of Lender’s outside and in-house counsel) in connection with
      any amendments or modifications to this Agreement or any other Loan Document,
      and in connection with any collection or enforcement actions hereunder or
      thereunder. 

    (g)
      This
      Agreement, the Requests For Advance, and any other Loan Documents executed
      and
      delivered pursuant hereto or thereto constitute the entire agreement between
      Lender or Borrower with respect to the Collateral and the subject matter of
      this
      Agreement and supersede all other prior agreements and understandings whether
      oral or written between the parties with respect to the subject matter hereof.
      This Agreement may not be changed, waived, amended or terminated except by
      written agreement signed by both Lender and Borrower, except that Lender may
      insert on the applicable Request For Advance the serial numbers of the
      Collateral after delivery thereof. No express or implied waiver by Lender of
      any
      Event of Default hereunder shall in any way be, or be construed to be, a waiver
      of any future and/or subsequent Event of Default whether similar in kind or
      otherwise but shall be effective only in the specific instance and for the
      purpose for which given. No Notice to Borrower in any case will entitle Borrower
      to any other or further Notice in the same, similar or other
      circumstances.

     

    
      
         

      

      
        -
          7 -

        
          

        

      

      
         

      

    

    (h)
      Neither Lender nor Borrower shall not issue any press release or other public
      disclosures, whether written or oral, of the existence or terms of this
      Agreement without the other party’s prior written consent; provided,
      that
      the foregoing shall not prohibit either party from making any disclosures to
      or
      filings with any governmental authority, or from disclosing this Agreement
      to
      either party’s accountants, attorneys and other agents or to either party’s
      lenders, or from reflecting the terms of this Agreement in any financial
      statements or reports made public in the ordinary course of either party’s
      business.

    

    31.  COUNTERPARTS.
      This
      Agreement may be signed in any number of counterpart copies and by the parties
      hereto on separate counterparts, but all such copies shall constitute one and
      the same instrument. Delivery of an executed counterpart of a signature page
      to
      this Agreement by facsimile transmission shall be effective as delivery of
      a
      manually executed counterpart. Any party executing this Agreement by facsimile
      transmission shall promptly deliver a manually executed counterpart, provided
      that any failure to do so shall not affect the validity of the counterpart
      executed by facsimile transmission.

    

    32.  WAIVER
      OF JURY TRIAL.
      EACH OF
      LENDER AND BORROWER HEREBY WAIVES ANY RIGHT TO DEMAND A JURY TRIAL WITH RESPECT
      TO ANY ACTION OR PROCEEDING INSTITUTED BY LENDER OR BORROWER IN CONNECTION
      WITH
      THIS AGREEMENT OR ANY TRANSACTION RELATED HERETO. BORROWER AND LENDER
      ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY. 

    

    Borrower
      acknowledges that it has read and understood all the provisions of this
      Agreement, including the waiver of jury trial, and has been advised by counsel
      as necessary or appropriate.

    

    WITNESS
      the due execution hereof with the intent to be legally bound.

     

    
      	WITNESS/ATTEST:	 	BORROWER:
LCA-VISION
              INC. 
	 	 	 	 	 
	By:	/s/ Barbara
              E. Ruskaup	 	By:	/s/ Michael
              J. Celebrezze
	Title:	Administrative
              Director	 	Title:	Senior
              Vice
              President Finance & Treasurer

    

    
       

       

      
        	 	 	LENDER:
PNC
                EQUIPMENT FINANCE, LLC
	 	 	 	 	 
	 	 	 	By:	/s/ Cheree
                F.
                Kurela
	 	 	 	Title:	Vice
                President

      

       

      
        
           

        

        
          -
            8 -

          
            

          

        

        
           

        

         

        
          
            	Request For
                    Advance	
                    

                  
	 	 

          

           

          
            	Advance Number:
                    04940-001	
                    Loan
                      and Security Agreement
                      Number:
                      04940

                  
	Date of Request:
                    4/24/08	
                    Date
                      of Loan and Security Agreement:
                      4/24/08

                  

          

           

        

        
          LCA-VISION
            INC.
            ("Borrower") hereby requests an advance from PNC Equipment Finance, LLC
            ("Lender") in the amount of $19,184,075.00 ("Loan") under that certain
            Loan and
            Security Agreement between Lender and Borrower dated April 24, 2008 (as
            amended,
            restated or replaced from time to time, the "Agreement"). Any capitalized
            term
            used without definition in this Request For Advance shall have the same
            meaning
            given to such term in the Agreement. To induce Lender to make such advance,
            the
            Borrower hereby represents, covenants, warrants and agrees as
            follows:

          

          
            	
                    1.
                      

                  	
                    COLLATERAL:
                      The
                      requested Loan is for the purpose of financing the following-described
                      property: Advanced
                      Medical Optics (AMO), IntraLase FS Laser vision correction
                      Lasik
                      system
                      (the "Collateral"). Borrower has attached hereto a copy of
                      the purchase
                      invoice for the Collateral and the certificate of title related
                      thereto.
                      Borrower hereby grants the Lender a security interest in the
                      Collateral,
                      which security interest will be governed by the terms and conditions
                      of
                      the Agreement. Borrower agrees to promptly execute and deliver
                      to Lender
                      such other instruments or documents as may be required by Lender
                      to
                      perfect its security interest in the Collateral, including,
                      delivery to
                      Lender of the original titles to vehicles (if any) relating
                      to the
                      Collateral.

                  

          

          

          
            	2.	
                    INTEREST:
                      The Loan shall accrue interest at the following fixed rate
                      per annum:
                      4.96%

                  

          

          

          
            	
                    3.
                      

                  	
                    TERMS:
                      The Loan will be for a term of sixty (60) months commencing
                      on April 24,
                      2008, and maturing on April 24, 2013. Borrower agrees to repay
                      the Loan in
                      Sixty (60) equal monthly installments of principal together
                      with interest
                      in the amount of $361,675.70, as billed monthly by Lender at
                      the rate set
                      forth in paragraph 2 above, each such payment due and payable
                      on the 24th
                      day of the month and all other sums due hereunder shall be
                      due and payable
                      on April 24, 2013.

                  

          

          

          
            	
                    4.
                      

                  	
                    PREPAYMENT:
                      So long as no Event of Default under the Agreement has occurred
                      and is
                      continuing, Borrower may prepay all, but not less than all,
                      of the
                      outstanding principal of the Loan prior to the maturity date
                      set forth in
                      the preceding paragraph, provided that upon such prepayment
                      Borrower shall
                      also pay to Lender a prepayment charge equal to three percent
                      (3%) of the
                      remaining principal balance of the Loan if such prepayment
                      is made during
                      the first (1st)
                      year of the original term of the Loan set forth in the preceding
                      paragraph, two percent (2%) of the remaining principal balance
                      of the Loan
                      if during the second (2nd)
                      year of the original term of the Loan, one percent (1%) of
                      the remaining
                      principal balance if during the third (3rd)
                      year of the original term of the Loan, five tenths percent
                      (.5%) of the
                      remaining principal balance of the Loan if during the fourth
                      (4th)
                      year of the original term of the Loan or zero percent (0%)
                      of the
                      remaining principal balance of the Loan if during the fifth
                      (5th)
                      year of the original term of the Loan. All prepayments of principal
                      shall
                      be accompanied by the payment of accrued interest on the amount
                      of such
                      prepayment to the date thereof.

                  

          

          

          
            	
                    5.
                      

                  	
                    INSURANCE:
                      In
                      addition to the requirements contained in the Agreement, the
                      following
                      insurance requirements shall apply: (a) liability coverage:
                      (i) general
                      liability including/comprehensive form: premises/operations;
                      products/completed operations; contractual liability; independent
                      contractors; broad form property damage; personal injury; and
                      collapse
                      hazard; (ii) bodily injury and property damage combined single
                      limit per
                      occurrence: $3,000,000; (iii) fire-legal liability-custody,
                      care or
                      control, each occurrence: $100,000; and (b) property coverage:
                      all risk of
                      physical loss; equipment must be insured for at least the total
                      original
                      cost.

                  

          

          

          
            	
                    6.
                      

                  	
                    REPRESENTATIONS
                      AND WARRANTIES:
                      Borrower hereby (a) reaffirms the representations and warranties
                      made by
                      Borrower to the Lender in the Agreement and the other Loan
                      Documents; (b)
                      represents that Borrower is in compliance with all of the terms
                      and
                      conditions of the Loan Documents; and (c) represents that no
                      Event of
                      Default or event which with the passage of time, the giving
                      of notice, or
                      both, would constitute an Event of Default, has occurred and
                      is
                      continuing.

                  

          

          

          WITNESS
            the due execution hereof with the intent to be legally bound.

           

          
            
              	Accepted
                      By:
                      PNC EQUIPMENT FINANCE, LLC, Lender	 	LCA-VISION
                      INC., Borrower
	 	 	 	 	 
	By:	/s/ Cheree
                      F.
                      Kurela	 	By:	/s/ Michael
                      J. Celebrezze
	Title:	Vice
                      President	 	Title:	Senior
                      Vice
                      President Finance & Treasurer

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