Document:

Exhibit
      10.1

     

    ASSET
      PURCHASE AGREEMENT

     

    by
      and
      among

     

    Harbin
      Electric, Inc.

     

    (as
      “Harbin”),

     

    Harbin
      Tech Full Electric Co., Ltd.

     

    (as
      “Purchaser”),

     

    Harbin
      Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司)

     

    (as
      “Seller”),

     

    and

     

    Tianfu
      Yang,

     

    Tianli
      Yang,

     

    Suofei
      Xu,

     

    Zedong
      Xu

     

    and

     

    Harbin
      Tech Full Industry Co., Ltd.

     

    (as
      “Shareholders”)

     

    Dated
      as
      of June 16, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

     

    
      	 	 	 	 	 	
              Page

            
	 ARTICLE
              I DEFINITIONS AND DEFINED TERMS	 	
              1

            
	 	 	 
	 ARTICLE
              II PURCHASE AND SALE OF THE INTERESTS; CLOSING	 	
              7

            
	 	 	 	 	 	 
	
               

            	
              Section
                2.1

            	 	
              Purchase
                and Sale of Assets

            	 	
              7

            
	 	
              Section
                2.2

            	 	
              Excluded
                Assets

            	 	
              9

            
	 	
              Section
                2.3

            	 	
              Assumed
                Liabilities

            	 	
              9

            
	 	
              Section
                2.4

            	 	
              Excluded
                Liabilities

            	 	
              9

            
	 	
              Section
                2.5

            	 	
              Consideration

            	 	
              10

            
	 	
              Section
                2.6

            	 	
              The
                Closing

            	 	
              10

            
	 	
              Section
                2.7

            	 	
              Deliveries
                at Closing

            	 	
              10

            
	 	
              Section
                2.8

            	 	
              Allocation
                of Purchase Price

            	 	
              11

            
	 	 	 	 	 	 
	 ARTICLE
              III REPRESENTATIONS AND WARRANTIES OF SELLER AND
              SHAREHOLDERS	 	
              12

            
	 	 	 	 	 	 
	 	
              Section
                3.1

            	 	
              Organization
                and Good Standing

            	 	
              12

            
	 	
              Section
                3.2

            	 	
              Authorization
                and Effect of Agreement

            	 	
              12

            
	 	
              Section
                3.3

            	 	
              No
                Subsidiaries; Other Interests

            	 	
              12

            
	 	
              Section
                3.4

            	 	
              No
                Conflict

            	 	
              13

            
	 	
              Section
                3.5

            	 	
              No
                Other Agreement

            	 	
              13

            
	 	
              Section
                3.6

            	 	
              Title
                to Assets

            	 	
              13

            
	 	
              Section
                3.7

            	 	
              Permits;
                Compliance with Law

            	 	
              14

            
	 	
              Section
                3.8

            	 	
              Books
                and Records

            	 	
              14

            
	 	
              Section
                3.9

            	 	
              Litigation

            	 	
              14

            
	
               

            	
              Section
                3.10

            	 	
              Financial
                Statements; Undisclosed Liabilities; Internal Controls

            	 	
              15

            
	 	
              Section
                3.11

            	 	
              Absence
                of Certain Changes

            	 	
              16

            
	 	
              Section
                3.12

            	 	
              Contracts

            	 	
              16

            
	 	
              Section
                3.13

            	 	
              Customers

            	 	
              18

            
	 	
              Section
                3.14

            	 	
              Labor
                Relations

            	 	
              18

            
	 	
              Section
                3.15

            	 	
              Insurance

            	 	
              19

            
	 	
              Section
                3.16

            	 	
              Accounts
                Receivable

            	 	
              19

            
	 	
              Section
                3.17

            	 	
              Real
                Property; Leases

            	 	
              19

            
	 	
              Section
                3.18

            	 	
              Environmental

            	 	
              20

            
	 	
              Section
                3.19

            	 	
              No
                Broker

            	 	
              20

            
	 	
              Section
                3.20

            	 	
              Employee
                Benefits

            	 	
              21

            
	 	
              Section
                3.21

            	 	
              Employees

            	 	
              23

            
	 	
              Section
                3.22

            	 	
              Taxes
                and Tax Returns

            	 	
              23

            
	 	
              Section
                3.23

            	 	
              Intellectual
                Property

            	 	
              25

            
	 	
              Section
                3.24

            	 	
              Information
                Technology

            	 	
              26

            
	 	
              Section
                3.25

            	 	
              Guarantees

            	 	
              27

            
	 	
              Section
                3.26

            	 	
              Bank
                Accounts

            	 	
              27

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      	 	
              Section
                3.27

            	 	
              Foreign
                Corrupt Practices and International Trade Sanctions

            	 	
              27

            
	 	
              Section
                3.28

            	 	
              Inventory

            	 	
              27

            
	 	
              Section
                3.29

            	 	
              Encumbrances

            	 	
              27

            
	 	
              Section
                3.30

            	 	
              Sufficiency
                of Consideration

            	 	
              27

            
	 	
              Section
                3.31

            	 	
              Passive
                Foreign Investment Company

            	 	
              28

            
	 	
              Section
                3.32

            	 	
              Money
                Laundering Laws

            	 	
              28

            
	 	
              Section
                3.33

            	 	
              No
                Misleading Statements

            	 	
              28

            
	 	
              Section
                3.34

            	 	
              No
                Involuntary Liquidation, Insolvency, Winding-Up

            	 	
              28

            
	 	
              Section
                3.35

            	 	
              Product
                Warranties

            	 	
              29

            
	 	
              Section
                3.36

            	 	
              Privacy
                of Customer Information

            	 	
              29

            
	 	
              Section
                3.37

            	 	
              Distributors
                and Partners

            	 	
              29

            
	 	
              Section
                3.38

            	 	
              Suppliers

            	 	
              30

            
	 	
              Section
                3.39

            	 	
              Absence
                of Undisclosed Liabilities

            	 	
              30

            
	 	
              Section
                3.40

            	 	
              Securities
                Matters; Economic Risk; Sophistication

            	 	
              30

            
	 	
              Section
                3.41

            	 	
              Office
                of Foreign Assets Control of the U.S. Treasury Department

            	 	
              31

            
	 	 	 	 	 	 
	 ARTICLE
              IV REPRESENTATIONS AND WARRANTIES OF PURCHASER AND
              HARBIN	 	
              32

            
	 	 	 	 	 	 
	 	
              Section
                4.1

            	 	
              Organization
                of Purchaser and Harbin; Authority

            	 	
              32

            
	 	
              Section
                4.2

            	 	
              Authorization;
                Enforceability

            	 	
              32

            
	 	
              Section
                4.3

            	 	
              No
                Conflict

            	 	
              32

            
	 	 	 	 	 	 
	 ARTICLE
              V COVENANTS	 	
              33

            
	 	 	 	 	 	 
	 	
              Section
                5.1

            	 	
              Operation
                of Seller Pending the Closing

            	 	
              33

            
	 	
              Section
                5.2

            	 	
              Access

            	 	
              35

            
	 	
              Section
                5.3

            	 	
              Notification

            	 	
              35

            
	 	
              Section
                5.4

            	 	
              No
                Inconsistent Action

            	 	
              36

            
	 	
              Section
                5.5

            	 	
              Reasonable
                Best Efforts

            	 	
              36

            
	 	
              Section
                5.6

            	 	
              Further
                Assurances

            	 	
              36

            
	 	
              Section
                5.7

            	 	
              No
                Solicitation

            	 	
              37

            
	 	
              Section
                5.8

            	 	
              Tax
                Matters

            	 	
              37

            
	 	
              Section
                5.9

            	 	
              Release

            	 	
              37

            
	 	
              Section
                5.10

            	 	
              Restrictions
                on Sales

            	 	
              38

            
	
               

            	
              Section
                5.11

            	 	
              Payment
                of Liabilities

            	 	
              38

            
	 	 	 	 	 	 
	 ARTICLE
              VI CLOSING CONDITIONS	 	
              38

            
	 	 	 	 	 	 
	 	
              Section
                6.1

            	 	
              Conditions
                to Each Party’s Obligations

            	 	
              38

            
	 	
              Section
                6.2

            	 	
              Conditions
                Precedent to Obligations of Purchaser

            	 	
              38

            
	 	
              Section
                6.3

            	 	
              Conditions
                Precedent to Obligations of Seller

            	 	
              40

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    
      	 ARTICLE
              VII TERMINATION	 	
              40

            
	 	 	 	 	 	 
	 	
              Section
                7.1

            	 	
              Termination

            	 	
              40

            
	
               

            	
              Section
                7.2

            	 	
              Procedure
                and Effect of Termination

            	 	
              41

            
	 	 	 	 	 	 
	 ARTICLE
              VIII SURVIVAL; INDEMNIFICATION	 	
              42

            
	 	 	 	 	 	 
	 	
              Section
                8.1

            	 	
              Survival
                of Indemnification Rights

            	 	
              42

            
	 	
              Section
                8.2

            	 	
              Indemnification
                Obligations

            	 	
              42

            
	 	
              Section
                8.3

            	 	
              Indemnification
                Procedure

            	 	
              43

            
	 	
              Section
                8.4

            	 	
              Calculation
                of Indemnity Payments

            	 	
              44

            
	 	
              Section
                8.5

            	 	
              Indemnification
                Amounts

            	 	
              44

            
	 	 	 	 	 	 
	 ARTICLE
              IX MISCELLANEOUS PROVISIONS	 	
              44

            
	 	 	 	 	 	 
	
               

            	
              Section
                9.1

            	 	
              Notices

            	 	
              44

            
	 	
              Section
                9.2

            	 	
              Expenses

            	 	
              45

            
	 	
              Section
                9.3

            	 	
              Successors
                and Assigns

            	 	
              45

            
	 	
              Section
                9.4

            	 	
              Extension;
                Waiver

            	 	
              46

            
	 	
              Section
                9.5

            	 	
              Entire
                Agreement; Schedules

            	 	
              46

            
	 	
              Section
                9.6

            	 	
              Amendments,
                Supplements, Etc.

            	 	
              46

            
	 	
              Section
                9.7

            	 	
              Applicable
                Law

            	 	
              46

            
	 	
              Section
                9.8

            	 	
              Waiver
                of Jury Trial

            	 	
              46

            
	 	
              Section
                9.9

            	 	
              Actions
                by Seller

            	 	
              46

            
	 	
              Section
                9.10

            	 	
              Execution
                in Counterparts

            	 	
              47

            
	 	
              Section
                9.11

            	 	
              Titles
                and Headings

            	 	
              47

            
	 	
              Section
                9.12

            	 	
              Invalid
                Provisions

            	 	
              47

            
	 	
              Section
                9.13

            	 	
              Publicity

            	 	
              47

            
	 	
              Section
                9.14

            	 	
              Specific
                Performance

            	 	
              47

            
	 	
              Section
                9.15

            	 	
              Construction

            	 	
              47

            
	 	
              Section
                9.16

            	 	
              Labor
                and Employment Matters

            	 	
              48

            

    

     

    
      
        
        

      

      
        iii

        
          

        

      

       

    

    ASSET
      PURCHASE AGREEMENT

     

    This
      ASSET PURCHASE AGREEMENT (this “Agreement”)
      is
      made and entered into as of June 16, 2007 by and among Harbin Electric Inc.,
      a
      Nevada corporation (“Harbin”),
      Harbin Tech Full Electric Co., Ltd., a People’s Republic of China limited
      liability company and wholly owned subsidiary of Harbin (“Purchaser”),
      Harbin
      Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司),
      a
      limited liability company organized and existing under the laws of the People’s
      Republic of China (the “Seller”),
      and
      Tianfu Yang, Tianli Yang, Suofei Xu, Zedong Xu and Harbin Tech Full Industry
      Co., Ltd. (each a “Shareholder”
and
      collectively, “Shareholders”).

     

    RECITALS

     

    WHEREAS,
      Seller desires to sell substantially all of its assets to Purchaser,
      and
      Purchaser desires to purchase such assets from Seller, and Purchaser wishes
      to
      assume certain identified liabilities of Seller, all on the terms and subject
      to
      the conditions set forth in this Agreement; 

     

    WHEREAS,
      Seller owns legal title to all of the Assets and Excluded Assets;

     

    WHEREAS,
      Shareholders, directly or indirectly through Harbin Tech Full Industry Co.,
      Ltd., own 100% of the outstanding shares in Seller;

     

    NOW,
      THEREFORE, in consideration of the mutual representations, warranties, covenants
      and agreements herein contained, the Parties agree as follows:

     

    ARTICLE
      I

    DEFINITIONS
      AND DEFINED TERMS

     

    (a) As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    “Affiliate”
shall
      mean with respect to any Person, any other Person who, directly or indirectly,
      controls, is controlled by or is under common control with that Person. For
      purposes of this definition, a Person has control of another Person if it has
      the direct or indirect ability or power to direct or cause the direction of
      management policies of such other Person or otherwise direct the affairs of
      such
      other Person, whether through ownership of at least fifty percent (50%) of
      the
      voting securities of such other Person, by Contract or otherwise.

     

    “Business
      Day”
shall
      mean a day other than a Saturday, Sunday or other day on which commercial banks
      in New York City are authorized or required by law to close.

     

    “Code”
shall
      mean the Internal Revenue Code of 1986, as amended.

     

    “Consent”
shall
      mean any consent, approval or authorization of, notice to, permit, or
      designation, registration, declaration or filing with, any Person.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Contract”
shall
      mean, whether written or oral, any bond, debenture, note or other evidence
      of
      indebtedness, indenture, mortgage, deed of trust, lease, contract, agreement,
      permit, license, purchase order, sales order, instrument, arrangement or other
      commitment, obligation or understanding (including any understanding with
      respect to pricing) which a Person is a party or by which a Person or its assets
      or properties are bound.

     

    “Dollars”
and
      “$”
shall
      mean the lawful currency of the United States.

     

    “Employee”
shall
      mean any employee of Seller or any Person providing services through a
      third-party employee leasing or similar organization.

     

    “Exchange
      Act”
shall
      mean the Securities and Exchange Act of 1934, as amended.

     

    “GAAP”
shall
      mean U.S. generally accepted accounting principles.

     

    “Governmental
      Authority”
shall
      mean any federal, state, local, PRC national, provincial, local or other foreign
      government or any subdivision, agency, instrumentality, authority,
      quasi-governmental authority, regulatory agency or body, self-regulatory
      organization, department, commission, board or bureau thereof, domestic or
      foreign, or any federal, state, local or foreign court, tribunal or arbitrator.
      

     

    “Harbin
      Stock”
shall
      mean the common stock of Harbin.

     

    “IRS”
shall
      mean the Internal Revenue Service.

     

    “Knowledge”
      (including the word “Known”
and
      the
      phrase “to
      the
      Knowledge of”
and
      words or phrases of similar import) as to Seller or the Shareholders shall
      mean
      the knowledge of (i) Seller, Shareholders or the individuals listed on
Exhibit
      A
      with
      respect to Seller and (ii) the Shareholders with respect to Shareholders, in
      all
      such cases, after reasonable inquiry.

     

    “Laws”
shall
      mean all federal, state, local or foreign laws, orders, writs, injunctions,
      decrees, ordinances, awards, stipulations, treaties, statutes, judicial or
      administrative doctrines, rules or regulations enacted, promulgated, issued
      or
      entered by a Governmental Authority.

     

    “Liability”
shall
      mean any direct or indirect debts, obligations or liabilities of any nature,
      whether absolute, accrued, contingent, liquidated or otherwise, and whether
      currently due or to become due, asserted or unasserted, known or
      unknown.

     

    “Liens”
shall
      mean all title defects or objections, mortgages, liens, claims, charges, pledges
      or other encumbrances of any nature whatsoever, including licenses, leases,
      chattel or other mortgages, collateral security arrangements, pledges, title
      imperfections, defect or objection liens, security interests, conditional and
      installment sales agreements, easements, encroachments or restrictions, of
      any
      kind and other title or interest retention arrangements, reservations or
      limitations of any nature.

     

    “Losses”
shall
      mean all losses, liabilities, demands, claims, actions or causes of action,
      costs, damages, judgments, debts, settlements, assessments, deficiencies, Taxes,
      penalties, fines or expenses, whether or not arising out of any claims by or
      on
      behalf of a third-party, including interest, penalties, reasonable attorneys’
fees and expenses and all reasonable amounts paid in investigation, defense
      or
      settlement of any of the foregoing.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Material
      Adverse Effect”
shall
      mean any circumstance, change or effect that individually or in the aggregate
      with other circumstances, changes or effects, has a material adverse effect
      on
      (i) the properties, business, prospects, operations, earnings, assets,
      liabilities or condition (financial or otherwise) of Seller, (ii) the ability
      of
      Seller to perform its obligations under this Agreement or (C) the validity
      of
      any of this Agreement or the consummation of any of the transactions
      contemplated herein.

     

    “Nasdaq”
shall
      mean the National Association of Securities Dealers, Inc. Automated Quotation
      System.

     

    “Ordinary
      Course of Business”
shall
      mean the ordinary course of business of Seller consistent with past
      practice.

     

    “Organizational
      Documents”
shall
      mean (i) the articles or certificate of incorporation, the bylaws and any
      Shareholders agreement of a corporation, (ii) the partnership agreement and
      any
      statement of partnership of a general partnership, (iii) the limited partnership
      agreement and the certificate of limited partnership of a limited partnership,
      (iv) the operating or limited liability company agreement and certificate of
      formation or organization of any limited liability company, (v) any charter
      or
      similar document adopted or filed in connection with the creation, formation,
      or
      organization of a Person and (vi) any amendment to any of the
      foregoing.

     

    “Parties”
shall
      mean Harbin, Seller, Purchaser and Shareholders.

     

    “Permits”
shall
      mean all licenses, permits, certificates, Consents, orders, approvals and other
      authorizations from all Governmental Authorities, presently required or
      necessary to own or lease, as the case may be, and to operate Seller’s
      properties and to carry on its businesses as now conducted.

     

    “Permitted
      Liens”
shall
      mean (i) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens
      arising or incurred in the Ordinary Course of Business for amounts which are
      not
      material and not yet due and payable and which secure an obligation of Seller,
      (ii) Liens arising under Contracts with third parties entered into in the
      Ordinary Course of Business in respect of amounts still owing, which Liens
      are
      reflected in the Financial Statements, and (iii) Liens for Taxes that are not
      due and payable.

     

    “Person”
shall
      mean any individual, partnership, joint venture, corporation, trust,
      unincorporated organization, Governmental Authority or other
      entity.

     

    “PRC”
shall
      mean the People’s Republic of China. However, for the purposes of this
      Agreement, when referring to the Laws of the PRC, it shall not include the
      Laws
      of the territories of (a) the Hong Kong Special Administrative Region, China,
      (b) the Macau Special Administrative Region, China or (c) Taiwan.

     

    “Proceeding”
shall
      mean any action, arbitration, audit, hearing, investigation, litigation or
      suit
      (whether civil, criminal, administrative, judicial or investigative, whether
      formal or informal, whether public or private) commenced, brought, conducted
      or
      heard by or before, or otherwise involving, any governmental body or
      arbitrator.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Purchaser
      Document”
shall
      mean the Agreement or any other agreements, certificates and instruments to
      be
      executed by Seller in connection with the Agreement.

     

    “SEC”
shall
      mean the Securities and Exchange Commission.

     

    “Securities
      Act”
shall
      mean the Securities Act of 1933, as amended.

     

    “Seller
      Document”
shall
      mean the Agreement or any other agreements, certificates and instruments to
      be
      executed by Seller in connection with the Agreement.

     

    “Seller
      IT Systems”
shall
      mean any and all information technology and computer systems (including
      software, hardware and other equipment, firmware and embedded software) relating
      to the transmission, storage, maintenance, organization, presentation,
      generation, processing or analysis of data and information whether or not in
      electronic format, which technology and systems are used in or necessary to
      the
      conduct of the business of Seller.

     

    “Seller
      Option”
shall
      mean any option to purchase shares of Seller.

     

    “Seller
      Party”
shall
      mean Seller and its respective directors, managers, officers, employees and
      agents.

     

    “Subsidiary”
shall
      mean, with respect to any Person, any other corporation, partnership, limited
      liability company, joint venture or other entity in which such Person (i) owns,
      directly or indirectly, fifty percent (50%) or more of the outstanding voting
      securities, equity securities, profits interest or capital interest, (ii) is
      entitled to elect at least a majority of the board of directors or similar
      governing body or (iii) in the case of a limited partnership or limited
      liability company, is a general partner or managing member,
      respectively.

     

    “Tax
      Return”
shall
      mean any report, return, election, notice, estimate, declaration, information
      statement or other form or document (including all schedules, exhibits and
      other
      attachments thereto) relating to and filed or required to be filed with a Taxing
      Authority in connection with any Tax.

     

    “Taxes”
shall
      mean any and all federal, national, provincial, state, local, PRC national,
      provincial, local and other foreign taxes, assessments and other governmental
      charges, duties, impositions, levies and liabilities (including, without
      limitation, taxes based upon or measured by gross premiums, receipts, income,
      profits, sales, use or occupation, and value added, ad valorem, alternative
      or
      add-on minimum, transfer, gains, franchise, estimated, withholding, payroll,
      recapture, employment, excise, unemployment, insurance, social security,
      business license, occupation, business organization, stamp, environmental and
      property taxes), together with all interest, penalties and additions imposed
      with respect to such amounts. For purposes of this Agreement, “Taxes”
also
      includes any obligations under any agreements or arrangements with any Person
      with respect to the liability for, or sharing of, Taxes (including pursuant
      to
      Treasury Regulations Section 1.1502-6 or comparable provisions of state, local
      or foreign tax Law) and any liability for Taxes as a transferee or successor,
      by
      contract or otherwise.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Taxing
      Authority”
shall
      mean any federal, national, provincial, foreign (including the PRC), state
      or
      local government, or any subdivision, agency, commission or authority thereof
      exercising tax regulatory, enforcement, collection or other
      authority.

     

    “Treasury
      Regulations”
shall
      mean the regulations, including temporary regulations, promulgated under the
      Code, as the same may be amended hereafter from time to time (including
      corresponding provisions of succeeding regulations).

     

    “U.S.”
shall
      mean the United States of America.

     

    (b) Each
      of
      the following terms is defined in the Section set forth opposite such
      term:

     

    
      	
              Term

            	 	
              Section

            
	 	 	 
	
              2006
                Financial Statements

            	 	
              3.10(a)

            
	
              2007
                Financial Statements

            	 	
              3.10(a)

            
	
              Accountant

            	 	
              2.8

            
	
              Accounts
                Receivable

            	 	
              3.16

            
	
              Agreement

            	 	
              Preamble

            
	
              Alternative
                Proposal

            	 	
              5.7(b)

            
	
              Assets

            	 	
              2.1

            
	
              Assumed
                Liabilities

            	 	
              2.3

            
	
              Assumed
                Seller Contracts

            	 	
              2.1(g)

            
	
              Audited
                Financial Statements

            	 	
              3.10(a)

            
	
              Benefit
                Plan

            	 	
              3.20(a)

            
	
              Books
                and Records

            	 	
              2.1(d)

            
	
              Bulk
                Sales Laws

            	 	
              5.11

            
	
              Cash
                Payment

            	 	
              2.5

            
	
              Closing

            	 	
              2.6

            
	
              Closing
                Date

            	 	
              2.6

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              Copyrights

            	 	
              2.1(a)

            
	
              Distributors

            	 	
              3.37(a)

            
	
              Effective
                Time

            	 	
              2.6

            
	
              Environmental
                Law

            	 	
              3.18(a)(i)

            
	
              Environmental
                Permits

            	 	
              3.18(a)(ii)

            
	
              Excluded
                Assets

            	 	
              2.2

            
	
              Excluded
                Liabilities

            	 	
              2.4

            
	
              ERISA

            	 	
              3.20(a)

            
	
              ERISA
                Affiliate

            	 	
              3.20(d)(ii)

            
	
              Excluded
                Assets

            	 	
              2.2

            
	
              Financial
                Statements

            	 	
              3.10(a)

            
	
              Harbin

            	 	
              Preamble

            
	
              Indemnifying
                Parties

            	 	
              8.2

            
	
              Insolvent

            	 	
              3.34(b)

            
	
              Intellectual
                Property

            	 	
              3.23(a)

            
	
              Large
                Distributor or Partner

            	 	
              3.37(b)

            
	
              Leased
                Real Property

            	 	
              3.17(b)

            
	
              Marks

            	 	
              2.1(a)

            
	
              Materiality

            	 	
              8.2(a)

            
	
              Material
                Adverse Change

            	 	
              3.10(c)
                

            
	
              Material
                Customers

            	 	
              3.13(a)

            
	
              Money
                Laundering Laws

            	 	
              3.32

            
	
              OFAC

            	 	
              3.41

            
	
              Partners

            	 	
              3.37(a)

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              Patents

            	 	
              2.1(a)

            
	
              Pension
                Plan

            	 	
              3.20(a)

            
	
              Purchase
                Price

            	 	
              2.5

            
	
              Purchaser

            	 	
              Preamble

            
	
              Purchaser
                Financial Advisor

            	 	
              6.2(l)

            
	
              Purchaser
                Indemnified Parties

            	 	
              8.2

            
	
              Real
                Property Leases

            	 	
              3.17(b)

            
	
              Registered
                IP

            	 	
              3.23(b)

            
	
              Seller
                Intellectual Property

            	 	
              2.1(a)

            
	
              Seller

            	 	
              Preamble

            
	
              Seller
                Contracts

            	 	
              3.12(a)

            
	
              Shareholders

            	 	
              Preamble

            
	
              Special
                Committee

            	 	
              6.2(j)

            
	
              Stock
                Payment

            	 	
              2.5

            
	
              Trade
                Secrets

            	 	
              2.1(a)

            
	
              Welfare
                Plan

            	 	
              3.20(a)

            

    

     

    ARTICLE
      II

    PURCHASE
      AND SALE OF THE INTERESTS; CLOSING

     

    Section
      2.1 Purchase
      and Sale of Assets.
      At the
      Closing, upon the terms and subject to the conditions set forth herein, Seller
      shall sell, transfer, convey, assign and deliver to Purchaser, and cause any
      other Person holding Assets at the Closing, to sell, transfer, convey, assign
      and deliver their Assets to Purchaser, and Purchaser shall purchase and acquire
      from Seller, and any other Person holding Assets at the Closing, all of the
      Assets subject to the conditions set forth in this Agreement. Set forth in
      Schedule
      2.1
      is a
      complete list of the tangible assets of the Seller.

     

    Subject
      to the provisions of Section
      2.2,
      the
“Assets”
means
      all right, title and interest to all the tangible and intangible assets of
      Seller (other than the Excluded Assets, as defined in Section
      2.2),
      including but not limited to all of Seller’s right, title and interest in and to
      any of the following:

     

    (a) all
      (i)
      patents, patent applications of any kind, patent rights, inventions, discoveries
      and invention disclosures (whether or not patented) (collectively, “Patents”);
      (ii)
      trade names, trade dress, brands, logos, packaging design, slogans, Internet
      domain names, all phone numbers of Seller, registered and unregistered
      trademarks and service marks and related registrations and applications for
      registration (collectively, “Marks”);
      (iii)
      copyrights in both published and unpublished works, including all compilations,
      databases and computer programs, source code, object code, manuals and other
      documentation and all copyright registrations and applications, and all
      derivatives, translations, adaptations and combinations of the above
      (collectively, “Copyrights”);
      (iv)
      know-how, trade secrets, confidential or proprietary information, research
      in
      progress, knowledge, methods, algorithms, data, designs, processes, formulae,
      drawings, diagrams, schematics, blueprints, flow charts, models, strategies,
      prototypes, techniques, benchmark data, testing procedures and testing results
      (collectively, “Trade
      Secrets”);
      (v)
      other intellectual property rights and/or proprietary rights relating to any
      of
      the foregoing; and (vi) goodwill, franchises, licenses, permits, Consents,
      approvals, and claims of infringement against third parties (collectively,
      “Seller
      Intellectual Property”);
      
       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

     

    (b) all
      goodwill associated with Seller Intellectual Property and Seller;

     

    (c) all
      Permits;

     

    (d) customer,
      prospect and marketing lists, sales data, books, records, ledgers, files,
      documents, correspondence, personnel files and other personnel documents related
      to Seller Employees, advertising, promotional and marketing materials and
      similar items, whether in hard copy or computer format (collectively, the
“Books
      and Records”),
      including Seller’s email archives (other than personal email or email protected
      by the attorney-client privilege), and Seller’s accounting
      software;

     

    (e) all
      Accounts Receivable and other receivables, inventory, prepaid expenses and
      prepaid assets, securities, deposits, warranties, claims, refunds, causes of
      action, choses in action, rights of recovery, rights of set off and rights
      of
      recoupment, and similar other assets that would be characterized as “Accounts
      Receivable,” “inventory” or “current assets” (or similar nomenclature) on any
      balance sheet of Seller;

     

    (f) the
      equipment (including computers, telephones, computer screens, copiers, facsimile
      machines, scanners, projectors and servers), furniture, vehicles and other
      tangible personal property that would be characterized as “property and
      equipment” (or similar nomenclature) on any balance sheet of
      Seller;

     

    (g) all
      right, title and interest under any of Seller Contracts (as defined in
Section
      3.12)
      identified in Schedule
      3.12(a)
      (as
      updated pursuant to Section
      5.3)
      excluding any Seller Contracts excluded from the Assets pursuant to Section
      2.2
      (collectively, the “Assumed
      Seller Contracts”);

     

    (h) all
      Seller Intellectual Property assets owned or held by Seller acquired or
      developed before the Effective Time pursuant to any Seller
      Contract;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (i) all
      assets, properties or interests of Seller that would be characterized as “other
      assets” (or similar nomenclature) on any balance sheet of Seller;
      and

     

    (j) all
      rights to refunds of Taxes paid by Seller for periods prior to the Closing
      set
      forth in Schedule
      2.1(j).

     

    Section
      2.2 Excluded
      Assets.
      The
“Excluded
      Assets”
consist
      of the following, which will remain the property of Seller following the
      Closing:

     

    (a) all
      cash
      and cash equivalents that would be classified as “cash or cash equivalents” (or
      similar nomenclature) on any balance sheet of Seller;

     

    (b) all
      personnel Books and Records that Seller is required by Law to retain in its
      possession, a description of which is set forth on Schedule
      2.2(b);

     

    (c) all
      rights of Seller in this Agreement, Seller Documents and Purchaser
      Documents;

     

    (d) the
      shares of capital stock of Seller, if any, held in treasury;

     

    (e) the
      bank
      accounts of any Seller listed on Schedule
      2.2(e);

     

    (f) any
      employment contracts of whatever nature or any obligations arising out of any
      employment contracts, express or implied, oral or written, individual or
      collective, between Seller and any of Seller’s employees.

     

    Section
      2.3 Assumed
      Liabilities.
      At the
      Closing, Purchaser will assume only the following (collectively, the
“Assumed
      Liabilities”):

     

    (a) all
      obligations of the Seller that arise after the Effective Time and that are
      required to be performed after the Effective Time under the Assumed Seller
      Contracts and the Permits; and

     

    (b) any
      debt,
      obligation or liability related to the Assets that arises out of acts or
      omissions occurring after the Effective Time.

     

    Section
      2.4 Excluded
      Liabilities.
      It is
      understood and agreed that Purchaser
      will not
      assume, and Seller will retain and discharge, when due or otherwise satisfy
      following the Closing, any Liabilities of any Seller Party other than the
      Assumed Liabilities (collectively, the “Excluded
      Liabilities”).
      The
      Excluded Liabilities include:

     

    (a) Liabilities
      in respect of any of the Excluded Assets;

     

    (b) Liabilities
      relating to any Proceeding and any settlements thereof or related to any
      violation by any Seller Party or Affiliate thereof of Laws;

     

    (c) Liabilities
      relating to indebtedness for borrowed money;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (d) Liabilities
      relating to Taxes for any Seller Party, including any liability for Taxes of
      a
      third Person for which any Seller Party may be liable;

     

    (e) any
      Liability of any Seller Party to indemnify or guaranty the Liability of any
      Person, except for such indemnifications and guaranties that are included in
      Assumed Seller Contracts and that related to acts or omissions occurring after
      the Effective Time;

     

    (f) Liabilities
      relating to any Permit retained by a Seller Party;

     

    (g) any
      undisclosed Liability of a Seller Party;

     

    (h) Liabilities
      incurred by a Seller Party other than in the Ordinary Course of
      Business;

     

    (i) any
      Liability of a Seller Party incurred under this Agreement or any Seller
      Document;

     

    (j) any
      Liability relating to employment matters or Benefit Plans;

     

    (k) any
      Liability for a refund to any customer, distributor, partner or other Person
      that relates to payments received under an agreement with any such Person by
      a
      Seller Party before the Closing Date;

     

    (l) any
      other
      Liability that is not an Assumed Liability.

     

    Section
      2.5 Consideration.

     

    The
      aggregate purchase price for all of the Assets shall be an amount (the
“Purchase
      Price”)
      equal
      to (x) a cash payment (the “Cash
      Payment”)
      in the
      amount of Four Million Dollars ($4,000,000) and (y) Four Hundred Seventy Three
      Thousand Three Hundred Fifty Four (473,354) shares of Harbin Stock (the
“Stock
      Payment”).
      

     

    Section
      2.6 The
      Closing.
      The
      closing of the transactions contemplated by this Agreement (the “Closing”)
      shall
      take place at the offices of Reed Smith LLP, Two Embarcadero Center, Suite
      2000,
      San Francisco, California 94111, at 10:00 a.m., Pacific Time, on the later
      of
      (i) June 28, 2007 and (ii) the third (3rd) Business Day following the
      satisfaction or waiver of all conditions to the obligations of the Parties
      to
      consummate the transactions contemplated hereby (other than conditions which
      by
      their nature are to be satisfied at the Closing, but subject to the satisfaction
      or waiver of those conditions) or such other date as Purchaser and Seller may
      mutually agree in writing (the “Closing
      Date”).
      The
      Closing shall be deemed to have been consummated at 12:01 a.m., Pacific Time,
      on
      the Closing Date (the “Effective
      Time”).
      

     

    Section
      2.7 Deliveries
      at Closing.
      At the
      Closing:

     

    (a) Purchaser
      will pay the Cash Payment to Seller;

     

    (b) Harbin
      will transfer the Stock Payment to Seller;

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (c) Seller
      will endorse and deliver to Purchaser any certificates of title necessary to
      effect or record the transfer of any Assets for which ownership is evidenced
      by
      a certificate of title (each of which is listed on Schedule
      2.7(c))
      and any
      similar documentation as may be necessary or appropriate under the PRC Laws
      to
      yield a similar effect;

     

    (d) Seller
      will execute and deliver to Purchaser a Bill of Sale conveying the Assets to
      Purchaser, in the form attached hereto as Exhibit
      B,
      and any
      similar documentation as may be necessary or appropriate under the PRC Laws
      to
      yield a similar effect;

     

    (e) Seller
      and Purchaser will execute and deliver to each other a Patent and Patent
      Application Assignment Agreement conveying the Patents and Patent applications
      included within the Assets, in the form attached hereto as Exhibit
      C
      and any
      similar documentation as may be necessary or appropriate under the PRC Laws
      to
      yield a similar effect;

     

    (f) Seller
      and Purchaser will execute and deliver to each other an Assignment of
      Intellectual Property conveying the Intellectual Property included within the
      Assets, in the form attached hereto as Exhibit
      D,
      and any
      similar documentation as may be necessary or appropriate under the PRC Laws
      to
      yield a similar effect;

     

    (g) Purchaser
      and Seller will execute and deliver to each other an Assignment and Assumption
      Agreement evidencing the assumption by Purchaser of the Assumed Liabilities,
      in
      the form attached hereto as Exhibit
      E,
      and any
      similar documentation as may be necessary or appropriate under the PRC Laws
      to
      yield a similar effect;

     

    (h) Seller
      will execute and deliver to Purchaser such other assignments, releases, Consents
      to assignment and other instruments of sale, conveyance, assignment, assumption
      and transfer satisfactory in form and in substance to Purchaser as reasonably
      requested by Purchaser in order to convey to Purchaser all right, title and
      interest in and to the Assets in the manner provided for in this
      Agreement;

     

    (i) Seller
      will deliver to Purchaser the originals or copies of all of Seller’s books,
      records, ledgers, disks, proprietary information and other data included within
      the Assets and all other written or electronic depositories of information
      relating to the Assets and Seller, including a “snap shot” copy in a format
      reasonably requested by Purchaser of all data stored by Seller using Seller’s
      accounting software; and

     

    (j) the
      Purchaser and Seller will execute and deliver the documents required to be
      delivered by each of them pursuant to Article
      VI.

     

    Section
      2.8 Allocation
      of Purchase Price.
      Within
      20 days after the Closing Date, Purchaser will provide to Seller a proposed
      allocation of the Purchase Price. If Seller disagrees with any aspect of the
      proposed allocation, Seller shall, within 15 days after receipt thereof, furnish
      to Purchaser a written statement of such disagreement, together with the reasons
      therefor. If, within such 15 day period, Purchaser does not receive such a
      written statement of disagreement from Seller, Seller shall be deemed to have
      accepted the proposed allocation and the proposed allocation shall be final
      and
      binding upon Seller. If Purchaser does receive such a written statement of
      disagreement from Seller within such 15 day period, then within 10 days of
      such
      receipt Seller and Purchaser shall discuss in person, by telephone, or by
      videoconference, their disagreement in order to attempt to resolve it through
      good faith negotiations. If Seller and Purchaser are unable to resolve their
      disagreement within 20 days after receipt by Purchaser of the written statement
      of disagreement from Seller, the disagreement shall be submitted for
      determination to a mutually agreed upon independent nationally recognized
      accounting firm (the “Accountant”),
      which
      determination, absent manifest error, shall be final and binding upon Seller
      and
      Purchaser and not subject to appeal. Such determination by the Accountant shall
      be made in accordance with this Agreement. The expenses incurred due to
      retention of the Accountant in making such determination shall be borne equally
      by Seller and Purchaser.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES OF SELLER
      AND SHAREHOLDERS

     

    Seller,
      Tianfu Yang and Harbin Tech Full Industry Co., Ltd., jointly and severally,
      hereby represent and warrant to Purchaser and Harbin, and for purposes of
      Sections 3.2, 3.40 and 3.41, Seller and Shareholders jointly and severally,
      hereby represent and warrant to Purchaser and Harbin, in each case, as of the
      date hereof and as of the Closing Date or, if a representation or warranty
      is
      made as of a specified date, as of such date, as follows:

     

    Section
      3.1 Organization
      and Good Standing.
      Seller
      (i) has been duly organized, is validly existing and is in good standing under
      the laws of its jurisdiction of organization, and has been duly approved or
      registered (as applicable) by competent PRC Governmental Authorities, (ii)
      has
      all requisite power and authority to carry on its business and to own, lease
      and
      operate its properties and assets, and (iii) is duly qualified or licensed
      to do
      business and is in good standing as a foreign corporation or limited liability
      company, as the case may be, authorized to do business in each jurisdiction
      in
      which the nature of such business or the ownership or leasing of such properties
      requires such qualification, except where the failure to be so qualified would
      not, individually or in the aggregate, have a Material Adverse
      Effect.

     

    Section
      3.2 Authorization
      and Effect of Agreement.

     

    Seller
      has all requisite corporate power and authority to execute, deliver and perform
      their obligations under this Agreement and to consummate the transactions
      contemplated hereby. This Agreement has been duly authorized, executed and
      delivered by Seller and
      the
      Shareholders.
      This
      Agreement constitutes a legal, valid and binding obligation of Seller and the
      Shareholders (assuming due authorization, execution and delivery by Purchaser),
      enforceable against Seller and the Shareholders in accordance with its terms,
      except (i) as limited by applicable bankruptcy, fraudulent conveyance,
      insolvency, reorganization, moratorium and other laws of general application
      affecting enforcement of creditors’ rights generally, (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other
      equitable remedies, and (iii) to the extent the indemnification provisions
      contained in Article
      VIII
      of this
      Agreement may be limited by applicable federal or state securities
      laws.

     

    Section
      3.3 No
      Subsidiaries; Other Interests.

     

    (a) Seller
      has no Subsidiaries.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (b) Except
      as
      set forth on Schedule
      3.3,
      Seller
      does
      not
      own, directly or
      indirectly, any interest or investment (whether equity or debt) in any
      corporation, partnership, limited liability company, joint venture, business,
      trust or other Person.

     

    Section
      3.4 No
      Conflict.
      The
      execution and delivery by Seller of this Agreement and the consummation by
      Seller of the transactions contemplated assuming all required filings, Consents,
      approvals, authorizations and notices set forth on Schedule
      3.4(a)
      have
      been made, given or obtained, do not and shall not:

     

    (a) violate,
      conflict with or result in the breach of any Organizational Document of
      Seller;

     

    (b) (i)
      violate or conflict with any Law applicable to Seller or any of its Assets,
      or
      (ii) conflict with, result in a breach of, constitute a default of (or event
      which after notice or lapse of time or both) a Contract which it or its property
      is bound other than in each of clause (i) and (ii) such violations, breaches
      or
      defaults that are (A) disclosed in Schedule
      3.4(b)(ii)(A)
      or (B)
      not material;

     

    (c) require
      the Consent of any Person or a Governmental Authority (other than Consents
      already obtained) or result in the imposition of a Lien on any assets of Seller
      under or pursuant to (i) the Organizational Documents, (ii) any Contract, or
      (iii) any Law, other than in each of clause (ii) and (iii) such violations,
      breaches or defaults that are not material or 

     

    (d) (i)
      result in the termination of any Contract, (ii) result in the creation of any
      Lien under any such Contract or (iii) constitute an event which, after notice
      or
      lapse of time or both, would result in any such termination or creation of
      a
      Lien.

     

    Section
      3.5 No
      Other Agreement.
      Seller
      has no other obligation, absolute or contingent, to any other individual,
      corporation, partnership, trust, limited liability company, association, joint
      venture or any similar entity to sell the Assets.

     

    Section
      3.6 Title
      to Assets.

     

    (a) Set
      forth
      in Schedule
      2.1
      is a
      complete list of each tangible Asset of Seller. Set forth in Section
      2.2
      are the
      Excluded Assets of Seller. The Assets, together with the Excluded Assets,
      constitute all of the assets of Seller that are used in, generated by or
      associated with Seller. The Assets, together with the Excluded Assets,
      constitute all assets necessary to carry on the business of the Seller as
      currently conducted. 

     

    (b) Seller
      has good and marketable title to all of the Assets it owns, or purports to
      own,
      and a valid leasehold interest in all leased assets included within the Assets,
      free and clear of any Liens, other than Permitted Liens. The execution and
      delivery of Seller Documents by Seller at the Closing will convey to and vest
      in
      Purchaser good and marketable title to the Assets, free and clear of any Liens.
      The Assets, including any Assets held under leases or licenses: (i) are in
      good
      condition and repair, ordinary wear and tear excepted; and (ii) are in good
      working order and have been properly and regularly maintained. There is no
      default by Seller or, to the Knowledge of Seller, Tianfu Yang or Harbin Tech
      Full Industry Co., Ltd., any landlord under any lease of the real property,
      and
      no event has occurred and no condition exists which, with notice or given the
      passage of time, or both, would constitute a default by any party under such
      leases. Seller represents that no withholding of any Chinese Tax or any other
      Tax is required with respect to any payment to be made to Seller in connection
      with the transactions contemplated by this Agreement.
      The
      validity, legality and enforceability of this Agreement shall not be affected
      by
      the failure by either Party to pay any Tax provided herein.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Section
      3.7 Permits;
      Compliance with Law.

     

    (a) Seller
      possesses all Permits, and has made all declarations and filings with, all
      Governmental Authorities, presently required or necessary to own or lease,
      as
      the case may be, and to operate its properties and to carry on its business
      as
      now conducted. All of the Permits are valid and in full force and effect. Seller
      has fulfilled and performed all of its obligations with respect to such Permits
      and no event has occurred which allows, or after notice or lapse of time could
      allow, revocation or termination thereof or result in any other material
      impairment of the rights of the holder of any such Permit. Seller has not
      received notice of any Proceeding relating to revocation or modification of
      any
      such Permit and is not in receipt of any letter or notice from any relevant
      PRC
      Governmental Authority notifying it of revocation of any Permits issued to
      it
      for non-compliance or the need for compliance or remedial actions in respect
      of
      the activities carried out by Seller. All filings and registrations with the
      PRC
      Governmental Authorities required, if any, in respect of Seller and its
      operations including, without limitation, the registrations with the State
      Administration of Industry and Commerce, State Administration for Foreign
      Exchange, tax bureau and customs authorities have been duly completed in
      accordance with the relevant PRC rules and regulations.

     

    (b) Seller
      has complied with all relevant PRC laws and regulations regarding the
      contribution and payment of its registered share capital, the payment schedule
      of which has been approved by the relevant PRC Government
      Authorities.

     

    (c) As
      to
      Permits requisite for the conduct of any part of Seller’s which is subject to
      periodic renewal, Seller, Tianfu Yang and Harbin Tech Full Industry Co., Ltd.
      have no Knowledge of any grounds on which such requisite renewals will not
      be
      granted by the relevant PRC Governmental Authorities.

     

    (d) Seller
      is
      and
      has been in compliance with and is not in default under any
      Law
      applicable to Seller or any of its properties, assets or
      businesses.

     

    Section
      3.8 Books
      and Records.
      True
      and complete copies of the Organizational Documents of Seller, as currently
      in
      effect, have heretofore been delivered to Purchaser. The minute books of Seller
      accurately reflect in all material respects all actions taken at meetings,
      or by
      written Consent in lieu of meetings, of the shareholders, boards of directors
      (or other governing body) and all committees of the boards of directors (or
      other governing body) of Seller. All corporate actions and other actions taken
      by Seller, as the case may be, have been duly authorized, and no such actions
      taken by Seller, as the case may be, have been taken in breach or violation
      of
      the Organizational Documents of Seller.

     

    Section
      3.9 Litigation.
      There
      are no Proceedings pending or, to the Knowledge of Seller, Tianfu Yang or Harbin
      Tech Full Industry Co., Ltd., threatened that relate, directly or indirectly,
      to
      this Agreement, or any action taken or to be taken in connection with this
      Agreement. Except as set forth on Schedule
      3.9,
      there
      are no Proceedings pending or, to the Knowledge of Seller, Tianfu Yang or Harbin
      Tech Full Industry Co., Ltd., threatened that relate to the (a) Seller or its
      assets, properties or businesses or (b) the officers, directors, employees,
      shareholders or Affiliates of Seller (in their capacity as such). There are
      no
      outstanding judgments, writs, injunctions, orders, decrees or settlements that
      apply, in whole or in part, to Seller or its assets, properties or business.
      

     

    
      
        
        

      

      
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    Section
      3.10 Financial
      Statements; Undisclosed Liabilities;
      Internal Controls.

     

    (a) Seller
      has furnished Purchaser true and complete copies of the audited balance sheet
      and the related audited statements of income and cash flows of Seller for the
      period since inception through August 31, 2006 (the “Audited
      Financial Statements”),
      and
      the related opinion of the independent accountants of Seller, and the audited
      balance sheet and related statements of income and cash flows of Seller for
      the
      period ended December 31, 2006 (collectively, together with the related notes
      thereto, the “ 2006 Financial
      Statements”),
      and
      the related opinion of the independent accountants of Seller, and the audited
      balance sheet and the related statements of income and cash flows of Seller
      for
      the period ended March 31, 2007 (collectively, together with the related notes
      thereto, the “2007
      Financial Statements,”
and
      together with the Audited Financial Statements and the 2006 Financial
      Statements, the “Financial
      Statements”),
      and
      the related opinion of the independent accountants of Seller.

     

    (b) The
      Financial Statements fairly present in all material respects the financial
      position and the results of operations of Seller as of the respective dates
      thereof and for the respective periods then ended. The Financial Statements
      have
      been prepared in accordance with GAAP consistently applied during the periods
      involved, except as otherwise noted therein or in the notes thereto. The
      Financial Statements have been prepared in accordance with the books and records
      of Seller consistent with past practice.

     

    (c) Except
      (i) as reflected or adequately reserved against in the Financial Statements,
      (ii) liabilities which have been incurred since August 31, 2006 in the Ordinary
      Course of Business and (iii) as set forth on Schedule
      3.10(c),
      (x)
      Seller has not incurred any liabilities, direct or contingent, that are
      material, individually or in the aggregate, to Seller, or has entered into
      any
      material transactions not in the Ordinary Course of Business, (y) there has
      not
      been any material decrease in the capital stock or any material increase in
      long-term indebtedness or any material increase in short-term indebtedness
      of
      Seller, or any payment of or declaration to pay any dividends or any other
      distribution with respect to Seller, and (z) there has not been any Material
      Adverse Change in the properties, business, prospects, operations, earnings,
      assets, liabilities or condition (financial or otherwise) of Seller (each of
      clauses (x), (y) and (z), a “Material
      Adverse Change”).
      To
      the Knowledge of Seller, Tianfu Yang or Harbin Tech Full Industry Co., Ltd.,
      there is no event that is reasonably likely to occur in the foreseeable future,
      which if it were to occur, could, individually or in the aggregate, have a
      Material Adverse Change.

     

    (d) Seller
      maintains a system of internal accounting controls sufficient to provide
      reasonable assurance that (i) transactions are executed in accordance with
      management’s general or specific authorization, (ii) transactions are recorded
      as necessary to permit preparation of Financial Statements in conformity with
      GAAP and to maintain asset accountability, (iii) access to assets is permitted
      only in accordance with management’s general or specific authorization and (iv)
      the recorded accountability for assets is compared with the existing assets
      at
      reasonable intervals and appropriate action is taken with respect to any
      material differences.

     

    
      
        
        

      

      
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    Section
      3.11 Absence
      of Certain Changes.
      Since
      June 30, 2006, (a) Seller has been operated in the Ordinary Course of Business,
      (b) Seller has not taken or agreed to take any of the actions set forth in
      Section
      5.1,
      (c)
      there has not occurred any event or condition that, individually or in the
      aggregate, has had or is reasonably likely to have a Material Adverse Effect,
      (d) there have been no actual or threatened cancellations or terminations by
      any
      material producer, agent, supplier, customer or contractor of Seller and (e)
      there has been no material damage to or loss or theft of any of the material
      assets of Seller.

     

    Section
      3.12 Contracts.

     

    (a) Schedule
      3.12(a)
      sets
      forth a complete and accurate list of the following Contracts to which Seller
      is
      a party or by which Seller or any of its properties or assets is or may be
      bound
      (such Contracts collectively, the “Seller
      Contracts”):

     

    (i) all
      employment Contracts with any current or former officer, manager, director
      or
      Employee (the name, position or capacity and rate of compensation of each such
      Person and the expiration date of each such Contract being set forth in
      accordance with this Section
      3.12(a)),
      other
      than standard contracts required under local Law or custom;

     

    (ii) all
      Contracts (other than employment contracts) with any current or former officer,
      manager, director, shareholder, member, Employee, consultant, agent or other
      representative or with an entity in which any of the foregoing is a controlling
      Person;

     

    (iii) all
      collective bargaining or other labor or union Contracts, including all such
      agreements in China;

     

    (iv) all
      instruments relating to indebtedness for borrowed money, any note, bond, deed
      of
      trust, mortgage, indenture or agreement to borrow money, and any agreement
      relating to the extension of credit or the granting of a Lien other than
      Permitted Liens, or any Contract of guarantee in favor of any Person or entity
      other than Seller;

     

    (v) all
      lease, sublease, rental or other Contracts under which Seller is a lessor or
      lessee of any real property or the guarantee of any such lease, sublease, rental
      or other Contracts;

     

    (vi) all
      lease, sublease, rental, licensing use or similar Contracts with respect to
      personal property providing for annual rental license or use payments or the
      guarantee of any such lease, sublease, rental or other Contracts;

     

    (vii) all
      Contracts containing any covenant or provision limiting the freedom or ability
      of Seller to engage in any line of business, engage in business in any
      geographical area or compete with any other Person;

     

    
      
        
        

      

      
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    (viii) all
      Contracts for the purchase or sale of materials, supplies or equipment
      (including computer hardware and software), or the provision of services
      (including consulting services, data processing and management, project
      management services and clinical trial management);

     

    (ix) all
      confidentiality Contracts;

     

    (x) all
      partnership or joint venture Contracts;

     

    (xi) all
      Contracts, purchase orders or service agreements;

     

    (xii) all
      Contracts relating to licenses of trademarks, trade names, service marks or
      other Seller Intellectual Property;

     

    (xiii) all
      Contracts between or among (A) Seller, on the one hand, and (B) any Shareholder,
      Affiliate of any Shareholder (other than Seller) or any related Party on the
      other hand;

     

    (xiv) all
      Contracts (A) outside the Ordinary Course of Business for the purchase,
      acquisition, sale or disposition of any assets or properties or (B) for the
      grant to any Person (excluding Seller) of any option or preferential rights
      to
      purchase any assets or properties;

     

    (xv) all
      Contracts pursuant to which there is either a current or future obligation
      of
      Seller to make payments or provide services;

     

    (xvi) all
      Contracts under which Seller agrees to indemnify any Person;

     

    (xvii) all
      non-competition, non-solicitation and any similar Contracts;

     

    (xviii) all
      “earn-out” agreements or arrangements or any similar Contracts;

     

    (xix) all
      other
      Contracts material to the business of Seller; and each amendment, supplement
      and
      modification in respect of any of the foregoing.

     

    (b) Exceptions
      to Seller Contracts.

     

    (i) Except
      as
      set forth on Schedule
      3.12(b)(i),
      each
      Seller Contract is legal, valid, binding and enforceable against Seller and
      against each other party thereto, is in full force and effect and no party
      is in
      material breach or default, and no event has occurred which would constitute
      (with or without notice or lapse of time or both) a material breach or default
      (or give rise to any right of termination, modification, cancellation or
      acceleration) or material loss of any benefits under any Seller Contract.

     

    (ii) Except
      as
      set forth on Schedule
      3.12(b)(ii),
      each
      Seller Contract identified on Schedule
      3.12(a)
      and
      which is being assigned to or assumed by Purchaser is assignable by Seller
      to
      Purchaser without Consent of any other Person

     

    
      
        
        

      

      
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    Section
      3.13 Customers.

     

    (a) Set
      forth
      on Schedule
      3.13(a)
      is a
      complete list of each customer of Seller that has accounted for more than 10%
      of
      total sales for the period ended December 31, 2006 (the “Material
      Customers”),
      which
      list indicates the amount of customer orders attributable to each such Material
      Customer during the period ended December 31, 2006. None of the Material
      Customers has threatened to Seller (or, to Seller’s or the Shareholder’s
      Knowledge, to any Person), or notified Seller of any intention to terminate
      or
      materially alter its relationship with Seller. There has been no material change
      in pricing or pricing structure (other than changes in the Ordinary Course
      of
      Business made as a result of changes in commodity prices) with any Material
      Customer, and there has been no material dispute with a Material Customer,
      in
      each case since June 30, 2006. 

     

    (b) Set
      forth
      on Schedule
      3.13(b)
      is a
      schedule of sales revenue by product for the years ended December 31, 2005
      and
      December 31, 2006.

     

    Section
      3.14 Labor
      Relations.

     

    (a) As
      of the
      date of this Agreement, there is no labor dispute, charge, investigation, unfair
      labor practice claim or inquiry, controversy, arbitration, grievance, strike,
      slowdown, lockout or work stoppage against Seller pending or threatened which
      may interfere with the business activities of Seller. Seller is not a party
      to,
      or bound by, any labor agreement, collective bargaining agreement, work rules
      or
      practices or any other labor-related agreements or arrangements with any labor
      union, labor organization or works council. There are no labor agreements,
      collective bargaining agreements, work rules or practices or any other
      labor-related agreements or arrangements that pertain to any Employees. None
      of
      the Employees is represented by any labor organization with respect to such
      Employees’ employment or other service with Seller. No labor union, labor
      organization, works council or group of Employees of Seller has made a pending
      demand for recognition or certification, and there are no representation or
      certification proceedings or petitions seeking a representation proceeding
      presently pending or threatened in writing to be brought or filed with the
      National Labor Relations Board or any other labor relations tribunal or
      authority. There are no organizational efforts presently being made involving
      any of the presently unorganized Employees. Seller is neither a party to, nor
      otherwise bound by, any order relating to Employees or employment practices.
      

     

    (b) Seller
      is
      in compliance in all material respects with all applicable Laws and orders
      applicable to such entities or the Employees or other persons providing services
      to or on behalf of such entities, as the case may be, relating to the employment
      of labor, including all such Laws and orders relating to discrimination, civil
      rights, immigration, safety and health, workers’ compensation, wages,
      withholding, hours, and employment standards.

     

    (c) Seller
      has, in all material respects, properly classified the employment or other
      service status of all Employees, independent contractors and other persons
      providing services to or on behalf of Seller for purposes of compliance with
      (i)
      all applicable Laws and (ii) the terms or tax qualification requirements of
      any
      Benefit Plan or other benefit arrangement.

     

    
      
        
        

      

      
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    Section
      3.15 Insurance.
      Schedule
      3.15 sets forth a true and complete list of all insurance policies currently
      maintained relating to Seller, including those which pertain to Seller’s assets,
      directors, officers or employees or operations and all premiums due thereunder
      have been paid. There is no material claim outstanding under any such insurance
      policies and there are no existing circumstances likely to give rise to a claim
      under any such insurance policies. Seller has not received notice of
      cancellation of any such insurance policies. Seller has provided to Purchaser
      true and complete copies of all insurance policies (including any amendments
      thereto) listed on Schedule 3.15. Seller maintains reasonable adequate
      insurance covering its material properties, operations, personnel and business,
      and is insured by insurers of recognized financial responsibility against such
      losses and risks and in such amounts as are prudent and customary in the
      businesses in which it is engaged. All policies of insurance insuring Seller
      and
      its businesses, assets, employees, officers and directors are in full force
      and
      effect. Seller is in compliance with the terms of such policies and instruments
      in all material respects, and there are no claims by Seller under any such
      policy or instrument as to which any insurance company is denying liability
      or
      defending under a reservation of rights clause. Seller has not been refused
      any
      insurance coverage sought or applied for, and Seller has no reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that could not, individually
      or
      in the aggregate, have a Material Adverse Effect. 

     

    Section
      3.16 Accounts
      Receivable.
      All
      accounts receivable, notes receivable and other indebtedness of Seller (the
      “Accounts Receivable”) reflected in the Financial Statements or which
      arose subsequent to August 31, 2006, represent bona fide, arms-length
      transactions for the sale of goods or performance of services actually delivered
      in the Ordinary Course of Business and, in the case of Accounts Receivable,
      have
      been billed or invoiced in the Ordinary Course of Business consistent with
      past
      practice. Except to the extent expressly reserved against or reflected on the
      Financial Statements (which reserves are consistent with past practice) or
      paid
      prior to the Closing, the Accounts Receivable are or will be as of the Closing
      Date, collectible in the Ordinary Course of Business.

     

    Section
      3.17 Real
      Property; Leases.

     

    (a) Except
      as
      set forth on Schedule
      3.17(a)(i),
      Seller
      owns no real property and, except as set forth on Schedule
      3.17(a)(ii),
      any
      owned real property is owned free and clear of all Liens.

     

    (b) Schedule
      3.17(b)(i)
      contains
      a complete and correct list of all leases of real property, occupancy
      agreements, licenses, concessions or similar agreements (the “Real
      Property Leases”)
      under
      which Seller is a lessee, sub-lessee, tenant, licensee or assignee of any real
      property owned by any third Person (the “Leased
      Real Property”).
      Seller has delivered to Purchaser true, correct and complete copies of each
      Real
      Property Lease. With respect to each Real Property Lease, (i) there exists
      no
      default under such Real Property Lease by Seller nor is there any event which,
      with notice or the passage of time or both, could ripen into a default and
      Seller has not received written notice of any such default and (ii) there exists
      no default by any third-party thereunder nor any event which, with notice or
      the
      passage of time or both, could ripen into a default. Each Real Property Lease
      is
      a legal, valid and binding obligation of Seller and each other party thereto,
      enforceable against each such other party thereto in accordance with its terms,
      except as may be limited by applicable bankruptcy, insolvency, reorganization,
      moratorium or similar laws affecting creditors’ rights generally and subject to
      general principles of equity. The consummation of the transactions contemplated
      by this Agreement requires no Consents from any Person, except as set forth
      on
Schedule
      3.17(b)(ii)
      (which
      Consents have been obtained prior to the date hereof), and will not result
      in
      any default, penalty, right to terminate, increase in the amounts payable under
      or modification to any Real Property Lease. Seller holds good and valid
      leasehold estates in the Leased Real Property and such Leased Real Property
      constitutes all of the Real Property necessary for the conduct of Seller’s
      businesses.

     

    
      
        
        

      

      
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    (c) (i)
      There
      is no pending or, to the Knowledge of Seller, Tianfu Yang or Harbin Tech Full
      Industry Co., Ltd., threatened condemnation (or similar Proceedings) of all
      or
      any part of the Leased Real Property, and Seller has not assigned or sublet
      or
      granted any rights to use and occupy or created any limitations to or on its
      interests under any Real Property Lease to any Person, (ii) to the Knowledge
      of
      Seller, Tianfu Yang or Harbin Tech Full Industry Co., Ltd., there are no zoning,
      building code, occupancy restriction or other land-use regulation proceedings
      or
      any proposed change in any applicable Laws that could, individually or in the
      aggregate, result in a Material Adverse Effect, nor has Seller received any
      notice of any special assessment proceedings affecting any Leased Real Property,
      or applied for any change to the zoning or land use status of any Leased Real
      Property, (iii) to the Knowledge of Seller, Tianfu Yang or Harbin Tech Full
      Industry Co., Ltd., there are no defects, structural or otherwise, with respect
      to any of the Leased Real Property (or any improvements located thereon), which
      could reasonably be anticipated to have a material adverse impact on the value
      or utility of any such parcel of Leased Real Property and (iv) there are no
      easements, Liens or other agreements (whether of record or not) affecting title
      to, or creating any Lien or charge upon, any of the Leased Real Property.

     

    Section
      3.18 Environmental.

     

    (a) Seller
      (i) is in compliance with any and all applicable foreign, federal, state, PRC
      national, provincial, and local laws and regulations relating to the protection
      of the environment or hazardous or toxic substances or wastes, pollutants or
      contaminants (“Environmental
      Laws”),
      (ii)
      has received and is in compliance with all permits, licenses or other approvals
      required of it under applicable Environmental Laws to conduct its business
      (“Environmental
      Permits”),
      Schedule 3.18
      sets
      forth a true and complete list of all such Environmental Permits, (iii) has
      not
      received notice of any actual or potential liability for the investigation
      or
      remediation of any disposal or release of hazardous or toxic substances or
      wastes, pollutants or contaminants, (iv) Seller, Tianfu Yang or Harbin Tech
      Full
      Industry Co., Ltd. do not have Knowledge of any facts which would give rise
      to
      any claim, public or private, of violation of Environmental Laws emanating
      from,
      occurring on or in any way related to real properties now or formerly owned,
      leased or operated by it or to other assets or their use, except, in each case,
      such as would not reasonably be expected to result in a Material Adverse Effect;
      and (v) Seller has not stored any hazardous materials on real properties now
      or
      formerly owned, leased or operated by it and has not disposed of any hazardous
      materials in a manner contrary to any Environmental Laws; except where such
      non-compliance with Environmental Laws, failure to receive required permits,
      licenses or other approvals, or liability would not, individually or in the
      aggregate, have a Material Adverse Effect.

     

    
      
        
        

      

      
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    In
      the
      ordinary course of its business, Seller periodically reviews the effect of
      Environmental Laws on the business, operations and properties of Seller, in
      the
      course of which it identifies and evaluates associated costs and liabilities
      (including, without limitation, any capital or operating expenditures required
      for clean-up, closure of properties or compliance with Environmental Laws,
      or
      any permit, license or approval, any related constraints on operating activities
      and any potential liabilities to third parties). On the basis of such review,
      Seller has reasonably concluded that such associated costs could not have a
      Material Adverse Effect.

     

    Section
      3.19 No
      Broker.
      No
      agent, broker, finder, investment banker, financial advisor or other firm or
      Person (a) has acted directly or indirectly for Seller in connection with this
      Agreement or the transactions contemplated hereby or (b) is or will be entitled
      to any broker’s or finder’s fee or any other commission or similar fee in
      connection with this Agreement or the transactions contemplated
      hereby.

     

    Section
      3.20 Employee
      Benefits.

     

    (a) Schedule
      3.20(a)
      contains
      a list of: (i) each “employee
      pension benefit plan”
(as
      defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
      as amended (“ERISA”),
      and
      referred to herein as a “Pension
      Plan”),
      (ii)
      each “employee
      welfare benefit plan”
(as
      defined in Section 3(1) of ERISA and referred to herein as a “Welfare
      Plan”)
      and
      (iii) each other material plan, fund, program, arrangement or agreement
      (including any material employment or consulting agreement) to provide medical,
      health, disability, life, bonus, incentive, stock or stock-based right (option,
      ownership or purchase), retirement, deferred compensation, severance, change
      in
      control, salary continuation, vacation, sick leave, fringe, incentive insurance
      or other benefits to any current or former Employee, officer, manager or
      director of Seller (or any other individual providing non-professional services
      (directly or through a personal services corporation) as an independent
      contractor, consultant or agent to Seller) that is maintained, or contributed
      to, or required to be contributed to, by Seller or by any third-party leasing
      or
      similar organization in respect of any Employees (each such plan, any Pension
      Plan and any Welfare Plan referred to herein as a “Benefit
      Plan”).

     

    (b) With
      respect to each Benefit Plan, Seller has delivered to Purchaser true, complete
      and correct copies of: (i) such Benefit Plan (or, in the case of an unwritten
      Benefit Plan, a written description thereof), (ii) the three (3) most recent
      annual reports on Form 5500 filed with the IRS with respect to such Benefit
      Plan
      (if any such report was required), (iii) the most recent summary plan
      description and all subsequent summaries of material modifications for such
      Benefit Plan (if a summary plan description was required), (iv) each trust
      agreement and group annuity contract relating to such Benefit Plan, if any,
      (v)
      the most recent determination letter from the IRS with respect to such Benefit
      Plan, if any, and (vi) the most recent actuarial valuation with respect to
      such
      Benefit Plan, if any. Except as specifically provided in the foregoing documents
      delivered to Purchaser, there are no amendments to any Benefit Plan that have
      been adopted or approved by Seller that are not reflected in the applicable
      Benefit Plan and Seller has not undertaken to or committed to make any such
      amendments or to establish, adopt or approve any new Benefit Plan.

     

    
      
        
        

      

      
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    (c) Each
      Benefit Plan has, in all material respects, been established, funded, maintained
      and administered in compliance with its terms and with the applicable provisions
      of ERISA, the Code and/or all other applicable Laws. 

     

    (d) With
      respect to each Benefit Plan, there has not occurred, and no Person or entity
      is
      contractually bound to enter into, any nonexempt “prohibited
      transaction”
within
      the meaning of Section 4975 of the Code or Section 406 of ERISA. Seller does
      not
      sponsor or contribute to any “multiple
      employer welfare arrangement”
as
      defined in Section 3(40) of ERISA. Neither Seller nor any ERISA Affiliate of
      Seller has maintained, contributed to or been required to contribute to (i)
      any
      plan in the past six (6) years that is subject to the provisions of Title IV
      of
      ERISA or (ii) any plan that is a “multiemployer
      plan”
as
      defined in Section 3(37) of ERISA. For purposes hereof, “ERISA
      Affiliate”
means,
      with respect to any entity, trade or business, any other entity, trade or
      business that is, or was at the relevant time, a member of a group described
      in
      Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA
      that
      includes or included the first entity, trade or business or that is, or was
      at
      the relevant time, a member of the same “controlled
      group”
as
      the
      first entity, trade or business pursuant to Section 4001(a)(14) of
      ERISA.

     

    (e) Seller
      is
      not obligated under any Welfare Plan to provide life, health, medical, death
      or
      other welfare benefits with respect to any current or former Employee (or their
      beneficiaries or dependents) of Seller or its predecessors after termination
      of
      employment or other service, except as required under Section 4980B of the
      Code
      or Part 6 of Title I of ERISA or other applicable Law, (i) Seller has complied
      in all material respects with the notice and continuation coverage requirements,
      and all other requirements, of Section 4980B of the Code and Parts 6 and 7
      of
      Title I of ERISA, and the regulations thereunder, and/or any other applicable
      Law with respect to each Welfare Plan that is, or was during any taxable year
      for which the statute of limitations on the assessment of federal or foreign
      income Taxes remains open, by consent or otherwise, a group health plan within
      the meaning of Section 5000(b)(1) of the Code, and (ii) no Welfare Plan that
      is
      a group health plan, which is maintained, contributed to or required to be
      contributed to by Seller, is a self-insured plan.

     

    (f) All
      contributions or premiums owed by Seller with respect to Benefit Plans under
      Law, contract or otherwise have been made in full and on a timely basis. All
      material reports, returns and similar documents required to be filed with any
      Governmental Authority or distributed to any plan participant have been duly
      and
      timely filed or distributed. All amounts that Seller is legally or contractually
      required to deduct from the salaries of their Employees have been duly paid
      into
      the appropriate fund or funds. There are no pending or, to the Knowledge of
      Seller, Tianfu Yang or Harbin Tech Full Industry Co., Ltd., threatened, material
      claims, lawsuits, arbitrations or audits asserted or instituted against any
      Benefit Plan, any fiduciary (as defined by Section 3(21) of ERISA) of any
      Benefit Plan, Seller, any Employee, or administrator thereof, in connection
      with
      the existence, operation or administration of a Benefit Plan, other than routine
      claims for benefits.

     

    (g) Neither
      the execution and delivery of this Agreement nor the consummation of the
      transactions contemplated hereby will (either alone or in conjunction with
      any
      other event) (i) cause or result in the accelerated vesting, funding or delivery
      of, or increase the amount or value of, any material payment or benefit to
      any
      manager, officer, Employee, consultant or independent contractor of Seller,
      (ii)
      cause or result in the funding of any Benefit Plan or (iii) cause or result
      in a
      limitation on the right of Seller to amend, merge, terminate or receive a
      reversion of assets from any Benefit Plan or related trust. Without limiting
      the
      generality of the foregoing, no amount paid or payable by Seller in connection
      with the transactions contemplated hereby (either solely as a result thereof
      or
      as a result of such transactions in conjunction with any other event) will
      be an
“excess
      parachute payment”
within
      the meaning of Section 280G of the Code.

     

    
      
        
        

      

      
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    (h) Neither
      Seller nor any Person acting on behalf of Seller has made or entered into any
      legally binding commitment with any current or former managers, officers,
      Employees, consultants or independent contractors of Seller to the effect that,
      following the date hereof, (i) any benefits or compensation provided to such
      Persons under existing Benefit Plans or under any other plan or arrangement
      will
      be enhanced or accelerated, (ii) any new plans or arrangements providing
      benefits or compensation will be adopted, (iii) any Benefit Plan will be
      continued for any period of time or cannot be amended or terminated at any
      time
      or for any reason, (iv) any Benefit Plan or arrangement provided by Seller
      will
      be made available to such Persons, or (v) any trusts or other funding mechanisms
      will be required to be funded.

     

    (i) With
      regard to employment and staff or labor, Seller has complied with all applicable
      PRC laws and regulations in all material respects, including without limitation,
      laws and regulations pertaining to welfare funds, social benefits, medical
      benefits, insurance, retirement benefits, pensions or the like.

     

    Section
      3.21 Employees.

     

    (a) Schedule
      3.21(a)
      sets
      forth (i) the name, title and total compensation (payable by Seller) of each
      Employee, agent, officer, manager and director of Seller, (ii) all bonuses
      and
      other incentive compensation received by such Persons since January 1, 2006
      and
      any accrual for such bonuses and incentive compensation and (iii) all Contracts
      or commitments by Seller to increase the compensation or to modify the
      conditions or terms of employment or other service of any of its officers,
      managers, Employees, consultants and agents.

     

    (b) To
      the
      Knowledge of Seller, Tianfu Yang or Harbin Tech Full Industry Co., Ltd., no
      officer, manager or director of Seller or any Employee, consultant or agent
      of
      Seller is a party to, or is otherwise bound by, any agreement or arrangement,
      including any confidentiality, non-competition, or proprietary rights agreement,
      between such Person and any other Person that will (i) materially affect the
      performance by such Person of such Person’s duties to Seller or (ii) materially
      affect the ability of Seller to conduct its business.

     

    (c) No
      executive, key Employee or significant group of Employees has given notice
      to
      Seller to terminate employment or service with Seller during the next twelve
      (12) months.

     

    Section
      3.22 Taxes
      and Tax Returns.
      Except
      as provided on Schedule
      3.22:

     

    (a) All
      Tax
      Returns required to be filed by or with respect to Seller or its assets and
      operations have been timely filed. All such Tax Returns (i) were prepared in
      the
      manner required by applicable Law, (ii) are true, correct and complete in all
      material respects and (iii) accurately reflect the liability for Taxes of
      Seller.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (b) True,
      correct and complete copies of all federal, state, local and foreign Tax Returns
      of or including Seller filed in the previous five (5) years have been provided
      to Purchaser prior to the date hereof.

     

    (c) Seller
      has timely paid, or caused to be paid, all Taxes required to be paid, whether
      or
      not shown (or required to be shown) on a Tax Return, and Seller shall promptly
      pay all other Taxes that may become due that relate to periods ending on or
      before the Closing Date. Since inception, Seller has not incurred any liability
      for Taxes other than Taxes incurred in the Ordinary Course of
      Business.

     

    (d) Seller
      has complied in all material respects with the provisions of the Taxing
      Authority, has complied in all material respects with all provisions of state,
      local and foreign Law relating to the withholding and payment of Taxes, and
      has,
      within the time and in the manner prescribed by Law, withheld the applicable
      amount of Taxes required to be withheld from amounts paid to any Employee,
      independent contractor or other third-party and paid over to the proper
      Governmental Authorities all amounts required to be so paid over.

     

    (e) None
      of
      the Tax Returns of or relating to Seller has been examined by the IRS or any
      state, local or foreign Taxing Authorities and no adjustment relating to any
      Tax
      Return of or including Seller or its assets or operations has been proposed
      or
      threatened formally or informally by any Taxing Authority. Seller has not
      entered into a closing agreement pursuant to Section 7121 of the Code (or an
      analogous provision of state, local or foreign Law). There are no examinations
      or other administrative or court proceedings relating to Taxes in progress
      or
      pending, and there is no existing, pending or threatened claim, proposal or
      assessment against Seller or relating to their assets or operations asserting
      any deficiency for Taxes.

     

    (f) No
      claim
      has ever been made by any Taxing Authority with respect to Seller in a
      jurisdiction where Seller does not file Tax Returns that Seller is or may be
      subject to taxation by that jurisdiction. There are no security interests on
      any
      of the assets of Seller that arose in connection with any failure (or alleged
      failure) to pay any Taxes and, except for liens for real and personal property
      Taxes that are not yet due and payable, there are no liens for any Taxes upon
      any assets of Seller.

     

    (g) No
      extension of time with respect to any date by which a Tax Return was or is
      to be
      filed by or with respect to Seller is in force, and no waiver or agreement
      by
      Seller or any is in force for the extension of time for the assessment or
      payment of any Taxes.

     

    (h) Seller
      has not granted a power of attorney to any Person with respect to any
      Taxes.

     

    (i) Seller
      is
      not, nor is a party to, nor owns an interest in, a joint venture, partnership
      or
      other arrangement or contract that could be treated as a partnership for federal
      income tax purposes. Seller does not own any membership or other equity
      interest, or any other interest, in any other Person.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (j) There
      are
      no outstanding options, warrants, securities convertible into stock or other
      contractual obligations that might be treated for federal income tax purposes
      as
      stock or another equity interest in Seller.

     

    (k) Seller
      is
      not a party to any contract, agreement, plan or arrangement relating to
      allocating or sharing the payment of, indemnity for, or liability for,
      Taxes.

     

    (l) Seller
      is
      not, and has not been, a “United
      States real property holding corporation”
within
      the meaning of Section 897(c)(2) of the Code during the applicable period
      specified in Section 897(c)(1)(A)(ii) of the Code.

     

    (m) Seller
      has not participated in any “reportable
      transaction”
within
      the meaning of Treasury Regulation Section 1.6011-4.

     

    (n) Seller
      has not constituted either a “distributing
      corporation”
or
      a
“controlled
      corporation”
in
      a
      distribution of stock qualifying for tax-free treatment under Section 355 of
      the
      Code (x) in the two (2) years prior to the date of this Agreement or (y) in
      a
      distribution which could otherwise constitute part of a “plan”
or
      “series
      of related transactions”
(within
      the meaning of Section 355(e) of the Code) in conjunction with the transactions
      contemplated by this Agreement.

     

    (o) Seller
      has never participated in an international boycott within the meaning of Section
      999 of the Code.

     

    (p) Seller
      has, in all material respects, properly and in a timely manner documented its
      transfer pricing methodology in compliance with Section 482 and 6662 (and any
      related sections) of the Code, the related regulations, and any comparable
      provisions of state, local or foreign Tax Law or regulation.

     

    Section
      3.23 Intellectual
      Property.

     

    (a) Seller
      owns, or is validly licensed under, or has the right to use, all Patents, Patent
      rights, licenses, inventions, Copyrights, know-how (including Trade Secrets
      and
      other unpatented and/or unpatentable proprietary or confidential information,
      systems or procedures), trademarks, service marks and trade names (collectively,
      “Intellectual
      Property”)
      necessary for the conduct of its businesses and which as of the Closing Date,
      will be free and clear of all Liens, except where the failure to own, possess,
      or have the right to use such Intellectual Property would not have a Material
      Adverse Effect. To the Knowledge of Seller, Tianfu Yang or Harbin Tech Full
      Industry Co., Ltd., no claims or notices of any potential claim have been
      asserted by any Person challenging the use of any such Intellectual Property
      by
      Seller or questioning the validity or effectiveness of the Intellectual Property
      or any license or agreement related thereto, and, to Seller’s or the
      Shareholder’s Knowledge, there are no facts which would form a valid basis for
      any such claim. To the Knowledge of Seller, Tianfu Yang or Harbin Tech Full
      Industry Co., Ltd., the use of such Intellectual Property by Seller will not
      infringe on the Intellectual Property rights of any other Person. 

     

    (b) Schedule
      3.23(b)
      sets
      forth a complete list of (i) the Registered IP owned by or licensed to Seller
      and (ii) all other material Intellectual Property licensed to Seller including
      all licenses and other agreements relating thereto. “Registered
      IP”
means
      Intellectual Property that is registered, filed, or issued under the authority
      of any Governmental Authority, including all Patents, registered Copyrights,
      registered mask works, and registered trademarks and all applications for any
      of
      the foregoing. All Intellectual Properties owned by Seller are valid and
      enforceable and are in compliance with formal legal requirements.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (c) Seller
      has taken reasonable steps and measures to establish and preserve ownership
      of
      or right to use all Intellectual Property material to the operation of its
      business. Seller has taken reasonable steps to register, protect, maintain,
      and
      safeguard the Intellectual Property material to its business, including any
      Intellectual Property that is jointly developed with any third-parties, or
      any
      Intellectual Property for which improper or unauthorized disclosure would impair
      its value or validity, and has had executed appropriate nondisclosure and
      confidentiality agreements and made all appropriate filings, registrations and
      payments of fees in connection with the foregoing. There is no infringement
      or
      misappropriation by any other Person of any Intellectual Property of Seller.
      No
      Proceedings or claims in which Seller alleges that any Person is infringing
      upon, or otherwise violating, any Intellectual Property of Seller are pending,
      and none has been served, instituted or asserted by Seller.

     

    (d) Seller
      owns all rights in and to any and all Intellectual Property used or planned
      to
      be used by Seller, or covering or embodied in any past, current or planned
      activity or service of Seller, which Intellectual Property was made, developed,
      conceived, created or written by any consultant retained, or any employee
      employed, by Seller. No former or current employee, no former or current
      consultant, and no third-party joint developer of Seller has any rights in
      any
      Intellectual Property made, developed, conceived, created or written by the
      aforesaid employee or consultant during the period of his or her retention
      by
      Seller which can be asserted against Seller.

     

    (e) Except
      as
      set forth on Schedule
      3.23(e),
      no
      Intellectual Property owned by Seller is the subject of any security interest,
      Lien, license or other contract granting rights therein to any other Person.
      Seller has not (a) transferred or assigned, (b) granted an exclusive license
      to
      or (c) provided or licensed, any Intellectual Property owned by Seller to any
      Person.

     

    Section
      3.24 Information
      Technology.

     

    (a) The
      material Seller IT Systems have been properly maintained by technically
      competent personnel in accordance with standards set by the manufacturers for
      proper operation, monitoring and use. The material Seller IT Systems are in
      good
      working condition to effectively perform all information technology operations
      necessary for the conduct of its business as now conducted or as contemplated
      to
      be conducted. Seller has not experienced within the past twelve (12) months
      any
      material disruption to, or material interruption in, its conduct of its business
      attributable to a defect, bug, breakdown or other failure or deficiency on
      the
      part of Seller IT Systems.

     

    (b) Except
      for scheduled or routine maintenance which would not reasonably be expected
      to
      cause any material disruption to, or material interruption in, the conduct
      of
      the business, Seller IT Systems are available for use during normal working
      hours and other times when required to be available. Seller has taken
      commercially reasonable steps to provide for the backup and recovery of the
      data
      and information critical to the conduct of the business (including such data
      and
      information that is stored on magnetic or optical media in the ordinary course)
      without material disruption to, or material interruption in, the conduct of
      the
      business.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (c) Seller
      has taken commercially reasonable actions, consistent with standards in the
      business, with respect to Seller IT Systems to detect and prevent the disclosure
      to unauthorized persons of, and keep secure, any and all confidential
      information, Trade Secrets, or other proprietary information stored on Seller
      IT
      Systems including the designs, policies, processes, and procedures relating
      to
      the composition and structure of Seller IT Systems.

     

    Section
      3.25 Guarantees.
      Seller
      is not a guarantor or otherwise responsible for any liability or obligation
      (including indebtedness) of any Person.

     

    Section
      3.26 Bank
      Accounts.
      Schedule
      3.26
      contains
      a true and complete list of (i) the names and locations of all banks, trust
      companies, securities brokers and other financial institutions at which Seller
      has an account or safe deposit box or maintains a banking, custodial, trading
      or
      other similar relationship, (ii) a true and complete list and description of
      each such account, box and relationship and (iii) the name of every Person
      authorized to draw thereon or having access thereto.

     

    Section
      3.27 Foreign
      Corrupt Practices and International Trade Sanctions.
      Neither
      Seller nor any agent or other Person acting on behalf of Seller has (i) directly
      or indirectly, used any funds for unlawful contributions, gifts, entertainment
      or other unlawful expenses related to foreign or domestic political activity,
      (ii) made any unlawful payment to foreign or domestic government officials
      or
      employees or to any foreign or domestic political parties or campaigns from
      corporate funds, (iii) failed to disclose fully any contribution made by Seller
      (or made by any Person acting on its behalf of which Seller is aware) which
      is
      in violation of Law, (iv) violated in any material respect any provision of
      the
      Foreign Corrupt Practices Act of 1977, as amended, or (v) violated or operated
      in noncompliance with any export restrictions, anti-boycott regulations, embargo
      regulations or other applicable Laws.

     

    Section
      3.28 Inventory.
      The
      inventories shown on Seller’s balance sheet, net of inventory reserves reflected
      thereon were acquired and maintained in the Ordinary Course of Business, are
      of
      good and merchantable quality, and consist of items of a quantity and quality
      usable or salable in the Ordinary Course of Business.

     

    Section
      3.29 Encumbrances.
      As
      of the
      Closing Date, except as set forth in Schedule 3.29, there will be no
      encumbrances or contractual restrictions on the ability of Seller to pay
      dividends or make other distributions on its capital stock or to make loans
      or
      advances or pay any indebtedness to, or investments in, Seller, except for
      such
      restrictions set forth in this Agreement, restrictions imposed by a Governmental
      Authority, or limitations imposed by corporate law statutes.

     

    Section
      3.30 Sufficiency
      of Consideration.
      The
      Purchase Price will be sufficient to enable Seller to pay in full all accrued
      or
      contingent liabilities of Seller following the Closing, including all of
      Seller’s Taxes due and other amounts owed as a result of the transactions
      contemplated by Seller Documents, and, to the Knowledge of Seller, Tianfu Yang
      or Harbin Tech Full Industry Co., Ltd., to otherwise satisfy in full all actual
      or potential claims of creditors of Seller.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    Section
      3.31 Passive
      Foreign Investment Company.
      Seller
      neither is or intends to become a “passive
      foreign investment company”
(a
      “PFIC”)
      within
      the meaning of Section 1297 of the Code. 

     

    Section
      3.32 Money
      Laundering Laws.
      The
      operations of Seller are and have been conducted at all times in compliance
      with
      the money laundering statutes of applicable jurisdictions, the rules and
      regulations thereunder and any related or similar rules, regulations or
      guidelines, issued, administered or enforced by any applicable governmental
      agency (collectively, the “Money
      Laundering Laws”)
      and no
      action, suit or Proceeding by or before any court or governmental agency,
      authority or body or any arbitrator involving Seller with respect to the Money
      Laundering Laws is pending or, to the best Knowledge of Seller, Tianfu Yang
      or
      Harbin Tech Full Industry Co., Ltd., threatened.

     

    Section
      3.33 No
      Misleading Statements.
      All
      disclosure furnished by or on behalf of Seller, Tianfu Yang and Harbin Tech
      Full
      Industry Co., Ltd. to the Purchasers regarding Seller, its businesses and the
      transactions contemplated under the Agreement or other agreements, certificates
      and instruments to be executed by Purchaser or Seller in connection with this
      agreement, including the Disclosure Schedule to this Agreement, with respect
      to
      the representations and warranties made herein are true and correct with respect
      to such representations and warranties and do not contain any untrue statement
      of a material fact or omit to state any material fact necessary in order to
      make
      the statements made therein, in light of the circumstances under which they
      were
      made, not misleading.

     

    Section
      3.34 No
      Involuntary Liquidation, Insolvency, Winding-Up.

     

    (a) Except
      as
      contemplated by this Agreement, no order has been made or petition presented,
      or
      resolution passed by the board of directors, members, partners, managers or
      shareholders of Seller for the winding-up or liquidation of Seller and there
      is
      not outstanding:

     

    (i) any
      petition or order for the winding-up of Seller;

     

    (ii) any
      appointment of a receiver over the whole or part of the undertaking of assets
      of
      Seller;

     

    (iii) any
      petition or order for administration of Seller;

     

    (iv) any
      voluntary arrangement between Seller and any of its creditors;

     

    (v) any
      distress or execution or other process levied in respect of Seller which remains
      undischarged; or

     

    (vi) any
      unfulfilled or unsatisfied judgment or court order against Seller.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (b) Seller
      is
      not insolvent, nor will Seller be rendered insolvent by the sale to Purchaser
      of
      the Assets and the other transactions contemplated hereby and by Seller
      Documents. As used in this section, “Insolvent”
means,
      with respect to Seller, that the sum of the debts and other probable liabilities
      of Seller exceeds or will exceed the present fair saleable value of Seller’s
      assets. Immediately after the Closing, (i) Seller will be able to pay its
      liabilities as they become due in the Ordinary Course of Business, (ii) Seller
      will not have unreasonably small capital with which to conduct its business,
      (iii) Seller will have assets (calculated at fair market value) that exceed
      its
      Liabilities, and (iv) taking into account all pending and threatened claims
      and
      litigation, final judgments against Seller in actions for money damages are
      not
      reasonably anticipated to be rendered at a time when, or in amounts such that,
      Seller will be unable to satisfy any such judgments promptly in accordance
      with
      their terms (taking into account the maximum probable amount of such judgments
      in any such actions and the earliest reasonable time at which such judgments
      might be rendered) as well as all other obligations of Seller. The cash
      available to Seller, after taking into account all other anticipated uses of
      the
      cash, will be sufficient to pay all such debts and judgments promptly in
      accordance with their terms.

     

    Section
      3.35 Product
      Warranties.
      Each
      product manufactured, sold, leased, licensed or delivered by Seller has been
      done so in conformity with all applicable contractual commitments and all
      express and implied warranties, and, to the Knowledge of Seller, Tianfu Yang
      or
      Harbin Tech Full Industry Co., Ltd., Seller does not have liability (and there
      is no basis for any present or future action, suit, Proceeding, hearing,
      investigation, charge, complaint, claim, or demand against Seller giving rise
      to
      liability) for replacement or repair thereof or for other material damages
      in
      connection therewith that would constitute, individually or in the aggregate,
      an
      event that would reasonably be expected to result in a Material Adverse Change.
      No product manufactured, sold, leased, distributed, licensed or delivered by
      Seller is subject to any guaranty, warranty, or other indemnity beyond (a)
      Seller’s applicable standard terms and condition of sale or lease, (b) those
      implied or imposed by the Uniform Commercial Code (as implemented in applicable
      jurisdictions where such Seller conducts business), or (c) those additional
      or
      different warranty terms granted by Seller from to time that do not in the
      aggregate materially increase such Seller’s obligations or potential liability
      as compared to such Seller’s standard terms. Schedule
      3.35
      includes
      copies of the standard terms and conditions of license for Seller and a list
      of
      all discontinued products of Seller.

     

    Section
      3.36 Privacy
      of Customer Information.
      Seller
      has commercially reasonable security measures in place to protect the consumer
      or customer information it receives through its websites or otherwise and which
      it stores in its computer systems from illegal use by third parties or use
      by
      third parties in a manner violative of the rights of privacy of its
      customers.

     

    Section
      3.37 Distributors
      and Partners.

     

    (a) Schedule
      3.37(a)
      sets
      forth the name of each distributor of Seller (“Distributors”),
      together with the names of any Persons with which any Seller has a material
      strategic partnership or similar relationship (“Partners”).

     

    (b) No
      Distributor or Partner from or through which Seller received more than 10%
      of
      total sales during the period ended December 31, 2006 (each, a “Large
      Distributor or Partner”)
      has
      terminated or reduced its relationship with Seller or indicated to Seller (or,
      to the Knowledge of Seller, Tianfu Yang or Harbin Tech Full Industry Co., Ltd.,
      to any other Person) that such Large Distributor or Partner intends to terminate
      or reduce its agreement or relationship with Seller. No Large Distributor or
      Partner has, to the Knowledge of Seller, Tianfu Yang or Harbin Tech Full
      Industry Co., Ltd., any plan or intention to terminate, cancel or otherwise
      materially and adversely modify its relationship with Seller or to decrease
      materially or limit its usage, purchase or distribution of the services or
      products of Seller.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    (c) No
      Distributor or Partner has cancelled or otherwise terminated its relationship
      with Seller or has materially decreased its usage or purchase of the services
      or
      products of Seller, except (i) such events as, individually or in the aggregate,
      do not result in a Material Adverse Change, or (ii) pursuant to Seller Contracts
      that by their terms contemplate such termination or decrease.

     

    Section
      3.38 Suppliers.
      Within
      the last twelve months, neither the appliance vendor named on Schedule
      3.38
      nor any
      licensor of Intellectual Property Licenses-In has cancelled, materially
      modified, or otherwise terminated its relationship with Seller, materially
      and
      unilaterally decreased its services, supplies or materials to Seller, nor to
      the
      Knowledge of Seller, Tianfu Yang or Harbin Tech Full Industry Co., Ltd., have
      any plan or intention to do any of the foregoing, except to Seller Contracts
      that, by their terms, contemplate such termination or decrease.

     

    Section
      3.39 Absence
      of Undisclosed Liabilities.
      To the
      Knowledge of Seller, Tianfu Yang or Harbin Tech Full Industry Co., Ltd., Seller
      has no material liabilities or obligations, whether accrued, matured, unmatured,
      absolute, contingent, direct or indirect or otherwise, related exclusively
      to
      Seller, which: (a) (i) have not been reflected on the balance sheets of the
      Financial Statements, (ii) have not been incurred in the Ordinary Course of
      Business since August 31, 2006 or (iii) in the case of other types of
      liabilities and obligations not customarily reflected on a consolidated balance
      sheet prepared in accordance with historical accounting policies, have not
      been
      expressly described in Schedule
      3.39,
      or (b)
      with respect to each of clauses (i) (ii) or (iii) above, would be reasonably
      expected to have a Material Adverse Effect on Seller.

     

    Section
      3.40 Securities
      Matters; Economic Risk; Sophistication.
      

     

    (a) Seller
      and each Shareholder acknowledge that the shares of Harbin Stock being issued
      in
      connection with this Agreement have not been and will not be registered under
      the Securities Act, or any state securities laws and may not be resold without
      compliance with the Securities Act and any applicable state securities laws
      or
      based upon an exemption, if available, under the Securities Act and any
      applicable state securities laws. Seller and each Shareholder further represent,
      warrant and covenant that (i) the shares of Harbin Stock being issued in
      connection with this Agreement are being acquired by Seller solely for its
      own
      account, for investment purposes only, and with no present intention of
      distributing, selling or otherwise disposing of such Harbin Stock in connection
      with a distribution, and (ii) none of the shares of Harbin Stock being issued
      to
      or obtained by Seller will be offered, sold, assigned, pledged, hypothecated,
      transferred or otherwise disposed of except after full compliance with all
      of
      the applicable provisions of the Securities Act and the rules and regulations
      of
      the SEC and after full compliance with any applicable state securities laws.
      Seller and each Shareholder acknowledges that, in addition to any other legends
      which Harbin may require, all certificates evidencing the Harbin Stock shall
      bear the following legend:

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE
      SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED
      OR
      OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
      UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
      UNDER THE SECURITIES ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF
      AN
      OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED
      TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT. THE SHARES ARE
      “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES
      ACT. 

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (b) Seller
      and each Shareholder represent and warrant that Seller and each Shareholder
      (i)
      is able to bear the economic risks associated with their receipt, acceptance
      and
      ownership of restricted shares of Harbin Stock to be issued pursuant to or
      in
      connection with this Agreement, (ii) can afford to sustain a total loss of
      their
      restricted shares of Harbin Stock, and (iii) has such knowledge and experience
      in financial and business matters that such Person is capable of evaluating
      the
      merits and risks of their acceptance and ownership of restricted shares of
      Harbin Stock pursuant to this Agreement. Seller and each Shareholder further
      represent and warrant that Seller and each Shareholder has been supplied with,
      or had access to, information to which a reasonable investor would attach
      significance in making investment decisions, including without limitation the
      annual reports, quarterly reports and other reports and filings that have been
      filed with respect to Harbin with the SEC that are available through the SEC
      website and, without limiting the generality of the foregoing, has had an
      adequate opportunity to ask questions and receive answers from the officers
      of
      Harbin and its subsidiaries concerning any and all matters relating to Harbin
      and its subsidiaries and the transactions described herein, including the
      background and experience of the current and proposed officers and directors
      of
      Harbin and its subsidiaries, the plans for the operations of the business of
      Harbin and its subsidiaries, and any plans for additional acquisitions and
      the
      like. 

     

    (c) Seller
      and each Shareholder represent and warrant that Seller and each Shareholder
      have
      asked any and all questions in the nature described in the preceding sentence
      and all questions have been answered to his satisfaction.

     

    Section
      3.41 Office
      of Foreign Assets Control of the U.S. Treasury Department.
      No
      Shareholder is currently subject to any U.S. sanctions administered by the
      Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”);
      and
      each Shareholder will not directly or indirectly use the Cash Payment, or lend,
      contribute or otherwise make available such Cash Payment to any Subsidiary,
      joint venture partner or other Person or entity, for the purpose of financing
      the activities of any Person currently subject to any U.S. sanctions
      administered by OFAC.

     

    
      
        
        

      

      
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    ARTICLE
      IV

    REPRESENTATIONS
      AND WARRANTIES OF PURCHASER
      AND HARBIN

     

    Purchaser
      and Harbin represent and warrant to Seller as of the date hereof and as of
      the
      Closing Date or, if a representation or warranty is made as of a specified
      date,
      as of such date, as follows:

     

    Section
      4.1 Organization
      of Purchaser and Harbin; Authority.
      Each
      Purchaser and Harbin (i) has been duly organized, is validly existing and is
      in
      good standing under the laws of its jurisdiction of organization (ii) has all
      requisite power and authority to carry on its business and to own, lease and
      operate its properties and assets, and (iii) is duly qualified or licensed
      to do
      business and is in good standing as a foreign corporation authorized to do
      business in each jurisdiction in which the nature of such business or the
      ownership or leasing of such properties requires such qualification, except
      where the failure to be so qualified would not, individually or in the
      aggregate, have a Material Adverse Effect.

     

    Section
      4.2 Authorization;
      Enforceability.

     

    Each
      Purchaser and
      Harbin
      has all
      requisite corporate power and authority to execute, deliver and perform its
      obligations under this Agreement and to consummate the transactions contemplated
      hereby. This Agreement has been duly authorized, executed and delivered by
      each
      Purchaser and Harbin. This Agreement constitutes a legal, valid and binding
      obligation of each Purchaser and Harbin, as the case may be, enforceable against
      each Purchaser and Harbin, in accordance with its terms, except (i) as limited
      by applicable bankruptcy, insolvency, reorganization, moratorium and other
      laws
      of general application affecting enforcement of creditors’ rights generally,
      (ii) as limited by laws relating to the availability of specific performance,
      injunctive relief or other equitable remedies, and (iii) to the extent the
      indemnification provisions contained in Article
      VIII
      of this
      Agreement may be limited by applicable federal or state securities
      laws.

     

    Section
      4.3 No
      Conflict.
      The
      execution and delivery by each Purchaser and Harbin of this Agreement and the
      consummation by each Purchaser and Harbin of the transactions contemplated
      hereby assuming all required filings, Consents, approvals, authorizations and
      notices have been made, given or obtained, do not and shall not:

     

    (a) violate,
      conflict with or result in the breach of any Organizational Document of the
      Purchaser or Harbin;

     

    (b) (i)
      violate or conflict with any Law applicable to the Purchaser or Harbin, any
      of
      the Subsidiaries or any of their properties, or (ii) conflict with, result
      in a
      breach of, constitute a default of (or event which after notice or lapse of
      time
      or both) a Contract which any of them is a party or by which any of them or
      their respective property is bound other than in each of clause (i) and (ii)
      such violations, breaches or defaults that are (A) disclosed in Schedule
      4.3(b)
      or (B)
      not material;

     

    (c) require
      the Consent of any Person or a Governmental Authority (other than Consents
      already obtained) or result in the imposition of a Lien on any assets of the
      Purchaser or Harbin or any of the Subsidiaries under or pursuant to (i) the
      Organizational Documents, (ii) any Contract, or (iii) any Law, other than in
      each of clause (ii) and (iii) such violations, breaches or defaults that are
      not
      material; or 

     

    
      
        
        

      

      
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    (d) (i)
      result in the termination of any Contract, (ii) result in the creation of any
      Lien under any such Contract or (iii) constitute an event which, after notice
      or
      lapse of time or both, would result in any such termination or creation of
      a
      Lien;

     

    except,
      in the case of clause (a), (b) and (d) above, for any conflict, breach, default,
      termination or Lien that would not reasonably be expected to (A) adversely
      affect in any material respect the ability of each Purchaser and Harbin to
      enter
      into, perform its obligations under, and to consummate the transactions
      contemplated by, this Agreement or (B) adversely affect in any material respect
      the business, operations (including results of operations), assets, liabilities
      or financial condition of Purchaser, Harbin and the Subsidiaries.

     

    ARTICLE
      V

    COVENANTS

     

    Section
      5.1 Operation
      of Seller Pending the Closing.
      Seller
      covenants and agrees that Seller will not, and the Shareholders covenant and
      agree to cause Seller not to, take any action with the purpose of causing any
      of
      the conditions to Purchaser’s obligations set forth in Article
      VI
      to not
      be satisfied. Except with the prior written Consent of Purchaser, during the
      period from the date of this Agreement to the Closing, the businesses of Seller
      shall be conducted in the Ordinary Course of Business and Seller covenants
      and
      agrees, and the Shareholders agree to cause Seller, to use all commercially
      reasonable efforts consistent therewith to preserve intact Seller’s material
      properties, assets and business organizations. Without limiting the generality
      of the foregoing, and except as otherwise provided in this Agreement, Seller
      shall not, and the Shareholders shall cause Seller not to, without the prior
      written Consent of Purchaser:

     

    (a) amend
      any
      of its Organizational Documents;

     

    (b) liquidate,
      dissolve, recapitalize or otherwise wind up its business;

     

    (c) make
      any
      distribution or declare, pay or set aside any dividend (in cash or property)
      with respect to, or split, combine, redeem, reclassify, purchase or otherwise
      acquire, directly or indirectly, any equity interests or shares of capital
      stock
      of, or other equity or voting interest in, Seller, or make any other changes
      in
      the capital structure of Seller;

     

    (d) authorize
      for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver
      (i) any equity interest or capital stock of Seller, (ii) any equity rights
      in
      respect of, security convertible into, exchangeable for or evidencing the right
      to subscribe for or acquire either (x) any equity interest or shares of capital
      stock of Seller or (y) any securities convertible into, exchangeable for, or
      evidencing the right to subscribe for or acquire any shares of the capital
      stock
      of, or other equity or voting interest in, Seller, (iii) any instruments of
      indebtedness (other than in the Ordinary Course of Business) or (iv) any
      derivative instruments (other than in the Ordinary Course of
      Business);

     

    
      
        
        

      

      
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    (e) other
      than in the Ordinary Course of Business, acquire or dispose of, whether by
      purchase, merger, consolidation or sale, lease, pledge or other encumbrance
      of
      stock or assets or otherwise, any interest in any (i) corporation, partnership
      or other Person or (ii) assets comprising a business or any other property
      or
      assets, in a single transaction or in a series of transactions;

     

    (f) other
      than in the Ordinary Course of Business, sell, assign, pledge, dispose of,
      transfer, lease, license, guarantee or encumber, or authorize the sale, pledge,
      disposition, transfer, lease, license, guarantee or encumbrance of, any amount
      of property or assets;

     

    (g) sell,
      assign, lease, license, transfer or otherwise dispose of, mortgage, pledge
      or
      encumber, any real property, or amend, terminate, modify or renew any real
      property lease;

     

    (h) incur
      any
      indebtedness or issue any debt securities or assume, guarantee or endorse the
      obligations of any other Person in excess of Twenty Five Thousand Dollars
      ($25,000) in the aggregate;

     

    (i) cancel
      any third-party indebtedness owed to Seller;

     

    (j) (i)
      increase in any manner the rate or terms of compensation or benefits of any
      of
      its directors, managers, officers, Employees, consultants, agents, independent
      contractors or other individual service providers (including the acceleration
      of
      the vesting of any outstanding Seller Options or the grant of any new Seller
      Options or any other award), except (A) as may be required under existing
      employment agreements, or (B) annual wage increases granted in the Ordinary
      Course of Business, (ii) hire any new Employees except in the Ordinary Course
      of
      Business with respect to Employees with an annual base and incentive
      compensation opportunity not to exceed Twenty Five Thousand Dollars ($25,000),
      (iii) pay or agree to pay any pension, retirement allowance or other employee
      benefit not required or permitted by any existing Benefit Plan or other
      agreement or arrangement to any such director, manager, officer, Employee,
      consultant, agent, independent contractor or other individual service provider,
      whether past or present, (iv) enter into or amend any employment, bonus,
      severance or retirement contract, except for agreements for newly hired
      Employees in the Ordinary Course of Business with an annual base and incentive
      compensation opportunity not to exceed Twenty Five Thousand Dollars ($25,000),
      or (v) except as required to ensure that any Benefit Plan is not then out of
      compliance with applicable Law, enter into or adopt any new, or increase
      benefits under or renew or amend any existing, Benefit Plan or benefit
      arrangement or any collective bargaining agreement;

     

    (k) make
      any
      loans, advances or capital contributions (other than advances for travel and
      other normal business expenses to officers and Employees), except in the
      Ordinary Course of Business;

     

    (l) commit
      to
      make any capital expenditure or fail to make capital expenditures consistent
      with past practice;

     

    
      
        
        

      

      
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    (m) fail
      to
      maintain all its assets in good repair and condition, except to the extent
      of
      wear or use in the Ordinary Course of Business or damage by fire or other
      unavoidable casualty;

     

    (n) make,
      revoke or change any Tax election or change any Tax accounting method, settle
      or
      compromise any Tax liability, or waive or Consent to the extension of any
      statute of limitations for the assessment and collection of any
      Tax;

     

    (o) except
      as
      may be required as a result of a change in applicable Law or GAAP, change any
      accounting principles or practices used by Seller;

     

    (p) institute,
      settle or dismiss any action, claim, demand, lawsuit, Proceeding, arbitration
      or
      grievance by or before any court, arbitrator or governmental or regulatory
      body
      threatened against, relating to or involving Seller in connection with any
      business, asset or property of Seller;

     

    (q) enter
      into any Seller Contracts or Contracts (i) having a term in excess of twelve
      (12) months or (ii) involving the payment, or provision of goods or services,
      in
      excess of Seventy Five Thousand Dollars ($75,000) on an individual or aggregate
      basis;

     

    (r) either
      fail to pay the accounts payable or other liabilities of Seller, or fail to
      collect the Accounts Receivable or other indebtedness owed to Seller, in a
      manner consistent with the practices prior to the date hereof or take any action
      not consistent with past practices that is designed to accelerate or has the
      effect of accelerating the receipt by Seller of any amounts of cash earlier
      than
      such cash would have been realized consistent with past practices;

     

    (s) enter
      into, or renew, amend or otherwise modify or extend, any Contracts relating
      to
      derivative or hedging transactions or similar transactions, including currency
      derivative or hedging Contracts or transactions; or

     

    (t) agree
      in
      writing to take any of the foregoing actions.

     

    Section
      5.2 Access.
      Seller
      shall, and the Shareholders shall cause Seller to, afford to officers,
      employees, accountants, counsel and other representatives of Purchaser
      reasonable access to all of the assets, properties, personnel, and Books and
      Records of Seller.

     

    Section
      5.3 Notification.

     

    (a) Seller
      shall, and the Shareholders shall cause Seller to, promptly notify Purchaser,
      and Purchaser shall promptly notify Seller, of any Proceeding pending or, to
      their Knowledge, threatened against Seller, Purchaser or the Shareholders as
      the
      case may be, which challenges the transactions contemplated by this
      Agreement.

     

    (b) Seller
      and the Shareholders shall provide prompt written notice to Purchaser of any
      change in any of the information contained in the representations and warranties
      made by Seller
      and the
      Shareholders
      in
Article
      III
      or any
      exhibits or schedules referred to herein or attached hereto and shall promptly
      furnish any information which Purchaser may reasonably request in relation
      to
      such change; provided
      that
      such notice shall not operate to in any way modify or cure any breach of the
      representations and warranties made by Seller and the Shareholders in
Article
      III
      or any
      exhibits or schedules referred to herein or attached hereto.

     

    
      
        
        

      

      
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    (c) Seller
      shall, and the Shareholders shall cause Seller to, provide prompt written notice
      to Purchaser of any exercise of Seller Options between the date hereof and
      the
      Closing.

     

    Section
      5.4 No
      Inconsistent Action.
      Neither
      Seller, Purchaser, Harbin nor the Shareholders will take any action which is
      inconsistent with their respective obligations under this
      Agreement.

     

    Section
      5.5 Reasonable
      Best Efforts.

     

    (a) Upon
      the
      terms and subject to the conditions of this Agreement, each of the Parties
      shall
      use its reasonable best efforts to take, or cause to be taken, all actions,
      and
      to do, or cause to be done, all things necessary, proper or advisable under
      applicable Laws to consummate and make effective the transactions contemplated
      by this Agreement as promptly as practicable, including (i) the prompt
      preparation and filing of all forms, registrations and notices required to
      be
      filed to consummate the transactions contemplated by this Agreement and the
      taking of such commercially reasonable actions as are necessary to obtain any
      requisite approvals, Consents, orders, exemptions or waivers by any Governmental
      Authority or any other Person and (ii) using reasonable best efforts to cause
      the satisfaction of all conditions to Closing.

     

    (b) Each
      Party shall promptly consult with the other Parties with respect to, provide
      any
      necessary information with respect to and provide each other Party (or its
      counsel) copies of, all filings made by such Party with any Governmental
      Authority or any other Person or any other information supplied by such Party
      to
      a Governmental Authority or any other Person in connection with this Agreement
      and the transactions contemplated hereby.

     

    (c) Each
      Party shall promptly inform the other Party of any communication from any
      Governmental Authority regarding any of the transactions contemplated by this
      Agreement. If any Party or Affiliate thereof receives a request for additional
      information or documentary material from any such Governmental Authority with
      respect to the transactions contemplated by this Agreement, then such Party
      will
      endeavor in good faith to make, or cause to be made, as soon as reasonably
      practicable and after consultation with the other Party, an appropriate response
      in compliance with such request.

     

    Section
      5.6 Further
      Assurances.
      From
      time to time after the Closing, without additional consideration, each Party
      will (or, if appropriate, cause its Affiliates to) execute and deliver such
      further instruments and take such other action as may be necessary or reasonably
      requested by each other Party to make effective the transactions contemplated
      by
      this Agreement and to provide each other Party with the intended benefits of
      this Agreement. Without limiting the foregoing, upon reasonable request of
      Purchaser, each of the Shareholders and Seller shall, or shall cause their
      respective Affiliates to, as applicable, execute, acknowledge and deliver all
      such further assurances, deeds, assignments, consequences, powers of attorney
      and other instruments and paper as may be required to sell, transfer, assign,
      convey and deliver to Purchaser all right, title and interest in, to and under
      the Assets.

     

    
      
        
        

      

      
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    Section
      5.7 No
      Solicitation.

     

    (a) Seller
      shall, and Shareholders shall cause Seller to, cause each of its officers,
      managers, employees, subsidiaries, Affiliates, agents and other representatives
      to, immediately cease any existing discussions or negotiations with respect
      to
      any Alternative Proposal and will not, and shall cause such Persons not to,
      directly or indirectly, encourage, solicit, participate in, initiate or
      facilitate discussions or negotiations with, or provide any information to,
      any
      corporation, partnership, Person or other entity or group (other than Purchaser
      or its managers, officers, employees, subsidiaries, agents or other Affiliates)
      concerning any Alternative Proposal. Seller and the Shareholders shall
      immediately communicate to Purchaser any such inquiries or proposals regarding
      an Alternative Proposal, including the terms thereof.

     

    (b) “Alternative
      Proposal”
shall
      mean any of the following involving Seller (other than the transactions
      expressly contemplated by this Agreement): any inquiry or proposal relating
      to a
      sale of stock, merger, consolidation, share exchange, business combination,
      transfer of membership interests, partnership, joint venture, disposition of
      assets (or any interest therein) or other similar transaction.

     

    Section
      5.8 Tax
      Matters.

     

    (a) All
      transfer, documentary, sales, use, registration and other such Taxes (including
      all applicable Chinese and other real estate transfer Taxes and stock transfer
      Taxes) incurred in connection with this Agreement and the transactions
      contemplated hereby shall be paid by Seller. Each Party shall cooperate to
      the
      extent necessary in the timely making of all filings, returns, reports and
      forms
      as may be required in connection therewith.

     

    (b) Seller,
      Purchaser and the Shareholders shall, and shall each cause their Affiliates
      to,
      provide to the other cooperation and information, as and to the extent
      reasonably requested, in connection with the filing of any Tax Return or in
      conducting any audit, litigation or other Proceeding with respect to
      Taxes.

     

    Section
      5.9 Release.
      In
      consideration for payment of the Purchase Price, as of and following the Closing
      Date, Seller and each of the Shareholders (on its own behalf and on behalf
      of
      each of its Affiliates) knowingly, voluntarily and unconditionally releases,
      forever discharges, and covenants not to sue Harbin, Purchaser and their
      Subsidiaries and their respective predecessors, successors, parents,
      Subsidiaries and other Affiliates, and all of their respective current and
      former officers, directors, managers, employees, agents, attorneys and
      representatives from and for any and all claims, causes of action, demands,
      suits, debts, obligations, liabilities, damages, losses, costs, and expenses
      (including attorneys’ fees) of every kind or nature whatsoever, known or
      unknown, actual or potential, suspected or unsuspected, fixed or contingent,
      that Seller or the Shareholders or their respective Affiliates, as applicable,
      has or may have, now or in the future, arising out of, relating to, or resulting
      from any act of commission or omission, errors, negligence, strict liability,
      breach of contract, tort, violations of law, matter or cause whatsoever from
      the
      beginning of time to the Closing Date, with respect to, arising out of, or
      in
      connection with Seller; provided,
      however,
      that
      such release shall not cover: any claims arising under this Agreement, including
      the schedules and exhibits attached hereto, or the agreements or documents
      executed and/or delivered in connection herewith, but excluding claims of a
      breach of fiduciary duties by any Seller or Shareholder in connection with
      the
      transactions contemplated by this Agreement.

     

    
      
        
        

      

      
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    Section
      5.10 Restrictions
      on Sales.
      Seller
      and each Shareholder agree that Seller and each Shareholder will not sell,
      contract to sell, pledge, or otherwise dispose of, (or enter into any
      transaction which is designed to, or might reasonably be expected to, result
      in
      the disposition (whether by actual disposition or effective economic disposition
      due to cash settlement or otherwise) by Seller and such Shareholder or any
      Person in privity with Seller and such Shareholder) directly or indirectly,
      including the participation in the filing of a registration statement with
      the
      SEC in respect of, or establish or increase a put equivalent position or
      liquidate or decrease a call equivalent position within the meaning of Section
      16 of the Exchange Act, any shares of Harbin Stock acquired pursuant to this
      Agreement, or publicly announce an intention to effect any such transaction,
      for
      a period of 180 days after the Closing Date.

     

    Section
      5.11 Payment
      of Liabilities.
      Seller
      shall pay or otherwise satisfy in the Ordinary Course of Business all of its
      Liabilities and obligations. Purchaser and Seller hereby waive compliance with
      the bulk-transfer provisions of the Uniform Commercial Code (or any similar
      law)
      (“Bulk Sales Laws”) in connection with the Contemplated
      Transactions.

     

    ARTICLE
      VI

    CLOSING
      CONDITIONS

     

    Section
      6.1 Conditions
      to Each Party’s Obligations.
      The
      respective obligation of each Party to effect the transactions contemplated
      by
      this Agreement is subject to the satisfaction, on or prior to the Closing Date,
      of the following condition, which may be waived by Purchaser or
      Seller:

     

    There
      shall not be in effect any Law of any Governmental Authority of competent
      jurisdiction restraining, enjoining or otherwise preventing the consummation
      of
      the transactions contemplated by this Agreement.

     

    Section
      6.2 Conditions
      Precedent to Obligations of Purchaser.
      The
      obligation of Purchaser to effect the transactions contemplated by this
      Agreement is subject to the satisfaction or waiver of the following
      conditions:

     

    (a) The
      representations and warranties of Seller and the Shareholders in this Agreement
      that are qualified as to materiality shall be true and correct in all respects
      and the representations and warranties of Seller and the Shareholders that
      are
      not qualified as to materiality shall be true and correct in all material
      respects, in each case, as of the date hereof and at and as of the Closing
      with
      the same effect as though such representations and warranties had been made
      at
      and as of such time, other than representations and warranties that speak as
      of
      another specific date or time prior to the date hereof (which need only be
      true
      and correct as of such date or time);

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    (b) All
      of
      the terms, covenants and conditions to be complied with and performed by Seller
      and Shareholders on or prior to the Closing Date shall have been complied with
      or performed in all material respects;

     

    (c) Purchaser
      shall have received certificates of Seller and the Shareholders, dated as of
      the
      Closing Date, certifying in such detail as Purchaser may reasonably request
      that
      the conditions specified in Sections
      6.2(a)
      and
6.2(b)
      have
      been fulfilled;

     

    (d) No
      action, suit or Proceeding shall be pending or threatened by or before any
      Governmental Authority or pending or threatened by any other Person to enjoin,
      restrain, prohibit or obtain damages in respect of any of the transactions
      contemplated by this Agreement, or which would be reasonably likely to prevent
      or make illegal the consummation of any transactions contemplated by this
      Agreement;

     

    (e) There
      shall not have occurred any events that have had, or are, individually or in
      the
      aggregate, reasonably likely to have a Material Adverse Effect;

     

    (f) Purchaser
      shall have received evidence, reasonably satisfactory to Purchaser, of receipt
      of all requisite third-party and governmental Consents;

     

    (g) PRC
      Counsel to Seller shall have delivered to Purchaser and Harbin its opinion,
      dated as of the Closing Date, in form and substance satisfactory to the Special
      Committee and its counsel;

     

    (h) PRC
      Counsel to Harbin shall have delivered to Purchaser and Harbin its opinion,
      dated as of the Closing Date, in form and substance satisfactory to the Special
      Committee and its counsel; 

     

    (i) Harbin
      shall have received approval from Nasdaq for the listing of the additional
      shares to be transferred to the Seller as the Stock Payment;

     

    (j) A
      special
      committee of the board of directors of Harbin comprised solely of independent
      directors (the “Special
      Committee”)
      shall
      have unanimously (i) declared the advisability of the transactions contemplated
      by this Agreement and approved this Agreement and the transactions contemplated
      hereby and (ii) determined that the transactions contemplated by this Agreement
      are in the best interest of the stockholders of Harbin;

     

    (k) The
      board
      of directors of Harbin, by resolutions duly adopted unanimously at a meeting
      duly called and held, shall have duly (i) determined that this Agreement and
      the
      respective transactions contemplated by this Agreement are advisable, fair
      to
      and in the best interests of Harbin and the stockholders of Harbin, and (ii)
      approved this Agreement and the respective transactions contemplated by this
      Agreement and declared their advisability;

     

    (l) Harbin
      shall have received the written opinion of Houlihan Lokey Howard &
Zukin  (the “Purchaser
      Financial Advisor”)
      to the
      effect that, as of the date of the opinion, the consideration payable by
      Purchaser in connection with the transactions contemplated by this Agreement
      is
      fair to Harbin from a financial point of view; and

     

    
      
        
        

      

      
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    (l) Seller
      has executed and delivered such deeds, bills of sale, assignments and other
      instruments of transfer and conveyance, certificates of title and other
      documents as shall be reasonably required by Purchaser for the transfer to
      Purchaser of all of the Seller’s right, title, and interest to and in the
      Assets, free and clear of any material Liens or shall have delivered, with
      such
      instruments and documents, financing statement releases or termination
      statements with respect to any security interests constituting material Liens
      on
      the Assets.

     

    Section
      6.3 Conditions
      Precedent to Obligations of Seller.
      The
      obligation of Seller to effect the transactions contemplated by this Agreement
      are subject to the satisfaction or waiver of the following
      conditions:

     

    (a) The
      representations and warranties of Purchaser and Harbin in this Agreement that
      are qualified as to materiality shall be true and correct in all respects and
      the representations and warranties of Purchaser and Harbin that are not
      qualified as to materiality shall be true and correct in all material respects,
      in each case, as of the date hereof and at and as of the Closing with the same
      effect as though such representations and warranties had been made at and as
      of
      such time, other than representations and warranties that speak as of another
      specific date or time prior to the date hereof (which need only be true and
      correct as of such date or time);

     

    (b) All
      of
      the terms, covenants and conditions to be complied with and performed by
      Purchaser on or prior to the Closing Date shall have been complied with or
      performed in all material respects;

     

    (c) Seller
      shall have received a certificate, dated as of the Closing Date, executed on
      behalf of Purchaser by an authorized executive officer thereof, certifying
      in
      such detail as Seller may reasonably request that the conditions specified
      in
Section
      6.3(a)
      and
Section
      6.3(b)
      have
      been fulfilled;

     

    (d) Purchaser
      shall have delivered the Purchase Price in accordance with the terms of
Section
      2.5.

     

    ARTICLE
      VII

    TERMINATION

     

    Section
      7.1 Termination.
      This
      Agreement may be terminated and the transactions contemplated by this Agreement
      may be abandoned at any time prior to the Closing:

     

    (a) by
      mutual
      written Consent of all Parties;

     

    (b) by
      Seller
      or Purchaser if:

     

    (i) a
      Governmental Authority shall have issued an order, decree or ruling or taken
      any
      other action (which order, decree or ruling the Parties shall use reasonable
      best efforts to lift), in each case permanently restraining, enjoining or
      otherwise prohibiting the transactions contemplated by this Agreement and such
      order, decree, ruling or other action shall have become final and nonappealable;
      or

     

    
      
        
        

      

      
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    (ii) the
      Closing shall not have occurred on or before September 30, 2007 (other than
      due
      principally to the failure of the Party seeking to terminate this Agreement
      to
      perform any obligations under this Agreement required to be performed by it
      at
      or prior to the Closing);

     

    (c) by
      Purchaser if there is a default or breach by Seller or any Shareholder with
      respect to the due and timely performance of any of their respective covenants
      or agreements contained herein, or if the representations or warranties of
      Seller or any Shareholder contained in this Agreement shall have become
      inaccurate, in either case such that the conditions set forth in Section
      6.2
      would
      not be satisfied and such breach or default or inaccuracy is not curable or,
      if
      curable, has not been cured or waived within twenty (20) calendar days after
      written notice to Seller or the Shareholder, as applicable, specifying, in
      reasonable detail, such claimed default, breach or inaccuracy and demanding
      its
      cure or satisfaction; or

     

    (d) by
      Seller, if there is a default or breach by Purchaser or Harbin with respect
      to
      the due and timely performance of any of its covenants or agreements contained
      herein, or if the representations or warranties of Purchaser or Harbin contained
      in this Agreement shall have become inaccurate, in either case such that the
      conditions set forth in Section
      6.3
      would
      not be satisfied and such breach or default or inaccuracy is not curable or,
      if
      curable, has not been cured or waived within twenty (20) calendar days after
      written notice to Purchaser or Harbin, as applicable, specifying, in reasonable
      detail, such claimed default, breach or inaccuracy and demanding its cure or
      satisfaction.

     

    Section
      7.2 Procedure
      and Effect of Termination.
      In the
      event of termination and abandonment of the transactions contemplated by this
      Agreement pursuant to Section
      7.1,
      written
      notice thereof shall forthwith be given to the other Parties and this Agreement
      shall terminate (subject to the provisions of this Section
      7.2)
      and the
      transactions contemplated by this Agreement shall be abandoned, without further
      action by any of the Parties. If this Agreement is terminated as provided
      herein:

     

    (a) Upon
      the
      written request therefor, each Party will (i) redeliver or (ii) destroy with
      certification thereto in form and substance reasonably satisfactory to the
      other
      party, all documents, work papers and other materials of any other party
      relating to the transactions contemplated by this Agreement, whether obtained
      before or after the execution hereof, to the party furnishing the same;
provided,
      however,
      that
      each Party shall be entitled to retain copies of any such materials for
      record-keeping purposes or as required by Law; and

     

    (b) Subject
      to Section
      7.1,
      in the
      event of the termination and abandonment of this Agreement pursuant to
Section
      6.1,
      this
      Agreement shall forthwith become void and have no effect, without any liability
      on the part of any Party or its Affiliates, directors, managers, officers or
      shareholders, other than the provisions of Section
      7.1,
      9.1,
      9.2,
      9.3,
      9.7
      and
9.12.
      Nothing
      contained in this Section
      7.2
      shall
      relieve any party from liability for any breach of this Agreement.

     

    
      
        
        

      

      
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    ARTICLE
      VIII

    SURVIVAL;
      INDEMNIFICATION

     

    Section
      8.1 Survival
      of Indemnification Rights.
      Subject
      to the limitations and other provisions of this Agreement, the representations
      and warranties of Seller and the Shareholders in Article
      III
      shall
      survive the Closing and remain in full force and effect until the later of
      two
      years and the resolution of any claim for indemnification with respect to which
      any Purchaser Indemnified Party has provided Seller notice of a claim for
      indemnification pursuant to Section
      8.3(a)
      prior to
      the second anniversary of closing.

     

    The
      covenants and agreements of Seller and the Shareholders contained in this
      Agreement shall survive and remain in full force and effect for the applicable
      period specified therein, or if no such period is specified, indefinitely.
      The
      provisions of this Article
      VIII
      shall
      survive for so long as any other Section of this Agreement shall
      survive.

     

    Section
      8.2 Indemnification
      Obligations.
      Seller,
      Tianfu Yang and Harbin Tech Full Industry Co., Ltd. (the “Indemnifying
      Parties”)
      agree
      to jointly and severally indemnify, defend and hold harmless Purchaser, Harbin
      and any parent, Subsidiary, associate, Affiliate, director, manager, officer,
      shareholder, employee or agent thereof, and their respective representatives,
      successors and permitted assigns (all of the foregoing are collectively referred
      to as the “Purchaser
      Indemnified Parties”)
      from
      and against and pay on behalf of or reimburse such party in respect of, as
      and
      when incurred, all Losses which any such party may actually incur, suffer,
      sustain or become subject to or accrue, as a result of, in connection with,
      or
      relating to or by virtue of:

     

    (a) any
      inaccuracy in, or breach of, any representation or warranty made by Seller
      or
      the Shareholders under this Agreement, it being understood that such
      representations and warranties shall be interpreted without giving effect to
      any
      limitations or qualifications as to “Materiality”
      (including the word “Material”
or
      “Material
      Adverse Effect”)
      set
      forth therein;

     

    (b) any
      breach or non-fulfillment of any covenant or agreement on the part of Seller
      or
      the Shareholders in respect of pre-Closing covenants, under this
      Agreement;

     

    (c) any
      fees,
      expenses or other payments incurred or owed by Seller or the Shareholders to
      any
      agent, broker, investment banker or other firm or Person retained or employed
      by
      Seller or the Shareholders in connection with the transactions contemplated
      by
      this Agreement; 

     

    (d)  any
      Liability arising out of the ownership or operation of the Assets prior to
      the
      Closing Date other than the Assumed Liabilities; 

     

    (e) any
      product or services provided by Seller prior to the Closing Date;

     

    (f) any
      Excluded Liabilities; 

     

    (g) any
      liabilities attributable to any Employee resulting from or based upon
      (i) any employment-related Liability (statutory or otherwise) with respect
      to employment or termination of employment on or prior to the Closing Date
      or
      (ii) any liability relating to, arising under or in connection with any
      Benefit Plan, including any liability under COBRA, whether arising prior to,
      on
      or after the Closing Date;

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    (h) any
      liability under the WARN Act or any similar state or local legal requirement
      that may result from an “Employment Loss,” as defined by 29 U.S.C. sect.
      2101(a)(6), caused by any action of Seller prior to the
      Closing
      or
      by
Purchaser’s
      decision not to hire previous employees of Seller;
      or

     

    (i) any
      failure to comply with all applicable Bulk Sales Laws; 

     

    provided
      that in
      no event shall the Indemnifying Parties ’ aggregate obligation to indemnify the
      Purchaser Indemnified Parties pursuant to this Section 8.2 exceed an amount
      equal to Seven Million Five Hundred Thousand Dollars ($7,500,000).

     

    Section
      8.3 Indemnification
      Procedure.

     

    (a) If
      any
      Purchaser Indemnified Party intends to seek indemnification pursuant to this
      Article
      VIII,
      such
      Purchaser Indemnified Party shall promptly notify the Indemnifying Parties
      in
      writing. The Purchaser Indemnified Party will provide the Indemnifying Parties
      with prompt notice of any third-party claim in respect of which indemnification
      is sought. The failure to provide either such notice will not affect any rights
      hereunder except to the extent the Indemnifying Parties are materially
      prejudiced thereby.

     

    (b) If
      such
      claim involves a claim by a third-party against the Purchaser Indemnified
      Parties, the Indemnifying Parties may, upon notice to the Purchaser Indemnified
      Parties, assume, through counsel of the Indemnifying Parties’ choosing and at
      the Indemnifying Parties’ expense, the settlement or defense thereof, and the
      Purchaser Indemnified Parties shall reasonably cooperate with the Indemnifying
      Parties in connection therewith; provided
      that the
      Purchaser Indemnified Parties may participate in such settlement or defense
      through counsel chosen by them; provided,
      further,
      that if
      the Purchaser Indemnified Parties reasonably determine that representation
      by
      the counsel of the Indemnifying Parties and the Purchaser Indemnified Parties
      may present such counsel with a conflict of interests, then the Indemnifying
      Parties shall pay the reasonable fees and expenses of the Purchaser Indemnified
      Parties’ counsel. Notwithstanding anything in this Section
      8.3
      to the
      contrary, the Indemnifying Parties may not, without the prior written consent
      of
      the Purchaser Indemnified Parties, settle or compromise any action or consent
      to
      the entry of any judgment, such consent not to be unreasonably withheld. So
      long
      as the Indemnifying Parties are contesting any such claim in good faith, the
      Purchaser Indemnified Parties shall not pay or settle any such claim without
      the
      Indemnifying Parties’ consent, such consent not to be unreasonably withheld. If
      the Indemnifying Parties are not contesting such claim in good faith, then
      the
      Purchaser Indemnified Parties may conduct and control, through counsel of their
      own choosing and at the Indemnifying Parties’ expense, the settlement or defense
      thereof, and the Indemnifying Parties shall cooperate with it in connection
      therewith. The failure of the Purchaser Indemnified Parties to participate
      in,
      conduct or control such defense shall not relieve the Indemnifying Parties’ of
      any obligation they may have hereunder.

     

    
      
        
        

      

      
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    (c) Notwithstanding
      anything to the contrary in this Section
      8.3,
      to the
      extent a claim for which indemnification is sought by Purchaser Indemnified
      Parties relates to Taxes for a taxable period beginning on or before and ending
      after the Closing Date, Seller and Purchaser shall jointly control any
      Proceeding in respect of such claim and neither party shall settle or compromise
      any action or consent to the entry of any judgment with respect thereto without
      the prior written consent of the other party, such consent not to be
      unreasonably withheld.

     

    Section
      8.4 Calculation
      of Indemnity Payments.
      The
      amount of any Loss for which indemnification is provided under this Article
      VIII
      shall be
      (a) increased to the extent necessary such that after payment of any net Tax
      cost by the Purchaser Indemnified Parties with respect to the receipt or accrual
      of indemnity payments hereunder, as increased pursuant to this clause (a),
      the
      amount remaining shall be the amount of the indemnity payment prior to any
      increase pursuant to this clause (a) and (b) reduced by the amount of the net
      Tax benefit actually realized by the Purchaser Indemnified Parties by reason
      of
      such Loss.

     

    Section
      8.5 Indemnification
      Amounts.
      For the
      purpose of calculating the amount of any Loss for which a Purchaser Indemnified
      Party is entitled to indemnification under this Agreement, the amount of each
      Loss shall be deemed to be an amount net of any insurance proceeds and any
      indemnity, contribution or other similar payment that has been paid by any
      insurer or other third-party with respect thereto. The reasonable out-of-pocket
      costs and expenses (including reasonable fees and disbursements of counsel)
      actually incurred by the Purchaser Indemnified Parties in pursuing any insurance
      proceeds or indemnity, contribution or other similar payment from any insurer
      or
      other third-party under this Article
      VIII
      shall
      constitute additional Losses with respect to the matter for which
      indemnification may be sought hereunder, except to the extent such costs and
      expenses are paid or reimbursed by such insurer or other
      third-party.

     

    ARTICLE
      IX

    MISCELLANEOUS
      PROVISIONS

     

    Section
      9.1 Notices.
      All
      notices and other communications required or permitted hereunder will be in
      writing and, unless otherwise provided in this Agreement, will be deemed to
      have
      been duly given when delivered in Person or when dispatched by electronic
      facsimile transfer (confirmed in writing by mail simultaneously dispatched)
      or
      one (1) Business Day after having been dispatched by a nationally recognized
      overnight courier service to the appropriate party at the address specified
      below:

     

    (a) If
      to
      Purchaser or Harbin, to:

     

    No.
      9 Ha
      Ping Xi Lu,

    Ha
      Ping
      Lu Ji Zhong Qu

    Harbin
      Kai Fa Qu, 

    Harbin,
      People’s Republic of China 150060

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    with
      a
      copy to:

     

    Barry
      Raeburn

    2
      Penn
      Center, Suite 1306

    Philadelphia,
      PA 19102

     

    (b) If
      to
      Seller:

     

    No.
      9 Ha
      Ping Xi Lu,

    Ha
      Ping
      Lu Ji Zhong Qu

    Harbin
      Kai Fa Qu,

    Harbin,
      People’s Republic of China 150060

     

    (c) If
      to the
      Shareholders, pursuant to Exhibit
      F.

     

    or
      to
      such other address or addresses as any such party may from time to time
      designate as to itself by like notice.

     

    Section
      9.2 Expenses.
      Except
      as otherwise expressly provided herein, each Party will pay any expenses
      incurred by it incident to this Agreement and in preparing to consummate and
      consummating the transactions provided for herein.

     

    Section
      9.3 Successors
      and Assigns.
      No
      Party may assign any of its rights under this Agreement without the prior
      written consent of the other Parties. Subject to the preceding sentence, this
      Agreement will apply to, be binding in all respects upon, and inure to the
      benefit of the successors and permitted assigns of the Parties. Notwithstanding
      anything to the contrary in this Section
      9.3,
      upon
      written notice to Seller, Purchaser and Harbin shall be permitted to assign
      this
      Agreement and the rights and obligations under it to a wholly-owned direct
      or
      indirect Subsidiary of Purchaser or Harbin, as applicable; provided that in
      the
      event of any such assignment, Purchaser and Harbin shall remain liable in full
      for the performance of its obligations hereunder. Nothing expressed or referred
      to in this Agreement will be construed to give any Person other than the Parties
      any legal or equitable right, remedy or claim under or with respect to this
      Agreement or any provision of this Agreement. This Agreement and all of its
      provisions and conditions are for the sole and exclusive benefit of the parties
      to this Agreement and their successors and assigns.

     

    Section
      9.4 Extension;
      Waiver.
      Either
      Party may, by written notice to the other Party (a) extend the time for
      performance of any of the obligations of the other Party under this Agreement,
      (b) waive any inaccuracies in the representations or warranties of the other
      Party contained in this Agreement, (c) waive compliance with any of the
      conditions or covenants of the other Party contained in this Agreement or (d)
      waive or modify performance of any of the obligations of the other Party under
      this Agreement; provided
      that no
      Party may, without the prior written consent of the other Party, make or grant
      such extension of time, waiver of inaccuracies or compliance or waiver or
      modification of performance with respect to its representations, warranties,
      conditions or covenants hereunder. Except as provided in the immediately
      preceding sentence, no action taken pursuant to this Agreement will be deemed
      to
      constitute a waiver of compliance with any representations, warranties,
      conditions or covenants contained in this Agreement and will not operate or
      be
      construed as a waiver of any subsequent breach, whether of a similar or
      dissimilar nature.

     

    
      
        
        

      

      
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    Section
      9.5 Entire
      Agreement; Schedules.
      This
      Agreement, which includes the schedules and exhibits hereto, supersedes any
      other agreement, whether written or oral, that may have been made or entered
      into by any party relating to the matters contemplated by this Agreement and
      constitutes the entire agreement by and among the Parties.

     

    Section
      9.6 Amendments,
      Supplements, Etc.
      This
      Agreement may be amended or supplemented at any time by additional written
      agreements as may mutually be determined by Seller, Purchaser or the
      Shareholders to be necessary, desirable or expedient to further the purposes
      of
      this Agreement or to clarify the intention of the Parties.

     

    Section
      9.7 Applicable
      Law.
      This
      Agreement shall be governed by and construed under the Laws of the State of
      New
      York (without regard to the conflict of law principles thereof). Each of the
      Parties irrevocably agrees that any legal action or Proceeding with respect
      to
      this Agreement or for recognition and enforcement of any judgment in respect
      hereof shall be brought and determined in the United States District Court
      for
      the Southern District of New York or if such legal action or Proceeding may
      not
      be brought in such court for jurisdictional purposes, in other courts of the
      State of New York located in the Borough of Manhattan. Each of the Parties
      hereby (a) irrevocably submits with regard to any such action or Proceeding
      to
      the exclusive personal jurisdiction of the aforesaid courts in the event any
      dispute arises out of this Agreement or any transaction contemplated hereby
      and
      waives the defense of sovereign immunity, (b) agrees that it shall not attempt
      to deny or defeat such personal jurisdiction by motion or other request for
      leave from any such court or that such action is brought in an inconvenient
      forum and (c) agrees that it shall not bring any action relating to this
      Agreement or any transaction contemplated hereby in any court other than any
      New
      York state or federal court sitting in New York, New York.

     

    Section
      9.8 Waiver
      of Jury Trial.
      Each of
      the Parties hereby waives to the fullest extent permitted by applicable law
      any
      right it may have to a trial by jury with respect to any litigation directly
      or
      indirectly arising out of, under or in connection with this Agreement or the
      transactions contemplated by this Agreement. Each of the Parties hereby (a)
      certifies that no representative, agent or attorney of the other Party has
      represented, expressly or otherwise, that such other Party would not, in the
      event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
      that it has been induced to enter into this Agreement and the transactions
      contemplated by this Agreement, as applicable, by, among other things, the
      mutual waivers and certifications in this Section
      9.8.

     

    Section
      9.9 Actions
      by Seller.
      Where
      any provision of this Agreement indicates that Seller will take any specified
      action (or refrain from taking any specified action) or requires Seller to
      take
      any specified action (or to refrain from taking any specified action), then,
      regardless of whether this Agreement specifically provides that the Shareholders
      will do so, the Shareholders shall cause Seller to take such action (or to
      refrain from taking such action, as applicable). The Shareholders will be
      responsible for the failure of Seller to take any such action (or to refrain
      from taking any such action, as applicable).

     

    
      
        
        

      

      
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    Section
      9.10 Execution
      in Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which will be
      deemed an original, but all of which together will constitute one and the same
      agreement.

     

    Section
      9.11 Titles
      and Headings.
      Titles
      and headings to sections herein are inserted for convenience of reference only,
      and are not intended to be a part of or to affect the meaning or interpretation
      of this Agreement.

     

    Section
      9.12 Invalid
      Provisions.
      If any
      provision of this Agreement is held to be illegal, invalid or unenforceable
      under any present or future Law, and if the rights or obligations under this
      Agreement of Seller on the one hand and Purchaser on the other hand will not
      be
      materially and adversely affected thereby, (a) such provision will be fully
      severable, (b) this Agreement will be construed and enforced as if such illegal,
      invalid, or unenforceable provision had never comprised a part hereof, (c)
      the
      remaining provisions of this Agreement will remain in full force and effect
      and
      will not be affected by the illegal, invalid, or unenforceable provision or
      by
      its severance from this Agreement and (d) in lieu of such illegal, invalid
      or
      unenforceable provision, there will be added automatically as a part of this
      Agreement a legal, valid and enforceable provision as similar in terms to such
      illegal, invalid or unenforceable provision as may be possible.

     

    Section
      9.13 Publicity.
      The
      Parties agree that except as otherwise required by applicable Law or the rules
      and regulations of any national securities exchange, no Party shall issue any
      press release or otherwise make any public statement with respect to the
      transactions contemplated by this Agreement without prior consultation with
      and
      consent of Seller, Purchaser and the Shareholders, which consent shall not
      be
      unreasonably withheld, conditioned or delayed.

     

    Section
      9.14 Specific
      Performance.
      The
      Parties agree that if any of the provisions of this Agreement were not performed
      in accordance with their specific terms or were otherwise breached, irreparable
      damage would occur, no adequate remedy at law would exist and damages would
      be
      difficult to determine, and that the Parties shall be entitled to specific
      performance of the terms hereof, in addition to any other remedy at law or
      equity.

     

    Section
      9.15 Construction.

     

    (a) Whenever
      the words “include,”
      “includes,”
or
      “including”
are
      used in this Agreement, they shall be deemed to be followed by the words
“without
      limitation.”

     

    (b) All
      terms
      defined in this Agreement shall have the defined meanings contained herein
      when
      used in any certificate or other document made or delivered pursuant hereto,
      unless otherwise defined therein. The definitions contained in this Agreement
      are applicable to the singular as well as the plural forms of such terms and
      to
      the masculine as well as to the feminine and neuter genders of such terms.
      References to a Person are also to its permitted successors and
      assigns.

     

    (c) Any
      agreement, instrument or statute defined or referred to herein or in any
      agreement or instrument that is referred to herein means such agreement,
      instrument or statute as from time to time amended, qualified or supplemented,
      including (in the case of agreements and instruments) by waiver or consent
      and
      (in the case of statutes) by succession of comparable successor statutes and
      all
      attachments thereto and instruments incorporated therein.

     

    
      
        
        

      

      
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    (d) All
      article, section, paragraph, schedule and exhibit references used in this
      Agreement are to articles, sections, paragraphs, schedules and exhibits to
      this
      Agreement unless otherwise specified.

     

    (e) The
      Parties acknowledge that each Party and its attorney has reviewed this Agreement
      and that any rule of construction to the effect that any ambiguities are to
      be
      resolved against the drafting party, or any similar rule operating against
      the
      drafter of an agreement, shall not be applicable to the construction or
      interpretation of this Agreement.

     

    Section
      9.16 Labor
      and Employment Matters.
      

     

    (a) On
      and
      after the Closing Date, all hiring and staffing decisions in connection with
      the
      use of the Assets purchased by Purchaser shall be within Purchaser’s sole and
      exclusive discretion and control. Those employees of Seller to whom Purchaser
      shall not offer employment or who decline the employment offer of Purchaser
      shall remain in the employ of Seller, or, at Seller’s option, may be terminated
      by Seller in accordance with its personnel policies and at its expense. Seller
      agrees that to the extent the foregoing triggers any notice obligations under
      the Worker Adjustment and Retraining Notification Act (WARN), Seller shall
      be
      responsible for providing, and shall be liable to any persons or entities who
      do
      not receive, any required notices. Employees of Seller who become employees
      of
      Purchaser by accepting Purchaser’s offer of employment shall be subject to all
      rules, regulations, requirements and policies applicable to new hires of
      Purchaser. 

     

    (b) All
      offers of employment by Purchaser to any employee of Seller shall be conditioned
      on such employee terminating his or her employment with Seller on or prior
      to
      the Closing Date and waiving, to the maximum extent permitted by applicable
      law,
      all of his or her rights to make any claim or demand on Purchaser or any of
      Purchaser’s affiliates in respect of (i) any employment contracts of whatever
      nature or any obligations arising out of any employment contracts, express
      or
      implied, oral or written, individual or collective, between Seller and such
      employee and (ii) any obligations arising out of any pension benefit, employee
      welfare benefit, bonus, deferred compensation, stock purchase, stock option,
      severance, fringe benefit, medical insurance, life insurance or similar plan,
      policy or program of Seller, whether or not covered or excluded from coverage
      under ERISA. 

     

    (c) On
      and
      after the Closing Date, those employees of Seller who accept the employment
      offer of Purchaser shall be eligible for participation under all of Purchaser’s
      benefit plans and programs that are offered to Purchaser’s current employees.
      Such employees shall receive credit for their years of continuous service with
      Seller for purposes of determining participation and benefit levels under all
      of
      Purchaser’s paid time off policies and benefits plans and programs.

     

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    IN
      WITNESS WHEREOF, the Parties have executed this Agreement as of the day and
      year
      first above written.

     

    
      	 	 	 	
              HARBIN
                ELECTRIC, INC.

            
	 	 	 	 
	 	 	 	 
	
            	 	 	
              By:
                /s/ Barry L. Raeburn.

            
	
            	 	 	
              
                

              

              Name:
                .Barry L. Raeburn

            
	
            	 	 	
              Title:
                EVP Finance and Corporate
                Development

            

    

     

    
      	 	 	 	
              HARBIN
                TECH FULL ELECTRIC CO. LTD.

            
	 	 	 	 
	 	 	 	 
	
            	 	 	
              By:
                /s/
                Barry L. Raeburn

            
	
            	 	 	
              
                

              

              Name:
                Barry L. Raeburn

            
	
            	 	 	
              Title:
                Authorized Person

            

    

     

    
      	 	 	 	
              HARBIN
                TAIFU AUTO ELECTRIC CO., LTD.

            
	 	 	 	 
	 	 	 	 
	
            	 	 	
              By:
                /s/ Tianfu Yang

            
	
            	 	 	
              
                

              

              Name:
                Tianfu Yang

            
	
            	 	 	
              Title:
                Manager

            

    

     

    
      	 	 	 	
              TIANFU
                YANG

            
	 	 	 	 
	 	 	 	 
	
            	 	 	
              /s/
                Tianfu Yang

            
	
            	 	 	
              

            
	
            	 	 	
            
	 	 	 	
              TIANLI
                YANG

            
	 	 	 	 
	 	 	 	 
	 	 	 	
              ./s/
                Tianli Yang

            
	 	 	 	
              

            
	 	 	 	 
	 	 	 	
              SUOFEI
                XU

            
	 	 	 	
              /s/
                Suofei Xu

            
	 	 	 	
              

            
	 	 	 	 
	 	 	 	
              ZEDONG
                XU

            
	 	 	 	 
	 	 	 	 
	 	 	 	
              /s/
                Zedong Xu

            
	 	 	 	
              
 
	 	 	 	 
	 	 	 	
              HARBIN
                TECH FULL INDUSTRY CO., LTD.

            
	 	 	 	 
	 	 	 	 
	 	 	 	
              By:
                /s/
                Tianfu Yang

            
	 	 	 	
              
                

              

              Name:
                Tianfu Yang

            
	 	 	 	
              Title:
                Chairman and Chief Executive
                Officer

            

    

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

    Individuals
      (in addition to all Shareholders) whose knowledge is imputed to the
      Seller.

     

    
      	
              Name

            	 	
              Duty

            
	
              Tianfu
                Yang 

            	 	
              Manager,
                Harbin Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司)

            
	 	 	 
	
              Tianli
                Yang

            	 	
              Deputy
                Manager, Harbin Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司)

            
	 	 	 
	
              Yuli
                He

            	 	
              Deputy
                Manager, Harbin Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司)

            
	 	 	 
	
              Zedong
                Xu

            	 	
              Financial
                Manager, Harbin Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司)

            
	 	 	 
	
              Suofei
                Xu

            	 	
              Shareholder
                of the Seller (哈尔滨泰夫汽炚电气有榰公司)

            

    

    

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    

    BILL
      OF SALE

    

    This
      Bill
      of Sale (the “Bill
      of Sale”)
      is
      made as of [______], 2007 (the “Effective
      Date”),
      between Harbin
      Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司司),
      a
      People’s Republic of China limited liability company ("Seller"),
      and
Harbin
      Tech Full Electric Co., Ltd.,
      a
      People’s Republic of China limited liability company ("Purchaser").
      Purchaser and Seller are sometimes referred to herein individually as
“Party”
and
      collectively as “Parties”.
      All
      terms used, but not defined, in this Bill of Sale shall have the meanings
      ascribed to such terms in the Asset Purchase Agreement (defined
      below).

     

    In
      consideration of the premises, the mutual covenants and agreements contained
      in
      the Asset Purchase Agreement (the “Asset
      Purchase Agreement”),
      dated
      as of June 16, 2007, by and between the Parties and the Shareholders and Harbin,
      and other good and valuable consideration, the receipt, adequacy and sufficiency
      of which are hereby acknowledged, and as contemplated by Section 2.7(d) of
      that
      Asset Purchase Agreement, Seller makes the conveyances and assignments set
      forth
      in the following provisions of this Bill of Sale effective as of the Effective
      Date:

     

    1. Conveyance
      and Assignment of Assets. Seller
      hereby grants, sells, transfers, conveys, assigns, licenses, sets over and
      delivers to Purchaser all of Seller’s right, title and interest in, to and under
      all of the Assets (as defined in the Asset Purchase Agreement), free and clear
      of all liens and encumbrances except for the Permitted Liens, and Purchaser
      hereby purchases and receives from Seller all right, title and interest of
      Seller in the Assets.

     

    2. Further
      Actions.
      Seller
      agrees to do such other acts and things pursuant to Sections 2.7 and 5.6 of
      the
      Asset Purchase Agreement (and as has otherwise been agreed in the Asset Purchase
      Agreement) for the purpose of carrying out the intent of this Bill of
      Sale.

     

    3. Applicable
      Law.
      This
      Bill of Sale shall be governed by and construed in accordance with Section
      9.7
      of the
      Asset Purchase Agreement.

     

    4. Headings.
      The
      section headings contained herein are for convenience only and shall not be
      construed as part of this Bill of Sale.

     

    5. Successors
      and Assigns.
      This
      Bill of Sale shall be binding upon and inure to the benefit of each of the
      Parties and their respective successors and permitted assigns. This Bill of
      Sale
      may not be assigned by operation of law or otherwise without the express written
      consent of Seller and Purchaser (which consent may be granted or withheld in
      the
      sole discretion of Seller or Purchaser).

     

    6. No
      Third-Party Beneficiaries.
      This
      Bill of Sale shall be binding upon and inure solely to the benefit of the
      Parties and their permitted assigns, and nothing herein, express or implied,
      is
      intended to or shall confer upon any other Person any legal or equitable right,
      benefit or remedy of any nature whatsoever under or by reason of this Bill
      of
      Sale.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties have executed and delivered this Bill of Sale
      as of
      the Effective Date.

     

    
      	Seller	 	Purchaser
	 	 	 	 	 
	HARBIN
              TAIFU AUTO ELECTRIC CO., LTD. (哈尔滨泰夫汽炚电气有榰公司),
              a People’s Republic of China limited liability company	 	
              HARBIN
                TECH FULL ELECTRIC CO., LTD., a People’s Republic of China limited
                liability company

            
	 	 	 	 	 
	 By:	/s/ Tianfu Yang	 	 By:	/s/ Barry L. Raeburn
	    	
              
Name:
              Tianfu Yang	 	
               

                 

            	
              
Name:
              Barry L. Raeburn
	
            	Title:
              Manager	 	
            	Title: Authorized
              Person
	
            	
            	 	
            	
            

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

    

    PATENT
      AND PATENT APPLICATION ASSIGNMENT AGREEMENT

    

    This
      Patent and Patent Application Assignment Agreement (the “Assignment”)
      is
entered
      into between Harbin
      Tech Full Electric Co., Ltd.,
      a
      People’s Republic of China limited liability company ("Purchaser"),
      and
Harbin
      Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司),
      a
      People’s Republic of China limited liability company ("Seller")
      this
      [______] day of [______], 2007. Terms used but not defined in this Assignment
      and Assumption shall have the meanings ascribed to them in the Asset Purchase
      Agreement (defined below).

     

    WHEREAS,
      the parties have entered into a certain Asset Purchase Agreement dated as of
      June 16, 2007 (the "Asset
      Purchase Agreement"),
      by
      and among the Seller, Purchaser, the Shareholders and Harbin pursuant to which
      the Seller has agreed to enter into
      this
      Assignment.

     

    AGREEMENT

     

    NOW,
      THEREFORE, in consideration of the foregoing and of the premises and the mutual
      representations, warranties and covenants contained herein and other good and
      valuable consideration, the receipt, adequacy and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

     

    1. Assignment.
      Seller
      hereby sells, assigns, transfers and conveys unto Purchaser, the entire right,
      title and interest, for all countries, in and to certain inventions relating
      to
      the Patents, all of which are listed on Annex
      A
      and all
      applications for Letters Patent or other grants of protection of proprietary
      rights including, but not limited to, inventor’s certificate, utility model,
      utility certificate, patent of importation, registration of patent and
      industrial design registration which may be filed, and which may be granted,
      upon said inventions in any countries or regions foreign to the United States,
      and all reissues, renewals and extensions thereof; and Seller hereby authorizes
      and requests the Commissioner for Patents and Trademarks of the United States,
      and all officials of countries or regions foreign to the United States having
      authority so to do, to issue all such Letters Patent or other grants of
      protection upon said inventions to the Purchaser or to such nominees as it
      may
      designate.

     

    2. Authorization.
      Seller
      authorizes and empowers the Purchaser or nominees to invoke and claim for any
      application for such Letters Patent or other grants of protection for said
      inventions filed by it or them, the benefit of the right of priority provided
      by
      the International Convention for the Protection of Industrial Property, as
      amended, or by a convention which may henceforth be substituted for it, and
      to
      invoke and claim such right of priority without further written or oral
      authorization from Seller.

     

    3. Consent.
      Seller
      hereby consents that a copy of this assignment shall be deemed a full and formal
      equivalent of any assignment, consent to file or like document which may be
      required in any country or region for any purpose and more particularly in
      proof
      of the right of the said Purchaser or nominees to claim the aforesaid benefit
      of
      the right of priority provided by the International Convention for the
      Protection of Industrial Property, as amended, or by any convention which may
      henceforth be substituted for it.

     

    4. Title.
      Seller
      hereby covenants that it has the full right to convey the entire right, title
      and interest herein assigned and that it has not executed and will not execute
      any agreement in conflict herewith. 

     

    5. Enforcement.
      Seller
      hereby covenants and agrees that it will communicate to said Purchaser or
      nominees all facts known to it pertaining to said inventions, and will arrange
      for its officers and employees to testify in all legal proceedings, sign all
      lawful papers, execute all divisional, continuing and reissue applications,
      make
      all rightful oaths and declarations and in general perform all lawful acts
      necessary or proper to aid said Purchaser or nominees in obtaining, maintaining
      and enforcing all lawful patent or other grants of protection of said inventions
      in any and all countries and regions. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6. Successors
      and Assigns. This
      Assignment shall be binding upon and inure to the benefit of each of the
      Purchaser and Seller and their respective successors and permitted assigns.
      This
      Assignment may not be assigned by operation of law or otherwise without the
      express written consent of Purchaser and Seller (which consent may be granted
      or
      withheld in the sole discretion of Purchaser or Seller).

     

    7. Applicable
      Law.
      This
      Assignment shall be governed by and construed in accordance with Section
      9.7
      of the
      Asset Purchase Agreement.

     

    8. Counterparts.
      This
      Assignment may be executed in separate counterparts, each of which when so
      executed and delivered shall be an original for all purposes, but all such
      counterparts shall constitute but one and the same instrument.

     

    9. Headings.
      The
      section headings contained herein are for convenience only and shall not be
      construed as part of this Assignment.

     

    10. No
      Third-Party Beneficiaries.
      This
      Assignment shall be binding upon and inure solely to the benefit of the
      Purchaser and Seller and their permitted assigns, and nothing herein, express
      or
      implied, is intended to or shall confer upon any other Person any legal or
      equitable right, benefit or remedy of any nature whatsoever under or by reason
      of this Assignment.

     

    11. Further
      Acts.
      From and
      after the date of this Assignment, each of the Purchaser and Seller shall take,
      or cause to be taken, all appropriate action, do, or cause to be done, all
      things necessary, proper or advisable under requirements of laws, and execute
      and deliver such documents and other papers, as may be required to carry out
      the
      provisions of this Assignment and consummate and make effective the transactions
      contemplated by this Assignment.

     

    [Remainder
      of page intentionally left blank. Next page is signature
      page]

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
      as of the day first written above.

     

    
      	Seller	 	Purchaser
	 	 	 	 	 
	HARBIN
              TAIFU AUTO ELECTRIC CO., LTD. (哈尔滨泰夫汽炚电气有榰公司),
              a People’s Republic of China limited liability company	 	
              HARBIN
                TECH FULL ELECTRIC CO., LTD., a People’s Republic of China limited
                liability company

            
	 	 	 	 	 
	 By:	/s/ Tianfu Yang	 	 By:	/s/ Barry L. Raeburn
	
            	
              
Name:
Tianfu
              Yang	 	
               

                

            	
              

              Name:
                Barry L. Raeburn

            
	
            	Title:
              Manager	 	
            	Title: Authorized
              Person

    

     

    [Signature
      Page to Patent and Patent Application Assignment
      Agreement]

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    ANNEX
      A

    

    to

    

    PATENT
      AND PATENT APPLICATION ASSIGNMENT AGREEMENT

    

    ASSIGNED
      PATENTS

    

    Foreign
      Patents

    

    
      	
              Patent
                No.

            	 	
              Name

            	 	
              Patentee

            
	
              200420018371.4

            	 	
              Direct
                Current Motor for Automobile Seats

            	 	
              Harbin
                Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司)

            
	
              200420063323.7

            	 	
              Electromotor
                for Automobile Electric Aid Steering System

            	 	
              Harbin
                Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司)

            

    

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      D

     

    ASSIGNMENT
      OF INTELLECTUAL PROPERTY

    

    This
      Assignment of Intellectual Property (the “Assignment”)
      is
      entered into between Harbin
      Tech Full Electric Co., Ltd.,
      a
      People’s Republic of China limited liability company ("Purchaser")
      and
Harbin
      Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司),
      a
      People’s Republic of China limited liability company ("Seller")
      this
      [______] day of [______], 2007. Terms used but not defined in this Assignment
      shall have the meanings ascribed to them in the Asset Purchase Agreement
      (defined below).

    

    WHEREAS,
      the parties have entered into a certain Asset Purchase Agreement dated as of
      June 16, 2007 (the “Asset
      Purchase Agreement”),
      by
      and among the Seller, Purchaser, the Shareholders and Harbin pursuant to which
      the Seller has agreed to enter into this Assignment.

    

    AGREEMENT

    

    NOW,
      THEREFORE, in consideration of the foregoing and of the premises and the mutual
      representations, warranties and covenants contained herein and other good and
      valuable consideration, the receipt, adequacy and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

     

    1.
       Assignment.
      Seller
      hereby assigns to Purchaser exclusively throughout the world all right, title
      and interest (choate or inchoate) in (i) the subject matter referred to in
      Annex
      A
      (“Technology”);
      (ii)
      all patents, patent applications of any kind, patent rights, inventions,
      discoveries and invention disclosures (whether or not patented); (iii) all
      trade
      names, trade dress, brands, logos, packaging design, slogans, Internet domain
      names, all phone numbers of Seller, registered and unregistered trademarks
      and
      service marks and related registrations and applications for registration;
      (iv)
      copyrights in both published and unpublished works, including all compilations,
      databases and computer programs, source code, object code, manuals and other
      documentation and all copyright registrations and applications, and all
      derivatives, translations, adaptations and combinations of the above; (v)
      know-how, trade secrets, confidential or proprietary information, research
      in
      progress, knowledge, methods, algorithms, data, designs, processes, formulae,
      drawings, diagrams, schematics, blueprints, flow charts, models, strategies,
      prototypes, techniques, benchmark data, testing procedures and testing results;
      (vi) other intellectual property rights and/or proprietary rights relating
      to
      any of the foregoing; and (vii) goodwill, franchises, licenses, permits,
      Consents, approvals, and claims of infringement against third parties
      (collectively, “Seller
      Intellectual Property”).

    

    2.
       Consideration.
      Purchaser and Seller, in consideration of the mutual agreements contained herein
      and for other good and valuable consideration listed in the Asset Purchase
      Agreement, acknowledge this consideration to be satisfactory and
      adequate.

    

    3.1
       Further
      Assurances; Moral Rights; Competition; Marketing.
      Seller
      agrees to assist Purchaser in every legal way to evidence, record and perfect
      the Section
      1
      assignment and to apply for and obtain recordation of and from time to time
      enforce, maintain, and defend the assigned rights. If Purchaser is unable for
      any reason whatsoever to secure the Seller’s signature to any document it is
      entitled to under this Section
      3.1,
      Seller
      hereby irrevocably designates and appoints Purchaser and its duly authorized
      officers and agents, as his agents and attorneys-in-fact with full power of
      substitution to act for and on his behalf and instead of Seller, to execute
      and
      file any such document or documents and to do all other lawfully permitted
      acts
      to further the purposes of the foregoing with the same legal force and effect
      as
      if executed by Seller.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.2
       To
      the
      extent allowed by law, Section
      1
      includes
      all rights of paternity, integrity, disclosure and withdrawal and any other
      rights that may be known as or referred to as “moral rights,” “artist’s rights,”
“droit moral” or the like (collectively “Moral
      Rights”).
      To
      the extent Seller retains any such Moral Rights under applicable law, Seller
      hereby ratifies and consents to, and provides all necessary ratifications and
      consents to, any action that may be taken with respect to such Moral Rights
      by
      or authorized by Purchaser; Seller agrees not to assert any Moral Rights with
      respect thereto. Seller will confirm any such ratifications, consents and
      agreements from time to time as requested by Purchaser. 

    

    4.
       Confidential
      Information.
      Seller
      will not use or disclose anything assigned to Purchaser hereunder or any other
      technical or business information or plans of Purchaser, except to the extent
      Seller can document that it is generally available (through no fault of Seller)
      for use and disclosure by the public without any charge, license or restriction.
      Seller recognizes and agrees that there is no adequate remedy at law for a
      breach of this Section
      4,
      that
      such a breach would irreparably harm Purchaser and that Purchaser is entitled
      to
      equitable relief (including, without limitations, injunctions) with respect
      to
      any such breach or potential breach in addition to any other
      remedies.

    

    5.
       Warranty.
      Seller
      represents and warrants to Purchaser that Seller (i) was the sole owner (other
      than Purchaser) of all rights, title and interest in the Intellectual Property
      and the Technology, (ii) has not assigned, transferred, licensed, pledged or
      otherwise encumbered any Intellectual Property or the Technology or agreed
      to do
      so, (iii) has full power and authority to enter into this Assignment and to
      make
      the assignment as provided in Section
      1,
      (iv) is
      not aware of any violation, infringement or misappropriation of any third
      party’s rights (or any claim thereof) by the Intellectual Property or the
      Technology, (v) was not acting within the scope of employment by any third
      party
      when conceiving, creating or otherwise performing any activity with respect
      to
      anything purportedly assigned in Section
      1,
      and
      (vi) is not aware of any questions or challenges with respect to the
      patentability or validity of any claims of any existing patents or patent
      applications relating to the Intellectual Property.

    

    6. Miscellaneous.
      This
      Assignment is not assignable or transferable by Seller without the prior written
      consent of Purchaser; any attempt to do so shall be void. Any notice, report,
      approval or consent required or permitted hereunder shall be in writing and
      will
      be deemed to have been duly given if delivered personally or mailed by
      first-class, registered or certified U.S. mail, postage prepaid to the
      respective addresses of the parties as set below (or such other address as
      a
      party may designate by ten (10) days notice). No failure to exercise, and no
      delay in exercising, on the part of either party, any privilege, any power
      or
      any rights hereunder will operate as a waiver thereof, nor will any single
      or
      partial exercise of any right or power hereunder preclude further exercise
      of
      any other right hereunder. If any provision of this Assignment shall be adjudged
      by any court of competent jurisdiction to be unenforceable or invalid, that
      provision shall be limited or eliminated to the minimum extent necessary so
      that
      this Assignment shall otherwise remain in full force and effect and enforceable.
      Any waivers or amendments shall be effective only if made in writing and signed
      by a representative of the respective parties authorized to bind the parties.
      

    

    7. Applicable
      Law.
      This
Assignment
      shall be
      governed by and construed in accordance with Section
      9.7
      of the
      Asset Purchase Agreement.

     

    8. Headings.
      The
      section headings contained herein are for convenience only and shall not be
      construed as part of this Assignment.

     

    9. Successors
      and Assigns.
      This
      Assignment shall be binding upon and inure to the benefit of each of the Seller
      and Purchaser and their respective successors and permitted assigns. This
      Assignment may not be assigned by operation of law or otherwise without the
      express written consent of Seller and Purchaser (which consent may be granted
      or
      withheld in the sole discretion of Seller or Purchaser).

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    10. No
      Third-Party Beneficiaries.
      This
Assignment
      shall be
      binding upon and inure solely to the benefit of the Seller and Purchaser and
      their permitted assigns, and nothing herein, express or implied, is intended
      to
      or shall confer upon any other Person any legal or equitable right, benefit
      or
      remedy of any nature whatsoever under or by reason of this Assignment.

     

    [Remainder
      of page intentionally left blank. Next page is signature
      page.]

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
      as of the day first written above.

     

    
      	Seller	 	Purchaser
	 	 	 	 	 
	HARBIN
              TAIFU AUTO ELECTRIC CO., LTD. (哈尔滨泰夫汽炚电气有榰公司),
              a People’s Republic of China limited liability company	 	
              HARBIN
                TECH FULL ELECTRIC CO., LTD., a People’s Republic of China limited
                liability company

            
	 	 	 	 	 
	 By:	/s/ Tianfu Yang	 	 By:	/s/ Barry L. Raeburn
	
            	
              
Name: Tianfu
              Yang	 	
               

                

            	
              

              Name: Barry
                L. Raeburn

            
	 	Title: Manager	 	
            	Title: Authorized
              Person

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    

    ANNEX
      A

    

    to

    

    ASSIGNMENT
      OF INTELLECTUAL PROPERTY

     

    
      	
              A.

            	
              Foreign
                Patents

            

    

     

    
      	
              Patent
                No.

            	 	
              Name

            	 	
              Patentee

            
	
              200420018371.4

            	 	
              Direct
                Current Motor for Automobile Seats

            	 	
              Harbin
                Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司)

            
	
              200420063323.7

            	 	
              Electromotor
                for Automobile Electric Aid Steering System

            	 	
              Harbin
                Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司)

            

    

    

    
      	
              B.

            	
              Know-How:
                

            

    

    

    
      	 	
              a.

            	
              Products
                standards

            

    

    
      	 	
              b.

            	
              Products
                drawings

            

    

    
      	 	
              c.

            	
              Art-craft
                documents

            

    

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
      E

     

    ASSIGNMENT
      AND ASSUMPTION AGREEMENT

     

    This
      Assignment and Assumption Agreement (this "Assignment
      and Assumption"),
      is
      entered into between Harbin
      Taifu Auto Electric Co., Ltd. (哈尔滨泰夫汽炚电气有榰公司),
      a
      People’s Republic of China limited liability company ("Purchaser"),
      and
Harbin
      Tech Full Auto Co., Ltd.,
      a
      People’s Republic of China limited liability company ("Seller")
      this
      [______] day of [______], 2007. Terms used but not defined in this Assignment
      and Assumption shall have the meanings ascribed to them in the Asset Purchase
      Agreement (defined below).

    

    WHEREAS,
      the parties have entered into a certain Asset Purchase Agreement dated as of
      June 16, 2007 ( the "Asset
      Purchase Agreement"),
      by
      and among the Seller, Purchaser, the Shareholders and Harbin pursuant to which
      the Seller has agreed to enter into
      this
      Assignment and Assumption.

    

    AGREEMENT

    

    NOW,
      THEREFORE, in consideration of the foregoing and of the premises and the mutual
      representations, warranties and covenants contained herein and other good and
      valuable consideration, the receipt, adequacy and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

     

    1. Assignment
      of Liabilities.
      Subject
      to the terms and conditions of the Asset Purchase Agreement,
      Seller
      hereby conveys, assigns, delivers and otherwise transfers to Purchaser all
      of
      the Assumed Liabilities, and hereby delegates all duties and obligations of
      Seller thereunder to Purchaser, subject to the terms and conditions of the
      Asset
      Purchase Agreement.

     

    2. Assumption
      of Assumed Liabilities.
      Subject
      to the terms and conditions of the Asset Purchase Agreement, Purchaser hereby
      assumes and agrees to discharge all of the Assumed Liabilities, which Assumed
      Liabilities include only those obligations and liabilities of Seller expressly
      assumed by Purchaser pursuant to the Asset Purchase Agreement and do not include
      any other obligations or liabilities, including, without limitation, the
      Excluded Liabilities.

     

    3. Successors
      and Assigns.
      This
      Assignment and Assumption shall be binding upon and inure to the benefit of
      each
      of the Purchaser and Seller and their respective successors and permitted
      assigns. This Assignment and Assumption may not be assigned by operation of
      law
      or otherwise without the express written consent of Purchaser and Seller (which
      consent may be granted or withheld in the sole discretion of Purchaser or
      Seller).

     

    4. Applicable
      Law.
      This
      Assignment and Assumption shall be governed by and construed in accordance
      with
Section
      9.7
      of the
Asset
      Purchase
      Agreement.

     

    5. Counterparts.
      This
      Assignment and Assumption may be executed in separate counterparts, each of
      which when so executed and delivered shall be an original for all purposes,
      but
      all such counterparts
      shall
      constitute but one and the same instrument.

     

    6. Headings.
      The
      section headings contained herein are for convenience only and shall not be
      construed as part of this
      Assignment and Assumption.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7. No
      Third-Party Beneficiaries.
      This
      Assignment and Assumption shall be binding upon and inure solely to the benefit
      of the Purchaser and Seller and their permitted assigns, and nothing herein,
      express or implied, is intended to or
      shall
      confer upon any other Person any legal or equitable right, benefit or remedy
      of
      any nature whatsoever under or by reason of this Assignment and
      Assumption.

     

    8. Further
      Acts.
      From and
      after the date of this Assignment and Assumption, each of the Purchaser and
      Seller shall take, or cause to be taken, all appropriate action, do, or cause
      to
      be done, all things necessary, proper or advisable
      under
      requirements of laws, and execute and deliver such documents and other papers,
      as may be required to carry out the provisions of this Assignment and Assumption
      and consummate and make effective the transactions contemplated by this
      Assignment and Assumption.

     

    [Remainder
      of page intentionally left blank. Next page is signature
      page.]

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
      as of the day first written above.

     

    
      	Seller	 	Purchaser
	 	 	 	 	 
	HARBIN
              TAIFU AUTO ELECTRIC CO., LTD. (哈尔滨泰夫汽炚电气有榰公司),
              a People’s Republic of China limited liability company	 	
              HARBIN
                TECH FULL ELECTRIC CO., LTD., a People’s Republic of China limited
                liability company

            
	 	 	 	 	 
	 By:	/s/ Tianfu Yang	 	 By:	/s/ Barry L. Raeburn
	
            	
              
Name:
Tianfu
              Yang	 	
               

            	
              

              Name: Barry
                L. Raeburn

            
	 	Title: Manager	 	
            	Title: Authorized
              Person

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
      F

     

    SHAREHOLDER’S
      NOTICE ADDRESS

    

    
      	
              Shareholder

            	 	
              Mail
                Address

            
	
              Harbin
                Tech Full Industry Co.,Ltd.

            	 	
              No.9
                Ha Ping Xi Lu,

              Ha
                Ping Lu Ji Zhong Qu,

              Harbin
                Kai Fa Qu,

              Harbin
                , China, 150060

            
	
              Tianli
                Yang

            	 	
              No.9
                Ha Ping Xi Lu,

              Ha
                Ping Lu Ji Zhong Qu,

              Harbin
                Kai Fa Qu,

              Harbin
                , China, 150060

            
	
              Tianfu
                Yang 

            	 	
              No.9
                Ha Ping Xi Lu,

              Ha
                Ping Lu Ji Zhong Qu,

              Harbin
                Kai Fa Qu,

              Harbin
                , China, 150060

            
	
              Suofei
                Xu

            	 	
              No.9
                Ha Ping Xi Lu,

              Ha
                Ping Lu Ji Zhong Qu,

              Harbin
                Kai Fa Qu,

              Harbin
                , China, 150060

            
	
              Zedong
                Xu

            	 	
              No.9
                Ha Ping Xi Lu,

              Ha
                Ping Lu Ji Zhong Qu,

              Harbin
                Kai Fa Qu,

              Harbin
                , China, 150060

            

    

     

    
      
        
        

      

      
        -1-SECURITIES
      PURCHASE AGREEMENT

     

    SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of June 15, 2007, by and among Tribeworks, Inc., a Delaware corporation,
      (the
“Company”);
      all
      of its subsidiaries: Atlas Technology Group Holdings Limited, a Malta company,
      Atlas Technology Group (NZ) Limited, a New Zealand company, TakeCareofIT
      Limited, a Malta company, Atlas Technology Group (US), Inc. (“ATG
      US”),
      a
      Delaware corporation, Atlas Technology Group Consulting Inc., a Delaware
      corporation, BLive Networks Inc., a British Columbia corporation (collectively
      the “Subsidiaries”);
      and
      West Coast Opportunity Fund, LLC, a Delaware limited liability company, (the
      “Buyer”).

     

    WHEREAS:

     

    A.
      The
      Company and Buyer are executing and delivering this Agreement in reliance upon
      the exemption from securities registration afforded by Section 4(2) of the
      Securities Act of 1933, as amended (the “1933
      Act”),
      and
      Regulation D (“Regulation
      D”)
      promulgated by the Securities and Exchange Commission (the “SEC”)
      under
      the 1933 Act.

     

    B.
      The
      Company and ATG US desire to issue and sell or grant to Buyer, as applicable,
      and Buyer desires to purchase (i) senior secured promissory notes in the
      aggregate original aggregate principal amount of $5,000,000 in substantially
      the
      form attached hereto as Exhibit
      A
      (the
“Promissory
      Notes”)
      from
      ATG US; (ii) a yield enhancement consisting of up to 6,500,000 shares (each,
      a
“Yield
      Enhancement Share”)
      of the
      authorized but unissued shares of the Company’s common stock, $0.0004 par value
      per share (including any securities into which or for which such shares may
      be
      exchanged for, or converted into, pursuant to any stock dividend, stock split,
      stock combination, recapitalization, reclassification, reorganization or other
      similar event) (the “Common
      Stock”)
      from
      the Company; and (iii) warrants (the “Warrants”)
      to
      purchase up to 6,500,000 shares of Common Stock (the “Warrant
      Shares”)
      from
      the Company in substantially the form attached hereto as Exhibit
      B;
      all
      upon the terms and subject to the conditions set forth in this
      Agreement.

     

    C.
      Contemporaneously with the execution and delivery of this Agreement, the Company
      and Buyer are executing and delivering a Registration Rights Agreement,
      substantially in the form attached hereto as Exhibit
      C
      (the
“Registration
      Rights Agreement”),
      pursuant to which the Company has agreed to provide certain registration rights
      with respect to the Securities and Warrant Shares under the 1933 Act and the
      rules and regulations promulgated thereunder, and applicable state securities
      laws.

     

    D.
      The
      Promissory Notes, the Yield Enhancement Shares, the Warrants and the Warrant
      Shares are collectively referred to herein as the “Securities.”

     

    E.
      Prior
      to or at the Closing (as defined below), the Company and Buyer shall establish
      an escrow account at Wells Fargo Bank, NA in Seattle, Washington pursuant to
      an
      escrow agreement substantially in the form attached hereto as Exhibit
      D
      (the
“Escrow
      Agreement”),
      to
      hold undistributed portions of the Note Purchase Price (as defined below) until
      such time as they have been disbursed to the Company, pursuant to the terms
      hereof and of the Escrow Agreement (the “Escrow
      Account”).
      

     

    F. Contemporaneously
      with the execution and delivery of this Agreement, the Company and all of its
      subsidiaries (each a “Subsidiary”
and
      collectively the “Subsidiaries”),
      are
      pledging, assigning and granting to Buyer a first-priority security interest,
      pursuant to a Security Agreement substantially in the form attached hereto
      as
Exhibit
      E
      (the
“Security
      Agreement”),
      in
      all of the Company's and its Subsidiaries’ right, title and interest in and to
      all assets owned or hereafter acquired by the Company and its Subsidiaries
      (the
“Collateral”)
      to
      secure the prompt and complete payment and performance of obligations under
      the
      Promissory Notes and the other Transaction Documents (as defined below).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    G. Contemporaneously
      with the execution and delivery of this Agreement, the Company and all of its
      Subsidiaries other than ATG US are executing and delivering a Guaranty,
      substantially in the form attached hereto as Exhibit
      F
      (the
“Guaranty”
and
      collectively with the Escrow Agreement, Registration Rights Agreement, Warrants,
      Security Agreement, the Promissory Notes, this Agreement, and each of the other
      agreements required to be entered into by parties hereto in connection with
      the
      transactions contemplated by this Agreement, the “Transaction
      Documents”),
      pursuant to which the Subsidiaries have agreed to guaranty the obligations
      of
      the Company under the Promissory Notes and the other Transaction Documents.
      

     

    NOW,
      THEREFORE,
      the
      Company and Buyer hereby agree as follows:

     

    1. PURCHASE
      AND SALE OF PROMISSORY NOTES, WARRANTS AND YIELD ENHANCEMENT
      SHARES.

     

    (a) Purchase
      Price. The
      aggregate purchase price of the Promissory Notes and the Warrants of $5,000,000
      (the “Note
      Purchase Price”),
      shall
      be paid to the Company by Buyer in two equal payments of $2,500,000 on the
      Closing Date (as defined below) and July 10, 2007 (the “Second
      Tranche Payment Date”)
      subject to the closing conditions set forth herein. The aggregate purchase
      price
      of the Yield Enhancement Shares of $2,000 (the “Yield
      Enhancement Purchase Price”)
      shall
      be paid in two equal payments of $1,000 on the Closing Date (as defined below)
      and the Second Tranche Payment Date.

    

    (b)
       First
      Tranche.

    

    (i) Subject
      to and in reliance upon the representations and warranties set forth in
Section
      3
      below,
      and the satisfaction (or waiver) of the conditions set forth in Sections
      6 and 7
      below,
      (1) the Company and ATG US, as applicable, shall issue and sell to Buyer, and
      Buyer agrees to purchase from the Company on the Closing Date, (A) the initial
      Promissory Note in the principal amount of $2,500,000 (the “Initial
      Promissory Note”)
      from
      ATG US and (B) Warrants to purchase 3,250,000 shares of Common Stock of the
      Company (the “Initial
      Warrants”)
      from
      the Company and (2) the Company shall issue and sell to Buyer, and Buyer agrees
      to purchase 3,250,000 Yield Enhancement Shares (the “Initial
      Yield Enhancement Shares”)
      from
      the Company on the Closing Date. The aggregate purchase price of the Initial
      Promissory Note and Initial Warrants to be purchased by Buyer on the Closing
      Date shall be equal to $2,500,000 (the “Initial
      Note Payment”).
      The
      purchase price of the Initial Yield Enhancement Shares to be purchased by Buyer
      on the Closing Date shall be $1000 (the “Initial
      Yield Enhancement Payment”).
      The
      closing of the purchase of the Initial Promissory Note, the Initial Warrants
      and
      the Initial Yield Enhancement Shares by Buyer and the Company (the “Closing”)
      shall
      occur at the offices of Hughes and Luce LLP, 1717 Main Street, Dallas, Texas
      75201 on June 15, 2007 (the “Closing
      Date”)
      at
      10:00 a.m., local time. 

     

    (ii) At
      Closing, (1) Buyer shall pay the Initial Note Payment to the Company or the
      escrow agent and the Escrow Account (the “Escrow
      Agent”),
      as
      applicable, pursuant to Section
      1(b)(iii)
      for the
      Initial Promissory Note and the Initial Warrants and shall pay the Initial
      Yield
      Enhancement Payment for the Initial Yield Enhancement Shares to be issued and
      sold to Buyer at the Closing, by wire transfer of immediately available funds
      in
      accordance with the Company’s and Escrow Agent’s (as applicable) written wire
      instructions, (2) the Company shall deliver to Buyer (A) the Initial Promissory
      Note, duly executed on behalf of the Company and registered in the name of
      Buyer
      or its designee, (B) the Initial Warrants which Buyer is purchasing, duly
      executed on behalf of the Company and registered in the name of Buyer (C) a
      stock certificate representing the Initial Yield Enhancement Shares which Buyer
      is purchasing, duly executed on behalf of the Company and registered in the
      name
      of Buyer.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (iii) At
      Closing, Buyer will pay $1,000,000 of the Initial Note Payment directly to
      the
      Company; and the remaining $1,500,000 of the Initial Note Payment will be
      deposited into the Escrow Account, to be immediately released and paid to the
      Company pursuant to the terms of the Escrow Agreement.

     

    (c)
       Second
      Tranche.

     

    (i) Subject
      to and in reliance upon the representations and warranties set forth in
Section
      3
      below,
      and the satisfaction (or waiver) of the conditions set forth in Section
      6(b)
      and
      Section 7(b),
      below,
      (i) the Company and ATG US, as applicable, shall issue and sell to Buyer, and
      Buyer agrees to purchase on the Second Tranche Payment Date, the following:
      (A)
      the second Promissory Note in the principal amount of $2,500,000 (the
“Secondary
      Promissory Note”)
      from
      ATG US, (B) Warrants to purchase an additional 3,250,000 shares of Common Stock
      of the Company (the “Secondary
      Warrants”)
      from
      the Company and (C) an additional 3,250,000 Yield Enhancement Shares (the
“Secondary
      Yield Enhancement Shares”)
      from
      the Company. The aggregate purchase price of the Secondary Promissory Note
      and
      Secondary Warrants to be purchased by Buyer on the Second Tranche Payment Date
      shall be equal to $2,500,000 (the “Second
      Note Payment”).
      The
      aggregate purchase price of the Secondary Yield Enhancement Shares to be
      purchased by Buyer on the Second Tranche Payment Date shall be equal to $1,000
      (the “Second
      Yield Enhancement Payment”).
      The
      closing (the “Second
      Tranche Closing”)
      of the
      purchase of the Secondary Promissory Note, Secondary Warrants and Secondary
      Yield Enhancement Shares by Buyer shall occur at the offices of Hughes and
      Luce
      LLP, 1717 Main Street, Dallas, Texas 75201 on the Second Tranche Payment Date
      at
      10:00 a.m., local time.

     

    (ii) At
      the
      Second Tranche Closing, (1) Buyer shall pay the Second Note Payment to the
      Company and the Escrow Agent, as applicable, pursuant to Section
      1(c)(iii)
      for the
      Secondary Promissory Note and Secondary Warrants and shall pay the Second Yield
      Enhancement Payment for the Secondary Yield Enhancement Shares to be issued
      and
      sold to Buyer at the Second Tranche Closing, by wire transfer of immediately
      available funds in accordance with the Company’s and Escrow Agent’s (as
      applicable) written wire instructions, (2) the Company shall deliver to Buyer
      the Secondary Promissory Note, Secondary Warrants and a stock certificate
      representing the Secondary Yield Enhancement Shares which Buyer is purchasing,
      duly executed on behalf of the Company and registered in the name of
      Buyer.

     

    (iii) The
      entire amount of the Second Note Payment will be paid into the Escrow Account
      by
      Buyer at the Second Tranche Closing, to be immediately released and paid to
      the
      Company pursuant to the terms of the Escrow Agreement.

     

    2.
      BUYER’S
      REPRESENTATIONS AND WARRANTIES.

     

    Buyer
      represents and warrants with respect to only itself that:

     

    (a)
      Organization
      of Buyer.
      Buyer
      is a limited liability company duly formed, validly existing, and in good
      standing under the laws of Delaware.

     

    (b)
      Authorization
      of Transaction.
      All
      limited liability company action on the part of Buyer necessary for the
      authorization, execution, delivery and performance by Buyer of the Transaction
      Documents to which it is a party, and the consummation of the transactions
      contemplated herein and therein, has been taken. When executed and delivered
      by
      Buyer, each of the Transaction Documents to which it is a party, will constitute
      the legal, valid and binding obligation of Buyer, enforceable against Buyer
      in
      accordance with its terms, except as such may be limited by bankruptcy,
      insolvency, reorganization or other laws affecting creditors’ rights generally
      and by general equitable principles. Buyer has all requisite limited liability
      company power and authority to enter into each of the Transaction Documents
      to
      which it is a party, and to carry out and perform its obligations under the
      terms hereof and thereof. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (c)
      No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents to which it
      is
      a party, by Buyer and the consummation by Buyer of the transactions contemplated
      hereby and thereby will not (i) result in a violation of Buyer’s organizational
      documents; (ii) conflict with, or constitute a default (or an event which with
      notice or lapse of time or both, would become a default) under, or give to
      others any rights of termination, amendment, acceleration or cancellation of,
      any agreement, indenture or instrument to which Buyer is a party; or (iii)
      result in a violation of any law, rule, regulation, order, judgment or decree
      (including federal and state securities laws) applicable to Buyer or by which
      any property or asset of Buyer is bound or affected.

     

    (d)
      Consents.
      All
      consents, approvals, orders and authorizations required on the part of Buyer
      in
      connection with the execution, delivery or performance by Buyer of the
      Transaction Documents to which it is a party, and the consummation of the
      transactions contemplated herein by Buyer have been obtained and are effective
      as of the date hereof.

     

    (e)
      No
      Public Sale or Distribution.
      Buyer
      is acquiring the Securities for its own account and not with a view towards,
      or
      for resale in connection with, the public sale or distribution thereof in a
      manner that would violate the 1933 Act, except pursuant to sales registered
      or
      exempted under the 1933 Act; provided,
      however,
      that by
      making the representations herein, Buyer does not agree to hold any of the
      Securities for any minimum or other specific term, and reserves the right to
      dispose of the Securities or Warrant Shares at any time in accordance with
      or
      pursuant to the Registration Rights Agreement, a registration statement or
      an
      exemption under the 1933 Act. Buyer is acquiring the Securities hereunder in
      the
      ordinary course of its business. Buyer does not presently have any agreement
      or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Securities or Warrant Shares.

     

    (f)
      Investor
      Status.
      Buyer
      is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
      D. Buyer’s financial condition is such that it is able to bear the risk of
      holding the Securities and the Warrant Shares for an indefinite period of time
      and the risk of loss of its entire investment. Buyer has sufficient knowledge
      and experience in financial and business matters and in investing in companies
      similar to the Company so as to be able to evaluate the risks and merits of
      its
      investment in the Company. Buyer fully understands that the Securities and
      the
      Warrant Shares are speculative investments which involve a high degree of risk
      of loss of Buyer’s entire investment, and is able to bear the economic risks of
      an investment in the Company. Buyer is fully informed as to the business
      conducted by the Company. 

    

    (g)
      Reliance
      on Exemptions.
      Buyer
      understands that the Securities are being offered and sold to it in reliance
      on
      specific exemptions from the registration requirements of United States federal
      and state securities laws and that the Company is relying in part upon the
      truth
      and accuracy of, and Buyer’s compliance with, the representations, warranties,
      agreements, acknowledgments and understandings of Buyer set forth herein in
      order to determine the availability of such exemptions and the eligibility
      of
      Buyer to acquire the Securities.

     

    (h)
      Information.
      Buyer
      and its advisors, if any, have been furnished with all materials relating to
      the
      business, finances and operations of the Company and materials relating to
      the
      offer and sale of the Securities which have been requested by Buyer. Buyer
      and
      its advisors, if any, have been afforded the opportunity to ask questions of
      the
      Company. Buyer has sought such accounting, legal and tax advice as it has
      considered necessary to make an informed investment decision with respect to
      its
      acquisition of the Securities.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (i)
      No
      Governmental Review.
      Buyer
      understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Securities or the fairness or suitability of the investment
      in the Securities nor have such authorities passed upon or endorsed the merits
      of the offering of the Securities.

     

    (j)
      Transfer
      or Resale.
      Buyer
      may not transfer or offer to transfer the Promissory Notes. Buyer understands
      that except as provided in the Registration Rights Agreement: the offer and
      sale
      of the Securities have not been and are not being registered under the 1933
      Act
      or any state securities laws, and the Securities may not be offered for sale,
      sold, assigned or transferred unless (A) the resale of the Securities has
      subsequently been registered thereunder, (B) Buyer shall have delivered to
      the
      Company an opinion of counsel, in a generally acceptable form, to the effect
      that such Yield Enhancement Shares or Warrant Shares to be sold, assigned or
      transferred may be sold, assigned or transferred pursuant to an exemption from
      such registration, or (C) Buyer provides the Company with reasonable assurance
      that such Securities can be sold, assigned or transferred pursuant to Rule
      144
      or Rule 144A promulgated under the 1933 Act (or, in each case, a successor
      rule
      thereto).

     

    (k)
      Legends.
      Buyer
      understands that the certificates or other instruments representing the
      representing the Yield Enhancement Shares, Warrants and Warrant Shares, until
      removed in accordance with Section 3(k) of the Registration Rights Agreement,
      and except as set forth below, shall bear any legend as required by the “blue
      sky” laws of any state and a restrictive legend in substantially the following
      form (and a stop-transfer order may be placed against transfer of such stock
      certificates):

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
      THE
      ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR
      (B)
      AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
      NOT
      REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS
      SOLD
      PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. 

     

    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of the Securities upon which
      it is
      stamped, if (i) such Yield Enhancement Shares, Warrants or Warrant Shares are
      registered for resale under the 1933 Act, and Buyer has complied with Section
      3(k) of the Registration Rights Agreement, (ii) in connection with a sale,
      assignment or other transfer, such holder provides the Company with an opinion
      of counsel, in a generally acceptable form, to the effect that such sale,
      assignment or transfer of the Securities may be made without registration under
      the applicable requirements of the 1933 Act, or (iii) such Securities are sold,
      assigned or transferred pursuant to Rule 144, or such holder provides the
      Company with reasonable assurance that the Securities can be sold, assigned
      or
      transferred pursuant to Rule 144(k).

     

    Buyer
      understands that the Promissory Notes shall bear the following restrictive
      legend:

     

    THIS
      NOTE
      HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, SECTION
      25102(F) OF THE CALIFORNIA CORPORATIONS CODE AND THE REGULATIONS PROMULGATED
      THEREUNDER,
      OR THE
      SECURITIES LAWS OF ANY OTHER STATE. THIS NOTE MAY NOT BE SOLD, PLEDGED,
      HYPOTHECATED OR OTHERWISE TRANSFERRED.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (l)
      Intentionally
      Omitted.

     

    (m) Affiliations
      with Broker-Dealers.
      Buyer
      is not itself, or is not otherwise an affiliate of, a broker-dealer registered
      pursuant to Section 15 of the Securities Exchange Act of 1934, as amended,
      and
      the rules and regulations adopted by the SEC thereunder (the “Exchange
      Act”);
      provided,
      however,
      that if
      Buyer is itself, or is otherwise an affiliate of, a broker-dealer, then Buyer,
      at the time of purchase of the Securities, did not have any direct or indirect
      agreements or understandings with any Person to distribute the Promissory Notes,
      Yield Enhancement Shares, Warrants or Warrant Shares. For purposes of the
      preceding sentence, an affiliate of a broker-dealer is any Person that, directly
      or indirectly, through one or more intermediaries, controls, is controlled
      by,
      or is under common control with, a broker-dealer, and does not include any
      individuals employed by such broker-dealer or its affiliates.

     

    (n) Short
      Sales and Confidentiality Prior to Effective Date.
      During
      the last thirty (30) days prior to the Closing Date, neither Buyer nor any
      affiliate of Buyer, foreign or domestic, has, directly or indirectly, effected
      or agreed to effect any short sale (as defined in Rule 200 of Regulation SHO
      under the Exchange Act), whether or not against the box, established any “put
      equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act) with
      respect to the Common Stock, borrowed or pre-borrowed any shares of Common
      Stock, or granted any other right (including, without limitation, any put or
      call option) with respect to the Common Stock or with respect to any security
      that includes, relates to or derived any significant part of its value from
      the
      Common Stock or otherwise sought to hedge its position in the Common Stock
      or
      other securities purchased pursuant to this Agreement. Buyer has maintained
      the
      confidentiality of all disclosures made to it in connection with this
      transaction (including the existence and terms of this transaction) other than
      to other Persons that are a party to this Agreement. 

     

    (o) No
      Representations, Guaranties or Warranties.
      Other
      than as set forth herein, there have been no representations, guaranties, or
      warranties made to Buyer by the Company, its Subsidiaries, or its agents or
      employees, or by any other person, expressly or by implication, with respect to
      (i) the approximate length of time that Buyer will be required to remain an
      owner of the Securities; (ii) the percentage of profit and/or amount of or
      type
      of consideration, profit, or loss (including, without limitation, tax benefits)
      to be realized, if any, as a result of investment in the Securities and (iii)
      the possibility that the past performance or experience on the part of any
      officer or director of the Company, or of any other person, might in any way
      indicate the predictable results of operations of the Company, or of ownership
      of the Securities. Buyer knows of no breach of any representation or warranty
      of
      the Company as of the date hereof.

     

    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    As
      an
      inducement to Buyer to enter into this Agreement and to consummate the
      transactions contemplated hereby, the Company and its Subsidiaries represent
      and warrant to Buyer that each and all of the following representations and
      warranties made by the Company or the Subsidiaries, where applicable, (as
      modified by the disclosure schedules delivered to Buyer contemporaneously with
      the execution and delivery of this Agreement (the “Schedules”))
      are
      true and correct as of the date of this Agreement. The Schedules shall be
      arranged by the Company in paragraphs corresponding to the sections and
      subsections contained in this Section
      3.

     

    (a)  Organization
      and Qualification.
      The
      Company and each Subsidiary is duly organized and validly existing in good
      standing under the laws of the jurisdiction in which it is formed, and has
      the
      requisite power and authorization to own its properties and to carry on its
      business as now being conducted. The Company and each Subsidiary is duly
      qualified as a foreign entity to do business and is in good standing in every
      jurisdiction in which its ownership of property or the nature of the business
      conducted by it makes such qualification necessary, except to the extent that
      the failure to be so qualified or be in good standing would not have a Material
      Adverse Effect. As used in this Agreement, “Material
      Adverse Effect”
means
      any material adverse effect on the business, properties, assets, operations,
      results of operations, condition (financial or otherwise) or prospects of the
      Company, taken as whole, or on the transactions contemplated hereby and by
      the
      other Transaction Documents, or on the authority or ability of the Company
      or
      its Subsidiaries to perform its obligations under the Transaction Documents.
      The
      Company has no subsidiaries except those that are a party to this
      Agreement.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (b)  Authorization;
      Enforcement; Validity.
      The
      Company and each Subsidiary has the requisite power and authority to enter
      into
      and perform its obligations under the Transaction Documents and to issue the
      Securities in accordance with the terms hereof and thereof. The execution and
      delivery of the Transaction Documents by the Company and each Subsidiary has
      been duly authorized by the board of directors of the Company and each
      Subsidiary and the consummation by the Company and each Subsidiary of the
      transactions contemplated hereby and thereby, including, without limitation,
      the
      issuance of the Securities, have been duly authorized by the board of directors
      of the Company and (other than the filing with the SEC of a Form D and one
      or
      more Registration Statements in accordance with the requirements of the
      Registration Rights Agreement and other than filings with “Blue Sky” authorities
      as required therein) no further filing, consent, or authorization is required
      by
      the Company, any Subsidiary or their respective board of directors or
      stockholders. This Agreement and the other Transaction Documents of even date
      herewith have been duly executed and delivered by the Company and each
      Subsidiary, and constitute the legal, valid and binding obligations of the
      Company and each Subsidiary, enforceable against the Company and each Subsidiary
      in accordance with their respective terms, except as such enforceability may
      be
      limited by general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of applicable creditors’ rights and
      remedies.

     

    (c)  Issuance
      of Securities.
      The
      issuance of the Securities is duly authorized and free from all taxes, liens
      and
      charges with respect to the issue thereof. Upon issuance at each of the Closing
      Date and the Second Tranche Payment Date, the Yield Enhancement Shares and
      Warrants will be validly issued, fully paid and nonassessable and free from
      all
      preemptive or similar rights, taxes, liens and charges with respect to the
      issue
      thereof, with the holders being entitled to all rights accorded to a holder
      of
      Common Stock. Upon issuance, the Warrant Shares will be validly issued, fully
      paid and nonassessable and free from all preemptive or similar rights, taxes,
      liens and charges with respect to the issue thereof, with the holders being
      entitled to all rights accorded to a holder of Common Stock. Assuming the
      accuracy of the representations made by Buyer in Section 2,
      the
      offer and issuance by the Company of the Securities is exempt from registration
      under the 1933 Act.

     

    (d)  No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the other Transaction
      Documents by the Company and each Subsidiary and the consummation by the Company
      and each Subsidiary of the transactions contemplated hereby and thereby
      (including, without limitation, the issuance of the Securities) will not (i)
      result in a violation of the Company’s Articles of Incorporation, the Company’s
      Bylaws, or the governing documents of any of the Subsidiaries or the terms
      of
      any capital stock of the Company or any of its Subsidiaries; (ii) conflict
      with,
      or constitute a default (or an event which with notice or lapse of time or
      both,
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of, any agreement, indenture or
      instrument to which the Company or any Subsidiary is a party; or (iii) result
      in
      a violation of any law, rule, regulation, order, judgment or decree (including
      federal and state securities laws) applicable to the Company or any of its
      Subsidiaries or by which any property or asset of the Company or any of its
      Subsidiaries is bound or affected.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (e)  Consents.
      The
      Company and its Subsidiaries are not required to obtain any consent,
      authorization or order of, or make any filing or registration with, any court,
      governmental agency or any regulatory or self-regulatory agency or any other
      Person in order for it to execute, deliver or perform any of its obligations
      under or contemplated by the Transaction Documents, in each case in accordance
      with the terms hereof or thereof (other than (x) filing with the SEC of a Form
      8-K, Form D and one or more Registration Statements in accordance with the
      requirements of the Registration Rights Agreement, (y) filings with “Blue Sky”
authorities, and (z) filings required by the Security Agreement). All consents,
      authorizations, orders, filings and registrations which the Company and the
      Subsidiaries are required to obtain pursuant to the preceding sentence have
      been
      obtained or effected on or prior to the Closing Date, and the Company and each
      Subsidiary is unaware of any facts or circumstances which might prevent the
      Company and its Subsidiaries from obtaining or effecting any of the
      registration, application or filings pursuant to the preceding sentence. The
      Company is not in violation of its reporting requirements under the 1933 Act
      and
      has no knowledge of any facts which would reasonably lead to suspension of
      the
      quotation of its Common Stock on the NASD Over-the-Counter Bulletin Board (the
      “OTCBB”)
      in the
      foreseeable future.

     

    (f)  Acknowledgment
      Regarding Buyer’s Purchase of Securities.
      The
      Company acknowledges and agrees that Buyer is acting solely in the capacity
      of
      an arm’s length purchaser with respect to this Agreement and the other
      Transaction Documents and the transactions contemplated hereby and thereby
      and
      that Buyer is not (i) an officer or director of the Company or any Subsidiary,
      (ii) to the knowledge of the Company or any Subsidiary, an “affiliate” of the
      Company or any Subsidiary (as defined in Rule 144) prior to the Closing Date
      or
      (iii) to the knowledge of the Company, a “beneficial owner” of more than 10% of
      the shares of Common Stock (as defined for purposes of Rule 13d-3 of the
      Exchange Act) prior to the Closing Date. Company further acknowledges that
      Buyer
      not is acting as a financial advisor or fiduciary of the Company or any
      Subsidiary (or in any similar capacity) with respect to this Agreement and
      the
      other Transaction Documents and the transactions contemplated hereby and
      thereby, and any advice given by Buyer or any of its representatives or agents
      in connection with this Agreement and the other Transaction Documents and the
      transactions contemplated hereby and thereby is merely incidental to Buyer’s
      purchase of the Securities. The Company further represents to Buyer that the
      Company’s and the Subsidiaries’ decisions to enter into this Agreement and the
      other Transaction Documents have been based solely on the independent evaluation
      by the Company, the Subsidiaries and their respective representatives.

     

    (g)  No
      Integrated Offering.
      Neither
      the Company, its Subsidiaries, any of their affiliates, or any Person acting
      on
      their behalf has, directly or indirectly, made any offers or sales of any
      security or solicited any offers to buy any security, under circumstances that
      would require registration of any of the Securities under the 1933 Act or cause
      this offering of the Securities to be integrated with prior offerings by the
      Company for purposes of the 1933 Act or any applicable stockholder approval
      provisions, including, without limitation, under the rules and regulations
      of
      any exchange or automated quotation system on which any of the securities of
      the
      Company are listed or designated. None of the Company, its Subsidiaries, their
      affiliates or any Person acting on their behalf will take any action or steps
      referred to in the preceding sentence that would require registration of any
      of
      the Securities under the 1933 Act or cause the offering of the Securities to
      be
      integrated with other offerings. 

     

    (h)  U.S.
      Real Property Holding Corporation.
      Company
      is not is, nor has it ever been, a U.S. real property holding corporation within
      the meaning of Section 897 of the Internal Revenue Code of 1986, as amended,
      and
      the Company will so certify upon the request of Buyer. 

     

    (i)  Application
      of Takeover Protections; Rights Agreement.
      The
      Company and its Board of Directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s Articles of
      Incorporation or the laws of the jurisdiction of its formation which is or
      could
      become applicable to Buyer as a result of the transactions contemplated by
      this
      Agreement, including, without limitation, the Company’s issuance of the
      Securities and Buyer’s ownership of the Securities. The Company has not adopted
      a stockholder rights plan or similar arrangement relating to accumulations
      of
      beneficial ownership of Common Stock or a change in control of the
      Company.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (j)  SEC
      Documents; Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by it with the SEC pursuant to the reporting requirements
      of the Exchange Act (all of the foregoing filed prior to the date hereof and
      all
      exhibits included therein and financial statements, notes and schedules thereto
      and documents incorporated by reference therein being hereinafter referred
      to as
      the “SEC
      Documents”).
      As of
      their respective dates, or as subsequently amended, the SEC Documents complied
      in all material respects with the requirements of the Exchange Act and the
      rules
      and regulations of the SEC promulgated thereunder applicable to the SEC
      Documents, and none of the SEC Documents, at the time they were filed with
      the
      SEC, contained any untrue statement of a material fact or omitted to state
      a
      material fact required to be stated therein or necessary in order to make the
      statements therein, in the light of the circumstances under which they were
      made, not misleading. As of their respective dates, the financial statements
      of
      the Company included in the SEC Documents, as amended, complied as to form
      in
      all material respects with applicable accounting requirements and the published
      rules and regulations of the SEC with respect thereto. Such financial statements
      have been prepared in accordance with generally accepted accounting principles,
      consistently applied, during the periods involved (except (i) as may be
      otherwise indicated in such financial statements or the notes thereto, or (ii)
      in the case of unaudited interim statements, to the extent they may exclude
      footnotes or may be condensed or summary statements) and fairly present in
      all
      material respects the financial position of the Company as of the dates thereof
      and the results of its operations and cash flows for the periods then ended
      (subject, in the case of unaudited statements, to normal year-end audit
      adjustments).

     

    (k)  Absence
      of Certain Changes.
      Except
      as disclosed in the Company’s Quarterly Report on Form 10-Q for the period ended
      March 31, 2007, since March 31, 2007, there has been no material adverse change
      and no material adverse development in the business, assets, properties,
      operations, condition (financial or otherwise), results of operations or
      prospects of the Company or its Subsidiaries. Since March 31, 2007, the Company
      has not (i) declared or paid any dividends, (ii) sold any assets or (iii) had
      capital expenditures, individually or in the aggregate, in excess of $100,000,
      other than ordinary course of business. None of the Company or any of its
      Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy
      law or does the Company or any of its Subsidiaries have any knowledge or reason
      to believe that its creditors intend to initiate involuntary bankruptcy
      proceedings or any actual knowledge of any fact which would reasonably lead
      a
      creditor to do so. None of the Company or any of its Subsidiaries as of the
      Closing or Second Tranche Closing, and after giving effect to the transactions
      contemplated hereby to occur at the Closing or Second Tranche Closing, will
      be
      Insolvent (as defined below). For purposes of this Section
      3(k),
      “Insolvent”
means,
      with respect to the Company or any Subsidiary (i) the present fair saleable
      value of the Company’s or any Subsidiary’s assets is less than the amount
      required to pay the Company’s of any Subsidiary’s total Indebtedness (as defined
      in Section
      3(q)),
      as
      applicable, (ii) the Company or any Subsidiary is unable to pay its debts and
      liabilities, subordinated, contingent or otherwise, as such debts and
      liabilities become absolute and matured, (iii) the Company or any Subsidiary
      intends to incur or believes that it will incur debts that would be beyond
      its
      ability to pay as such debts mature or (iv) the Company or any Subsidiary,
      has
      unreasonably small capital with which to conduct the business in which it is
      engaged as such business is now conducted and is proposed to be
      conducted.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (l)  No
      Undisclosed Events, Liabilities, Developments or Circumstances.
      Except
      for the transaction contemplated by the Transaction Documents, no event,
      liability, development or circumstance has occurred or exists, or is
      contemplated to occur with respect to the Company, its Subsidiaries or their
      respective business, properties, prospects, operations or financial condition,
      that would be required to be disclosed by the Company under applicable
      securities laws on a registration statement on Form SB-2 filed with the SEC
      relating to an issuance and sale by the Company of its Common Stock and which
      has not been publicly announced.

     

    (m)  Conduct
      of Business; Regulatory Permits.
      None of
      the Company or its Subsidiaries is in violation of any term of or in default
      under its articles or certificate of incorporation or bylaws or other governing
      documents. Neither the Company nor any of its Subsidiaries is in violation
      of
      any judgment, decree or order or any statute, ordinance, rule or regulation
      applicable to the Company or its Subsidiaries. Without limiting the generality
      of the foregoing, the Company has no knowledge of any facts or circumstances
      that would reasonably lead to delisting or suspension of the Common Stock.
      During the one (1) year period prior to the date hereof, (i) trading in the
      Common Stock has not been suspended by the SEC and (ii) the Company has received
      no communication, written or oral, from the SEC regarding the suspension or
      delisting of the Common Stock. The Company and its Subsidiaries possess all
      certificates, authorizations and permits issued by the appropriate regulatory
      authorities necessary to conduct their respective businesses, and during the
      one
      (1) year period prior to the date hereof, neither the Company nor any such
      Subsidiary has received any notice of proceedings relating to the revocation
      or
      modification of any such certificate, authorization or permit. 

     

    (n)  Sarbanes-Oxley
      Act.
      The
      Company is in compliance with any and all applicable requirements of the
      Sarbanes-Oxley Act of 2002, and any and all applicable rules and regulations
      promulgated by the SEC thereunder, except where the failure to be in compliance
      would not have a Material Adverse Effect. 

     

    (o)  Transactions
      With Affiliates.
      Except
      as set forth in the SEC Documents filed at least ten days prior to the date
      hereof, none of the officers, directors or employees of the Company or any
      of
      its Subsidiaries is presently a party to any transaction with the Company or
      any
      of its Subsidiaries (other than for ordinary course services as employees,
      officers or directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      such officer, director or employee or, to the knowledge of the Company or any
      of
      its Subsidiaries, any corporation, partnership, trust or other entity in which
      any such officer, director, or employee has a substantial interest or is an
      officer, director, trustee or partner.

     

    (p)  Equity
      Capitalization.
      As of
      the date hereof, the authorized capital stock of the Company consists of
      (x) 200,000,000 shares of Common Stock, of which, as of the date hereof,
      26,531,805 shares are issued and outstanding, 7,016,284 shares of the Company’s
      outstanding shares are reserved for issuance pursuant to the Company’s stock
      option and purchase plans listed in Schedule
      3(p),
      and
      803,000 shares are reserved for issuance upon the exercise of warrants subject
      to the warrant agreements listed in Schedule
      3(p)
      and
      (y) 10,000,000 shares of preferred stock, par value $0.0001 per share, of
      which as of the date hereof, zero shares are issued and outstanding. All of
      the
      outstanding shares of the Company have been validly issued and are fully paid
      and nonassessable. The authorized capital stock of Atlas Technology Group
      Holdings Limited consists of 50,000 shares, of which, as of the date hereof,
      10,000 shares are issued and outstanding and zero shares are issued or reserved
      for issuance pursuant to stock options or warrants. The authorized capital
      stock
      of Atlas Technology Group (NZ) Limited consists of 100 shares, of which, as
      of
      the date hereof, 100 shares are issued and outstanding and zero shares are
      reserved for issuance pursuant to stock options or warrants. The authorized
      capital stock of TakeCareofIT consists of 50,000 shares, of which, as of the
      date hereof, 10,000 shares are issued and outstanding and zero shares are issued
      or reserved for issuance pursuant to stock options or warrants. The authorized
      capital stock of ATG US consists of 1,000 shares, of which, as of the date
      hereof, 1,000 shares are issued and outstanding and zero shares are issued
      or
      reserved for issuance pursuant to stock options or warrants. The authorized
      capital stock of Atlas Technology Group Consulting Inc. consists of 1,000
      shares, of which, as of the date hereof, 1,000 shares are issued and outstanding
      and zero shares are issued or reserved for issuance pursuant to stock options
      or
      warrants. The authorized capital stock of BLive Networks Inc. consists of 100
      shares, of which, as of the date hereof, 100 shares are issued and outstanding
      and zero shares are reserved for issuance pursuant to stock options or warrants.
      Except as disclosed in the SEC Documents or Schedule
      3(p):
      (i)
      none of the Company’s or its Subsidiaries’ share capital is subject to
      preemptive rights or any other similar rights or any liens or encumbrances
      suffered or permitted by the Company; (ii) there are no outstanding options,
      warrants, scrip, rights to subscribe to, calls or commitments of any character
      whatsoever relating to, or securities or rights convertible into, or exercisable
      or exchangeable for, any share capital of the Company or any Subsidiary, or
      contracts, commitments, understandings or arrangements by which the Company
      or
      any Subsidiary is or may become bound to issue additional share capital of
      the
      Company or any Subsidiary or any options, warrants, scrip, rights to subscribe
      to, calls or commitments of any character whatsoever relating to, or securities
      or rights convertible into, or exercisable or exchangeable for, any share
      capital of the Company or any Subsidiary; (iii) there are no outstanding debt
      securities, notes, credit agreements, credit facilities or other agreements,
      documents or instruments evidencing Indebtedness of the Company or any
      Subsidiary or by which Company or any Subsidiary is or may become bound; (iv)
      there are no financing statements securing obligations in any material amounts,
      either singly or in the aggregate, filed in connection with the Company or
      any
      Subsidiary; (v) there are no agreements or arrangements under which the Company
      or any Subsidiary is obligated to register the sale of any of its securities
      under the 1933 Act (except the Registration Rights Agreement); (vi) there are
      no
      outstanding securities or instruments of the Company or any Subsidiary which
      contain any redemption or similar provisions, and there are no contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to redeem a security of the Company; (vii)
      there are no securities or instruments containing anti-dilution or similar
      provisions that will be triggered by the issuance of the Securities or Warrant
      Shares; (viii) the Company and its Subsidiaries have no stock appreciation
      rights or “phantom stock” plans or agreements or any similar plan or agreement;
      and (ix) the Company and its Subsidiaries have no liabilities or obligations
      required to be disclosed in the SEC Documents but not so disclosed in the SEC
      Documents, other than those incurred in the ordinary course of the Company’s or
      it Subsidiaries’ businesses. Schedule
      3(p)
      contains
      true, correct and complete copies of (i) the Company’s Articles of
      Incorporation, as amended and as in effect on the date hereof (“the Company’s
      Articles of Incorporation”)
      and
      (ii) the Company’s Bylaws, as amended and as in effect on the date hereof
      (“the Company’s Bylaws”).
      

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (q)  Indebtedness
      and Other Contracts.
      Except
      as disclosed in the SEC Documents or Schedule
      3(q),
      neither
      the Company nor any of its Subsidiaries (i) have any outstanding Indebtedness,
      (ii) are a party to any contract, agreement or instrument, the violation of
      which, or default under which, by the other party(ies) to such contract,
      agreement or instrument would result in a Material Adverse Effect, (iii) are
      in
      violation of any term of or in default under any contract, agreement or
      instrument relating to any Indebtedness, or (iv) are a party to any contract,
      agreement or instrument relating to any Indebtedness, the performance of which,
      in the judgment of the Company’s officers, has or is expected to have a Material
      Adverse Effect, except as otherwise disclosed in Schedule
      3(q).
      For
      purposes of this Agreement: (x) “Indebtedness”
of
      any
      Person means, without duplication (A) all indebtedness for borrowed money,
      (B)
      all obligations issued, undertaken or assumed as the deferred purchase price
      of
      property or services (including, without limitation, “capital leases” in
      accordance with generally accepted accounting principles) (other than trade
      payables entered into in the ordinary course of business), (C) all reimbursement
      or payment obligations with respect to letters of credit, surety bonds and
      other
      similar instruments, (D) all obligations evidenced by notes, bonds, debentures
      or similar instruments, including obligations so evidenced incurred in
      connection with the acquisition of property, assets or businesses, (E) all
      indebtedness created or arising under any conditional sale or other title
      retention agreement, or incurred as financing, in either case with respect
      to
      any property or assets acquired with the proceeds of such indebtedness (even
      though the rights and remedies of the seller or bank under such agreement in
      the
      event of default are limited to repossession or sale of such property), (F)
      all
      monetary obligations under any leasing or similar arrangement which, in
      connection with generally accepted accounting principles, consistently applied
      for the periods covered thereby, is classified as a capital lease, (G) all
      indebtedness referred to in clauses (A) through (F) above secured by (or for
      which the holder of such Indebtedness has an existing right, contingent or
      otherwise, to be secured by) any mortgage, lien, pledge, charge, security
      interest or other encumbrance upon or in any property or assets (including
      accounts and contract rights) owned by any Person, even though the Person which
      owns such assets or property has not assumed or become liable for the payment
      of
      such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
      or obligations of others of the kinds referred to in clauses (A) through (G)
      above; (y) “Contingent
      Obligation”
means,
      as to any Person, any direct or indirect liability, contingent or otherwise,
      of
      that Person with respect to any indebtedness, lease, dividend or other
      obligation of another Person if the primary purpose or intent of the Person
      incurring such liability, or the primary effect thereof, is to provide assurance
      to the obligee of such liability that such liability will be paid or discharged,
      or that any agreements relating thereto will be complied with, or that the
      holders of such liability will be protected (in whole or in part) against loss
      with respect thereto; and (z) “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    
      
        
        

      

      
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    (r)  Absence
      of Litigation.
      Except
      as disclosed in the SEC Documents or in writing to Buyer, there is no action,
      suit, proceeding, inquiry or investigation before or by any court, public board,
      government agency (including the SEC), self-regulatory organization or body
      pending or, to the knowledge of the Company, threatened against or the Company,
      the Common Stock or any of its Subsidiaries or any of the Company’s or its
      Subsidiaries’ officers or directors.

     

    (s)  Insurance.
      The
      Company and each of its Subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its Subsidiaries are engaged. In the past one (1)
      year,
      neither the Company nor any Subsidiary has been refused any insurance coverage
      sought or applied for and neither the Company nor any such Subsidiary has any
      reason to believe that it will not be able to renew its existing insurance
      coverage as and when such coverage expires or to obtain similar coverage from
      similar insurers as may be necessary to continue its business at a cost that
      would not have a Material Adverse Effect.

     

    (t)  Employee
      Relations.
      Neither
      Company nor any of its Subsidiaries is a party to any collective bargaining
      agreement or employs any member of a union. Company and its Subsidiaries believe
      that their relations with their employees are good. No executive officer of
      Company or any of its Subsidiaries has notified Company or any such Subsidiary
      that such officer intends to leave Company or any such Subsidiary or otherwise
      terminate such officer’s employment with Company or any such Subsidiary. No
      executive officer of Company or any of its Subsidiaries, to the knowledge of
      Company or any such Subsidiary, is in violation of any material term of any
      employment contract, confidentiality, disclosure or proprietary information
      agreement, non-competition agreement, or any other contract or agreement or
      any
      restrictive covenant. Company and its Subsidiaries are in compliance with all
      federal, state, local and foreign laws and regulations respecting labor,
      employment and employment practices and benefits, terms and conditions of
      employment and wages and hours, except where failure to be in compliance would
      not, either individually or in the aggregate, reasonably be expected to result
      in a Material Adverse Effect. 

     

    
      
        
        

      

      
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    (u)  Title.
      The
      Company and its Subsidiaries have good and marketable title to all real property
      and good and marketable title to all personal property owned by them which
      is
      material to the business of the Company and its Subsidiaries, in each case
      free
      and clear of all liens, encumbrances and defects except Permitted Liens (as
      such
      term is defined in the Promissory Notes) and such as do not materially affect
      the value of such property and do not interfere with the use made and proposed
      to be made of such property by the Company and any of its Subsidiaries. Any
      real
      property and facilities held under lease by the Company and any of its
      Subsidiaries are held by them under valid, subsisting and enforceable leases
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and facilities by the Company and
      its
      Subsidiaries.

     

    (v)  Intellectual
      Property Rights.
      The
      Company and its Subsidiaries own or possess adequate rights or licenses to
      use
      all trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets and other intellectual property
      rights (“Intellectual
      Property Rights”)
      necessary to conduct their respective businesses as now conducted. None of
      the
      Company’s or any of its Subsidiaries’ Intellectual Property Rights have expired
      or terminated, or are expected to expire or terminate, within three years from
      the date of this Agreement. The Company has no knowledge of any infringement
      by
      the Company or its Subsidiaries of Intellectual Property Rights of others.
      There
      is no claim, action or proceeding being made or brought, or to the knowledge
      of
      the Company, being threatened, against the Company or its Subsidiaries regarding
      its Intellectual Property Rights. The Company is unaware of any facts or
      circumstances which might give rise to any of the foregoing infringements or
      claims, actions or proceedings. The Company and its Subsidiaries have taken
      reasonable security measures to protect the secrecy, confidentiality and value
      of all of their intellectual properties.

     

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

     

    (x)  Subsidiary
      Rights.
      Company
      or one of its Subsidiaries has the unrestricted right to vote, and (subject
      to
      limitations imposed by applicable law) to receive dividends and distributions
      on, all capital securities of its Subsidiaries as owned by Company or such
      Subsidiary.

     

    (y)  Investment
      Company.
      Neither
      the Company nor its Subsidiaries are, or are an affiliate of, an “investment
      company” within the meaning of the Investment Company Act of 1940, as
      amended.

     

    (z)  Tax
      Status.
      The
      Company and each of its Subsidiaries (i) has made or filed all foreign, federal
      and state income and all other tax returns, reports and declarations required
      by
      any jurisdiction to which it is subject, (ii) has paid all taxes and other
      governmental assessments and charges that are material in amount, shown or
      determined to be due on such returns, reports and declarations, except those
      being contested in good faith and (iii) has set aside on its books provision
      reasonably adequate for the payment of all taxes for periods subsequent to
      the
      periods to which such returns, reports or declarations apply. There are no
      unpaid taxes in any material amount claimed to be due by the taxing authority
      of
      any jurisdiction, and the officers of the Company know of no basis for any
      such
      claim.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (cc)  Ranking
      of Promissory Note.
      Except
      as permitted by the Promissory Notes, no Indebtedness of the Company will rank
      senior to or pari
      passu
      with the
      Promissory Notes.

     

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

     

    (ee)  Manipulation
      of Price.
      The
      Company has not, and to its knowledge no one acting on its behalf has, (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
      purchased, or paid any compensation for soliciting purchases of, any of the
      Securities (except for customary placement fees payable in connection with
      this
      transaction), or (iii) paid or agreed to pay to any Person any compensation
      for
      soliciting another to purchase any other securities of the Company (except
      for
      customary placement fees payable in connection with this
      transaction).

     

    (ff)  Commission
      and Brokers.
      Other
      than the commission to be paid to Equity Source Partners, LLC set forth on
      Schedule
      3(ff),
      no
      commission has been charged or shall be payable to any person with respect
      to
      the issuance and sale by the Company to Buyer of the Securities or the
      completion of any other transaction contemplated by this Agreement as a result
      of any action or agreement on the part of Company; and Company has not retained,
      utilized or been represented by any other broker or finder in connection with
      the transactions contemplated by this Agreement. The Company shall be
      responsible for the payment of any placement agent’s fees, financial advisory
      fees, or brokers’ commissions (other than for Persons engaged by Buyer or its
      investment advisor) relating to or arising out of the transactions
      contemplated hereby. The Company shall pay, and hold Buyer harmless against,
      any
      liability, loss or expense (including, without limitation, attorney’s fees and
      out-of-pocket expenses) arising in connection with any such
      claim. 

     

    
      
        
        

      

      
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    (gg)  Foreign
      Corrupt Practices.
      Neither
      Company nor any of its Subsidiaries nor any director, officer, agent, employee
      or other Person acting on behalf of Company or any of its Subsidiaries has,
      in
      the course of its actions for, or on behalf of, Company or any of its
      Subsidiaries (i) used any corporate funds for any unlawful contribution, gift,
      entertainment or other unlawful expenses relating to political activity; (ii)
      made any direct or indirect unlawful payment to any foreign or domestic
      government official or employee from corporate funds; (iii) violated or is
      in
      violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
      as
      amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
      kickback or other unlawful payment to any foreign or domestic government
      official or employee.

     

    (hh)  No
      General Solicitation; Placement Agent’s Fees.
      The
      Company, the Subsidiaries nor any of their affiliates, nor any Person acting
      on
      its or their behalf, has engaged in any form of general solicitation or general
      advertising (within the meaning of Regulation D) in connection with the offer
      or
      sale of the Securities. The Company shall be responsible for the payment of
      any
      placement agent’s fees, financial advisory fees, or brokers’ commissions (other
      than for Persons engaged by the Buyer or their investment advisors) relating
      to
      or arising out of the transactions contemplated hereby. The Company shall pay,
      and hold Buyer harmless against, any liability, loss or expense (including,
      without limitation, attorney’s fees and out-of-pocket expenses) arising in
      connection with any such claim.

     

    (ii)  Disclosure.
      The
      Company understands and confirms that Buyer will rely on the foregoing
      representations in effecting transactions in securities of the Company. All
      disclosure provided to Buyer, the Company, its business and the transactions
      contemplated hereby, including the Schedules to this Agreement, furnished by
      or
      on behalf of the Company is true and correct and does not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements made therein, in the light of the circumstances
      under which they were made, not misleading. The Company knows of no breach
      of
      any representation or warranty of Buyer as of the date hereof.

     

    4.
      COVENANTS.

     

    (a)  Commercially
      Reasonable Efforts.
      Each
      party shall use commercially reasonable efforts timely to satisfy each of the
      conditions to be satisfied by it as provided in Sections
      6 and 7
      of this
      Agreement.

     

    (b)  Form
      D
      and Blue Sky.
      The
      Company agrees to file a Form D with respect to the Securities as required
      under
      Regulation D and to provide a copy thereof to Buyer promptly after such filing.
      The Company shall, on or before the Closing Date or Second Tranche Payment
      Date,
      as applicable, take such action as the Company shall reasonably determine is
      necessary in order to obtain an exemption for or to qualify the Securities
      for
      sale to Buyer at the Closing pursuant to this Agreement under applicable
      securities or “Blue Sky” laws of the states of the United States (or to obtain
      an exemption from such qualification), and shall provide evidence of any such
      action so taken to Buyer on or prior to the Closing Date. Each of the Company
      shall make all filings and reports relating to the offer and sale of the
      Securities required under applicable securities or “Blue Sky” laws of the states
      of the United States following the Closing Date.

     

    
      
        
        

      

      
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    (c)  Reporting
      Status.
      Until
      the date on which the Investors (as defined in the Registration Rights
      Agreement) shall have sold all the Yield Enhancement Shares, Warrants, Warrant
      Shares and the Promissory Notes are no longer outstanding (the “Reporting
      Period”),
      the
      Company shall file all reports required to be filed with the SEC pursuant to
      the
      Exchange Act, and the Company shall not terminate its status as an issuer
      required to file reports under the Exchange Act even if the Exchange Act or
      the
      rules and regulations thereunder would otherwise permit such termination.

     

    (d)  Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Securities (i) for the fees
      and expenses associated with the sale of the Securities and (ii) for general
      corporate purposes. 

     

    (e)  Financial
      Information.
      The
      Company agrees to send the following to each Investor (as defined in the
      Registration Rights Agreement) during the Reporting Period: (i) unless filed
      with the SEC through EDGAR and available to the public through the EDGAR system,
      within one business day after the filing thereof with the SEC, a copy of all
      Annual Reports on Form 10-K or 10-KSB, any interim reports or any consolidated
      balance sheets, income statements, stockholders’ equity statements and/or cash
      flow statements for any period other than annual, any Current Reports on Form
      8-K and any registration statements (other than on Form S-8) or amendments
      filed
      pursuant to the 1933 Act of the Company , (ii) on the same day as the release
      thereof, copies of all press releases issued by Company or any of its
      Subsidiaries, and (iii) copies of any notices and other information made
      available or given to the stockholders of Company generally, contemporaneously
      with the making available or giving thereof to the stockholders.

     

    (f)  Listing.
      To the
      extent the Registrable Securities (as defined in the Registration Rights
      Agreement) are listed upon a national securities exchange or automated quotation
      system that provides for the listing of securities, the Company shall promptly
      secure the listing of all of the Registrable Securities upon each national
      securities exchange and automated quotation system, if any, upon which the
      Common Stock is then listed (subject to official notice of issuance) and shall
      maintain such listing of all Registrable Securities from time to time issuable
      under the terms of the Transaction Documents. The Company shall not take any
      action which would be reasonably expected to result in the delisting or
      suspension of the Common Stock. The Company shall pay all fees and expenses
      in
      connection with satisfying its obligations under this Section
      4(f).
      

     

    (g)  Fees.
      The
      Company shall reimburse Buyer or its designee(s) for reasonable and documented
      costs and expenses incurred in connection with the transactions contemplated
      by
      the Transaction Documents (including reasonable legal fees and disbursements
      in
      connection therewith, documentation and implementation of the transactions
      contemplated by the Transaction Documents and due diligence in connection
      therewith) up to an amount not to exceed $15,000, which amount shall be withheld
      by Buyer from the Initial Note Payment at the Closing. The Company shall be
      responsible for the payment of, and shall pay, any placement agent’s fees,
      financial advisory fees, or broker’s commissions (other than for Persons engaged
      by Buyer or its investment advisors) relating to or arising out of the
      transactions contemplated hereby, and shall hold Buyer harmless against, any
      liability, loss or expense (including, without limitation, reasonable attorney’s
      fees and out-of-pocket expenses) arising in connection with any claim relating
      to any such payment.

     

    (h)  Disclosure
      of Transactions and Other Material Information.
      On or
      before 5:30 p.m., Washington, D.C. time, on the second business day
      following the date of this Agreement, the Company shall file a Current Report
      on
      Form 8-K describing the terms of the transactions contemplated by the
      Transaction Documents in the form required by the Exchange Act and attaching
      the
      material Transaction Documents (including, without limitation, this Agreement,
      the form of Promissory Note, form of Warrant, Security Agreement, Guaranty
      and
      the Registration Rights Agreement) (including all attachments, the “8-K
      Filing”).
      Any
      material non-public information provided by the Company to Buyer in connection
      with this transaction shall be included by the Company within the aforementioned
      8-K Filing. From and after the filing of the 8-K Filing with the SEC, the
      Company represents and acknowledges that Buyer shall not be in possession of
      any
      material, nonpublic information received from the Company or any of its
      Subsidiaries, or any of their respective officers, directors, employees or
      agents, that is not disclosed in the 8-K Filing. The Company shall not, and
      shall cause each of its Subsidiaries and its and each of their respective
      officers, directors, employees and agents not to, provide Buyer with any
      material, nonpublic information regarding the Company or any of its Subsidiaries
      from and after the filing of the 8-K Filing with the SEC without the express
      written consent of Buyer. In the event of a breach of the foregoing covenant
      by
      the Company, any of its Subsidiaries, or any of its or their respective
      officers, directors, employees or agents, in addition to any other remedy
      provided herein or in the Transaction Documents, Buyer shall, to the extent
      it
      becomes aware of such breach, notify the Company of such breach and the
      material, nonpublic information the receipt of which resulted in such breach.
      Within two business days of receipt of such notice, the Company shall either
      (a)
      deliver a notice to Buyer certifying such material, non-public information
      has
      already been publicly disclosed by the Company or (b) make a public disclosure,
      in the form of a press release, public advertisement or otherwise, of such
      material, nonpublic information. Subject to the foregoing, neither the Company,
      its Subsidiaries nor Buyer shall issue any press releases or any other public
      statements with respect to the transactions contemplated hereby; provided,
      however,
      that
      the Company shall be entitled, without the prior approval of Buyer, to make
      any
      press release or other public disclosure with respect to such transactions
      (i)
      in substantial conformity with the 8-K Filing and contemporaneously therewith
      and (ii) as is required by applicable law and regulations (provided that in
      the
      case of clause (i) Buyer shall be consulted by the Company in connection with
      any such press release or other public disclosure prior to its release). Without
      the prior written consent of Buyer (which consent shall not be unreasonably
      withheld, delayed or conditioned), Company shall not disclose the name of Buyer
      or its affiliates in any filing, announcement, release or otherwise except
      in
      the 8-K Filing.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (i)  Incurrence
      of Liens.
      So long
      as the Promissory Notes are outstanding, the Company shall not, directly or
      indirectly, allow or suffer to exist any Lien, other than Permitted Liens (as
      defined in the Promissory Note), upon any property or assets (including accounts
      and contract rights) owned by the Company.

     

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

     

    (k)  Allocation
      of Purchase Price for Federal Income Tax Purposes.
      In
      accordance with Treasury regulations section 1.1273-2(h), the Company shall
      allocate the (i) Note Purchase Price between the Promissory Notes and the
      Warrants based upon their relative fair market values and (ii) Yield
      Enhancement Purchase Price between the Yield Enhancement Shares based upon
      their
      relative fair market value. In making such allocation, the parties hereto shall
      agree, based upon the advice of their financial advisors, upon the appropriate
      methodology to be used for determining the relative fair market values of the
      Promissory Notes, the Warrants and the Yield Enhancement Shares.

     

    (l)  No
      Short Sales Permitted.
      Beginning on the Closing Date and until such time as the Promissory Notes have
      been fully repaid by the Company, Buyer and its affiliates, whether foreign
      or
      domestic, will not, directly or indirectly, effect or agree to effect any short
      sale (as defined in Rule 200 of Regulation SHO under the Exchange Act), whether
      or not against the box, establish any “put equivalent position” (as defined in
      Rule 16a-1(h) under the Exchange Act) with respect to the Common Stock, borrow
      any shares of Common Stock, or grant any other right (including, without
      limitation, any put or call option) with respect to the Common Stock or with
      respect to any security that includes, relates to or derived any significant
      part of its value from the Common Stock or otherwise sought to hedge its
      position in the Common Stock or other securities purchased pursuant to this
      Agreement. 

     

    
      
        
        

      

      
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    (m) Pro
      Rata Participation.
      

     

    (i)  As
      long
      as Buyer holds at least 1,000,000 shares of Common Stock of the Company, the
      Company shall permit Buyer to purchase its pro rata share of New Securities
      (as
      defined below) on terms and conditions that are equal to those offered by the
      Company in a subsequent sale of New Securities after the date of this Agreement.
      Buyer’s pro rata share, for purposes of this Section 4(m), is equal to the ratio
      of (a) the number of shares of Common Stock owned by Buyer immediately
      prior to the issuance of New Securities to (b) the total number of shares
      of Common Stock outstanding. Buyer may assign its right of participation
      hereunder to any person to which Buyer may transfer registration rights pursuant
      to the terms of the Registration Rights Agreement. “New
      Securities”
shall
      mean any capital stock of the Company whether now authorized or not, and rights,
      convertible securities, options or warrants to purchase such capital stock,
      and
      securities of any type whatsoever that are, or may become, exercisable or
      convertible into capital stock; provided
      that the
      term “New Securities” does not include: (A) the Warrants and Yield
      Enhancement Shares issued pursuant to this Agreement and the Warrant Shares
      issuable upon exercise thereof; (B) shares of Common Stock and options,
      warrants or other rights to purchase Common Stock issued to employees, officers
      or directors of, or consultants or advisors to the Company or any subsidiary
      pursuant to restricted stock purchase agreements, stock option plans or similar
      arrangements approved by Board of Directors; (C) securities issued pursuant
      to the conversion or exercise of any convertible securities, options or warrants
      outstanding as of this date of this Agreement; (D) securities issued
      pursuant to a qualified public offering; (E) shares of Common Stock issued
      or issuable pursuant to the acquisition of another corporation or entity by
      the
      Company by merger, purchase of substantially all of the assets or other
      reorganization or to a joint venture agreement, provided,
      that
      such issuances are approved by the Board of Directors of the Company; or
      (F) shares of Common Stock issued or issuable to suppliers or third party
      service providers in connection with the provision of goods or services pursuant
      to transactions approved by the Board of Directors of the Company.

     

    (ii)  In
      the
      event the Company proposes to undertake an issuance of New Securities, it shall
      give Buyer written notice of its intention, describing the type of New
      Securities, and their price and the general terms upon which the Company
      proposes to issue the same. Buyer shall have twenty (20) days after any such
      notice is mailed or delivered to agree to purchase Buyer’s pro rata share of
      such New Securities and to indicate whether such Buyer desires to exercise
      its
      option for the price and upon the terms specified in the notice by giving
      written notice to the Company, stating therein the quantity of New Securities
      to
      be purchased.

     

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

    

    5.
      TRANSFER
      AGENT INSTRUCTIONS.

     

    (a)  Registers.
      The
      Company’s transfer agent is Registrar and Transfer Company. The Company’s
      transfer agent maintains a register for the Common Stock in which it records
      the
      name and address of each Person in whose name the Common Stock has been issued,
      and will keep such register open and available at all times during business
      hours for inspection by Buyer or its legal representatives.

     

    (b)  Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates or credit shares to the
      applicable balance accounts at The Depository Trust Company (“DTC”),
      registered in the name of Buyer or its respective nominee(s), for the Yield
      Enhancement Shares and Warrant Shares in such amounts as specified from time
      to
      time by Buyer to the Company in the form of Exhibit
      G
      attached
      hereto (the “Irrevocable
      Transfer Agent Instructions”).
      The
      Company warrants that no instruction other than the Irrevocable Transfer Agent
      Instructions referred to in this Section
      5(b),
      and
      stop transfer instructions to give effect to Sections
      2(j)
      and
2(k)
      hereof,
      will be given by the Company to its transfer agent with respect to the Yield
      Enhancement Shares and Warrant Shares and that the Yield Enhancement Shares
      and
      Warrant Shares shall otherwise be freely transferable (subject to applicable
      federal and state securities laws) on the books and records of the Company,
      as
      applicable, and to the extent provided in this Agreement and the other
      Transaction Documents. If Buyer effects a sale, assignment or transfer of Yield
      Enhancement Shares and Warrant Shares in accordance with Sections
      2(j)
      and
2(k),
      the
      Company shall permit the transfer and shall promptly instruct its transfer
      agent
      to issue one or more certificates or credit shares to the applicable balance
      accounts at DTC in such name and in such denominations as specified by Buyer
      to
      effect such sale, transfer or assignment (subject to applicable federal and
      state securities laws). In the event that such sale, assignment or transfer
      involves Yield Enhancement Shares or Warrant Shares sold, assigned or
      transferred pursuant to an effective registration statement or pursuant to
      Rule
      144, the transfer agent shall issue such Yield Enhancement Shares or Warrant
      Shares to Buyer, assignee or transferee, as the case may be, without any
      restrictive legend. The Company acknowledges that a breach by it of its
      obligations hereunder will cause irreparable harm to Buyer. 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

    (a)
      The
      obligations of the Company hereunder to issue and sell the Initial Promissory
      Note, Initial Warrants, and Initial Yield Enhancement Shares to Buyer at the
      Closing is subject to the satisfaction, at or before the Closing Date, of each
      of the following conditions, provided that these conditions are for the
      Company’s sole benefit and may be waived by the Company at any time in its sole
      discretion by providing Buyer with prior written notice thereof:

     

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

     

    (ii)
      Buyer shall have delivered to the Company and the Escrow Agent the Initial
      Note
      Purchase Price (less the amounts withheld by it pursuant to Section
      4(g))
      for the
      Initial Promissory Note and Initial Warrants being purchased by Buyer at the
      Closing, pursuant to the terms of the escrow provisions in Section
      1(b)(iii)
      of the
      Agreement and the Escrow Agreement, by wire transfer of immediately available
      funds pursuant to the wire instructions provided by the Company.

     

    (iii)
      Buyer shall have delivered to the Company the Initial Yield Enhancement Payment
      for the Initial Yield Enhancement Shares being purchased by Buyer at the Closing
      by wire transfer of immediately available funds pursuant to the wire
      instructions provided by the Company.

     

    (iv)
      The
      representations and warranties of Buyer shall be true and correct in all
      material respects as of the date when made and as of the Closing Date as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date), and Buyer shall have performed, satisfied and complied in all
      material respects with the covenants, agreements and conditions required by
      this
      Agreement to be performed, satisfied or complied with by Buyer at or prior
      to
      the Closing Date. Company shall have received certificates, executed by an
      authorized representative of the Buyer, dated as of the Closing Date, to the
      foregoing effect and as to such other matters as may be reasonably requested
      by
      Buyer, substantially in the form attached hereto as Exhibit
      H.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (b)
      The
      obligations of the Company hereunder to issue and sell the Secondary Promissory
      Note, Secondary Warrants and the Secondary Yield Enhancement Shares to Buyer
      at
      the Second Tranche Closing is subject to the satisfaction, at or before the
      Second Tranche Payment Date, of each of the following conditions, provided
      that
      these conditions are for the Company’s sole benefit and may be waived by the
      Company at any time in its sole discretion by providing Buyer with prior written
      notice thereof:

     

    (i)
      Buyer
      shall have deposited in the Escrow Account the Second Note Payment for the
      Secondary Promissory Note and Secondary Warrants being purchased by Buyer at
      the
      Second Tranche Closing, pursuant to the terms of the escrow provisions in
Section
      1(c)(iii)
      of the
      Agreement and the Escrow Agreement, by wire transfer of immediately available
      funds pursuant to the wire instructions provided by the Company.

     

    (ii)
      Buyer shall have delivered to the Company the Second Yield Enhancement Payment
      for the Secondary Yield Enhancement Shares being purchased by Buyer at the
      Second Tranche Closing by wire transfer of immediately available funds pursuant
      to the wire instructions provided by the Company.

     

    (iii) The
      representations and warranties of Buyer shall be true and correct in all
      material respects as of the date when made and as of the Second Tranche Payment
      Date as though made at that time (except for representations and warranties
      that
      speak as of a specific date), and Buyer shall have performed, satisfied and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by Buyer
      at or prior to the Second Tranche Payment Date. Company shall have received
      certificates, executed by an authorized representative of the Buyer, dated
      as of
      the Second Tranche Payment Date, to the foregoing effect and as to such other
      matters as may be reasonably requested by Buyer, substantially in the form
      attached hereto as Exhibit
      P.

     

    7.
      CONDITIONS
      TO BUYER’S OBLIGATION TO PURCHASE.

     

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

     

    (i)  The
      Company shall have executed and delivered to Buyer (A) each of the Transaction
      Documents, (B) the Initial Promissory Note, (C) the Initial Warrants being
      purchased by Buyer at the Closing pursuant to this Agreement and (D) the stock
      certificates representing the Initial Yield Enhancement Shares being purchased
      by Buyer at the Closing pursuant to this Agreement.

     

    (ii)  Buyer
      shall have received the opinion of Hughes & Luce LLP, the Company’s outside
      counsel, dated as of the Closing Date, in substantially the form of Exhibit
      I
      attached
      hereto. 

     

    (iii)  Buyer
      shall have received the opinion of Grech, Vella, Tortell & Hyzler, the
      Company’s local counsel in Malta, dated as of the Closing Date, in substantially
      the form of Exhibit
      J
      attached
      hereto.

     

    (iv)  Buyer
      shall have received the opinion of Simpson Grierson, the Company’s local counsel
      in New Zealand, dated as of the Closing Date, in substantially the form of
      Exhibit
      K
      attached
      hereto.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (v)  Buyer
      shall have received the opinion of Richards, Buell, Sutton LLP, the Company’s
      local counsel in Canada, dated as of the Closing Date, in substantially the
      form
      of Exhibit
      L
      attached
      hereto.

     

    (vi)  The
      Company shall have delivered to Buyer a copy of the Irrevocable Transfer Agent
      Instructions attached hereto as Exhibit
      G,
      which
      instructions shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

     

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

     

    (viii)  The
      Company shall have delivered to Buyer a certificate evidencing the Company’s
      qualification as a foreign corporation and good standing issued by the Secretary
      of State (or comparable office) of each jurisdiction in which the Company
      conducts business, as of a date reasonably proximate to Closing
      Date.

     

    (ix)  The
      Company shall have delivered to Buyer a certificate evidencing, for each of
      Company’s Subsidiaries, its qualification as a foreign corporation and good
      standing issued by the Secretary of State (or comparable office) of each
      jurisdiction in which such Subsidiary conducts business, as of a date reasonably
      proximate to Closing Date.

     

    (x)  The
      Company shall have delivered to Buyer a certified copy of the Company’s articles
      of incorporation as certified by the Secretary of State of the State of Delaware
      reasonably proximate to the Closing Date.

     

    (xi)  The
      Company shall have delivered to Buyer a certified copy of each Subsidiary’s
      articles of incorporation (or comparable formation document) as certified by
      the
      Secretary of State (or comparable office) of the jurisdiction in which such
      Subsidiary is incorporated reasonably proximate to the Closing
      Date.

     

    (xii)  The
      Company shall have delivered to Buyer a certificate, executed by the Secretary
      of the Company and dated as of the Closing Date, substantially in the form
      attached hereto as Exhibit
      M,
      as to
      (A) the resolutions consistent with Section
      3(b)
      as
      adopted by the Company’s Board of Directors in a form reasonably acceptable to
      Buyer, (B) the Company’s articles of incorporation and (C) the Company’s bylaws,
      each as in effect at the Closing.

     

    (xiii)  The
      Company shall have delivered to Buyer certificates, executed by the Secretary
      (or comparable officer or manager) of each of the Company’s Subsidiaries and
      dated as of the Closing Date, substantially in the form attached hereto as
      Exhibit
      M,
      as to
      (A) the resolutions consistent with Section
      3(b)
      as
      adopted by such Subsidiary’s board of directors (or other governing body) in a
      form reasonably acceptable to Buyer, (B) such Subsidiary’s articles of
      incorporation (or other formation documents) and (C) such Subsidiary’s bylaws
      (or other operating agreements), each as in effect at the Closing. 

     

    (xiv)  The
      representations and warranties of the Company and its Subsidiaries shall be
      true
      and correct as of the date when made and as of the Closing Date as though made
      at that time (except for representations and warranties that speak as of a
      specific date, which shall be true and correct as of such specific date), and
      the Company and its Subsidiaries shall have performed, satisfied and complied
      in
      all respects with the covenants, agreements and conditions required by the
      Transaction Documents to be performed, satisfied or complied with by the Company
      at or prior to the Closing Date. Buyer shall have received certificates,
      executed by the Chief Executive Officer (or duly authorized officer or director
      for foreign Subsidiaries) of the Company and its Subsidiaries, dated as of
      the
      Closing Date, to the foregoing effect and as to such other matters as may be
      reasonably requested by Buyer, substantially in the form attached hereto as
      Exhibit
      N.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (xv)  The
      Company shall have delivered to Buyer a letter from Company’s transfer agent
      certifying the number of shares of Common Stock outstanding as of a date within
      five days of the Closing Date.

     

    (xvi)  The
      Company shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the sale of the Securities.

     

    (xvii)  Each
      of
      the Subsidiaries shall have executed and delivered to Buyer this
      Agreement.

     

    (xviii)  The
      Company and its Subsidiaries shall have executed and delivered to Buyer the
      Security Agreement, substantially in the form attached hereto as Exhibit
      E.

     

    (xix)  The
      Company and its Subsidiaries (other than ATG US) shall have executed and
      delivered to Buyer the Guaranty, substantially in the form attached hereto
      as
Exhibit
      F.

     

    (xx)  The
      Company’s management shareholders and the Blankstein family shareholders have
      executed the lock-up agreement in favor of Buyer, substantially in the form
      attached hereto as Exhibit
      O.

     

    (xxi)  The
      Company shall have obtained and delivered to Buyer searches of Uniform
      Commercial Code filings (or comparable searches for foreign jurisdictions)
      in
      the jurisdictions of formation of the Company and its Subsidiaries, the
      jurisdiction of the chief executive offices of the Company and its Subsidiaries
      and each jurisdiction where any Collateral (as defined in the Security
      Agreement) exceeding a value of $10,000 is located or where a filing would
      need
      to be made in order to perfect Buyer’s security interest in the Collateral,
      copies of the financing statements on file in such jurisdictions and evidence
      that no Liens exist other than Permitted Liens.

     

    (xxii)  The
      Company and its Subsidiaries shall have executed and delivered to Buyer UCC
      financing statements (or comparable statements for foreign jurisdictions) for
      each appropriate jurisdiction as is necessary, in Buyer’s sole discretion, to
      perfect Buyer’s security interest in the Collateral.

     

    (xxiii)  The
      Company shall have delivered to Buyer such other documents relating to the
      transactions contemplated by this Agreement as Buyer or its counsel may
      reasonably request.

     

    (xxiv)  There
      is
      a valid exemption under the 1933 Act regarding the offering and sale of the
      Promissory Notes, the Yield Enhancement Shares, and the Warrants.

     

    (xxv)  The
      Buyer
      has completed a due
      diligence review and investigation of the Company.

     

    (xxvi)  There
      have been no material adverse changes in the business condition (financial
      or
      otherwise), earnings or properties of the Company. 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (xxvii)  There
      has
      been no material disruption in the market for Common Stock (including, but
      not
      limited to, a material decrease in the trading price or trading volume of the
      Common Stock) or the U.S. stock markets as a whole.

     

    (b) The
      obligation of Buyer hereunder to purchase the Secondary Promissory Note,
      Secondary Warrants and Secondary Yield Enhancement Shares at the Second Tranche
      Closing is subject to the satisfaction, at or before the Second Tranche Payment
      Date, of each of the following conditions, provided that these conditions are
      for Buyer’s sole benefit and may be waived by Buyer at any time in its sole
      discretion by providing the Company with prior written notice
      thereof:

     

    (i)  The
      Company shall have executed and delivered to Buyer (A) the Secondary Promissory
      Note, (B) the Secondary Warrants being purchased by Buyer at the Closing
      pursuant to this Agreement and (C) the stock certificates representing the
      Initial Yield Enhancement Shares being purchased by Buyer at the Closing
      pursuant to this Agreement.

     

    (ii)  Buyer
      shall have received the opinion of Hughes & Luce LLP, the Company’s outside
      counsel, dated as of the Second Tranche Payment Date, in substantially the
      form
      of Exhibit
      I
      attached
      hereto. 

     

    (iii)  Buyer
      shall have received the opinion of Grech, Vella, Tortell & Hyzler, the
      Company’s local counsel in Malta, dated as of the Second Payment Date, in
      substantially the form of Exhibit
      J
      attached
      hereto.

     

    (iv)  Buyer
      shall have received the opinion of Simpson Grierson, the Company’s local counsel
      in New Zealand, dated as of the Second Payment Date, in substantially the form
      of Exhibit
      K
      attached
      hereto.

     

    (v)  Buyer
      shall have received the opinion of Richards, Buell, Sutton LLP, the Company’s
      local counsel in Canada, dated as of the Second Payment Date, in substantially
      the form of Exhibit
      L
      attached
      hereto.

     

    (vi)  The
      Company shall have delivered to Buyer a copy of the Irrevocable Transfer Agent
      Instructions attached hereto as Exhibit
      G,
      which
      instructions shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

     

    (vii)  The
      Company shall have delivered to Buyer a certificate evidencing the formation
      and
      good standing of the Company and each of its Subsidiaries in such entity’s
      jurisdiction of formation issued by the Secretary of State (or comparable
      office) of such jurisdiction, as of a date reasonably proximate to the Second
      Tranche Payment Date.

     

    (viii)  The
      Company shall have delivered to Buyer a certificate evidencing the Company’s
      qualification as a foreign corporation and good standing issued by the Secretary
      of State (or comparable office) of each jurisdiction in which the Company
      conducts business, as of a date reasonably proximate to Second Tranche Payment
      Date.

     

    (ix)  The
      Company shall have delivered to Buyer a certificate evidencing, for each of
      Company’s Subsidiaries, its qualification as a foreign corporation and good
      standing issued by the Secretary of State (or comparable office) of each
      jurisdiction in which such Subsidiary conducts business, as of a date reasonably
      proximate to Second Tranche Payment Date.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (x)  The
      Company shall have delivered to Buyer a certified copy of the Company’s articles
      of incorporation as certified by the Secretary of State of the State of Delaware
      reasonably proximate to the Second Tranche Payment Date.

     

    (xi)  The
      Company shall have delivered to Buyer a certified copy of each Subsidiary’s
      articles of incorporation (or comparable formation document) as certified by
      the
      Secretary of State (or comparable office) of the jurisdiction in which such
      Subsidiary is incorporated reasonably proximate to the Second Tranche Payment
      Date.

     

    (xii)  The
      Company shall have delivered to Buyer a certificate, executed by the Secretary
      of the Company and dated as of the Second Tranche Payment Date, substantially
      in
      the form attached hereto as Exhibit
      M,
      as to
      (A) the resolutions consistent with Section
      3(b)
      as
      adopted by the Company’s Board of Directors in a form reasonably acceptable to
      Buyer, (B) the Company’s articles of incorporation and (C) the Company’s bylaws,
      each as in effect at the Closing.

     

    (xiii)  The
      Company shall have delivered to Buyer certificates, executed by the Secretary
      (or comparable officer or manager) of each of the Company’s Subsidiaries and
      dated as of the Second Tranche Payment Date, substantially in the form attached
      hereto as Exhibit
      M,
      as to
      (A) the resolutions consistent with Section
      3(b)
      as
      adopted by such Subsidiary’s board of directors (or other governing body) in a
      form reasonably acceptable to Buyer, (B) such Subsidiary’s articles of
      incorporation (or other formation documents) and (C) such Subsidiary’s bylaws
      (or other operating agreements), each as in effect at the Closing. 

     

    (xiv)  The
      representations and warranties of the Company and its Subsidiaries shall be
      true
      and correct as of the date when made and as of the Second Tranche Payment Date
      as though made at that time (except for representations and warranties that
      speak as of a specific date, which shall be true and correct as of such specific
      date), and the Company and its Subsidiaries shall have performed, satisfied
      and
      complied in all respects with the covenants, agreements and conditions required
      by the Transaction Documents to be performed, satisfied or complied with by
      the
      Company at or prior to the Second Tranche Payment Date. Buyer shall have
      received certificates, executed by the Chief Executive Officer (or duly
      authorized officer or director for foreign Subsidiaries) of the Company and
      its
      Subsidiaries, dated as of the Second Tranche Payment Date, to the foregoing
      effect and as to such other matters as may be reasonably requested by Buyer,
      substantially in the form attached hereto as Exhibit
      Q.

     

    (xv)  The
      Company shall have delivered to Buyer a letter from Company’s transfer agent
      certifying the number of shares of Common Stock outstanding as of a date within
      five days of the Second Tranche Payment Date.

     

    (xvi)  The
      Company shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the sale of the Securities.

     

    (xvii)  Each
      of
      the Subsidiaries shall have executed and delivered to Buyer this
      Agreement.

     

    (xviii)  The
      Company and its Subsidiaries shall have executed and delivered to Buyer the
      Security Agreement, substantially in the form attached hereto as Exhibit
      E.

     

    (xix)  The
      Company and its Subsidiaries (other than ATG US) shall have executed and
      delivered to Buyer the Guaranty, substantially in the form attached hereto
      as
Exhibit
      F.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (xx)  The
      Company shall have obtained and delivered to Buyer searches of Uniform
      Commercial Code filings (or comparable searches for foreign jurisdictions)
      in
      the jurisdictions of formation of the Company and its Subsidiaries, the
      jurisdiction of the chief executive offices of the Company and its Subsidiaries
      and each jurisdiction where any Collateral (as defined in the Security
      Agreement) exceeding a value of $10,000 is located or where a filing would
      need
      to be made in order to perfect Buyer’s security interest in the Collateral,
      copies of the financing statements on file in such jurisdictions and evidence
      that no Liens exist other than Permitted Liens.

     

    (xxi)  The
      Company and its Subsidiaries shall have executed and delivered to Buyer UCC
      financing statements (or comparable statements for foreign jurisdictions) for
      each appropriate jurisdiction as is necessary, in Buyer’s sole discretion, to
      perfect Buyer’s security interest in the Collateral.

     

    (xxii)  The
      Company shall have delivered to Buyer such other documents relating to the
      transactions contemplated by this Agreement as Buyer or its counsel may
      reasonably request.

     

    (xxiii)  There
      is
      a valid exemption under the 1933 Act regarding the offering and sale of the
      Promissory Notes, the Yield Enhancement Shares, and the Warrants.

     

    (xxiv)  There
      have been no material adverse changes in the business condition (financial
      or
      otherwise), earnings or properties of the Company. 

     

    (xxv)  There
      has
      been no material disruption in the market for Common Stock (including, but
      not
      limited to, a material decrease in the trading price or trading volume of the
      Common Stock) or the U.S. stock markets as a whole.

     

    (xxvi)  There
      has
      been no Event of Default under the Initial Promissory Note.

     

    8.
      TERMINATION.
      

     

    (a) Closing.
      In the
      event that the Closing shall not have occurred with respect to Buyer on or
      before five business days from the date hereof due to the Company’s or Buyer’s
      failure to satisfy the conditions set forth in Section 6(a) and Section 7(a)
      above (and the nonbreaching party’s failure to waive such unsatisfied
      condition(s)), the nonbreaching party shall have the option to terminate this
      Agreement with respect to such breaching party at the close of business on
      such
      date without liability of any party to any other party.

     

    (b) Second
      Tranche Closing.
      In the
      event that the Second Tranche Closing shall not have occurred with respect
      to
      Buyer on or before five business days of the Second Tranche Payment Date due
      to
      the Company’s or Buyer’s failure to satisfy the conditions set forth in Section
      6(b) and Section 7(b) above (and the nonbreaching party’s failure to waive such
      unsatisfied condition(s)), the nonbreaching party shall have the option to
      terminate this Agreement with respect to such breaching party at the close
      of
      business on such date without liability of any party to any other party provided
      that this shall not preclude any party from any claim with respect to the
      Initial Promissory Note, Initial Warrants, Initial Yield Enhancement Shares
      and
      the related Transaction Documents.

     

    9.
      MISCELLANEOUS.

     

    (a)
      Governing
      Law; Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of
      Delaware, without giving effect to any choice of law or conflict of law
      provision or rule (whether of the State of Delaware or any other jurisdictions)
      that would cause the application of the laws of any jurisdictions other than
      the
      State of Delaware. Each party hereby irrevocably submits to the exclusive
      jurisdiction of the state and federal courts sitting in Delaware, for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is brought in an inconvenient forum or that
      the
      venue of such suit, action or proceeding is improper. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof to
      such
      party at the address for such notices to it under this Agreement and agrees
      that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law. 

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (b)
      Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to each other party;
      provided that a facsimile signature shall be considered due execution and shall
      be binding upon the signatory thereto with the same force and effect as if
      the
      signature were an original, not a facsimile signature.

     

    (c)
      Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    (d)
      Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    (e)
      Entire
      Agreement; Amendments.
      This
      Agreement and the other Transaction Documents supersede all other prior oral
      or
      written agreements between Buyer, the Company, the Company’s Subsidiaries, and
      their affiliates and Persons acting on their behalf with respect to the matters
      discussed herein, and this Agreement, the other Transaction Documents and the
      instruments referenced herein and therein contain the entire understanding
      of
      the parties with respect to the matters covered herein and therein and, except
      as specifically set forth herein or therein, none of the Company, the Company’s
      Subsidiaries or Buyer makes any representation, warranty, covenant or
      undertaking with respect to such matters. No provision of this Agreement may
      be
      amended other than by an instrument in writing signed by the Company and Buyer.
      No provision hereof may be waived other than by an instrument in writing signed
      by the party against whom enforcement is sought. No such amendment shall be
      effective to the extent that it applies to less than all of the holders of
      the
      applicable Securities then outstanding. The Company has not, directly or
      indirectly, made any agreements with Buyer relating to the terms or conditions
      of the transactions contemplated by the Transaction Documents except as set
      forth in the Transaction Documents. Without limiting the foregoing, the Company
      confirms that, except as set forth in this Agreement, Buyer has not made any
      commitment or promise or has any other obligation to provide any financing
      to
      the Company or otherwise.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

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

     

    If
      to the
      Company: 
Tribeworks,
      Inc.

    2001
      152nd Avenue NE

    Redmond,
      Washington 98052

    Attn:
      Peter B. Jacobson 

    Facsimile:
      (949) 723-0970 

     

    With
      a
      copy (which shall not constitute notice) sent to:

     

    Hughes
      & Luce, LLP

    1717
      Main
      Street, Suite 2800

    Dallas,
      Texas 75201

    Attn:
      I.
      Bobby Majumder, Partner

    Facsimile:
      (214) 939-5849

     

    If
      to
      Buyer:  
West
      Coast Opportunity Fund, LLC

    2151
      Alessandro Drive, Suite 100

    Ventura,
      CA 93001 

    Attn:
      Atticus Lowe, CFA

    Facsimile:
      (805) 648-6488

    

    With
      a
      copy (which shall not constitute notice) sent to:

     

    
      	
              McDermott
                Will & Emery LLP

            
	
              340
                Madison Avenue

            
	
              New
                York, New York 10173

              Attn:
                Stephen E. Older, Esq. 

              Meir
                A. Lewittes, Esq.

              Facsimile:
                (212)
                547-5444

            

    

     

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

     

    (g)
      Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns. Neither party may assign this Agreement
      without the prior written consent of the other party, provided,
      however,
      that
      Buyer may assign some or all of its rights hereunder in connection with transfer
      of any of its Securities pursuant to the terms contemplated herein without
      the
      consent of the Company.

     

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

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (i)
      Survival.
      Unless
      this Agreement is terminated under Section
      8,
      the
      representations and warranties of the Company and Buyer contained in
Sections
      2 and 3
      and the
      agreements and covenants set forth in Sections 4,
      5 and 9
      shall
      survive the Closing.

     

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

     

    (k)
      Indemnification.
      Buyer
      agrees to indemnify, defend and hold harmless the Company and its officers,
      directors, subsidiaries and affiliates from and against all damages, losses,
      costs and expenses (including reasonable attorneys' fees) which Company may
      incur by reason of Buyer’s failure to fulfill any of the terms or conditions of
      this Agreement, or by reason of any breach of the representations and warranties
      made by Buyer herein. The Company hereby agrees to indemnify, defend and hold
      harmless Buyer and its officers, directors, subsidiaries and affiliates from
      and
      against all damages, losses, costs, and expenses (including reasonable
      attorneys' fees) which Buyer may incur by reason of the Company's failure to
      fulfill any of the terms or conditions of this Agreement, or by reason of any
      breach of the representations and warranties made by the Company
      herein.

     

    (l)
      No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    (m)
      Remedies.
      Buyer
      and each holder of the Securities shall have all rights and remedies set forth
      in the Transaction Documents and all rights and remedies which such holders
      have
      been granted at any time under any other agreement or contract and all of the
      rights which such holders have under any law. Any Person having any rights
      under
      any provision of this Agreement shall be entitled to enforce such rights
      specifically (without posting a bond or other security), to recover damages
      by
      reason of any breach of any provision of this Agreement and to exercise all
      other rights granted by law. 

     

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

     

    [Signature
      Pages Follow]

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	 	 
	 	
              COMPANY:

            
	 	 
	 	
              TRIBEWORKS,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	 
	 	
              
Name:
              Peter B. Jacobson
	 	Title:
              Chief Executive Officer

    

     

    
      [Signature
        Page to Securities Purchase Agreement]

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        	 	 	 
	 	
                
                  SUBSIDIARIES:

                

              
	 	 
	 	
                ATLAS
                  TECHNOLOGY GROUP HOLDINGS LIMITED

              
	 
 	 
 	 
 
	
              	By:  	 
	 	
                
Name:
                B.S.P. Marra
	 	
                Title:

                
                  

                

              

      

      
        
          
            	 	 	 
	 	
                    ATLAS
                      TECHNOLOGY GROUP (NZ) LIMITED

                  
	 
 	 
 	 
 
	
                  	By:  	 
	 	
                    
Name:
                    B.S.P. Marra
	 	
                    Title:

                    
                      

                    

                  

          

        

      

    

    
      
        
          
            	 	 	 
	 	
                    TAKECAREOFIT
                      LIMITED

                  
	 
 	 
 	 
 
	
                  	By:  	 
	 	
                    
Name:
                    B.S.P. Marra
	 	
                    Title:

                    
                      

                    

                  

          

        

      

      
        
          
            
              	 	 	 
	 	
                      ATLAS
                        TECHNOLOGY GROUP (US), INC.

                    
	 
 	 
 	 
 
	
                    	By:  	 
	 	
                      
Name:
                      Peter B. Jacobson
	 	Title:
                      President

            

          

        

        
          
            
               

              
                	 	 	 
	 	
                        ATLAS
                          TECHNOLOGY GROUP CONSULTING INC.

                      
	 
 	 
 	 
 
	
                      	By:  	 
	 	
                        
Name:
                        Michael T. Murphy
	 	Title:
                        President

              

            

          

        

      

    

    
      
        
          
             

            
              	 	 	 
	 	
                      BLIVE
                        NETWORKS INC.

                    
	 
 	 
 	 
 
	
                    	By:  	 
	 	
                      

                      Name:

                      
                        

                      

                    
	 	
                      Title:

                      
                        

                      

                    

            

          

        

      

    

     

    
      [Signature
        Page to Securities Purchase Agreement]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      
        
          
            
               

              
                	 	 	 
	 	
                        
                          BUYER:

                        

                      
	 	 
	 	
                        WEST
                          COAST OPPORTUNITY FUND, LLC

                      
	 
 	 
 	 
 
	
                      	By:  	 
	 	
                        

                        Name:
                          Atticus Lowe

                      
	 	Title:
                        Chief Investment
                        Officer

              

            

          

        

      

      

        [Signature
          Page to Securities Purchase Agreement]

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    EXHIBIT
      A

    

    FORM
      OF PROMISSORY NOTES

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    

    FORM
      OF WARRANTS

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      D

    

    ESCROW
      AGREEMENT

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      E

    

    SECURITY
      AGREEMENT

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      F

    

    FORM
      OF GUARANTY

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      G

    

    IRREVOCABLE
      TRANSFER AGENT INSTRUCTIONS

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      H

    

    BUYER’S
      CLOSING CERTIFICATE

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      I

    

    U.S.
      LEGAL OPINION

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      J

    

    MALTA
      LEGAL OPINION

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      K

    

    NEW
      ZEALAND LEGAL OPINION

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      L

    

    CANADIAN
      LEGAL OPINION

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      M

    

    SECRETARY’S
      CERTIFICATE

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      N

    

    COMPANY’S
      CLOSING CERTIFICATE

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      O

    

    FORM
      OF LOCK-UP AGREEMENT

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      P

    

    BUYER’S
      SECOND TRANCHE CLOSING CERTIFICATE

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      Q

    

    COMPANY’S
      SECOND TRANCHE CLOSING CERTIFICATE

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]