Document:

Exhibit
4.3

 

	
  

  	
  COMMON STOCK PAR VALUE $.0001 COMMON STOCK THIS CERTIFICATE IS
  TRANSFERABLE IN CANTON, MA AND JERSEY CITY, NJ SPECIMEN Shares **1*********************
  ***1******************** ****1******************* *****1****************** ******1*****************
  Adobe ADOBE SYSTEMS INCORPORATED INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE Certificate
  Number CI00034298 THIS CERTIFIES THAT COMPUTERSHARE SHAREHOLDER SERVICES INC
  SPECIMEN CERTIFICATE CUSIP 00724F 10 1 SEE REVERSE
  FOR CERTAIN DEFINITIONS is the owner of **ONE** FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, $.0001 PAR VALUE,
  OF Adobe Systems Incorporated transferable only on the share register of said
  Corporation, in person or by duly authorized Attorney, upon surrender of this
  Certificate properly endorsed or assigned. The shares represented hereby are
  issued and shall be held subject to all the provisions of the Certificate of
  Incorporation and the By-Laws of said Corporation and any amendments thereof,
  to all of which holder of this Certificate, by acceptance hereof, assents.
  This Certificate is not valid until countersigned by the Transfer Agent and registered
  by the Registrar. Witness the
  facsimile seal of the Corporation and the facsimile signatures of its duly
  authorized officers. President and
  Chief Executive Officer Senior Vice President & General Counsel ADOBE
  SYSTEMS INCORPORATED SEAL MAY 30, 1997 DELAWARE DATED 07-JAN-2010 COUNTERSIGNED
  AND REGISTERED: COMPUTERSHARE TRUST COMPANY, N.A.
  TRANSFER AGENT AND REGISTRAR, By AUTHORIZED SIGNATURE SECURITY INSTRUCTIONS
  ON REVERSE 308229 Printed by DATA BUSINESS FORMS

  

 

	
  

  	
  ADOBE SYSTEMS INCORPORATED This certificate also evidences and
  entitles the holder hereof to certain rights as set forth in a Rights
  Agreement between Adobe Systems Incorporated and Computershare Trust Company,
  N.A., as Rights Agent, dated as of July 11, 1990
  (the "Rights Agreement"), as amended, the terms of which are
  incorporated herein by reference and a copy of which is on file at the
  principal executive offices of Adobe Systems Incorporated. Under certain
  circumstances as set forth in the Rights Agreement, such rights will be
  evidenced by separate certificates and will no longer be evidenced by this
  certificate. Adobe Systems Incorporated will mail to the holder of this
  certificate a copy of the Rights Agreement without charge within five days
  after receipt by it of a written request therefor.
  Under certain circumstances as provided in the Rights Agreement, rights
  issued to or beneficially owned by acquiring persons or their associates or
  affiliates (as defined in the Rights Agreement) or any subsequent holder of
  such rights may be limited as provided in Section 11(a)(ii) and Section 24 of
  the Rights Agreement. A STATEMENT OF THE RIGHTS, PREFERENCES, PRIVILEGES AND
  RESTRICTIONS GRANTED TO OR IMPOSED UPON THE RESPECTIVE CLASSES OR SERIES OF
  SHARES OF STOCK OF THE CORPORATION AND UPON THE HOLDERS THEREOF, AS ESTABLISHED
  BY THE CORPORATION'S CERTIFICATE OF INCORPORATION, AS AMENDED, OR BY ANY
  CERTIFICATE OF DESIGNATION, AND THE NUMBER CF SHARES CONSTITUTING EACH CLASS
  OR SERIES AND THE DESIGNATIONS THEREOF, MAY BE OBTAINED BY ANY STOCKHOLDER,
  UPON REQUEST AND WITHOUT CHARGE, AT THE PRINCIPAL OFFICE OF THE CORPORATION. The
  following abbreviations, when used in the inscription on the face of this
  certificate, shall be construed as though they were written out in full
  according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT- Custodian (Cust)
  (Minor) TEN ENT - as tenants by the entireties under
  Uniform Gifts to Minors Act (State) JT TEN - as joint tenants with right of
  survivorship and not as tenants in common (Cust) (Minor)
  UNIF  TRF MIN ACT Custodian
  (until age ) under Uniform Transfers to Minors Act (State) Additional
  abbreviations may also be used though not in the above list. PLEASE INSERT
  SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE For value received, hereby
  sell, assign and transfer unto (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
  INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) Shares of the common stock
  represented by the within certificate, and do hereby irrevocably constitute
  and appoint Attorney to transfer the said stock on the books of the within
  named Corporation with full power of substitution in the premises. Dated: 20 Signature:
  Signature: Notice: The signature to this assignment must correspond with the
  name as written upon the face of the certificate, in every particular,
  without alteration or enlargement, or any change whatever. Signature(s)
  Guaranteed: Medallion Guarantee Stamp THE SIGNATURE(S) SHOULD BE GUARANTEED
  BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan
  Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE
  GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE
  17Ad-15. SECURITY INSTRUCTIONS THIS IS WATERMARKED PAPER, DO NOT ACCEPT
  WITHOUT NOTING WATERMARK. HOLD TO LIGHT TO VERIFY WATERMARK.cagm_8-ex10x2.htm

    Exhibit 10.2

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of January 11, 2010, by and among China Green Material Technologies, Inc., a
Nevada corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively, the “Purchasers”).

     

    WHEREAS, subject to the terms
and conditions set forth in this Agreement and pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the “Securities Act”), and
Regulation D promulgated thereunder (“Regulation D”), the
Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, securities of
the Company as more fully described in this Agreement; and

     

    WHEREAS, Gar Wood Securities
LLC is acting as the placement agent for the Company (the “Placement
Agent”).

     

    NOW, THEREFORE, in
consideration of the mutual covenants contained in this Agreement, and for other
good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and each Purchaser agree as follows:

     

    ARTICLE
1

    DEFINITIONS

     

        1.1    Definitions. In
addition to the terms defined elsewhere in this Agreement, the following terms
have the meanings set forth in this Section 1.1:

     

           “Accredited Investor”
means an “accredited investor” as defined in Rule 501(a) of Regulation
D.

     

           “Action” shall have
the meaning ascribed to such term in Section 3.1(j).

     

           “Affiliate” means a
Person that, directly or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person
specified.

     

           “Aggregate Purchase
Price” shall have the meaning ascribed to such term in Section
2.1.

     

           “Agreement” shall have
the meaning ascribed to such term in the preamble.

     

           “ARC China” means ARC
China, Inc., a Shanghai corporation, a consultant to the
Purchasers.

     

           “Board of Directors”
means the board of directors of the Company.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

           “Closing” shall have
the meaning ascribed to such term in Section 2.1.

     

           “Closing Date” means
the date on which the Closing occurs.

     

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

     

           “Common Stock” shall
have the meaning ascribed to such term in Section 2.1.

     

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

     

           “Company” shall have
the meaning set forth in the preamble.

     

           “Company Counsel”
means Troutman Sanders LLP, with an office located in the Chrysler Building at
405 Lexington Avenue, New York, New York 10174-0700.

     

           “Control” (including
the terms “Controlled
by” and “under
common Control with”) means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.

     

           “CPP” shall have the
meaning ascribed to such term in Section 3.1(ii).

     

           “CPP Agreement” shall
have the meaning ascribed to such term in Section 3.1(ii).

     

           “Disclosure Schedules”
shall mean the schedules attached hereto, including the schedules as described
in Sections 3.1 and 3.2.

     

           “Effective Date” means
the date that the Registration Statement filed by the Company pursuant to
Section 4.18 is first declared effective by the Commission.

     

           “ERISA” shall have the
meaning ascribed to such term in Section 3.1(hh).

     

           “Escrow Account” means
the escrow account maintained by the Escrow Agent for the deposit of the
Purchase Price and for the retention of the IR Cash and IR
Warrants.

     

     

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             “Escrow Agent” means
Corporate Stock Transfer, Inc.

    

     

           “Escrow Agreement”
means the escrow agreement in the form attached hereto as Exhibit A, by and
among the Company, the Escrow Agent, the Placement Agent, and United Western
Bank, as the escrow bank.

     

           “Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(q).

     

           “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

     

           “Filing Date” shall
have the meaning ascribed to such term in Section 4.18(a)(i).

     

           “GAAP” means the
United States generally accepted accounting principles applied on a consistent
basis during the periods involved.

     

           “Indebtedness” shall
have the meaning ascribed to such term in Section 3.1(z).

     

           “Intellectual Property
Rights” shall have the meaning ascribed to such term in Section
3.1(o).

     

           “IR Cash” shall have
the meaning ascribed to such term in Section 2.2.

     

           “IR Warrants” shall
have the meaning ascribed to such term in Section 2.2.

     

           “Knowledge of the
Company” means the actual knowledge, after reasonable investigation of
the executive officers of the Company.

     

           “Liens” means any
mortgage, lien, pledge, charge, restriction, security interest, encumbrance,
right of first refusal, preemptive right, option, lease, sublease or other
restriction or encumbrance except for statutory liens for the payment of current
taxes that are not yet delinquent and encumbrances and liens that arise in the
ordinary course of business and do not materially impair the Company’s
ownership or use of its property or assets.

     

           “Liquidated Damages”
shall have the meaning ascribed to such term in Section 4.18(a)(v).

     

           “Material Adverse
Effect” means any effect which, individually or in the aggregate with all
other effects, would reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), operations, assets or prospects of the
Company and the Subsidiaries, taken as a whole, or would affect the legality,
validity or enforceability of any Transaction Document, or would impair the
Company’s ability to perform, in any material respect and on a timely basis, the
Company’s obligations under any Transaction Document, other than those resulting
from (a) general economic conditions affecting the industry in which the
business of the Company is carried is carried on or any outbreak of hostility,
terrorist activities or war, (b) the announcement, pendency or consummation
of the transactions contemplated by or required by this Agreement, or
(c) any changes in general economic, political or regulatory conditions in
the industry in which this Company operates.

     

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    “Material Permits”
shall have the meaning ascribed to such term in Section 3.1(m).

     

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

     

    “Placement Agent”
shall have the meaning ascribed to such term in the Recitals.

     

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

     

    “Purchase Price”
means, as to each Purchaser, the aggregate amount to be paid for the Common
Stock purchased hereunder as specified below such Purchaser’s name on the
signature page of this Agreement and next to the heading “Purchase Price,” in
United States dollars and in immediately available funds.

     

    “Purchaser” shall have
the meaning set forth in the preamble.

     

    “Purchaser Party”
shall have the meaning ascribed to such term in Section 4.9.

     

    “Registrable
Securities” shall have the meaning ascribed to such term in Section
4.18(a)(i).

     

    “Registration
Statement” means a registration statement meeting the requirements set
forth in Section 4.18 and covering the resale of the Securities by each
Purchaser as provided for in Section 4.18.

     

    “Regulation D” shall
have the meaning ascribed to such term in the Recitals.

     

    “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

     

    “Required Effective
Date” shall have the meaning ascribed to such term in Section
4.18(a)(i).

     

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    “Required Filing Date”
shall have the meaning ascribed to such term in Section 4.18(a)(i).

     

    “Required Holders”
means the Purchasers holding a majority of the Securities then
outstanding.

     

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

     

    “Rule 415 Amount”
shall have the meaning ascribed to such term in Section 4.18(a)(i).

     

    “SEC Reports” shall
have the meaning ascribed to such term in Section 3.1(h).

     

    “Securities” shall
have the meaning ascribed to such term in Section 2.1.

     

    “Securities Act” shall
have the meaning ascribed to such term in the Recitals.

     

    “Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where
applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.

     

    “Trading Day” means a
day on which the principal Trading Market is open for trading provided, that in
the event that the Common Stock is not listed or quoted on the a Trading Market,
then Trading Day shall mean Business Day.

     

    “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE Amex Equities, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange or the OTC Bulletin Board.

     

    “Transaction
Documents” means this Agreement, the Escrow Agreement, the agreement with
the Placement Agent, all schedules and exhibits thereto and hereto and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.

     

    “Transfer Agent” means
Securities Transfer Corporation, the current transfer agent of the Company, with
a mailing address of 2591 Dallas Parkway, Suite 102, Frisco, Texas 75034 and a
facsimile number of (469) 633-0088, and any successor transfer agent of the
Company.

     

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    ARTICLE
2

    PURCHASE
AND SALE

     

    2.1  Closing. Upon the
terms and subject to the conditions set forth herein, the Company agrees to
sell, and the Purchasers agree, severally and not jointly, to purchase the
number of shares of common stock, par value 0.001 per share, of the Company (the
“Common  Stock”)
set forth opposite each Purchaser’s name on the Purchaser signature page
attached hereto at a price of $0.90 per share, for up to an aggregate of
5,300,000 shares of Common Stock with an aggregate Purchase Price of up to
$4,770,000 (the “Aggregate Purchase
Price”). The shares of Common Stock being offered and sold pursuant to
this Agreement are sometimes referred to as the “Securities”. Subject
to the satisfaction or waiver of the conditions and deliverables set forth in
Sections 2.3 and 2.4, the closing shall take place within five business days
upon the signing of this Agreement, or this Agreement will automatically expire
unless agreed otherwise by both the Company and ARC China, as the consultant to
the Purchasers (the “Closing”). At or
before the Closing, each Purchaser shall deliver to the Escrow Agent via wire
transfer or a certified check of immediately available funds equal to their
Purchase Price and the Company, upon receipt of the closing deliverables set
forth on Section 2.3(b), shall deliver to each Purchaser the items set forth in
Section 2.3(a) issuable at the Closing.  The Closing shall occur
remotely via the exchange of documents and signature pages at 9:00 a.m. eastern
standard time on the Closing Date or at such time and location occur as is
mutually agreeable to the Company, ARC China, and the Placement
Agent.  At the Closing, both the Company and the Placement Agent shall
deliver to the Escrow Agent a duly executed escrow release certificate in the
form attached as Schedule I to the
Escrow Agreement (the “Escrow Release
Notice”) that the Closing has occurred.  The Escrow Agent will
disburse to the Company that amount of funds equal to the Aggregate Purchase
Price (net of the IR Cash (as defined below) and Closing costs, fees and
expenses) as set forth in the Escrow Release Notice.

     

    2.2  Investor Relations
Escrow. The Company acknowledges and agrees that (i) $100,000 of the
Aggregate Purchase Price (the “IR Cash”) will remain
in the Escrow Account and will not be disbursed to the Company at the Closing,
and (ii) the Company will deposit with the Escrow Agent one-year warrants to
purchase 700,000 shares of Common Stock at a price of $0.90 per share with
cashless exercise rights as contemplated by a Share Purchase Binding Letter of
Intent dated as of July 27, 2009 and exercisable for a period of one year from
the date that such warrants are issued to Company-approved investor relations
firms (the “IR
Warrants”), both for dissemination on or before September 30, 2010 (the
"IR Period") to
Company-approved investor relations firms, as determined from time-to-time by
ARC China in its sole discretion; provided, however, that any IR Cash not used
to compensate investor relations firms on or before the expiration of the IR
Period shall be released to the Company and any IR Warrants not issued on or
before the expiration of the IR Period shall be cancelled.

     

    2.3
 
Deliveries.

     

    (a)  At the
Closing, the Company shall deliver or cause the following to be
delivered:

     

    (i)  to each
Purchaser, this Agreement duly executed by the Company;

     

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    (ii)  to each
Purchaser, a copy of legal opinion of Company Counsel addressed to the
Purchasers, in substantially the form of Exhibit B attached
hereto;

     

    (iii)  to each
Purchaser, a certificate evidencing a number of shares of Common Stock purchased
by such Purchaser set forth on such Purchaser’s signature page attached
hereto;

     

    (iv)  to each
Purchaser, an officer’s certificate from a duly authorized executive officer,
dated as of the Closing Date, certifying and setting forth (A) the names,
signatures and positions of the Persons authorized to execute this Agreement and
any other Transaction Documents to which the Company is a party, (B) a copy of
the resolutions of the Company authorizing the execution, delivery and
performance of this Agreement, and (C) certifying that the representations and
warranties of the Company are true and correct in all material respects as of
the Closing Date;

     

    (v)  to the
Escrow Agent, the IR Warrants; and

     

    (vi)  such
other duly executed documents and certificates as may be required to be
delivered by the Company pursuant to the terms of this Agreement or as may be
reasonably requested by the Purchasers prior to the Closing.

     

    (b)  At the
Closing, each Purchaser shall deliver or cause the following to be
delivered:

     

    (i)  to the
Company, this Agreement duly executed by such Purchaser;

     

    (ii)  to the
Escrow Agent, such Purchaser’s Purchase Price by wire transfer or a certified
check of immediately available funds pursuant to the instructions set forth on
Exhibit C
attached hereto; and

     

    (iii)  such
other duly executed documents and certificates as may be required to be
delivered by a Purchaser pursuant to the terms of this Agreement or as may be
reasonably requested by the Company prior to the Closing.

     

    2.4  Closing
Conditions.

     

    (a)  The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

     

    (i)  the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties (except for representations and warranties that
speak as of a specific date, which shall be accurate in all material respects as
of such specified date) of the Purchasers contained herein;

     

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

     

     

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    (iii)  all
obligations, covenants and agreements of each Purchaser required to be performed
at or prior to the Closing Date shall have been performed in all material
respects; and

     

    (iv)  the
delivery by each Purchaser of the items set forth in Section 2.3(b) of this
Agreement.

     

    (b)  The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:

     

    (i)       
the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties (except for representations and warranties that
speak as of a specific date, which shall be accurate in all material respects as
of such specified date) of the Company contained herein;

     

    (ii)  all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been performed in all material
respects;

     

    (iii)  the
delivery by the Company of the items set forth in Section 2.3(a) of this
Agreement;

     

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

     

    (v)  there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof; and

     

    (vi)  from the
date hereof to the Closing Date, trading in the Common Stock shall not have been
suspended by the Commission or the Company’s principal Trading Market (except
for any suspension of trading of limited duration agreed to by the Company,
which suspension shall be terminated prior to the Closing).

     

    ARTICLE
3

    REPRESENTATIONS
AND WARRANTIES

     

    3.1  Representations and
Warranties of the Company. Except as set forth in the Disclosure
Schedules, the Company hereby makes the following representations and warranties
as of the date hereof and as of the Closing Date to each Purchaser as
follows:

     

    (a)  Subsidiaries. All of
the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

     

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    (b)  Organization and
Qualification. The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and, at the time of
Closing will be, in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in a Material Adverse Effect, and no
Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification. In case at the time of the Closing, the Company is not in good
standing under the laws of the jurisdiction of its incorporation or organization
as a result of its failure to file its annual report with the State of Nevada,
the Company shall use its best efforts to be in good standing as soon as
possible.

     

    (c)  Authorization;
Enforcement. The Company has the requisite corporate power and authority
to enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, its Board of Directors
or its stockholders in connection therewith other than in connection with the
Required Approvals. Each Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except: (i) as limited by general
equitable principles and 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) insofar as indemnification and contribution provisions may be
limited by applicable law.

     

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

     

     

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    (e)  Filings, Consents and
Approvals. The Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.5, (ii) the filing with the
Commission of the Registration Statement, (iii) the notice and/or application(s)
to each applicable Trading Market for the issuance and sale and listing of the
Securities for trading thereon in the time and manner required thereby, and (iv)
the filing of Form D with the Commission and such filings as are required to be
made under applicable state securities laws (collectively, the “Required Approvals”);
in each case, at or prior to the Closing.

     

    (f)  Issuance of the
Securities. The Securities are duly authorized and, when issued and paid
for in accordance with the applicable Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents.

     

    (g)  Capitalization. The
capitalization of the Company is as set forth on Schedule 3.1(g),
which Schedule
3.1(g) shall also include the number of shares of Common Stock owned
beneficially, and of record, by Affiliates of the Company as of the date hereof.
The Company has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to the exercise of
employee stock options under the Company’s stock option plans, the issuance of
shares of Common Stock to employees pursuant to the Company’s employee stock
purchase plans and pursuant to the conversion and/or exercise of Common Stock
Equivalents outstanding as of the date of the most recently filed periodic
report under the Exchange Act. No Person has any right of first refusal,
preemptive right, right of participation, extraordinary voting right, or any
similar right to participate in the transactions contemplated by the Transaction
Documents. Except as a result of the purchase and sale of the Securities and the
issuance of the IR Warrants, and except for those disclosed in the Disclosure
Schedules to this Agreement and reported in the Company’s existing public
filings, there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares of Common
Stock or Common Stock Equivalents, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents. Except as a
result of the purchase and sale of the Securities and the issuance of the IR
Warrants, the issuance and sale of the Securities will not obligate the Company
to issue shares of Common Stock or other securities to any Person (other than
the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under any
of such securities. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the Knowledge of
the Company, between or among any of the Company’s stockholders.

     

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    (h)  SEC Reports; Financial
Statements.  The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for two years preceding the date hereof (or such shorter period
as the Company was required by law or regulation to file such material) (the
foregoing materials, including the exhibits thereto and documents incorporated
by reference therein, being collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of
their respective filing dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  Except as
set forth in the Company’s annual reports filed with the Commission on Form
10-K, there have been no violations of the reporting requirements of Section
16(a) of the Exchange Act by the Company’s Control persons and insiders. As of
their respective filing dates, the financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with GAAP, except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial year-end audit adjustments.

     

    (i)  Material Changes.
Since the date of the latest audited financial statements included within the
SEC Reports, except as specifically disclosed in a subsequent SEC Report filed
prior to the date hereof or on Schedule 3.1(i)
attached hereto: (i) there has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables, accrued expenses and other liabilities incurred
in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s financial statements
pursuant to GAAP or disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock option plans. The Company does not have pending before the
Commission any request for confidential treatment of information. Except for the
issuance of the Securities contemplated by this Agreement or as set forth on
Schedule
3.1(i), no event, liability or development has occurred or exists with
respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly disclosed at
least one Trading Day prior to the date that this representation is
made.

     

     

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    (j)  Litigation. There is
no Proceeding pending or, to the Knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”)
which could have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof (in such his or her capacity as such), is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty.  There has not
been, and to the Knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or
former director or officer (in such his or her capacity as such) of the Company.
The Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.

     

    (k)  Labor Relations. No
labor dispute exists or, to the Knowledge of the Company, is imminent with
respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the Company nor
any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their
employees are good.  No executive officer, to the knowledge of the
Company, is, or is now expected to be, in violation of any term of any
employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing
matters.  The Company and its Subsidiaries are in compliance with all
U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not
reasonably be expected to have a Material Adverse Effect.

     

     

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    (l)  Compliance. Neither
the Company nor any Subsidiary: (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business
and all such laws that affect the environment, except in each case as could not
have or reasonably be expected to result in a Material Adverse
Effect.

     

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

     

    (n)  Title to Assets. The
Company and the Subsidiaries have good and marketable title in fee simple to all
real property owned by them that is material to their respective business and
good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, in each case free
and clear of all Liens, except for Liens that do not materially affect the value
of such property and do not materially interfere with the use made and proposed
to be made of such property by the Company and the Subsidiaries and Liens for
the payment of federal, state or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance, except as could not, individually or in the aggregate, have
or reasonable be expected to result in a Material Adverse Effect.

     

    (o)  Patents and
Trademarks.

     

    (i)  The
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights as described in the SEC Reports as necessary or
material for use in connection with their respective businesses and which the
failure to so have could have a Material Adverse Effect (collectively, the
“Intellectual Property
Rights”). Neither the Company nor any Subsidiary has received a written
notice that any of the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person. To the Knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

     

     

    13

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii)  All
licensing fees incurred by the Company and its Subsidiaries for the use of
Intellectual Property Rights owned by third parties, including the fee payable
to Mr. Ji Guoliang for the use of his Intellectual Property Rights, have been
paid in full or will be paid when such fees become due and owing.

     

    (iii)  The
application fee for patent application #2008 101709359 has been duly paid by the
Company, and such patent application is presently under review by the State
Intellectual Property Office of PRC.

     

    (p)  Transactions with Affiliates
and Employees. Except as set forth in the SEC Reports, none of the
officers or directors of the Company and, to the Knowledge of the Company, none
of the employees of the Company is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the Knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $120,000
other than for: (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii)
other employee benefits, including stock option agreements under any stock
option plan of the Company.

     

    (q)  Internal Accounting
Controls. The Company is in compliance with all provisions of the
Sarbanes Oxley Act of 2002 which are applicable to it as of the Closing Date.
The Company and the Subsidiaries maintain 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 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
differences.  The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
material information required to be disclosed by the Company in the reports it
files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the
Company’s disclosure controls and procedures as of the end of the period covered
by the Company’s most recently ended fiscal quarter (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report on Form 10-Q
under the Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no material or significant changes in the Company’s internal control over
financial reporting (as such term is defined in the Exchange Act) that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.

     

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    (r)  Certain Fees. Except
as set forth on Schedule 3.1(r), no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims (other than
such fees or commission owed by a Purchaser pursuant to an agreement by such
Purchaser for fees and commissions owed by such Purchaser) made by or on behalf
of other Persons for fees of a type contemplated in this Section 3.1(r) that may
be due in connection with the transactions contemplated by the Transaction
Documents.

     

    (s)  Private Placement.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2, no registration under the Securities Act is required for
the offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market.

     

    (t)  Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended
(the “Investment
Company Act”). The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.

     

    (u)
 
Registration
Rights.  As of the date of this Agreement and the date of the
Closing, other than the registration rights set forth herein of the Purchasers
and the Persons set forth on Schedule 3.1(u), no Person has any right to cause
the Company to effect the registration under the Securities Act of any
securities of the Company.

     

    (v)  Listing and Maintenance
Requirements. The Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act, and the Company has taken no action designed to, or
which to the Knowledge of the Company is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the twelve months
preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such Trading
Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements.

     

     

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    (w)  Takeover Protection.
The Company has not adopted any anti-takeover provision for 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 its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchasers’ ownership of the
Securities.

     

    (x)  Disclosure. Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or
might constitute material, nonpublic information. The Company understands and
confirms that the Purchasers will rely on the foregoing representation in
effecting transactions in securities of the Company. All disclosures furnished
by or on behalf of the Company to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.

     

    (y)  No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
(i) the Securities Act which would require the registration of any such
securities under the Securities Act, or (ii) any applicable shareholder approval
provisions of any Trading Market on which any of the securities of the Company
are listed or designated. To the Knowledge of the Company, all prior sales of
the Company’s securities have complied with all state “blue sky” laws and there
are no rescission rights against the Company.

     

    (z)  Solvency. Based on
the consolidated financial condition of the Company as of the Closing Date,
before giving effect to the receipt by the Company of the proceeds from the sale
of the Securities hereunder: (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature, (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt).  The Company has no knowledge of any facts
or circumstances which lead it to believe that it will file for reorganization
or liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date.  Schedule 3.1(z) sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement, “Indebtedness” means
(x) any liabilities for borrowed money or amounts owed in excess of $100,000
(other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $100,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is
in default with respect to any Indebtedness.

     

     

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    (aa)  Tax Status. Except
for matters that would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect, the Company and each
Subsidiary has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon,
and to the Knowledge of the Company, the Company has no tax deficiency which has
been asserted or threatened against the Company or any Subsidiary.

     

    (bb)  No General
Solicitation. Neither the Company nor any person acting on behalf of the
Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the Securities for
sale only to the Purchasers and certain other Accredited Investors.

     

    (cc)  Foreign Corrupt
Practices. Neither the Company, nor to the Knowledge of the Company, any
agent or other person acting on behalf of the Company, 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 the
Company (or made by any person acting on its behalf of which the Company is
aware) which is in violation of law or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended.

     

    (dd)  No Disagreements with
Accountants and Lawyers. There are no disagreements of any kind,
including, but not limited to, any disagreements regarding fees owed for
services rendered, presently existing, or reasonably anticipated by the Company
to arise, between the Company and the accountants and lawyers formerly or
presently employed by the Company which could affect the Company’s ability to
perform any of its obligations under any of the Transaction Documents and the
Company is current with respect to any fees owed to its accountants and
lawyers.

     

    (ee)  Acknowledgment Regarding
Purchasers’ Purchase of Securities. The Company acknowledges and agrees
that each of the Purchasers is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Purchaser is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Securities. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its
representatives.

     

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    (ff)  Regulation M
Compliance. The Company has not, and to the Knowledge of the Company 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 of the Company, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii) and
(iii), compensation paid to the Company’s placement agent in connection with the
placement of the Securities.

     

    (gg)  Obligations of
Management. Each officer and key employee of the Company and its
Subsidiaries is currently devoting substantially all of his or her business time
to the conduct of business of the Company and its Subsidiaries. Neither the
Company nor any of its Subsidiaries is aware that any officer or key employee of
the Company or any Subsidiary is planning to work less than full time at the
Company or any Subsidiary, as applicable, in the future. No officer or key
employee is currently working or, to the Knowledge of the Company, plans to work
for a competitive enterprise, whether or not such officer of key employee is or
will be compensated by such enterprise.

     

    (hh)  Employee Benefits.
Except as set forth on Schedule 3.1(hh),
neither the Company nor any Subsidiary has (nor for the two years preceding the
date hereof has had) any plans which are subject to ERISA. “ERISA” means the
Employee Retirement Income Security Act of 1974 or any successor law and the
regulations and rules issued pursuant to that act or any successor
law.

     

    (ii)        
Exclusivity. Except
as set forth on Schedule 3.1(ii) and
the CPP Agreement, the Company is not a party to any exclusivity agreement or
arrangement, written, oral or otherwise memorialized, and the Company is not in
violation of any such exclusivity agreement or arrangement, including the CPP
Agreement and those set forth on Schedule 3.1(ii), if
any.  The Company acknowledges that it is a party to the Sales and
Marketing Agreement dated as of July 29, 2009 by and between the Company and
China Pacific Partners LLC, doing business as Huayang Business Consulting Co.,
Ltd. (“CPP”),
pursuant to which the Company granted CPP exclusive sales and marketing rights
in North America and non-exclusive sales rights in other areas of the world (the
“CPP
Agreement”). The Company hereby represents and warrants that the terms
and provisions set forth in the CPP Agreement have not and do not violate the
terms of any other sales and marketing, exclusivity, or other agreement, written
or otherwise, to which the Company has been or is a party, and any such sales
and marketing, exclusivity, or other agreement, written or otherwise, have not
and do not violate the terms of the CPP Agreement.

     

    (jj)           Shareholder Rights
Plan.  The Company has not adopted any plan or arrangement
under which the Company or any other Person can claim that any Purchaser is an
“acquiring person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or that any Purchaser could be deemed to trigger the
provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company
and the Purchaser.

     

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    3.2  Representations and
Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows:

     

    (a)  Organization;
Authority. Such Purchaser is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, if
applicable, with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents to which it is a party and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of the Transaction
Documents to which it is a party and performance by such Purchaser of the
transactions contemplated by the Transaction Documents to which it is a party
have been duly authorized by all necessary action on the part of such Purchaser.
Each Transaction Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the legal, valid and binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and 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) insofar as indemnification and contribution provisions may be
limited by applicable law.

     

    (b)  No Conflicts. The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which such Purchaser is a party and the consummation by
such Purchaser of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such Purchaser’s charter
documents, bylaws, operating agreement, partnership agreement or other
organizational documents, if applicable, or (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 or
obligation to which such Purchaser is a party or by which its properties or
assets are bound, or result in a violation of any law, rule, or regulation, or
any order, judgment or decree of any court or governmental agency applicable to
such Purchaser or its properties (except for such conflicts, defaults and
violations as would not, individually or in the aggregate, have a material
adverse effect on such Purchaser). Such Purchaser is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under this Agreement or any other Transaction Document to
which such Purchaser is a party or to purchase the Securities in accordance with
the terms hereof, provided, that for purposes of the representation made in this
sentence, such Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.

     

    (c)  Investment
Representation. Such Purchaser is purchasing the Securities for its own
account for investment and not for the benefit of any other person and not with
a view to distribute or sell in violation of the Securities Act or any state
securities laws or rules and regulations promulgated thereunder. Such Purchaser
has been advised and understands that the Securities have not been registered
under the Securities Act or under applicable state securities laws and that the
Securities are being offered and sold to a limited number of Accredited
Investors in transactions not requiring registration under the Securities Act or
applicable state securities laws; accordingly, the Securities are “restricted
securities” within the meaning of Rule 144 and, except as otherwise provided
herein, may not be offered, sold or otherwise transferred without prior
registration under the Securities Act and applicable state securities laws,
unless an exemption from such registration requirements is available, and it
agrees that if it decides to offer, sell or otherwise transfer any of the
Securities absent such registration, it will not offer, sell or otherwise
transfer any of the Securities, directly or indirectly except (i) pursuant to an
effective registration statement under the Securities Act or (ii) in a
transaction that is exempt from registration under the Securities Act and any
applicable state securities laws; and in the case of subparagraph (ii), it has
furnished to the Company an opinion of counsel of recognized standing reasonably
satisfactory to the Company to such effect.

     

     

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    (d)  Purchaser Status. At
the time such Purchaser was offered the Securities, it was, and as of the date
hereof it is, an Accredited Investor and has initialed the category of
accredited investor applicable to the Purchaser on the Purchaser signature page
attached hereto. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act, and is not affiliated with
any broker-dealer registered under Section 15 of the Exchange Act.

     

    (e)  Experience of Such
Purchaser. Such Purchaser, either alone or together with its
representatives (who satisfy all of the affiliation, financial experience,
acknowledgment and disclosure conditions set forth under Rule 501(h) of
Regulation D), has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Securities, and has so evaluated the merits and
risks of such investment. Such Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to afford a
complete loss of such investment. Each Purchaser acknowledges and agrees that it
has read and understands the Risk Factors set forth in the Company's
existing Form 10-K filed with the Commission on March 31, 2009.

     

    (f)  Suitability of
Investment.  Such Purchaser has carefully considered and has,
to the extent such Purchaser believed such discussion necessary, discussed with
its professional legal, tax and financial advisers the suitability of an
investment in the Company for such Purchaser’s particular tax and financial
situation and has determined that the Securities will be a suitable investment
for such Purchaser.

     

    (g)  Liquidity of Each
Purchaser.  Such Purchaser has no need for liquidity with
respect to such Purchaser’s investment in the Securities to satisfy any existing
or contemplated need, undertaking or indebtedness.  Such Purchaser is
able to bear the economic risk of such Purchaser’s investment in the Company and
purchase of the Securities for an indefinite period, including the risk of
losing all of its investment.

     

    (h)  General Solicitation.
Such Purchaser is not purchasing the Securities as a result of any “general
solicitation” or “general advertising” as those terms are used in Regulation D,
including but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or the
Internet or broadcast over television, radio or the Internet or any seminar or
meeting whose attendees have been invited by general solicitation or general
advertising.

     

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    (i)  Company Information.
The Company has made available to such Purchaser all documents and information
relating to an investment in the Company as each Purchaser has requested, and
such Purchaser has had the opportunity to ask questions of, and receive answers
from, the Company relating to its purchase of the Securities.

     

    (j)    
 No Government Review.
Such Purchaser 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 thereof.

     

    (k)  Reliance by the
Company. Such Purchaser has conducted its own due diligence in making a
decision to purchase the Securities.  In evaluating the suitability of
an investment in the Company, such Purchaser has not relied upon any
representations or other information (whether oral or written) from the Company
or any other person or entity acting as an agent for the Company in connection
with the Offering other than the representations of the Company provided in
Section 3.1 or disclosed in the Company's SEC Reports.  With respect
to tax and other economic considerations involved in this investment, such
Purchaser has not relied on the Company or any other person or entity acting as
an agent for the Company in connection with the Offering.

     

    (l)  Broker and
Finders.  Except as set forth on Schedule 3.2(l)
attached hereto, no Purchaser has engaged any broker or finder or incurred any
liability for any brokerage fees, commissions, finders’ fees or similar fees in
connection with the transactions contemplated by the Transaction
Documents.  No investment banking, financial advisory or similar fees
have been incurred or are or will be payable by any Purchaser in connection with
this Agreement or the transactions contemplated hereby.

     

    (m)  Correctness of
Representations and Information. Such Purchaser represents that the
representations and warranties of this Section 3.2 and the information provided
by such Purchaser on the signature page hereof are true and correct as of the
date hereof and, unless such Purchaser otherwise notifies the Company in writing
prior to the Closing Date, shall be true and correct as of the Closing
Date.

     

    ARTICLE
4

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1  Transfer
Restrictions.

     

    (a)  The
Securities may only be disposed of in compliance with state and federal
securities laws. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a Purchaser under this Agreement.  The Company may require the
transferor to provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act.  

     

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    (b)  The
Purchasers agree to the imprinting, so long as is required by this Section 4.1,
of a legend on any of the Securities in the following form:

     

    THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AND, IN THE CASE OF (B) ABOVE, AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CHINA GREEN MATERIAL TECHNOLOGIES, INC. THAT SUCH REGISTRATION
IS NOT REQUIRED HAS BEEN DELIVERED.  THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

     

    The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an Accredited Investor and who agrees to be bound by the
provisions of this Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith, however,
such legal opinion may be required in connection with a subsequent
transfer.  No notice shall be required of such pledge. At the
appropriate Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration pursuant Section 4.18
hereof, the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of selling stockholders
thereunder.

     

     

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    (c)  Certificates
evidencing Securities may not be required to contain such legend or any other
legend (i) while a Registration Statement covering the resale of such Securities
is effective under the Securities Act; provided, that, the Company’s
counsel has delivered a legal opinion relating to the removal of legends upon a
sale or transfer of such Securities, or (ii) following any sale of such
Securities pursuant to Rule 144, or (iii) if such legend is not required under
applicable requirements of the Securities Act.  The Company will cause
its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Transfer Agent on the Effective Date and to deliver any
required legal opinions with respect to the removal of legends upon the sale or
transfer of Securities.  Following
the Effective Date or at such earlier time as a legend is no longer required for
certain Securities, the Company will no later than five Trading Days following
the delivery by a Purchaser to the Company of a legended certificate
representing such Securities, use its reasonable best efforts to deliver or
cause to be delivered to such Purchaser a certificate representing such
Securities that is free from all restrictive and other legends.  The
Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this
Section 4. Certificates for shares of Common Stock subject to legend removal
hereunder shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with the Depository Trust
Company System as directed by such Purchaser.

     

    (d)  Each
Purchaser, severally and not jointly with the other Purchasers, agrees that such
Purchaser will only sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold
pursuant to a Registration Statement, they will be sold in compliance with the
plan of distribution set forth therein, and acknowledges that the removal of the
restrictive legend from certificates representing the Securities as set forth in
this Section 4.1 is predicated upon the Company’s reliance upon this
understanding.

     

    4.2  Acknowledgment of
Dilution. The Company acknowledges that the issuance of the Securities
may result in dilution of the outstanding shares of Common Stock, which dilution
may be substantial under certain market conditions. The Company further
acknowledges that its obligations under the Transaction Documents, including,
without limitation, the shares of Common Stock underlying the IR Warrants, are
unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Company may have against any Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the other
stockholders of the Company.

     

    4.3  Furnishing of
Information. Until such time that no Purchaser owns any Securities, the
Company covenants to maintain the registration of the Securities under Section
12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the Securities
under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request to satisfy the
provisions of Rule 144 applicable to the issuer of securities relating to
transactions for the sale of securities pursuant to Rule 144.

     

     

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    4.4  Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities to the
Purchasers in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market.

     

    4.5  Securities Laws
Disclosure; Publicity. The
Company shall, before the applicable Trading Market opens on the first Trading
Day immediately following the Closing Date, issue a Current Report on Form 8-K,
disclosing the material terms of this Agreement and the transactions
contemplated hereby and thereby and including the Transaction Documents as
exhibits thereto as required by the Commission.

     

    4.6  [Reserved.]

     

    4.7  Non-Public
Information. Except with respect to the material terms and conditions of
the transactions contemplated by the Transaction Documents, the Company
covenants and agrees that neither it, nor any other Person acting on its behalf,
will provide any Purchaser or its agents or counsel with any information that
the Company believes constitutes material nonpublic information, unless prior
thereto such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.

     

    4.8  Use of Proceeds. The
Company shall use the net proceeds from the sale of the Securities hereunder for
working capital purposes and shall not use such proceeds for: (a) the
satisfaction of any portion of the Company’s debt (other than payment of trade
payables in the ordinary course of the Company’s business and prior practices),
(b) the redemption of any Common Stock or Common Stock Equivalents or (c) the
settlement of any outstanding litigation.

     

    4.9  Indemnification of the
Purchasers. Subject to the provisions of this Section 4.9, the Company
will indemnify and hold each Purchaser and its directors, officers,
shareholders, members, partners, employees, agents, successors and permitted
assigns (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other title),
each Person who controls such Purchaser (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers,
shareholders, agents, members, partners or employees (and any other Persons with
a functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling person (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser’s representations,
warranties or covenants under the Transaction Documents to which it is a party
or any agreements or understandings such Purchaser may have with any such
stockholder or any violations by the Purchaser of state or federal securities
laws or any conduct by such Purchaser which constitutes gross negligence or
malfeasance). If any action shall be brought against any Purchaser Party in
respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
such separate counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party, in which case
the Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel.  the employment thereof has been
specifically authorized by the Company in writing.  The Company will
not be liable to any Purchaser Party under this Agreement (y) for any settlement
by a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents to which it is a party or from such Purchaser Party’s
fraud, gross negligence, willful misconduct or malfeasance.

     

     

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    4.10  Indemnification of the
Company. Subject to the provisions of this Section 4.10, the Purchasers
will indemnify and hold the Company and its directors, officers, shareholders,
employees, agents, successors and permitted assigns (and any other Persons with
a functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title), each Person who controls such Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, shareholders, agents, members,
partners or employees (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title) of such controlling person (each, a “Company Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Company Party may suffer or incur as a result of or
relating to any breach of any of the representations, warranties, covenants or
agreements made by the Purchasers in this Agreement or in the other Transaction
Documents. If any action shall be brought against any Company Party in respect
of which indemnity may be sought pursuant to this Agreement, such Company Party
shall promptly notify the Purchasers in writing, and the Purchasers shall have
the right to assume the defense thereof with counsel of its own choosing
reasonably acceptable to the Company Party. Any Company Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Company Party except to the extent that the employment thereof
has been specifically authorized by the Purchasers in writing.  The
Purchasers will not be liable to any Company Party under this Agreement (y) for
any settlement by a Company Party effected without the Purchasers’ prior written
consent, which shall not be unreasonably withheld or delayed; or (z) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Company Party’s breach of any of the representations,
warranties, covenants or agreements made by such Company Party in this Agreement
or in the other Transaction Documents to which it is a party or from such
Company Party’s fraud, gross negligence, willful misconduct or
malfeasance.

     

    4.11  Reservation and Listing of
Securities. The Company shall maintain a reserve from its duly authorized
shares of Common Stock for issuance pursuant to the Transaction Documents in
such amount as may then be required to fulfill its obligations in full under the
Transaction Documents.

     

    4.12  Form D; Blue Sky
Filings. The Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D and provide copies thereof, promptly
upon request of any Purchaser. The Company shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or
to qualify the Securities for, sale to the Purchasers at the Closing under
applicable securities or “Blue Sky” laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of any
Purchaser.

     

     

     

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    4.13  Appointment of Chief
Financial Officer; Replacement Auditor. ARC China shall, with the
assistance of an executive search firm engaged and paid by the Company (ARC
China must inform the Company of the fee and receive the approval from the
Company before it retains any such executive search firm, which approval shall
not be unreasonably withheld or delayed), perform the search for such Chief
Financial Officer for the Company and make its recommendations to the
Company.  Such Chief Financial Officer must be
bilingual.  The Company, upon receiving recommendations from ARC China
and/or the executive search firm, must review the applicant and determine, in
its sole discretion, if it wishes to employ the applicant as the Chief Financial
Officer.  If the Company decides not to employ such application, ARC
China and the executive search firm shall continue to make additional
recommendations. Upon the consummation of the transaction set forth herein, the
Company agrees to change its auditor to Goldman Parks Kurland Mohidin, LLP (the
“Replacement
Auditor”) if the Replacement Auditor agrees, which shall occur in time
for the preparation of the Company’s audited financial statements for the fiscal
year ending December 31, 2009. The Company further agrees to consent to and
adopt all amendments to and restatements of its prior financial statements and
records that may be suggested by the Replacement Auditor.  The Purchasers are fully
aware and acknowledge that there may be different work products results by
different auditing teams on the Transaction.  No terms contained in
this Agreement shall be changed as a result.

     

    4.14  Senior Exchange
Listing. The Company shall use best efforts to cause the Common Stock to
be eligible for listing on the Nasdaq Capital Market or the NYSE Amex
Equities.

     

    4.15  Board Designee; Independent
Board of Directors; Board Committees.  Upon the consummation of
the transaction set forth herein, the Company shall cause one person designated
by ARC China to be duly appointed or elected to the Company’s Board of Directors
within 5 Business Days of ARC China’s designation. The Company shall add members
to its Board of Directors as soon as is reasonably practicable but no later than
120 calendar days of the Closing Date, such that (i) a majority of the Board of
Directors shall be “independent directors” within the meaning of the rules of
the Nasdaq Stock Market and/or the NYSE Amex Equities, and (ii) the Board of
Directors will have established an audit committee, compensation committee and
nominating committee.

     

    4.16  Investor Road Shows.
So long as any Purchaser holds Securities, the Company shall conduct an
aggregate of at least three investor road shows during each twelve month period
following the Closing Date in each of the United States or Europe.

     

    4.17  Certain Transactions and
Confidentiality. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that neither it nor any affiliate acting on its behalf or
pursuant to any understanding with it will execute any purchases or sales,
including short sales of any of the Company’s securities during the period
commencing with the execution of this Agreement and ending at such time that the
transactions contemplated by this Agreement are first publicly announced (or
should have been publicly announced) pursuant to Section 4.5. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed
(or should have been publicly disclosed) by the Company pursuant to Section 4.5,
such Purchaser will maintain the confidentiality of the existence and terms of
this transaction and the information included in the Disclosure
Schedules.

     

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    4.18  Registration
Rights.

     

    (a)  
 
“Mandatory
Registration”

     

    (i)  No later
than 45 days following the final Closing Date of this Offering (the “Required Filing
Date”), the Company shall file a Registration Statement on Form S-1 (or
any similar or successor forms promulgated by the Commission) to register the
Securities (the “Registrable
Securities”) (the actual date of such filing, the “Filing Date”), and
use its best efforts to cause the Registration Statement to be declared
effective by the date (the “Required Effective
Date”) of the earlier of the following: (x) 90 calendar days after the
Required Filing Date (or 180 calendar days in the event the Registration
Statement receives a “full review” or the Commission issues comments related to
Rule 415) or (y) Four Trading Days after oral or written notice to the Company
or its counsel from the Commission that it may be declared effective; provided
that the amount of Registrable Securities shall be limited to not less than 100%
of the maximum amount (“Rule 415 Amount”) of
the Securities which may be included in a single registration statement without
exceeding registration limitations imposed by the Commission pursuant to Rule
415 of the Securities Act;

     

    (ii)  the
Company will pay all expenses associated with the registration, including,
without limitation, filing and printing fees, and the Company’s counsel and
accounting fees and expenses, costs, if any, associated with clearing the
Registrable Securities for sale under applicable state securities
laws;

     

    (iii)  the
Company shall have the right to delay, including, without limitation, by
delaying the filing or effectiveness of the Registration Statement, the
disclosure of material, non-public information concerning the Company the
disclosure of which at the time is not, in the reasonable opinion of the Company
in the best interest of the Company and, as applicable, suspend sales of
Registrable Securities under an effective registration statement or suspend
trading of its securities on any exchange; and

     

    (iv)  the
Company will use commercially reasonable efforts to cause the Registration
Statement to remain continuously effective for a period (the “Effectiveness
Period”) that will terminate upon the earlier of (x) the date on which all the
Registrable Securities covered by the Registration Statement have been sold or
(y) the date on which all the Registrable Securities covered by the Registration
Statement may be sold immediately without registration under the Securities Act
and without volume restrictions pursuant to Rule 144(b), as determined by
reputable United States securities counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Transfer Agent
and the affected Purchasers, and will advise the Purchasers when the
Effectiveness Period has expired with respect to the Purchasers.

     

     

    27

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  Purchaser
Information. Each Purchaser shall (A) furnish to the Company such
information regarding itself, the Registrable Securities, other securities of
the Company held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably requested by the Company to effect
and maintain the effectiveness of the Registration Statement, (B) execute such
documents in connection with the Registration Statement as the Company may
reasonably request, and (C) immediately discontinue disposition of Registrable
Securities pursuant to any registration statement upon notice from the Company
of (x) the issuance of any stop order or other suspension of effectiveness of
the Registration Statement by the Commission, or the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
by the applicable regulatory authorities or (y) the happening of any event, as
promptly as practicable after becoming aware of such event, as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading or (z)
the failure of the prospectus included in the Registration Statement, as then in
effect, to comply with the requirements of the Securities Act until the
Purchaser’s receipt of a supplemented or amended prospectus or receipt of notice
that no supplement or amendment is required.

     

    (c)  Indemnification and
Contribution.

     

    (i)  In the
event of a registration of any Registrable Securities under the Securities Act
pursuant to this Section 4.18, the Company will, to the extent permitted by law,
indemnify and hold harmless each Purchaser, its officers, directors and other
person, if any, who controls such Purchaser within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which such Purchaser or such controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances when made, and will subject to the
provisions of Section 4.18(c)(iii) reimburse such Purchaser and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
such Purchaser or any such controlling person to the extent that any such
damages arise out of or are based upon an untrue statement or omission made in
any preliminary prospectus if (i) such Purchaser failed to send or deliver a
copy of the final prospectus delivered by the Company to such Purchaser with or
prior to the delivery of written confirmation of the sale by such Purchaser to
the person asserting the claim from which such damages arise, (ii) the final
prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, or (iii) to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any Purchaser or any controlling person
in writing specifically for use in the Registration Statement or
prospectus.

     

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    (ii)  In the
event of a registration of any of the Registrable Securities under the
Securities Act pursuant to this Section 4.18, each Purchaser severally but not
jointly will, to the extent permitted by law, indemnify and hold harmless the
Company, and each person, if any, who controls the Company within the meaning of
the Securities Act, each officer of the Company who signs the Registration
Statement, and each director of the Company, against all losses, claims, damages
or liabilities, joint or several, to which the Company or such officer, director
or controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that such Purchaser will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Purchaser, as such, furnished in writing to the Company by such Purchaser
specifically for use in the Registration Statement or prospectus, and provided,
further, however, that the liability of such Purchaser hereunder shall be
limited to the net proceeds actually received by such Purchaser from the sale of
Registrable Securities covered by the Registration Statement.

     

    (iii)  Promptly
after receipt by an indemnified party hereunder of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party other
than under this Section 4.18(c)(iii) and shall only relieve it from any
liability which it may have to such indemnified party under this Section
4.18(c)(iii), except and only if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 4.18(c)(iii) for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified parties, as a group, shall have the right to select one
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.

     

    29

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (iv)  In order
to provide for just and equitable contribution in the event of joint liability
under the Securities Act in any case in which either (i) a Purchaser, or any
controlling person of a Purchaser, makes a claim for indemnification pursuant to
this Section 4.18(c) but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 4.18(c) provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of such
Purchaser or such controlling person in circumstances for which indemnification
is not provided under this Section 4.18(c); then, and in each such case, the
Company and such Purchaser will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that such Purchaser is responsible only for the
portion represented by the percentage that the public offering price of its
securities offered by the registration statement bears to the public offering
price of all securities offered by such registration statement, provided,
however, that, in any such case, (y) such Purchaser will not be required to
contribute any amount in excess of the public offering price of all such
securities sold by it pursuant to such registration statement; and (z) no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.

     

    ARTICLE
5

    MISCELLANEOUS

     

    5.1  Termination. This
Agreement may be terminated: (i) upon the mutual agreement of the Company and
the Required Holders; (ii) by the Required Holders, if the Company’s Closing
conditions set forth in Section 2.4(b) have not been satisfied or waived on or
before January 15, 2010; or (iii) by the Company, if the Purchasers’ Closing
conditions set forth in Section 2.4(a) have not been satisfied or waived on or
before January 15, 2010.

     

    5.2     
 Fees and Expenses.
Except as expressly set forth in the Transaction Documents to the contrary, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to the
Purchasers.

     

    30

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    5.4  Incorporation of Exhibits
and Schedules.  All schedules and exhibits hereto which are
referred to herein are hereby made a part hereof and incorporated herein by such
reference.  Each schedule to this Agreement shall be deemed to include
and incorporate all disclosures made on the other schedules to this
Agreement.  The specification of any dollar amount in the
representations and warranties contained in this Agreement or the inclusion of
any specific item in the Schedules is not intended to imply that such amounts
(or higher or lower amounts) are or are not material, and no party shall use the
fact of the setting of such amounts or the fact of the inclusion of any such
item in the schedules in any dispute or controversy between the parties as to
whether any obligation, item, or matter not described herein or included in a
Schedule is or is not material for purposes of this Agreement.  The
Company may from time to time notify the Purchasers of any changes or additions
to any of the Company’s Schedules to this Agreement as a result of unforeseen
events or circumstances arising after the date of this Agreement, and the
Purchasers may from time to time notify the Company of any changes or additions
to any of the Purchaser’s Schedules to this Agreement as a result of unforeseen
events or circumstances arising after the date of this Agreement, by the
delivery of amendments or supplements thereto.

     

    5.5  Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (eastern standard time)
on a Trading Day, (b) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto on a day that is not a Trading
Day or later than 5:30 p.m. (eastern standard time) on any Trading Day, (c) the
second Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by the party to
whom such notice is required to be given. The Placement Agent shall be entitled
to receive all notices related to the Transaction Documents and the Offering.
The address for such notices and communications shall be as set forth on the
signature pages attached hereto other than for the Placement Agent, which
address is 440 S. LaSalle St., Suite 2201, Chicago, Illinois 60605,
Attn:  Ben Thistlethwaite, Facsimile:  (312)
566-0750.

     

    5.6  Amendments; Waivers.
No provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the
Company and the Required Holders or, in the case of a waiver, by the party
against whom enforcement of any such waived provision is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such
right.

     

     

    31

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.7  Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

     

    5.8  Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. The Company may not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of each Purchaser (other than by merger). Any Purchaser may
assign any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities or its rights to acquire the
Securities, including, but not limited to the registration rights set forth in
Section 4.18, provided that such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the Purchasers.

     

    5.9  Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person,
except as otherwise set forth in Section 4.9.

     

    5.10  Governing Law; Venue; Waiver
Of Jury Trail.  ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. THE COMPANY AND
PURCHASERS HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE CITY OF LAS VEGAS, NEVADA FOR THE ADJUDICATION
OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY PURCHASER HEREUNDER, IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN
(INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS),
AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY THE COMPANY OR ANY PURCHASER, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT 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 VIA REGISTERED OR
CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY
AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY
ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

     

    32

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.11  Survival. Sections
3.1, 3.2, Article IV, Sections 5.8 through 5.11 and 5.13 through 5.18 shall
survive the Closing and the delivery of the Securities for the applicable
statute of limitations.

     

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

     

    5.13  Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     

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

     

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

     

    33

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.16  Remedies.

     

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

     

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

     

    5.18  Independent Nature of
Purchasers’ Obligations and Rights. The obligations of each Purchaser
under any Transaction Document are several and not joint with the obligations of
any other Purchaser, and no Purchaser shall be responsible in any way for the
performance or non-performance of the obligations of any other Purchaser under
any Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Purchaser pursuant thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Purchaser shall be
entitled to independently protect and enforce its rights including, without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. Each
Purchaser has been represented by its own separate legal counsel in their review
and negotiation of the Transaction Documents to which it is a party. For reasons
of administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through ARC China or Brownstein.
Brownstein does not represent the Purchasers but only ARC China. The Company has
elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by the Purchasers.

     

     

    34

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.19  Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking of any action
or the expiration of any right required or granted herein shall not be a
Business Day, then such action may be taken or such right may be exercised on
the next succeeding Business Day.

     

    5.20  Construction.
Whenever required by the context of this Agreement, the singular shall include
the plural and the plural shall include the singular. The parties agree that
each of them and/or their respective counsel has reviewed and had an opportunity
to revise the Transaction Documents to which they are a party and, therefore,
the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents to which they are a party or any amendments
hereto.

     

    5.21  WAIVER OF JURY TRIAL.
IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY
AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE
GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

     

    (Signature
Pages Follow)

     

     

     

    35

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    
      	
              CHINA
      GREEN MATERIAL TECHNOLOGIES, INC.

            	 
      	
              Address for Notice:

            
	 
      	 
      	 
      
	 
      	 
      	
              27F(Changqing
      Building)

            
	 
      	 
      	
              172
      Zhongshan Road Harbin City

            
	
              By:

            	/s/
      Su Zhonghao	 
      	
              P.R.
      China 150040

            
	 
      	
              Name:
      Su Zhonghao

            	 
      	
              Fax
      No. (86) 451-82812677

            
	 
      	
              Title:
      Chief Executive Officer

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

            	 
      	 
      
	 
      	 
      	 
      
	
              Troutman
      Sanders

            	 
      	 
      
	
              Attn:
      Howard Jiang, Esq.

            	 
      	 
      
	
              The
      Chrysler Building

            	 
      	 
      
	
              405
      Lexington Avenue

            	 
      	 
      
	
              New
      York, New York 10174-0700

            	 
      	 
      
	
              Fax
      No: (212) 704-5939

            	 
      	 
      

    

    

    

    

    

     

    

    

    

    

    

    

    

    

    

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASERS FOLLOW]

     

    36

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    
      	
              Name
      of
      Purchaser:  

            	
              _____________________________________________________________________________________________________________

            

    

    (Exact
name as it should appear in the records of the Company and any registration
statement in which Purchaser is named “selling stockholder”)

     

    
      	
              Signature
      of
      Authorized Signatory of Purchaser:  

            	
              /s/
      signed                                                                                                                                                                                            
       

            

    

    
      
        	
                
                  Name
      and
      Title of Authorized Signatory:  

                

              	
                _________________________________________________________________________________________

              

      

    

    
      
        
          
            
              	
                      
                        
                          Title
      of Authorized Signatory: 

                        

                      

                    	
                      _________________________________________________________________________________________

                    

            

          

        

      

    

    
      
        
          
            
              
                
                  
                    	
                            
                              
                                
                                  Email
      Address
      of Authorized Signatory:  

                                

                              

                            

                          	
                            _________________________________________________________________________________________

                          

                  

                

              

            

          

        

      

    

    
      
        
          
            
              
                
                  
                    
                      	
                              
                                
                                  
                                    
                                      Fax
      Number
      of Authorized Signatory: 
    

                                    

                                  

                                

                              

                            	
                              _________________________________________________________________________________________

                            

                    

                     

                  

                

              

            

          

        

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    
                                      
                                        
                                          
                                            
                                              Address
      for
      Notice of Purchaser:

                                            

                                          

                                        

                                      

                                    

                                  	
                                     

                                  

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        
           

          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          
                                            
                                              
                                                
                                                  
                                                    Purchase
      Price ($0.90 per
      share):  

                                                  

                                                

                                              

                                            

                                          

                                        	
                                          _________________________________________________________________________________________

                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        Common
      Stock Shares: 

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          	
                                            _________________________________________________________________________________________

                                          

                                  

                                   

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            Social
      Security or Tax ID Number (or foreign
      equivalent):

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            	
                                              _________________________________________________________________________________________

                                            

                                    

                                    (Purchaser
may alternatively provide a copy of a validly issued identification card or
passport of the Authorized
Signatory)

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    Please
also complete the following:

     

    Purchaser
is a broker-dealer registered under Section 15 of the Exchange Act:

    Yes ___
No ___

    Purchaser
is an affiliate of a broker-dealer: Yes ___ No ___

    If the
answer is yes, please explain the nature of any such relationship:

    

    

    Please
describe any material relationship with the Company or any of its officers
within the past three years:

    

    

    Please
describe all other securities of the Company that Purchaser beneficially
owns:

    

    

    Please
describe any arrangements made or known relating to the distribution of any
shares of the Company’s common stock under any registration statement, including
the amount of such arrangements:

    

    

    If
Purchaser is an entity, please list all natural persons with the power to vote
or dispose of the Securities being purchased:

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
Purchaser hereby represents and warrants that the Purchaser is an Accredited
Investor as a result of satisfying the requirements of the paragraphs below to
which the Subscriber has indicated.

     

    
      	
              (1)

            	
              ____

            	
              any
      bank as defined in Section 3(a)(2) of the Securities Act or any savings
      and loan association or other institution as defined in Section 3(a)(5)(A)
      of the Securities Act whether acting in its individual or fiduciary
      capacity;

            
	 
      	 
      	 
      
	
              (2)

            	
              ____

            	
              any
      broker or dealer registered pursuant to Section 15 of the Exchange
      Act;

            
	 
      	 
      	 
      
	
              (3)

            	
              ____

            	
              any
      insurance company as defined in Section 2(a)(13) of the Securities
      Act;

            
	 
      	 
      	 
      
	
              (4)

            	
              ____

            	
              any
      investment company registered under the Investment Company Act of 1940, as
      amended, or a business development company as defined in Section 2(a)(48)
      of that Act;

            
	 
      	 
      	 
      
	
              (5)

            	
              ____

            	
              any
      small business investment company licensed by the U.S. Small Business
      Administration under Section 301(c) or (d) of the Small Business
      Investment Act of 1958;

            
	 
      	 
      	 
      
	
              (6)

            	
              ____

            	
              any
      plan established and maintained by a state, its political subdivisions, or
      any agency or instrumentality of a state or its political subdivisions,
      for the benefit of its employees, if such plan has total assets in excess
      of $5,000,000;

            
	 
      	 
      	 
      
	
              (7)

            	
              ____

            	
              any
      employee benefit plan within the meaning of the Employee Retirement Income
      Security Act of 1974, if the investment decision is made by a plan
      fiduciary, as defined in Section 3(21) of such Act, which is either a
      bank, savings and loan association, insurance company, or registered
      investment adviser, or if the employee benefit plan has total assets in
      excess of $5,000,000, or, if a self-directed plan, with investment
      decisions made solely by persons that are Accredited
      Investors;

            
	 
      	 
      	 
      
	
              (8)

            	
              ____

            	
              any
      private business development company as defined in Section 202(a)(22) of
      the Investments Advisers Act of 1940;

            
	 
      	 
      	 
      
	
              (9)

            	
              ____

            	
              any
      organization described in section 501(c)(3) of the Internal Revenue Code
      of 1986, as amended, corporation, Massachusetts or similar business trust,
      or partnership not formed for the specific purpose of acquiring the
      Securities, with total assets in excess of $5,000,000;

            
	 
      	 
      	 
      
	
              (10)

            	
              ____

            	
              a
      director or executive officer of the issuer of the securities being
      offered or sold;

            

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      	 
      	 
      	 
      
	
              (11)

            	
              ____

            	
              a
      natural person that has a net worth (or joint net worth together with his
      or her spouse) in excess of $1,000,000;

            
	 
      	 
      	 
      
	
              (12)

            	
              ____

            	
              a
      natural person that had annual gross income during the last two full
      calendar years in excess of $200,000 (or together with his or her spouse
      in excess of $300,000 in each of those years) and reasonably expects to
      have annual gross income in excess of $200,000 (or together with his or
      her spouse in excess of $300,000) during the current calendar
      year;

            
	 
      	 
      	 
      
	
              (13)

            	
              ____

            	
              any
      trust with total assets in excess of $5,000,000, not formed for the
      specific purpose of acquiring the Securities, whose purchase is directed
      by a sophisticated person, as defined in Rule 506(b)(2)(ii) of the
      Securities Act; or

            
	 
      	 
      	 
      
	
              (14)

            	
              ____

            	
              any
      entity in which all the equity owners are within one or more of the
      foregoing categories.

            

    

     

     

    

     

      Terms used in this
signature page have the meanings given them in the Agreement unless otherwise
defined herein.

    

    

    [PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

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