Document:

f8k090808ex10ii_somerset.htm

    WARRANT

    

    THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON THEIR EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND
MAY NOT BE TRANSFERRED UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, A "NO-ACTION" LETTER FROM THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION (THE “COMMISSION” OR THE
“SEC”) WITH
RESPECT TO SUCH TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE
COMMISSION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

    

    

    Somerset International
Group, Inc.

    

    WARRANT NO. September 2008
101

    

    Dated:
September 8, 2008

    

    

    Somerset International
Group, Inc., a corporation organized under the laws of the State of
Delaware (the “Company”), hereby
certifies that, for value received from Dutchess Private Equities Fund, Ltd., a
Cayman Island exempted company (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company up
to a total of  nine hundred thousand (900,000) shares of the common
stock, $0.001 par value per share (the “Common Stock”), of
the Company (the “Warrant Shares”), at
an exercise price equal to 1/1000 US dollars ($.001) per share (the “Exercise
Price”).  This Warrant may be exercised on a cashless basis
anytime after issuance through and including the fifth (5th) anniversary of its
original issuance as noted above (the “Expiration Date”),
subject to the following terms and conditions:

    

    1.           Registration of
Warrant.  The Company shall, from time to time and whenever
requested by the Holder, register this Warrant in conformity with records to be
maintained by the Company for such purpose (the “Warrant Register”) in
the name of the Holder.  The Company shall treat the registered Holder
of this Warrant as the absolute owner hereof for any and all purposes, including
the exercise hereof or any distribution to the Holder, and the Company shall not
be affected by notice to the contrary.

    

    2.           Registration of Transfers
and Exchanges.

     

     

    
      _______   /s/ JXA

        DHL          JXA

    

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
 

     (a)                                           The
Company or the transfer agent shall enter or record the transfer of all or any
portion of this Warrant in the Warrant Register, upon surrender of this Warrant
to the Company at the office specified herein or pursuant to Section 11
hereof.  Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any such new
warrant hereinafter referred to as a “New Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the Holder.  The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.

    

    (b)           This
Warrant is exchangeable, upon the surrender hereof by the Holder to the office
of the Company specified herein or pursuant to Section 3(b) hereof
for one or more New Warrants, evidencing in the aggregate the right to purchase
the number of Warrant Shares which may then be purchased
hereunder.  Any such New Warrant shall  be dated as of the
date of such exchange.

    

    3.           Duration and Exercise of
Warrants.

    

    (a)           This
Warrant shall be exercisable by the registered Holder on any business day before
5:00 P.M., Boston time, at any time and from time to time on or after the date
hereof to and including the Expiration Date.  At 5:00 P.M., Boston
time on the Expiration Date, the portion of this Warrant not exercised prior
thereto shall be and become void and of no value.  Prior to the
Expiration Date, the Company may not call or otherwise redeem this Warrant
without the prior written consent of the Holder, which consent shall be given or
withheld at the sole and absolute discretion of the Holder.

    

    (b)           Subject
to Section
2(b), Section
6 and Section
10 hereof, upon: (x) surrender of this Warrant, together with the Form of
Election to Purchase attached hereto duly completed and signed, to the Company
at its address for notice set forth in Section 11 hereof;
and (y) payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than five (5) business days after the Date
of Exercise (as defined below)) issue or cause to be issued and cause to be
delivered to the Holder in such name(s) as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise and free of
restrictive legends unless (i) a registration statement covering the resale of
the Warrant Shares and naming the Holder as a selling stockholder thereunder is
not then effective or the Warrant Shares are not freely transferable without
volume restrictions pursuant to Rule 144(k) promulgated under the Securities Act
then the Warrant Shares will bear a Securities Act restrictive legend, or (ii)
this Warrant shall have been issued pursuant to a written agreement between the
original Holder and the Company, as required by such agreement.  Any
person so designated by the Holder to receive Warrant Shares shall be deemed to
have become holder of record of such Warrant Shares as of the Date of Exercise
of this Warrant.  A “Date of Exercise”
means the date on which the Company shall have received (I) this Warrant (or any
New Warrant, as applicable), together with the Form of Election to Purchase
attached hereto (or attached to such New Warrant) appropriately completed and
duly signed; and (II) payment of the Exercise Price for the number of Warrant
Shares so indicated by the holder hereof to be purchased.

     

     

    
      _______   /s/ JXA

      
        
            DHL          JXA

        

      

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
 

    (c)           This
Warrant shall be exercisable in its entirety or, from time to time, for a
portion of the number of Warrant Shares.  If less than all of the
Warrant Shares which may be purchased under this Warrant are exercised at any
time, the Company shall issue or cause to be issued, at its expense, a New
Warrant evidencing the right to purchase the remaining number of Warrant Shares
for which no exercise has been evidenced by this Warrant.  In the
event the Common Stock representing the Warrant Shares is not delivered per the
written instructions of the Holder within five (5) business days after the
Notice of Election and Warrant is received by the Company (the “Delivery Date”), then
the Company shall pay to Holder in cash two percent (2.0%) of the dollar value
of the Warrant Shares to be issued per each day after the Delivery Date that the
Warrant Shares are not delivered.  The Company acknowledges that its
failure to deliver the Warrant Shares by the Delivery Date will cause the Holder
to suffer damages in an amount that will be difficult to
ascertain.  Accordingly, the parties hereto agree that it is
appropriate to include in this Warrant this provision for liquidated
damages.  The parties hereto acknowledge and agree that the liquidated
damages provision set forth in this section represents the parties’ good faith
effort to quantify such damages and therefore agree that the form and amount of
such liquidated damages are reasonable and will not constitute a
penalty.  Notwithstanding the foregoing, the payment of liquidated
damages shall not relieve the Company from its obligations to deliver the Common
Stock pursuant to the terms of this Warrant.  The Company shall make
any payments incurred under this Section 3 in
immediately available funds within five (5) business days from the date of
issuance of the applicable Warrant Shares.  Nothing herein shall limit
Holder’s right to pursue actual damages or cancel the Notice of Election for the
Company’s failure to issue and deliver Common Stock to the Holder within seven
(7) business days following the Delivery Date.

    

    4.           Registration
Rights.  During the term of this Warrant, the Company agrees to
use its best efforts to file a registration statement with the SEC covering the
resale of the Warrant Shares and naming the Holder as a selling stockholder
thereunder on or before April 16, 2007 (unless the Warrant Shares are otherwise
freely transferable without volume restrictions pursuant to Rule 144(k) or Rule
144A promulgated under the Securities Act). The registration rights granted to
the Holder pursuant to this Section shall continue until all of the Holder's
Warrant Shares have been sold in accordance with an effective registration
statement or upon the Expiration Date, or as otherwise provided in the Debenture
Registration Rights Agreement entered into between the Company and the original
Holder as of the original issuance date hereof.  The Company will pay
all registration expenses in connection therewith.

     

     

    
      
        
          _______   /s/ JXA

            DHL          JXA

           

        

      

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
 

    5.      Payment of
Taxes.  Upon the exercise of this Warrant, the Company will pay
all documentary stamp taxes attributable to the issuance of Warrant Shares;
provided, however, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder.  The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.

    

    6.           Replacement of
Warrant.  If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it.  Applicants for a New Warrant under
such circumstances shall comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may
prescribe.

    

    7.           Reservation of Warrant
Shares.  The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued
Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire Warrant, free
from preemptive rights or any other actual contingent purchase rights of persons
other than the Holder (taking into account the adjustments and restrictions of
Section 8
hereof).  The Company covenants that all Warrant Shares that shall be
so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.  If the
Company does not have a sufficient amount of Common Stock authorized to reserve
for the Warrant Shares, it shall, as soon as reasonably practicable, use its
best efforts to increase the number of its authorized shares such that the
Company will have a sufficient amount of Common Stock authorized to reserve for
the Warrant Shares.

    

    8.           Certain
Adjustments.  The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section
8.  Upon each such adjustment of the Exercise Price pursuant to
this Section 8,
the Holder shall thereafter but prior to the Expiration Date be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
Warrant Shares obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of Warrant Shares issuable upon exercise
of this Warrant immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.

    

    (a)           An
adjustment shall be made, if the Company, at any time while this Warrant is
outstanding (i) pays a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make distribution(s) on shares of its Common Stock
or on any other class of capital stock and not the Common Stock payable in
shares of Common Stock; (ii) subdivides outstanding shares of Common Stock into
a larger number of shares; or (iii) combines outstanding shares of Common Stock
into a smaller number of shares.  If either (i), (ii) or (iii) above
occurs, the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding after such event.  

     

    
      
        
          _______   /s/ JXA

            DHL          JXA

        

      

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

       

       

      Any
adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination, and shall apply to
successive subdivisions and combinations.

    

    

    (b)           In
case of any reclassification of the Common Stock, any consolidation or merger of
the Company with or into another entity, the sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange
pursuant to which the Common Stock is converted into other securities, cash or
property, then the Holder shall have the right thereafter to exercise this
Warrant only into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock following such
reclassification, consolidation, merger, sale, transfer or share exchange, and
the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder would
have been entitled to had such Holder exercised this Warrant immediately prior
to such reclassification, consolidation, merger, sale, transfer or share
exchange.  The terms of any such consolidation, merger, sale, transfer
or share exchange shall include such terms so as to continue to give to the
Holder the right to receive the securities or property set forth in this Section 8(b) upon any
exercise following any such reclassification, consolidation, merger, sale,
transfer or share exchange.

    

     (c)                                           
At any time while this Warrant is outstanding, if the Company distributes to all
holders of Common Stock (and not to holders of this Warrant) evidence of its
indebtedness or assets or rights or warrants to subscribe for or purchase any
security (excluding those referred to in Section 8(a), Section 8(b) and
Section 8(d)
hereof), then in each such case the Exercise Price shall be determined by
multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Exercise Price determined as of
the record date mentioned above, and of which the numerator shall be such
Exercise Price on such record date less the then fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (the “Appraiser”).

     

     

     

    
      
        
          _______   /s/ JXA

            DHL          JXA

           

        

      

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
 

    (d)           If,
at any time while this Warrant is outstanding, the Company shall issue or cause
to be issued rights or warrants to acquire or otherwise sell or distribute
shares of Common Stock for a consideration per share less than the lower of the
Exercise Price then in effect and the then fair market value of the Common
Stock, then, forthwith upon such issue or sale, the Exercise Price shall be
reduced to the price (calculated to the nearest one hundredth of a cent)
determined by multiplying the Exercise Price in effect immediately prior thereto
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding immediately prior to such issuance, and (ii)
the number of shares of Common Stock which the aggregate consideration received
(or to be received, assuming exercise or conversion in full of such rights,
warrants and convertible securities) for the issuance of such additional shares
of Common Stock would purchase at the Exercise Price, and the denominator of
which shall be the sum of the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares.  Such
adjustment shall be made successively whenever such an issuance is
made.

    

    (e)           For
the purposes of this Section 8, the
following clauses shall also be applicable:

    

    (i)  Record
Date.  In case the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in Common Stock or in securities convertible or
exchangeable into shares of Common Stock, or (B) to subscribe for or purchase
Common Stock or securities convertible or exchangeable into shares of Common
Stock, then such record date shall be deemed to be the date of the issue or sale
of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

    

    (ii)  Treasury
Shares.  The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account of
the Company, and the disposition of any such shares shall be considered an issue
or sale of Common Stock.

    

     (f)                                           All
calculations under this Section 8 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may
be.

    

    (g)           Whenever
the Exercise Price is adjusted pursuant to Section 8(c) hereof,
the Holder, after receipt of the determination by the Appraiser, shall have the
right to select an additional appraiser (which shall be a nationally recognized
accounting firm), in which case the adjustment shall be equal to the average of
the adjustments recommended by each of the Appraiser and such additional
appraiser appointed under this Section
8(g).  The Holder shall promptly mail or cause to be mailed to
the Company, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment.  Such adjustment shall become effective immediately after
the record date mentioned above, if:

    

    (i)           the
Company shall declare a dividend (or any other distribution) on its Common
Stock;

    (ii)           the
Company shall declare a special nonrecurring cash dividend on or a redemption of
its Common Stock;

     

    
      
        
          _______   /s/ JXA

            DHL          JXA

           

        

      

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
 

    (iii)           the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights;

    

    (iv)           the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock of the Company, any consolidation or
merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash or property;
or

    

    (v)           the
Company shall authorize the voluntary dissolution, liquidation or winding up of
the affairs of the Company, then the Company shall cause to be mailed to the
Holder at their last addresses as they shall appear upon the Warrant Register,
at least thirty (30) calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up; provided, however, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.

    

    9.           Payment of Exercise
Price.  The Holder, at its sole election, may pay the Exercise
Price in one of the following manners:

    

    (a)           Cash
Exercise.  The Holder shall deliver immediately available
funds; or

    (b)           Cashless Exercise. If
at any time after one year from the date of issuance of this Warrant there is no
effective Registration Statement registering the resale of the Warrant Shares by
the Holder at such time, this Warrant may also be exercised at such time by
means of a cashless exercise.  In such event, the Holder shall
surrender this Warrant to the Company, together with a notice of cashless
exercise, and the Company shall issue to the Holder the number of Warrant Shares
determined as follows:

    

    X = Y
(A-B)/A

     

     

    
      
        
          _______   /s/ JXA

            DHL          JXA

        

      

    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

     

    
 

    where:

    X = the
number of Warrant Shares to be issuedto the Holder.

    

    Y = the
number of Warrant Shares with respect to which this Warrant is being
exercised.

    

    A = the
average closing bid price of the Common Stock for the five (5) trading days
immediately prior to the Date of Exercise.

    

    B = the
Exercise Price.

    

    For
purposes of Rule 144 of the Securities Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction
shall be deemed to have been acquired by the Holder, and the holding period for
the Warrant Shares shall be deemed to have been commenced, on the issue
date.

    

    (c)           Notwithstanding
anything in this Warrant to the contrary, the Holder is limited in the amount of
this Warrant it may exercise.  In no event shall the Holder be
entitled to exercise any amount of this Warrant in excess of that amount upon
exercise of which the sum of (1) the number of shares of Common Stock
beneficially owned (as such term is defined under Section 13(d) and Rule 13d-3
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) by
the Holder, and (2) the number of Warrant Shares issuable upon the exercise of
any Warrants then owned by Holder, would result in beneficial ownership by the
Holder of more than four and ninety-nine one hundredths percent (4.99%) of the
outstanding shares of Common Stock of the Company, as determined in accordance
with Rule13d-1(j) of the Exchange Act.  Furthermore, the Company shall
not process any exercise that would result in beneficial ownership by the Holder
of more than four and ninety-nine one hundredths percent (4.99%) of the
outstanding shares of Common Stock of the Company.

    

    10.           Fractional
Shares.  The Company shall not be required to issue or cause to
be issued fractional Warrant Shares on the exercise of this
Warrant.  The number of full Warrant Shares which shall be issuable
upon the exercise of this Warrant shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of this Warrant so
presented.  If any fraction of a Warrant Share would, except for the
provisions of this Section 10, be
issuable on the exercise of this Warrant, the Company shall pay an amount in
cash equal to the Exercise Price multiplied by such fraction.

     

     

    
      
        
          _______   /s/ JXA

            DHL          JXA

        

      

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

     

    
 

    11.           Notices.  Any
and all notices or other communications or deliveries hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Section prior to 5:00 p.m.
Boston time on a business day, (ii) the business day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section later than 5:00 p.m. Boston
time on any date and earlier than 11:59 p.m. Boston time on such date, (iii) the
business day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.  The addresses for such communications
shall be:

    

    If to the
Company:              Somerset
International Group, Inc.

    90
Washington Valley Road

    Bedminster,
NJ  07921

    Telephone:
(908) 719-8909

    Facsimile:  (908)
953-0797

    

    

    

    If to the
Holder:                   Dutchess
Capital Management, LLC

    50
Commonwealth Ave, Suite 2

    Boston,
MA  02116

    Attention:
Douglas Leighton

    Telephone:
(617) 301-4700

    Facsimile:
(617) 249-0947

    

    12.           Warrant
Agent.  The Company shall serve as warrant agent under this
Warrant.  Upon thirty (30) days notice to the Holder, the Company may
appoint a new warrant agent.  Any corporation into which the Company
or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor warrant agent under this Warrant without any further
action.  Any such successor warrant agent shall promptly cause notice
of its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Warrant
Register.

    

    13.           Miscellaneous.

    

    (a)           This
Warrant shall be binding on and inure to the benefit of the parties
hereto.  This Warrant may be amended only in writing signed by the
Company and the Holder.

    

    (b)           Nothing
in this Warrant shall be construed to give to any person or corporation other
than the Company and the Holder any legal or equitable right, remedy or cause
under this Warrant.  This Warrant shall inure to the sole and
exclusive benefit of the Company and the Holder.

     

    
      
        
          _______   /s/ JXA

            DHL          JXA

        

      

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
 

     (c)                      This
Warrant shall be governed by and construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts without regard to the principles of
conflicts of law thereof.

    

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

    

    (e)           In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

    

    (f)           The
Company hereby represent and warrants to the Holder that: (i) it is voluntarily
issuing this Warrant of its own freewill, (ii) it is not issuing this Warrant
under economic duress, (iii) the terms of this Warrant are reasonable and fair
to the Company, and (iv) the Company has had independent legal counsel of its
own choosing review this Warrant, advise the Company with respect to this
Warrant, and represent the Company in connection with its issuance of this
Warrant.

    

    (g)           Any
capitalized term used but not defined in this Warrant shall have the meaning
ascribed to it in the Transaction Documents (as such term is defined in that
certain Debenture Registration Rights Agreement, of even date
herewith,  by and between the Company and the Holder).

    

    (h)           This
Warrant may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Warrant.  In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

    

    (i)           This
Warrant and the obligations of the Company hereunder shall not be assignable by
the Company.

    

    (j)           Notwithstanding
anything in this Warrant to the contrary, the parties hereto hereby acknowledge
and agree to the following: (i) the Holder makes no representations or covenants
that it will not engage in trading in the securities of the Company; (ii) the
Company shall, by 8:30 a.m. Boston Time on the trading day following the date
hereof, file a current report on Form 8-K disclosing the material terms of the
transactions contemplated hereby and in the other Transaction Documents; (iii)
the Company has not and shall not provide material non-public information to the
Holder unless prior thereto the Holder Party shall have executed a written
agreement regarding the confidentiality and use of such information; and (iv)
the Company understands and confirms that the Holder will be relying on the
acknowledgements set forth in clauses (i) through (iii) above if the Holder
effects any transactions in the securities of the Company.

     

    
      
        
          _______   /s/ JXA

            DHL          JXA

        

      

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

     

    14.  Disputes Under This
Agreement.

    

    All disputes arising under this Warrant
shall be governed by and interpreted in accordance with the laws of the
Commonwealth of Massachusetts, without regard to principles of conflict of
laws.  The parties hereto will submit all disputes arising under this
Agreement to arbitration in Boston, Massachusetts before a single arbitrator of
the American Arbitration Association (the “AAA”).  The
arbitrator shall be selected by application of the rules of the AAA, or by
mutual agreement of the parties, except that such arbitrator shall be an
attorney admitted to practice law in the Commonwealth of
Massachusetts.  No party hereto will challenge the jurisdiction or
venue provisions provided in this Section
14.  Nothing in this Section 14 shall
limit the Holder's right to obtain an injunction for a breach of this Agreement
from a court of law. Any injunction obtained shall remain in full force and
effect until the arbitrator, as set forth in this Section 14 fully
adjudicates the dispute.

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

    
      
        _______   /s/ JXA

          DHL          JXA

      

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

     

     

     

    
 

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.

    

    

    SOMERSET
INTERNATIONAL GROUP, INC.

    

    By   /s/  John X. Adiletta                    

    Name:
John X. Adiletta

    Title:
Chief Executive Officer

    

    

    DUTCHESS
PRIVATE EQUITIES FUND, LTD.

    

    

    By:
__________________________________

    Name:
Douglas H. Leighton

    Title:
Director

     

     

     

    
      
        _______   /s/ JXA

          DHL          JXA

      

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    
 

    EXHIBIT
A

    

    FORM
OF ELECTION TO PURCHASE

    

    Somerset
International Group, Inc.

    

    Re: Intention to Exercise
Right to Purchase Shares of Common Stock Under the Warrant

    

    Gentlemen:

    

    In
accordance with the Warrant enclosed with this Form of Election to Purchase, the
undersigned hereby irrevocably elects to purchase _________________shares of
Common Stock, $0.001 par value per share, of Somerset International Group, Inc.
and, if such Holder is not utilizing the cashless exercise provisions set forth
in the Warrant, encloses herewith $________ in cash, certified or official bank
check(s), which sum represents the aggregate Exercise Price for the number of
shares of Common Stock to which this Form of Election to Purchase relates,
together with any applicable taxes payable by the undersigned pursuant to the
Warrant.  Any capitalized terms used but not defined in this Form of
Election to Purchase shall have the meaning ascribed to them in the accompanying
Warrant.

    

    The
undersigned requests that certificates for the shares of Common Stock issuable
upon this exercise be issued in the name of:

    

    

      
        

      
(Please insert SS# or FEIN #)

     

     

    
      
        

      
(Please print name and address)

    

    If the
number of shares of Common Stock issuable upon this exercise shall not be all of
the shares of Common Stock which the undersigned is entitled to purchase in
accordance with the enclosed Warrant, the undersigned requests that a New
Warrant evidencing the right to purchase the shares of Common Stock not issuable
pursuant to the exercise evidenced hereby be issued in the name of and delivered
to:

     

     

    
      

    

    (Please print name and address)

     

    
      
        

      

      
        

      

    

    

    Dated: _____________,
_____                                                                                     Name
of Holder:

    

    Signed:    ________________________________________

    Print
Name:  ________________________________________

    Title:       
________________________________________

    

    (Signature
must conform in all respects to name of Holder as specified on the face of the
Warrant)

     

    13ex10_1.htm

    EXHIBIT
10.1

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated as of
September 10, 2008, among SinoHub, Inc., a Delaware corporation (collectively
with its predecessors, the “Company”), and the investors
listed on the Schedule of Buyers attached hereto as Annex A and
identified on the signature pages hereto (each, an “Investor” and collectively,
the “Investors”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated
thereunder, the Company desires to issue and sell to each Investor, and each
Investor, severally and not jointly, desires to purchase from the Company
certain securities of the Company, as more fully described in this
Agreement.

     

    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 the Investors agree as
follows:

     

    ARTICLE
1.

    DEFINITIONS

     

    1.1.           Definitions.  In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:

     

    “Action” means any action,
claim, suit, inquiry, notice of violation, proceeding (including any partial
proceeding such as a deposition) or investigation pending or threatened in
writing against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local or
foreign), stock market, stock exchange or trading facility.

     

    “Affiliate” means any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144.

     

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

     

    “Class A Warrants” means those
warrants to purchase shares of Common Stock until the third anniversary of the
Closing Date, at an exercise price of $2.15 per share, subject to
adjustment.

     

    “Class B Warrants” means those
warrants to purchase shares of Common Stock until the fifth anniversary of the
Closing Date, at an exercise price of $3.00 per share, subject to
adjustment.

     

     “Closing” means the
closing of the purchase and sale of the Shares pursuant to Article
2.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Closing Date” means the
Business Day on which all of the conditions set forth in Sections 5.1 and 5.2
hereof are satisfied, or such other date as the parties may agree.

     

    "Closing Escrow Agreement"
means the Escrow Agreement, dated as of the date hereof, among the Company, the
Investors, the Placement Agent and the escrow agent (the “Escrow Agent”).

     

    “Commission” means the
Securities and Exchange Commission.

     

    “Common Stock” means the
common stock of the Company, par value $0.001 per share, and any securities into
which such common stock may hereafter be reclassified.

     

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

     

    “Company Counsel” means Crone
Rozynko, LLP.

     

    “Company Deliverables” has the
meaning set forth in Section 2.2(a).

     

    “Disclosure Materials” has the
meaning set forth in Section 3.1(g).

     

    “Effective Date” means the
date that the Registration Statement required by Section 2(a) of the
Registration Rights Agreement is first declared effective by the
Commission.

     

     “Evaluation Date” has
the meaning set forth in Section 3.1(r).

     

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

     

    “GAAP” means U.S. generally
accepted accounting principles.

     

    “Intellectual Property Rights”
has the meaning set forth in Section 3.1(o).

     

     “Investment Amount”
means, with respect to each Investor, the Investment Amount indicated on such
Investor’s signature page to this Agreement.

     

    “Investor Deliverables” has
the meaning set forth in Section 2.2(b).

     

    “Investor Party” has the
meaning set forth in Section 4.7.

     

    “Lien” means any lien, charge,
encumbrance, security interest, right of first refusal or other restrictions of
any kind, including any restriction on use, voting, transfer, receipt of income,
or exercise of any other attribute of ownership.

     

    “Material Adverse Effect”
means any result, occurrence, fact, change, event or effect (whether or not
constituting a breach of a representation, warranty or covenant set forth in
this
Agreement) that, individually or in the aggregate with any such other results,
occurrences, facts, changes, events or effects, (i) would have or could
reasonably be expected to have a material adverse effect on the historical or
near-term or long-term projected business, operations, assets, liabilities,
condition (financial or otherwise) or results of operations of the Company and
the Subsidiaries, taken as a whole, (ii) would or could reasonably be expected
to prevent or materially impair or delay the ability of the Company to
consummate the transactions contemplated by this Agreement or perform its duties
under this Agreement or any of the other Transaction Documents, or (iii) would
or could reasonably be expected to be materially adverse to the ability of the
Company or any Subsidiary to operate its business immediately after the Closing
substantially in the manner as such business was operated immediately prior to
the Closing.  

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Money Laundering Laws” has the
meaning set forth in Section 3.1(bb).

     

    “OFAC” has the meaning set
forth in Section 3.1(aa).

     

    “Outside Date” means September
5, 2008.

     

    "Per Share Purchase Price"
equals $1.70.

     

    "Performance Escrow Agreement"
means the Performance Escrow Agreement, dated as of the date hereof, between
certain members of the management of the Company, the Placement Agent and the
escrow agent.

     

    “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” means Global
Hunter Securities, LLC.

     

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

     

    “Registration Rights
Agreement” means the Registration Rights Agreement, dated as of the date
of this Agreement, among the Company and the Investors.

     

    “Registration Statement” means
a registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Investors of any of the Shares
or any of the Warrant Shares.

     

    “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.

     

    “SEC Reports” has the meaning
set forth in Section 3.1(g).

     

     “Securities Act” means
the Securities Act of 1933, as amended.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Share Delivery Date” has the
meaning set forth in Section 4.1(c).

     

    “Shares” means the shares of
Common Stock issued or issuable to the Investors pursuant to this
Agreement.

     

    “Short Sales” include, without
limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated
brokers.

     

    “Subsidiary” of a specified
Person is an Affiliate controlled by such Person directly, or indirectly through
one or more intermediaries.

     

    “Trading Day” means (i) a day
on which the Common Stock is traded on a Trading Market (other than the OTC
Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market
(other than the OTC Bulletin Board), a day on which the Common Stock is traded
in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii)
if the Common Stock is not quoted on any Trading Market, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the Pink
Sheets LLC (or any similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.

     

    “Trading Market” means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.

     

    “Transaction Documents” means
this Agreement, the Registration Rights Agreement, the Warrants, the Closing
Escrow Agreement and any other documents or agreements executed in connection
with the transactions contemplated hereunder.

     

    “Warrants” means the Class A
Warrants and Class B Warrants, collectively.

     

    “Warrant Shares” means the
shares of Common Stock issuable upon exercise of the Warrants.

     

    ARTICLE
2.

    PURCHASE
AND SALE

     

    2.1.           Closing.  Subject
to the terms and conditions set forth in this Agreement, at the Closing the
Company shall issue and sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company, the Shares representing
such Investor’s Investment Amount.  The Closing shall take place at
the offices of Company Counsel on the Closing Date or at such other location or
time as the parties may agree.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2.2.           Closing
Deliveries.  (a)  At
the Closing, the Company shall deliver or cause to be delivered to each Investor
the following (the “Company
Deliverables”):

     

    (i)           a
certificate evidencing a number of Shares equal to such Investor’s Investment
Amount divided by the Per Share Purchase Price, registered in the name of such
Investor; and

     

    (ii)          warrant
certificates registered in the name of such Investor evidencing (A) a Class A
Warrant  exercisable for 1⁄4 of the Shares issued under 2.2(i) and (B) a
Class B Warrant  exercisable for 1⁄4 of the Shares issued under
2.2(i).

     

    (b)           By
the Closing, each Investor shall deliver or cause to be delivered the agreements
specified in Section 5.2(d), each duly signed by such Investor (collectively,
the “Investor
Deliverables”).

     

    (c)           Within
one Business Day following the date of this Agreement, each Investor shall cause
to be delivered to the Escrow Agent, its Investment Amount, in United States
dollars and in immediately available funds, by wire transfer to an account
designated in writing by the Company for such purpose in accordance with the
terms of the Closing Escrow Agreement.

     

    ARTICLE
3.

    REPRESENTATIONS
AND WARRANTIES

     

    3.1.           Representations and
Warranties of the Company.  The
Company hereby makes the following representations and warranties to each
Investor:

     

    (a)          Subsidiaries.  The
Company has no direct or indirect Subsidiaries other than as specified in the
SEC Reports.  The Company owns, directly or indirectly, all of the
capital stock of each Subsidiary free and clear of any and all Liens, and all
the issued and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and
similar rights.  There are no outstanding conversion or other rights,
options, warrants or agreements granted or issued by or binding upon any
Subsidiary for the purchase or acquisition of any shares of capital stock of any
Subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital
stock.  Neither the Company nor any Subsidiary is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of the capital stock of any Subsidiary or any convertible
securities, rights, warrants or options of the type described in the preceding
sentence.  Neither the Company nor any Subsidiary is party to, nor has
any knowledge of, any agreement restricting the voting or transfer of any shares
of the capital stock of any Subsidiary.

     

    (b)         Organization and
Qualification.  The Company and each Subsidiary are duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  The
Company and each Subsidiary are duly qualified to conduct its respective
businesses and are 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, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (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
thereunder, and to issue and sell the Shares and the Warrants.  The
execution and delivery of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, any Subsidiary, the Board of Directors of the
Company, or the Company’s stockholders in connection therewith.  Each
Transaction Document has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application.

     

    (d)         No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated 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,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse
Effect.

     

    (e)          Filings, Consents and
Approvals.  Neither the Company nor any Subsidiary is required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any United States or PRC 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 filing with the Commission of one or
more Registration Statements in accordance with the requirements of the
Registration Rights Agreement, (ii) filings required by state securities laws,
(iii) the filing of a Notice of Sale of Securities on Form D with the Commission
under Regulation D of the Securities
Act, (iv) the filings required in accordance with Section 4.5 hereof and (v)
those that have been made or obtained prior to the date of this
Agreement.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (f)          Issuance of the
Shares.  The Shares and Warrant Shares have been duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens.  The Warrants have been duly authorized for
issuance.  The Company has reserved from its duly authorized capital
stock the shares of Common Stock issuable pursuant to this Agreement in order to
issue the Shares and Warrant Shares.

     

    (g)         SEC Reports; Financial
Statements.  The Company has filed all reports required to be
filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof
(or such shorter period as the Company was required by law to file such reports)
(the foregoing materials being collectively referred to herein as the “SEC Reports” and, together
with the Schedules to this Agreement (if any), the “Disclosure Materials”) on a
timely basis or has timely filed a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing.  Such financial statements have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved, except as
may be otherwise specified in such financial statements or the notes thereto,
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 year-end audit adjustments.

     

    (h)         Press
Releases.  The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken as a whole
do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made and
when made, not misleading.

     

    (i)           Material
Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (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) neither the Company nor any Subsidiary has incurred any liabilities
(direct, indirect, 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 required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors, (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 Company or Subsidiary 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.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (j)           Litigation.  There
is no Action which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Shares or (ii) except
as specifically disclosed in the SEC Reports, could, if there were an
unfavorable decision, individually or in the aggregate, 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 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, except as specifically disclosed in the SEC
Reports.  There has not been, and to the knowledge of the Company,
there is not pending any investigation by the Commission involving the Company
or any current or former director or officer of the Company (in his or her
capacity as such).  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 material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company or any Subsidiary.

     

    (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 relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect. The Company is in compliance with all effective
requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and
regulations thereunder, that are applicable to it, except where such
noncompliance 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 United States
and PRC federal, state, local or foreign regulatory authorities necessary to
conduct their respective businesses as described in the SEC Reports, except
where the failure to possess such permits could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect,
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
permits.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (n)         Title to
Assets.  The Company and the Subsidiaries have valid land use
rights for all  of all real estate owned by the Company or the
Subsidiaries, respectively, and good and marketable leasehold estates to all
real estate leased by the Company or the Subsidiaries, respectively, and good
and marketable title in all personal property owned by them, in each case free
and clear of all Liens, except for Liens as do not materially affect the value
of such property and do not materially interfere with the use made and proposed
to be made of such property by the Company and the Subsidiaries. Any real
property and facilities held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases of which the Company
and the Subsidiaries are in compliance, except as could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

     

    (o)         Patents and
Trademarks.  Neither the Company nor any of its Subsidiaries
has any knowledge, nor have any of them received a written or oral notice, that
its patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and other similar rights that the
Company and its Subsidiaries owns, uses, or has the rights to use (collectively,
the “Intellectual Property
Rights”), violates or infringes upon the rights of any
Person.  The Company and its Subsidiaries own or possess all rights to
use, option and/or license, as the case may be, all Intellectual Property Rights
necessary for the conduct of their respective businesses as currently being
conducted, except where the failure to own or possess such rights could not
reasonably be expected to result in a Material Adverse Effect.  To the
knowledge of the Company and its Subsidiaries, no former or current employee, no
former or current consultant, and no third-party joint developer of the Company
or its Subsidiaries has any Intellectual Property Rights made, developed,
conceived, created or written by the aforesaid employee, consultant or
third-party joint developer during the period of his or her retention by, or
joint venture with, such Company or Subsidiary which can be asserted against any
of the Company or any such Subsidiary.

     

    (p)         Insurance.  The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged.  The Company has no reason to believe that it will not be
able to renew its and the Subsidiaries’ existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business on terms consistent with market for the
Company’s and such Subsidiaries’ respective lines of business.

     

    (q)         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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (r)          Internal Accounting
Controls.  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 relating to the Company, including its Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s Form 10-Q was being
prepared.  The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures in accordance with Item
307 of Regulation S-K under the Exchange Act for the Company’s most recently
ended fiscal quarter or fiscal year-end (such date, the “Evaluation
Date”).  The Company presented in its most recently filed Form
10-Q 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
significant changes in the Company’s internal controls (as such term is defined
in Item 308(c) of Regulation S-K under the Exchange Act) or, to the Company’s
knowledge, in other factors that could significantly affect the Company’s
internal controls.  The books and records of the Company and its
Subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and the Subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any Subsidiary to the
extent required to be contained therein.

     

    (s)         Solvency.  Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s fair saleable value of
its 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 for the 12-month
period following Closing 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 debt
when such amounts are required to be paid.

     

    (t)          Certain
Fees.  The Investors shall have no obligation with respect to
any fees or with respect to any claims (other than such fees or commissions owed
by an Investor pursuant to written agreements executed by such Investor which
fees or commissions shall be the sole responsibility of such Investor) made by
or on behalf of any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person for brokerage or finder’s fees or
commissions that may be due in connection with the transactions contemplated by
this Agreement.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (u)         Certain Registration
Matters. Assuming the accuracy of the Investors’ representations and
warranties set forth in Section 3.2(b)-(e), no registration under the Securities
Act is required for the offer and sale of the Shares, the Warrants, or the
Warrant Shares by the Company to the Investors under the Transaction
Documents.  The Company is eligible to register its Common Stock for
resale by the Investors under Form S-1 promulgated under the Securities
Act.  Other than the registration rights granted to holders of SinoHub
International, Inc.’s former Convertible A, B and C  preferred stock,
the Company has not granted or agreed to grant to any Person any rights
(including “piggy-back” registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority that
have not been satisfied.

     

    (v)         Listing and Maintenance
Requirements.  Except as specified in the SEC Reports, the
Company has not, in the two years preceding the date hereof, received notice
from any Trading Market to the effect that the Company is not in compliance with
the listing or maintenance requirements thereof.  The Company is, and
has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with the listing and maintenance requirements for continued
listing of the Common Stock on the Trading Market on which the Common Stock is
currently listed or quoted.  The issuance and sale of the Shares under
the Transaction Documents does not contravene the rules and regulations of the
Trading Market on which the Common Stock is currently listed or quoted, and no
approval of the shareholders of the Company thereunder is required for the
Company to issue and deliver to the Investors the Shares contemplated by
Transaction Documents.

     

    (w)        Investment
Company.  The Company is not, and is not an Affiliate of, and
immediately following the Closing will not have become, an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended.

     

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

     

    (y)         Consultation with
Auditors.  The Company has consulted its independent auditors
concerning the accounting treatment of the transactions contemplated by the
Transaction Documents, and in connection therewith has furnished such auditors
complete copies of the Transaction Documents.

     

    (z)          Foreign Corrupt Practices
Act.  Neither the Company nor any Subsidiary, nor to the
knowledge of the Company, any agent or other person acting on behalf of any of
the Company or any Subsidiary, has, directly or indirectly, (i) used any funds,
or will use any proceeds from the sale of the Shares, 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 any Subsidiary (or made
by any Person acting on their behalf of which the Company is aware) which is in
violation of law, or (iv) has violated the Foreign Corrupt Practices Act of
1977, as amended, and the rules and regulations thereunder.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (aa)       OFAC. Neither the
Company nor any Subsidiary nor, to the knowledge of the Company, any director,
officer, agent, employee, Affiliate or Person acting on behalf of the Company or
any Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not directly or indirectly use the proceeds of the sale of the Shares, or lend,
contribute or otherwise make available such proceeds to any Subsidiary, joint
venture partner or other Person or entity, towards any sales or operations in
Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for
the purpose of financing the activities of any Person currently subject to any
U.S. sanctions administered by OFAC.

     

    (bb)       Money Laundering
Laws. The operations of each of the Company and any Subsidiary are and
have been conducted at all times in compliance with the money laundering
statutes of applicable jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or
enforced by any applicable governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company and/or any Subsidiary
with respect to the Money Laundering Laws is pending or, to the best knowledge
of the Company, threatened.

     

    (cc)       Executive
Officers.  No executive officer (as defined in Rule 501(f) of
the Securities Act) of the Company or any Subsidiary has notified the Company or
such Subsidiary that such officer intends to leave the Company or such
Subsidiary or otherwise terminate such officer’s employment with the Company or
such Subsidiary.  No executive officer of the Company or any
Subsidiary, to the knowledge of the Company or such Subsidiary, is in violation
of any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant.

     

    (dd)       No Undisclosed Events or
Circumstances.  No event or circumstance has occurred or exists
with respect to the Company or its Subsidiaries or their respective businesses,
properties, prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or
disclosed.

     

    3.2.           Representations and
Warranties of the Investors.  Each
Investor hereby, for itself and for no other Investor, represents and warrants
to the Company as follows:

     

    (a)          Organization;
Authority.  Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by such Investor of the transactions
contemplated by this Agreement has been duly authorized by all necessary
corporate or, if such Investor is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of such
Investor.  Each of this Agreement and the Registration Rights
Agreement has been duly executed by such Investor, and when delivered by such
Investor in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such
Investor, enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (b)         Investment
Intent.  Such Investor is acquiring the Shares and Warrants as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Shares, Warrants or Warrant Shares or
any part thereof, without prejudice, however, to such Investor’s right at all
times to sell or otherwise dispose of all or any part of such Shares or Warrant
Shares in compliance with applicable federal and state securities
laws.  Such Investor is acquiring the Shares and Warrants hereunder in
the ordinary course of its business. Such Investor does not have any agreement
or understanding, directly or indirectly, with any Person to distribute any of
the Shares or Warrant Shares.

     

    (c)         Investor
Status.  At the time such Investor was offered the Shares and
Warrants, it was, and at the date hereof it is, an “accredited investor” as
defined in Rule 501(a) under the Securities Act.  Such Investor is not
a registered broker-dealer under Section 15 of the Exchange Act.

     

    (d)         General
Solicitation.  Such Investor is not purchasing the Shares and
Warrants as a result of any advertisement, article, notice or other
communication regarding the Shares published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.

     

    (e)         Access to
Information.  Such Investor acknowledges that it has reviewed
the Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Shares; (ii)
access to information about the Company and the Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment.  Neither such inquiries nor any other investigation
conducted by or on behalf of such Investor or its representatives or counsel
shall modify, amend or affect such Investor’s right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction
Documents.

     

    (f)          Certain Trading
Activities.  Such Investor has not directly or indirectly, nor
has any Person acting on behalf of or pursuant to any understanding with such
Investor, engaged in any transactions in the securities of the Company
(including, without limitations, any Short Sales involving the Company’s
securities) since the earlier to occur of (1) the time that such Investor was
first contacted by the Company or Global Hunter Securities, LLC regarding an
investment in the Company and (2) the 30th day
prior to the date of this Agreement.  Such Investor covenants that
neither it nor any Person acting on its behalf or pursuant to any understanding
with it will engage in any transactions in the securities of the Company
(including Short
Sales) prior to the time that the transactions contemplated by this Agreement
are publicly disclosed.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (g)         Independent Investment
Decision.  Except as may be disclosed in any filings with the
Commission by the Investors under Section 13 and/or Section 16 of the Exchange
Act, no Investor has agreed to act with any other Investor for the purpose of
acquiring, holding, voting or disposing of the Shares or the Warrant Shares for
purposes of Section 13(d) under the Exchange Act, and each Investor is acting
independently with respect to its investment in the Shares and the Warrant
Shares.  Such Investor has independently evaluated the merits of its
decision to purchase Shares pursuant to the Transaction Documents, and such
Investor confirms that it has not relied on the advice of any other Investor’s
business and/or legal counsel in making such decision.  Such Investor
has not relied on the business or legal advice of Global Hunter Securities, LLC
or any of its agents, counsel or Affiliates in making its investment decision
hereunder, and confirms that none of such Persons has made any representations
or warranties to such Investor in connection with the transactions contemplated
by the Transaction Documents.

     

    ARTICLE
4.

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1.          (a)         Shares,
Warrants and Warrant Shares may only be disposed of in compliance with state and
federal securities laws.  In connection with any transfer of the
Shares and Warrant Shares other than pursuant to an effective registration
statement, to the Company, to an Affiliate of an Investor or in connection with
a pledge as contemplated in Section 4.1(b), the Company may require the
transferor thereof 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 of such transferred Shares under the Securities Act.

     

    (b)         Certificates
evidencing the Shares and Warrant Shares will contain the following legend,
until such time as they are not required under Section 4.1(c):

     

    THESE
SECURITIES HAVE 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 PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    The
Company acknowledges and agrees that an Investor may from time to time pledge,
and/or grant a security interest in some or all of the Shares pursuant to a bona
fide margin agreement in connection with a bona fide margin account and, if
required under the terms of such agreement or account, such Investor may
transfer pledged or secured Shares to the pledgees or secured
parties.  Such a pledge or transfer would not be subject to approval
or consent of the Company and no legal opinion of legal counsel to the pledgee,
secured party or pledgor shall be required in connection with the pledge, but
such legal opinion may be required in connection with a subsequent transfer
following default by the Investor transferee of the pledge.  No notice
shall be required of such pledge.  At the appropriate Investor’s
expense, the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Shares may reasonably request in connection with a
pledge or transfer of the Shares including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) of the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list
of selling stockholders thereunder.  Except as otherwise provided in
Section 4.1(c), any Shares subject to a pledge or security interest as
contemplated by this Section 4.1(b) shall continue to bear the legend set forth
in this Section 4.1(b) and be subject to the restrictions on transfer set forth
in Section 4.1(a).

     

    (c)         Certificates
evidencing Shares and Warrant Shares shall not contain any legend (including the
legend set forth in Section 4.1(b)): (i) following a sale or transfer of such
Shares or Warrant Shares pursuant to an effective registration statement
(including a Registration Statement), or (ii) following a sale or transfer of
such Shares or Warrant Shares pursuant to Rule 144 (assuming the transferee is
not an Affiliate of the Company), or (iii) while such Shares and Warrant Shares
are eligible for sale without volume limitations pursuant to Rule
144.  If an Investor shall make a sale or transfer of Shares or
Warrant Shares either (x) pursuant to Rule 144 or (y) pursuant to a registration
statement and in each case shall have delivered to the Company or the Company’s
transfer agent the certificate representing Shares or Warrant Shares containing
a restrictive legend which are the subject of such sale or transfer and a
representation letter in customary form (the
date of such sale or transfer and share delivery being the “Share Delivery Date”), then
the Company shall deliver or cause to be delivered to such Investor a
certificate representing such Shares or Warrant Shares that is free from all
restrictive or other legends by the third Trading Day following the Share
Delivery Date.

     

    4.2.           Furnishing of
Information.  As
long as any Investor owns the Shares, the Company covenants 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, and the Company shall not terminate its status as
an issuer required to file reports under the Exchange Act even if the Exchange
Act or the rules and regulations thereunder would permit such termination; provided, however, that the
provisions of this Section 4.2 shall
terminate and be of no further force and effect in the event of the acquisition
of the Company or substantially all of its assets.  The Company
further covenants that it will take such further action as any holder of Shares
may reasonably request, all to the extent required from time to time to enable
such Person to sell the Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    4.3.           Integration.  The
Company shall not, and shall use its best efforts to ensure that no Affiliate of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Shares in a manner
that would require the registration under the Securities Act of the sale of the
Shares and Warrants to the Investors, or that would be integrated with the offer
or sale of the Shares for purposes of the rules and regulations of any Trading
Market in a manner that would require stockholder approval of the sale of the
securities to the Investors.

     

    4.4.           Subsequent
Registrations.  Other
than pursuant to the Registration Rights Agreement, prior to the first to occur
of (a) 30 days after the Effective Date of a Registration Statement resulting in
all Registrable Securities (as defined in the Registration Rights Agreement)
being registered for resale pursuant to one or more effective Registration
Statements or (b) such time as all Registrable Securities may be sold by the
Investors without volume restrictions pursuant to Rule 144, the Company may not
file any registration statement (other than on Form S-8)  with the
Commission with respect to any securities of the Company.

     

    4.5.           Securities Laws Disclosure;
Publicity.  On
the next Business Day following the execution of this Agreement the Company will
issue an appropriate press release and file a Current Report on Form 8-K
disclosing the material terms of the Transaction Documents (and attach as
exhibits thereto the Transaction Documents), and on the next Business Day
following the Closing Date the Company will issue an additional press release
and file an additional Current Report on Form 8-K to disclose the
Closing.  In addition, the Company will make such other filings and
notices in the manner and time required by the Commission and the Trading Market
on which the Common Stock is listed.  Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Investor, or include the
name of any Investor in any filing with the Commission (other than a
Registration Statement and any exhibits to filings made in respect of this
transaction in accordance with periodic filing requirements under the Exchange
Act) or any regulatory agency or Trading Market, without the prior written
consent of such Investor, except to the extent such disclosure is required by
law or Trading Market regulations.

     

    4.6.           Limitation on Issuance of
Future Priced Securities.  For
so long as the Investors own any Shares or Warrant Shares, the Company shall not
issue any “Future Priced Securities” as such term is described by NASD
IM-4350-1.

     

    4.7.           Indemnification of
Investors.  In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold the Investors and their directors, officers,
shareholders, partners, employees and agents (each, an “Investor 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 Investor Party may suffer or incur as a result of or
relating to any misrepresentation, breach or inaccuracy of any representation,
warranty, covenant or agreement made by the Company in any Transaction
Document.  Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 4.7
shall be the same as those set forth in Section 5 of the Registration Rights
Agreement.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    4.8.           Non-Public Information.  The
Company covenants and agrees that neither it nor any other Person acting on its
behalf will provide any Investor or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Investor shall have executed a written agreement regarding
the confidentiality and use of such information.  The Company
understands and confirms that each Investor shall be relying on the foregoing
representations in effecting transactions in securities of the
Company.

     

    4.9.           Listing of
Shares.  The
Company agrees, (i) if the Company applies to have the Common Stock traded on
any other Trading Market, it will include in such application the Shares and the
Warrant Shares, and will take such other action as is necessary or desirable to
cause the Shares and the Warrant Shares to be listed on such other Trading
Market as promptly as possible, and (ii) it will take all action reasonably
necessary to continue the listing and trading of its Common Stock on a Trading
Market and will comply in all material respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading
Market.

     

    4.10.         Use of
Proceeds.  The
Company will use the net proceeds from the sale of the Shares hereunder for
working capital, equipment/infrastructure, and business development purposes and
to cover fees and expenses associated with this offering and not for the
satisfaction of any portion of the Company’s debt (other than payment of trade
payables and accrued expenses in the ordinary course of the Company’s business
and consistent with prior practices), or to redeem any Common Stock or Common
Stock Equivalents.

     

    4.11          Participation
Right.  For a period of one year following the Effective Date
of the Registration Statement, Investor is hereby granted the right to
participate in each future capital-raising transaction commenced by the Company
prior to the expiration of such one-year period (on the same terms and
conditions as are offered to third party participants in such transaction), pro
rata to the extent of the dollar amount of Investor’s investment in the Shares.
The Company shall provide Investor with not less than ten days’ prior written
notice of Investor’s right to participate in a capital-raising transaction
covered by this provision, and Investor shall have ten days from its receipt or
deemed receipt of such notice to notify the Company, in writing, whether it
desires to participate. In the event Investor fails to respond to the Company’s
notice within such ten day period, Investor shall be deemed not to have
exercised its participation right. In the event Investor provides timely written
notice to the Company of its election to participate in a capital-raising
transaction covered by this provision, Investor shall tender its payment and any
required documentation to the Company within five days following Investor’s
written notice of participation to the Company. In the event Investor fails to
make such payment on a timely basis or provide such documents, Investor’s right
of participation shall terminate and shall thereafter be of no further force or
effect.  The right of participation granted to Investors under this
Section 4.11 shall not apply to:

     

    (1)           any
of the transaction whereby (i) the Company pays a stock dividend on its Common
Stock or otherwise makes a distribution on any class of capital stock that is
payable in shares of Common Stock, (ii) the Company subdivides outstanding
shares of Common Stock into a larger number of shares, (iii) the Company
combines outstanding shares of Common Stock into a smaller number of shares or
(iv) there is a Fundamental Transaction (as defined in the
Warrant),

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (2)           the
issuance, conversion, exchange or exercise of any securities pursuant to this
Agreement,

     

    (3)           the
issuance of options exercisable for Common Stock to employees, officers,
consultants or directors of the Company or its subsidiaries, but only to the
extent that the aggregate number of shares excluded hereby and issued after the
date of this Agreement shall not exceed 5% of the outstanding shares of Common
Stock at the time of such issuance,

     

    (4)           the
issuance, conversion, exchange or exercise of any securities pursuant to any
additional equity financings with higher offering price per share on its common
shares or equity-linked securities of any kind than the shares of Common Stock
issued pursuant to this Agreement,

     

    (5)           the
issuance of Common Stock issuable upon the conversion, exchange or exercise of
other securities, warrants, options or similar rights, which securities were
issued before the date of this Agreement, provided such securities are not
amended after the date hereof to increase the number of shares of Common Stock
issuable thereunder or to lower the exercise or conversion price thereof,
or

     

    (6)           the
issuance of Common Stock, options, warrants or other convertible securities
issued to strategic partners of the Company in connection with transactions
consummated with such strategic partners in furtherance of the Company’s
business objectives.

     

    4.12           Public Relations
Firm. Within 45 days following the final closing of the Offering, the
Company agrees to engage a reputable public relations firm to provide the
Company with investor relations services.

    

    4.13           Lock-Up
Agreements.  The Company’s President and CEO have entered into
an agreement with the Placement Agent, under which each such executive officer
has agreed, without the prior written consent of the Placement Agent, not to
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, sell stock short, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of any
shares of Common Stock or enter into any swap or other arrangement that
transfers any economic consequences of ownership of Common Stock, for a period
of one year following the Effective Date of the Registration Statement;
provided, however, that each of the President and the CEO will be permitted to
sell up to 100,000 shares of Common Stock each, subject to their compliance with
the resale requirements of Rule 144.

    

    4.14           Reservation of
Shares.  For so long as any of the Warrants remain outstanding
and unexpired, the Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than one hundred
percent (100%) of the aggregate number of shares of Common Stock needed to
provide for (i) the issuance of the Warrant Shares and (ii) the full exercise or
conversion of all outstanding securities of the Company that are exercisable
for, or convertible into, shares of Common Stock.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    ARTICLE
5.

    CONDITIONS
PRECEDENT TO CLOSING

     

    5.1.           Conditions Precedent to the
Obligations of the Investors to Purchase Shares.  The
obligation of each Investor to acquire Shares and Warrants at the Closing is
subject to the satisfaction or waiver by such Investor, at or before the
Closing, of each of the following conditions:

     

    (a)           Representations and
Warranties.  The representations and warranties of the Company
contained herein shall be true and correct in all material respects as of the
date when made and as of the Closing as though made on and as of such
date;

     

    (b)           Performance.  The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to the
Closing;

     

    (c)           No Injunction or
Action.  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; and no Action shall have been instituted or threatened against the
Company or any Subsidiary, or any of the officers, directors or affiliates of
the Company or any Subsidiary seeking to restrain, prevent or change the
transactions contemplated by the Transaction Documents, or seeking damages in
connection with such transactions.

     

    (d)           Adverse
Changes.  Since the date of execution of this Agreement, no
event or series of events shall have occurred that reasonably could have or
result in a Material Adverse Effect, or could materially adversely affect the
credit standing of the Company or the Subsidiaries, or could materially
adversely affect the financial markets generally;

     

    (e)           No Suspensions of Trading in
Common Stock; Listing.  Trading in the Common Stock shall not
have been suspended by the Commission or any Trading Market (except for any
suspensions of trading of not more than one Trading Day solely to permit
dissemination of material information regarding the Company) at any time since
the date of execution of this Agreement, and the Common Stock shall have been at
all times since such date listed for trading on a Trading Market;

     

    (f)           Company
Agreements.  The Company shall have delivered:

     

    (i)           The
Closing Escrow Agreement, duly executed by the Company and the Escrow
Agent;

     

    (ii)           The
Registration Rights Agreement, duly executed by the Company; and

     

    (iii)           The
Lock-Up Agreement, duly executed by each of the Company’s CEO and
President.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (g)           Company
Deliverables.  The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a);

     

    (h)           Performance Escrow
Agreement.  Management of the Company and the Placement Agent
shall have duly executed and delivered the Performance Escrow
Agreement;

     

    (i)           Termination.  This
Agreement shall not have been terminated as to such Investor in accordance with
Section 6.5;

     

    (j)           Opinion of
Counsel.  At the Closing, the Investors shall have received the
legal opinion of Crone Rozynko LLP, legal
counsel to the Company, dated the date of the Closing, in the form of
Annex B hereto;
and

     

    (k)           Minimum
Investment.  A minimum of US $7,000,000 shall have been
deposited into escrow for investment in the Common Stock and Warrants pursuant
to the Closing Escrow Agreement.

     

    5.2.           Conditions Precedent to the
Obligations of the Company to sell Shares.  The
obligation of the Company to sell Shares and Warrants at the Closing is subject
to the satisfaction or waiver by the Company, at or before the Closing, of each
of the following conditions:

     

    (a)           Representations and
Warranties.  The representations and warranties of each
Investor contained herein shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though made on and as of
such date;

     

    (b)           Performance.  Each
Investor shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor at or
prior to the Closing;

     

    (c)           No
Injunction.  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;

     

    (d)           Investor
Deliverables.  Each Investor shall have delivered the
Registration Rights Agreement and the Closing Escrow Agreement, each duly
executed by such Investor;

     

    (e)           Termination.  This
Agreement shall not have been terminated in accordance with Section 6.5;
and

     

    (f)           Secretary’s
Certificate.  The Company shall have delivered to such Investor
a secretary’s certificate, dated as of the Closing Date, as to (i) the
resolutions adopted by the Company’s Board of Directors or any committee thereof
approving the transactions contemplated hereby, (ii) the Company’s Certificate
of Incorporation and Bylaws, each as in effect at the Closing, and (iii) the
authority and incumbency of the officers of the Company executing the
Transaction Documents and any other documents required to be executed or
delivered in connection therewith.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    ARTICLE
6.

    MISCELLANEOUS

     

    6.1.           Fees and
Expenses.  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 the
Transaction Documents; provided, however, that that
the Company shall pay all actual attorneys’ fees and expenses (including
disbursements and out-of-pocket expenses) incurred by Renn Capital Group, Inc.
in connection with (i) the preparation, negotiation, execution and delivery of
this Agreement and the other Transaction Documents and the transactions
contemplated thereunder, (ii) the filing and declaration of effectiveness by the
Commission of the Registration Statement (as defined in the Registration Rights
Agreement) and (iii) any amendments, modifications or waivers of this Agreement
or any of the other Transaction Documents requested by the Company, subject to a
cap of $20,000 .  The fees set forth in this Section 6.1 and which
are incurred prior to the Closing Date shall be paid at Closing.  The
Company shall pay all stamp and other taxes and duties levied in connection with
the issuance of the Shares.

     

    6.2.           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, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.

     

    6.3.           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 (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 6:30 p.m. (New York City 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
specified in this Section on a day that is not a Trading Day or later than 6:30
p.m. (New York City time) on any Trading Day, (c) the 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 address for such notices and communications shall be
as follows:

     

    
      	 	
              If
      to the Company:

            	
              SinoHub,
      Inc.

            
	 	 	
              Room
      B, Second Floor, M-10, Central (W.)

            
	 	 	Shenzhen High-Tech
      Park, Shenzhen
	 	 	People’s Republic of
      China 518057
	 	 	
              Attn:
      Chief Executive Officer

            
	 	 	
              Facsimile:
      +86-755-26012224

            
	 	 	 
	 	
              With
      a copy to:

            	
              Crone
      Rozynko LLP

            
	 	 	
              101
      Montgomery St., Ste 1950

            
	 	 	
              San
      Francisco, CA 94104

            
	 	 	
              Facsimile:  (415)
      955-8910

            
	 	 	
              Attn.:  Adam
      M. Guttmann

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

      
         

        
          	 	
                  If
      to an Investor:

                	
                  To the
      address set forth under such Investor's name on the signature pages
      hereof; or such other address as may be designated in writing
      hereafter, in the same manner, by such
Person.

                

        

         

        or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.

         

      

    

    6.4.           Amendments; Waivers; No
Additional Consideration.  No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company and the Investors at least 66 2/3% of the
Shares.  No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right.  No consideration shall be offered or
paid to any Investor to amend or consent to a waiver or modification of any
provision of any Transaction Document unless the same consideration is also
offered to all Investors who then hold Shares.  Without the written
consent or the affirmative vote of each Investor affected thereby, an amendment
or waiver under this Section 6.4 may not waive or amend any Transaction Document
the effect of which would be to permit the Company to (1) name any Investor as
an underwriter in a Registration Statement without such Investor’s specific
written consent thereto, or (2) not include any Registrable Securities (as
defined in the Registration Rights Agreement) of an Investor in a Registration
Statement due to their refusal to be named as an underwriter
therein.

     

    6.5.           Termination.  This
Agreement may be terminated prior to Closing:

     

    (a)           by
written agreement of the Investors and the Company, a copy of which shall be
provided to the Escrow Agent; and

     

    (b)           by
the Company or an Investor (as to itself but no other Investor) upon written
notice to the other and to the Escrow Agent, if the Closing shall not have taken
place by 6:30 p.m. Eastern time on the Outside Date; provided, that the
right to terminate this Agreement under this Section 6.5(b) shall not be
available to any Person whose failure to comply with its obligations under this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or before such time.

     

    In the event of a termination pursuant
to this Section, the Company shall promptly notify all non-terminating
Investors. Upon a termination in accordance with this Section 6.5, the Company
and the terminating Investor(s) shall not have any further obligation or
liability (including as arising from such termination) to the other (except with
respect to breaches of this Agreement) and no Investor will have any liability
to any other Investor under the Transaction Documents as a result
therefrom.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    6.6.           Construction.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.

     

    This
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement or any of the
Transaction Documents.

     

    6.7.           Successors and
Assigns.  This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns.  The Company may not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Investors. Any Investor may assign any or all of its rights under
this Agreement to any Person to whom such Investor assigns or transfers any
Shares, provided such transferee agrees in writing to be bound, with respect to
the transferred Shares, by the provisions hereof that apply to the
“Investors.”

     

    6.8.           No Third-Party
Beneficiaries.  This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set forth
in Section 4.7 (as to each Investor Party).

     

    6.9.           Governing
Law.  All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof.  Each party agrees that all
Actions concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the state or federal courts located
in the State of Texas.  Each party hereto hereby irrevocably submits
to the exclusive jurisdiction of the state or federal courts located in Dallas
County, Texas for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
Action, any claim that it is not personally subject to the jurisdiction of any
such courts, or that such Action has been commenced in an improper or
inconvenient forum.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Action by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal Action arising out of or relating to this Agreement
or the transactions contemplated hereby.  If either party shall
commence an Action to enforce any provisions of a Transaction Document, then the
prevailing party in such Action shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Action.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    6.10.         Survival.  The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Shares.

     

    6.11.         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, 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 signature page
were an original thereof.

     

    6.12.         Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

     

    6.13.         Rescission and Withdrawal
Right.  Notwithstanding
anything to the contrary contained in (and without limiting any similar
provisions of) the Transaction Documents, whenever any Investor 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 Investor 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.

     

    6.14.         Replacement of
Shares.  If
any certificate or instrument evidencing any Shares is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested.  If a replacement
certificate or instrument evidencing any Shares 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.

     

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

     

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

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    6.17.         Independent Nature of
Investors’ Obligations and Rights.  The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document.  The decision of each
Investor to purchase Shares pursuant to the Transaction Documents has been made
by such Investor independently of any other Investor.  Nothing
contained herein or in any Transaction Document, and no action taken by any
Investor pursuant thereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Investor acknowledges that no other
Investor has acted as agent for such Investor in connection with making its
investment hereunder and that no Investor will be acting as agent of such
Investor in connection with monitoring its investment in the Shares or enforcing
its rights under the Transaction Documents.  Each Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such
purpose.  The Company acknowledges that each of the Investors has been
provided with the same Transaction Documents for the purpose of closing a
transaction with multiple Investors and not because it was required or requested
to do so by any Investor.

     

     [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGES FOLLOW]

     

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        	 	SINOHUB, INC.	 
	 	 	 	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name: 	 
	 	 	Title: 	 

      

    

    
    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGES FOR INVESTORS FOLLOW]

     

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    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.

     

    
       

      
        	 	NAME OF
    INVESTOR
	 	 
	 	 
	 	 
	 	By: 	 
	 	 	Name:
	 	 	Title:

      

       

      
        	 	Investment
      Amount:  $    	 
	 	 
	 	
                Tax
      ID No.:        

              	 
  

      

       

       

      
        	 	
                ADDRESS
      FOR NOTICE

              
	 	 
	 	
                
                  c/o:

                

              	 

      

       

      
        	 	Street:	 

      

       

      
        	 	City/State/Zip:	 

      

       

      
        	 	Attention:	 

      

       

      
        	 	Tel:	 

      

       

      
        	 	Fax:	 

      

       

       

      
        	 	
                
                  
                    DELIVERY
      INSTRUCTIONS

                    
                      (if
      different from above)

                    

                  

                

              
	 	 
	 	c/o:	 

      

      
         

        
          	 	Street:	 

        

         

        
          	 	City/State/Zip:	 

        

         

        
          	 	Attention:	 

        

         

        
          	 	Tel:	 

        

         

        
        

      

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

                                                     Annex A

     

    SCHEDULE
OF BUYERS

     

    

    
      	
              (1)

            	
              (2)

            
	 	 
	 	 
	 	 
	
              
                 

                Buyer

              

            	
              
                Address
      and

                Facsimile
      Number

              

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      

    

     

     

     

     

    
      
        
        

      

      
        28

        
          

        

      

    

     

    
      Annex
B

    FORM OF OPINION OF
COUNSEL

     

     

    1.           The
Company is incorporated, validly existing and in good standing in the State of
Delaware.  The Company has the requisite corporate power to own, lease
and operate its properties and assets, and to carry on its business as described
in the SEC Documents.

    

    2.           The
Company has the requisite corporate power to enter into and perform its
obligations under the Transaction Documents and to issue the Common Shares, the
Warrants and the Warrant Shares.  The execution, delivery and
performance of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly and
validly authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required.

    

    3.           Each
of the Transaction Documents have been duly executed and delivered, and the
Warrants have been duly executed, issued and delivered by the Company, and each
of the Transaction Documents constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its respective
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to or affecting
creditors’ rights generally and to general equitable principles.  The
Common Stock purchased pursuant to the Purchase Agreement or issuable upon
exercise of the Warrants is not subject to any preemptive rights under the
Certificate of Incorporation or the Bylaws.

    

    4.           The
Shares have been duly authorized and, when delivered against payment in full as
provided in the Purchase Agreement, will be validly issued, fully paid and
nonassessable.  The Warrant Shares have been duly authorized and
reserved for issuance, and, when delivered upon against payment in full as
provided in the Warrants, will be validly issued, fully paid and
nonassessable.

    

    5.           The
execution, delivery and performance of and compliance with the terms of the
Transaction Documents and the issuance of the Shares, the Warrants and the
Warrant Shares do not (i) violate any provision of the Certificate of
Incorporation or Bylaws, (ii) breach or result in an event of default under any
agreement filed by the Company as an exhibit to any of the SEC Reports, or (iii)
violate any federal or Delaware statute, rule, regulation or order known to us
and applicable to the Company.

    

    6.           No
consent, approval or authorization of or designation, declaration or filing with
any governmental authority on the part of the Company is required under any
federal or Delaware law, rule or regulation in connection with the valid
execution and delivery of the Transaction Documents, or the offer, sale or
issuance of the Common Shares, the Warrants or the Warrant
Shares, other than post-closing filings required under applicable federal and
state securities laws and other in connection with the filing of the
Registration Statement.

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    7.           The
offer, issuance and sale of the Securities pursuant to the Transaction Documents
are exempt from the registration requirements of the Securities Act of 1933
assuming (i) the Purchasers’ representations are accurate, (ii) the manner of
sale provisions of Rule 502(a) and (c) of Regulation D, promulgated under the
Securities Act, have been complied with, and (iii) the filing provisions of Rule
503 of the Securities Act have been complied with.

    

    8.           The
Company is not, and as a result of and immediately upon Closing will not be, an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
amended.

     

     

     

     

     

    
30

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]