Document:

Investment
      Trust Agreement 

     

    The
      Agreement is made and entered into on October 28, 2006 in Xi’an,
      the
      PRC by and between

     

    
      	
              Trustor: 

            	 	
              Xi’an
                Amorphous Alloy Science & Technology Co., Ltd.
                

            
	 	 	
              Address:
                6F, Yasen Industrial Center Building, No. 15 Gaoxin 6th
                Road, 

            
	 	 	
              Hi-tech
                Zone, Xi’an
                

            
	
               

            	 	
              Legal
                representative: Song Yongxing 

            
	 	 	 
	
              Trustees:
                

            	
              1.
                

            	
              Song
                Yongxing 

            
	 	 	
              ID
                No.:

            
	
               

            	 	
              Domicile:
                

            
	 	 	 
	
               

            	
              2.

            	
              Mao
                Junming 

            
	 	 	
              ID
                No.:

            
	
               

            	 	
              Domicile:
                

            
	 	 	 
	
               

            	
              3.
                

            	
              Xu
                Zewei 

            
	 	 	
              ID
                No.: 

            
	 	 	
              Domicile:
                

            
	 	 	 
	 	
              4.

            	
              Dai
                Tao 

            
	 	 	
              ID
                No.: 

            
	 	 	
              Domicile:
                

            
	 	 	 
	 	
              5.
                

            	
              Wang
                Yuefeng 

            
	 	 	
              ID
                No.: 

            
	 	 	
              Domicile:
                

            
	 	 	 
	 	
              6.

            	
              Lin
                Yuan 

            
	 	 	
              ID
                No.: 

            
	 	 	
              Domicile:
                

            
	 	 	 
	 	
              7.

            	
              Zhang
                Wei 

            
	 	 	
              ID
                No.: 

            
	 	 	
              Domicile:
                

            
	 	 	 
	 	
              8.

            	
              Feng
                Yarong 

            
	 	 	
              ID
                No.: 

            
	 	 	
              Domicile:
                

            
	 	 	 
	 	
              9.
                

            	
              Shi
                Sujun 

            
	 	 	
              ID
                No.: 

            
	 	 	
              Domicile:
                

            
	 	 	 
	 	
              10.
                

            	
              Yu
                Xinzheng 

            
	 	 	
              ID
                No.: 

            
	 	 	
              Domicile:
                

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
 

    WHEREAS:

     

    1.
      The
      Trustor is a joint stock limited company incorporated and legally existing
      in
      accordance with the laws of China, registered in Shaanxi Xi’an Administration
      for Industry and Commerce, No. 6101012110931; 

     

    2.
      The
      Trustees are citizens of the People’s Republic of China and natural person
      shareholders of the Trustor, and Song Yongxing is the legal representative
      of
      the Trustor.. 

     

    3.
      Xi’an
      Amorphous Alloy Zhongxi Transformer Co., Ltd. (hereinafter referred to as
“AAZX”) is a limited liability company established by the Trustees with the
      authorization of the Trustor on June 29, 2004 and registered in Shaanxi Xi’an
      Administration for Industry and Commerce; the Trustees hold the shareholdings
      of
      AAZX and are registered as the shareholder on behalf of the Trustor. AAZX owns
      RMB32 million as registered capital, among which the Trustees contributed
      totally RMB30 million, holding 93.75% of the total shares of AAZX, and Xi’an
      Zhongxi Rectifying Electric Cooker Transformer Factory contributed RMB2 million.
      

     

    4.
      The
      Parties agree to make a formal trust investment agreement to specify the trust
      relationship between the Parties and to realize Trustor’s aim of oversea
      financing. 

     

    It
      is
      hereby agreed as follows through friendly negotiation concerning the matters
      as
      mentioned in the WHEREAS: 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    Article
      1 Investment Trust and Escrow

     

    1.1
      The
      Parties confirm that thirty million yuan (RMB30 million) of investment by the
      Trustees in AAZX shall be the investment entrusted by the Trustor, who shall
      be
      the actual owner of 93.75% of the shareholdings of AAZX(hereinafter referred
      to
      as the “Warehoused Shareholding”) which is registered under the names of the
      Trustees, and the Trustees are entrusted shareholders. 

     

    1.2
      All
      of the investment contributed by the Trustees with entrustment of theTrustor
      shall include investment of money with amount to seven million and eight hundred
      and sixty thousand yuan (RMB7,860,000), workshop, namely, workshop 1F and office
      building 4F of No. 1, Yasen Industrial Center Building, No. 15 Gaoxin 6th Road,
      Hi-tech Zone, Xi’an, with amount to fourteen million two hundred thousand yuan
      (RMB14,200,000), and equipment with amount to seven million nine hundred and
      forty thousand yuan (RMB7,940,000), seeing Annex 1, the List of Material
      Investment, and Annex 2, the List of Asset Handover. 

     

    1.3
      Assets comtributed by the Trustees with entrustment have been verified by Shanxi
      Zhongqing Certified Public Accountants, which issued the capital verification
      report, No. Shan Zhong Qing Yan Zi(2004)1112. The assets contributed with
      entrustment and the proportion of shareholdings are as follows: 

     

    
      
        	
                Serial
                  No.

              	 	
                Name
                  of Agent 

              	 	
                Amount
                  of Capital Contribution(RMB) 

              	 	
                Form
                  of Capital Contribution 

              	 	
                Proportion
                  of Shareholding 

              	 
	
                1

              	 	 	
                Song
                  Yongxing

              	 	 	
                3,000,000

              	 	 	
                Currency

              	 	 	
                43.75

              	
                %

              
	 	 	 	 	 	 	
                11,000,000

              	 	 	
                Material
                  Objects (real estate

              	
                )

              	 	 	 
	
                2

              	 	 	
                Mao
                  Junming

              	 	 	
                2,100,000

              	 	 	
                Material
                  Objects (equipment

              	
                )

              	 	
                6.56

              	
                %

              
	
                3

              	 	 	
                Xu
                  Zewei

              	 	 	
                2,000,000

              	 	 	
                Material
                  Objects (equipment

              	
                )

              	 	
                6.25

              	
                %

              
	
                4

              	 	 	
                Wang
                  Yuefeng 

              	 	 	
                1,920,000

              	 	 	
                Material
                  Objects (equipment

              	
                )

              	 	
                6

              	
                %

              
	
                5

              	 	 	
                Dai
                  Tao

              	 	 	
                1,920,000

              	 	 	
                Material
                  Objects (equipment

              	
                )

              	 	
                6

              	
                %

              
	
                6

              	 	 	
                Lin
                  Yuan

              	 	 	
                1,660,000

              	 	 	
                Currency

              	 	 	
                5.19

              	
                %

              
	
                7

              	 	 	
                Zhang
                  Wei

              	 	 	
                1,600,000

              	 	 	
                Currency

              	 	 	
                5

              	
                %

              
	
                8

              	 	 	
                Feng
                  Yarong 

              	 	 	
                1,600,000

              	 	 	
                Currency

              	 	 	
                5

              	
                %

              
	
                9

              	 	 	
                Shi
                  Sujun

              	 	 	
                1,600,000

              	 	 	
                Material
                  Objects (real estate

              	
                )

              	 	
                5

              	
                %

              
	
                10

              	 	 	
                Yu
                  Xinzheng 

              	 	 	
                1,600,000

              	 	 	
                Material
                  Objects (real estate

              	
                )

              	 	
                5

              	
                %

              

      

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    1.4
      The
      Trustor shall have the right to terminate the trust at any time with a notice
      to
      the Trustees. The Trustees shall, within the period given by the Trustor after
      receipt the notice from the Trustor, make the Warehoused Shareholding registered
      under the name of the Trustor or a third party appointed by the Trustor in
      accordance with the method determined by the Trustor, including but not limited
      to, gratuitous donations, consideration of RMB1, or gratuitous transfer.

     

    1-5
      The
      Trustees shall be willing to accept the said trust of the Trustor, to make
      capital contributions and hold the shares on behalf of the Trustor and to
      exercise relevant shareholders’ rights subject to the Trustor’s instructions.
      The Trustees shall agree to all arrangements under the Agreement. 

    

    Article
      2 Scope of Authority 

     

    The
      rights to be exercises by the Trustees with the trust of the Trustor shall
      include: 

     

    2.1
      The
      Trustees shall register as the shareholders of AAZX, sign their names in the
      shareholder book of AAZX and exercise the voting right as AAZX’s shareholders
      subject to the instructions of the Trustor; 

     

    2.2
      One
      or several persons of the Trustees shall act as the director of AAZX, be elected
      as the legal representative and exercise the voting right as the legal
      representative and the director of AAZX; 

     

    2.3
      The
      Trustees shall make resolutions concerning recombination and listing of the
      assets, shareholdings, rights and interestsof the Trustor and AAZX as the
      shareholders of AAZX pursuant to relevant decisions of the Trustor, and execute
      the agreements and legal documents concerning AAZX oversea financing and listing
      as the legal representative or the authorized representative; 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2-4
      The
      Trustees shall, for interests of the Trustor, exercise other rights of the
      shareholders conferred by the Corporation Law and the Articles of Association
      of
      AAZX. 

    

    Article
      3 Term of Investment Trust

     

    The
      term
      of trust investment shall be effective from the day of execution and
      effectiveness of the Agreement to

     

    1)
      the
      termination of AAXZ; or 

    2)
      the
      day of termination of the Agreement negotiated by and between the Parties;
      or

    3)
      the
      day of rescission of the Agreement notified in writing by the Trustor.

     

    If
      the
      Trustor notifies one or several persons of the Trustees in writing of rescission
      of the entrustment relationship, the Agreement shall remain in full force upon
      the other Trustees who are not notified. 

    

    Article
      4 Rights and Obligations of the Trustor 

     

    The
      rights and obligations of the Trustor within the term of trust investment shall
      include: 

     

    4.1
      As an
      actual investor and owner of the assets of investment entrusted, the Trustor
      shall enjoy the actual and final right to own, dispose (including but not
      limited to, assignment, donation or pledge etc.), and gain benefits from the
      Warehoused Shareholding. The Trustor shall enjoy the actual shareholders’ rights
      and assume corresponding obligations. The decisions upon operation and
      management made by theTrustees shall meet the interests of the Trustor;

     

    4.2
      The
      Trustor shall enjoy the right to, at its own discretion, give instructions
      to
      the Trustees at any time concerning entrustment of the Trustees’ exercise of the
      rights as described in Article 2 hereof, and the Trustees shall carry out the
      instructions unconditionally; 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    4.3
      The
      Trustor shall enjoy the right to, at its own discretion, know the operation
      of
      AAZX and make decisions upon the Trustees at any time, and the Trustees shall
      carry out the decisions unconditionally; 

     

    4.4
      The
      Trustor shall enjoy the right to, at its own discretion, at any time rescind
      the
      trust to the Trustees and require the Trustees to make the Warehoused
      Shareholding registered under the name of the Trustor or a third party appointed
      by the Trustor subject to the method determined by the Trustor, including but
      not limited to, gratuitous donations, consideration of RMB1, or gratuitous
      transfer. In case of necessary execution of relevant legal documents and
      completion of corresponding legal procedures then, the Trustees shall consent
      and undertake unconditionally; 

     

    4.5
      The
      Trustor shall enjoy the right to, pursuant to the Agreement, supervise and
      correct improper acts of the Trustees and require the Trustees to compensate
      for
      losses due to such acts; 

     

    4.6
      The
      Trustor may authorize the Trustees to entrust a third party to be in charge
      of
      operation and management of the Company; 

     

    4.7
      Instructions given by the Trustor to the Trustees shall not impair the
      legitimate individual rights of the Trustees, nor conflict with the laws and
      regulations of China. 

     

    Article
      5 Rights and Obligations of the Trustees 

     

    The
      rights and obligations of the Trustees within the term of trust investment
      shall
      include: 

     

    5.1
      The
      Trustees shall make investment in AAZX in their own names with entrustment
      of
      the Trustor and act as the dummy shareholders of AAZX; 

     

    5.2
      The
      Trustees shall operate AAZX in good faith for the interest of the Trustor;
      

     

    5.3
      The
      Trustees shall have the right to, at the Trustor’s instruction, exercise the
      rights hereunder as the dummy shareholders; however, the Trustees shall not
      seek
      for any private interests for themselves in the name of dummy shareholders,
      nor
      cause any adverse impacts on the Trustor or AAZX; 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    5.4
      If
      the Trustor requires the Trustees to sub-entrust a third party to operate and
      manage AAZX, the Trustees shall, at the Trustor’s requirements, make relevant
      resolutions at the board meetings and the Shareholders’ meetings and execute
      relevant contracts; 

     

    5.5
      The
      Trustees shall, at any time at the Trustors’ instructions, transfer the
      Warehoused Shareholding to the Trustor or any third party appointed by the
      Trustor pursuant to Article 4.4 hereof, and cooperate unconditionally with
      the
      Trustor or the third party in completing relevant legal procedures;

     

    5.6
      If,
      during performance of the Agreement, one or several persons of the Trustees
      resign from the Company, they shall disqualify for Trustees automatically,
      and
      the Trustor shall entrust others as substitute for trustee; however, the former
      trustee shall perform his rights and obligations until the new trustee is
      nominated; 

     

    5.7
      The
      Trustees shall have the right to refuse the issues which are violated Article
      4.7 hereof. 

    

    Article
      6 Effectiveness 

     

    6.1
      The
      Agreement shall become effective as of the day when the legal representative
      or
      authorized representative of the Trustor signs and stamps the common seal on
      and
      all the Trustees sign the Agreement. 

     

    6.2
      In
      the case where the Agreement becomes null and invalid due to amendment to the
      laws, regulations and policies of the People’s Republic of China, government
      regulation or others, neither party shall compensate each other; however, the
      Parties shall take corresponding measures to avoid or minimize losses
      immediately subject to the solutions of Trustor. 

    

    Article
      7 Confidentiality 

     

    7.1
      The
      Parties agree and shall urge the persons who know about the trust investment
      to
      assume strict confidentiality liabilities concerning all terms of the Agreement
      and all items with respect to the Warehoused Shareholding and not to disclose
      to
      any third party except with express provisions of laws, requirements of judicial
      institutions or relevant governmental authorities or the consent of the Parties;
      otherwise, corresponding legal liabilities shall be held. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    7.2
      The
      confidentiality obligation shall be permanent and survive the termination of
      the
      Agreement. 

    

    Article
      8 Liability for Breach of Agreement 

     

    After
      effectiveness of the Agreement, the acts of either party against the provisions
      herein shall constitute a breach of the Agreement, and the breaching party
      shall
      compensate the losses to the non-breaching caused thereof. 

    

    Article
      9 Settlement of Dispute 

     

    Any
      and
      all disputes arising from the Agreement shall be settled through amicable
      negotiation. Where negotiation fails, either party may have the right to bring
      a
      lawsuit with the People’s Court with legal jurisdiction. 

    

    Article
      10 Severability 

     

    10.1
      If
      any provision of the Agreement becomes null and invalid or unenforceable in
      accordance with relevant laws and regulations, such provision shall be null
      and
      invalid merely, and the remainder of the Agreement shall still be in full force
      and binding upon the Parties. 

     

    10.2
      In
      case of circumstances as mentioned in Article 10.1, the Parties shall make
      a
      supplementary provisions as soon as possible through friendly negotiation to
      substitute for the null and invalid provision. 

    

    Article
      11 Non-waiver 

     

    11.1
      Either party’s non-performance or delay of performance of certain right as
      provided herein shall not constitute the party’s waiver of such right.

     

    11.2
      Either party’s failure to require the other party to perform its obligations
      hereunder shall not be deemed as the party’s waiver of further requirement.

     

    11.3
      Exemption of either party in breach of any of the terms of the Agreement from
      liability by the other party shall not be deemed as further exemption from
      liabilities from breach of the said term or other terms hereof. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
 

    Article
      12 Supplementary Provisions 

     

    12.1
      Any
      and all taxes and duties arising from execution and performance of the Agreement
      and in the course of trust investment shall be borne by the Parties respectively
      in accordance with the laws and regulations. 

     

    12.2
      Relevant supplementary agreement made by and between the Parties concerning
      the
      trust investment after effectiveness of the present Agreement, if any, is part
      of the Agreement and has equal legal force with the Agreement. In case of
      conflict of the supplementary agreement with this Agreement, the former shall
      apply. In case of several supplementary agreements, the latest one shall
      prevail. 

     

    12.3
      The
      Agreement shall be in twelve originals, one for each party concerned and the
      remaining shall be available for corresponding formalities. 

    

    (no
      text
      below) 

    

    Trustor: Xi’an
      Amorphous Alloy Science & Technology Co., Ltd.

     

    Legal
      representative: 

    (or
      authorized representative)

     

    
      	 	 	 	 	 
	Trustees: 	By:/s/ Song
              Yongxing  	 	 	By:/s/ Mao
              Junming
	 	
              
                
Song
                Yongxing

            	 	 	
              
                
Mao
                Junming

            
	 	
            	 	 	 
	 	By:/s/ Xu
              Zewei	 	 	By:/s/ Dai
              Tao
	 	
              
                
Xu
                Zewei

            	 	 	
              
                
Dai
                Tao

            
	 	 	 	 	 
	 	By:/s/ Wang
              Yuefeng	 	 	By:/s/
              Lin
              Yuan
	 	
              
                
Wang
                Yuefeng

            	 	 	
              
                
Lin
                Yuan

            

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	 	By:/s/ Zhang
              Wei	 	 	By:/s/ Feng
              Yarong
	 	
              
                
Zhang
                Wei

            	 	 	
              
                
Feng
                Yarong

            

    

     

    
      	 	 	 	 
	 	 	 	 
	
              
                

              

              Shi
                Sujun

            	 	 	
              
                

              

              Yu
                Xinzheng

            

    

     

    Annexes:
      

    1.
      List
      of Material Investment 

    

    2.
      List
      of Asset Handover 

     

    
      
        
        

      

      
        10COMMON
      STOCK AND WARRANT PURCHASE AGREEMENT

     

    THIS
      COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement")
      is
      entered into as of January
      4, 2008,
      by and
      among CHINA POWER EQUIPMENT,
      INC.,
      a
      Maryland corporation (the "Company"), with headquarters located at YASEN
      INDUSTRY CENTER, 4TH FLOOR, NO.15 GAO XIN 6TH ROAD , HI-TECH INDUSTRIAL
      DEVELOPMENT ZONE , XI'AN, SHAANXI, CHINA 710075 , and the purchasers
      (collectively, the "Purchasers" and each a "Purchaser") set forth on
Schedule 1
      hereof,
      with regard to the following:

     

    RECITALS

     

    A. The
      Company and the Purchasers are executing and delivering this Agreement in
      reliance upon the exemption from securities registration afforded by the
      provisions of Regulation D ("Regulation D") and/or Regulation S, as
      promulgated by the United States Securities and Exchange Commission (the "SEC")
      under the Securities Act of 1933, as amended (the "Securities
      Act").

     

    B. The
      Purchasers desire to (a) purchase, upon the terms and conditions stated in
      this Agreement, shares of the Company's Common Stock, $.001 par value per share
      (the "Common Stock") and (b) purchase, upon the terms and conditions stated
      in
      this Agreement, the Common Stock Purchase Warrants (the "Warrants") to purchase
      shares of the Company’s Common Stock, in the form attached hereto as
Exhibit A.
      The
      shares of Common Stock issuable upon exercise of or otherwise pursuant to the
      Warrants are referred to herein as "Warrant Shares." The Common Stock, the
      Warrants and the Warrant Shares are collectively referred to herein as the
      "Securities".
      The
      Warrants and any other documents or agreements executed in connection with
      the
      transactions contemplated hereunder, are hereinafter referred to as the
      "Transaction Documents.”

     

    AGREEMENTS

     

    NOW,
      THEREFORE, in consideration of their respective promises contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Purchasers hereby agree as
      follows:

     

    ARTICLE
      I

    PURCHASE
      AND SALE OF COMMON STOCK AND WARRANTS

     

    1.1  Purchase
      of Common Stock and Warrants.
      Subject
      to the terms and conditions of this Agreement, the issuance, sale and purchase
      of the Common Stock and Warrants shall be consummated in a "Closing." The
      purchase price (the "Purchase Price"), ONE
      HUNDRED THOUSAND DOLLARS ($100,000.00),
      receipt
      of which is hereby acknowledged for 434,800
      shares
      of Common Stock and Warrants to purchase 434,800
      shares of common stock with an exercise price of $ 1.00 per share
      at
      the option of the Purchaser. On
      the
      date of the Closing, subject to the satisfaction or waiver of the conditions
      set
      forth in ARTICLES VI
      and
VII
      hereof,
      the Company shall issue and sell to each Purchaser, and each Purchaser severally
      agrees to purchase from the Company, the number of Securities set forth on
      Schedule
      1
      hereto.
      Each Purchaser's obligation to purchase Securities hereunder is distinct and
      separate from each other Purchaser's obligation to purchase, and no Purchaser
      shall be required to purchase hereunder more than the number of Securities
      set
      forth on Schedule
      1
      hereto.
      The obligations of the Company with respect to each Purchaser shall be separate
      from the obligations of each other Purchaser and shall not be conditioned as
      to
      any Purchaser upon the performance of obligations of any other
      Purchaser.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.2  Closing
      Date.
      Subject
      to the satisfaction (or waiver) of the conditions set forth in ARTICLES VI
      and
VII
      below,
      the date and time of the issuance, sale and purchase of the Common Stock and
      Warrants pursuant to this Agreement shall be at 10:00 a.m. New York time,
      on January 4, 2007.

     

    ARTICLE
      II

    PURCHASER'S
      REPRESENTATIONS AND

    WARRANTIES

     

    Each
      Purchaser represents and warrants to the Company, as of the date hereof and
      as
      of the Closing, severally and not jointly with respect to itself and its
      purchase hereunder and not with respect to any other Purchaser or the purchase
      hereunder by any other Purchaser that the following statements are true and
      correct:

     

    2.1  Investment
      Purpose.
      Purchaser is purchasing the Common Stock and the Warrants for Purchaser's own
      account for investment only and not with a view toward or in connection with
      the
      public sale or distribution thereof. Purchaser will not, directly or indirectly,
      offer, sell, pledge or otherwise transfer its Common Stock, Warrants or any
      interest therein except pursuant to transactions that are exempt from the
      registration requirements of the Securities Act and/or sales registered under
      the Securities Act. Purchaser understands that Purchaser must bear the economic
      risk of this investment indefinitely, unless the Securities are registered
      pursuant to the Securities Act and any applicable state securities laws or
      an
      exemption from such registration is available, and that the Company has no
      present intention of registering any such Securities other than as contemplated
      by the terms of the Company’s Articles of Incorporation setting forth the
      designation, rights and preferences of the Common Stock (the “Charter”) and the
      terms of the Warrants set forth in the certificate evidencing the Warrants
      (the
“Warrant Certificate”).

     

    2.2  Accredited
      Investor/"Non-U.S."
      Person Status.
      Purchaser is an "accredited investor" as that term is defined in
      Rule 501(a) of Regulation D as provided in Exhibit B hereto or Purchaser is
      a “non-U.S.” Person as defined under Rule 902 of Regulation S.

     

    2.3  Reliance
      on Exemptions.
      Purchaser understands that the Common Stock and Warrants are being offered
      and
      sold to Purchaser in reliance upon specific exemptions from the registration
      requirements of United States federal and state securities laws and that the
      Company is relying upon the truth and accuracy of, and Purchaser's compliance
      with, the representations, warranties, agreements, acknowledgments and
      understandings of Purchaser set forth herein in order to determine the
      availability of such exemptions and the eligibility of Purchaser to acquire
      the
      Common Shares and Warrants.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.4  General
      Solicitation.
      Purchaser
      is not
      purchasing the Securities as a result of any advertisement, article, notice
      or
      other communication regarding the Securities 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
      ,including, without limitation, as a result of the filing of the registration
      statement on form SB-2 filed with the SEC on November 13, 2007. Purchaser became
      interested in the private placement through its substantive, pre-existing
      relationship with the Company or direct contact by the Company or its agents
      and
      not as a result of the filing of such registration statement.

     

    2.5  Information.
      Purchaser has been afforded the opportunity to ask questions of the Company,
      was
      permitted to meet with the Company's officers and has received what the
      Purchaser believes to be complete and satisfactory answers
      to any such inquiries. Except for the answers received by Purchaser as a result
      of inquiries made by Purchaser to Company officers, and except as otherwise
      provided in this Agreement, the Purchaser is not relying upon any information,
      representations or warranties of any other party. Neither
      such inquiries nor any other due diligence investigation conducted by Purchaser
      or any of its representations shall modify, amend or affect Purchaser's right
      to
      rely on the Company's representations and warranties contained in ARTICLE III.
      Purchaser understands that Purchaser's investment in the Securities involves
      a
      high degree of risk.

     

    2.6  Governmental
      Review.
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed upon or made any recommendation
      or
      endorsement of the Securities.

     

    2.7  Transfer
      or Resale.
      Purchaser understands that (i) except as provided in the Charter and the
      Warrant Certificate, the Securities have not been and are not being registered
      under the Securities Act or any state securities laws, and may not be offered,
      sold, pledged or otherwise transferred unless subsequently registered thereunder
      or an exemption from such registration is available (which exemption the Company
      expressly agrees may be established as contemplated in clauses (b) and (c)
      of
Section 5.1
      hereof);
      (ii) any sale of such Securities made in reliance on Rule 144 under the
      Securities Act (or a successor rule) ("Rule 144")
      may be
      made only in accordance with the terms of Rule 144 and further, if
      Rule 144 is not applicable, any resale of such Securities without
      registration under the Securities Act under circumstances in which the seller
      may be deemed to be an underwriter (as that term is defined in the Securities
      Act) may require compliance with some other exemption under the Securities
      Act
      or the rules and regulations of the SEC thereunder in order for such resale
      to
      be allowed, and (iii) the Company is under no obligation to register such
      Securities under the Securities Act or any state securities laws or to comply
      with the terms and conditions of any exemption thereunder (in each case, other
      than pursuant to the Charter and the Warrant Certificate). 

     

    2.8  No
      Directed Selling Efforts.
      Neither
      Purchaser, nor any of his affiliates, nor any person acting on its behalf or
      any
      behalf of any such affiliate, has engaged or will engage in any activity
      undertaken for the purpose of, or that reasonably could be expected to have
      the
      effect of, conditioning the markets in the United States for the Securities
      or
      Common Stock, including but not limited to effecting any sale or short sale
      of
      the Company’s securities through Purchaser or any of his affiliates prior to the
      expiration of any restricted period contained in Regulation S (any such activity
      being defined herein as a “Directed Selling Effort”). To the best knowledge of
      the undersigned, this Agreement and the transactions contemplated herein are
      not
      part of a plan or scheme to evade the registration provisions of the 1933 Act,
      and the Securities are being purchased for investment purposes by Purchaser.
      Purchaser agrees that all offers and sales of the Common Stock from the date
      hereof and through the expiration of the any restricted period set forth in
      Rule
      903 of Regulation S (as the same may be amended from time to time hereafter)
      shall not be made to U.S. Persons or for the account or benefit of U.S. Persons
      and shall otherwise be made in compliance with the provisions of Regulation
      S
      and any other applicable provisions of the Securities Act. Purchaser and its
      representatives have not conducted any Directed Selling Effort as that term
      is
      used and defined in Rule 902 of Regulation S and will not engage in any such
      Directed Selling Effort within the United States through the expiration of
      any
      restricted period set forth in Rule 903 of Regulation S.

     

    
      
        
        

      

      
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    2.9  Legends.
      Purchaser understands that, subject to ARTICLE V
      hereof,
      the certificate for the Common Stock and the Warrant Certificate and, until
      such
      time as the Warrant Shares have been registered under the Securities Act or
      otherwise may be sold by Purchaser pursuant to Rule 144 (subject to and in
      accordance with the procedures specified in ARTICLE V
      hereof),
      the certificates for the Common Stock and the Warrant Shares will bear a
      restrictive legend (the "Legend"),
      which
      will include language in substantially the following form:

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
      THE
      UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD
      OR
      OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
      FOR
      THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
      TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OF THOSE LAWS.

     

    2.10  Authorization;
      Enforcement.
      This
      Agreement has been duly and validly authorized, executed and delivered on behalf
      of Purchaser and is a valid and binding agreement of Purchaser enforceable
      in
      accordance with its terms, except to the extent that such validity or
      enforceability may be subject to or affected by any bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally the enforcement of, creditors' rights or remedies of
      creditors, or by other equitable principles of general application.

     

    2.11  Residency.
      Purchaser is a resident of the jurisdiction set forth under Purchaser's name
      on
      the signature page hereto executed by Purchaser.

     

    
      
        
        

      

      
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    2.12  Hedging
      Transactions.
      Purchaser does not have an existing short position with respect to the Company’s
      Common Stock. 

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    The
      Company represents and warrants to each Purchaser as of the date hereof and
      as
      of the Closing that the following statements are true and correct, except as
      set
      forth on the disclosure schedules, if any, attached hereto as Schedule
      2
      (the
      "Company Disclosure Schedules"). 

     

    Organization
      and Qualification.
      Each of
      the Company and its subsidiaries is a corporation duly organized and existing
      in
      good standing under the laws of the jurisdiction in which it is incorporated,
      and has the requisite corporate power to own its properties and to carry on
      its
      business as now being conducted. The Company and each of its subsidiaries is
      duly qualified as a foreign corporation to do business and is in good standing
      in every jurisdiction where the failure so to qualify or be in good standing
      could reasonably be expected to have a Material Adverse Effect. "Material
      Adverse Effect" means any effect which, individually or in the aggregate with
      all other effects, reasonably would be expected to be materially adverse to
      the
      business, operations, properties, financial condition, operating results or
      prospects of the Company and its subsidiaries, taken as a whole on a
      consolidated basis or on the transactions contemplated hereby.

     

    3.1  Authorization;
      Enforcement.
      (a) The Company has the requisite corporate power and authority to enter
      into and perform under the Transaction Documents, and to issue, sell and perform
      its obligations with respect to the Securities in accordance with the terms
      hereof and thereof and in accordance with the terms and conditions of the
      Securities; (b) the execution, delivery and performance of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby (including, without limitation, the issuance
      of
      the Common Stock, the Warrants and Warrant Shares, and the reservation for
      issuance of the Warrant Shares) have been duly authorized by all necessary
      corporate action and no further consent or authorization of the Company, its
      board of directors, or its stockholders or any other Person is required with
      respect to any of the transactions contemplated hereby or thereby; (c) 
this Agreement, the Common Stock, and the Warrants have been duly executed
      and
      delivered by the Company; and (d) this Agreement, the Common Stock, and the
      Warrants constitute legal, valid and binding obligations of the Company
      enforceable against the Company in accordance with their respective terms,
      except (i) to the extent that such validity or enforceability may be
      subject to or affected by any bankruptcy, insolvency, reorganization,
      moratorium, liquidation or similar laws relating to, or affecting generally
      the
      enforcement of, creditors' rights or remedies of creditors generally, or by
      other equitable principles of general application, and (ii) as rights to
      indemnity and contribution may be limited by federal or state securities laws.
      "Person" means any individual, sole proprietorship, partnership, limited
      liability company, joint venture, trust, unincorporated association,
      corporation, entity or government (whether federal, state, county, city or
      otherwise, including, without limitation, any instrumentality, division, agency
      or department thereof).

     

    
      
        
        

      

      
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    3.2  Capitalization.
      There
      are currently 110,000,000 shares of authorized capital stock with 100,000,000
      shares of Common Stock authorized and 10 million shares of preferred stock
      authorized. There are currently 10,451,613
      shares
      of
      Common Stock outstanding and 92,500 shares of preferred stock outstanding.
      All
      of such outstanding shares of capital stock have been, or upon issuance will
      be,
      validly issued, fully paid and nonassessable. No shares of capital stock of
      the
      Company (including the Common Stock and the Warrant Shares) are subject to
      preemptive rights or any other similar rights of the stockholders of the Company
      or any liens or encumbrances. Except as disclosed in Schedule 3
      hereof,
      as of the date of this Agreement, (i) there are no outstanding options,
      warrants, scrip, rights to subscribe for, calls or commitments of any character
      whatsoever relating to, or securities or rights convertible into or exercisable
      or exchangeable for, any shares of capital stock of the Company or any of its
      subsidiaries, or contracts, commitments, understandings or arrangements by
      which
      the Company or any of its subsidiaries is or may become bound to issue
      additional shares of capital stock of the Company or any of its subsidiaries,
      (ii) issuance of the Securities will not trigger anti-dilution rights for
      any other outstanding or authorized securities of the Company, (iii) up until
      the date of effectiveness of a registration statement registering the re-sale
      of
      the Securities, there will be no more than 20 million shares of common stock
      outstanding on a fully diluted basis, and (iv) there are no agreements or
      arrangements under which the Company or any of its subsidiaries is obligated
      to
      register the sale of any of its or their securities under the Securities Act
      (except for the provisions sets forth in the Charter and the Warrant
      Certificate). The Company has made available to Purchaser true and correct
      copies of the Company's Articles of Incorporation as in effect on the date
      hereof ("Articles of Incorporation"), and the Company's By-laws as in effect
      on
      the date hereof (the "By-laws"). The Company has set forth on Schedule 3
      hereof
      all instruments and agreements (other than the Articles of Incorporation and
      By-laws) governing securities convertible into or exercisable or exchangeable
      for Common Stock of the Company (and the Company shall provide to Purchaser
      copies thereof upon the request of Purchaser).

     

    3.3  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company,
      and the consummation by the Company of transactions contemplated hereby and
      thereby (including, without limitation, the issuance and reservation for
      issuance, as applicable, of the Securities) do not and will not (a) result
      in a violation of the Articles of Incorporation or By-laws or (b) conflict
      with, or constitute a default (or an event which, with notice or lapse of time
      or both, would become a default) under, or give to others any rights of
      termination, amendment, acceleration or cancellation of, any agreement,
      indenture or instrument to which the Company or any of its subsidiaries is
      a
      party, or result in a violation of any law, rule, regulation, order, judgment
      or
      decree (including U.S. federal and state securities laws) applicable to the
      Company or any of its subsidiaries, or by which any property or asset of the
      Company or any of its subsidiaries, is bound or affected (except for such
      possible conflicts, defaults, terminations, amendments, accelerations,
      cancellations and violations as would not, individually or in the aggregate,
      have a Material Adverse Effect). Neither the Company nor any of its subsidiaries
      is in violation of its Articles of Incorporation or other organizational
      documents. Neither the Company nor any of its subsidiaries, is in default (and
      no event has occurred which has not been waived which, with notice or lapse
      of
      time or both, could reasonably be expected to put the Company or any of its
      subsidiaries in default) under, nor has there occurred any event giving others
      (with notice or lapse of time or both) any rights of termination, amendment,
      acceleration or cancellation of, any agreement, indenture or instrument to
      which
      the Company or any of its subsidiaries is a party, except for possible
      violations, defaults or rights as would not, individually or in the aggregate,
      have a Material Adverse Effect. The businesses of the Company and its
      subsidiaries are not being conducted, and shall not be conducted so long as
      a
      Purchaser owns any of the Securities, in violation of any law, ordinance or
      regulation of any governmental entity, except for possible violations the
      sanctions for which either individually or in the aggregate would not have
      a
      Material Adverse Effect. Except as (A) such as may be required under the
      Securities Act in connection with the performance of the Company's obligations
      under the Charter and Warrant Certificate, (B) filing of a Form D with
      the SEC, and (C) compliance with the state securities or Blue Sky laws of
      applicable jurisdictions, the Company is not required to obtain any consent,
      authorization or order of, or make any filing or registration with, any court
      or
      governmental agency or any regulatory or self-regulatory agency in order for
      it
      to execute, deliver or perform any of its obligations under this Agreement
      or to
      perform its obligations in accordance with the terms hereof or
      thereof.

     

    
      
        
        

      

      
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    3.4  Consents.
      The
      execution, delivery and performance by the Company of the Transaction Documents
      and the offer, issuance and sale of the Securities require no consent of, action
      by or in respect of, or filing with, any Person, governmental body, agency,
      or
      official other than (i) filings that have been made pursuant to applicable
      state
      securities laws, (ii) post-sale filings pursuant to applicable state and federal
      securities laws, and (iii) any consent, action or filing that either
      individually or in the aggregate would not have a Material Adverse Effect.
      Subject to the accuracy of the representations and warranties of each Purchaser
      set forth in ARTICLE
      II
      hereof,
      the Company has taken all action necessary to exempt (i) the issuance and sale
      of the Common Stock, (ii) the issuance of the Warrants, and (iii) the issuance
      of the Warrant Shares, from the provisions of any stockholder rights plan or
      other “poison pill” arrangement, any anti-takeover, business combination or
      control share law or statute binding on the Company or to which the Company
      or
      any of its assets and properties may be subject and any provision of the
      Company’s Articles of Incorporation or By-laws that is or could reasonably be
      expected to become applicable to the Purchasers as a result of the transactions
      contemplated hereby, including without limitation, the issuance of the
      Securities and the ownership, disposition or voting of the Securities by the
      Purchasers or the exercise of any right granted to the Purchaser pursuant to
      this Agreement or the other Transaction Documents.

     

    3.5  Absence
      of Litigation.
      There
      is no action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, or self-regulatory organization or body pending
      or, to the Company's knowledge or any of its subsidiaries, threatened against
      or
      affecting the Company, any of its subsidiaries, or any of their respective
      directors or officers in their capacities as such. There are no facts known
      to
      the Company which, if known by a potential claimant or governmental authority,
      could reasonably be expected to give rise to a claim or proceeding which, if
      asserted or conducted with results unfavorable to the Company or any of its
      subsidiaries, could reasonably be expected to have a Material Adverse
      Effect.

     

    3.6  Disclosure.
      No
      information relating to or concerning the Company set forth in this Agreement
      contains an untrue statement of a material fact. The Company has not omitted
      to
      state a material fact necessary in order to make the statements made herein
      or
      therein, in light of the circumstances under which they were made, not
      misleading. Except for the execution and performance of this Agreement, no
      material fact (within the meaning of the federal securities laws of the United
      States and of applicable state securities laws) exists with respect to the
      Company which has not been publicly disclosed.

     

    
      
        
        

      

      
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    3.7  No
      General Solicitation.
      Neither
      the Company nor any distributor participating on the Company's behalf in the
      transactions contemplated hereby (if any) nor any person acting for the Company,
      or any such distributor, has conducted any "general solicitation," as described
      in Rule 502(c) under Regulation D, with respect to any of the
      Securities being offered hereby.

     

    3.8  No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would prevent
      the parties hereto from consummating the transactions contemplated hereby
      pursuant to an exemption from the registration under the Securities Act pursuant
      to the provisions of Regulation D. The transactions contemplated hereby are
      exempt from the registration requirements of the Securities Act, assuming the
      accuracy of the representations and warranties herein contained of each
      Purchaser.

     

    3.9  No
      Brokers.
      The
      Company has taken no action which would give rise to any claim by any person
      for
      brokerage commissions, finder's fees or similar payments by Purchaser relating
      to this Agreement or the transactions contemplated hereby.

     

    ARTICLE
      IV

    COVENANTS

     

    4.1  Reasonable
      Efforts.
      The
      parties shall use their commercially reasonable efforts to timely satisfy each
      of the conditions described in ARTICLES
      VI
      and
VII
      of this
      Agreement and to seek its Board of Directors' approval of this
      Agreement.

     

    4.2  Securities
      Laws; Disclosure; Press Release.
      The
      Company agrees to file a Form D with respect to the Securities with the SEC
      as required under Regulation D. The Company shall, on or prior to the date
      of
      Closing, take such action as is necessary to sell the Securities to each
      Purchaser under applicable securities laws of the states of the United States.
      

     

    4.3  Reservation
      of Common Stock.
      The
      Company shall continue to reserve and keep available at all times, free of
      preemptive rights, a sufficient number of shares of Common Stock for the purpose
      of enabling the Company to issue the Warrant Shares. 

     

    4.4  Corporate
      Existence.
      So long
      as any Purchaser beneficially owns any Securities, the Company shall maintain
      its corporate existence, except in the event of a merger, consolidation or
      sale
      of all or substantially all of the Company's assets, as long as the surviving
      or
      successor entity in such transaction assumes the Company's obligations hereunder
      and under the agreements and instruments entered into in connection
      herewith.

     

    4.5  Hedging
      Transactions.
      No
      Purchaser has an existing short position with respect to the Company’s Common
      Stock. Each Purchaser agrees not to, directly or indirectly, enter into any
      short sales with respect to the Common Stock prior to the date on which such
      Purchaser is entitled to sell, transfer the number of shares of Common Stock
      as
      to which such Purchaser proposes to establish a short position. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      V

    LEGEND
      REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES

     

    5.1  Removal
      of Legend.
      The
      Legend shall be removed and the Company shall issue a certificate without such
      Legend to the holder of any Security upon which it is stamped, and a certificate
      for a security shall be originally issued without the Legend, if, (a) the
      sale of such Security is registered under the Securities Act, (b) such
      holder provides the Company with an opinion of counsel, in form, substance
      and
      scope customary for opinions of counsel in comparable transactions and
      reasonably satisfactory to the Company and its counsel (the reasonable cost
      of
      which shall be borne by the Company if, after one (1) year, neither an
      effective registration statement under the Securities Act or Rule 144 is
      available in connection with such sale) to the effect that a public sale or
      transfer of such Security may be made without registration under the Securities
      Act pursuant to an exemption from such registration requirements or
      (c) such Security can be sold pursuant to Rule 144 and the holder
      provides the Company with reasonable assurances that the Security can be so
      sold
      without restriction or (d) such Security can be sold pursuant to
      Rule 144(k). The Company may not make any notation on its records or give
      instructions to any transfer agent of the Company that enlarge the restrictions
      on transfer set forth in this Section. Each Purchaser agrees to sell all
      Securities, including those represented by a certificate(s) from which the
      Legend has been removed, or which were originally issued without the Legend,
      pursuant to an effective registration statement, in accordance with the manner
      of distribution described in such registration statement and to deliver a
      prospectus in connection with such sale, or in compliance with an exemption
      from
      the registration requirements of the Securities Act. In the event the Legend
      is
      removed from any Security or any Security is issued without the Legend and
      the
      Security is to be disposed of other than pursuant to the registration statement
      or pursuant to Rule 144, then prior to, and as a condition to, such
      disposition such Security shall be relegended as provided herein in connection
      with any disposition if the subsequent transfer thereof would be restricted
      under the Securities Act. Also, in the event the Legend is removed from any
      Security or any Security is issued without the Legend and thereafter the
      effectiveness of a registration statement covering the resale of such Security
      is suspended or the Company determines that a supplement or amendment thereto
      is
      required by applicable securities laws, then upon reasonable advance notice
      to
      Purchaser holding such Security, the Company may require that the Legend be
      placed on any such Security that cannot then be sold pursuant to an effective
      registration statement or Rule 144 or with respect to which the opinion referred
      to in clause (b) next above has not been rendered, which Legend shall be
      removed when such Security may be sold pursuant to an effective registration
      statement or Rule 144 or such holder provides the opinion with respect
      thereto described in clause (b) next above.

     

    5.2  Transfer
      Agent Instructions.
      The
      Company agrees that following the effective date of the registration statement
      or at such time as such legend is no longer required under Section 5.1, it
      will,
      no later than ten (10) days following the delivery by a Purchaser to the Company
      or the Company's transfer agent of a certificate representing Warrant Shares
      issued with a restrictive legend (such date, the "Legend Removal Date"), deliver
      or cause to be delivered to such Purchaser a certificate representing such
      Securities that is free from all restrictive and other legends, registered
      in
      the name of each Purchaser or its nominee for the Warrant Shares in such amounts
      determined in accordance with the terms of the Warrants. The Company covenants
      that no instruction other than such instructions referred to in this
ARTICLE V,
      and
      stop transfer instructions to give effect to Section 2.6 hereof in the case
      of the Warrant Shares prior to registration of the Warrant Shares under the
      Securities Act, will be given by the Company to its transfer agent and that
      the
      Securities shall otherwise be freely transferable on the books and records
      of
      the Company. Nothing in this Section shall affect in any way each Purchaser's
      obligations and agreement set forth in Section 5.1 hereof to resell the
      Securities pursuant to an effective registration statement and to deliver a
      prospectus in connection with such sale or in compliance with an exemption
      from
      the registration requirements of applicable securities laws. If (a) a
      Purchaser provides the Company with an opinion of counsel, which opinion of
      counsel shall be in form, substance and scope customary for opinions of counsel
      in comparable transactions and reasonably satisfactory to the Company and its
      counsel (the reasonable cost of which shall be borne by the Company if, after
      one (1) year, neither an effective registration statement under the
      Securities Act or Rule 144 is available in connection with such sale), to
      the effect that the Securities to be sold or transferred may be sold or
      transferred pursuant to an exemption from registration or (b) a Purchaser
      transfers Securities to an affiliate which is an accredited investor (within
      the
      meaning of Regulation D under the Securities Act) and which delivers to the
      Company in written form the same representations, warranties and covenants
      made
      by Purchaser hereunder or pursuant to Rule 144, the Company shall permit
      the transfer, and, in the case of the Warrant Shares, promptly instruct its
      transfer agent to issue one or more certificates in such name and in such
      denomination as specified by such Purchaser. The Company acknowledges that
      a
      breach by it of its obligations hereunder will cause irreparable harm to a
      Purchaser by vitiating the intent and purpose of the transaction contemplated
      hereby. Accordingly, the Company acknowledges that the remedy at law for a
      breach of its obligations under this ARTICLE V
      will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this ARTICLE V,
      that a
      Purchaser shall be entitled, in addition to all other available remedies to
      an
      injunction restraining any breach and requiring immediate issuance and transfer,
      without the necessity of showing economic loss and without any bond or other
      security being required.

     

    
      
        
        

      

      
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    ARTICLE
      VI

    CONDITIONS
      TO THE COMPANY'S OBLIGATION TO SELL

     

    6.1  Conditions
      to the Company's Obligation to Sell.
      The
      obligation of the Company hereunder to issue and sell the Common Stock and
      Warrants to a Purchaser at the Closing is subject to the satisfaction, as of
      the
      date of the Closing and with respect to such Purchaser, of each of the following
      conditions thereto, provided that these conditions are for the Company's sole
      benefit and may be waived by the Company at any time in its sole
      discretion:

     

    (i)  Such
      Purchaser shall have executed and delivered the signature page to this
      Agreement;

     

    (ii)  Such
      Purchaser shall have wired its aggregate Purchase Price set forth on Schedule
      1
      hereto to the Company;

     

    (iii)  The
      representations and warranties of such Purchaser shall be true and correct
      as of
      the date when made and as of the Closing with the same force and effect as
      though such representations and warranties had been made on and as of the date
      of Closing (except for representations and warranties that speak as of a
      specific date), and such Purchaser shall have performed, satisfied and complied
      in all material respects with the covenants, agreements and conditions required
      by this Agreement to be performed, satisfied or complied with by the applicable
      Purchaser at or prior to the Closing;

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (iv)  No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction or any self-regulatory organization having
      authority over the matters contemplated hereby which restricts or prohibits
      the
      consummation of any of the transactions contemplated by this Agreement;
      and

     

    (v)  The
      Company shall have obtained all waivers, authorizations, approvals and consents
      needed to consummate the transaction contemplated by this Agreement which the
      Company agrees to diligently procure.

     

    ARTICLE
      VII

    CONDITIONS
      TO EACH PURCHASER'S OBLIGATION TO PURCHASE

     

    7.1  The
      obligation of each Purchaser hereunder to purchase the Common Stock and Warrants
      to be purchased by it on the date of the Closing is subject to the satisfaction
      of each of the following conditions, provided that these conditions are for
      each
      Purchaser's sole benefit and may be waived by such Purchaser at any time in
      such
      Purchaser's sole discretion:

     

    (i)  The
      Company shall have executed and delivered the signature page to this
      Agreement;

     

    (ii)  The
      Company shall have delivered to the Purchaser duly issued certificates for
      the
      Common Stock and Warrants being so purchased by Purchaser at the
      Closing;

     

    (iii)  The
      representations and warranties of the Company shall be true and correct in
      all
      material respects as of the date when made and as of the Closing with the same
      force and effect as though such representations and warranties had been made
      on
      and as of the date of Closing, and the Company shall have performed, satisfied
      and complied in all material respects with the covenants, agreements and
      conditions required by this Agreement to be performed, satisfied or complied
      with by the Company at or prior to the Closing; and

     

    (iv)  No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction or any self-regulatory organization having
      authority over the matters contemplated hereby which prohibits the consummation
      of any of the transactions contemplated by this Agreement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VIII

    GOVERNING
      LAW; MISCELLANEOUS

     

    8.1  Governing
      Law: Jurisdiction.
      This
      Agreement shall be governed by and construed in accordance with the Maryland
      General Corporation Law (in respect of matters of corporation law) and the
      laws
      of the State of New York (in respect of all other matters) applicable to
      contracts made and to be performed in the State of New York. The parties hereto
      irrevocably consent to the jurisdiction of the United States federal courts
      and
      state courts located in the County of New York in the State of New York in
      any
      suit or proceeding based on or arising under this Agreement or the transactions
      contemplated hereby and irrevocably agree that all claims in respect of such
      suit or proceeding may be determined in such courts. The Company and each
      Purchaser irrevocably waives the defense of an inconvenient forum to the
      maintenance of such suit or proceeding in such forum. The Company and each
      Purchaser further agrees that service of process upon the Company or such
      Purchaser, as applicable, mailed by the first class mail in accordance with
      Section 8.6 shall be deemed in every respect effective service of process
      upon the Company or such Purchaser in any suit or proceeding arising hereunder.
      Nothing herein shall affect Purchaser's right to serve process in any other
      manner permitted by law. The parties hereto agree that a final non-appealable
      judgment in any such suit or proceeding shall be conclusive and may be enforced
      in other jurisdictions by suit on such judgment or in any other lawful manner.
      The parties hereto irrevocably waive any right to a trial by jury under
      applicable law.

     

    8.2  Counterparts.
      This
      Agreement may be executed in two or more counterparts, including, without
      limitation, by facsimile transmission, all of which counterparts shall be
      considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party.
      In
      the event any signature page is delivered by facsimile transmission, the party
      using such means of delivery shall cause additional original executed signature
      pages to be delivered to the other parties as soon as practicable
      thereafter.

     

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

     

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

     

    8.5  Entire
      Agreement; Amendments.
      This
      Agreement and the instruments referenced herein contain the entire understanding
      of the parties with respect to the maters covered herein and therein and, except
      as specifically set forth herein or therein, neither the Company nor any
      Purchaser makes any representation, warranty, covenant or undertaking with
      respect to such matters. No provision of this Agreement may be waived other
      than
      by an instrument in writing signed by the party to be charged with enforcement
      and no provision of this Agreement may be amended other than by an instrument
      in
      writing signed by the Company and each Purchaser.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    8.6  Notice.
      Any
      notice herein required or permitted to be given shall be in writing and may
      be
      personally served or delivered by nationally-recognized overnight courier or
      by
      facsimile machine confirmed telecopy, and shall be deemed delivered at the
      time
      and date of receipt (which shall include telephone line facsimile transmission).
      The addresses for such communications shall be:

     

    if
      to the Company:

    

    China
      Power Equipment, Inc.

    11
      East
      86th
      Street

    Suite
      19B

    New
      York,
      NY 10028

    Attention:
      Michael
      Segal

    

    If
      to the Purchasers:

     

    Seaside
      Capital II, LLC

    c/o
      William J. Ritger

    750
      Ocean
      Royale Way, # 805

    Juno
      Beach, FL 33408

     

    Each
      party shall provide notice to the other parties of any change in
      address.

     

    8.7  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns. Neither the Company nor any Purchaser shall assign
      this Agreement or any rights or obligations hereunder without the prior written
      consent of the other. 

     

    8.8  Third
      Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

     

    8.9  Survival;
      Indemnification.
      The
      representations and warranties of the Company and the agreements and covenants
      shall survive the Closing hereunder notwithstanding any due diligence
      investigation conducted by or on behalf of Purchaser. The Company agrees to
      indemnify and hold harmless each Purchaser and each of each Purchaser's
      officers, directors, employees, partners, agents and affiliates from and against
      any and all losses, claims, damages, liabilities and expenses (including without
      limitation reasonable attorneys' fees and disbursements and other expenses
      incurred in connection with investigating, preparing or defending any action,
      claim or proceeding, pending or threatened and the costs of enforcement thereof)
      (collectively, "Losses") arising as a result of or related to any breach or
      alleged breach by the Company of any of its representations or covenants set
      forth herein, including advancement of expenses as they are incurred. The
      representations and warranties of the Purchasers shall survive the Closing
      hereunder and each Purchaser shall indemnify and hold harmless the Company
      and
      each of its officers, directors, employees, partners, agents and affiliates
      from
      and against any and all Losses arising as a result of the breach of such
      Purchaser's representations and warranties.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

    8.11  Remedies.
      No
      provision of this Agreement providing for any remedy to a Purchaser shall limit
      any remedy which would otherwise be available to such Purchaser at law or in
      equity. Nothing in this Agreement shall limit any rights a Purchaser may have
      with any applicable federal or state securities laws with respect to the
      investment contemplated hereby. The Company acknowledges that a breach by it
      of
      its obligations hereunder will cause irreparable harm to a Purchaser.
      Accordingly, the Company acknowledges that the remedy at law for a material
      breach of its obligations under this Agreement will be inadequate and agrees,
      in
      the event of a breach or threatened breach by the Company of the provisions
      of
      this Agreement, that a Purchaser shall be entitled, in addition to all other
      available remedies, to an injunction restraining any breach and requiring
      immediate compliance, without the necessity of showing economic loss and without
      any bond or other security being required.

     

    8.12  Final
      Agreement.
      This
      Agreement, when executed by the parties hereto, shall constitute the final
      agreement between the parties and upon such execution Purchasers and the Company
      accept the terms hereof and have no cause of action against each other for
      prior
      negotiations preceding the execution of this Agreement. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the undersigned Purchasers and the Company have caused this
      Agreement to be duly executed as of the date first above written.

     

    COMPANY:

     

    CHINA
      POWER EQUIPMENT, INC.

     

    
      	By:	
                                          

            

    

    
      	
            	
              Name:

            	
              Yongxing
                Song

            

    

    
      	
            	
              Title:

            	
              Chief
                Executive Officer

            

    

     

    PURCHASERS:
      Seaside Capital II. LLC

     

     

    
      	                                	
              $    100,000.00        

            

    

    Signature

     

    William
      J. Ritger, Manager                            

    Name
      Typed or Printed

    

      
        	 	
                Address:

              	
                Seaside
                  Capital II. LLC , c/o William J. Ritger                    
                  

              
	 	 	
                750
                  Ocean Royale Way, # 805

              
	 	 	
                Juno
                  Beach, FL 33408

              
	 	 	
                Telephone:    732-682-4950    

              

      

    

     

     

    

      
        	
                                                

              	 	
                $________________

              
	
                Signature

              	 	 
	 	 	
                Number
                  of Securities: ____________

              
	
                                                

              	 	 
	
                Name
                  Typed or Printed

              	 	 

      

    

    

      
        	 	
                Address:

              	
                ______________________

              
	 	 	
                ______________________

              
	 	 	
                ______________________

              
	 	 	
                Telephone:
                  _____________

              
	 	 	 

      

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    LIST
      OF
      EXHIBITS

     

    EXHIBIT
      A - FORM
      OF WARRANT

     

    EXHIBIT
      B - ACCREDITED
      INVESTOR QUESTIONNAIRE

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    Exhibit
      A

    to

    Common
      Stock
      and Warrant Purchase Agreement

        

    FORM
      OF WARRANT

     

    NEITHER
      THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
      WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      AND
      THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “SECURITIES
      ACT”).
      THIS
      WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT
      BE
      OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER
      THE
      SECURITIES ACT OR UNLESS SUCH OFFER, SALE OR TRANSFER IS EXEMPT FROM SUCH
      REGISTRATION.

    

    CHINA
      POWER EQUIPMENT, INC.

     

    COMMON
      STOCK WARRANT

    

      
        	
                No.      6    

              	
                January__,
                  2008

              

      

    

     

    CHINA
      POWER EQUIPMENT, INC.,
      a
      Maryland corporation (the “Company”),
      hereby certifies that _____
      Seaside Capital II. LLC _,
      its
      permissible transferees, designees, successors and assigns (collectively, the
      “Holder”), for value received, is entitled to purchase from the Company at any
      time (the “Effective Date”) and terminating on the third anniversary of the date
      hereof (the “Termination Date”) up to 434,800 shares (each, a “Share” and
      collectively the “Shares”) of the Company’s common stock, $.001 par value per
      Share (the “Common Stock”) at an exercise price of $1.00 per share. In the
      aggregate, the number of Shares of Common Stock for which the warrant can be
      exercisable should be no more that 5 million shares.

     

    1. Exercise
      of Warrant.

     

    (a)    The
      purchase right represented by this Common Stock Warrant (this "Warrant") is
      exercisable, in whole or in part, at any time and from time to time from and
      after the Effective Date through and including the Termination
      Date.

     

    
      (b)    Upon
        presentation and surrender of this Warrant, accompanied by a completed Election
        to Purchase in the form attached hereto as Exhibit
        A
        (the
“Election
        to Purchase”)
        duly
        executed, at the principal office of the Company currently located at YASEN
        INDUSTRY CENTER, 4TH FLOOR, NO.15 GAO XIN 6TH ROAD, HI-TECH INDUSTRIAL
        DEVELOPMENT ZONE , XI'AN, SHAANXI, CHINA 710075, (or such other office or
        agency
        of the Company within the United States as the Company may designate to the
        Holder) together with a check payable to, or wire transfer to, the Company
        in
        the amount of the Exercise Price multiplied by the number of Shares being
        purchased, the Company or the Company’s transfer agent, as the case may be,
        shall within three (3) business days deliver to the Holder hereof certificates
        of fully paid and non-assessable Common Stock which in the aggregate represent
        the number of Shares being purchased. The certificates so delivered shall
        be in
        such denominations as may be requested by the Holder and shall be registered
        in
        the name of the Holder or such other name as shall be designated by the Holder.
        All or less than all of the purchase rights represented by this Warrant may
        be
        exercised and, in case of the exercise of less than all, the Company, upon
        surrender hereof, will at the Company’s expense deliver to the Holder a new
        warrant entitling said holder to purchase the number of Shares represented
        by
        this Warrant which have not been exercised. This Warrant may only be exercised
        to the extent the Company has a sufficient number of Shares of Common Stock
        available for issuance at the time of any exercise. 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2. Warrant.

     

    (a)    Exchange,
      Transfer and Replacement.
      At any
      time prior to the exercise hereof, this Warrant may be exchanged upon
      presentation and surrender to the Company, alone or with other warrants of
      like
      tenor of different denominations registered in the name of the same Holder,
      for
      another warrant or warrants of like tenor in the name of such Holder exercisable
      for the aggregate number of Shares as the warrant or warrants
      surrendered.

     

    (b)    Replacement
      of Warrant.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction, or mutilation of this Warrant and, in the case of any such loss,
      theft, or destruction, upon delivery of an indemnity agreement reasonably
      satisfactory in form and amount to the Company, or, in the case of any such
      mutilation, upon surrender and cancellation of this Warrant, the Company, at
      its
      expense, will execute and deliver in lieu thereof, a new Warrant of like
      tenor.

     

    (c)    Cancellation;
      Payment of Expenses.
      Upon
      the surrender of this Warrant in connection with any transfer, exchange or
      replacement as provided in this Section 2, this Warrant shall be promptly
      canceled by the Company. The Holder shall pay all taxes and all other expenses
      (including legal expenses, if any, incurred by the Holder or transferees) and
      charges payable in connection with the preparation, execution and delivery
      of
      Warrants pursuant to this Section 2. 

     

    (d)    Warrant
      Register.
      The
      Company shall maintain, at its principal executive offices (or at the offices
      of
      the transfer agent for the Warrant or such other office or agency of the Company
      as it may designate by notice to the holder hereof), a register for this Warrant
      (the “Warrant Register”), in which the Company shall record the name and address
      of the person in whose name this Warrant has been issued, as well as the name
      and address of each transferee and each prior owner of this
      Warrant.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

      3.
        Rights and Obligations of Holders of this Warrant.
        The
        Holder of this Warrant shall not, by virtue hereof, be entitled to any rights
        of
        a stockholder in the Company, either at law or in equity; provided,
        however,
        that in
        the event any certificate representing shares of Common Stock or other
        securities is issued to the holder hereof upon exercise of this Warrant,
        such
        holder shall, for all purposes, be deemed to have become the holder of record
        of
        such Common Stock on the date on which this Warrant, together with a duly
        executed Election to Purchase, was surrendered and payment of the aggregate
        Exercise Price was made, irrespective of the date of delivery of such Common
        Stock certificate.  

    

     

    4. Registration
      Rights.

     

    (a)
      The
      Company, for a period of two years, will give written notice to each Holder
      of
      this Warrant or shares of Common Stock issued upon exercise of this Warrant
      (“Warrant Shares”) not less than 20 days in advance of the initial filing of any
      registration statement under the Securities Act of 1933, as amended (other
      than
      a registration statement pertaining to securities issuable pursuant to employee
      stock option, stock purchase, or similar plans or a registration statement
      pertaining to securities issuable in connection with the acquisition of a
      business, whether through a merger, consolidation, acquisition of assets, or
      exchange of securities), covering any Common Stock or other securities of the
      Company, and will afford the Holder the opportunity to have included in such
      registration statement all or such part of the Warrant Shares issued or issuable
      upon exercise of this Warrant, as may be designated by written notice to the
      Company not later than ten days following receipt of such notice from the
      Company. The Company shall be entitled to exclude the Warrant Shares held by
      or
      issuable to the Holder from any one, but not more than one, such registration
      if
      either the Company or the underwriter in connection with offering to be made
      pursuant to such registration statement in its sole discretion decides that
      the
      inclusion of such shares will materially interfere with the orderly sale and
      distribution of the securities being offered under such registration statement
      by the Company. Notwithstanding the foregoing, the Company shall not be entitled
      to exclude the Warrant Shares held by or issuable to the Holder if shares of
      other shareholders are being included in any such registration statement and,
      in
      such circumstances, the Holder shall be entitled to include the Warrant Shares
      held by or issuable to the Holder on a pro-rata basis in the proportion that
      the
      number of Warrant Shares of Common Stock held by or issuable to the Holder
      bears
      to the shares of Common Stock held by all other shareholders, including shares
      in such registration statement. The Holder shall not be entitled to include
      shares in more than two registration statements pursuant to the provisions
      of
      this Section (3)(e), and all rights of any holder under this Section (3)(e)
      shall terminate after the holder has included shares of Common Stock in two
      registration statements pursuant to this Section (3)(e).

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (b)
      The
      Company will pay all out-of-pocket costs and expenses of any registration
      effected pursuant to the provisions of Section 5(a), including registration
      fees, legal fees, accounting fees, printing expenses (including such number
      of
      any preliminary and the final prospectus as may be reasonably requested), blue
      sky qualification fees and expenses, and all other expenses, except for
      underwriting commissions or discounts applicable to the shares of Common Stock
      being sold by the holder and the fees of counsel for the Holder, all of which
      shall be paid by the Holder.

     

    5. Fractional
      Shares.
      In lieu
      of issuance of a fractional share upon any exercise hereunder, the Company
      will
      pay the cash value of that fractional share, calculated on the basis of the
      Exercise Price. 

     

    6. Legends.
      Prior
      to issuance of the shares of Common Stock underlying this Warrant, all such
      certificates representing such shares shall bear a restrictive legend to the
      effect that the Shares represented by such certificate have not been registered
      under the 1933 Act, and that the Shares may not be sold or transferred in the
      absence of such registration or an exemption therefrom, such legend to be
      substantially in the form of the bold-face language appearing at the top of
      Page
      1 of this Warrant. 

     

    7. Disposition
      of Warrants or Shares; Lockup.
      

     

    (a)
      The
      Holder of this Warrant, each transferee hereof and any holder and transferee
      of
      any Shares, by his or its acceptance thereof, agrees that no public distribution
      of Warrants or Shares will be made in violation of the provisions of the
      Securities Act of 1933, as amended. Furthermore, it shall be a condition to
      the
      transfer of this Warrant that any transferee thereof deliver to the Company
      his
      or its written agreement to accept and be bound by all of the terms and
      conditions contained in this Warrant. 

     

    (b)
      The
      Holder may not, without obtaining the prior written consent of the Company,
      directly or indirectly sell, offer to sell, grant an option for the sale of,
      transfer, assign, hypothecate, pledge, distribute or otherwise dispose of or
      encumber any Warrant Shares or any beneficial interest therein until at least
      150 days following the exercise of Warrant; provided, however, immediately
      upon
      the exercise of Warrant a Holder may sell up to 10% of the Warrant Shares issued
      to such Holder upon exercise of this Warrant, after the expiration of 90 days
      after the exercise of Warrant a Holder may sell up to 30% of the Warrant Shares
      issued to such Holder upon exercise of this Warrant, and after the expiration
      of
      120 days following the Effective Date a holder may sell up to an additional
      30%
      of the Warrant Shares issued to such Holder..

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    8. Merger
      or Consolidation.
      The
      Company will not merge or consolidate with or into any other corporation, or
      sell or otherwise transfer its property, assets and business substantially
      as an
      entirety to another corporation, unless the corporation resulting from such
      merger or consolidation (if not the Company), or such transferee corporation,
      as
      the case may be, shall expressly assume, by supplemental agreement reasonably
      satisfactory in form and substance to the Holder, the due and punctual
      performance and observance of each and every covenant and condition of this
      Warrant to be performed and observed by the Company.

     

    9. Notices.
      Except
      as otherwise specified herein to the contrary, all notices, requests, demands
      and other communications required or desired to be given hereunder shall only
      be
      effective if given in writing by certified or registered U.S. mail with return
      receipt requested and postage prepaid; by private overnight delivery service
      (e.g. Federal Express); by facsimile transmission (if no original documents
      or
      instruments must accompany the notice); or by personal delivery. Any such notice
      shall be deemed to have been given (a) on the business day immediately following
      the mailing thereof, if mailed by certified or registered U.S. mail as specified
      above; (b) on the business day immediately following deposit with a private
      overnight delivery service if sent by said service; (c) upon receipt of
      confirmation of transmission if sent by facsimile transmission; or (d) upon
      personal delivery of the notice. All such notices shall be sent to the following
      addresses (or to such other address or addresses as a party may have advised
      the
      other in the manner provided in this Section 10):

    

      
        	 	
                if
                  to the Company:

              
	 	
                China
                  Power Equipment, Inc.

              
	
                 

              	
                11
                  East 86th
                  Street

              
	
                 

              	
                Suite
                  19B

              
	
                 

              	
                New
                  York, NY 10028

              
	
                 

              	
                Attention:
                  Michael
                  Segal

              
	 	 
	
                 

              	
                 If
                  to the Holder:

              
	
                 

              	
                Seaside
                  Capital II, LLC

              
	 	
                c/o
                  William J. Ritger

              
	 	
                750
                  Ocean Royale Way, # 805

              
	 	
                Juno
                  Beach, FL 33408

              

      

    

    

    Notwithstanding
      the time of effectiveness of notices set forth in this Section, an Election
      to
      Purchase shall not be deemed effectively given until it has been duly completed
      and submitted to the Company together with this original Warrant and payment
      of
      the Exercise Price in a manner set forth in this Section.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    10. Governing
      Law.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of Maryland applicable to contracts made and to be performed in the State
      of Maryland. 

     

    11. Successors
      and Assigns.
      This
      Warrant shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective successors and assigns.

     

    12. Headings.
      The
      headings of various sections of this Warrant have been inserted for reference
      only and shall not affect the meaning or construction of any of the provisions
      hereof.

     

    13. Severability.
      If any
      provision of this Warrant is held to be unenforceable under applicable law,
      such
      provision shall be excluded from this Warrant, and the balance hereof shall
      be
      interpreted as if such provision were so excluded.

     

    14. Modification
      and Waiver.
      This
      Warrant and any provision hereof may be amended, waived, discharged or
      terminated only by an instrument in writing signed by the Company and the
      Holder. 

     

    15. Specific
      Enforcement.
      The
      Company and the Holder acknowledge and agree that irreparable damage would
      occur
      in the event that any of the provisions of this Warrant were not performed
      in
      accordance with their specific terms or were otherwise breached. It is
      accordingly agreed that the parties shall be entitled to an injunction or
      injunctions to prevent or cure breaches of the provisions of this Warrant and
      to
      enforce specifically the terms and provisions hereof, this being in addition
      to
      any other remedy to which either of them may be entitled by law or
      equity.

     

    16. Assignment.
      Subject
      to prior written approval by the Company, this Warrant may be transferred or
      assigned, in whole or in part, at any time and from time to time by the then
      Holder by submitting this Warrant to the Company together with a duly executed
      Assignment in substantially the form and substance of the Form of Assignment
      which accompanies this Warrant, as Exhibit B hereto, and, upon the
      Company’s receipt hereof, and in any event, within three (3) business days
      thereafter, the Company shall issue a warrant to the Holder to evidence that
      portion of this Warrant, if any as shall not have been so transferred or
      assigned. 

     

    (signature
      page immediately follows)

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed,
      manually or by facsimile, by one of its officers thereunto duly
      authorized.

     

    
      	
               

               

              Date:
                January __, 2008

            	
              CHINA
                POWER EQUIPMENT, INC.

               

              By:____________________________________

              Name: Yongxing
                Song

              Title: President
                

            

    

    

    
      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

    

    

    EXHIBIT
      A

    TO

    WARRANT
      CERTIFICATE

     

    ELECTION
      TO PURCHASE

     

    To
      Be
      Executed by the Holder

    in
      Order
      to Exercise the Warrant

     

    The
      undersigned Holder hereby elects to purchase _______ Shares pursuant to the
      attached Warrant, and requests that certificates for securities be issued in
      the
      name of: 

     

    __________________________________________________

    (Please
      type or print name and address)

                                           

                                           

                                           

    (Social
      Security or Tax Identification Number)

     

    and
      delivered

    to:                                        

                                             .

    (Please
      type or print name and address if different from above)

     

    If
      such
      number of Shares being purchased hereby shall not be all the Shares that may
      be
      purchased pursuant to the attached Warrant, a new Warrant for the balance of
      such Shares shall be registered in the name of, and delivered to, the Holder
      at
      the address set forth below.

     

    In
      full
      payment of the purchase price with respect to the Shares purchased and transfer
      taxes, if any, the undersigned hereby tenders payment of $__________ by check,
      money order or wire transfer payable in United States currency to the order
      of
      CHINA POWER EQUIPMENT, INC.

     

    
      	 	
              HOLDER:

               

              By:_____________________________________

                  Name:

                  Title:

                  Address:

            
	
               

               

               

              Dated:_______________________

            	 

    

    

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    TO

    WARRANT

     

    FORM
      OF
      ASSIGNMENT

    (To
      be
      signed only on transfer of Warrant)

     

    For
      value
      received, the undersigned hereby sells, assigns, and transfers unto
      _____________ the right represented by the within Warrant to purchase ______
      shares of Common Stock of China Power Equipment, Inc., a Maryland corporation,
      to which the within Warrant relates, and appoints ____________________ Attorney
      to transfer such right on the books of China Power Equipment, Inc., a Maryland
      corporation, with full power of substitution of premises.

     

    
      	
              Dated:

            	
              By:_______________________________

                  Name:

                  Title:

              (signature
                must conform to name

              of
                holder as specified on the fact

              of
                the Warrant)

            
	 	
               

               

              Address:

            

    

    

     

    Signed
      in
      the presence of:

     

    Dated:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      B

    To

    Common
      Stock and Warrant Purchase Agreement

     

     

    ACCREDITED
      INVESTOR QUESTIONNAIRE

     

     

    CHINA
      POWER EQUIPMENT, INC.

    

    ACCREDITED
      INVESTOR QUESTIONNAIRE

    

    ITEM
      1.    All
      Accredited Investors must initial the following line:

    

    ________(a) I
      understand that the representations contained in this Questionnaire are made
      for
      the purpose of qualifying me as an accredited investor as that term is defined
      pursuant to Regulation D under the Securities Act of 1933 for the purpose of
      inducing a sale of securities to me. I hereby represent that the statement
      or
      statements initialed below are true and correct in all respects. I understand
      that a false representation may constitute a violation of law, and that any
      person who suffers damage as a result of a false representation may have a
      claim
      against me for damages.

    

    ITEM
      2.    Accredited
      individual investors must initial one or more of the following three
      statements:

    

    ________(a) I
      certify
      that I am an accredited investor because I had individual income (exclusive
      of
      any income attributable to my spouse) of more than $200,000 in each of the
      most
      recent two years and I reasonably expect to have an individual income in excess
      of $200,000 for the current year.

    

    ________(b) I
      certify
      that I am an accredited investor because I had individual income (inclusive
      of
      any income attributable to my spouse) of more than $300,000 in each of the
      most
      recent two years and I reasonably expect to have an individual income (inclusive
      of any income attributable to my spouse) in excess of $300,000 for the current
      year.

    

    ________(c) I
      certify
      that I am an accredited investor because I have an individual net worth, or
      my
      spouse and I have a combined individual net worth, in excess of $1,000,000.
      For
      purposes of this questionnaire, "individual net worth" means the excess of
      total
      assets at fair market value, including home and personal property, over total
      liabilities.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ITEM
      3.    Accredited
      partnerships, corporations, or other entities which are not trusts must initial
      at least one of the following statements:

    

    ________(a) The
      Subscriber hereby certifies that all of the equity owners of the Subscriber
      are
      accredited individual investors as defined in either Item 2(a), 2(b) or 2(c)
      above. Item 5 must be completed by all equity owners.

    

    ________(b) The
      Subscriber hereby certifies that it is a "bank," "savings and loan association,"
      or "insurance company" as defined in the Act.

    

    ________(c) The
      Subscriber hereby certifies that it is an "employee benefit plan" as defined
      in
      the Employee Retirement Income Security Act of 1974 (a "Plan") that has total
      assets in excess of $5,000,000.

    

    ________(d) The
      Subscriber hereby certifies that it is a Plan whose investment decisions,
      including the decision to subscribe for the Shares, are made solely by (i)
      a
      "plan fiduciary" as defined in the Employee Retirement Income Security Act
      of
      1974, which includes a bank, a savings and loan association, an insurance
      company or a registered investment adviser, or (ii) an "accredited investor"
      as
      defined under Rule 501(a) under the Act, for a self-directed plan.

    

    ________(e) The
      Subscriber hereby certifies that it is a broker/dealer registered pursuant
      to
      Section 15 of the Securities Exchange Act of 1934, as amended.

    

    ________(f) The
      Subscriber hereby certifies that it is an investment company registered under,
      or a "business development company" as defined in, the Investment Company Act
      of
      1940. 

    

    ________(g) The
      Subscriber hereby certifies that it is a Small Business Investment Company
      licensed by the U.S. Small Business Administration under the Small Business
      Investment Act of 1958.

    

    ________(h) The
      Subscriber hereby certifies that it is a plan established and maintained by
      a
      state, its political subdivisions, or any agency or instrumentality of a state
      or its political subdivisions, for the benefit of its employees and having
      total
      assets in excess of $5,000,000.

    

    ________(i) The
      Subscriber hereby certifies that it is a private business development company
      as
      defined in Section 202(a)(22) of the Investment Advisers Act of
      1940.

    

    ________(j) The
      Subscriber hereby certifies that it is an organization described in Section
      501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar
      business trust or partnership, not formed for the specific purpose of acquiring
      the Shares, with total assets in excess of $5,000,000.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    ITEM
      4.    Accredited
      trusts must initial one of the following two statements:

    

    ________(a) The
      trustee of the trust Subscriber hereby certifies that the trust has total assets
      in excess of $5,000,000, the trust was not formed for the specific purpose
      of
      acquiring the Shares whose purchase is directed by a "sophisticated person"
      as
      described in Rule 506(b)(2)(ii) under the Act.

    

    ________(b) The
      trustee of the trust Subscriber hereby certifies that all settlors and
      beneficiaries of the trust are accredited individual investors as defined in
      either Item 2(a), 2(b) or 2(c) above. Item 5 must be completed by all equity
      owners.

    

    
      	ITEM
              5.	
              Accredited
                corporations, partnerships, trusts or other entities choosing Item.3(a)
                OR
                Item.4(b) above must provide the following
                information:

            

    

    

    The
      Subscriber hereby certifies that set forth below is a complete list of all
      own-ers of equity in ________________________________ [name of entity], a
      _____________________________ [type of entity] formed pursuant to the laws
      of
      the State of ________________________. The Subscriber also certifies that each
      such owner has initialed the space opposite his/her name and that each such
      owner understands that by initialing that space he/she is representing that
      he/she is an accredited individual in-vestor satisfying the test for accredited
      individual investors indi-cated under Item 2 above.

    

      
        	
                Name
                  of Equity Owner

              	
                Type
                  of Accredited Investor

              	
                Initials

              
	 	 	 
	
                1.

              	 	 
	
                2.

              	 	 
	
                3.

              	 	 
	
                4.

              	 	 
	
                5.

              	 	 
	
                6.

              	 	 
	
                7.

              	 	 
	
                8.

              	 	 
	
                9.

              	 	 
	
                10.

              	 	 

      

    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    List
      of Schedules

    to

    Common
      Stock and Warrant Purchase Agreement

     

    Schedule 1 -     List
      of
      Investors

     

    Schedule
      2 -     Company
      Disclosure Schedules

     

    Schedule 3 -     Capitalization

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      1

    TO
      COMMON STOCK AND WARRANT PURCHASE AGREEMENT

     

    LIST
      OF INVESTORS

     

    
      	
              Investor

              Name
                and Address and Telephone Number

            	
              Shares
                of Common Stock

            	
              Warrant
                Shares

            	
              Aggregate
                Purchase Price

            
	
              Seaside
                Capital II. LLC ,
                750 Ocean Royale Way, # 805, Juno Beach, FL 33408

              732-682-4950

               

            	
              434,800

            	
              434,800

            	
              $100,000.00

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
               

              Totals:

            	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      2

    TO

    COMMON
      STOCK AND WARRANT PURCHASE AGREEMENT

     

     

    COMPANY
      DISCLOSURE SCHEDULES

     

    None.

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      3

    TO

    COMMON
      STOCK AND WARRANT PURCHASE AGREEMENT

     

    CAPITALIZATION

    AS
      OF
      January 4 , 2007

     

    
      	 	 	
              Number
                of Shares

            
	
              Authorized
                Stock as:

            	 	 
	
              Common
                Stock:

            	 	
              100,000,000            

            
	
              Series
                A Preferred

            	 	
              5,000,000            

            
	
              Blank
                Check Preferred Stock

            	 	
              5,000,000            

            
	
              Outstanding
                Stock:

            	 	             
	
              Common
                Stock:

            	 	
              10,451,613            

            
	
               Series
                A Preferred

            	 	
              92,500            

            
	
               Blank
                Check Preferred Stock

            	 	
              0            

            
	
              Stock
                Options:

            	 	
              0            

            
	
              Warrants:
                

            	 	
              92,500
                (1)              

            

    

     

     

    
      	
              (1)
                Each
                warrant entitles the holder to purchase 43.98 share of Common Stock
                at the
                exercise price of $1.00 per share.

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