Document:

f8k0410ex4ii_silverpearl.htm

    Exhibit
4.2

     

    CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE

    SERIES
M CONVERTIBLE PREFERRED STOCK

    OF

    SILVER
PEARL ENTERPRISES, INC.

    

     

    The
Articles of Incorporation of Silver Pearl Enterprises, Inc., a Nevada
corporation (the “Company”),
provide that the Company is authorized to issue 20,000,000 shares of preferred
stock with a par value of $0.001, and that the Board of Directors have the
authority to attach such terms as they deem fit with respect to the preferred
stock.

     

    Pursuant
to the authority conferred upon the Board of Directors by the Articles of
Incorporation, and pursuant to Section 78.1955 of the Nevada Revised Statutes,
the Board of Directors, by Unanimous Written Consent, dated April 22, 2010,
adopted a resolution providing for the designation, rights, powers and
preferences and the qualifications, limitations and restrictions of 47,658
shares of Series M Convertible Preferred Stock, and that a copy of such
resolution is as follows:

     

    RESOLVED, that pursuant to the
authority vested in the Board of Directors of the Company, the provisions of its
Articles of Incorporation, and in accordance with the Nevada Revised Statutes,
the Board of Directors hereby authorizes the filing of a Certificate of
Designations, Preferences and Rights of Series M Convertible Preferred Stock of
the Company.  Accordingly, the Company is authorized to issue Series M
Convertible Preferred Stock with par value of $0.001 per share, which shall have
the powers, preferences and rights and the qualifications, limitations and
restrictions thereof, as follows:

     

    1. Designation and Rank.
The designation of such series of the Preferred Stock shall be the Series M
Convertible Preferred Stock, par value $0.001 per share (the “Series M
Preferred Stock”). The maximum number of shares of Series M Preferred
Stock shall be 47,658 shares. The Series M Preferred Stock shall rank pari passu
to the Company’s common stock, par value $0.001 per share (the “Common
Stock”), and junior to all other classes and series of equity securities
of the Company which by their terms do not rank pari passu, including the Series
A Convertible Preferred Stock. The Series M Preferred Stock shall be subordinate
to and rank junior to all indebtedness of the Company now or hereafter
outstanding.

     

    2. Dividends.

     

    The
Series M Preferred Stock shall not pay a dividend; provided that no cash
dividends or distributions shall be declared or paid or set apart for payment on
the Common Stock unless such cash dividend or distribution is likewise declared,
paid or set apart for payment on the Series M Preferred Shares.

     

    3. Voting
Rights.  Holders of the Series M Preferred Stock shall vote on
an “as converted” basis, together as a single class, with the Common Stock, on
all matters requiring the approval, ratification or consent of holders of Common
Stock of the Company. The Common Stock into which the Series M Preferred Stock
is convertible shall, when issued, have all of the same voting rights as other
issued and outstanding Common Stock of the Company, and none of the rights of
the Series M Preferred Stock.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    4. Conversion. The
holder of Series M Preferred Stock shall have the following conversion rights
(the “Conversion
Rights”):

     

    (a) Mandatory Conversion.
On or after the Issuance Date, at such time when the Company amends its Articles
of Incorporation to increase the number of authorized shares of Common Stock to
such number that is equal to or greater than one hundred million (100,000,000),
the holder of any such shares of Series M Preferred Stock shall automatically
convert (a “Mandatory
Conversion”) all of the shares of Series M Preferred Stock held by such
person into a number of fully paid and nonassessable shares of Common Stock
equal to the product of (i) the number of shares of Series M Preferred Stock;
and (ii) the Conversion Multiple (as defined in Section 4(c)
below).

     

    (b) Mechanics of Mandatory
Conversion. The Mandatory Conversion of Series M Preferred Stock shall be
conducted in the following manner:

     

    (i) Holder's Delivery
Requirements. Upon the Mandatory Conversion, the holder thereof shall
surrender to a common carrier for delivery to the Company’s designated transfer
agent (the “Transfer
Agent”) as soon
as practicable following such Mandatory Conversion the original certificates
representing the shares of Series M Preferred Stock being converted (or an
indemnification undertaking with respect to such shares in the case of their
loss, theft or destruction) (the “Preferred
Stock Certificates”).

     

    (ii) Company's Response and
Common Stock Issuance. Upon the Mandatory Conversion, the Company shall
immediately send, via facsimile, a confirmation of receipt of such Preferred
Stock Certificates to such holder. Upon receipt by the Transfer Agent of the
Preferred Stock Certificates, the Company shall, within three (3) trading days
following the later of the (x) Mandatory Conversion, and (y) date of receipt of
the Preferred Stock Certificates by the Transfer Agent, issue and deliver to the
holder certificates registered in the name of the holder or its designee,
representing the number of shares of Common Stock to which the holder shall be
entitled.

     

    (iii) Record Holder. The
person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of the Series M Preferred Stock shall be treated for all purposes as
the record holder or holders of such shares of Common Stock from and after the
Conversion Date.

     

    (c) Conversion
Price.

     

    (i) The term
“Conversion
Multiple” shall mean 1,000.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (d) No Impairment. The
Company shall not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder, but shall at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series M Preferred Stock against impairment.

     

    (e) Issue Taxes. The
Company shall pay any and all issue and other taxes, excluding federal, state or
local income taxes, that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series M Preferred Stock
pursuant hereto; provided, however, that the
Company shall not be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such
conversion.

     

    (f) Notices. All notices
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or by facsimile or three (3) business days following
being mailed by certified or registered mail, postage prepaid, return-receipt
requested, addressed to the holder of record at its address appearing on the
books of the Company.

     

    (g) Fractional Shares. No
fractional shares of Common Stock shall be issued upon conversion of the Series
M Preferred Stock. In lieu of any fractional shares to which the holder would
otherwise be entitled, the Company shall round the number of shares to be issued
upon conversion up to the nearest whole number of shares.

     

    (h) Retirement of Series M
Preferred Stock. Conversion of Series M Preferred Stock shall be deemed
to have been effected on a Mandatory Conversion.

     

    5. No Preemptive Rights.
No holder of the Series M Preferred Stock shall be entitled to rights to
subscribe for, purchase or receive any part of any new or additional shares of
any class, whether now or hereinafter authorized, or of bonds or debentures, or
other evidences of indebtedness convertible into or exchangeable for shares of
any class, but all such new or additional shares of any class, or any bond,
debentures or other evidences of indebtedness convertible into or exchangeable
for shares, may be issued and disposed of by the Board of Directors on such
terms and for such consideration (to the extent permitted by law), and to such
person or persons as the Board of Directors in their absolute discretion may
deem advisable.

     

    6. Vote to Change the Terms of
or Issue Preferred Stock. The affirmative vote at a meeting duly called
for such purpose or the written consent without a meeting, of the Majority
Holders (in addition to any other corporate approvals then required to effect
such action), shall be required for any change to this Certificate of
Designation or the Company's Articles of Incorporation which would amend, alter,
change or repeal any of the powers, designations, preferences and rights of the
Series M Preferred Stock.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    7. Lost or Stolen
Certificates. Upon receipt by the Company of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing the shares of Series M Preferred Stock, and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
holder to the Company and, in the case of mutilation, upon surrender and
cancellation of the Preferred Stock Certificate(s), the Company shall execute
and deliver new preferred stock certificate(s) of like tenor and date; provided, however, that the
Company shall not be obligated to re-issue Preferred Stock Certificates if the
holder contemporaneously requests the Company to convert such shares of Series M
Preferred Stock into Common Stock.

     

    8. Remedies, Characterizations,
Other Obligations, Breaches and Injunctive Relief. The remedies provided
in this Certificate of Designation shall be cumulative and in addition to all
other remedies available under this Certificate of Designation, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall limit a
holder's right to pursue actual damages for any failure by the Company to comply
with the terms of this Certificate of Designation. Amounts set forth or provided
for herein with respect to payments, conversion and the like (and the
computation thereof) shall be the amounts to be received by the holder thereof
and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the holders of the Series M Preferred Stock and that the remedy at law for any
such breach may be inadequate. The Company therefore agrees that, in the event
of any such breach or threatened breach, the holders of the Series M Preferred
Stock shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.

     

    9. Specific Shall Not Limit
General; Construction. No specific provision contained in this
Certificate of Designation shall limit or modify any more general provision
contained herein. This Certificate of Designation shall be deemed to be jointly
drafted by the Company and all initial purchasers of the Series M Preferred
Stock and shall not be construed against any person as the drafter
hereof.

     

    10. Failure or Indulgence Not
Waiver. No failure or delay on the part of a holder of Series M Preferred
Stock in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.

     

    

    [The
remainder of this page is intentionally left blank]

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    [Signature
page to the Certificate of Designations of Series M Convertible Preferred
Stock]

    

    

    IN
WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate
and does affirm the foregoing as true this 22nd day
of April, 2010.

     

    
      
        	 	SILVER
      PEARL ENTERPRISES, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Denis D.
      Smith                                               
      	 
	 	 	Name:
      Denise D. Smith 	 
	 	 	Title:  Chief
      Executive Officer and Chief Financial Officer	 
	 	 	 	 

      

    

     

    
 

     

     

     

     5f8k0410ex10i_silverpearl.htm

     

     

    Exhibit 10.1

     

     

     

    

    SECURITIES
PURCHASE AGREEMENT

    

    among

    

    SILVER
PEARL ENTERPRISES, INC.

     

    and

     

    THE
PURCHASERS LISTED ON EXHIBIT A

     

    Dated as of April 22,
2010

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    Table of
Contents

     

    

    
      	
              
ARTICLE 1

            	
              PURCHASE
      AND SALE OF THE UNITS 

            	
              1

            

    

     

    
      	
               
      

            	
              Section
      1.1

            	
              Purchase
      and Sale of Units 

            	
              1

            

    

     

    
      	
               
      

            	
              Section
      1.2

            	
              Warrants 

            	
              1

            

    

     

    
      	
               
      

            	
              Section
      1.3

            	
              Conversion
      and Warrant Shares 

            	
              2

            

    

     

    
      	
               
      

            	
              Section
      1.4

            	
              Purchase
      Price and Closing 

            	
              2

            

    

     

    
      	
              ARTICLE
      2

            	
              REPRESENTATIONS
      AND WARRANTIES 

            	
              3

            

    

     

    
      	
               
      

            	
              Section
      2.1

            	
              Representations
      and Warranties of the Company, non-PRC Subsidiaries and the PRC
      Subsidiary 

            	
              3

            

    

     

    
      	
               
      

            	
              Section
      2.2

            	
              Representations
      and Warranties of the Purchasers 

            	
              15

            

    

     

    
      	
              ARTICLE
      3

            	
              COVENANTS 

            	
              18

            

    

     

    
      	
               
      

            	
              Section
      3.1

            	
              Securities
      Compliance 

            	
              18

            

    

     

    
      	
               
      

            	
              Section
      3.2

            	
              Registration
      and Listing 

            	
              18

            

    

     

    
      	
               
      

            	
              Section
      3.3

            	
              Compliance
      with Laws 

            	
              19

            

    

     

    
      	
               
      

            	
              Section
      3.4

            	
              Keeping
      of Records and Books of Account 

            	
              19

            

    

     

    
      	
               
      

            	
              Section
      3.5

            	
              Reporting
      Requirements 

            	
              19

            

    

     

    
      	
               
      

            	
              Section
      3.6

            	
              Amendments 

            	
              19

            

    

     

    
      	
               
      

            	
              Section
      3.7

            	
              Other
      Agreements 

            	
              20

            

    

     

    
      	
               
      

            	
              Section
      3.8

            	
              Distributions 

            	
              20

            

    

     

    
      	
               
      

            	
              Section
      3.9

            	
              Reservation
      of Shares 

            	
              20

            

    

     

    
      	
               
      

            	
              Section
      3.10

            	
              Transfer
      Agent 

            	
              20

            

    

     

    
      	
               
      

            	
              Section
      3.11

            	
              Disposition
      of Assets 

            	
              21

            

    

     

    
      	
               
      

            	
              Section
      3.12

            	
              Reporting
      Status 

            	
              21

            

    

     

    
      	
               
      

            	
              Section
      3.13

            	
              Disclosure
      of Transaction 

            	
              21

            

    

     

    
      	
               
      

            	
              Section
      3.14

            	
              Disclosure
      of Material Information 

            	
              21

            

    

     

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              Section
      3.15

            	
              Pledge
      of Securities 

            	
              22

            

    

     

    
      	
               
      

            	
              Section
      3.16

            	
              Lock-Up
      Agreements 

            	
              22

            

    

     

    
      	
               
      

            	
              Section
      3.17

            	
              DTC 

            	
              22

            

    

     

    
      	
               
      

            	
              Section
      3.18

            	
              Sarbanes-Oxley
      Act 

            	
              22

            

    

     

    
      	
               
      

            	
              Section
      3.19

            	
              No
      Integrated Offerings 

            	
              22

            

    

     

    
      	
               
      

            	
              Section
      3.20

            	
              No
      Commissions in Connection with Conversion of Preferred
      Shares 

            	
              22

            

    

     

    
      	
               
      

            	
              Section
      3.21

            	
              No
      Manipulation of Price 

            	
              22

            

    

     

    
      	
               
      

            	
              Section
      3.22

            	
              Subsequent
      Financings 

            	
              23

            

    

     

    
      	
               
      

            	
              Section
      3.23

            	
              Corporate
      Governance 

            	
              24

            

    

     

    
      	
              ARTICLE
      4

            	
              CONDITIONS 

            	
              25

            

    

     

    
      	
               
      

            	
              Section
      4.1

            	
              Conditions
      Precedent to the Obligation of the Company to Sell the
      Units 

            	
              25

            

    

     

    
      	
               
      

            	
              Section
      4.2

            	
              Conditions
      Precedent to the Obligation of the Purchasers to Purchase the
      Units 

            	
              25

            

    

     

    
      	
              ARTICLE
      5

            	
              STOCK
      CERTIFICATE LEGEND 

            	
              27

            

    

     

    
      	
               
      

            	
              Section
      5.1

            	
              Legend 

            	
              27

            

    

     

    
      	
              ARTICLE
      6

            	
              INDEMNIFICATION 

            	
              29

            

    

     

    
      	
               
      

            	
              Section
      6.1

            	
              General
      Indemnity 

            	
              29

            

    

     

    
      	
               
      

            	
              Section
      6.2

            	
              Indemnification
      Procedure 

            	
              29

            

    

     

    
      	
              ARTICLE
      7

            	
              MISCELLANEOUS 

            	
              30

            

    

     

    
      	
               
      

            	
              Section
      7.1

            	
              Fees
      and Expenses 

            	
              30

            

    

     

    
      	
               
      

            	
              Section
      7.2

            	
              Specific
      Enforcement, Consent to Jurisdiction 

            	
              31

            

    

     

    
      	
               
      

            	
              Section
      7.3

            	
              Entire
      Agreement; Amendment 

            	
              31

            

    

     

    
      	
               
      

            	
              Section
      7.4

            	
              Notices 

            	
              32

            

    

     

    
      	
               
      

            	
              Section
      7.5

            	
              Waivers 

            	
              33

            

    

     

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              Section
      7.6

            	
              Headings 

            	
              33

            

    

     

    
      	
               
      

            	
              Section
      7.7

            	
              Successors
      and Assigns 

            	
              33

            

    

     

    
      	
               
      

            	
              Section
      7.8

            	
              No
      Third Party Beneficiaries 

            	
              33

            

    

     

    
      	
               
      

            	
              Section
      7.9

            	
              Governing
      Law 

            	
              33

            

    

     

    
      	
               
      

            	
              Section
      7.10

            	
              Survival 

            	
              33

            

    

     

    
      	
               
      

            	
              Section
      7.11

            	
              Counterparts 

            	
              34

            

    

     

    
      	
               
      

            	
              Section
      7.12

            	
              Publicity 

            	
              34

            

    

     

    
      	
               
      

            	
              Section
      7.13

            	
              Severability 

            	
              34

            

    

     

    
      	
               
      

            	
              Section
      7.14

            	
              Further
      Assurances 

            	
              34

            

    

     

    
      	
               
      

            	
              Section
      7.15

            	
              Currency 

            	
              34

            

    

     

    
      	
               
      

            	
              Section
      7.16

            	
              Termination 

            	
              34

            

    

     

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

     

    EXHIBIT
LIST

     

    
      	 
      	 
      	 
      
	
              Exhibit
      A

            	
              List
      of Purchasers

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      B

            	
              Definition
      of Accredited Investor

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      B-1

            	
              Accredited
      Investor Representations

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      B-2

            	
              Non-US
      Persons Representations

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      C

            	
              Form
      of Series A Preferred Stock Certificate of Designation

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      D-1

            	
              Form
      of Series A Warrant

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      D-2

            	
              Form
      of Series B Warrant

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      E

            	
              Form
      of Registration Rights Agreement

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      F

            	
              Form
      of Lock-up Agreement

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      G

            	
              Form
      of Escrow Deposit Agreement

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      H

            	
              Form
      of Securities Escrow Agreement

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      I

            	
              Irrevocable
      Transfer Agent Instructions

            	 
      
	 
      	 
      	 
      
	
              Exhibit
      J

            	
              Form
      of Opinion of Anslow & Jaclin, LLP, Securities Counsel

            	 
      

    

     

    
      
         

      

      
        iv

        
          

        

      

      
         

      

    

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated
as of April 22, 2010 by and among Silver Pearl Enterprises, Inc., a Nevada
corporation (the “Company”), and each
of the Purchasers whose names are set forth on Exhibit A hereto
(individually, a “Purchaser” and
collectively, the “Purchasers”).

     

    RECITALS

     

    WHEREAS,
the Company and the Purchasers are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Section 4(2) of the Securities Act and/or Rule 506 of Regulation D
(“Regulation
D”) as promulgated by the United States Securities and Exchange
Commission (the “Commission”) under
the Securities Act of 1933, as amended (the “Securities Act”), or
Regulation S (“Regulation S”) as
promulgated under the Securities Act; and

     

    WHEREAS,
the Company is offering units (the “Units”), each
consisting of (i) nine (9) shares of the Company’s 6% Series A Convertible
Preferred Stock, par value $0.001 per share (the “Preferred Shares”),
initially convertible into nine (9) shares of the Company’s common stock, par
value $0.001 per share (the “Common Stock”)
(subject to adjustment), (ii) one (1) share of Common Stock (the “Common Shares”) and
(iii) a Series A Warrant (the “Series A Warrant”)
and Series B Warrant (the “Series B Warrant”
and, together with the Series A Warrant, the “Warrants”), with each
of the Warrants exercisable to purchase the number of shares of Common Stock
equal to ten percent (10%) of the aggregate number of shares of Common Stock
underlying the Units and the underlying Preferred Shares purchased by each
Purchaser (the “Financing
Transaction”).

     

    AGREEMENT

     

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

     

    ARTICLE
1

     

    PURCHASE
AND SALE OF THE UNITS

     

    Section
1.1 Purchase and Sale of
Units.  Upon the following terms and conditions, the Company is
offering to each Purchaser the number of Units set forth opposite such
Purchaser’s name as Exhibit A hereto
consisting of (i) nine (9) Preferred Shares, initially convertible into nine (9)
shares of Common Stock (subject to adjustment), (ii) one (1) Common Share and
(iii) a Series A Warrant and a Series B Warrant. The designation, rights,
preferences and other terms and provisions of the Preferred Shares are set forth
in the Series A Certificate of Designation, substantially in the form attached
hereto as Exhibit
C (the “Series
A Certificate of Designation”).

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    Section
1.2 Warrants.  Each
of the Purchasers shall be issued, as part of the Units, a Series A Warrant and
a Series B Warrant, each Warrant to purchase the number of shares of Common
Stock equal to ten percent (10%) of the aggregate number of shares of Common
Stock underlying the Units and the underlying Preferred Shares purchased by each
Purchaser, as set forth opposite such Purchaser’s name on Exhibit A hereto. The
Series A Warrant, in substantially the form attached hereto as Exhibit D-1, shall
expire three (3) years following the Closing Date, and have an initial exercise
price of $4.50.  The Series B Warrant, in substantially the form
attached hereto as Exhibit D-2, shall
expire three (3) years following the Closing Date, and have an initial exercise
price of $5.25.

     

    Section
1.3 Conversion and Warrant
Shares.  The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other similar
contractual rights of stockholders, a number of shares of Common Stock equal to
one hundred ten percent (110%) of the number of shares of Common Stock as shall
from time to time be sufficient to effect conversion of all of the Preferred
Shares and exercise of the Warrants then outstanding. Any shares of Common Stock
issuable upon conversion of the Preferred Shares and exercise of the Warrants
(and such shares when issued) are herein referred to as the “Conversion Shares”
and the “Warrant
Shares”, respectively.  The Preferred Shares, the Common
Shares, the Conversion Shares and the Warrant Shares are sometimes collectively
referred to as the “Shares.”

     

    Section
1.4 Purchase Price and
Closing.  Subject to the terms and conditions hereof, the
Company agrees to issue and sell to the Purchasers and, in consideration of and
in express reliance upon the representations, warranties, covenants, terms and
conditions of this Agreement, the Purchasers, severally but not jointly, agree
to purchase the Units for $35.00 per Unit (the “Purchase Price”) for
an aggregate purchase price of $30,000,000, provided, however, the
Financing Transaction can be closed with a minimum aggregate purchase price of
$20,000,000. Additionally, the Company, in its sole discretion, shall have the
right to increase the aggregate purchase price hereunder to up to $40,000,000.
Subject to all conditions to closing have been satisfied or waived, the closing
of the purchase and sale of the Units shall take place at the offices of Anslow
& Jaclin, LLP (the “Closing”) no later
than April 22, 2010, which date may be mutually extended
by _______________________ (the “Placement Agent”) and
the Company (the “Closing Date”). In the event that the Closing occurs
with an amount less than the full offering amount of $30,000,000 (and any
permitted over-allotment amount), the Company and the Placement Agent can hold a
subsequent closing for all or any portion of the remaining amount of the
Financing Transaction not sold at the time of the Closing, provided, however, that such subsequent closing must
occur no later than twenty-five days following the
Closing.  Subject to the terms and conditions of this
Agreement, at the Closing the Company shall deliver or cause to be delivered to
each Purchaser (x) certificates for the number of Common Shares and Preferred
Shares set forth opposite the name of such Purchaser on Exhibit A hereto, (y)
the Warrants to purchase such number of shares of Common Stock as is set forth
opposite the name of such Purchaser on Exhibit A attached
hereto, and (z) any other documents required to be delivered pursuant to Article
4 hereof.  At the time of the Closing, each Purchaser shall have
delivered its Purchase Price by wire transfer to the escrow account pursuant to
the Escrow Deposit Agreement (as hereafter defined).  The Company may
also, in its sole discretion, terminate the offering and the Company and the
Placement Agent would then notify the Escrow Agent (as defined in the Escrow
Deposit Agreement) to return the funds deposited in escrow, in accordance with
the Escrow Deposit Agreement.

     

    
      
         

      

      
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    ARTICLE
2

     

    REPRESENTATIONS
AND WARRANTIES

     

    Section
2.1 Representations and
Warranties of the Company, non-PRC Subsidiaries and the PRC
Subsidiary.  The Company hereby represents and warrants to the
Purchasers on behalf of itself, its non-PRC Subsidiaries, as set forth on Schedule 2.1(e), and
Keyuan Plastics Co., Ltd., a Subsidiary incorporated under the laws of the
People’s Republic of China (the “PRC Subsidiary”), as
of the date hereof (except as set forth on the Schedule of Exceptions attached
hereto with each numbered Schedule corresponding to the section number herein),
as follows:

     

    (a) Organization, Good Standing
and Power. Each of the Company, its non-PRC Subsidiaries and the PRC
Subsidiary is a corporation or other entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization (as applicable) and has the
requisite corporate power to own, lease and operate its properties and assets
and to conduct its business as it is now being conducted.  Except as
set forth on Schedule
2.1(a), each of the Company, its non-PRC Subsidiaries and the PRC
Subsidiary is duly qualified to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary except for any jurisdiction(s) (alone or
in the aggregate) in which the failure to be so qualified will not have a
Material Adverse Effect (as defined in Section 2.1(g) hereof) on the Company’s
consolidated financial condition.

     

    (b) Corporate Power; Authority
and Enforcement. The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Registration Rights
Agreement in the form attached hereto as Exhibit E (the “Registration Rights
Agreement”), the Lock-Up Agreement (as defined in Section 3.16 hereof) in
the form attached hereto as Exhibit F, the Escrow
Deposit Agreement by and among the Company, the Placement Agent and the escrow
agent named therein, dated as of March 18, 2010, substantially in the form of
Exhibit G
attached hereto (the “Escrow Deposit
Agreement”), the Securities Escrow Agreement by and among the Company,
the Purchasers, the Principal Stockholder (as defined therein) and the escrow
agent named therein, dated as of the date hereof, substantially in the form of
Exhibit H
attached hereto (the “Securities Escrow
Agreement,” and together with the Escrow Deposit Agreement and the
Securities Escrow Agreement, the “Escrow Agreements”),
the Irrevocable Transfer Agent Instructions (as defined in Section 3.10), the
Series A Certificate of Designation, and the Warrants (collectively, the “Transaction
Documents”), and to issue and sell the Units in accordance with the terms
hereof. The execution, delivery and performance of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action, and no further consent or authorization of the Company or its Board of
Directors or stockholders is required.  Each of the Transaction
Documents constitutes, or shall constitute when executed and delivered, a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.

     

    
      
         

      

      
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    (c) Capitalization. The
authorized capital stock of the Company and the shares thereof currently issued
and outstanding as of the date hereof is set forth on Schedule 2.1(c)
hereto.  All of the issued and outstanding shares of the Common Stock
have been duly and validly authorized. Except as contemplated by the Transaction
Documents or as set forth on Schedule 2.1(c)
hereto:

     

    (i) no shares
of Common Stock are entitled to preemptive, conversion or other rights and there
are no outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company;

     

    (ii) there are
no contracts, commitments, understandings, or arrangements by which the Company
is or may become bound to issue additional shares of  capital stock of
the Company or options, securities or rights convertible into shares of capital
stock of the Company;

     

    (iii) the
Company is not a party to any agreement granting registration or anti-dilution
rights to any person with respect to any of its equity or debt securities;
and

     

    (iv) the
Company is not a party to, and it has no knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock of the
Company.

     

    The offer
and sale of all capital stock, convertible securities, rights, warrants, or
options of the Company issued prior to the Closing complied with all applicable
Federal and state securities laws.  The Company has furnished or made
available to the Purchasers true and correct copies of the Company’s Articles of
Incorporation, as amended and in effect on the date hereof (the “Articles”), and the
Company’s Bylaws, as amended and in effect on the date hereof (the “Bylaws”).  Except
as restricted under applicable federal, state, local or foreign laws and
regulations, the Articles, the Series A Certificate of Designation or the
Transaction Documents, or as set forth on Schedule 2.1 (c), no
written or oral contract, instrument, agreement, commitment, obligation, plan or
arrangement of the Company shall limit the payment of dividends on the Company’s
Preferred Shares, or its Common Stock.

     

    (d) Issuance of
Shares.  The Units, the Preferred Shares, the Common Shares and
the Warrants to be issued at the Closing have been duly authorized by all
necessary corporate action and the Preferred Shares, when paid for or issued in
accordance with the terms hereof, will be validly issued and outstanding, fully
paid and nonassessable and entitled to the rights and preferences set forth in
the Series A Certificate of Designation and, immediately after the Closing, the
Purchasers will be the record and beneficial owners of all of such securities
and have good and valid title to all of such securities, free and clear of all
encumbrances. When the Conversion Shares and the Warrant Shares are issued in
accordance with the terms of the Series A Certificate of Designation and the
Warrants, respectively, such Shares will be duly authorized by all necessary
corporate action and validly issued and outstanding, fully paid and
nonassessable, and the holders will be entitled to all rights accorded to a
holder of Common Stock and will be the record and beneficial owners of all of
such securities and have good and valid title to all of such securities, free
and clear of all encumbrances.

     

    
      
         

      

      
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    (e) Subsidiaries. Schedule 2.1(e)
hereto sets forth each Subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of ownership of
each Subsidiary. There are no outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by or binding upon any
Subsidiary for the purchase or acquisition of any shares of capital stock of any
Subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital stock. Neither
the Company nor any Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any Subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Except as filed as
exhibits to the Commission Documents (as defined below), neither the Company nor
any Subsidiary is party to, nor has any knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock of any Subsidiary. All
of the outstanding shares of capital stock of each Subsidiary has been duly
authorized and validly issued, and are fully paid and
nonassessable.  For the purposes of this Agreement, “Subsidiary” shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interests having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries.

     

    (f) Commission Documents,
Financial Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”),
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
(all of the foregoing including filings incorporated by reference therein being
referred to herein as the “Commission
Documents”).  The Company has not provided to the Purchasers
any material non-public information or other information which, according to
applicable law, rule or regulation, was required to have been disclosed publicly
by the Company but which has not been so disclosed, other than (i) with respect
to the transactions contemplated by this Agreement, or (ii) pursuant to a
non-disclosure or confidentiality agreement signed by the
Purchasers.  At the time of the respective filings, the Form 10-K and
the Form 10-Q complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such documents.  As of their respective filing dates,
none of the Form 10-K or Form 10-Q contained any untrue statement of a material
fact; and none omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the Commission Documents (the “Financial
Statements”) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect thereto. The
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles (“GAAP”) applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in the Financial Statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the consolidated financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

     

    
      
         

      

      
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    (g) No Material Adverse
Effect. Since December 31, 2009, neither the Company, the non-PRC
Subsidiaries, nor the PRC Subsidiary has experienced or suffered any Material
Adverse Effect. For the purposes of this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, operations,
properties, or financial condition of the Company, its non-PRC Subsidiaries, the
PRC Subsidiary, individually, or in the aggregate and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to perform any of its obligations under this
Agreement in any material respect.

     

    (h) No Undisclosed
Liabilities.  Other than as disclosed on Schedule 2.1(h) or
set forth in the Commission Documents, to the knowledge of the Company, neither
the Company, the non-PRC Subsidiaries, nor the PRC Subsidiary has any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) other than
those incurred in the ordinary course of the Company’s, the non-PRC
Subsidiaries’ and the PRC Subsidiary’s respective businesses since December 31,
2009 and those which, individually or in the aggregate, do not have a Material
Adverse Effect on the Company, the non-PRC Subsidiaries or the PRC
Subsidiary.

     

    (i) No Undisclosed Events or
Circumstances. To the Company’s knowledge, no event or circumstance has
occurred or exists with respect to the Company, the non-PRC Subsidiaries or the
PRC Subsidiary or their respective businesses, properties, operations or
financial condition, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.

     

    (j) Indebtedness. The
Financial Statements set forth all outstanding secured and unsecured
Indebtedness of the Company on a consolidated basis, or for which the Company,
the non-PRC Subsidiaries or the PRC Subsidiary have commitments as of the date
of Financial Statements or any subsequent period that would require disclosure.
For the purposes of this Agreement, “Indebtedness” shall
mean (a) any liabilities for borrowed money or amounts owed (other than trade
accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same should be reflected in the
Company’s consolidated balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments due under leases required to be capitalized in accordance
with GAAP.  Neither the Company, the non-PRC Subsidiaries nor the PRC
Subsidiary is in default with respect to any Indebtedness which, individually or
in the aggregate, would have a Material Adverse Effect.

     

    (k) Title to Assets. Each
of the Company, the non-PRC Subsidiaries and the PRC Subsidiary has good and
marketable title to (i) all properties and assets purportedly owned or used by
them as reflected in the Financial Statements, (ii) all properties and assets
necessary for the conduct of their business as currently conducted, and (iii)
all of the real and personal property reflected in the Financial Statements free
and clear of any Lien. All leases are valid and subsisting and in full force and
effect.

     

    
      
         

      

      
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    (l) Actions Pending.
There is no action, suit, claim, investigation, arbitration, alternate dispute
resolution proceeding or any other proceeding pending or, to the knowledge of
the Company, threatened against or involving the Company, any Subsidiary or the
PRC Subsidiary (i) which questions the validity of this Agreement or any of the
other Transaction Documents or the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto or (ii) involving
any of their respective properties or assets.  To the knowledge of the
Company, there are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against the
Company, the non-PRC Subsidiaries or the PRC Subsidiary or any of their
respective executive officers or directors in their capacities as
such.

     

    (m) Compliance with
Law.  The Company, the non-PRC Subsidiaries and the PRC
Subsidiary have all material franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of their respective business as now being conducted by it unless the
failure to possess such franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.

     

    (n) No
Violation.  The business of the Company, the non-PRC
Subsidiaries and the PRC Subsidiary is not being conducted in violation of any
Federal, state, local or foreign governmental laws, or rules, regulations and
ordinances of any of any governmental entity, except for possible violations
which singularly or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. The Company is not required under Federal, state, local
or foreign law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under the
Transaction Documents, or issue and sell the Units, the Preferred Shares, the
Common Shares, the Warrants, the Conversion Shares and the Warrant Shares in
accordance with the terms hereof or thereof (other than (x) any consent,
authorization or order that has been obtained as of the date hereof, (y) any
filing or registration that has been made as of the date hereof or (z) any
filings which may be required to be made by the Company with the Commission or
state securities administrators subsequent to the Closing).

     

    (o) No Conflicts. The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated herein and
therein do not and will not (i) violate any provision of the Articles or Bylaws,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company, any Subsidiary, or the
PRC Subsidiary is a party or by which it or its properties or assets are bound,
(iii) create or impose a lien, mortgage, security interest, pledge, charge or
encumbrance (collectively, “Lien”) of any nature
on any property of the Company, any Subsidiary, or the PRC Subsidiary under any
agreement or any commitment to which the Company, any Subsidiary, or the PRC
Subsidiary is a party or by which the Company, any Subsidiary, or the PRC
Subsidiary is bound or by which any of its respective properties or assets are
bound, or (iv) result in a violation of any federal, state, local or foreign
statute, rule, regulation, order, judgment or decree (including Federal and
state securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company, any Subsidiary or
the PRC Subsidiary are bound or affected, provided, however, that,
excluded from the foregoing in all cases are such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect.

     

    
      
         

      

      
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    (p) Taxes. Each of the
Company, the non-PRC Subsidiaries and the PRC Subsidiary, to the extent its
applicable, has accurately prepared and filed all federal, state and other tax
returns required by law to be filed by it, has paid or made provisions for the
payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the consolidated financial
statements of the Company for all current taxes and other charges to which the
Company, the non-PRC Subsidiaries or the PRC Subsidiary, if any, is subject and
which are not currently due and payable. None of the federal income tax returns
of the Company have been audited by the Internal Revenue Service. The Company
has no knowledge of any additional assessments, adjustments or contingent tax
liability (whether federal, state or foreign) of any nature whatsoever, whether
pending or threatened against the Company, any Subsidiary or the PRC Subsidiary
for any period, nor of any basis for any such assessment, adjustment or
contingency.

     

    (q) Certain Fees. Except
as set forth on Schedule 2.1(q)
hereto, no brokers fees, finders fees or financial advisory fees or commissions
will be payable by the Company with respect to the transactions contemplated by
this Agreement and the other Transaction Documents.

     

    (r) Intellectual
Property. Each of the Company, the non-PRC Subsidiaries and the PRC
Subsidiary, owns or has the lawful right to use all patents, trademarks, domain
names (whether or not registered) and any patentable improvements or
copyrightable derivative works thereof, websites and intellectual property
rights relating thereto, service marks, trade names, copyrights, licenses and
authorizations, if any, and all rights with respect to the foregoing, if any,
which are necessary for the conduct of their respective business as now
conducted without any conflict with the rights of others, except where the
failure to so own or possess would not have a Material Adverse
Effect.

     

    (s) Books and Records Internal
Accounting Controls. Except as may have otherwise been disclosed in the
Commission Documents, the books and records of the Company, the non-PRC
Subsidiaries and the PRC Subsidiary accurately reflect in all material respects
the information relating to the business of the Company, the non-PRC
Subsidiaries and the PRC Subsidiary, the location and collection of their
assets, and the nature of all transactions giving rise to the obligations or
accounts receivable of the Company, the non-PRC Subsidiaries or the PRC
Subsidiary.  Except as disclosed on Schedule 2.1(s), the
Company, the non-PRC Subsidiaries and the PRC Subsidiary maintain a system of
internal accounting controls sufficient, in the judgment of the Company, to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate actions are taken
with respect to any differences.

     

    
      
         

      

      
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    (t) Material Agreements.
Any and all written or oral contracts, instruments, agreements, commitments,
obligations, plans or arrangements, the Company, the non-PRC Subsidiaries and
the PRC Subsidiary is a party to, that a copy of which would be required to be
filed with the Commission as an exhibit to a registration statement on Form S-1
(collectively, the “Material Agreements”)
if the Company or any Subsidiary were registering securities under the
Securities Act has previously been publicly filed with the Commission in the
Commission Documents.  Each of the Company, the non-PRC Subsidiaries
and the PRC Subsidiary has in all material respects performed all the
obligations required to be performed by them to date under the foregoing
agreements, have received no notice of default and are not in default under any
Material Agreement now in effect the result of which would cause a Material
Adverse Effect.

     

    (u) Transactions with
Affiliates. Except as set forth in the Financial Statements or in the
Commission Documents or on Schedule 2.1(u), there are no loans, leases,
agreements, contracts, royalty agreements, management contracts or arrangements
or other continuing transactions between (a) the Company or any Subsidiary on
the one hand, and (b) on the other hand, any officer, employee, consultant or
director of the Company, or any of non-PRC Subsidiaries or the PRC Subsidiary,
or any person owning any capital stock of the Company, any Subsidiary, or the
PRC Subsidiary, or any member of the immediate family of such officer, employee,
consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder.

     

    (v) Securities Act of
1933. Assuming the accuracy of the representations of the Purchasers set
forth in Section 2.2 (d)-(i) hereof, the Company has complied with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Units hereunder. Neither the Company nor anyone acting
on its behalf, directly or indirectly, has sold or will sell, offer to sell or
solicit offers to buy any of the Units, the Preferred Shares, the Common Shares,
the Warrants or similar securities to, or solicit offers with respect thereto
from, or enter into any preliminary conversations or negotiations relating
thereto with, any person, or has taken or will take any action so as to bring
the issuance and sale of any of the Units, the Preferred Shares, the Common
Shares and the Warrants in violation of the registration provisions of the
Securities Act and applicable state securities laws, and neither the Company nor
any of its affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or sale
of any of the Units, the Preferred Shares, the Common Shares and the
Warrants.

     

    (w) Governmental
Approvals. Except for the filing of any notice prior or subsequent to the
Closing Date that may be required under applicable state and/or Federal
securities laws (which if required, shall be filed on a timely basis), including
the filing of a Form D and a registration statement or statements pursuant to
the Registration Rights Agreement, and the filing of the Series A Certificate of
Designation with the Secretary of State for the State of Nevada, no
authorization, consent, approval, license, exemption of, filing or registration
with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the execution or delivery of the Units, the Preferred Shares,
the Common Shares and the Warrants, or for the performance by the Company of its
obligations under the Transaction Documents.

     

    
      
         

      

      
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    (x) Employees. Except as
disclosed on Schedule
2.1(x), neither the Company nor any Subsidiary or the PRC Subsidiary has
any collective bargaining arrangements covering any of its
employees.  Schedule 2.1(x) sets
forth a list of the employment contracts, agreements regarding proprietary
information, non-competition agreements, non-solicitation agreements,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant to be
employed or engaged by the Company. Since December 31, 2009, no officer,
consultant or key employee of the Company or any Subsidiary or the PRC
Subsidiary whose termination, either individually or in the aggregate, would
have a Material Adverse Effect, has terminated or, to the knowledge of the
Company, has any present intention of terminating his or her employment or
engagement with the Company or any Subsidiary.

     

    (y) Absence of Certain
Developments. Except as disclosed on Schedule 2.1(y),
since December 31, 2009, neither the Company, the non-PRC Subsidiaries, nor the
PRC Subsidiary have:

     

    (i) issued
any stock, bonds or other corporate securities or any rights, options or
warrants with respect thereto;

     

    (ii) borrowed
any amount or incurred or become subject to any liabilities (absolute or
contingent) except current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the current liabilities
incurred in the ordinary course of business during the comparable portion of its
prior fiscal year, as adjusted to reflect the current nature and volume of the
Company’s or such Subsidiary’s business;

     

    (iii) discharged
or satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business;

     

    (iv) declared
or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock;

     

    (v) sold,
assigned or transferred any other tangible assets, or canceled any debts or
claims, except in the ordinary course of business;

     

    (vi) sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights, or
disclosed any proprietary confidential information to any person except to
customers in the ordinary course of business or to the Purchasers or their
representatives;

     

    (vii) suffered
any material losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
prospective business;

     

    (viii) made any
changes in employee compensation except in the ordinary course of business and
consistent with past practices;

     

    
      
         

      

      
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    (ix) made
capital expenditures or commitments therefor that aggregate in excess of
$50,000;

     

    (x) entered
into any other transaction other than in the ordinary course of business, or
entered into any other material transaction, whether or not in the ordinary
course of business;

     

    (xi) made
charitable contributions or pledges in excess of $10,000;

     

    (xii) suffered
any material damage, destruction or casualty loss, whether or not covered by
insurance;

     

    (xiii) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment;

     

    (xiv) effected
any two or more events of the foregoing kind which in the aggregate would be
material to the Company, its Subsidiaries or the PRC Subsidiary; or

     

    (xv) entered
into an agreement, written or otherwise, to take any of the foregoing
actions.

     

    (z) Public Utility Holding
Company Act; Investment Company Act and U.S. Real Property Holding Corporation
Status. The Company is not a “holding company” or a “public utility
company” as such terms are defined in the Public Utility Holding Company Act of
1935, as amended. The Company is not, and as a result of and immediately upon
the Closing will not be, an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.  The Company is not and has never been a U.S. real
property holding corporation within the meaning of Section 897 of the Internal
Revenue Code of 1986, as amended.

     

    (aa) ERISA. No liability
to the Pension Benefit Guaranty Corporation has been incurred with respect to
any Plan (as defined below) by the Company or any of its subsidiaries which is
or would be materially adverse to the Company and its subsidiaries. The
execution and delivery of this Agreement and the other Transaction Documents and
the issuance and sale of the Units, the Preferred Shares, the Common Shares and
the Warrants will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as
amended, provided, that, if any of the Purchasers, or any person or entity that
owns a beneficial interest in any of the Purchasers, is an “employee pension
benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to
which the Company is a “party in interest” (within the meaning of Section 3(14)
of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if
applicable, are met. As used in this Section 2.1(aa), the term “Plan” shall mean an
“employee pension benefit plan” (as defined in Section 3 of ERISA) which is or
has been established or maintained, or to which contributions are or have been
made, by the Company or any Subsidiary or by any trade or business, whether or
not incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.

     

    
      
         

      

      
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    (bb) 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 cause the offering of the Shares pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes of
the Securities Act which would prevent the Company from selling the Shares
pursuant to Rule 506 under the Securities Act, nor will the Company or any of
its affiliates take any action or steps that would cause the offering of the
Shares to be integrated with other offerings. The Company does not have any
registration statement pending before the Commission or currently under the
Commission’s review and since May 2005, other than as contemplated under the
Transaction Documents, the Company has not offered or sold any of its equity
securities or debt securities convertible into shares of Common
Stock.

     

    (cc) Sarbanes-Oxley Act.
The Company is in compliance with the applicable provisions of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”),
and the rules and regulations promulgated thereunder, that are effective and for
which compliance by the Company is required as of the date hereof.

     

    (dd) Additional PRC Subsidiary’s
Representations and Warranties.

     

    (i) All
material consents, approvals, permits, authorizations or licenses requisite
under PRC law for the due and proper establishment and operation of the PRC
Subsidiary have been duly obtained from the relevant PRC governmental
authorities and are in full force and effect.  Neither the Company nor
the PRC Subsidiary is aware of any threat or challenge to revoke any of the
foregoing mentioned documents by the PRC government or its
agencies.

     

    (ii) All
filings and registrations with the PRC governmental authorities required in
respect of the PRC Subsidiary and its capital structure and operations
including, without limitation, to the extent applicable, tax bureau and
environmental, land and customs authorities, have been duly completed in
accordance with the relevant PRC rules and regulations, except where the failure
to complete such filings and registrations does not, and would not, individually
or in the aggregate, have a Material Adverse Effect.

     

    (iii) Neither
the PRC Subsidiary nor any affiliated entity is in receipt of any letter or
notice from any relevant PRC governmental or quasi-governmental authority
notifying it of the revocation, or otherwise questioning the validity, of any
licenses or qualifications issued to it or any subsidy granted to it by any PRC
governmental authority, or the need for compliance or remedial actions in
respect of the activities carried out by the Company or such
Subsidiary.

     

    (iv) The PRC
Subsidiary has conducted its business activities within its permitted scope of
business or has otherwise operated its businesses in compliance with all
relevant legal requirements and with all requisite licenses and approvals
granted by competent PRC governmental authorities other than such non-compliance
that do not, and would not, individually or in the aggregate, have a Material
Adverse Effect. As to licenses, approvals and government grants and concessions
requisite or material for the conduct of any part of the PRC Subsidiary’
business which is subject to periodic renewal, neither the Company, the non-PRC
Subsidiaries, nor the PRC Subsidiary has any knowledge of any grounds on which
such requisite renewals will not be granted by the relevant PRC governmental
authorities.

     

    
      
         

      

      
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    (v) The PRC
Subsidiary has complied with all applicable PRC laws and regulations in all
material respects, including without limitation, laws and regulations pertaining
to welfare fund contributions, social benefits, medical benefits, insurance,
retirement benefits, pensions or the like.

     

    (ee) No Additional
Agreements.  Neither the Company nor any of its affiliates has
any agreement or understanding with any Purchaser with respect to the
transactions contemplated by the Transaction Documents other than as specified
in the Transaction Documents.

     

    (ff) Foreign Corrupt Practices
Act.  Neither the Company, the non-PRC Subsidiaries, the PRC
Subsidiary, nor to the knowledge of the Company, the non-PRC Subsidiaries, the
PRC Subsidiary, any agent or other person acting on behalf of the Company, the
non-PRC Subsidiaries or the PRC Subsidiary, has, directly or indirectly, (i)
used any funds, or will use any proceeds from the sale of the Units, for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company, or any Subsidiary of the
Company (or made by any Person acting on their behalf of which the Company is
aware) or any members of their respective management which is in violation of
any applicable law, or (iv) has violated in any material respect any provision
of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder which was or is applicable to the Company or any of its
non-PRC Subsidiaries.

     

    (gg) PFIC.  None
of the Company or any of its non-PRC Subsidiaries or the PRC Subsidiary is or
intends to become a “passive foreign investment company” within the meaning of
Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.

     

    (hh) OFAC. None of the
Company or any of its non-PRC Subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee, affiliate or person acting on behalf of
any of the Company or any of its non-PRC Subsidiaries, is currently subject to
any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the sale of the
Units, or lend, contribute or otherwise make available such proceeds to any
Subsidiary, joint venture partner or other Person or entity, towards any sales
or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
sanctioned by OFAC or for the purpose of financing the activities of any Person
currently subject to any U.S. sanctions administered by OFAC.

     

    (ii) Money Laundering
Laws. The operations of each of the Company, the non-PRC Subsidiaries and
the PRC Subsidiary have been conducted at all times in compliance with the money
laundering requirements of all applicable governmental authorities and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental authority (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or governmental
authority or any arbitrator involving any of the Company, the non-PRC
Subsidiaries or the PRC Subsidiary with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company, threatened.

     

    
      
         

      

      
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    (jj) Environmental
Matters.

     

    (i) Each of
the Company, the Subsidiary and the PRC Subsidiary has complied and is in
compliance in all material respects with all applicable Environmental Laws (as
defined herein) pertaining to any of the properties and assets of the Company,
the Subsidiary and the PRC Subsidiary (including all real property owned by the
Company, the Subsidiary and the PRC Subsidiary, together with all structures,
facilities, improvements, fixtures, systems, equipment and items of property
presently or hereafter located thereon or attached or appurtenant thereto or
owned by the Company, the Subsidiary or the PRC Subsidiary and located on real
property leased by the Company, the Subsidiary or the PRC Subsidiary, and all
easements, licenses, rights and appurtenances relating to the foregoing
(collectively, the “Company Real Property”) and the use and ownership thereof,
and to the operation of their respective businesses. No material violation the
Company, the Subsidiary or the PRC Subsidiary is being alleged of any applicable
Environmental Law relating to any of the properties and assets of the Company,
the Subsidiary or the PRC Subsidiary (including the Company Real Property) or
the use or ownership thereof, or to the operation of their respective
businesses.

     

    (ii) None of
the Company, the Subsidiary or the PRC Subsidiary or any other Person (including
any tenant or subtenant) has caused or taken any action that will result in, nor
is the Company, the Subsidiary or the PRC Subsidiary thereof subject to, any
material liability or obligation on the part of the Company, the Subsidiary or
the PRC Subsidiary thereof or any of its Affiliates, relating to (x) the
environmental conditions on, under, or about the Company Real Property or other
properties or assets owned, leased, operated or used by the Company, the
Subsidiary or the PRC Subsidiary or any predecessor thereto at the present time
or in the past, including without limitation, the air, soil and groundwater
conditions at such properties or (y) the past or present use, management,
handling, transport, treatment, generation, storage, disposal or Release (as
defined herein) of any Hazardous (as defined herein) materials.

     

    (iii) The
Company has disclosed and made available to the Purchasers all information,
including, without limitation, all studies, analyses and test results, in the
possession, custody or control of or otherwise known the Company, the Subsidiary
or the PRC Subsidiary relating to (x) the environmental conditions on, under or
about the Company Real Property or other properties or assets owned, leased,
operated or used by the Company, the Subsidiary or the PRC Subsidiary any
predecessor in interest thereto at the present time or in the past, and (y) any
Hazardous materials used, managed, handled, transported, treated, generated,
stored or Released by the Company, the Subsidiary or the PRC Subsidiary, or any
other Person on, under, about or from any of the Company Real Property, or
otherwise in connection with the use or operation of any of the properties and
assets of the Company, the Subsidiary or the PRC Subsidiary, or their respective
businesses.

     

    (iv) For
purposes of this Agreement, the following terms shall have the meanings ascribed
to them below:

     

    
      
         

      

      
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    “Environmental
Laws” means all Laws relating to the protection of the environment, to human
health and safety, or to any Environmental activity, including, without
limitation, (a) CERCLA, the Resource Conservation and Recovery Act, and the
Occupational Safety and Health Act, or any equivalent law under the PRC,
including, without limitation, the Environmental Protection Law of the PRC, the
Law of the PRC on Appraising of Environmental Impacts and the Law of the PRC on
Prevention and Control of Environmental Pollution by Solid Waste, (b) all other
requirements pertaining to reporting, licensing, permitting, investigation or
remediation of emissions, discharges, releases or threatened releases of
Hazardous materials into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, sale, treatment,
receipt, storage, disposal, transport or handling of Hazardous materials and (c)
all other requirements pertaining to the protection of the health and safety of
employees or the public.

     

    “Hazardous
Materials” means any substance that: (a) is or contains asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon as or related materials (b)
requires investigation, removal or remediation under any Environmental Law, or
is defined, listed or identified as a “hazardous waste” or
“hazardous  substance” thereunder, or (c) is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any Governmental Authority or
Environmental Law.

     

    “Release”
means any releasing, disposing, discharging, injecting, spilling, leaking,
leaching, pumping, dumping, emitting, escaping, emptying, seeing, dispersal,
leeching, migration, transporting, placing and the like, including without
limitation, the moving of any materials through, into or upon, any land, soil,
surface water, ground water or air, or otherwise entering into the
environment.

     

    Section
2.2 Representations and
Warranties of the Purchasers.  Each Purchaser hereby makes the
following representations and warranties to the Company as of the date hereof,
with respect solely to itself and not with respect to any other
Purchaser:

     

    (a) Organization and Good
Standing of the Purchasers. If the Purchaser is an entity, such Purchaser
is a corporation, partnership or limited liability company duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.

     

    (b) Authorization and
Power. Each Purchaser has the requisite power and authority to enter into
and perform this Agreement and each of the other Transaction Documents to which
such Purchaser is a party and to purchase the Units, consisting of the Preferred
Shares, the Common Shares and Warrants, being sold to it hereunder. The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which such Purchaser is a party by such Purchaser and
the consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate, partnership or limited
liability company action, and no further consent or authorization of such
Purchaser or its Board of Directors, stockholders, partners, members, or
managers, as the case may be, is required. This Agreement and each of the other
Transaction Documents to which such Purchaser is a party has been duly
authorized, executed and delivered by such Purchaser and constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of such
Purchaser enforceable against such Purchaser in accordance with the terms
hereof.

     

    
      
         

      

      
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    (c) No Conflicts. The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which such Purchaser is a party and the consummation by
such Purchaser of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such Purchaser’s charter
documents, bylaws, operating agreement, partnership agreement or other
organizational documents or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument or obligation to which
such Purchaser is a party or by which its properties or assets are bound, or
result in a violation of any law, rule, or regulation, or any order, judgment or
decree of any court or governmental agency applicable to such Purchaser or its
properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or any other Transaction Document to which such Purchaser
is a party or to purchase the Units, Preferred Shares, Common Shares or acquire
the Warrants in accordance with the terms hereof, provided, that for purposes of
the representation made in this sentence, such Purchaser is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.

     

    (d) Status of Purchasers.
Each Purchaser is an “accredited investor” (“Accredited Investor”)
as defined in Regulation D, or a “non-US person” as defined in Regulation S.
Such Purchaser is not required to be registered as a broker-dealer under Section
15 of the Exchange Act and such Purchaser is not a broker-dealer, nor an
affiliate of a broker-dealer.

     

    (e) Acquisition for
Investment. Each Purchaser is acquiring the Units, and the underlying
Preferred Shares, Common Shares and the Warrants solely for its own account for
the purpose of investment and not with a view to or for sale in connection with
a distribution. The Purchaser does not have a present intention to sell the
Units, Preferred Shares, Common Shares or the Warrants, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of the Units, Preferred Shares, Common Shares or the Warrants to or
through any person or entity; provided, however, that by
making the representations herein and subject to Section 2.2(h) below, such
Purchaser does not agree to hold the Units, Preferred Shares, Common Shares or
the Warrants for any minimum or other specific term and reserves the right to
dispose of the Units, Preferred Shares, Common Shares or the Warrants at any
time in accordance with Federal and state securities laws applicable to such
disposition. Each Purchaser acknowledges that it is able to bear the financial
risks associated with an investment in the Units, Preferred Shares, Common
Shares and the Warrants and that it has been given full access to such records
of the Company, the non-PRC Subsidiaries and the PRC Subsidiary and to the
officers of the Company, the non-PRC Subsidiaries and the PRC Subsidiary and
received such information as it has deemed necessary or appropriate to conduct
its due diligence investigation and has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the Company’s stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company. Each Purchaser further acknowledges that such Purchaser
understands the risks of investing in companies domiciled and/or which operate
primarily in the PRC and that the purchase of the Units, Preferred Shares,
Common Shares and Warrants involves substantial risks.

     

    
      
         

      

      
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    (f) Additional Representations
and Warranties of Accredited Investors.  Each Purchaser
indicating that such Purchaser is an Accredited Investor, severally and not
jointly, further makes the representations and warranties to the Company set
forth on Exhibit
B-1.

     

    (g) Additional Representations
and Warranties of Non-U.S. Persons.  Each Purchaser indicating
that it is not a U.S. person, severally and not jointly, further makes the
representations and warranties to the Company set forth on Exhibit
B-2.

     

    (h) Opportunities for Additional
Information. Each Purchaser acknowledges that such Purchaser has had the
opportunity to ask questions of and receive answers from, or obtain additional
information from, the executive officers of the Company concerning the financial
and other affairs of the Company.

     

    (i) No General
Solicitation. Each Purchaser acknowledges that the Units were not offered
to such Purchaser by means of any form of general or public solicitation or
general advertising, or publicly disseminated advertisements or sales
literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of
communications.

     

    (j) Rule 144. Such
Purchaser understands that the Shares must be held indefinitely unless such
Shares are registered under the Securities Act or an exemption from registration
is available. Such Purchaser acknowledges that such Purchaser is familiar with
Rule 144, of the rules and regulations of the Commission, as amended,
promulgated pursuant to the Securities Act (“Rule 144”), and that
such person has been advised that Rule 144 permits resales only under certain
circumstances. Such Purchaser understands that to the extent that Rule 144 is
not available, such Purchaser will be unable to sell any Shares without either
registration under the Securities Act or the existence of another exemption from
such registration requirement.

     

    (k) General. Such
Purchaser understands that the Units are being offered and sold in reliance on a
transactional exemption from the registration requirements of Federal and state
securities laws and the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
such Purchaser set forth herein in order to determine the applicability of such
exemptions and the suitability of such Purchaser to acquire the
Units.

     

    (l) Independent
Investment. Except as may be disclosed in any filings with the Commission
by the Purchasers under Section 13 and/or Section 16 of the Exchange Act, no
Purchaser has agreed to act with any other Purchaser for the purpose of
acquiring, holding, voting or disposing of the Shares purchased hereunder for
purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting
independently with respect to its investment in the Shares.

     

    
      
         

      

      
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    (m) Brokers. Other than
the Placement Agent and selected dealers of the Placement Agent, no Purchaser
has any knowledge of any brokerage or finder’s fees or commissions that are or
will be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other person or entity with
respect to the transactions contemplated by this Agreement.

     

    (n) Confidential
Information.  Each Purchaser agrees that such Purchaser and its
employees, agents and representatives will keep confidential and will not
disclose, divulge or use (other than for purposes of monitoring its investment
in the Company) any confidential information which such Purchaser may obtain
from the Company pursuant to financial statements, reports and other materials
submitted by the Company to such Purchaser pursuant to this Agreement, unless
such information is known to the public through no fault of such Purchaser or
his or its employees or representatives; provided, however, that a Purchaser may
disclose such information (i) to its attorneys, accountants and other
professionals in connection with their representation of such Purchaser in
connection with such Purchaser’s investment in the Company, (ii) to any
prospective permitted transferee of the Shares, or (iii) to any general partner
or affiliate of such Purchaser, so long as the prospective transferee agrees to
be bound by the provisions of this Section 2.2(n).

     

    (o) RMB
Investment.  One or more Purchasers, at its or their option,
may purchase the Units in RMB Yuan.

     

    ARTICLE
3

     

    COVENANTS

     

    The
Company covenants with each of the Purchasers as follows, which covenants are
for the benefit of the Purchasers and their permitted assignees (as defined
herein).

     

    Section
3.1 Securities
Compliance. The Company shall notify the Commission in accordance with
its rules and regulations, of the transactions contemplated by any of the
Transaction Documents, including filing a Form D with respect to the Units, the
Preferred Shares, Common Shares, Warrants, the Conversion Shares and Warrant
Shares as required under Regulation D and applicable “blue sky” laws, and shall
take all other necessary action and proceedings as may be required and permitted
by applicable law, rule and regulation, for the legal and valid issuance of the
Units, the Preferred Shares, the Common Shares, the Warrants, Conversion Shares
and the Warrant Shares to the Purchasers or subsequent holders.

     

    Section
3.2 Registration and
Listing.  The Company shall (a) comply in all respects with its
reporting and filing obligations under the Exchange Act, (b) comply with all
requirements related to any registration statement filed pursuant to the
Registration Rights Agreement, and (c) not take any action or file any document
(whether or not permitted by the Securities Act or the rules promulgated
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the Exchange Act or Securities Act
except as permitted under the Transaction Documents. Subject to the terms of the
Transaction Documents, the Company further covenants that it will take such
further action as the Purchasers may reasonably request, all to the extent
required from time to time to enable the Purchasers to sell the Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act, as
amended.

     

    
      
         

      

      
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    Section
3.3 Compliance with
Laws.  The Company shall comply, and cause each Subsidiary to
comply in all respects, with all applicable laws, rules, regulations and orders,
except for such non-compliance which singularly or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.

     

    Section
3.4 Keeping of Records and Books
of Account.  The Company shall keep and cause each Subsidiary
and each PRC Subsidiary to keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Company, the non-PRC Subsidiaries
and the PRC Subsidiary, and in which, for each fiscal year, all proper reserves
for depreciation, depletion, obsolescence, amortization, taxes, bad debts and
other purposes in connection with its business shall be made.

     

    Section
3.5 Reporting
Requirements.  If the Commission ceases making periodic reports
filed under the Exchange Act available via the IDEA system, then at a
Purchaser’s request the Company shall furnish the following to such Purchaser so
long as such Purchaser shall beneficially own any Shares:

     

    (a) Current
Reports filed with the Commission on Form 8-K as soon as practicable after the
document is filed with the Commission, and in any event within five (5) business
days after the document is filed with the Commission;

     

    (b) Quarterly
Reports filed with the Commission on Form 10-Q as soon as practicable after the
document is filed with the Commission, and in any event within five (5) business
days after the document is filed with the Commission;

     

    (c) Annual
Reports filed with the Commission on Form 10-K as soon as practicable after the
document is filed with the Commission, and in any event within five (5) business
days after the document is filed with the Commission; and

     

    (d) Copies of
all notices and information, including without limitation any other filings
pursuant to the Exchange Act and the Securities Act, and notices and proxy
statements in connection with any meetings, which are provided to holders of
shares of Common Stock, contemporaneously with the delivery of such notices or
information to such holders of Common Stock.

     

    Section
3.6 Amendments.  The
Company shall not amend or waive any provision of the Articles or Bylaws of the
Company in any way that would adversely affect the liquidation preferences,
dividends rights, conversion rights, voting rights or redemption rights of the
Preferred Shares; provided, however, that while
the Preferred Shares are outstanding, any creation and issuance of another
series of Junior Stock (as defined in the Series A Certificate of Designation)
shall not be deemed to materially and adversely affect such rights, preferences
or privileges.

     

    
      
         

      

      
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    Section
3.7 Other
Agreements.  The Company shall not enter into any agreement the
terms of which would restrict or impair the ability of the Company to perform
its obligations under any Transaction Document.

     

    Section
3.8 Distributions.  So
long as any Preferred Shares remain outstanding, the Company agrees that it
shall not declare or pay any dividends or make any distributions to any
holder(s) of Common Stock or Junior Stock unless such dividends or distributions
are also simultaneously paid or made to the holders of the Preferred Shares on
an as-converted basis.

     

    Section
3.9 Reservation of
Shares.  So long as any of the Preferred Shares or Warrants
remain outstanding, the Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, no less than one
hundred ten percent (110%) of the aggregate number of shares of Common Stock
needed to provide for the issuance of the Conversion Shares and the Warrant
Shares.

     

    Section
3.10 Transfer
Agent.  The Company has engaged the transfer agent and
registrar listed on Schedule 3.10 hereto
(the “Transfer
Agent”) with respect to its Common Stock, who is DTC and DWAC eligible
and who will recognize, execute and honor the Irrevocable Transfer Agent
Instructions (as defined below).  As a condition to Closing, the
Company shall issue irrevocable instructions to its transfer agent, and any
subsequent transfer agent, to issue certificates, registered in the name of each
Purchaser or its respective nominee(s), for the Conversion Shares and the
Warrant Shares in such amounts as specified from time to time by each Purchaser
to the Company upon conversion of the Preferred Shares or exercise of the
Warrants in the form of Exhibit I attached
hereto (the “Irrevocable Transfer Agent
Instructions”). Prior to registration of the Conversion Shares and the
Warrant Shares under the Securities Act, all such certificates shall bear the
restrictive legend specified in Section 5.1 of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 3.10 will be given by the Company to
its transfer agent with respect to the Conversion Shares and Warrant Shares and
that the Shares shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement, in compliance
with applicable law and the Registration Rights Agreement. If a Purchaser
provides the Company with an opinion of counsel, in a generally acceptable form,
to the effect that a public sale, assignment or transfer of the Shares may be
made without registration under the Securities Act or the Purchaser provides the
Company with reasonable assurances that such Shares can be sold pursuant to Rule
144 without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Company shall permit the
transfer, and, in the case of the Conversion Shares and the Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by such Purchaser and without any
restrictive legend. The Company acknowledges that a breach by it of its
obligations under this Section 3.10 will cause irreparable harm to the
Purchasers 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 Section 3.10 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 3.10, that the Purchasers shall be entitled, in addition to all
other available remedies, to an order and/or 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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    Section
3.11 Disposition of
Assets.  So long as any Preferred Shares remain outstanding,
neither the Company nor any Subsidiary shall sell, transfer or otherwise dispose
of any of its material properties, assets and rights including, without
limitation, its software and intellectual property, to any person except for (i)
sales to customers in the ordinary course of business (ii) sales or transfers
between the Company, the non-PRC Subsidiaries and the PRC Subsidiary, or (iii)
otherwise with the prior written consent of the holders of a majority of the
Preferred Shares then outstanding.

     

    Section
3.12 Reporting
Status.  So long as a Purchaser beneficially owns any of the
Shares, the Company shall timely file all reports required to be filed with the
Commission pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.

     

    Section
3.13 Disclosure of
Transaction.  The Company shall issue a press release
describing the material terms of the transactions contemplated hereby (the
“Press
Release”) as soon as practicable after the Closing but in no event later
than 9:00 A.M. Eastern Time on the fourth Business Day following the Closing.
The Company shall also file with the Commission, the Form 8-K describing the
material terms of the transactions contemplated hereby (and attaching as
exhibits thereto this Agreement, the Registration Rights Agreement, the Series A
Certificate of Designation, the form of Lock-Up Agreement, the Securities Escrow
Agreement, the form of each series of Warrant and the Press Release) within four
(4) Business Days following the Closing Date.  The Press Release and
Form 8-K shall be subject to prior review and comment by counsel for the
Purchasers. “Business
Day” means any day during which the NYSE AMEX (“AMEX”) (or other
principal exchange) shall be open for trading.

     

    Section
3.14 Disclosure of Material
Information.  The Company, the non-PRC Subsidiaries and the PRC
Subsidiary covenant and agree that neither it nor any other person acting on its
or their behalf has provided or, from and after the filing of the Press Release,
will provide any Purchaser or its agents or counsel with any information that
the Company believes constitutes material non-public information (other than
with respect to the transactions contemplated by this Agreement), unless prior
thereto such Purchaser shall have executed a specific written agreement
regarding the confidentiality and use of such information.  The
Company understands and confirms that each Purchaser shall be relying on the
foregoing covenants in effecting transactions in securities of the
Company.  At the time of the filing of the Press Release, no Purchaser
shall be in possession of any material, nonpublic information received from the
Company, any of its subsidiaries or any of its respective officers, directors,
employees or agents, that is not disclosed in the Press Release.  The
Company shall not disclose the identity of any Purchaser in any filing with the
Commission except as required by the rules and regulations of the Commission
thereunder.  In the event of a breach of the foregoing covenant by the
Company, any of its subsidiaries, or any of its or their respective officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, a Purchaser may notify the Company, and the
Company shall make public disclosure of such material nonpublic information
within two (2) trading days of such notification.

     

    
      
         

      

      
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    Section
3.15 Pledge of
Securities.  The Company acknowledges and agrees that the
Shares may be pledged by a Purchaser in connection with a bonafide margin agreement
or other loan or financing arrangement that is secured by the Common Stock. The
pledge of Common Stock shall not be deemed to be a transfer, sale or assignment
of the Common Stock hereunder, and no Purchaser effecting a pledge of Common
Stock shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document; provided, that a
Purchaser and its pledgee shall be required to comply with the provisions of
Article 5 hereof in order to effect a sale, transfer or assignment of Common
Stock to such pledgee. At a Purchaser’s expense, the Company hereby agrees to
execute and deliver such documentation as a pledgee of the Common Stock may
reasonably request in connection with a pledge of the Common Stock to such
pledgee by a Purchaser, in accordance with applicable laws relating to the
transfer of the securities.

     

    Section
3.16 Lock-Up
Agreements.  The persons listed on Schedule 3.16
attached hereto shall be subject to the terms and provisions of the Lock-Up
Agreement (the “Lock-Up Agreement”),
which shall provide the manner in which certain stockholders of the Company may
sell, transfer or dispose of their shares of Common Stock.

     

    Section
3.17 DTC.  Not
later than the effective date of the Registration Statement (as defined in the
Registration Rights Agreement), the Company shall cause its Common Stock to be
eligible for transfer with its transfer agent pursuant to the Depository Trust
Company Automated Securities Transfer Program.

     

    Section
3.18 Sarbanes-Oxley
Act.  The Company shall be in compliance with the applicable
provisions of the Sarbanes-Oxley Act of 2002, and the rules and regulations
promulgated thereunder, as required under such Act.

     

    Section
3.19 No Integrated
Offerings.  The Company shall not make any offers or sales of
any security (other than the securities being offered or sold hereunder) under
circumstances that would require registration of the securities being offered or
sold hereunder under the Securities Act.

     

    Section
3.20 No Commissions in Connection
with Conversion of Preferred Shares.  In connection with the
conversion of the Preferred Shares into Conversion Shares, neither the Company
nor any person acting on its behalf will take any action that would result in
the Conversion Shares being exchanged by the Company other than with the then
existing holders of the Preferred Shares exclusively where no commission or
other remuneration is paid or given directly or indirectly for soliciting the
exchange in compliance with Section 3(a)(9) of the Securities Act.

     

    Section
3.21 No Manipulation of
Price.  The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.

     

    
      
         

      

      
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    Section
3.22 Subsequent
Financings.

     

    (a) So long
as a Purchaser owns at least ten percent (10%) of the total number of Preferred
Shares such Purchaser purchased on the date of this Agreement (an “Eligible Purchaser”),
the Company covenants and agrees to promptly notify in writing (a “Rights Notice”) the
Eligible Purchasers of the terms and conditions of any proposed offer or sale
to, or exchange with (or other type of distribution to) any third party (a
“Subsequent
Financing”), of Common Stock or any debt or equity securities
convertible, exercisable or exchangeable into Common Stock; provided, however, prior to
delivering to each Eligible Purchaser a Rights Notice, the Company shall first
deliver to each Eligible Purchaser a written notice of its intention to effect a
Subsequent Financing (“Pre-Notice”) within
three (3) Business Days of receiving an applicable offer, which Pre-Notice shall
ask such Eligible Purchaser if it wants to review the details of such
financing.  Upon the request of an Eligible  Purchaser, and
only upon a request by such Eligible Purchaser within three (3) Business Days of
receipt of a Pre-Notice, the Company shall promptly, but no later than two (2)
Business Days after such request, deliver a Rights Notice to such Eligible
Purchaser.  The Rights Notice shall describe, in reasonable detail,
the proposed Subsequent Financing, the names and investment amounts of all
investors participating in the Subsequent Financing (if known), the proposed
closing date of the Subsequent Financing, which shall be no earlier than ten
(10) Business Days from the date of the Rights Notice, and all of the terms and
conditions thereof and proposed definitive documentation to be entered into in
connection therewith.  The Rights Notice shall provide each Eligible
Purchaser an option (the “Rights Option”)
during the ten (10) Business Days following delivery of the Rights Notice (the
“Option
Period”) to inform the Company whether such Eligible Purchaser will
purchase up to its pro rata portion of all or a portion of the securities being
offered in such Subsequent Financing on the same, absolute terms and conditions
as contemplated by such Subsequent Financing, provided that, the amount of such
purchase shall not exceed such Eligible Purchaser’s Purchase Price hereunder
except as allowed by the following sentence.  If any Eligible
Purchaser elects not to participate in such Subsequent Financing, the other
Eligible Purchasers may participate on a pro-rata basis so long as such
participation in the aggregate does not exceed the total Purchase Price
hereunder.  For purposes of this Section, all references to “pro rata”
means, for any Eligible Purchaser electing to participate in such Subsequent
Financing, the percentage obtained by dividing (x) the number of Preferred
Shares purchased by such Eligible Purchaser at the Closing by (y) the total
number of all of the Preferred Shares purchased by all of the participating
Eligible Purchasers at the Closing.  Delivery of any Rights Notice
constitutes a representation and warranty by the Company that there are no other
material terms and conditions, arrangements, agreements or otherwise except for
those disclosed in the Rights Notice, to provide additional compensation to any
party participating in any proposed Subsequent Financing, including, but not
limited to, additional compensation based on changes in the Purchase Price or
any type of reset or adjustment of a purchase or conversion price or to issue
additional securities at any time after the closing date of a Subsequent
Financing.  If the Company does not receive notice of exercise of the
Rights Option from any or all of Eligible Purchasers within the Option Period,
the Company shall have the right to close the Subsequent Financing on the
scheduled closing date set forth in the Rights Notice (or within sixty (60) days
thereafter) without the participation of any or all of such Eligible Purchasers;
provided that, all of the material terms and conditions of the closing are the
same as those provided to the Eligible Purchasers in the Rights
Notice.  If the closing of the proposed Subsequent Financing does not
occur on the scheduled closing date set forth in the Rights Notice (or within
sixty (60) days thereafter), any closing of the contemplated Subsequent
Financing or any other Subsequent Financing shall be subject to all of the
provisions of this Section 3.23(a), including, without limitation, the delivery
of a new Rights Notice.  The provisions of this Section 3.23(a) shall
not apply to issuances of securities in a Permitted Financing.

     

    
      
         

      

      
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    (b) For
purposes of this Agreement, a Permitted Financing (as defined hereinafter) shall
not be considered a Subsequent Financing.  A “Permitted Financing”
shall mean (i) securities issued pursuant to a bona fide acquisition of another
business entity or business segment of any such entity by the Company pursuant
to a merger, purchase of substantially all the assets or any type of
reorganization (each an “Acquisition”)
provided that (A) the Company will own more than fifty percent (50%) of the
voting power of such business entity or business segment of such entity and (B)
such Acquisition is approved by the Company’s Board of Directors; (ii)
securities issued pursuant to the conversion or exercise of convertible or
exercisable securities issued or outstanding on or prior to the date of this
Agreement or issued pursuant to this Agreement (so long as the terms governing
the conversion or exercise price in such securities are not amended to lower
such price and/or adversely affect the Purchasers); (iii) securities issued in
connection with bona fide strategic license agreements or other partnering
arrangements so long as such issuances are not for the primary purpose of
raising capital; (iv) Common Stock issued or the issuance or grants of options
to purchase Common Stock, in each case, at no less than the then-applicable fair
market value, pursuant to equity incentive plans that are adopted by the
Company’s Board of Directors; (v) securities issued to any placement agent and
its respective designees for the transactions contemplated by this Agreement;
(vi) securities issued at no less than the then-applicable fair market value to
advisors or consultants (including, without limitation, financial advisors and
investor relations firms) in connection with any engagement letter or consulting
agreement, provided that any such issuance is approved by the Company’s Board of
Directors; (vii) securities issued to financial institutions or lessors in
connection with reasonable commercial credit arrangements, equipment financings
or similar transactions, provided that any such issue is approved by the
Company’s Board of Directors; (viii) securities issued to vendors or customers
or to other persons in similar commercial situations as the Company, provided
that any such issue is approved by the Company’s Board of Directors; and (ix)
securities issued in connection with any recapitalization of the
Company.

     

    Section
3.23 Corporate
Governance.  As soon as possible, but no later than four (4)
months of the Closing, the Company shall nominate a board of directors, the
majority of which shall be composed of independent directors (as that term is
defined for SEC purposes and NASDAQ rules and regulations) and take all actions,
and obtain all authorizations, consents and approvals as are required to be
obtained in order to effectuate the election of these nominees. As soon as
possible, but not later than four (4) months of the Closing, the Company shall
employ an English-speaking Chief Financial Officer.

     

    ARTICLE
4

     

    CONDITIONS

     

    Section
4.1 Conditions Precedent to the
Obligation of the Company to Sell the Units.  The obligation
hereunder of the Company to issue and sell the Units, and the underlying
Preferred Shares, Common Shares and the Warrants to the Purchasers is subject to
the satisfaction or waiver, at or before the Closing, of each of the conditions
set forth below. These conditions are for the Company’s sole benefit and may be
waived by the Company at any time in its sole discretion.

     

    
      
         

      

      
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    (a) Accuracy of Each Purchaser’s
Representations and Warranties. The representations and warranties of
each Purchaser in this Agreement and each of the other Transaction Documents to
which such Purchaser is a party shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made at
that time, except for representations and warranties that are expressly made as
of a particular date, which shall be true and correct in all material respects
as of such date.

     

    (b) Performance by the
Purchasers. Each Purchaser shall have performed, satisfied and complied
in all respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by such Purchaser at or
prior to the Closing.

     

    (c) No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.

     

    (d) Delivery of Purchase
Price. The Purchase Price for each of the Units sold shall have been
delivered to the escrow agent pursuant to the Escrow Deposit
Agreement.

     

    (e) Delivery of Transaction
Documents. The Transaction Documents to which the Purchasers are parties
shall have been duly executed and delivered by the Purchasers to the
Company.

     

    Section
4.2 Conditions Precedent to the
Obligation of the Purchasers to Purchase the Units.  The
obligation hereunder of each Purchaser to acquire and pay for the Units is
subject to the satisfaction or waiver, at or before the Closing, of each of the
conditions set forth below. These conditions are for each Purchaser’s sole
benefit and may be waived by such Purchaser at any time in its sole
discretion.

     

    (a) Accuracy of the Company’s
Representations and Warranties. Each of the representations and
warranties of the Company in this Agreement and the other Transaction Documents
that are qualified by materiality or by reference to any Material Adverse Effect
shall be true and correct in all respects, and all other representations and
warranties shall be true and correct in all material respects, as of the date
when made and as of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a particular date,
which shall be true and correct in all respects as of such date.

     

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

     

    
      
         

      

      
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    (c) No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.

     

    (d) No Proceedings or
Litigation. No action, suit or proceeding before any arbitrator or any
governmental authority shall have been commenced, and no investigation by any
governmental authority shall have been threatened, against the Company or any
Subsidiary, or any of the officers, directors or affiliates of the Company or
any Subsidiary seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.

     

    (e) Series A Certificate of
Designation of Rights and Preferences. Prior to the Closing, the Articles
of Amendment to the Articles, including the Series A Certificate of Designation
shall have been filed with the Secretary of State of Nevada.

     

    (f) Opinions of Counsel,
Etc. At the Closing, the Purchasers shall have received an opinion of (i)
Anslow & Jaclin, LLP, securities counsel to the Company, dated the date of
the Closing, in substantially the form of Exhibit J; and (ii)
Han Kun Law Offices, PRC counsel to the PRC Subsidiary, dated the date of the
Closing with respect to such matters as the Purchasers may reasonably
request.

     

    (g) Registration Rights
Agreement. On the Closing Date, the Company shall have executed and
delivered the Registration Rights Agreement to each Purchaser.

     

    (h) Certificates. The
Company shall have executed and delivered to the Purchasers the certificates (in
such denominations as such Purchaser shall request) for the Preferred Shares,
Common Shares and the Warrants being acquired by such Purchaser at the Closing
(in such denominations as such Purchaser shall request) to such address set
forth next to each Purchasers name on Exhibit A with
respect to the Closing.

     

    (i) Resolutions. The
Board of Directors of the Company shall have adopted resolutions consistent with
Section 2.1(b) hereof in a form reasonably acceptable to such Purchaser (the
“Resolutions”).

     

    (j) Reservation of
Shares. As of the Closing Date, the Company shall have reserved out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Preferred Shares and the exercise of the Warrants, a
number of shares of Common Stock equal to one hundred ten percent (110%) of the
aggregate number of Conversion Shares issuable upon conversion of the Preferred
Shares issued or to be issued pursuant to this Agreement and the number of
Warrant Shares issuable upon exercise of the number of Warrants issued or to be
issued pursuant to this Agreement.

     

    (k) Lock-Up Agreements.
As of the Closing Date, the persons listed on Schedule 3.16 shall
have delivered to the Purchasers fully executed Lock-Up Agreements.

     

    (l) Secretary’s
Certificate. The Company shall have delivered to such Purchaser a
secretary’s certificate, dated as of the Closing Date, as to (i) the resolutions
adopted by the Board of Directors of the Company consistent with Section 2.1(b),
(ii) the Articles, (iii) the Bylaws, (iv) the Series A Certificate of
Designation, each as in effect at the Closing, and (v) the authority and
incumbency of the officers of the Company executing the Transaction Documents
and any other documents required to be executed or delivered in connection
therewith.

     

    
      
         

      

      
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    (m) Officer’s
Certificate. The Company shall have delivered to the Purchasers a
certificate of an executive officer of the Company, dated as of the Closing
Date, confirming the accuracy of the Company’s representations, warranties and
covenants as of the Closing Date and confirming the compliance by the Company
with the conditions precedent set forth in this Section 4.2 as of the Closing
Date.

     

    (n) Escrow Deposit
Agreement. On the Closing Date, the Company and the escrow agent shall
have executed and delivered the Escrow Deposit Agreement to each
Purchaser.

     

    (o) Securities Escrow
Agreement. On the Closing Date, the Securities Escrow Agreement shall
have been executed by the parties thereto and the Escrow Shares (as defined in
the Securities Escrow Agreement) shall have been deposited into the escrow
account pursuant to the terms of the Securities Escrow Agreement.

     

    (p) Material Adverse
Effect. No Material Adverse Effect shall have occurred at or before the
Closing Date.

     

    ARTICLE
5

     

    STOCK
CERTIFICATE LEGEND

     

    Section
5.1 Legend.  Each
certificate representing the Preferred Shares, the Common Shares, the Warrants
and Warrant Shares and if appropriate, securities issued upon conversion or
exercise thereof, shall be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required by
applicable state securities or “blue sky” laws):

     

    
      
         

      

      
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    “THESE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

     

    Each
certificate representing the Preferred Shares, the Common Shares, the Warrants
and Warrant Shares and if appropriate, securities issued upon conversion or
exercise thereof, if such securities are being offered to Purchasers in reliance
upon Regulation S, shall be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required by
applicable state securities or “blue sky” laws):

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES
ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE
BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER
CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.”

     

    The
Company agrees to reissue certificates representing any of the Conversion Shares
or the Warrant Shares, without the legend set forth above if at such time, prior
to making any transfer of any such securities, such holder thereof shall give
written notice to the Company describing the manner and terms of such sale and
removal as the Company may reasonably request.  Such proposed transfer
and removal will not be effected until: (a) either (i) the Company has received
an opinion of counsel reasonably satisfactory to the Company, to the effect that
the registration of the Conversion Shares or the Warrant Shares under the
Securities Act is not required in connection with such proposed transfer, (ii) a
registration statement under the Securities Act covering such proposed
disposition has been filed by the Company with the Commission and has become
effective under the Securities Act, (iii) the Company has received other
evidence reasonably satisfactory to the Company that such registration and
qualification under the Securities Act and state securities laws are not
required, or (iv) the holder provides the Company with reasonable assurances
that such security can be sold pursuant to Rule 144(i)  under the
Securities Act; and (b) either (i) the Company has received an opinion of
counsel reasonably satisfactory to the Company, to the effect that registration
or qualification under the securities or “blue sky” laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or “blue sky” laws has been effected or a valid
exemption exists with respect thereto. The Company will respond to any such
notice from a holder within five (5) business days. In the case of any proposed
transfer under this Section 5.1, the Company will use reasonable efforts to
comply with any such applicable state securities or “blue sky” laws, but shall
in no event be required, (x) to qualify to do business in any state where it is
not then qualified, (y) to take any action that would subject it to tax or to
the general service of process in any state where it is not then subject, or (z)
to comply with state securities or “blue sky” laws of any state for which
registration by coordination is unavailable to the Company. The restrictions on
transfer contained in this Section 5.1 shall be in addition to, and not by way
of limitation of, any other restrictions on transfer contained in any other
section of this Agreement. Whenever a certificate representing the Conversion
Shares or the Warrant Shares is required to be issued to a Purchaser without a
legend, in lieu of delivering physical certificates representing the Conversion
Shares or the Warrant Shares (provided that a registration statement under the
Securities Act providing for the resale of the Warrant Shares and Conversion
Shares is then in effect), the Company may cause its transfer agent to
electronically transmit the Conversion Shares or Warrant Shares to a Purchaser
by crediting the account of such Purchaser or such Purchaser’s prime broker with
the DTC through its DWAC system (to the extent not inconsistent with any
provisions of this Agreement).

     

    
      
         

      

      
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    ARTICLE
6

     

    INDEMNIFICATION

     

    Section
6.1 General
Indemnity.  The Company agrees to indemnify and hold harmless
the Purchasers (and their respective directors, officers, managers, partners,
members, shareholders, affiliates, agents, successors and assigns) from and
against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, reasonable attorneys’ fees, charges and
disbursements) incurred by the Purchasers as a result of any breach of the
representations, warranties or covenants made by the Company herein. Each
Purchaser severally but not jointly agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors and assigns
from and against any and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, reasonable attorneys’ fees, charges
and disbursements) incurred by the Company as a result of any breach of the
representations, warranties or covenants made by such Purchaser herein. The
maximum aggregate liability of each Purchaser pursuant to its indemnification
obligations under this Article 6 shall not exceed the portion of the Purchase
Price paid by such Purchaser hereunder. In no event shall any “Indemnified
Party” (as defined below) be entitled to recover consequential or punitive
damages resulting from a breach or violation of this Agreement.

     

    Section
6.2 Indemnification
Procedure. Any party entitled to indemnification under this Article 6 (an
“Indemnified
Party”) will give written notice to the indemnifying party of any matters
giving rise to a claim for indemnification; provided, that the
failure of any party entitled to indemnification hereunder to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under this Article 6 except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an Indemnified Party in respect of which
indemnification is sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the Indemnified Party a
conflict of interest between it and the indemnifying party may exist with
respect of such action, proceeding or claim, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. In the event that the
indemnifying party advises an Indemnified Party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the Indemnified Party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the Indemnified Party’s
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The Indemnified Party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party which relates to such
action or claim. The indemnifying party shall keep the Indemnified Party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the Indemnified Party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be 

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

       

      liable
for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the
indemnifying party shall be liable for any settlement if the indemnifying party
is advised of the settlement but fails to respond to the settlement within
thirty (30) days of receipt of such notification. Notwithstanding anything in
this Article 6 to the contrary, the indemnifying party shall not, without the
Indemnified Party’s prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future
obligation on the Indemnified Party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all liability in respect of such claim. The
indemnity agreements contained herein shall be in addition to (a) any cause of
action or similar rights of the Indemnified Party against the indemnifying party
or others, and (b) any liabilities the indemnifying party may be subject to
pursuant to the law.

    

     

    ARTICLE
7

     

    MISCELLANEOUS

     

    Section
7.1 Fees and
Expenses.  Except as otherwise set forth in this Agreement and
the other Transaction Documents, each party shall pay the fees and expenses of
its advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, provided that the Company
shall pay all actual and reasonable attorneys’ fees and expenses (including
disbursements and out-of-pocket expenses) up to a maximum of $30,000 incurred by
the Purchasers in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Transaction Documents.  The
Company shall also pay all reasonable fees and expenses incurred by the
Purchasers in connection with the enforcement of this Agreement or any of the
other Transaction Documents, including, without limitation, all reasonable
attorneys’ fees and expenses but only if the Purchasers are successful in any
litigation or arbitration relating to such enforcement.  Any such fees
and expenses that remain outstanding shall be paid out of the escrow account
pursuant to the Escrow Deposit Agreement, prior to the release of the Purchase
Price to the Company.

     

    Section
7.2 Specific Enforcement,
Consent to Jurisdiction.

     

    (a) The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Documents 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 Agreement or the other Transaction Documents and to enforce
specifically the terms and provisions hereof or thereof, this being in addition
to any other remedy to which any of them may be entitled by law or
equity.

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

     

    (b) Each of
the Company and the Purchasers (i) hereby irrevocably submits to the
jurisdiction of the United States District Court sitting in the Southern
District of New York and the courts of the State of New York located in New York
county for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement or any of the other Transaction Documents or the
transactions contemplated hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchasers
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing in this Section
7.2 shall affect or limit any right to serve process in any other manner
permitted by law.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  The
Company hereby appoints Anslow & Jaclin, LLP as its agent for service of
process in New York.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law.

     

    Section
7.3 Entire Agreement;
Amendment.  This Agreement and the other Transaction Documents
contains the entire understanding and agreement of the parties with respect to
the matters covered hereby and, except as specifically set forth herein or in
the Transaction Documents, neither the Company nor any of the Purchasers makes
any representations, warranty, covenant or undertaking with respect to such
matters and they supersede all prior understandings and agreements with respect
to said subject matter, all of which are merged herein. No provision of this
Agreement nor any of the Transaction Documents may be waived or amended other
than by a written instrument signed by the Company and the holders of at least
fifty percent (50%) of the Preferred Shares then outstanding (the “Majority Holders”),
and no provision hereof may be waived other than by a written instrument signed
by the party against whom enforcement of any such waiver is sought. No such
amendment shall be effective to the extent that it applies to less than all of
the holders of the Preferred Shares then outstanding. No consideration shall be
offered or paid to any person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents or holders of
Preferred Shares, as the case may be.

     

    Section
7.4 Notices.  All
notices, demands, consents, requests, instructions and other communications to
be given or delivered or permitted under or by reason of the provisions of this
Agreement or in connection with the transactions contemplated hereby shall be in
writing and shall be deemed to be delivered and received by the intended
recipient as follows: (i) if personally delivered, on the business day of such
delivery (as evidenced by the receipt of the personal delivery service), (ii) if
delivered by overnight courier (with all charges having been prepaid), on the
business day of such delivery (as evidenced by the receipt of the overnight
courier service of recognized standing), or (iii) if delivered by facsimile
transmission, on the business day of such delivery if sent by 6:00 p.m. in the
time zone of the recipient, or if sent after that time, on the next succeeding
business day (as evidenced by the printed confirmation of delivery generated by
the sending party’s telecopier machine). If any notice, demand, consent,
request, instruction or other communication cannot be delivered because of a
changed address of which no notice was given (in accordance with this Section
4), or the refusal to accept same, the notice, demand, consent, request,
instruction or other communication shall be deemed received on the second
business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile numbers as
applicable:

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

     

    

    If to the
Company:

    

    Silver
Pearl Enterprises, Inc.

    c/o
Keyuan Plastics Co., Ltd.

    Qingshi
Industrial Park

    Ninbo
Economic & Technological Development Zone

    Ningbo,
Zhejiang Province, P.R. China 315803

    Attention:
Chief Executive Officer

    Telephone
No.: (86) 574-8623-2955

    Facsimile
No.: (86) 574-8623-2616

    

    with
copies (which shall not constitute notice) to:

    

    Anslow
& Jaclin, LLP

    195 Route
9 South. Suite 204

    Manalapan,
New Jersey, 07726

    Attention:
Eric M. Stein, Esq.

    Tel. No.:
(732) 409-1212

    Fax No.:
(732) 577-1188

    

    If to any
Purchaser:  At the address of such Purchaser set forth on Exhibit A to this
Agreement, as the case may be, with copies to Purchaser’s counsel as set forth
on Exhibit A or
as specified in writing by such Purchaser.

    

    Any party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.

    

    Section
7.5 Waivers.  No
waiver by any party of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any other provisions, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it
thereafter.

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

     

    Section
7.6 Headings.  The
section headings contained in this Agreement (including, without limitation,
section headings and headings in the exhibits and schedules) are inserted for
reference purposes only and shall not affect in any way the meaning,
construction or interpretation of this Agreement. Any reference to the
masculine, feminine, or neuter gender shall be a reference to such other gender
as is appropriate. References to the singular shall include the plural and vice
versa.

     

    Section
7.7 Successors and
Assigns.  This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Purchasers, as
applicable, provided, however, that,
subject to federal and state securities laws and as otherwise provided in the
Transaction Documents, a Purchaser may assign its rights and delegate its duties
hereunder in whole or in part (i) to a third party acquiring all or
substantially all of its Shares or Warrants in a private transaction or (ii) to
an affiliate, in each case, without the prior written consent of the Company or
the other Purchasers, after notice duly given by such Purchaser to the Company
provided, that
no such assignment or obligation shall affect the obligations of such Purchaser
hereunder and that such assignee agrees in writing to be bound, with respect to
the transferred securities, by the provisions hereof that apply to the
Purchasers.  The provisions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties.  Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. If any Purchaser transfers Preferred Shares purchased
hereunder, any such penalty shares or liquidated damages, as the case may be,
pursuant to this Agreement shall similarly transfer to such transferee with no
further action required by the purchaser or the Company.

     

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

     

    Section
7.9 Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
of the conflicts of law principles which would result in the application of the
substantive law of another jurisdiction. This Agreement shall not be interpreted
or construed with any presumption against the party causing this Agreement to be
drafted.

     

    Section
7.10 Survival.  The
representations and warranties of the Company and the Purchasers shall survive
the execution and delivery hereof and the Closing hereunder for a period of
three (3) years following the Closing Date.

     

    Section
7.11 Counterparts.  This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.

     

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

     

    Section
7.12 Publicity.  Except
with respect to the registration statement required to be filed pursuant to the
terms of the Registration Rights Agreement, the Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Purchasers without the consent of the Purchasers unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.

     

    Section
7.13 Severability.  The
provisions of this Agreement and the Transaction Documents are severable and, in
the event that any court of competent jurisdiction shall determine that any one
or more of the provisions or part of the provisions contained in this Agreement
or the Transaction Documents shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement or the Transaction Documents and such provision shall be reformed
and construed as if such invalid or illegal or unenforceable provision, or part
of such provision, had never been contained herein, so that such provisions
would be valid, legal and enforceable to the maximum extent
possible.

     

    Section
7.14 Further
Assurances.  From and after the date of this Agreement, upon
the request of any Purchaser or the Company, each of the Company and the
Purchasers shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement, the Preferred
Shares, the Common Shares, the Conversion Shares, the Warrants, the Warrant
Shares, the Series A Certificate of Designation, the Registration Rights
Agreement and the other Transaction Documents.

     

    Section
7.15 Currency.  With
the exception of Section 2.2(o) and unless otherwise indicated, all dollar
amounts referred to in this Agreement are in United States Dollars (“US
Dollars”).  All amounts owed under this Agreement or any
Transaction Document shall be paid in US Dollars.  All amounts
denominated in other currencies shall be converted in the US Dollar equivalent
amount in accordance with the Exchange Rate on the date of
calculation.  “Exchange Rate” means, in relation to any amount of
currency to be converted into US Dollars pursuant to this Agreement, the US
Dollar exchange rate as published in The Wall Street Journal on the relevant
date of calculation.

     

    Section
7.16 Termination.  This
Agreement may be terminated prior to Closing:

     

    (a) by mutual
written agreement of the Purchasers and the Company, a copy of which shall be
provided to the escrow agent appointed under the Escrow Deposit Agreement (the
“Escrow
Agent”); and

     

    (b) by the
Company or a Purchaser (as to itself but no other Purchaser) upon written notice
to the other, with a copy to the Escrow Agent, if the Closing shall not have
taken place by 5:00 p.m. Eastern time on April 22, 2010, unless extended to a
later date by the mutual consent of the Company and the Placement Agent;
provided, that the right to terminate this Agreement under this Section 7.16(b)
shall not be available to any person whose failure to comply with its
obligations under this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such time.

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

     

    (c) In the
event of a termination pursuant to Section 7.16(a) or 7.16(b), each Purchaser
shall have the right to a return of up to its entire Purchase Price deposited
with the Escrow Agent pursuant to this Agreement, without interest or
deduction.  The Company covenants and agrees to cooperate with such
Purchaser in obtaining the return of its Purchase Price, and shall not
communicate any instructions to the contrary to the Escrow Agent.

     

    (d) In the
event of a termination pursuant to this Section 7.16, the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with
this Section 7.16, the Company and the terminating Purchaser(s) shall not have
any further obligation or liability (including as arising from such termination)
to the other and no Purchaser will have any liability to any other Purchaser
under the Transaction Documents as a result therefrom.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    

     

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

     

    
      
        	 	Silver
      Pearl Enterprises, Inc.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/                                                                   
      	 
	 	 	Name:
      Chunfeng Tao	 
	 	 	Title: Chief
      Executive Officer	 
	 	 	 	 

      

    

     

     

     

     

     

     

     

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

     

    COUNTERPART
SIGNATURE PAGE

     

    (FOR ISSUANCES TO AN ENTITY PURSUANT TO
SECTION 4(2) OF THE SECURITIES ACT)

     

    By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of April 22, 2010 by and among Silver Pearl
Enterprises, Inc. and the Purchasers (as defined therein), as to the number of
Units set forth below, and authorizes this signature page to be attached to the
Securities Purchase Agreement or counterparts thereof and for its name, address
and number of Units purchased to be added to Exhibit A of the
Securities Purchase Agreement.

     

     

     

    
      
        	 	[ENTITY NAME]	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/                                                                             
      	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

      

    

    
 

                                                                                           

    PRINT
EXACT NAME IN WHICH YOU WANT 

    THE
SECURITIES TO BE REGISTERED

     

     

    
      	Attn:  	                                                        
        
	 	 
	Address:  	                
                                                
      
	 	 
	 	                               
                                 
      
	 	 
	 	                                              
                  
      
	 	 
	Phone
      No.  	                                                         
       
	 	 
	Facsimile
      No. 	                                                     
            
	 	 
	 	 
	Email: 	                                                      
           

    

     

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

     

    COUNTERPART
SIGNATURE PAGE

     

    (FOR ISSUANCES TO AN INDIVIDUAL PURSUANT
TO SECTION 4(2) OF SECURITIES ACT )

     

    By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of April 22, 2010 by and among Silver Pearl
Enterprises, Inc. and the Purchasers (as defined therein), as to the number of
Units set forth below, and authorizes this signature page to be attached to the
Securities Purchase Agreement or counterparts thereof and for his or her name,
address and number of Units purchased to be added to Exhibit A of the
Securities Purchase Agreement.

     

     
 

    
      
        	 	 	 
	 	 	 	 
	
                 

              	
                 

              	                                                                              
        	 
	 	 	Name: 	 
	 	 	 	 
	 	 	 	 

      

    

     

     

    
                                                                                              

      PRINT
EXACT NAME IN WHICH YOU WANT 

      THE
SECURITIES TO BE REGISTERED

    

     

    
      	Attn:  	                                                        
        
	 	 
	Address:  	                
                                                
      
	 	 
	 	                               
                                 
      
	 	 
	 	                                              
                  
      
	 	 
	Phone
      No.  	                                                         
       
	 	 
	Facsimile
      No. 	                                                     
            
	 	 
	 	 
	Email: 	                                                      
           

    

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

    COUNTERPART
SIGNATURE PAGE

     

    (FOR
ISSUANCES TO AN ENTITY PURSUANT TO REGULATION S)

     

    By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of April 22, 2010 by and among Silver Pearl
Enterprises, Inc. and the Purchasers (as defined therein), as to the number of
Units set forth below, and authorizes this signature page to be attached to the
Securities Purchase Agreement or counterparts thereof and for its name, address
and number of Units purchased to be added to Exhibit A of the
Securities Purchase Agreement.

     

     

     

    
      	 	[ENTITY NAME]	 
	 	 	 	 
	
               

            	
              By:
      

            	/s/                                                                                
      	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 

    

     

    OFFSHORE DELIVERY
INSTRUCTIONS:

     

                                                                                          

    
      
        PRINT
EXACT NAME IN WHICH YOU WANT 

        THE
SECURITIES TO BE REGISTERED

      

       

      
        	Attn:  	                                                        
        
	 	 
	Address:  	                
                                                
      
	 	 
	 	                               
                                 
      
	 	 
	 	                                              
                  
      
	 	 
	Phone
      No.  	                                                         
       
	 	 
	Facsimile
      No. 	                                                     
            
	 	 
	 	 
	Email: 	                                                      
           

      

       

      
        
           

        

        
          39

          
            

          

        

        
           

        

      

    

     

    COUNTERPART
SIGNATURE PAGE

     

    (FOR
ISSUANCES TO AN INDIVIDUAL PURSUANT TO REGULATION S)

     

    By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of April 22, 2010 by and among Silver Pearl
Enterprises, Inc. and the Purchasers (as defined therein), as to the number of
Units set forth below, and authorizes this signature page to be attached to the
Securities Purchase Agreement or counterparts thereof and for his or her name,
address and number of Units purchased to be added to Exhibit A of the
Securities Purchase Agreement.

     

    
      
        
          	 	 	 
	 	 	 	 
	
                   

                	
                   

                	                                       
                                             	 
	 	 	Name: 	 
	 	 	 	 
	 	 	 	 

        

      

       

      OFFSHORE
DELIVERY INSTRUCTIONS:

       

      
                                                                                              

        PRINT
EXACT NAME IN WHICH YOU WANT 

        THE
SECURITIES TO BE REGISTERED

      

       

      
        	Attn:  	                                                        
        
	 	 
	Address:  	                
                                                
      
	 	 
	 	                               
                                 
      
	 	 
	 	                                              
                  
      
	 	 
	Phone
      No.  	                                                         
       
	 	 
	Facsimile
      No. 	                                                     
            
	 	 
	 	 
	Email: 	                                                      
           

      

    

     

     

     

    40

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