Document:

Unassociated Document

    

     

    Exhibit
10.58

     

    Execution
Document

     

    PURCHASE
AGREEMENT

     

              This
PURCHASE AGREEMENT (this “Agreement”), dated as
of October 1, 2010, is by and between Nephros, Inc., a Delaware corporation
(the “Company”), and Lambda
Investors LLC (“Purchaser”).

     

    WITNESSETH:

     

              WHEREAS,
the Company proposes pursuant to the Rights Offering Registration Statement (as
defined herein), to commence a rights offering (the “Rights Offering”) to
the holders of record (the “Record Holders”) of
its common stock, par value $0.001 per share (the “Common Stock”), as of
5:00 p.m. Eastern Time on the record date established for the Rights Offering
(the “Record
Date”) of non-transferable subscription rights (the “Subscription Rights”)
to purchase units (the “Units”) at a
subscription price (the “Subscription Price”)
of $0.02 per Unit, each Unit consisting of one share of Common Stock and a
warrant to purchase 0.924532845 shares of Common Stock at the exercise price of
$0.02 per share;

     

              WHEREAS,
pursuant to the Rights Offering, the Company will distribute to each such Record
Holder, at no charge, one Subscription Right for each share of Common Stock held
by such Record Holder as of the Record Date, and each Subscription Right will
entitle the holder to purchase 4.185496618 Units from the Company (with
fractional Units rounded down to the nearest whole number) at the Subscription
Price (the “Basic
Subscription Privilege”);

     

              WHEREAS,
each holder of Rights who exercises in full such its Basic Subscription
Privilege will be entitled to subscribe for additional Units at the Subscription
Price and on the terms set forth in the Rights Offering Registration Statement
to the extent that other holders of Rights do not exercise all of their Basic
Subscription Privileges (the “Over-Subscription
Privilege”);

     

              WHEREAS,
the Company has agreed to issue and sell to Purchaser, and Purchaser has agreed
to purchase from the Company in a private placement, subject to the terms of
this Agreement and satisfaction of the conditions as set forth in that certain
Senior Secured Note of the Company, dated October 1, 2010, issued to the
Purchaser (the “Note”), that number of Units that is set forth herein and that
would otherwise be available for purchase by Purchaser pursuant to the exercise
of Purchaser’s Basic Subscription Privilege and, if and to the extent exercised
by Purchaser, its Over-Subscription Privilege in the Rights Offering;
and

     

              WHEREAS,
Purchaser is an existing stockholder of the Company, with two representatives
serving on the Company’s board of directors, one of whom is currently serving as
Acting Chief Executive Officer of the Company.

     

              NOW
THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, the parties hereto hereby agree as follows:

     

              Section 1.
Definitions.
The following terms used herein shall have the meanings set forth
below:

     

              “Agreement” shall have
the meaning set forth in the preamble hereof.

     

              “Basic Subscription
Privilege” shall have the meaning set forth in the recitals
hereof.

     

              “Closing” shall have
the meaning set forth in Section 3 hereof.

     

              “Closing Date” shall
have the meaning set forth in Section 3 hereof.

     

              “Commission” shall
mean the United States Securities and Exchange Commission, or any successor
agency thereto.

     

              “Common Stock” shall
have the meaning set forth in the recitals hereof.

     

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

     

              “Exchange Act” shall
mean the Securities Exchange Act of 1934 and the rules and regulations
promulgated by the Commission thereunder, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

              “Note” shall have the
meaning set forth in the recitals hereof.

     

              “Over-Subscription
Privilege” shall have the meaning set forth in the recitals
hereof.

     

              “Person” shall mean an
individual, corporation, partnership, association, joint stock company, limited
liability company, joint venture, trust, governmental entity, unincorporated
organization or other legal entity.

     

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

     

              “Record Date” shall
have the meaning set forth in the recitals hereof.

     

              “Registration Rights
Agreement” shall mean the registration rights agreement between the
Company and Purchaser substantially in the form filed as Exhibit 10.57 to the
Rights Offering Registration Statement.

     

              “Rights Offering”
shall have the meaning set forth in the recitals hereof.

     

              “Rights Offering
Prospectus” shall mean the prospectus relating to the Common Stock
included with the Rights Offering Registration Statement.

     

              “Rights Offering Registration
Statement” means the Company’s Registration Statement on Form S-1 under
the Securities Act or such other appropriate form under the Securities Act,
pursuant to which the shares of Common Stock underlying the Rights will be
registered pursuant to the Securities Act.

     

              “Securities Act” shall
mean the Securities Act of 1933 and the rules and regulations promulgated by the
Commission thereunder, as amended.

     

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

     

              “Securities” shall
have the meaning set forth in Section 4 hereof.

     

              “Subscription Price”
shall have the meaning set forth in the recitals hereof.

     

              “Subscription Rights”
shall have the meaning set forth in the recitals hereof.

     

              “Units” shall have the
meaning set forth in the recitals hereof.

     

              Section 2.
Purchase
Commitment. (a) Purchaser hereby agrees, subject to satisfaction by the
Company of each of the conditions set forth under clause 7(n) of the Note, to
purchase from the Company, and the Company hereby agrees to sell to Purchaser,
at the Subscription Price, 60,194,226 Units, which amount equals the number of
Units that would otherwise be available for purchase by Purchaser pursuant to
its Basic Subscription Privilege.

     

              (b) In
the event that Purchaser agrees to purchase the 60,194,226 Units specified in
Section 2(a) above, Purchaser shall have the right, but not the obligation, to
purchase from the Company, at the Subscription Price, under this Agreement and
not under the Rights Offering Registration Statement, such additional number of
Units as would otherwise be available for purchase by Purchaser pursuant to its
Over-Subscription Privilege.

     

              (c) Purchaser
agrees not to exercise its Basic Subscription Privilege or Over-Subscription
Privilege in the Rights Offering.

     

              Section 3.
The Closing. As
soon as practicable following the closing of the Rights Offering, the Company
shall (a) establish to Purchaser’s satisfaction that each of the conditions set
forth under clause 7(n) of the Note has been satisfied, (b) execute and deliver
to Purchaser the Registration Rights Agreement and (c) notify Purchaser of the
number of Units to be purchased by Purchaser pursuant to Section 2 hereof.
The delivery of and payment for the Units shall take place at the offices of
Wyrick Robbins Yates & Ponton LLP, 4101 Lake Boone Trail, Suite 300,
Raleigh, North Carolina, at 10:00 a.m., Eastern time, on a date that is
within five business days of receipt of the foregoing notification (the “Closing Date” and the
consummation of the transaction being referred to as the “Closing”).

     

              Section 4.
Delivery of the
Securities. At the Closing, the shares of Common Stock and warrants to
purchase shares of Common Stock underlying the Units (the “Securities”) to be
purchased by Purchaser hereunder, registered in the name of Purchaser, shall be
delivered by or on behalf of the Company to Purchaser, for Purchaser’s account,
against delivery by Purchaser of the purchase price therefor in immediately
available funds in the form of one or more federal funds checks or a wire
transfer to an account designated by the Company.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

              Section 5.
Representations and
Warranties of the Company. The Company represents and warrants to
Purchaser as follows:

     

              (a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted.

     

              (b) This
Agreement has been duly and validly authorized, executed and delivered by the
Company and constitutes a binding obligation of the Company enforceable against
it in accordance with its terms.

     

              (c) All
of the Securities will have been duly authorized for issuance prior to issuance,
and, when issued and distributed as set forth in the Rights Offering Prospectus,
will be validly issued, fully paid and non-assessable; and none of the
Securities will have been issued in violation of the preemptive rights of any
security holders of the Company arising as a matter of law or under or pursuant
to the Company’s Amended and Restated Certificate of Incorporation, the
Company’s Amended and Restated By-laws, or any agreement or instrument to which
the Company is a party or by which it is bound.

     

              Section 6.
Representations and
Warranties of Purchaser. Purchaser represents and warrants to the Company
as follows:

     

              (a) This
Agreement has been duly and validly authorized, executed and delivered by
Purchaser and constitutes a binding obligation of Purchaser enforceable against
it in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws or equitable principles affecting
the enforcement of creditors’ rights
generally.

     

              (b) Purchaser
will have sufficient cash funds on hand to purchase the Units on the terms and
conditions contained in this Agreement on the Closing Date.

     

              (c) Purchaser
is familiar with the business in which the Company is engaged, and Purchaser is
familiar with an investment of the type that Purchaser is undertaking pursuant
to the terms of this Agreement; Purchaser is aware of the problems and risks
involved in making an investment of this type; and based upon Purchaser’s
knowledge and experience in financial and business matters, Purchaser is capable
of evaluating the merits and risks of this investment. Purchaser is able to
afford a complete loss of such investment. Purchaser acknowledges that, prior to
executing this Agreement, Purchaser has received or has had full access to all
the information it considers necessary or appropriate for deciding whether to
purchase the Units and has had an opportunity to ask questions and receive
answers regarding the terms and conditions of the Units. Purchaser has consulted
with such attorneys and financial and tax advisors on any aspects of the
transaction as it deems necessary, including the risks thereof.

     

              (d) Purchaser
is not acting in concert and is not a member of any “group” (within the meaning
of Section 13(d)(3) of the Exchange Act) with respect to
Company.

     

              (e) Purchaser
is an “accredited investor” within the meaning of Rule 501(a) under the
Securities Act and is acquiring the Units for investment for its own account,
with no present intention of dividing its participation with others or reselling
or otherwise distributing the same in violation of the Securities Act or any
applicable state securities laws.

     

              (f) Purchaser
understands that: (i) the Securities, when acquired by Purchaser under this
Agreement, will not have been registered under the Securities Act or any
applicable state securities laws, and such Securities may not be sold or
otherwise transferred by it unless (a) the Securities are sold or
transferred pursuant to an effective registration statement under the Securities
Act, (b) at the Company’s request, such Purchaser shall have delivered to
the Company an opinion of counsel (which opinion shall be in form, substance and
scope reasonably satisfactory to the Company’s counsel) to the effect that the
Units to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration or (c) the Securities are sold pursuant to
Rule 144 promulgated under the Securities Act; and (ii) any sale of
such Securities made in reliance on Rule 144 under the Securities Act may
be made only in accordance with the terms of such rule. Purchaser acknowledges
that a restrictive legend will be placed on the certificate or certificates
representing the Securities that are purchased pursuant to this Agreement in a
form substantially similar to the legend set forth below (and a stop-transfer
order may be placed against transfers of the certificates evidencing such
Units):

     

    THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE CORPORATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO COMPLY WITH ALL SUCH RESTRICTIONS ON TRANSFER.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

              Section 7.
Public
Statements. Neither the Company nor Purchaser shall issue any public
announcement, statement or other disclosure with respect to this Agreement or
the transactions contemplated hereby without the prior consent of the other
party hereto, which consent shall not be unreasonably withheld or delayed,
except if such public announcement, statement or other disclosure is required by
applicable law or applicable stock market regulations, in which case the
disclosing party shall consult in advance with respect to such disclosure with
the other party to the extent reasonably practicable.

     

              Section 8.
Termination.
Purchaser may terminate this Agreement if the Rights Offering is terminated or
at any time after January 30, 2011 if the conditions set forth under clause 7(n)
of the Note have not been satisfied by such date.

     

              Section 9.
Notices. All
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing (which shall include notice by facsimile
transmission) and shall be deemed to have been duly made and received when
personally served, or when delivered by Federal Express or a similar overnight
courier service, expenses prepaid, or by facsimile communications equipment
(with confirmation of receipt by recipient), addressed as set forth
below:

    

    If to
Purchaser:

    

    Lambda
Investors LLC

    Attn:
Arthur Amron

    c/o
Wexford Capital LP

    Wexford
Plaza

    411 West
Putnam Avenue

    Greenwich,
CT 06830

    Tel:
(203) 862-7012

    Fax:
(203) 862-7312

    

    Copy to
(which will not constitute notice):

    

    Akin Gump
Strauss Hauer & Feld LLP

    Attn:
Seth R. Molay, P.C.

    1700
Pacific Avenue, Suite 4100

    Dallas,
TX 75201

    Tel:
(214) 969-4780

    Fax:
(214) 969-4343

    

    If to the
Company:

    

    Nephros,
Inc.

    Attn:
Gerald J. Kochanski, Chief Financial Officer

    41 Grand
Ave.

    River
Edge, NJ 07661

    Tel:
(201) 343-5202

    Fax:
(201) 343-5207

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    Copy to
(which will not constitute notice):

    

    Wyrick
Robbins Yates & Ponton LLP

    Attn:
Alexander M. Donaldson, Esq.

    4101 Lake
Boone Trail, Suite 300

    Raleigh,
NC  27607

    Tel:
(919) 781-4000

    Fax:
(919) 781-4865

     

              Section 10.
Assignment.
This Agreement will be binding upon, and will inure to the benefit of and be
enforceable by, the parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, the rights and obligations of the Company and
Purchaser under this Agreement shall not be assigned or delegated without the
prior written consent of the other (which consent may be withheld in such
party’s sole discretion).

     

              Section 11.
Amendment. This
Agreement may be amended only by a written instrument executed by the Company
and Purchaser that specifically references this Agreement and the provisions
hereof to be amended.

     

              Section 12.
Governing Law.
This Agreement and any claim, controversy or dispute arising under or related to
this Agreement, the relationship of the parties, and/or the interpretation and
enforcement of the rights and duties of the parties shall be governed by and
construed in accordance with the internal laws of the State of Delaware
(excluding the conflict of law rules thereof).

     

              Section 13.
Severability.
If any provision of this Agreement or the application thereof to any person or
circumstances is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which it has
been held invalid, void or unenforceable, shall remain in full force and effect
and shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination, the
parties shall negotiate in good faith in an effort to agree upon a suitable and
equitable substitute provision to effect the original intent of the
parties.

     

              Section 14.
Headings. The
headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning of this Agreement.

     

              Section 15.
Counterparts.
This Agreement may be executed simultaneously in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. The exchange of copies of this Agreement and of signature
pages by facsimile transmission (whether directly from one facsimile device to
another by means of a dial-up connection or whether otherwise transmitted via
electronic transmission), by electronic mail in “portable document format”
(“.pdf”) form, or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, or by a combination of
such means, shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of an original Agreement for all
purposes. Signatures of the parties transmitted by facsimile or other electronic
transmission shall be deemed to be original signatures for all purposes under
this Agreement.

     

    [Remainder
of this page intentionally left blank.]

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

     

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

     

     

    
      	 
      	 
      	 
      	 
      	 
      
	 
      	
              NEPHROS,
      INC.

                

               

            	 
      
	 
      	
              By:  

            	/s/
      Gerald J. Kochanski	 
      
	 
      	 
      	
              Name:  

            	Gerald
      J. Kochanski	 
      
	 
      	 
      	
              Title:  

            	Chief
      Financial Officer	 
      
	 
      
	 
      	
              LAMBDA
      INVESTORS LLC

               

               

            	 
      
	 
      	
              By:  

            	/s/
      Arthur Amron	 
      
	 
      	 
      	
              Name:  Arthur
      Amron

            	 
      
	 
      	 
      	
              Title:  Vice
      President

            	 
      
	 
      

    

     

     

    
      
        
        

      

      
        6Exhibit
4.20

    

     

    December
23, 2009

    
    

    UNIONWAY
RESOURCES LIMITED

     

    (as
Seller)

     

    and

     

    HOLLYSYS
AUTOMATION TECHNOLOGIES, LTD

     

    (as
Buyer)

    _______________________

     

    SHARE
SALE AND PURCHASE AGREEMENT

     

    Relating
to

     

    THE
SALE AND PURCHASE OF

     

    100%
EQUITY INTEREST IN MAYPOWER LIMITED

    _______________________

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    TABLE
OF CONTENTS

     

    
      
        	
                OPERATIVE
      PROVISIONS

              	
                3

              
	
                1

              	
                Interpretation

              	
                3

              
	
                2

              	
                Sale
      and purchase of the Shares

              	
                4

              
	
                3

              	
                Consideration

              	
                4

              
	
                4

              	
                Position
      pending Completion

              	
                5

              
	
                5

              	
                Completion

              	
                5

              
	
                6

              	
                Right
      to terminate

              	
                6

              
	
                7

              	
                Seller
      Warranties and Indemnities

              	
                6

              
	
                8

              	
                Announcements

              	
                8

              
	
                9

              	
                General

              	
                9

              

      

    

    
      
        
          
            
              
                
                  
                    
                      	 	 
	SCHEDULES	 
	
                              SCHEDULE
      1

                            	
                              Part
      1 – Particulars of the Company

                            	
                              13

                            
	 
      	
                              Part
      2 – Particulars of the Subsidiaries

                            	
                              14

                            
	
                              SCHEDULE
      2 – Documents to be delivered

                            	 
      
	 
      	
                              Part
      1 –Documents to be delivered

                            	
                              17

                            
	 
      	
                              Part
      2 –Documents to be delivered

                            	
                              18

                            
	
                              SCHEDULE
      3 - Warranties

                            	
                              19

                            
	
                              SCHEDULE
      4 - Position pending Completion

                            	
                              22

                            

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    This
Share Sale and Purchase Agreement (the “Agreement”) is made on
December 23, 2009, between:

     

    
      	
              (1)

            	
              Unionway
      Resources Limited, a company registered in the British Virgin Islands (no.
      1524864) whose registered office is at Morgan & Morgan Building, Pasea
      Estate, Road Town, Tortola, British Virgin Islands (the “Seller”);  and

            

    

     

    
      	
              (2)

            	
              Hollysys
      Automation Technologies. Ltd, a company registered in the British Virgin
      Islands (no. 1009283) whose registered office is at P.O. Box 173, Kingston
      Chambers, Road Town, Tortola, British Virgin Islands (the
      “Buyer”).

            

    

     

    WHEREAS:

     

    
      
        	
                (A)

              	
                The
      Seller is the legal and beneficial owner of all of the issued and
      outstanding shares in the Company (as defined below) and has the right,
      power and authority to sell and transfer such shares in the manner
      contemplated by this Agreement;
and

              

      

    

     

    
      	
              (B)

            	
              The
      Buyer wishes to purchase the Shares (as defined below) in accordance with
      the terms of this Agreement,

            

    

     

    IT
IS AGREED:

     

    
      	
              1

            	
              Interpretation

            

    

     

    
      	
              1.1

            	
              In
      this Agreement, except where a different interpretation is necessary in
      the context, the parties shall be referred to in the manner set out after
      their names above, and the following expressions shall have the following
      meanings:

            

    

     

    
      
        
          	 	
                  Act

                	
                  the
      BVI Companies Act 2004, as amended or superseded from time to
      time

                
	 	 
      	 
      
	 	
                  Affiliate

                	
                  in
      relation to any body corporate (whether or not registered in the British
      Virgin Islands), any holding company or subsidiary of such body corporate
      or any subsidiary of a holding company of such body
    corporate

                
	 	 
      	 
      
	 	
                  this
      Agreement

                	
                  this
      agreement including the recitals and the schedules

                
	 	 
      	 
      
	 	
                  Business
      Day

                	
                  a
      day (other than a Saturday, Sunday or public holiday) when banks are open
      for business in the British Virgin Islands

                
	 	 
      	 
      
	 	
                  Claim

                	
                  any
      claim for breach of any Warranty

                
	 	 
      	 
      
	 	
                  the
      Company

                	
                  Maypower
      Limited, short particulars of which are set out in  Schedule
      1

                
	 	 
      	 
      
	 	
                  Completion

                	
                  completion
      of the sale and purchase of the Shares in accordance with clause
      5

                
	 	 
      	 
      
	 	
                  Completion
      Date

                	
                  March
      31, 2010, the date on which Completion takes
  place

                

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          
            	 	
                    Completion
      Documents

                  	
                    the
      documents respectively required to be delivered by each party to the other
      on Completion in accordance with the Contractual
  Documents

                  
	 	 
      	 
      
	 	
                    Confidential
      Information

                  	
                    all
      information which relates
to:

                  

          

        

      

    

    

    
      
        
          
            
              
                
                  	 	
                          (a)

                        	
                          the
      Company, any business of
      the Company;

                        
	 	 	 
	 	
                          (b)

                        	
                          the
      provisions of this Agreement;

                        
	 	 	 
	 	
                          (c)

                        	
                          the
      negotiations relating to this Agreement;

                        
	 	 	 
	 	
                          (d)

                        	
                          the
      subject matter of this Agreement; and

                        
	 	 	 
	 	
                          (e)

                        	
                          the
      Seller or Buyer and any of their Affiliates (as the case may be) from time
      to
time

                        

                

              

            

          

        

      

    

    

    
      
        
          	 	
                  Consideration

                	
                  The
      amount set out in clause 3 which is to be satisfied in accordance with
      clause 3

                
	 	 
      	 
      
	 	
                  Contractual
      Documents

                	
                  this
      Agreement, together with any other written agreements between the parties
      and referred to in this Agreement

                
	 	 
      	 
      
	 	
                  the
      Directors

                	
                  the
      persons specified as directors of the Company in Schedule 1 (the
      expression “Director” meaning any of
      them)

                
	 	 
      	 
      
	 	
                  Encumbrance

                	
                  any
      interest or equity of any person (including any right to acquire, option
      or right of pre-emption) or any mortgage, charge (fixed or floating),
      pledge, lien, assignment, hypothecation, security interest, title
      retention or any other security agreement or arrangement which has the
      effect of creating security or payment priority

                
	 	 
      	 
      
	 	
                  Intellectual
      Property

                	
                  patents,
      trade marks, signs and service marks, rights in designs, trade and
      business names, copyrights (including rights in computer software,
      database and topography rights whether or not any of these is registered
      and including applications for registration of any of these) and all
      rights or forms of protection of a similar nature or having equivalent or
      similar effect to any of these which may subsist anywhere in the
      world

                
	 	 
      	 
      
	 	
                  Material
      Breach

                	
                  the
      meaning given to that term in clause 6.2

                
	 	 
      	 
      
	 	
                  RMB

                	
                  Renminbi,
      the legal currency of the People’s Republic of China

                
	 	 
      	 
      
	 	
                  Seller’s
      Group

                	
                  the
      Seller and its Affiliates, including until Completion the Company and the
      Subsidiaries

                
	 	 
      	 
      
	 	
                  Shares

                	
                  the
      ordinary shares of one US dollar par value each which comprise all of the
      issued and outstanding shares of the Company

                
	 	 
      	 
      
	 	
                  Subsidiaries

                	
                  the
      companies as set out at Part 2 of Schedule 1 and the expression of “Subsidiary” shall mean
      any one of them

                
	 	 
      	 
      
	 	
                  Taxation

                	
                  all
      forms of taxation imposed anywhere in the world

                
	 	 
      	 
      
	 	
                  Taxing
      Authority

                	
                  any
      governmental or state body or official anywhere the world competent to
      impose tax

                

           

          
            
              
              

            

            
              3

              
                

              

            

            
              
              

            

          

           

          
            	 	
                    Warranties

                  	
                    the
      warranties given in clause 7 and Schedule 3
      and each such warranty
      shall be a "Warranty"

                  

          

        

      

    

     

    
      	
              1.2

            	
              All
      references to statutory provisions or enactments shall include references
      to any amendment, modification, extension, consolidation, replacement or
      re-enactment of any such provision or enactment (whether before or after
      the date of this Agreement), to any previous enactment which has been
      replaced or amended and to any regulation, instrument or order or other
      subordinate legislation made under such provision or enactment, unless any
      such change imposes upon any party any liabilities or obligations which
      are more onerous than as at the date of this Agreement.  Unless
      otherwise indicated, any reference to specific legislation is to that
      legislation as enacted by the Legislature of the British Virgin
      Islands.

            

    

     

    
      	
              1.3

            	
              References
      in this Agreement and the Schedules to the parties, the Recitals,
      Schedules and clauses are references respectively to the parties, the
      Recitals and Schedules to and clauses of this
  Agreement.

            

    

     

    
      	
              1.4

            	
              Save
      where the context specifically requires otherwise, words importing one
      gender shall be treated as importing any gender, words importing
      individuals shall be treated as importing corporations and vice versa,
      words importing the singular shall be treated as importing the plural and
      vice versa, and words importing the whole shall be treated as including a
      reference to any part thereof.  References to persons shall
      include bodies' corporate, unincorporated associations and partnerships,
      in each case whether or not having a separate legal
      personality.  References to the word “include” or “including”
      (or any similar term) are not to be construed as implying any limitation
      and general words introduced by the word “other” (or any similar term)
      shall not be given a restrictive meaning by reason of the fact that they
      are preceded by words indicating a particular class of acts, matters or
      things.

            

    

     

    
      	
              1.5

            	
              Clause
      and paragraph headings and the table of contents are inserted for ease of
      reference only and shall not affect
  construction.

            

    

     

    
      	
              1.6

            	
              Any
      reference to “writing” or “written” includes faxes
      and emails and any other non-transitory form of visible reproduction of
      words.

            

    

     

    
      	
              2

            	
              Sale and purchase of the
      Shares

            

    

     

    
      	
              2.1

            	
              The
      Buyer shall not be obliged to complete the purchase of any of the Shares
      unless the purchase of all the Shares is completed simultaneously in
      accordance with this Agreement.

            

    

     

    
      	
              2.2

            	
              The
      Seller irrevocably and unconditionally waives, and shall procure that
      there are waived, any and all pre-emption rights in respect of the Shares
      whether arising by virtue of any memorandum or articles of association,
      agreement, law or otherwise.

            

    

     

    
      	
              2.3

            	
              On or before the date of this Agreement, the
      Seller shall deliver to the Buyer the items listed in Part 1 of Schedule 2
      (the Buyer receiving them, where appropriate, as agent for the
      Company).

            

    

     

    
      	
              3

            	
              Consideration

            

    

     

    
      	
              3.1

            	
              In
      consideration of the sale of the Shares, the Buyer shall pay an aggregate
      value of RMB 398,768,745.21 to the Seller as
  following:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Cash,
      totalling RMB 67,634,366.25 (the
      "Cash
      Consideration");
      and

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (b)

            	
              4,413,948
      shares of ordinary shares of the
Buyer.

            

    

     

    
      	
              3.2

            	
              The
      Consideration shall be satisfied in accordance with clause 3.3
      below.

            

    

     

    
      	
              3.3

            	
              The
      Buyer shall pay the Cash
      Consideration to the Seller on the Completion Date (such payment to be
      made in accordance with clause
5.2).

            

    

     

    
      	
              3.4

            	
              Any
      payment made by the Seller to the Buyer under or in respect of any breach
      of this Agreement (including, without limitation, in respect of any claim
      for breach of the Warranties or any indemnity contained in this Agreement)
      shall be and shall be deemed to be a reduction in the price paid for the
      Shares under this Agreement to the extent legally
  possible.

            

    

     

    
      	
              3.5

            	
              The Buyer shall issue the shares described in
      clause 3.1(b) above on or
      before the Completion
      Date.

            

    

     

    
      	
              4

            	
              Position pending
      Completion

            

    

     

    The
Seller covenants with and undertakes to the Buyer to comply with the provisions
of Schedule 4 (Position pending Completion).

     

    
      	
              5

            	
              Completion

            

    

     

    
      	
              5.1

            	
              On
      or before the Completion Date, the Seller shall deliver to the Buyer the
      items listed in Part 2 of Schedule 2
      (the Buyer receiving them, where appropriate, as agent for the
      Company).

            

    

     

    
      	
              5.2

            	
              On
      or prior to the Completion Date, the Buyer shall procure the delivery of
      an electronic transfer to the account of the Seller (as notified by the
      Seller to the Buyer at the time of this Agreement) for the amount of the
      Cash Consideration.

            

    

     

    
      	
              5.3

            	
              If
      for any reason the provisions of clause 5.1 are not fully complied with,
      the Buyer shall not be obliged to complete the sale and purchase of the
      Shares and shall be entitled (in addition to and without prejudice to any
      other right or remedy available to it, including the right to claim
      damages) to elect:

            

    

     

    
      	
               
      

            	
              (a)

            	
              to
      rescind this Agreement, without liability on the part of the Buyer;
      or

            

    

     

    
      	
               
      

            	
              (b)

            	
              to
      proceed to complete the purchase of the Shares or some of the Shares (at
      the Buyer’s option) in which case the Seller shall be bound to complete
      the sale of all or part of the Shares accordingly and the Buyer shall be
      entitled to pay only the proportion of the Consideration due for those of
      the Shares it is acquiring and in addition the Buyer may withhold from the
      proportion of the Consideration which is payable an amount which it
      considers reasonable as security for the remedying of the Seller’s
      default; or

            

    

     

    
      	
               
      

            	
              (c)

            	
              to
      defer the date for Completion (in which case the provisions of this clause
      5.3 shall apply to Completion as so
      deferred); or

            

    

     

    
      	
               
      

            	
              (d)

            	
              to
      proceed to Completion so far as practicable without prejudice to its
      rights under this Agreement, the Seller then being obliged to use its best
      endeavours to perform or procure the performance of any of the outstanding
      provisions of clause 5.1 on or before such date as is specified by the
      Buyer.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              6

            	
              Right to
      terminate

            

    

     

    
      	
              6.1

            	
              If
      at any time prior to Completion the Buyer becomes aware
  of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              any
      fact, matter or event, which constitutes a Material Breach of a Warranty;
      and/or

            

    

     

    
      	
               
      

            	
              (b)

            	
              any
      fact, matter or event, which constitutes a Material Breach of any of the
      Seller’s undertakings contained in Schedule 4 (Position pending
      Completion),

            

    

     

    the Buyer
shall be entitled (in addition to and without prejudice to all other rights or
remedies available to it including the right to claim damages) to proceed to
Completion so far as practicable having regard to the breaches that have
occurred or, by notice in writing to the Seller, to elect to terminate this
Agreement without any liability whatsoever to the Buyer.

     

    
      	
              6.2

            	
              For
      the purposes of clause 6.1 a “Material Breach” shall
      mean:

            

    

     

    
      	
               
      

            	
              (a)

            	
              a
      breach of a Warranty which would, if the Warranties were repeated on or at
      any time prior to Completion by reference to the facts and circumstances
      then existing, entitle the Buyer to an amount in damages, following
      Completion, equal to or greater than 1% of the aggregate value of this
      Agreement; or

            

    

     

    
      	
               
      

            	
              (b)

            	
              a
      breach of any of the Seller’s undertakings contained in Schedule 4
      (Position pending Completion) which would entitle the Buyer to an amount
      in damages, following Completion, equal to or greater than 1% of the
      aggregate value of this Agreement,

            

    

     

    which (if
capable of remedy) is not remedied to the complete satisfaction of the Buyer
prior to Completion.

     

    
      	
              6.3

            	
              Any
      right of termination exercised pursuant to clause 6.1 shall automatically
      terminate this Agreement (other than clauses 9.15 (Costs and Expenses) and
      9.28 (Governing Law and Jurisdiction) which shall continue in full force
      and effect) and no party shall have any claim of any nature whatsoever
      against the other parties under this Agreement, save in respect of any
      rights and liabilities of any party which have accrued prior to the
      Agreement terminating or in relation to the clauses of this Agreement
      which remain in force.

            

    

     

    
      	
              6.4

            	
              Any
      right of termination conferred upon the Buyer by this Agreement shall be
      in addition to and without prejudice to all other rights and remedies
      available to the Buyer and no exercise of or failure to exercise such a
      right of termination shall constitute a waiver by the Buyer of any such
      other right or remedy.

            

    

     

    
      	
              7

            	
              Seller Warranties and
      Indemnities

            

    

     

    
      	
              7.1

            	
              The
      Seller warrants to the Buyer for itself and for any successor in title to
      the Shares that each and every Warranty is true, correct, accurate and not
      misleading at the date of this
Agreement.

            

    

     

    
      	
              7.2

            	
              Each
      of the Warranties shall be deemed to be repeated immediately prior to
      Completion by reference to the facts and circumstances then existing and
      on the basis that all references (whether express or implied) in such
      Warranties to the “date
      of this Agreement” or in any of the definitions in clause 1.1 used
      in such Warranties shall be deemed to be substituted with references to
      the “Completion
      Date”, as appropriate.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              7.3

            	
              The
      Seller shall forthwith notify the Buyer in writing of any matter or thing
      which may arise or become known to it after the date of this Agreement and
      prior to Completion which constitutes (or would with the passage of time
      constitute) a breach of any of the Warranties or a breach of any of the
      covenants or undertakings or obligations of the Seller under this
      Agreement.

            

    

     

    
      	
              7.4

            	
              Each
      Warranty is a separate and independent warranty and, save as otherwise
      expressly provided, no Warranty shall be limited by reference to any other
      Warranty or by the other terms of this
  Agreement.

            

    

     

    
      	
              7.5

            	
              The
      rights and remedies of the Buyer in respect of any breach of the
      Warranties shall not be affected by Completion, by any investigation made
      by or on behalf of the Buyer into the affairs of the Company, or by any other event or matter
      whatsoever which otherwise might have affected such rights and remedies
      except a specific and duly authorised written waiver or
      release.  No information relating to the Company of which the
      Buyer has knowledge (actual or constructive) other than by reason of its
      being disclosed in accordance with clause 7.1 shall prejudice any claim
      which the Buyer shall be entitled to bring or shall operate to reduce any
      amount recoverable by the Buyer under this
  Agreement.

            

    

     

    
      	
              7.6

            	
              Where
      any Warranty is qualified by the expression “so far as the Seller is
      aware” or “to the
      best of the knowledge, information and belief of the Seller” or
      words having similar effect, such Warranty shall be deemed to include a
      statement that such awareness means both the actual knowledge of the
      Seller and also such knowledge which the Seller would have had if it had
      made due and careful enquiry of all relevant
  persons.

            

    

     

    
      	
              7.7

            	
              Each
      of the paragraphs in Schedule 3 shall
      be interpreted as being deemed to include all references to the foreign
      equivalent of terms used, statutes and regulations referred to and
      concepts applied where the Company is incorporated in, does business in or
      is affected by the laws or regulations of a country outside the British
      Virgin Islands.

            

    

     

    
      	
              7.8

            	
              Any
      information supplied by the Company, its officers, employees or agents to
      the Seller, its agents, representatives or advisers in connection with
      this Agreement, or in connection with, or to form the basis of, the
      Warranties, or for any other reason, shall be deemed not to include or
      have included a representation, warranty or guarantee of its accuracy to
      the Seller and shall not constitute a defence to the Seller to any claim
      made by the Buyer.  The Seller hereby waives any and all claims
      against the Company, its officers or
      employees in respect of any information so supplied (and undertakes that
      no other person claiming under or through it will make any such
      claim).

            

    

     

    
      	
              7.9

            	
              Without
      restricting the rights of the Buyer or any successor in title to the
      Shares or their ability to claim damages on any basis available to them,
      in the event of any breach or non-fulfilment of the Warranties, the Seller
      hereby undertakes to the Buyer for itself and for any successor in title
      to the Shares that the Seller will on demand pay to the Buyer or such
      successors:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the
      full amount of any shortfall or diminution in the value of any assets of
      the Company and any increase in the liabilities of the Company and an
      amount equal to any other loss suffered or incurred by the Buyer or the
      Company or any such successor as a result of or in relation to any act,
      matter, thing or circumstance constituting a breach or non-fulfilment of
      any of the Warranties; and

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (b)

            	
              all
      costs, expenses and disbursements suffered or incurred by the Buyer, the
      Company or any such successor directly or indirectly as a result of or in
      relation to any breach or non-fulfilment of any of the
      Warranties.

            

    

     

    
      	
              8

            	
              Announcements

            

    

     

    
      	
              8.1

            	
              Except
      to the extent otherwise expressly permitted by this Agreement, the parties
      shall not make any public announcement or issue a press release or respond
      to any enquiry from the press or other media concerning or relating to
      this Agreement or its subject matter or any ancillary
    matter.

            

    

     

    
      	
              8.2

            	
              Notwithstanding
      any other provision in this Agreement, either party may, after
      consultation with the other party whenever practicable, make or permit to
      be made an announcement concerning or relating to this Agreement or its
      subject matter or any ancillary matter if and to the extent required
      by:

            

    

     

    
      	
               
      

            	
              (a)

            	
              law;
      or

            

    

     

    
      	
               
      

            	
              (b)

            	
              any
      securities exchange on which either party’s securities are listed or
      traded; or

            

    

     

    
      	
               
      

            	
              (c)

            	
              any
      regulatory or governmental or other authority with relevant powers to
      which either party is subject or submits, whether or not the requirement
      has the force of law.

            

    

     

    
      	
              8.3

            	
              Subject
      to Clauses 8.1 and 8.2, each of the Seller and the Buyer undertakes with
      the other that it shall both during and after the term of this Agreement
      preserve the confidentiality of the Confidential Information, and except
      to the extent otherwise expressly permitted by this Agreement, not
      directly or indirectly reveal, report, publish, disclose or transfer or
      use for its own or any other purposes such Confidential
      Information.

            

    

     

    
      	
              8.4

            	
              Notwithstanding
      any other provision in this Agreement, either party may, after
      consultation with the other party whenever practicable, disclose
      Confidential Information if and to the
extent:

            

    

     

    
      	
               
      

            	
              (a)

            	
              required
      by law; or

            

    

     

    
      	
               
      

            	
              (b)

            	
              required
      by any securities exchange on which either party’s securities are listed
      or traded; or

            

    

     

    
      	
               
      

            	
              (c)

            	
              required
      by any regulatory or governmental or other authority with relevant powers
      to which either party is subject or submits (whether or not the authority
      has the force of law); or

            

    

     

    
      	
               
      

            	
              (d)

            	
              required
      to vest the full benefit of this Agreement in that party or to enforce any
      of the rights of that party in this Agreement;
  or

            

    

     

    
      	
               
      

            	
              (e)

            	
              required
      by its professional advisers, officers, employees, consultants,
      sub-contractors or agents to provide their services (and subject always to
      similar duties of confidentiality);
or

            

    

     

    
      	
               
      

            	
              (f)

            	
              that
      information is in or has come into the public domain through no fault of
      that party; or

            

    

     

    
      	
               
      

            	
              (g)

            	
              the
      other party has given prior written consent to the disclosure;
      or

            

    

     

    
      	
               
      

            	
              (h)

            	
              it
      is necessary to obtain any relevant tax clearances from any appropriate
      tax authority.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    The
restrictions contained in this clause 8.4 shall continue to apply after
Completion without limit in time.

     

    
      	
              9

            	
              General

            

    

     

    Further
Assurance

     

    
      	
              9.1

            	
              Without
      prejudice to any restriction or limitation on the extent of any party’s
      obligations under this Agreement, each party shall so far as each is
      reasonably able, do or procure the doing of all such acts and/or execute
      or procure the execution of all such documents in a form reasonably
      satisfactory to and at the cost of the other party concerned as such other
      party may reasonably consider necessary to transfer the Shares to the
      Buyer or otherwise to give any party the full benefit of this
      Agreement.

            

    

     

    Assignment

     

    
      	
              9.2

            	
              This
      Agreement is personal to the parties and, except as provided in clauses
      9.3 to 9.5, no party may assign, transfer, subcontract, delegate, charge
      or otherwise deal in any other manner with this Agreement or any of its
      rights or obligations nor grant, declare, create or dispose of any right
      or interest in it without the prior written consent of the other
      party.

            

    

     

    
      	
              9.3

            	
              The
      Seller acknowledges and agrees that the Buyer may at any time following
      Completion reorganise its group, pursuant to which the Buyer may sell or
      transfer all or any of the Shares or assets of the Company to an Affiliate
      or assign (in whole or in part) its rights under this
      Agreement.  Accordingly, subject to clause 9.4, the Seller
      agrees that the rights under this Agreement may be assigned (in whole or
      in part) by the Buyer without the consent of the Seller to, and may be
      enforced by, any Affiliate of the Buyer which is the legal or beneficial
      owner from time to time of any or all of the Shares or assets of the
      Company as if it were the Buyer under this
  Agreement.

            

    

     

    
      	
              9.4

            	
              If
      the rights under the whole or any part of this Agreement are assigned by
      the Buyer to an Affiliate in accordance with clause 9.3 that Affiliate may
      at any time assign those rights to any other Affiliate of the Buyer
      provided that the Buyer shall procure that any Affiliate to whom any or
      all of the rights under this Agreement are assigned shall assign such
      rights back to the Buyer (or to another continuing Affiliate of the Buyer)
      immediately prior to it ceasing to be an Affiliate of the
      Buyer.

            

    

     

    
      	
              9.5

            	
              The
      Buyer may assign (in whole or in part) its rights under this Agreement by
      way of security to any bank and/or financial institution lending money or
      making other banking facilities available to the Buyer or any of its
      Affiliates.

            

    

     

    
      	
              9.6

            	
              Any
      purported assignment, transfer, subcontracting, delegation, charging or
      dealing in contravention of this clause 9 shall be
      ineffective.

            

    

     

    Entire
Agreement

     

    
      	
              9.7

            	
              This
      Agreement and the documents referred to or incorporated in it constitute
      the entire agreement between the parties relating to the subject matter of
      this Agreement and supersede and extinguish any prior drafts, agreements,
      undertakings, representations, warranties and arrangements of any nature
      whatsoever, whether or not in writing, between the parties in relation to
      the subject matter of this
Agreement.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              9.8

            	
              Each
      of the parties acknowledges and agrees that it has not entered into this
      Agreement in reliance on any statement or representation of any person
      (whether a party to this Agreement or not) other than as expressly
      incorporated in this Agreement.

            

    

     

    
      	
              9.9

            	
              Without
      limiting the generality of the foregoing, each of the parties irrevocably
      and unconditionally waives any right or remedy it may have to claim
      damages and/or to rescind this agreement by reason of any
      misrepresentation (other than a fraudulent misrepresentation) having been
      made to it by any person (whether party to this agreement or not) and upon
      which it has relied in entering into this
  agreement.

            

    

     

    
      	
              9.10

            	
              Each
      of the parties acknowledges and agrees that the only cause of action
      available to it under the terms of this Agreement shall be for breach of
      contract.

            

    

     

    
      	
              9.11

            	
              Nothing
      in this Agreement or in any other document referred to herein shall be
      read or construed as excluding any liability or remedy as a result of
      fraud.

            

    

     

    Waiver,
Variation and Release

     

    
      	
              9.12

            	
              No
      omission to exercise or delay in exercising on the part of any party to
      this Agreement any right, power or remedy provided by law or under this
      Agreement shall constitute a waiver of such right, power or remedy or any
      other right, power or remedy or impair such right, power or remedy. No
      single or partial exercise of any such right, power or remedy shall
      preclude or impair any other or further exercise thereof or the exercise
      of any other right, power or remedy provided by law or under this
      Agreement.

            

    

     

    
      	
              9.13

            	
              Any
      waiver of any right, power or remedy under this Agreement must be in
      writing and may be given subject to any conditions thought fit by the
      grantor. Unless otherwise expressly stated, any waiver shall be effective
      only in the instance and only for the purpose for which it is
      given.

            

    

     

    
      	
              9.14

            	
              No
      variation to this Agreement shall be of any effect unless it is agreed in
      writing and signed by or on behalf of each
  party.

            

    

     

    Costs and
Expenses

     

    
      	
              9.15

            	
              Each
      party shall pay its own costs and expenses in relation to the negotiation,
      preparation; execution and carrying into effect of this Agreement and
      other agreements forming part of the
  transaction.

            

    

     

    Notices

     

    
      	
              9.16

            	
              Any
      communication to be given in connection with the matters contemplated by
      this Agreement shall be in writing except where expressly provided
      otherwise and shall either be delivered by hand or sent by first class
      pre-paid post or facsimile transmission.  Delivery by courier
      shall be regarded as delivery by hand.  A communication shall be
      deemed to have been served:

            

    

     

    
      	
               
      

            	
              (a)

            	
              if
      delivered by hand at the address referred to in clause 9.17, at the time
      of delivery;

            

    

     

    
      	
               
      

            	
              (b)

            	
              if
      sent by first class pre-paid post to the address referred to in clause
      9.17, at the expiration of two clear days after the time of posting;
      and

            

    

     

    
      	
               
      

            	
              (c)

            	
              if
      sent by facsimile to the number referred to in clause 9.17, at the time of
      completion of transmission by the
sender.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    If a
communication would otherwise be deemed to have been delivered outside normal
business hours (being 8.30 am to 5.30 pm on a Business Day) under the preceding
provisions of this clause 9.16, it shall be deemed to have been delivered at the
next opening of such business hours.

     

    
      	
              9.17

            	
              Such
      communication shall be sent to the address of the relevant party referred
      to in this Agreement or the facsimile number set out below or to such
      other address or facsimile number may from time to time be notified in
      writing to the other party in accordance with this clause
      9.17.  Each communication shall be marked for the attention of
      the relevant person.

            

    

     

    Seller:
Morgan & Morgan Building, Pasea Estate, Road Town, Tortola, British Virgin
Islands; facsimile number 86 10 5218 1952 for the attention of Wang
Wenfu.

     

    Buyer:
P.O. Box 173, Kingston Chambers, Road Town, Tortola, British Virgin Islands;
facsimile number 86 10 5898 1301 for the attention of Jennifer
Zhang.

     

    Counterparts

     

    
      	
              9.18

            	
              This
      Agreement may be executed in any number of counterparts (whether original
      or facsimile) and by the parties on different counterparts, but shall not
      be effective until each party has executed at least one
      counterpart.

            

    

     

    
      	
              9.19

            	
              Each
      counterpart shall constitute an original of this Agreement but all the
      counterparts shall together constitute one and the same
      agreement.

            

    

     

    Severability

     

    
      	
              9.20

            	
              Each
      of the provisions of this Agreement is severable.  If any such
      provision is or becomes illegal, invalid or unenforceable in any respect
      under the law of any jurisdiction, the legality, validity or
      enforceability in that jurisdiction of the remaining provisions of this
      Agreement shall not in any way be affected or impaired
      thereby.

            

    

     

    Effect of
Completion

     

    
      	
              9.21

            	
              This
      Agreement shall, to the extent that it remains to be performed, continue
      in full force and effect notwithstanding
  Completion.

            

    

     

    Interest
on Late Payments

     

    
      	
              9.22

            	
              If
      a party fails to pay any sum payable by it on the due date for payment
      under this Agreement, it shall pay interest on the overdue sum for the
      period from and including the due date of payment up to the date of actual
      payment (after as well as before judgement) in accordance with clause
      9.23.

            

    

     

    
      	
              9.23

            	
              The
      interest referred to in clause 9.22 shall accrue from day to day and shall
      be paid on demand at the rate of 0.1%. Unpaid interest shall compound
      quarterly.

            

    

     

    Grossing-up
of payments

     

    
      	
              9.24

            	
              All
      amounts payable by the Seller to any person under this Agreement shall be
      paid free of any rights of counterclaim or set off and without any
      deductions or withholdings whatsoever, save only as may be required by any
      applicable law.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              9.25

            	
              If
      any deductions or withholdings are required by law to be made from any of
      the amounts payable by the Seller under this Agreement, the Seller shall
      be obliged to pay to the recipient of the payment such amount as will,
      after the deduction or withholding has been made, leave that person with
      the same amount as it would have been entitled to receive in the absence
      of any such requirement to make a deduction or
  withholding.

            

    

     

    
      	
              9.26

            	
              If
      Taxation is payable on any amount paid by the Seller to any person under
      this Agreement, the amount payable shall be increased by such amount as
      will ensure that, after payment of any Taxation charged on or in respect
      of such payment, there shall be left an amount equal to that which would
      otherwise be payable under this
Agreement.

            

    

     

    Set
Off

     

    
      	
              9.27

            	
              All
      payments to be made under this Agreement shall be paid in full without any
      set-off or counterclaim.

            

    

     

    Governing
Law and Jurisdiction

     

    
      	
              9.28

            	
              The
      parties irrevocably submit to the exclusive jurisdiction of the courts of
      the British Virgin Islands to settle any dispute which may arise out of or
      in connection with this Agreement.

            

    

     

    
      	
              9.29

            	
              This
      Agreement shall be governed by and construed in accordance with the laws
      of the British Virgin Islands.

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    SCHEDULE
1

     

    Part 1

     

    Particulars
of the Company

     

    Name: Maypower
Limited

     

    Registered
Number: 1499765

     

    Date of
Incorporation: 17th March
2009

     

    Place of
Incorporation: British Virgin Islands

     

    Registered
Office: P. O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands.

     

    Authorised
shares:  50,000 share

     

    Issued
shares:  one share

     

    Shareholders
and shareholding: Unionway Resources Limited, 100% shareholding

     

    Sole
Director: Wang Wenfu

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    SCHEDULE
1

     

    Part
2

     

    Particulars
of the Subsidiaries

     

    Name:
Trinity Star Investments Limited

     

    Registered
Number: 1247703

     

    Date of
Incorporation: 17th June
2008

     

    Place of
Incorporation: Hong Kong

     

    
      Registered
Office:  19th Floor,
Beverly House, Nos. 93-107 Lockhart Road, Wanchai, Hong
Kong.

    

     

    Authorised
shares: 1,000 shares

     

    Issued
shares: 1,000 shares

     

    Shareholders
and shareholding:  Maypower Limited, 100% shareholding

     

    Sole
Director: Wang Wenfu

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    Name:
Beijing Chuanzhongchengzhen Medical Science and Technology Company
Ltd.

     

    Registered
Number: 110000450091589

     

    Date of
Incorporation: 5th May
2009

     

    Place of
Incorporation: People’s Republic of China

     

    Registered
Office: Room 1304, 1st floor,
10 Jiancaicheng Middle Road, Xisanqi, Haidian District, Beijing, People’s
Republic of China

     

    Authorised
shares: one share

     

    Issued
shares: one share

     

    Shareholders
and shareholding: Trinity Star Investments Limited

     

    Sole
Director: Shen Tao

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    Name: Beijing
Yingcaibao Beauty Company Ltd.

     

    Registered
Number: 110105011873413

     

    Date of
Incorporation: 27th April
2009

     

    Place of
Incorporation: People’s Republic of China

     

    Registered
Office: 1st and
2nd
Floor, Building B-03, No. 66, Xiaguangli, Dongsanhuan Beilu,
Chaoyang District, Beijing.

     

    Authorised
shares: one share

     

    Issued
shares: one share

     

    Shareholders
and shareholding: Beijing Chuanzhongchengzhen Medical Science and Technology
Company Ltd, 100% shareholding

     

    Sole
Director: Wu Yang

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    SCHEDULE
2

     

    Part 1

     

    Documents
which have been delivered prior to or at execution of this
Agreement

     

    
      	
              1

            	
              A
      certified true copy of the minutes of a meeting of the directors of the
      Seller authorising the execution by the appropriate signatories on behalf
      of the Seller of this Agreement.

            

    

     

    
      	
              2

            	
              A certified true copy of the resolutions of the
      shareholders of the Seller authorising the transfer of the Shares in
      accordance with section 175 of the
Act.]

            

    

     

    
      	
              3

            	
              A certificate in the agreed form executed by the
      Seller confirming that there has been no breach of any of the
      Warranties.

            

    

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    SCHEDULE 2 

     

    Part 2

     

    
      	
              1

            	
              A
      written instrument of transfer in respect of the Shares duly executed by
      the Seller in favour of the Buyer.

            

    

     

    
      	
              2 

            	
              The
      original share certificates for the Shares (if any) and any other
      documents which may be required to give good title to the Shares and to
      enable the Buyer to procure registration of the Shares in its name or as
      it may direct.

            

    

     

    
      	
              3

            	
              A
      certified true copy of the Company's register of members, updated so as to
      reflect the transfer of the Shares to the Buyer as at the date of Completion.

            

    

     

    
      	
              4

            	
              The
      resignations in the agreed form of each of the Directors of the
      Company.

            

    

     

    
      	
              5

            	
              Certified
      copy of the board resolution of the Company in the agreed form. 

            

    

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    SCHEDULE
3

     

    Warranties

     

    
      	
              1 

            	
              The
      Shares

            

    

     

    
      	
              1.1

            	
              The
      Shares constitute all of the issued and outstanding shares in the Company
      and are fully paid or credited as fully paid.  The Company has
      not granted any options or other rights (whether exercisable now or in the
      future and whether contingent or not) to subscribe for shares or other
      securities in the Company.

            

    

     

    
      	
              1.2

            	
              The
      Seller is the legal and beneficial owner of the Shares and has full
      capacity and authority to sell the Shares in accordance with the terms of
      this Agreement.

            

    

     

    
      	
              1.3

            	
              There
      is no Encumbrance on, over or affecting the Shares, no agreement to create
      any Encumbrance has been made and no claim has been received by the Seller
      that any person is entitled to any
Encumbrance.

            

    

     

    
      	
              2 

            	
              Capacity
      and Authority

            

    

     

    
      	
              2.1 

            	
              This
      Agreement constitutes binding obligations of the Seller in accordance with
      its terms;

            

    

     

    
      	
              2.2

            	
              The
      execution and delivery of, and the performance by the Seller of its
      obligations under, this Agreement will
not:

            

    

     

    
      	
               
      

            	
              (a)

            	
              result
      in a breach of, or constitute a default under, any instrument to which the
      Seller is a party or by which the Seller is bound and which is material in
      the context of the transactions contemplated by this
      Agreement;

            

    

     

    
      	
               
      

            	
              (b)

            	
              result
      in a breach of any order, judgment or decree of any court or governmental
      agency to which the Seller is a party or by which the Seller is bound and
      which is material in the context of the transactions contemplated by this
      Agreement;

            

    

     

    
      	
               
      

            	
              (c)

            	
              allow
      any person to exercise any right to acquire the Shares, whether by reason
      of any pre-emption right or otherwise;
or

            

    

     

    
      	
               
      

            	
              (d)

            	
              require
      the Seller to obtain any consent or approval of, or give any notice to or
      make any registration with, any governmental or other authority which has
      not been obtained or made at the date hereof both on an unconditional
      basis and on a basis which cannot be revoked (save pursuant to any legal
      or regulatory entitlement to revoke the same other than by reason of any
      misrepresentation or misstatement).

            

    

     

    
      	
              3 

            	
              The
      Company and the Subsidiaries

            

    

     

    
      	
              3.1

            	
              Each
      of the Company and the Subsidiaries is duly incorporated and validly
      existing under the laws of the jurisdiction in which it is
      incorporated.

            

    

     

    
      	
              3.2

            	
              The
      Company has not, since incorporation, carried on any business or trade or
      incurred any liabilities (including actual, future, contingent unqualified
      or disputed liabilities), other than
investment.

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	
              3.3

            	
              The
      Company does not own and has not owned since incorporation shares or other
      interests in any corporate or other body other than the
      Subsidiaries.

            

    

     

    
      	
              3.4

            	
              The
      Company does not act or carry on and has never acted or carried on
      business in partnership with any other person.  The Company is
      not, and never has been, a member of any unincorporated body, undertaking
      or association.

            

    

     

    
      	
              3.5

            	
              The
      Company has not and never has entered into any contract, commitment or
      arrangement, whether written or otherwise and whether or not valid,
      binding or legally enforceable in accordance with its
    terms.

            

    

     

    
      	
              3.6

            	
              There
      is no Encumbrance on, over or affecting any of the assets of the Company,
      no agreement to create any Encumbrance has been made and no claim has been
      received by the Seller that any person is entitled to any
      Encumbrance.

            

    

     

    
      	
              4 

            	
              Compliance
      with laws

            

    

     

    
      	
              4.1

            	
              The
      Company has not committed and is not liable for any criminal, illegal,
      unlawful, ultra vires or unauthorised act or breach of covenant, contract
      or statutory duty and there is no violation of, or default with respect
      to, any statute, regulation, order, decree or judgment of any court or
      central or local government agency.

            

    

     

    
      	
              4.2

            	
              The
      Company has not been a party to any understanding or assurance given to
      any court or governmental or regulatory agency which is still in force and
      there are no judgements or orders given or made by any court against the
      Company which have not been fully satisfied and complied
    with.

            

    

     

    
      	
              5 

            	
              Accuracy
      of information

            

    

     

    
      	
              5.1

            	
              The
      information contained or referred to in Schedule 1 (The Company and the
      Subsidiaries) is true, complete and accurate and not
      misleading.

            

    

     

    
      	
              5.2

            	
              The
      records, statutory books and books of account of the Company are duly
      written up and maintained in accordance with all legal requirements
      applicable thereto and all such books and all records and documents
      (including, without limitation, all documents of title, accounts, books,
      ledgers and contracts to which it is a party) which are the property of
      the Company are in its possession or under its
  control.

            

    

     

    
      	
              6 

            	
              Employees

            

    

     

    The
Company does not have and never has had any employees, neither has it ever been
a party to any pension arrangements or any employee benefit or employee
incentive arrangements.

     

    
      	
              7 

            	
              Litigation

            

    

     

    
      	
              7.1

            	
              Neither
      the Company nor any person for whose acts or omissions the Company may be
      vicariously liable for are engaged in or subject to any civil, criminal or
      arbitration proceedings or which have been issued and served and, as far
      as the Seller is aware, there are no such proceedings pending or
      threatened by or against the Company or against any such person and no
      facts or circumstances likely to give rise to any such
      proceedings.

            

    

     

    
      	
              7.2

            	
              There
      is no investigation or inquiry which is or has been conducted by any
      governmental or other body into the affairs of the Company and the Seller
      is not aware of any circumstances which would give rise to such an
      investigation or inquiry.

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	
              8 

            	
              Insolvency

            

    

     

    
      	
              8.1 

            	
              The
      Company has not:

            

    

     

    
      	
               
      

            	
              (a)

            	
              entered
      into any arrangement or composition for the benefit of its creditors or
      any of them nor has it (or its agent or nominee) convened a meeting of its
      creditors;

            

    

     

    
      	
               
      

            	
              (b)

            	
              been
      the subject of a resolution for voluntary winding up under Part XII of the
      Act nor has a meeting of its shareholders been called to consider a
      resolution for winding up; or

            

    

     

    
      	
            	
              (c) 

            	
              had
      a receiver appointed in respect of all or any of its
    assets.

            

    

     

    
      	
              8.2 

            	
              The
      Company is not unable to pay its debts as they fall
  due.

            

    

     

    
      	
              8.3

            	
              The
      Company has not entered into any transaction at an undervalue nor been
      given a preference which may be liable to be set aside or avoided for any
      reason.

            

    

     

    
      	
              8.4

            	
              The
      Company has not entered into or suffered nor has there occurred any
      analogous proceedings to those specified
above.

            

    

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    SCHEDULE
4

     

    Position
pending Completion

     

    
      	
              1 

            	
              Pending
      Completion the Seller will procure that each of the Company and the
      Subsidiaries:

            

    

     

    
      	
               
      

            	
              1.1

            	
              continues
      to pay its creditors in the ordinary course of business or within the
      usual terms of payment of such
creditors;

            

    

     

    
      	
               
      

            	
              1.2

            	
              maintains
      in force all insurance policies usually kept in force relating in whole or
      in part to its business and
operations;

            

    

     

    
      	
               
      

            	
              1.3

            	
              maintains
      all licences, consents and authorisations which are needed to carry on its
      business and comply with all applicable laws and regulations;
      and

            

    

     

    
      	
            	
              1.4 

            	
              maintains
      all accounting and other records in the ordinary and usual
      course.

            

    

     

    
      	
              2

            	
              The
      Seller shall not and shall procure that each of the Company and the
      Subsidiaries shall not at any time prior to Completion without the prior
      written consent of the Buyer do, allow or procure any act or omission
      which would (or would be likely to) cause, constitute or result in a
      breach of any of the Warranties if they were to be expressly repeated at
      Completion or which would make any of Warranties untrue, incorrect,
      inaccurate or misleading if they were expressly repeated at
      Completion.

            

    

     

    
      	
              3

            	
              Without
      prejudice to the generality of paragraph 2, the Seller shall procure that
      each of the Company and the Subsidiaries shall not at any time prior to
      Completion without the prior written consent of the
  Buyer:

            

    

     

    
      	
            	
              3.1 

            	
              alter
      its authorised shares or the rights attaching to any of its
      shares;

            

    

     

    
      	
               
      

            	
              3.2

            	
              create,
      allot, issue, redeem, purchase, consolidate, convert or subdivide any
      shares or loan capital or any securities convertible into shares or grant
      any options for the issue of any such
  securities;

            

    

     

    
      
        	
              	
                3.3 

              	
                subscribe
      or otherwise acquire, or dispose of any shares in any
    company;

              

      

    

     

    
      	
               
      

            	
              3.4

            	
              acquire
      or dispose of the whole or part of the undertaking of it or of any other
      person, firm or company;

            

    

     

    
      	
            	
              3.5 

            	
              send
      any notice to its shareholders or pass any shareholder
      resolution;

            

    

     

    
      	
               
      

            	
              3.6

            	
              cease
      to carry on its business or be wound up or enter into receivership,
      administrative receivership or any form of management or administration of
      its assets;

            

    

     

    
      	
               
      

            	
              3.7

            	
              permit
      or suffer any of its insurances to lapse or do anything which would make
      any such policy of insurance null or voidable, fail to notify any
      insurance claim in accordance with the terms of the relevant policy or
      settle any insurance claim below the amount
  claimed;

            

    

     

    
      	
               
      

            	
              3.8

            	
              make
      any change to its auditors, its bankers or the terms of the mandate given
      to such bankers in relation to its account(s), or change its accounting
      reference date;

            

    

     

    
      	
               
      

            	
              3.9

            	
              borrow
      monies (other than by way of its agreed overdraft facility), accept credit
      (other than normal trade credit), make payments out of or drawings on its
      bank accounts other than in the ordinary and usual course or repay any
      loan or financial facility;

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              3.10 

            	
              make
      any payment otherwise than on an arm’s length
  basis;

            

    

     

    
      	
               
      

            	
              3.11

            	
              enter
      into or give or permit or suffer to subsist any guarantee of or indemnity
      or contract of suretyship for or otherwise commit itself in respect of the
      due payment of money or the performance of any contract, engagement or
      obligation of any other person or
body;

            

    

     

    
      	
            	
              3.12 

            	
              declare
      or pay any dividend or make any other
  distribution;

            

    

     

    
      	
            	
              3.13 

            	
              enter
      into any partnership, consortium, association or joint
      venture;

            

    

     

    
      	
            	
              3.14 

            	
              engage
      any employee;

            

    

     

    
      	
               
      

            	
              3.15

            	
              make
      any loan or give any credit (other than normal trade credit) or acquire
      any loan capital of any corporate body (wherever
      incorporated);

            

    

     

    
      	
               
      

            	
              3.16

            	
              amend
      or terminate any contract or commitment other than in the ordinary course
      of business;

            

    

     

    
      	
               
      

            	
              3.17

            	
              enter
      into any leasing, hire, hire purchase or other agreement for payment on
      deferred terms or any unusual or onerous contract or any other material or
      major or long-term contract;

            

    

     

    
      	
               
      

            	
              3.18

            	
              make
      any change in its business or do any act or thing outside the ordinary
      course of the business carried on by
it;

            

    

     

    
      	
               
      

            	
              3.19

            	
              commence
      or conduct any litigation (save for the collection of debts arising in the
      ordinary course of business) or settle or compromise any claim or dispute;
      or

            

    

     

    
      	
               
      

            	
              3.20

            	
              enter
      into any contract or non-binding commitment to do any of the acts or
      matters referred to in this paragraph
3.

            

    

     

    
      	
              4 

            	
              The
      Seller shall not at any time prior to
  Completion:

            

    

     

    
      	
               
      

            	
              4.1

            	
              dispose
      or attempt to dispose of any interest in the Shares or grant any option
      over, or mortgage, charge or otherwise encumber any of the Shares;
      or

            

    

     

    
      	
               
      

            	
              4.2

            	
              enter
      into or continue any discussions or negotiations with any persons as
      regards the Shares or any part
thereof.

            

    

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    ATTESTATIONS

     

    SIGNED on
behalf of UNIONWAY RESOURCES LIMITED:

     

    
      
        
          
            	
                     

                  	 
      	
                    Wenfu Wang

                  
	
                    Signed

                  	 
      	
                    Full
      name (please
print)

                  

          

        

      

    

     

    SIGNED on
behalf of HOLLYSYS AUTOMATION TECHNOLOGIES, LTD.:

      

    
      
        
          	
                   

                	 
      	
                  Changli Wang

                
	
                  Signed

                	 
      	
                  Full
      name (please print)

                

        

      

    

     

    
      
         

      

      
        24

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