Document:

EXECUTION
VERSION

     

    
      

      

    

    SHENGDATECH,
INC.

     

    as
Issuer

     

    THE
BANK OF NEW YORK MELLON

     

    as
Trustee

     

    and

     

    as
Conversion Agent

     

    and

     

    as
Principal Paying Agent

     

    INDENTURE

     

    Dated
as of December 14, 2010

     

    6.5%
Senior Convertible Notes due 2015

     

    
      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    SHENGDATECH,
INC.

    Reconciliation
and Tie between Trust Indenture Act of 1939 and

    Indenture,
dated as of December 14, 2010

     

    
      
        	
                Trust Indenture Act Section

              	 
      	
                Indenture Section

              
	
                §310(a)(1)

              	 
      	
                7.09

              
	
                (a)(2)

              	 
      	
                7.09

              
	
                (a)(3)

              	 
      	
                Not
      Applicable

              
	
                (a)(4)

              	 
      	
                Not
      Applicable

              
	
                (a)(5)

              	 
      	
                7.09

              
	
                (b)

              	 
      	
                7.08;
      7.10; 7.11

              
	
                (c)

              	 
      	
                Not
      Applicable

              
	
                §311(a)

              	 
      	
                7.13

              
	
                (b)

              	 
      	
                7.13

              
	
                §312(a)

              	 
      	
                5.01;
      5.02(a)

              
	
                (b)

              	 
      	
                5.02(b)

              
	
                (c)

              	 
      	
                5.02(c)

              
	
                §313(a)

              	 
      	
                5.03(a)

              
	
                (b)

              	 
      	
                5.03(a)

              
	
                (c)

              	 
      	
                5.03(a)

              
	
                (d)

              	 
      	
                5.03(b)

              
	
                §314(a)

              	 
      	
                5.04

              
	
                (b)

              	 
      	
                Not
      Applicable

              
	
                (c)(1)

              	 
      	
                16.06

              
	
                (c)(2)

              	 
      	
                16.06

              
	
                (c)(3)

              	 
      	
                Not
      Applicable

              
	
                (d)

              	 
      	
                Not
      Applicable

              
	
                (e)

              	 
      	
                16.06

              
	
                §315(a)

              	 
      	
                7.01

              
	
                (b)

              	 
      	
                6.08

              
	
                (c)

              	 
      	
                7.01

              
	
                (d)

              	 
      	
                7.01

              
	
                (e)

              	 
      	
                6.09

              
	
                §316(a)

              	 
      	
                8.01

              
	
                (a)(1)(A)

              	 
      	
                8.01;
      6.01; 6.07

              
	
                (a)(1)(B)

              	 
      	
                6.07

              
	
                (a)(2)

              	 
      	
                Not
      Applicable

              
	
                (b)

              	 
      	
                6.04

              
	
                (c)

              	 
      	
                8.01

              
	
                §317(a)(1)

              	 
      	
                6.02;
      6.03; 6.05

              
	
                (a)(2)

              	 
      	
                6.02

              
	
                (b)

              	 
      	
                7.05;
      12.01

              
	
                §318(a)

              	 
      	
                1.02

              
	
                (c)

              	
                  

              	
                1.02

              

      

    

    

    Note:  This
reconciliation and tie shall not, for any purpose, be deemed to be part of the
Indenture.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

    
      

    

    

    
      
        
          
            
              
                
                  
                    	 
      	 
      	
                            Page

                          
	 
      	 
      	 
      
	
                            ARTICLE
      1

                          	 
      	 
      
	
                            Definitions

                          	 
      	 
      
	 
      	 
      	 
      
	
                            SECTION
      1.01. Definitions

                          	 
      	
                            2

                          
	
                            SECTION
      1.02. Incorporation by
      Reference of
      Trust Indenture Act

                          	 
      	
                            12

                          
	 
      	 
      	 
      
	
                            ARTICLE
      2

                          	 
      	 
      
	
                            Issue,
      Description, Execution, Registration and Exchange of Notes

                          	 
      	 
      
	 
      	 
      	 
      
	
                            SECTION
      2.01. Designation and
      Amount

                          	 
      	
                            13

                          
	
                            SECTION
      2.02. Form of
      Notes

                          	 
      	
                            13

                          
	
                            SECTION
      2.03.
      Legends

                          	 
      	
                            14

                          
	
                            SECTION
      2.04. Date and
      Denomination of
      Notes

                          	 
      	
                            18

                          
	
                            SECTION
      2.05. Execution,
      Authentication and Delivery of Notes

                          	 
      	
                            18

                          
	
                            SECTION
      2.06. Exchange and
      Registration of Transfer of Notes; Transfer Generally;
      Depositary

                          	 
      	
                            19

                          
	
                            SECTION
      2.07. Special Transfer
      Provisions

                          	 
      	
                            22

                          
	
                            SECTION
      2.08.
      Mutilated,
      Destroyed, Lost or Stolen Notes

                          	 
      	
                            23

                          
	
                            SECTION
      2.09. Temporary
      Notes

                          	 
      	
                            25

                          
	
                            SECTION
      2.10. Cancellation of
      Notes Paid, Etc

                          	 
      	
                            25

                          
	
                            SECTION
      2.11. CUSIP
      Numbers

                          	 
      	
                            25

                          
	
                            SECTION
      2.12. Additional Notes;
      Repurchases

                          	 
      	
                            25

                          
	 
      	 
      	 
      
	
                            ARTICLE
      3

                          	 
      	 
      
	
                            [Reserved]

                          	 
      	 
      
	 
      	 
      	 
      
	
                            ARTICLE
      4

                          	 
      	 
      
	
                            Particular
      Covenants of the Company

                          	 
      	 
      
	 
      	 
      	 
      
	
                            SECTION
      4.01. Payment of
      Principal, Premium and Interest

                          	 
      	
                            26

                          
	
                            SECTION
      4.02. Additional
      Interest

                          	 
      	
                            28

                          
	
                            SECTION
      4.03. Maintenance of
      Office or Agency

                          	 
      	
                            29

                          
	
                            SECTION
      4.04. Appointments to
      Fill Vacancies in Trustee’s Office

                          	 
      	
                            30

                          
	
                            SECTION
      4.05. Provisions as to
      Paying Agent

                          	 
      	
                            30

                          
	
                            SECTION
      4.06.
      Existence

                          	 
      	
                            31

                          
	
                            SECTION
      4.07. Payment of
      Additional Amounts

                          	 
      	
                            31

                          
	
                            SECTION
      4.08. Stay, Extension
      and Usury Laws

                          	 
      	
                            34

                          
	
                            SECTION
      4.09. Compliance
      Certificate; Statements as to Defaults

                          	 
      	
                            34

                          
	
                            SECTION
      4.10. Further
      Instruments and Acts

                          	 
      	
                            35

                          
	
                            SECTION
      4.11. Limitation on
      Incurrence of Indebtedness.

                          	 
      	
                            35

                          

                  

                

              

            

          

        

      

    

    

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      	
                              ARTICLE
      5

                            	 
      	 
      
	
                              Lists
      of Noteholders and Reports by the Company and the Trustee

                            	 
      	 
      
	 
      	 
      	 
      
	
                              SECTION
      5.01. Lists of
      Noteholders

                            	 
      	
                              35

                            
	
                              SECTION
      5.02. Preservation and
      Disclosure of Lists

                            	 
      	
                              36

                            
	
                              SECTION
      5.03. Reports by
      Trustee

                            	 
      	
                              36

                            
	
                              SECTION
      5.04. Reports by
      Company

                            	 
      	
                              36

                            
	 
      	 
      	 
      
	
                              ARTICLE
      6

                            	 
      	 
      
	
                              Defaults
      and Remedies

                            	 
      	 
      
	 
      	 
      	 
      
	
                              SECTION
      6.01. Events of
      Default

                            	 
      	
                              37

                            
	
                              SECTION
      6.02. Payments of Notes
      on Default; Suit
      Therefor

                            	 
      	
                              41

                            
	
                              SECTION
      6.03. Application of
      Monies Collected by Trustee

                            	 
      	
                              43

                            
	
                              SECTION
      6.04. Proceedings by
      Noteholders

                            	 
      	
                              44

                            
	
                              SECTION
      6.05. Proceedings by
      Trustee

                            	 
      	
                              45

                            
	
                              SECTION
      6.06. Remedies
      Cumulative and Continuing

                            	 
      	
                              45

                            
	
                              SECTION
      6.07. Direction
      of Proceedings
      and Waiver of Defaults by Majority of Noteholders

                            	 
      	
                              45

                            
	
                              SECTION
      6.08. Notice of
      Defaults

                            	 
      	
                              46

                            
	
                              SECTION
      6.09. Undertaking to Pay
      Costs

                            	 
      	
                              46

                            
	 
      	 
      	 
      
	
                              ARTICLE
      7

                            	 
      	 
      
	
                              Concerning
      the Trustee

                            	 
      	 
      
	 
      	 
      	 
      
	
                              SECTION
      7.01. Duties and
      Responsibilities of Trustee

                            	 
      	
                              47

                            
	
                              SECTION
      7.02. Reliance on
      Documents, Opinions, Etc

                            	 
      	
                              49

                            
	
                              SECTION
      7.03. No Responsibility
      for Recitals, Etc

                            	 
      	
                              51

                            
	
                              SECTION
      7.04. Trustee, Paying
      Agents, Conversion Agents or Registrar May Own
Notes

                            	 
      	
                              51

                            
	
                              SECTION
      7.05. Monies to Be Held
      in Trust

                            	 
      	
                              52

                            
	
                              SECTION
      7.06. Compensation and
      Indemnification of Trustee

                            	 
      	
                              52

                            
	
                              SECTION
      7.07.
      Officers’ Certificate as
      Evidence

                            	 
      	
                              53

                            
	
                              SECTION
      7.08. Conflicting
      Interests of Trustee

                            	 
      	
                              53

                            
	
                              SECTION
      7.09. Eligibility of
      Trustee

                            	 
      	
                              54

                            
	
                              SECTION
      7.10. Resignation or
      Removal of Trustee

                            	 
      	
                              54

                            
	
                              SECTION
      7.11. Acceptance by
      Successor Trustee

                            	 
      	
                              55

                            
	
                              SECTION
      7.12. Succession by
      Merger, Etc

                            	 
      	
                              56

                            
	
                              SECTION
      7.13. Limitation on
      Rights of Trustee as Creditor

                            	 
      	
                              57

                            
	
                              SECTION
      7.14.
      Trustee’s Application for Instructions
      from the Company

                            	 
      	
                              57

                            
	 
      	 
      	 
      
	
                              ARTICLE
      8

                            	 
      	 
      
	
                              Concerning
      the Noteholders

                            	 
      	 
      
	 
      	 
      	 
      
	
                              SECTION
      8.01. Action by
      Noteholders

                            	 
      	
                              57

                            

                    

                  

                

              

            

          

        

      

    

    

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  SECTION
      8.02. Proof of Execution
      by Noteholder

                                	 
      	
                                  58

                                
	
                                  SECTION
      8.03. Who Are Deemed
      Absolute Owners

                                	 
      	
                                  58

                                
	
                                  SECTION
      8.04. Company-Owned
      Notes Disregarded

                                	 
      	
                                  58

                                
	
                                  SECTION
      8.05. Revocation of
      Consents; Future Holders Bound

                                	 
      	
                                  59

                                
	 
      	 
      	 
      
	
                                  ARTICLE
      9

                                	 
      	 
      
	
                                  Noteholders’
      Meetings

                                	 
      	 
      
	 
      	 
      	 
      
	
                                  SECTION
      9.01. Purpose of
      Meetings

                                	 
      	
                                  59

                                
	
                                  SECTION
      9.02. Call of Meetings
      by Trustee

                                	 
      	
                                  60

                                
	
                                  SECTION
      9.03. Call of Meetings
      by Company or Noteholders

                                	 
      	
                                  60

                                
	
                                  SECTION
      9.04. Qualifications for
      Voting

                                	 
      	
                                  60

                                
	
                                  SECTION
      9.05.
      Regulations

                                	 
      	
                                  60

                                
	
                                  SECTION
      9.06.
      Voting

                                	 
      	
                                  61

                                
	
                                  SECTION
      9.07. No Delay of Rights
      by Meeting

                                	 
      	
                                  62

                                
	 
      	 
      	 
      
	
                                  ARTICLE
      10

                                	 
      	 
      
	
                                  Supplemental
      Indentures

                                	 
      	 
      
	 
      	 
      	 
      
	
                                  SECTION
      10.01. Supplemental
      Indentures without Consent of Noteholders

                                	 
      	
                                  62

                                
	
                                  SECTION
      10.02. Supplemental
      Indentures with Consent of Noteholders

                                	 
      	
                                  64

                                
	
                                  SECTION
      10.03. Effect of
      Supplemental Indentures

                                	 
      	
                                  65

                                
	
                                  SECTION
      10.04. Notation on
      Notes

                                	 
      	
                                  65

                                
	
                                  SECTION
      10.05. Evidence of
      Compliance of Supplemental Indenture to Be Furnished to
      Trustee

                                	 
      	
                                  66

                                
	 
      	 
      	 
      
	
                                  ARTICLE
      11

                                	 
      	 
      
	
                                  Consolidation,
      Merger, Sale, Conveyance and Lease

                                	 
      	 
      
	 
      	 
      	 
      
	
                                  SECTION
      11.01. Company May
      Consolidate, Etc. on Certain Terms

                                	 
      	
                                  66

                                
	
                                  SECTION
      11.02. Successor
      Corporation to Be Substituted

                                	 
      	
                                  67

                                
	
                                  SECTION
      11.03.
      Officers’ Certificate and Opinion of Counsel to
      be Given Trustee

                                	 
      	
                                  67

                                
	 
      	 
      	 
      
	
                                  ARTICLE
      12

                                	 
      	 
      
	
                                  Satisfaction
      and Discharge of Indenture

                                	 
      	 
      
	 
      	 
      	 
      
	
                                  SECTION
      12.01. Discharge of
      Indenture

                                	 
      	
                                  68

                                
	
                                  SECTION
      12.02. Deposited Monies
      to Be Held in Trust by Trustee

                                	 
      	
                                  68

                                
	
                                  SECTION
      12.03. Paying Agent
      to Repay Monies
      Held

                                	 
      	
                                  68

                                
	
                                  SECTION
      12.04. Return of
      Unclaimed Monies

                                	 
      	
                                  69

                                
	
                                  SECTION
      12.05.
      Reinstatement

                                	 
      	
                                  69

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      	
                              ARTICLE
      13

                            	 
      	 
      
	
                              Immunity
      of Incorporators, Stockholders, Officers and Directors

                            	 
      	 
      
	 
      	 
      	 
      
	
                              SECTION
      13.01. Indenture and
      Notes Solely
      Corporate Obligations

                            	 
      	
                              69

                            
	 
      	 
      	 
      
	
                              ARTICLE
      14

                            	 
      	 
      
	
                              Conversion
      of Notes

                            	 
      	 
      
	 
      	 
      	 
      
	
                              SECTION
      14.01. Conversion
      Privilege

                            	 
      	
                              70

                            
	
                              SECTION
      14.02.
      [Reserved]

                            	 
      	
                              72

                            
	
                              SECTION
      14.03. Conversion
      Procedure

                            	 
      	
                              72

                            
	
                              SECTION
      14.04. Adjustment of
      Conversion Rate

                            	 
      	
                              75

                            
	
                              SECTION
      14.05. Shares to Be
      Fully Paid

                            	 
      	
                              85

                            
	
                              SECTION
      14.06. Effect of
      Reclassification, Consolidation, Merger or Sale

                            	 
      	
                              85

                            
	
                              SECTION
      14.07. Certain
      Covenants

                            	 
      	
                              87

                            
	
                              SECTION
      14.08. Responsibility of
      Trustee

                            	 
      	
                              87

                            
	
                              SECTION
      14.09. Notice to Holders
      Prior to Certain Actions

                            	 
      	
                              88

                            
	
                              SECTION
      14.10. Share Rights
      Plans

                            	 
      	
                              89

                            
	 
      	 
      	 
      
	
                              ARTICLE
      15

                            	 
      	 
      
	
                              Purchase
      of Notes at Option of Holders

                            	 
      	 
      
	 
      	 
      	 
      
	
                              SECTION
      15.01. Purchase of Notes
      at Option of the Holder

                            	 
      	
                              89

                            
	
                              SECTION
      15.02. Purchase at
      Option of Holders Upon a Fundamental Change

                            	 
      	
                              94

                            
	 
      	 
      	 
      
	
                              ARTICLE
      16

                            	 
      	 
      
	
                              Miscellaneous
      Provisions

                            	 
      	 
      
	 
      	 
      	 
      
	
                              SECTION
      16.01. Provisions
      Binding on Company’s
      Successors

                            	 
      	
                              98

                            
	
                              SECTION
      16.02. Official Acts by
      Successor Corporation

                            	 
      	
                              98

                            
	
                              SECTION
      16.03. Addresses for
      Notices, Etc

                            	 
      	
                              99

                            
	
                              SECTION
      16.04. Governing
      Law

                            	 
      	
                              100

                            
	
                              SECTION
      16.05. Submission to Jurisdiction;
      Waiver of Immunity

                            	 
      	
                              100

                            
	
                              SECTION
      16.06. Evidence of
      Compliance with Conditions Precedent; Certificates and Opinions of Counsel
      to Trustee

                            	 
      	
                              102

                            
	
                              SECTION
      16.07. Legal
      Holidays

                            	 
      	
                              102

                            
	
                              SECTION
      16.08. No Security
      Interest Created

                            	 
      	
                              102

                            
	
                              SECTION
      16.09. Benefits of
      Indenture

                            	 
      	
                              102

                            
	
                              SECTION
      16.10. Table of
      Contents, Headings, Etc

                            	 
      	
                              102

                            
	
                              SECTION
      16.11. Authenticating
      Agent

                            	 
      	
                              103

                            
	
                              SECTION
      16.12. Currency
      Indemnity

                            	 
      	
                              104

                            
	
                              SECTION
      16.13. Execution in
      Counterparts

                            	 
      	
                              104

                            
	
                              SECTION
      16.14.
      [Reserved]

                            	 
      	
                              104

                            
	
                              SECTION
      16.15.
      Calculations

                            	
                                

                            	
                              105

                            

                    

                  

                

              

            

          

        

      

    

    

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        iv

        
          

        

      

      
         

      

    

    INDENTURE
dated as of December 14, 2010 between ShengdaTech, Inc., a Nevada corporation,
as issuer (hereinafter sometimes called the “Company,” as more fully set
forth in Section 1.01), The Bank of New York Mellon, a banking corporation,
as trustee (hereinafter sometimes called the “Trustee”, as more fully set
forth in Section 1.01) and as principal paying agent (hereinafter sometimes
called the “Principal Paying
Agent” as more fully set forth in Section 1.01).

     

    WITNESSETH:

     

    WHEREAS,
for its lawful corporate purposes, the Company has duly authorized the issue of
its 6.5% Senior Convertible Notes due 2015 (hereinafter sometimes called the
“Notes”), initially in
an aggregate principal amount not to exceed US$130,000,000, and in order to
provide the terms and conditions upon which the Notes are to be authenticated,
issued and delivered, the Company has duly authorized the execution and delivery
of this Indenture; and

     

    WHEREAS,
the Notes, the certificate of authentication to be borne by the Notes, a form of
assignment, a form of the Fundamental Change Purchase Notice, a form of the Put
Right Purchase Notice, a form of Conversion Notice and certificate of transfer
to be borne by the Notes are to be substantially in the forms hereinafter
provided for; and

     

    WHEREAS,
all acts and things necessary to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute these presents a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.

     

    NOW,
THEREFORE, THIS INDENTURE WITNESSETH:

     

    That in
order to declare the terms and conditions upon which the Notes are, and are to
be, authenticated, issued and delivered, and in consideration of the premises
and of the purchase and acceptance of the Notes by the holders thereof, the
Company covenants and agrees with the Principal Paying Agent and the Trustee for
the equal and proportionate benefit of the respective holders from time to time
of the Notes (except as otherwise provided below), as follows:

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    ARTICLE 1

    Definitions

     

    SECTION 1.01.
Definitions.

     

    (a)           The
terms defined in this Section 1.01 (except as herein otherwise expressly
provided or unless the context otherwise requires) for all purposes of this
Indenture and of any indenture supplemental hereto shall have the respective
meanings specified in this Section 1.01.  All other terms used in
this Indenture, which are defined in the Trust Indenture Act or which are by
reference therein defined in the Securities Act (except as herein otherwise
expressly provided or unless the context otherwise requires) shall have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this
Indenture.  If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in this Indenture
by any of the provisions of the Trust Indenture Act, such required provision
shall control.  The words “herein,” “hereof,” “hereunder,” and words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other Subdivision.  The terms defined in this
Article Include the plural as well as the singular.

     

    “Additional Shares” shall have
the meaning specified in Section 14.01(b).

     

    “Additional Amounts” shall have
the meaning specified in Section 4.07.

     

    “Additional Interest” shall
have the meaning specified in Section 4.02.

     

    “Adjustment Determination Date”
shall have the meaning specified in Section 14.04(k).

     

    “Adjustment Event” shall have
the meaning specified in Section 14.04(k).

     

    “Affiliate” of any specified
person means any other person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified
person.  For the purposes of this definition, “control,” when used with
respect to any specified person means the power to direct or cause the direction
of the management and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and
“controlled” have
meanings correlative to the foregoing.

     

    “Agent Member” means a member
of, or a participant in, the Depositary.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    “Beneficial Owner” and “Beneficial Ownership” means as
determined in accordance with Rule 13d-3 and 13d-5 under the Exchange
Act.

     

    “Board of Directors” means the
Board of Directors of the Company or a committee of such Board duly authorized
to act for it hereunder.

     

    “Board Resolution” means a copy
of a resolution certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors, or duly authorized
committee thereof (to the extent permitted by applicable law), and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.

     

    “Business Day” means any day,
except a Saturday, Sunday or legal holiday on which banking institutions in The
City of New York or the city in which the Corporate Trust Office is located are
authorized or obligated by law or executive order to close.

     

    “Capital Stock” means, for any
entity, any and all shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated)
stock issued by that entity.

     

    “Change in Control” means
either of the following events:  (a) any person or group, other than
the Company, its Subsidiaries or any employee benefit plan of the Company or its
Subsidiaries, files a Schedule 13D or Schedule TO (or any successor
schedule, form or report) pursuant to the Exchange Act disclosing that such
person or group has become the beneficial owner of the Company’s Capital Stock
with a majority of the total voting power of all of outstanding Capital Stock
that is entitled to vote generally in the election of the Board of Directors
(the “Voting
Securities”), unless such beneficial ownership (i) arises solely as a
result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to the applicable rules and regulations under the
Exchange Act, and (ii) is not also then reportable on Schedule 13D (or any
successor schedule) under the Exchange Act; or (b) the Company consolidates with
or merges with or into another person (other than one of its Subsidiaries), or
sells, conveys, transfers or leases all or substantially all of its properties
and assets to any person (other than one of its Subsidiaries), or any person
(other than one of its Subsidiaries) consolidates with or merges with or into
the Company, and the Company’s outstanding Voting Securities are reclassified
into, converted for or converted into the right to receive any property or
security; provided that
none of these circumstances will be a Change in Control if persons that
beneficially own the Voting Securities immediately prior to the transaction own,
directly or indirectly, a majority of the Voting Securities of the surviving or
transferee person immediately after the transaction in substantially the same
proportion as their ownership of the Voting Securities immediately prior to the
transaction. Notwithstanding the
foregoing, it will not constitute a Change in Control if at least 90% of the
consideration for the Shares (excluding cash payments for fractional shares and
cash payments made in respect of dissenters’ appraisal rights and cash payment
of the required cash payment, if any) in the transaction or transactions
constituting the Change in Control consists of securities traded on a United
States national securities exchange or quoted on the Nasdaq, or which will be so
traded or quoted when issued or exchanged in connection with the Change in
Control, and as a result of such transaction or transactions the Notes become
convertible solely into such securities.  For purposes of this
definition, (1) the terms “person” and “group” have the meanings given by
Sections 13(d) and 14(d) of the Exchange Act or any successor provisions,
(2) the term “group” includes any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act or any successor provision and (c) the term “beneficial
owner” shall be determined in accordance with Rules 13d-3 and 13d-5 under
the Exchange Act or any successor provisions, except that a person will be
deemed to have beneficial ownership of all shares of Capital Stock that person
has the right to acquire irrespective of whether that right is exercisable
immediately or only after the passage of time.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    “close of business” means 5:00
p.m. New York City time.

     

    “Code” means the U.S. Internal
Revenue Code of 1983, as amended.

     

    “Commission” means the
Securities and Exchange Commission.

     

    “Common Stock Price” means the
price paid in the Make-Whole Change in Control per Share, in connection with a
Make-Whole Change in Control, pursuant to which Additional Shares shall be added
to the Conversion Rate as set forth in Section 14.01(b) hereof, which shall
be equal to (i) if holders of Shares receive only cash in such Make-Whole Change
in Control, the cash amount paid per Share, and (ii) in all other cases, the
average of the Last Reported Sale Prices of the Shares over the five consecutive
Trading Day period ending on the Trading Day preceding the Effective Date of the
Make-Whole Change in Control.

     

    “Company” means ShengdaTech,
Inc., a Nevada corporation, and subject to the provisions of Article 11,
shall include its successors and assigns.

     

    “Company Order” means a written
order signed in the name of the Company, signed by any two
Officers.

     

    “Company Put Right Notice”
shall have the meaning specified in Section 15.01(b).

     

    “Company Put Right Notice Date”
shall have the meaning specified in Section 15.01(b).

     

    “Conversion Agent” shall have
the meaning specified in Section 4.03.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    “Conversion Date” shall have
the meaning specified in Section 14.03(c).

     

    “Conversion Notice” shall have
the meaning specified in Section 14.03(c).

     

    “Conversion Obligation” shall
have the meaning specified in Section 14.01(a).

     

    “Conversion Price” means as of
any date US$1,000 divided by the Conversion Rate as of such date.

     

    “Conversion Rate” shall have
the meaning specified in Section 14.01(a).

     

    “Corporate Trust Office” or
other similar term means the principal corporate trust office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office is, at the date as of which this Indenture is dated,
located at 101 Barclay Street, Floor 4 East, New York, NY 10286, United States
of America, Attention: Global Corporate Trust, Facsimile: +1 212 815 5366, which
may be acting through The Bank of New York Mellon, Level 12, Three Pacific
Place, 1 Queen's Road East, Hong Kong or such other address as the Trustee may
designate from time to time by notice to the Holders and the Company, or the
principal corporate trust officer of any successor Trustee (or such other
address as such successor Trustee may designate from time to time by notice to
the Holders and the Company).

     

    “Custodian” means The Bank of
New York Mellon, as custodian for The Depository Trust Company, with respect to
the Notes in global form, or any successor entity thereto.

     

    “Default” means any event that
is, or after notice or passage of time, or both, would be, an Event of
Default.

     

    “Defaulted Interest” shall have
the meaning specified in Section 4.01.

     

    “Definitive Notes” shall have
the meaning specified in Section 2.06(e).

     

    “Depositary” means, with
respect to the Notes issuable or issued in whole or in part in global form, the
person specified in Section 2.06(e) as the Depositary with respect to such
Notes, until a successor shall have been appointed and become such pursuant to
the applicable provisions of this Indenture, and thereafter, “Depositary” shall mean or
include such successor.

     

    “Distributed Property” shall
have the meaning specified in Section 14.04(c).

     

    “DTC” means The Depository
Trust Company and its successors.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    “Effective Date” shall have the
meaning specified in Section 14.01(b).

     

    “Event of Default” means, with
respect to the Notes, any event specified in Section 6.01.

     

    “Ex-Dividend Date” means, with
respect to any issuance or distribution on the Shares or any other equity
security, the first date on which the Shares or such other equity security trade
on the applicable exchange or in the applicable market, regular way, without the
right to receive such issuance, dividend or distribution.

     

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

     

    “Fundamental Change” shall be
deemed to have occurred upon a Change in Control or a Termination of
Trading.

     

    “Fundamental Change Control
Notice” shall have the meaning specified in
Section 15.02(b).

     

    “Fundamental Change Expiration
Time” shall have the meaning specified in
Section 15.02(b).

     

    “Fundamental Change Purchase
Date” shall have the meaning specified in
Section 15.02(a).

     

    “Fundamental Change Purchase
Notice” shall have the meaning specified in
Section 15.02(a)(i).

     

    “Fundamental Change Purchase
Price” shall have the meaning specified in
Section 15.02(a).

     

    “Global Note” shall have the
meaning specified in Section 2.06(b).

     

    “Indebtedness” means
obligations for money borrowed.

     

    “Indenture” means this
instrument as originally executed or, if amended or supplemented as herein
provided, as so amended or supplemented.

     

    “Initial Purchasers” means
Morgan Stanley & Co. Incorporated, Oppenheimer & Co. Inc., Brean Murray,
Carret & Co., LLC and Global Hunter Securities, LLC.

     

    “interest” on a Note means the
interest on such Note (including any Additional Amounts payable by the Company
in respect of such interest).

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    “Interest Payment Date” means
June 15 and December 15 of each year, beginning on June 15,
2011.

     

    “Last Reported Sale Price”
means, with respect to the Shares or any other securities for which a Last
Reported Sale Price must be determined, on any date, the closing sale price per
Share or unit of such other securities (or, if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) on such date as
reported on the Nasdaq or other principal U.S. securities exchange on which the
Shares or such other securities are traded.  If the Shares or such
other securities are not listed for trading on a United States national or
regional securities exchange and not reported by the Nasdaq on the relevant
date, the Last Reported Sale Price of the Shares or such other securities shall
be the last quoted bid price per Share or such other securities are in the
over-the-counter market on the relevant date, as reported by the National
Quotation Bureau or similar organization.  If the Shares or such other
securities are not quoted, the Last Reported Sale Price of the Shares or such
other securities shall be the average of the mid-point of the last bid and asked
prices for the Shares or such other securities on the relevant date from each of
at least three U.S. nationally recognized independent investment banking firms
selected from time to time by the Board of Directors for that
purpose.  The Last Reported Sale Price shall be determined without
reference to extended or after hours trading.

     

    “Make-Whole Change in Control”
means either of (a) any person or group, other than the Company, its
Subsidiaries or any employee benefit plan of Company or its Subsidiaries, files
a Schedule 13D or Schedule TO (or any successor schedule, form or report)
pursuant to the Exchange Act disclosing that such person or group has become the
beneficial owner of the Company’s Capital Stock with a majority of the total
voting power of all of the Company’s outstanding Voting Securities, unless such
beneficial ownership (i) arises solely as a result of a revocable proxy
delivered in response to a proxy or consent solicitation made pursuant to the
applicable rules and regulations under the Exchange Act, and (ii) is not also
then reportable on Schedule 13D (or any successor schedule) under the
Exchange Act or (b) the Company consolidates with or merges with or into another
person (other than one of its Subsidiaries), or sells, conveys, transfers or
leases all or substantially all of its properties and assets to any person
(other than one of its Subsidiaries), or any person (other than one of its
Subsidiaries) consolidates with or merges with or into the Company, and the
Company’s outstanding Voting Securities are reclassified into, converted for or
converted into the right to receive any property or security. Notwithstanding
the foregoing, it will not constitute a Make-Whole Change in Control if at least
90% of the consideration for the Company’s Shares (excluding cash payments for
fractional shares and cash payments made in respect of dissenters’ appraisal
rights and cash payment of the required cash payment, if any) in the transaction
or transactions constituting the Make-Whole Change in Control consists of
securities traded or quoted on a United States national securities exchange, or
which will be so traded when issued or exchanged in connection with the
Make-Whole Change in Control, and as a result of such transaction or
transactions the Notes become convertible solely into such securities. For
purposes of this definition, (1) the terms “person” and “group” have the
meanings given by Sections 13(d) and 14(d) of the Exchange Act or any
successor provisions, (2) the term “group” includes any group acting for the
purpose of acquiring, holding or disposing of securities within the meaning of
Rule 13d-5(b)(1) under the Exchange Act or any successor provision and (c)
the term “beneficial owner” shall be determined in accordance with
Rules 13d-3 and 13d-5 under the Exchange Act or any successor provisions,
except that a person will be deemed to have beneficial ownership of all shares
of Capital Stock that person has the right to acquire irrespective of whether
that right is exercisable immediately or only after the passage of
time.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    “Market Disruption Event” means
the occurrence or existence for more than a one-half hour period in the
aggregate on any Trading Day for the Shares of any suspension or limitation
imposed on trading (by reason of movements in price exceeding limits permitted
by the stock exchange or otherwise) in the Shares or in any options, contracts
or future contracts relating solely to the Shares, and such suspension or
limitation occurs or exists at any time before 1:00 p.m. (New York City time) on
such day.

     

    “Maturity Date” means December
15, 2015.

     

    “Merger Event” shall have the
meaning specified in Section 14.06.

     

    “Nasdaq” means the Nasdaq
Global Select Market.

     

    “Note” or “Notes” means any note or
notes, as the case may be, authenticated and delivered under this
Indenture.

     

    “Noteholder” or “holder,” as applied to any
Note, or other similar terms (but excluding the term “beneficial holder”), means
any person in whose name at the time a particular Note is registered on the Note
Register.

     

    “Note Register” shall have the
meaning specified in Section 2.06(a).

     

    “Note Registrar” shall have the
meaning specified in Section 2.06(a).

     

    “Officer” means the president
or chief executive officer, any vice president, the chief financial officer of
the Company, or any other Person duly appointed by the shareholders of the
Company, or the Board of Directors to perform corporate duties.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    “Officers’ Certificate,” when
used with respect to the Company, means a certificate signed by any two Officers
of the Company and delivered to the Trustee.

     

    “Offering Memorandum” means the
final offering memorandum dated December 9, 2010 relating to the offering by the
Company of the Notes.

     

    “Opinion of Counsel” means an
opinion in writing signed by legal counsel, who may be an employee of or counsel
to the Company, or other counsel, which opinion shall be reasonably acceptable
to the Trustee, which is delivered to the Trustee.  Each such opinion
shall include the statements provided for in Section 16.06 if and to the
extent required by the provisions of such Section.

     

    “outstanding,” when used with
reference to Notes, shall, subject to the provisions of Section 8.04, mean,
as of any particular time, all Notes authenticated and delivered by the Trustee
under this Indenture, except:

     

    (i)           Notes
theretofore cancelled by the Trustee or accepted by the Trustee for
cancellation;

     

    (ii)          Notes,
or portions thereof, for the payment or repurchase of which monies in the
necessary amount shall have been deposited in trust with the Trustee or with any
Paying Agent (other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent);

     

    (iii)         Notes
in lieu of which, or in substitution for which, other Notes shall have been
authenticated and delivered pursuant to the terms of Section 2.08 unless
proof satisfactory to the Trustee is presented that any such Notes are held by
protected purchasers in due course; and

     

    (iv)         Notes
converted pursuant to Article 14.

     

    “Paying Agent” shall have the
meaning specified in Section 4.03.

     

    “Permitted Indebtedness” shall
have the meaning specified in Section 4.11.

     

    “Person” means an individual, a
corporation, a limited liability company, an association, a partnership, a joint
venture, a joint stock company, a trust, an unincorporated organization or a
government or an agency or a political subdivision thereof.

     

    “PRC” means the People’s
Republic of China.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    “Predecessor Note” of any
particular Note means every previous Note evidencing all or a portion of the
same debt as that evidenced by such particular Note; and, for the purposes of
this definition, any Note authenticated and delivered under Section 2.08 in
lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the lost, destroyed or stolen Note that it replaces.

     

    “Principal Paying Agent” means The Bank
of New York Mellon, and its successors and any corporation resulting from or
surviving any consolidation or merger to which it or its successors may be a
party or such other paying agent as the Company shall appoint.

     

    “Process Agent” shall have the
meaning assigned to it in Section 16.05.

     

    “Purchase Agreement” means that
certain Purchase Agreement, dated December 9, 2010, between the Company and the
Initial Purchasers.

     

    “Put Right Purchase Date” shall
have the meaning assigned to it in Section 15.01(a).

     

    “Put Right Purchase Notice”
shall have the meaning assigned to it in Section 15.01(a)(i).

     

    “Put Right Purchase Price”
shall have the meaning assigned to it in Section 15.01(a).

     

    “QIB” means any “qualified
institutional buyer” (as such term is defined in Rule 144A).

     

    “record date,” with respect to
any Interest Payment Date, shall have the meaning specified in
Section 4.01.

     

    “Reference Property” shall have
the meaning specified in Section 14.06(b).

     

    “Relevant Taxing Jurisdiction”
has the meaning specified in Section 4.07.

     

    “Responsible Officer,” when
used with respect to the Trustee, shall mean any officer within the Corporate
Trust Office, including any managing director, director, vice president,
assistant vice president, assistant secretary, assistant treasurer, trust
officer or any other officer of the Trustee who customarily performs functions
similar to those performed by the Persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    “Restricted Securities” shall
have the meaning specified in Section 2.03.

     

    “Restricted Securities Legend”
shall have the meaning specified in Section 2.03.

     

    “Rule 144” means
Rule 144 under the Securities Act.

     

    “Rule 144A” means
Rule 144A under the Securities Act.

     

    “Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.

     

    “Shares” means shares of the
Company, par value US$0.00001 per share, at the date of this Indenture or shares
of any class or classes resulting from any reclassification or reclassifications
thereof and that have preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Company and that are not subject to redemption by the Company; provided that if at any time
there shall be more than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.

     

    “Spin-Off” shall have the
meaning specified in Section 14.04(c).

     

    “Subsidiary” of the Company
means (i) a corporation a majority of whose Capital Stock with voting
power, under ordinary circumstances, to elect directors is at the time, directly
or indirectly, owned by the Company, by the Company and one or more Subsidiaries
of the Company or by one or more Subsidiaries of the Company or (ii) any
other person (other than a corporation) in which the Company, one or more
Subsidiaries of the Company or the Company and one or more Subsidiaries of the
Company, directly or indirectly, at the date of determination thereof, has
greater than a 50% ownership interest.

     

    “Successor Company” shall have
the meaning specified in Section 11.01(a).

     

    “Termination of Trading” shall
be deemed to have occurred if the Shares, or other securities into which the
Notes are then convertible, are not listed for trading on a U.S. national
securities exchange, except as a result of a merger involving the Company or a
tender offer or exchange offer for the Shares or other securities into which the
Notes are then convertible.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    “Trading Day” means a day
during which (a) trading in the Shares generally occurs, (b) there is no Market
Disruption Event and (c) a Last Reported Sale Price for the Shares (other than a
Last Reported Sale Price referred to in the third sentence of such definition)
is available for such day; provided that if the Shares
are not admitted for trading or quotation on or by any exchange, bureau or other
organization referred to in the definition of Last Reported Sale Price
(excluding the third sentence of that definition), Trading Day shall mean any
Business Day.

     

    “Trigger Event” shall have the
meaning specified in Section 14.04(c).

     

    “Trust Indenture Act” means the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after the date hereof, the
term “Trust Indenture
Act” shall mean, to the extent required by such amendment, the Trust
Indenture Act of 1939, as so amended.

     

    “Trustee” means The Bank of New
York Mellon, a New York banking corporation, and its successors and any
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee at the time serving
as successor trustee hereunder.

     

    “U.S. Dollars” and “US$” each mean the currency of
the United States of America.

     

    “Valuation Period” shall have
the meaning specified in Section 14.04(c).

     

    “Voting Securities” shall have
the meaning specified in the definition of “Change in Control” in this
Section 1.01.

     

    SECTION 1.02.
Incorporation by Reference of
Trust Indenture Act.

     

    This
Indenture is subject to the mandatory provisions of the Trust Indenture Act,
which are incorporated by reference in and made a part of this
Indenture.  The following Trust Indenture Act terms have the following
meanings:

     

    “indenture securities” means
the Notes.

     

    “indenture security holder”
means a holder.

     

    “indenture to be qualified”
means this Indenture.

     

    “indenture trustee” or “institutional trustee” means
the Trustee.

     

    “obligor” on the indenture
securities means the Company and any other obligor on the indenture
securities.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    All other
terms in this Indenture that are defined by the Trust Indenture Act, defined by
it by reference to another statute or defined by Commission rule have the
meanings assigned to them by such definitions.  If any provision
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in this Indenture by the Trust Indenture Act, such
required provision shall control.

     

    ARTICLE 2

    Issue,
Description, Execution, Registration and Exchange of Notes

     

    SECTION 2.01.
Designation and
Amount.  The Notes shall
be designated as the “6.5% Senior Convertible Notes due 2015.”  The
aggregate principal amount of Notes that may be authenticated and delivered
under this Indenture is initially limited to US$130,000,000, subject to
Section 2.12 and except for Notes authenticated and delivered upon
registration or transfer of, or in exchange for, or in lieu of other Notes
pursuant to Section 2.06, Section 2.08, Section 10.04,
Section 14.03, Section 15.01 and Section 15.02
hereof.

     

    SECTION 2.02.
Form of
Notes.  The Notes and
the Trustee’s certificate of authentication to be borne by such Notes shall be
substantially in the form set forth in Exhibit A, with such applicable legends
as are provided for in Section 2.03(a).

     

    Any of
the Notes may have such letters, numbers or other marks of identification and
such notations, legends or endorsements as the officers executing the same may
approve (execution thereof to be conclusive evidence of such approval) and as
are not inconsistent with the provisions of this Indenture, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any securities exchange or automated
quotation system on which the Notes may be listed or designated for issuance, or
to conform to usage or to indicate any special limitations or restrictions to
which any particular Notes are subject.

     

    The Notes
offered and sold pursuant to Rule 144A shall be issued initially in the form of
one or more permanent Global Notes with the applicable legends as provided in
Section 2.03.  Each Global Note shall represent such principal amount
of the outstanding Notes as shall be specified therein and shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be increased or reduced to
reflect purchases, conversions, transfers or exchanges permitted
hereby.  Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Custodian, at the direction of the Company,
in such manner and upon instructions given by the registered holder of such
Notes in accordance with this Indenture.  Payment of principal and
accrued and unpaid interest on the Global Note shall be made to the registered
holder of such Note on the date of payment, unless a record date or other means
of determining holders eligible to receive payment is provided for
herein.

    

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    The terms
and provisions contained in the forms of Note attached as Exhibit A hereto are
incorporated herein and shall constitute, and are hereby expressly made, a part
of this Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.

     

    SECTION 2.03.
Legends.  Each Note issued
hereunder and each Share issued upon conversion of such Note (collectively, the
“Restricted Securities”)
shall, upon issuance, bear the legend set forth in Section 2.03(a) or
2.03(b), as applicable (each a “Restricted Securities
Legend”), and such legend shall not be removed except as provided in
Section 2.03(c).  Each such Restricted Security that bears or is
required to bear the applicable Restricted Securities Legend shall be subject to
the restrictions on transfer set forth in this Section 2.03 (including the
Restricted Securities Legend set forth below), and the holder of each such
Restricted Security, by such holder’s acceptance thereof, shall be deemed to
have agreed to be bound by all such restrictions on transfer.

     

    As used
in Section 2.03, the term “transfer” encompasses any
sale, pledge, transfer or other disposition whatsoever of any Restricted
Security.

     

    (a)           Restricted Securities Legend for the
Notes.  Except as provided in Section 2.03(c), any
certificate evidencing such Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear a Restricted Securities Legend in substantially
the following form:

     

    THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE.  BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
ACQUIRER:

     

    (1)           REPRESENTS
THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL
BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT), AND THAT
IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT,
AND

     

    (2)           AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE
TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN EXCEPT ONLY:

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    (A)           TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, OR

     

    (B)           PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT,
OR

     

    (C)           TO
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR

     

    (D)           TO
AN INSTITUTIONAL ACCREDITED INVESTOR, OR

     

    (E)           PURSUANT
TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.

     

    PRIOR TO
THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(C) or (2)(D) ABOVE, A
DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM
THE TRUSTEE) MUST BE DELIVERED TO THE TRUSTEE.  PRIOR TO THE
REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, THE COMPANY
AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL
OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN
ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.  NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

     

    IN ANY
CASE, THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY ENGAGE IN ANY HEDGING
TRANSACTIONS WITH REGARD TO THE NOTES OR THE SHARES ISSUABLE UPON CONVERSION OF
THE NOTE EXCEPT AS PERMITTED UNDER THE SECURITIES ACT.

     

    (b)           Restricted Securities Legend for the
Shares Issued Upon Conversion of the Notes.  Each Share issued
upon conversion of Notes bearing a Restricted Securities Legend will bear the
following legend:

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.  BY ITS ACQUISITION
HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THERE;
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT; (C) TO A PERSON THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
ANOTHER QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT; (D) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT); OR (E) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT; AND (2) IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY FURNISH
TO THE TRANSFER AGENT AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS MAY BE REQUIRED TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

     

    (c)           Removal of the Restricted Securities
Legends.  The Restricted Securities Legend may be removed from
any Note or any Share issued upon conversion of any Note if there is delivered
to the Company such satisfactory evidence, which may include an opinion of
independent counsel, as may be reasonably required by the Company, that neither
such legend nor the restrictions on transfer set forth therein are required to
ensure that transfers of such Note or Shares issued upon conversion of Notes, as
the case may be, will not violate the registration requirements of the
Securities Act or the qualification requirements under any state securities
laws.  Upon provision of such satisfactory evidence, at the written
direction of the Company, (x) in the case of a Note, the Trustee shall
authenticate and deliver in exchange for such Note another Note or Notes having
an equal aggregate principal amount that does not bear such legend or (y) in the
case of a Share, the Company shall authenticate and deliver in exchange for
Shares bearing such legend, one or more new Shares that do not bear such
legend.  If the Restricted Securities Legend has been removed from a
Note or Share issued upon conversion of any Note as provided above, no other
Note issued in exchange for all or any part of such Note, or no other Share
issued in exchange for such Share, shall bear such legend, unless the Company
has reasonable cause to believe that such other Note is a “restricted security”
(or such Shares are “restricted securities”) within the meaning of Rule 144
and instructs the Trustee in writing to cause a Restricted Securities Legend to
appear thereon.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    Any Note
(or Note issued in exchange or substitution therefor) as to which the conditions
for removal of the Restricted Securities Legend set forth in
Section 2.03(a) as set forth therein have been satisfied may, upon
surrender of such Note for exchange to the Note Registrar in accordance with the
provisions of Section 2.06(a), be exchanged for a new Note or Notes, of
like tenor and aggregate principal amount, which shall not bear the Restricted
Securities Legend required by Section 2.03(a).

     

    Any Share
issued upon conversion of any Note as to which the conditions for removal of the
Restricted Securities Legend set forth in Section 2.03(b) have been
satisfied may, upon surrender of the Share for exchange, be exchanged for a new
Share, which shall not bear the Restricted Securities Legend.

     

    (d)          Global Note
Legend.  Each Global Note shall also bear the following legend
(the “Global Note
Legend”) on the face thereof:

     

    UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     

    TRANSFERS
OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO IN THE
TERMS OF THE NOTE ATTACHED HERETO.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    (e)           Legend for Definitive
Notes.  Definitive Notes, in addition to the legend set forth
in Section 2.03(a), will also bear a legend substantially in the following
form:

     

    THIS
SECURITY WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A GLOBAL
NOTE UNLESS THE HOLDER OF THIS SECURITY, SUBSEQUENT TO SUCH EXCHANGE, WILL HOLD
NO NOTES.

     

    SECTION 2.04.
Date and Denomination of
Notes.  The Notes shall
be issuable initially in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof.  Each Note
shall be dated the date of its authentication and shall bear interest from the
date specified on the face of the form of Note attached as Exhibit A hereto, as
applicable.

     

    SECTION 2.05.
Execution, Authentication and
Delivery of Notes.  The Notes shall
be signed in the name and on behalf of the Company by the manual or facsimile
signature of its Chief Executive Officer together with any of its executive
Officers; or any two of its executive Officers.

     

    At any
time and from time to time after the execution and delivery of this Indenture,
the Company may deliver Notes executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Notes, and the Trustee in accordance with such Company Order
shall authenticate and deliver such Notes, without any further action by the
Company hereunder; provided that the Trustee
shall have the right to decline to authenticate and deliver any such Notes that
the Trustee in good faith determines that such authentication or delivery may
not lawfully be taken.

     

    Only such
Notes as shall bear thereon a certificate of authentication substantially in the
form set forth on the form of Note attached as Exhibit A hereto,
manually executed by the Trustee (or an authenticating agent appointed by the
Trustee as provided by Section 16.11), shall be entitled to the benefits of
this Indenture or be valid or obligatory for any purpose.  Such
certificate by the Trustee (or such an authenticating agent) upon any Note
executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.

     

    In case
any officer of the Company who shall have signed any of the Notes shall cease to
be such officer before the Notes so signed shall have been authenticated and
delivered by the Trustee, or disposed of by the Company, such Notes nevertheless
may be authenticated and delivered or disposed of as though the person who
signed such Notes had not ceased to be such officer of the Company; and any Note
may be signed on behalf of the Company by such persons as, at the actual date of
the execution of such Note, shall be the proper officers of the Company,
although at the date of the execution of this Indenture any such person was not
such an officer.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    SECTION 2.06.
Exchange and Registration of
Transfer of Notes; Transfer Generally; Depositary.

     

    (a)           The
Company shall cause to be kept at the Corporate Trust Office a register (the
register maintained in such office and in any other office or agency of the
Company designated pursuant to Section 4.03 being herein sometimes
collectively referred to as the “Note Register”) in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Notes and of transfers of Notes.  Such
register shall be in written form or in any form capable of being converted into
written form within a reasonable period of time.  The Trustee is
hereby initially appointed “Note Registrar” for the
purpose of registering Notes and transfers of Notes as herein
provided.  The Company may appoint one or more co-registrars in
accordance with Section 4.03.

     

    Upon
surrender for registration of transfer of any Note to the Note Registrar or any
co-registrar, and satisfaction of the requirements for such transfer set forth
in this Section 2.06, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.

     

    Notes may
be exchanged for other Notes of any authorized denominations and of a like
aggregate principal amount, upon surrender of such Notes to be exchanged at any
such office or agency maintained by the Company pursuant to
Section 4.03.  Whenever any Notes are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Notes which the Noteholder making the exchange is entitled to
receive, bearing registration numbers not contemporaneously
outstanding.

     

    All Notes
presented or surrendered for registration of transfer or for exchange,
repurchase or conversion shall (if so required by the Company, the Trustee, the
Note Registrar or any co-registrar) be duly endorsed, or be accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company and duly executed, by the Noteholder thereof or his attorney-in-fact
duly authorized in writing.

     

    No
service charge shall be charged to the Noteholder for any exchange or
registration of transfer of Notes, but the Company may require payment of a sum
sufficient to cover any tax, assessments or other governmental charges that may
be imposed in connection therewith.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    None of
the Company, the Trustee, the Note Registrar or any co-registrar shall be
required to exchange or register a transfer of (a) any Notes surrendered for
conversion or, if a portion of any Note is surrendered for conversion, such
portion thereof surrendered for conversion or (b) any Notes, or a portion of any
Note, surrendered for repurchase (and not withdrawn) except in accordance with
Article 14 for conversion and Article 15 for repurchase hereof,
respectively.

     

    All Notes
issued upon any registration of transfer or exchange of Notes in accordance with
this Indenture shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture as the Notes
surrendered upon such registration of transfer or exchange.

     

    (b)           So
long as the Notes are eligible for book-entry settlement with the Depositary,
unless otherwise required by law, all Notes shall be represented by one or more
Notes in global form (each, a “Global Note”) registered in
the name of the Depositary or the nominee of the Depositary.  The
transfer and exchange of beneficial interests in a Global Note, which does not
involve the issuance of a Definitive Note, shall be effected through the
Depositary (but not the Trustee or the Custodian) in accordance with this
Indenture (including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefor.

     

    (c)           Any
Global Note shall initially bear (i) the Restricted Securities Legend set forth
in Section 2.03(a) and (ii) the Global Note Legend set forth in
Section 2.03(d), and may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the provisions
of this Indenture as may be required by the Custodian, the Depositary or by the
Financial Industry Regulatory Authority, Inc. to comply with any applicable law
or any regulation thereunder or with the rules and regulations of any securities
exchange or automated quotation system upon which the Notes may be listed or
traded or designated for issuance or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Notes are subject.

     

    (d)           Notwithstanding
any other provisions of this Indenture, a Global Note may not be transferred as
a whole or in part except by the Depositary to a nominee of the Depositary or by
a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary and except (i) as set forth in the second
paragraph of Section 2.06(e) and (ii) transfers of portions thereof in
definitive form may be made upon request of an Agent Member (for itself or on
behalf of a beneficial owner) by written notice given to the Trustee by or on
behalf of the Depositary in accordance with customary procedures of the
Depositary and in compliance with this Section.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    Agent
Members will have no rights under this Indenture with respect to any Global Note
held on their behalf by the Depositary, and the Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner and Holder of such Global Note for all purposes
whatsoever.  Notwithstanding the foregoing, the Depositary or its
nominee may grant proxies and otherwise authorize any Person (including any
Agent Member and any Person that holds a beneficial interest in a Global Note
through an Agent Member) to take any action which a Holder is entitled to take
under this Indenture or the Notes, and nothing herein will impair, as between
the Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a holder of any security.

     

    (e)           The
Depositary shall be a clearing agency registered under the Exchange
Act.  The Company initially appoints The Depository Trust Company to
act as Depositary with respect to each Global Note.  Initially, each
Global Note shall be issued to the Depositary, registered in the name of Cede
& Co., as the nominee of the Depositary, and deposited with the Trustee as
custodian for Cede & Co.

     

    If at any
time the Depositary for a Global Note (i) notifies the Company that it is
unwilling or unable to continue as Depositary for such Note or (ii) ceases to be
registered as a clearing agency under the Exchange Act, the Company may appoint
a successor Depositary with respect to such Note.  If (1) a successor
Depositary for such Global Note is not appointed by the Company within 90 days
after the Company receives such notice or the Depositary ceasing to be a
registered clearing agency; (2) the Company, at its option, notifies the Trustee
in writing that it elects to cause the issuance of Notes in definitive (“Definitive Notes”) form in
exchange for all or any part of the Notes represented by a Global Note, subject
to the procedures of the Depositary; or (3) an Event of Default has occurred and
is continuing and the Trustee has received a written request from the Depositary
for the issuance of Definitive Notes in exchange for a Global Note, the Company
will execute, and the Trustee, upon receipt of an Officers’ Certificate for the
authentication and delivery of Notes, will authenticate and deliver Definitive
Notes in an aggregate principal amount equal to the principal amount of such
Global Note, in exchange for such Global Note, and upon delivery of the Global
Note to the Trustee such Global Note shall be canceled.

     

    Definitive
Notes issued in exchange for all or a part of the Global Note pursuant to this
Section 2.06 shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee in
writing.  Upon execution and authentication, the Trustee shall deliver
such Definitive Notes to the persons in whose names such Definitive Notes are so
registered.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    At such
time as all interests in a Global Note have been converted, canceled,
repurchased or transferred, such Global Note shall be, upon receipt thereof,
canceled by the Trustee in accordance with standing procedures and instructions
existing between the Depositary and the Custodian.  At any time prior
to such cancellation, if any interest in a Global Note is exchanged for
Definitive Notes, converted, canceled, repurchased or transferred to a
transferee who receives Definitive Notes therefor or any Definitive Note is
exchanged or transferred for part of such Global Note, the principal amount of
such Global Note shall, in accordance with the standing procedures and
instructions existing between the Depositary and the Custodian, be appropriately
reduced or increased, as the case may be, and an endorsement shall be made on
such Global Note, by the Trustee or the Custodian, at the direction of the
Trustee, to reflect such reduction or increase.

     

    SECTION 2.07.
Special Transfer
Provisions.  Unless a Note is
no longer a Restricted Security, the following provisions shall apply to any
sale, pledge or other transfer of such Notes:

     

    (a)           Transfer of Notes to a
QIB.  The following provisions shall apply with respect to the
registration of any proposed transfer of Notes to a QIB:

     

    (i)           If
the Notes to be transferred consist of a beneficial interest in the Global
Notes, the transfer of such interest may be effected only through the book-entry
systems maintained by DTC.

     

    (ii)          If
the Notes to be transferred consist of Definitive Notes, the Note Registrar
shall register the transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form of Note stating (or
has otherwise advised the Company and the Registrar in writing) that the sale
has been made in compliance with the provisions of Rule 144A to a
transferee who has signed a certification stating or has otherwise advised the
Company and the Note Registrar in writing that:

     

    (A)           it
is purchasing the Notes for its own account or an account with respect to which
it exercises sole investment discretion;

     

    (B)           it
and any such account is a QIB within the meaning of Rule 144A;

     

    (C)           it
is aware that the sale to it is being made in reliance on
Rule 144A;

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    (D)           it
acknowledges that it has received such information regarding the Company as it
has requested pursuant to Rule 144A or has determined not to request such
information; and

     

    (E)           it
is aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by
Rule 144A.

     

    (b)           [Reserved]

     

    (c)           General.  By its
acceptance of any Note bearing the Restricted Securities Legend, each holder of
such Note acknowledges the restrictions on transfer of such Note set forth in
this Indenture and agrees that it will transfer such Note only as provided in
this Indenture.  The Note Registrar shall not register a transfer of
any Note unless such transfer complies with the restrictions on transfer of such
Note set forth in this Indenture.  The Note Registrar shall be
entitled to receive and rely on written instructions from the Company verifying
that such transfer complies with such restrictions on transfer.  In
connection with any transfer of Notes, each holder agrees by its acceptance of
the Notes to furnish the Note Registrar or the Company such certifications,
legal opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act;
provided that the Note
Registrar shall not be required to determine (but may rely on a determination
made by the Company with respect to) the sufficiency of any such certifications,
legal opinions or other information.

     

    The Note
Registrar shall retain copies of all certifications, letters, notices and other
written communications received pursuant to Section 4.01 hereof or this
Section 2.07.  The Company shall have the right to inspect and
make copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable written notice to the Note
Registrar.

     

    SECTION 2.08.
Mutilated, Destroyed, Lost or
Stolen Notes. In case any Note shall
become mutilated or be destroyed, lost or stolen, the Company in its discretion
may execute, and upon its written request the Trustee or an authenticating agent
appointed by the Trustee shall authenticate and deliver, a new Note, bearing a
number not contemporaneously outstanding, in exchange and substitution for the
mutilated Note, or in lieu of and in substitution for the Note so destroyed,
lost or stolen.  In every case the applicant for a substituted Note
shall furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as may be required by them to
save each of them harmless from any loss, liability, cost or expense caused by
or connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership
thereof.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    The
Trustee or such authenticating agent may authenticate any such substituted Note
and deliver the same upon the receipt of such security or indemnity as the
Trustee, the Company and, if applicable, such authenticating agent may
require.  Upon the issuance of any substituted Note, the Company may
require the payment by the holder of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in relation thereto
and any other expenses (including the fees and expenses of the Trustee)
connected therewith.  In case any Note which has matured or is about
to mature or has been tendered for purchase upon a Fundamental Change or is
about to be converted into Shares shall become mutilated or be destroyed, lost
or stolen, the Company may, in its sole discretion, instead of issuing a
substitute Note, convert or authorize the conversion of the same (without
surrender thereof except in the case of a mutilated Note), as the case may be,
if the applicant for such conversion shall furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in every case of destruction, loss or theft, evidence satisfactory to the
Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent
evidence of their satisfaction of the destruction, loss or theft of such Note
and of the ownership thereof.

     

    Every
substitute Note issued pursuant to the provisions of this Section 2.08 by
virtue of the fact that any Note is destroyed, lost or stolen shall constitute
an additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Note shall be found at any time, and shall be entitled
to all the benefits of (but shall be subject to all the limitations set forth
in) this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.  To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement, conversion or repurchase of
mutilated, destroyed, lost or stolen Notes and shall preclude any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement, conversion or
repurchase of negotiable instruments or other securities without their
surrender.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    SECTION 2.09.
Temporary
Notes.  Pending the
preparation of Notes in certificated form, the Company may execute and the
Trustee or an authenticating agent appointed by the Trustee shall, upon written
request of the Company, authenticate and deliver temporary Notes (printed or
lithographed).  Temporary Notes shall be issuable in any authorized
denomination, and substantially in the form of the Notes in certificated form
but with such omissions, insertions and variations as may be appropriate for
temporary Notes, all as may be determined by the Company.  Every such
temporary Note shall be executed by the Company and authenticated by the Trustee
or such authenticating agent upon the same conditions and in substantially the
same manner, and with the same effect, as the Notes in certificated
form.  Without unreasonable delay the Company will execute and deliver
to the Trustee or such authenticating agent Notes in certificated
form (other than in the case of Notes in global form) and thereupon any or
all temporary Notes (other than any Global Note) may be surrendered in exchange
therefor, at each office or agency maintained by the Company pursuant to
Section 4.03 and the Trustee or such authenticating agent shall
authenticate and deliver in exchange for such temporary Notes an equal aggregate
principal amount of Notes in certificated form.  Such exchange shall
be made by the Company at its own expense and without any charge
therefor.  Until so exchanged, such temporary Notes shall in all
respects be entitled to the same benefits and subject to the same limitations
under this Indenture as Notes in certificated form authenticated and delivered
hereunder.

     

    SECTION 2.10.
Cancellation of Notes Paid,
Etc.  All Notes
surrendered for the purpose of payment, repurchase, conversion, exchange or
registration of transfer, shall, if surrendered to the Company or any Paying
Agent or any Note Registrar or any Conversion Agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture.  The
Trustee shall destroy canceled Notes in accordance with its customary procedures
and, after such destruction, shall deliver a certificate of such destruction to
the Company, at the Company’s written request.  If the Company shall
acquire any of the Notes, such acquisition shall not operate as satisfaction of
the indebtedness represented by such Notes unless and until the same are
delivered to the Trustee for cancellation.

     

    SECTION 2.11.
CUSIP
Numbers.  The Company in
issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if
so, the Trustee shall use “CUSIP” numbers in Company Notices as a convenience to
holders of the Notes; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or Company Notice and that reliance may be placed
only on the other identification numbers printed by the Company on the
Notes.  The Company will promptly notify the Trustee or Paying Agent
in writing of any change in the “CUSIP” numbers.

     

    SECTION 2.12.
Additional Notes;
Repurchases.  Subject to
Section 4.11, the Company may, without the consent of the Noteholders and
notwithstanding Section 2.01, reopen this Indenture and issue additional
Notes hereunder with the same terms and with the same CUSIP number as the Notes
initially issued hereunder in an unlimited aggregate principal amount, which
will form the same series with the Notes initially issued hereunder; provided that no such
additional Notes may be issued by the Company unless the Company has determined
that they are fungible with the Notes initially issued hereunder for U.S.
federal income tax purposes.  The Company may also from time to time
repurchase the Notes in open market purchases or negotiated transactions without
prior notice to Noteholders.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    ARTICLE 3

    [Reserved]

     

    ARTICLE 4

    Particular
Covenants of the Company

     

    SECTION 4.01.
Payment of Principal, Premium
and Interest.  The Company
covenants and agrees that it will cause to be paid the principal of, premium, if
any, and accrued and unpaid interest (including Additional Interest, if any) on
each of the Notes and if applicable, the Conversion Obligation and Additional
Shares, at the places, at the respective times and in the manner provided herein
and in the Notes.  The payment of the principal of, premium, if any,
and accrued and unpaid interest on each of the Notes will be exclusively in such
coin or currency of the United States as at the time of payment will be legal
tender for the payment of public and private debts.  The Company
shall, through the Principal Paying Agent, pay the principal of the Notes at the
office or agency designated by the Company in the Borough of Manhattan, the City
of New York.  Each installment of accrued and unpaid interest on the
Notes due on any Interest Payment Date may be paid by mailing checks for the
amount payable to or upon the written order of the Noteholders entitled thereto
as they shall appear on the registry books of the Company; provided that with respect to
any Noteholder with an aggregate principal amount in excess of US$5,000,000, at
the application of such holder in writing to the Note Registrar not later than
the relevant record date, any accrued and unpaid interest on such holder’s Notes
shall be paid by wire transfer in immediately available funds to such holder’s
account in the United States supplied by such holder from time to time to the
Trustee and Paying Agent (if different from Trustee); provided further that
payments in respect of the Global Note shall be paid by wire transfer in
immediately available funds to the accounts specified by the Depository in
accordance with such wire transfer instructions and other procedures provided by
the Depositary from time to time.

     

    Interest
on the Notes shall be computed on the basis of a 360-day year comprised of
twelve 30-day months.

     

    The
person in whose name any Note (or its Predecessor Note) is registered on the
Note Register at the close of business on any record date with respect to any
Interest Payment Date shall be entitled to receive the interest payable on such
Interest Payment Date.  The term “record date” with respect to
any Interest Payment Date shall mean the June 1 or December 1 preceding the
applicable June 15 or December 15 Interest Payment Date,
respectively.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    Any
interest on any Note which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall
forthwith cease to be payable to the Noteholder on the relevant record date by
virtue of his having been such Noteholder, and the Company shall make a payment
of such Defaulted Interest to the relevant Noteholder as determined through
clause (a) or clause (b) below, the choice of which clause to so utilize being
the Company’s:

     

    (a)           The
Company may elect to make payment of any Defaulted Interest to the persons in
whose names the Notes (or their respective Predecessor Notes) are registered at
the close of business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner.  The Company
shall notify the Trustee and the Principal Paying Agent in writing of the amount
of Defaulted Interest proposed to be paid on each Note and the date of the
proposed payment (which shall be not less than 25 days after the receipt by the
Trustee and the Principal Paying Agent of such notice, unless the Trustee
consents to an earlier date), and at the same time the Company shall deposit
with the Principal Paying Agent an amount of money equal to the aggregate amount
to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit on or prior to the date of the
proposed payment, such money when deposited to be held in trust for the benefit
of the persons entitled to such Defaulted Interest as in this clause
provided.  Thereupon the Company shall fix a special record date for
the payment of such Defaulted Interest which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment, and not less
than 10 days after the receipt by the Trustee and the Principal Paying Agent of
the notice of the proposed payment.  The Company shall promptly notify
the Trustee and the Principal Paying Agent in writing of such special record
date and the Trustee, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first-class postage prepaid, to each holder at his
address as it appears in the Note Register, not less than 10 days prior to such
special record date.  Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been so mailed, such
Defaulted Interest shall be paid to the persons in whose names the Notes (or
their respective Predecessor Notes) are registered at the close of business on
such special record date and shall no longer be payable pursuant to the
following clause (b) of this Section 4.01.

     

    (b)           The
Company may make payment of any Defaulted Interest in any other lawful manner
not inconsistent with the requirements of any securities exchange or automated
quotation system on which the Notes may be listed or designated for issuance,
and upon such notice as may be required by such exchange or automated quotation
system, if, after notice given by the Company to the Trustee and the Principal
Paying Agent of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee and the Principal Paying
Agent.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    SECTION 4.02.
Additional
Interest.

     

    (a)           If,
at any time during the six-month period beginning on, and including, the date
that is six months after the last date of original issuance of the Notes and
ending on the date that is one year after the last date of the original issuance
of the Notes, the Company either (i) fails to timely file any periodic
report that the Company is required to file with the Commission under
Section 13 or 15(d) of the Exchange Act, as applicable (after giving effect
to all applicable grace periods thereunder and other than reports on Form 8-K),
or (ii) the Notes are not otherwise freely tradable pursuant to
Rule 144 by Holders of the Notes other than the Company’s Affiliates, or
under the terms of this Indenture or the Notes, then in either case (an “Additional Interest Event”),
the Company shall pay additional interest on the Notes (the “Additional Interest”). Such
Additional Interest will accrue on the Notes at the rate of 0.50% per annum of
the principal amount of Notes outstanding for each day during which an
Additional Interest Event has occurred and is continuing.

     

    (b)          Unless:

     

    (i)           the
restrictive legend on the Notes has been removed; or

     

    (ii)          the
Notes are freely tradable pursuant to Rule 144 by Holders other than the
Company’s Affiliates (without restrictions pursuant to U.S. securities law or
the terms of this Indenture or the Notes),

     

    on or
after the one year anniversary after the last date of original issuance of the
Notes, an Additional Interest Event shall be deemed to have occurred and the
Company shall pay Additional Interest on the Notes at an annual rate equal to
0.50% of the aggregate principal amount of the Notes outstanding for each day
until the Notes are freely tradable as described above.

     

    (c)           Notwithstanding
the foregoing, the Company shall not be required to pay Additional Interest on
any date if (i) the Company has filed a shelf registration statement for
the resale of the Notes and any ADSs issued upon conversion of the Notes,
(ii) such shelf registration statement is effective and usable by Holders
of the Notes identified therein as selling securityholders for the resale of the
Notes and any ADSs issued upon conversion of the Notes and (iii) the
Holders may register the resale of their Notes under such shelf registration
statement on terms customary for the resale of convertible securities offered in
reliance on Rule 144A.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    (d)           Under
no circumstances will the combined rate of Additional Interest or Special
Interest exceed 1.00% per annum.

     

    (e)           Additional
Interest shall be payable in arrears on each Interest Payment Date following
accrual in the same manner as regular interest on the Notes.

     

    (f)       
    The Company shall not, and shall not permit any of its
“affiliates” within the meaning of Rule 144, to resell any of the Notes
that constitute “restricted securities” under Rule 144 that have been
reacquired by them.

     

    (g)           The
Company shall provide written notice to the Trustee no later than 5 Business
Days prior to an Interest Payment Date prior to paying any Additional Interest,
..

     

    SECTION 4.03.
Maintenance of Office or
Agency.  The Company will
designate in the Borough of Manhattan, The City of New York, an office or agency
where the Notes may be surrendered for registration of transfer or exchange or
for presentation for payment (through the Principal Paying Agent), or repurchase
(“Paying Agent”) or for
conversion (“Conversion
Agent”) and where notices and demands to or upon the Company in respect
of the Notes and this Indenture may be served.  The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency not designated or appointed by the
Trustee.  If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office or the office or agency of the Trustee in
the Borough of Manhattan, The City of New York.

     

    The
Company may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York, for such purposes.  The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.  The terms Paying
Agent and Conversion Agent include any such additional or other offices or
agencies, as applicable.

     

    The
Company hereby initially designates the Trustee as Principal Paying Agent, Note
Registrar, Custodian and Conversion Agent and the Corporate Trust Office shall
be considered as one such office or agency of the Company for each of the
aforesaid purposes.  So long as the Trustee is the Note Registrar, the
Trustee agrees to mail, or cause to be mailed, the notices set forth in
Section 7.10(a) and the third paragraph of Section 7.11.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    SECTION 4.04.
Appointments to Fill Vacancies
in Trustee’s Office.  The Company,
whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 7.10, a Trustee, so that there
shall at all times be a Trustee hereunder.

     

    SECTION 4.05.
Provisions as to Paying
Agent.

     

    (a)           If
the Company shall appoint a Paying Agent other than the Trustee or the Principal
Paying Agent or if the Trustee shall appoint such a Paying Agent, the Company
will cause such Paying Agent to execute and deliver to the Trustee an instrument
in which such agent shall agree with the Trustee, subject to the provisions of
this Section 4.05:

     

    (i)           that
it will hold all sums held by it as such agent for the payment of the principal
of and premium, if any, and accrued and unpaid interest (including any
Additional Interest, if any) on the Notes (whether such sums have been paid to
it by the Company or by any other obligor on the Notes) in trust for the benefit
of the holders of the Notes;

     

    (ii)          that
it will give the Trustee written notice of any failure by the Company (or by any
other obligor on the Notes) to make any payment of the principal of and premium,
if any, and accrued and unpaid interest (including Additional Interest, if any)
on the Notes when the same shall be due and payable; and

     

    (iii)         that
at any time during the continuance of an Event of Default, upon request of the
Trustee, it will forthwith pay to the Trustee all sums so held in
trust.

     

    The
Company shall, no later than 10 a.m., New York City time, 2 Business Days before
each due date of the principal of, or premium, if any, or accrued and unpaid
interest (including Additional Interest) on the Notes, deposit with the Paying
Agent a sum sufficient to pay such principal, premium, if any, or accrued and
unpaid interest and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee in writing of any failure to take such
action.

     

    (b)           If
the Company shall act as its own Paying Agent, it will, on or before each due
date of the principal of, premium, if any, and accrued and unpaid interest
(including Additional Interest, if any) on the Notes, set aside, segregate and
hold in trust for the benefit of the holders of the Notes a sum sufficient to
pay such principal, premium, if any, and accrued and unpaid interest, so
becoming due and will notify the Trustee in writing of any failure to take such
action and of any failure by the Company (or any other obligor under the Notes)
to make any payment of the principal of, premium, if any, and accrued and unpaid
interest (including Additional Interest, if any) on the Notes when the same
shall become due and payable.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    (c)           Anything
in this Section 4.05 to the contrary notwithstanding, the Company may, at
any time, for the purpose of obtaining a satisfaction and discharge of this
Indenture, or for any other reason, pay or cause to be paid to the Trustee all
sums held in trust by the Company or any Paying Agent hereunder as required by
this Section 4.05, such sums to be held by the Trustee upon the trusts
herein contained and upon such payment by the Company or any Paying Agent to the
Trustee, the Company and such Paying Agent shall be released from all further
liability with respect to such sums.

     

    (d)           Anything
in this Section 4.05 to the contrary notwithstanding, the agreement to hold
sums in trust as provided in this Section 4.05 is subject to
Section 12.03 and Section 12.04.

     

    SECTION 4.06.
Existence.  Subject to
Article 11, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence.

     

    SECTION 4.07.
Payment of Additional
Amounts.

     

    (a)           All
payments made by the Company or any successor to the Company under or with
respect to the Notes including payments of cash or delivery of Shares upon
conversion, will be made without withholding or deduction for, or on account of,
any present or future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied by or within any jurisdiction in which the
Company, or its successors, are organized or resident for tax purposes or
through which payment is made (or any political subdivision or taxing authority
thereof or therein) (each, as applicable, a “Relevant Taxing
Jurisdiction”), unless such withholding or deduction is required by law
or by regulation or governmental policy having the force of law. In the event
that any such withholding or deduction is so required, the Company or any
successor to the Company will pay to the holder of each Note such additional
amounts (“Additional
Amounts”) as may be necessary to ensure that the net amount received by
the holder after such withholding or deduction (and after deducting any taxes on
the Additional Amounts) shall equal the amounts which would have been received
by such holder had no such withholding or deduction been required, except that
no Additional Amount shall be payable:

     

    (i)          
for or on account of:

     

    (A)          any
tax, duty, assessment or other governmental charge that would not have been
imposed but for:

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    (1)           the
existence of any present or former connection between the Noteholder (or between
a fiduciary, settlor, beneficiary, member or partner of, or possessor of a power
over, such Noteholder, if such Noteholder is an estate, trust or partnership) or
beneficial owner of such Note and the Relevant Taxing Jurisdiction other than
merely holding such Note or the receipt of payments thereunder, including,
without limitation, such Noteholder (or such fiduciary, settlor, beneficiary,
member, partner, or possessor) or beneficial owner being or having been a
national, domiciliary or resident of such Relevant Taxing Jurisdiction or
treated as a resident thereof or being or having been physically present or
engaged in a trade or business therein, or having had a permanent establishment
therein or making or having made an election the effect of which is to subject
such Noteholder or beneficial owner (or such fiduciary, settlor, beneficiary,
member, partner, or possessor) to such tax, assessment or other governmental
charge;

     

    (2)           the
presentation of such Note (in cases in which presentation is required) more than
30 days after the later of the date on which the payment of the principal of,
premium, if any, and interest (including Additional Interest, if any) on, such
Note became due and payable pursuant to the terms thereof or was made or duly
provided for; or

     

    (3)           the
failure of the Noteholder or beneficial owner of such Note to comply with any
requirement (including any certification, identification or information
reporting requirements) under income tax treaties, statutes and regulations or
administrative practice of the Relevant Taxing Jurisdiction to establish
entitlement to exemption from or reduction of such tax, assessment or other
governmental charge; provided, however, that, in the case of
any taxes imposed by a jurisdiction other than the United States, the Company
has given a timely request for such requirement; or

     

    (4)           such
Noteholder’s present or former status as a personal holding company with respect
to the United States, or a controlled foreign corporation for United States tax
purposes or a corporation which accumulates earnings to avoid United States
federal income tax;

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    (B)           any
estate, inheritance, gift, sale, transfer, capital gains, excise, personal
property or similar tax, assessment or other governmental charge;

     

    (C)           any
tax, duty, assessment or other governmental charge that is payable otherwise
than by withholding from payments under or with respect to the
Notes;

     

    (D)           any
tax, duty, assessment or other governmental charge imposed by the United States
on interest received as a result of: (1) a person’s actual or constructive
ownership of 10 percent or more of the total combined voting power of all
classes of the Company’s stock entitled to vote; (2) such Noteholder being a
bank receiving interest described in section 881(c)(3)(A) of the Code; or (3)
such Noteholder being a “controlled foreign corporation” that is related to the
Company by stock ownership described in section 881(c)(3)(C) of the Code;
or

     

    (E)           any
combination of taxes, duties, assessments or other governmental charges referred
to in the preceding clauses (A), (B), (C) or (D); or

     

    (ii)         with
respect to any payment of the principal of, or premium, if any, or interest
(including Additional Interest, if any) on, such Note to a Noteholder, if the
Noteholder is a fiduciary, partnership or person other than the sole beneficial
owner of that payment to the extent that such payment would be required to be
included in the income under the laws of the Relevant Taxing Jurisdiction, for
tax purposes, of a beneficiary or settlor with respect to the fiduciary, a
member of that partnership or a beneficial owner who would not have been
entitled to such Additional Amounts had that beneficiary, settlor, partner or
beneficial owner been the Noteholder thereof.

     

    (b)           The
Notes are subject in all cases to any tax, fiscal or other law or regulation or
administrative or judicial interpretation.  Except as specifically
provided above or otherwise herein, the Company shall not be required to make a
payment with respect to any tax, assessment or governmental charge imposed by
any government or a political subdivision or taxing authority thereof or
therein.

     

    (c)           In
the event that Additional Amounts actually paid with respect to the Notes are
based on rates of deduction or withholding of withholding taxes in excess of the
appropriate rate applicable to the holder of such Notes, and, as a result
thereof such holder is entitled to make claim for a refund or credit of such
excess from the authority imposing such withholding tax, then such holder shall,
by accepting such Notes, be deemed to have assigned and transferred all right,
title, and interest to any such claim for a refund or credit of such excess to
the Company.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    (d)           Any
reference in this Indenture or the Notes to principal, interest or any other
amount payable in respect of the Notes by the Company (including conversion into
Shares, if any) will be deemed also to refer to any Additional Amounts, unless
the context requires otherwise, that may be payable with respect to that amount
under the obligations referred to in this Section.

     

    For the
avoidance of doubt, Additional Amounts shall not be payable in connection with
dividends on the Shares following a Conversion or any constructive
dividends.

     

    (e)           The
foregoing obligation will survive termination or discharge of the
Indenture.

     

    SECTION 4.08.
Stay, Extension and Usury
Laws.  The Company
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the principal
of or interest (including Additional Interest, if any) on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this
Indenture.  The Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been
enacted.

     

    SECTION 4.09.
Compliance Certificate;
Statements as to Defaults.  The Company
shall deliver to the Trustee within 120 days after the end of each fiscal
year of the Company (beginning with the fiscal year ending on December 31,
2010) an Officers’ Certificate stating whether or not the signer thereof has
knowledge of any failure by the Company to comply with all conditions and
covenants then required to be performed under this Indenture and, if so,
specifying each such failure and the nature thereof.

     

    In
addition, the Company shall deliver to the Trustee, as soon as possible and in
any event within 30 days after the Company becomes aware of the occurrence
of any Event of Default or Default, an Officers’ Certificate setting forth the
details of such Event of Default or Default, its status and the action which the
Company proposes to take with respect thereto.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    SECTION 4.10.
Further Instruments and
Acts.  Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.

     

    SECTION 4.11.
Limitation on Incurrence of
Indebtedness.

     

    (a)           The
Company shall not, and it shall not permit any of its Subsidiaries to, incur,
directly or indirectly, any Indebtedness; provided, however, that the Company may
incur additional unsecured Indebtedness (the “Permitted Indebtedness”) which
ranks equal in right of payment to the Notes in an amount (together with the
amount of all such indebtedness incurred since May 28, 2008) not to exceed
US$15,000,000; provided
further that such Permitted Indebtedness does not require any repayment
prior to December 15, 2013 at the time of such incurrence;

     

    (b)           The
Company shall be permitted to issue equity securities, including common stock
and preferred stock, and any securities which rank junior in right of payment to
the Notes; provided
that in the case of preferred stock, such preferred stock shall not be
redeemable or otherwise repayable prior to the Maturity Date so long as 25% or
more of the initial aggregate principal amount of Notes authenticated and
delivered under the Indenture (including any Notes authenticated and delivered
under the Indenture pursuant to the Initial Purchaser exercise of their option
to purchase additional Notes in full as set forth in the Purchase Agreement) is
outstanding; and

     

    (c)           The
limitation set forth in this Section 4.11 shall cease to be in effect at
such point when the aggregate principal amount of Notes outstanding is less
than 25% of the initial aggregate principal amount of Notes authenticated and
delivered under the Indenture.

     

    ARTICLE 5

    Lists
of Noteholders and Reports by the Company and the Trustee

     

    SECTION 5.01.
Lists of
Noteholders.  The Company
covenants and agrees that it will furnish or cause to be furnished to the
Trustee, semi-annually, not more than 15 days after each May 15 and November 15
in each year beginning with May 15, 2011, and at such other times as the Trustee
may request in writing, within 30 days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may require of the names and addresses of the
Noteholders as of a date not more than 15 days (or such other date as the
Trustee may reasonably request in order to so provide any such notices) prior to
the time such information is furnished, except that no such list need be
furnished so long as the Trustee is acting as Note Registrar.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    SECTION 5.02.
Preservation and Disclosure of
Lists.

     

    (a)           The
Trustee shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the Noteholders contained in the
most recent list furnished to it as provided in Section 5.01 or maintained
by the Trustee in its capacity as Note Registrar, if so acting.  The
Trustee may destroy any list furnished to it as provided in Section 5.01
upon receipt of a new list so furnished.

     

    (b)           The
rights of Noteholders to communicate with other Noteholders with respect to
their rights under this Indenture or under the Notes and the corresponding
rights and duties of the Trustee, shall be as provided by the Trust Indenture
Act.

     

    (c)           Every
Noteholder, by receiving and holding the same, agrees with the Company and the
Trustee that neither the Company nor the Trustee nor any agent of either of them
shall be held accountable by reason of any disclosure of information as to names
and addresses of Noteholders made pursuant to the Trust Indenture
Act.

     

    SECTION 5.03.
Reports by
Trustee.

     

    (a)           The
Trustee shall transmit to Noteholders such reports dated as of May 15 of each
year in which such reports are made concerning the Trustee and its actions under
this Indenture as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant thereto.  Reports so
required to be transmitted at stated intervals of not more than 12 months shall
be transmitted no later than August 1 in each calendar year, beginning with the
year 2011 and for so long as the Notes remain outstanding.  Each such
report shall be dated as of a date not more than 60 days prior to the date of
transmission.

     

    (b)           A
copy of such report shall, at the time of such transmission to Noteholders, be
filed by the Trustee with each stock exchange and automated quotation system
upon which the Notes are listed, with the Commission and with the
Company.  The Company will notify the Trustee in writing within a
reasonable time when the Notes are listed on any stock exchange or automated
quotation system and when any such listing is discontinued.

     

    SECTION 5.04.
Reports by
Company.

     

    (a)           The
Company shall file with the Trustee and the Commission, and transmit to
Noteholders, such information, documents and other reports and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is filed with the Commission.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    (b)           In
the event and for so long as the Company is not subject to Section 13 or
15(d) of the Exchange Act, it shall file with the Trustee and cause to be mailed
to each holder at such holder’s registered address, upon the request of any
holder or beneficial holder of the Notes or the Shares issued upon conversion
thereof, and make available to such holder or beneficial holder of such Notes or
Shares in connection with any sale thereof and any prospective purchaser of
Notes or Shares designated by such holder or beneficial holder, the information
required pursuant to Rule 144A(d)(4) under the Securities Act and it will
take such further action as any holder or beneficial holder of such Notes or
Shares may reasonably request, all to the extent required from time to time to
enable such holder or beneficial holder to sell its Notes or Shares without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144A, as such Rule may be amended from time to
time.

     

    (c)           Delivery
of such reports, information and documents to the Trustee is for informational
purposes only, and the Trustee’s receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company’s compliance with any of
its covenants hereunder (as to which the Trustee is entitled to conclusively
rely exclusively on an Officers’ Certificate).

     

    ARTICLE 6

    Defaults
and Remedies

     

    SECTION 6.01.
Events of
Default.  The following
events shall be Events of Default with respect to the Notes:

     

    (a)           default
in any payment of interest, including any related Additional Amounts, on any
Note when due and payable and the default continues for a period of 30
days;

     

    (b)           default
in the payment of principal of any Note, including any related Additional
Amounts, when due and payable on the Maturity Date, required repurchase,
declaration or otherwise;

     

    (c)           failure
by the Company to comply with its obligations to convert the Notes into Shares
upon exercise of a holder’s conversion right;

     

    (d)           failure
by the Company to issue a Fundamental Change Control Notice in accordance with
Section 15.02;

     

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Inc.

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    (e)           failure
by the Company for 60 days to comply with any of its other agreements (other
than a covenant or warranty or default in whose performance or whose breach is
elsewhere in this Section specifically provided for) contained in the Notes or
this Indenture after written notice of such default from the Trustee or the
holders of at least 25% in aggregate principal amount of the Notes then
outstanding has been received by the Company;

     

    (f)           failure
by the Company or any Subsidiary of the Company to make any payment of the
principal or interest on any mortgage, agreement or other instrument under which
there may be outstanding, or by which there may be secured or evidenced, any
debt for money borrowed in excess of US$10 million in the aggregate of the
Company and/or any such Subsidiary, whether such debt now exists or shall
hereafter be created, resulting in such debt becoming due and payable before the
date on which it would otherwise have become due and payable, if such failure is
not cured or waived, or such acceleration is not rescinded, within 60 days after
notice to the Company by the Trustee or to the Company and the Trustee by the
holders of at least 25% in aggregate principal amount of the Notes then
outstanding, in accordance with this Indenture;

     

    (g)           failure
by the Company or any Subsidiary of the Company, within 60 days, to pay, bond or
otherwise discharge any judgments or orders for the payment of money the total
uninsured amount of which for the Company or any Subsidiary of the Company
exceeds $10 million, which are not stayed on appeal; or

     

    (h)           the
Company or any Subsidiary of the Company, pursuant to, or within the meaning of,
any Bankruptcy Law, insolvency law, or other similar law now or hereafter in
effect or otherwise, either:

     

     (A)        commences
a voluntary case,

     

     (B)         consents
to the entry of an order for relief against it in an involuntary
case,

     

     (C)         consents
to the appointment of a custodian of it or for all or substantially all of its
property, or

     

     (D)         makes
a general assignment for the benefit of its creditors; or

     

     (i)         a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:

     

    (A)         is
for relief against the Company or any Subsidiary of the Company in an
involuntary case or proceeding, or adjudicates the Company or any Subsidiary of
the Company insolvent or bankrupt,

     

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Inc.

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    (B)         appoints
a custodian of the Company or any Subsidiary of the Company for all or
substantially all of the property of the Company or any Subsidiary of the
Company, as the case may be, or

     

    (C)         orders
the winding up or liquidation of the Company or any Subsidiary of the
Company,

     

    and, in
the case of each of the foregoing clauses (A), (B) and (C) of this
clause (i), the order or decree remains unstayed and in effect for at least
90 consecutive days.

     

    (j)           any
event occurs that under the laws of the United States or any political
subdivision thereof or any other country has substantially the same effect as
any of the events referred to in any of clause (h) or (i) (an Event of
Default specified in clause (h), (i) or this clause (i), a “Bankruptcy
Default”).

     

    In this
Section 6.01, the term “Bankruptcy Law” means the bankruptcy laws
of the respective jurisdictions of incorporation of the Company and any
Subsidiary of the Company for the relief of debtors, and the term “custodian” means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy
Law.

     

    In case
one or more Events of Default shall have occurred and be continuing (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), then, and in each and every such case
(other than a Bankruptcy Default with respect to the Company), unless the
principal of all of the Notes shall have already become due and payable, either
the Trustee or the holders of at least 25% in aggregate principal amount of the
Notes then outstanding determined in accordance with Section 8.04, by
notice in writing to the Company (and to the Trustee if given by Noteholders),
may declare 100% of the principal of and premium, if any, and accrued and unpaid
interest, including any Additional Amounts and Additional Interest, if any, on
all the Notes to be due and payable immediately, and upon any such declaration
the same shall become and shall be immediately due and payable, anything in this
Indenture or in the Notes contained to the contrary
notwithstanding.  If a Bankruptcy Default occurs and is continuing
with respect to the Company, the principal of, and premium, if any, and accrued
and unpaid interest, including Additional Amounts and Additional Interest, if
any, on all the Notes shall be immediately due and payable, regardless of any
prior action by any Noteholder or the Trustee.  This provision,
however, is subject to the conditions that if, at any time after the principal
of the Notes shall have been so declared due and payable, and before any
judgment or decree for the payment of the monies due shall have been obtained or
entered as hereinafter provided, the Company shall pay or shall deposit with the
Trustee a sum sufficient to pay installments of accrued and unpaid interest,
including Additional Amounts and Additional Interest, if any, upon all Notes and
the principal of and premium, if any, on any and all Notes that shall have
become due otherwise than by acceleration (with interest on overdue installments
of accrued and unpaid interest (to the extent that payment of such interest is
enforceable under applicable law), including Additional Amounts and Additional
Interest, if any, and on such principal and premium, if any, at the rate borne
by the Notes during the period of such Default) and amounts due to the Trustee
pursuant to Section 7.06, and if (1) rescission would not conflict with any
judgment or decree of a court of competent jurisdiction and (2) any and all
Events of Defaults under this Indenture, other than the nonpayment of principal
of and premium, if any, and accrued and unpaid interest, including Additional
Amounts and Additional Interest, if any, on Notes that shall have become due
solely by such acceleration, shall have been cured or waived pursuant to
Section 6.07, then and in every such case the holders of a majority in
aggregate principal amount of the Notes then outstanding, by written notice to
the Company and to the Trustee, may waive all defaults or Events of Default with
respect to the Notes and rescind and annul such declaration and its consequences
and such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or Event of Default, or shall impair any
right consequent thereon.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    Notwithstanding
the foregoing, the sole remedy for an Event of Default relating to the failure
to comply with the reporting obligations set forth in Section 5.04 hereof
or the failure to comply with the requirements of Section 314(a)(1) of the
Trust Indenture Act, shall for the 180  calendar days after the occurrence
of such an Event of Default consist exclusively of the right to receive special
interest on the Notes at an annual rate equal to 0.50% of the principal amount
of the Notes (“Special
Interest”).  This Special Interest will be payable in the same
manner and on the same dates as the stated interest payable on the
Notes.  The Special Interest will accrue on all outstanding Notes from
and including the date on which an Event of Default relating to a failure to
comply with the reporting obligations herein first occurs to but not including
the 180th calendar day thereafter (or such earlier date on which the Event of
Default shall have been cured or waived).  On such 180th calendar day
(or earlier, if the Event of Default relating to the reporting obligations is
cured or waived prior to such 180th calendar day), such Special Interest will
cease to accrue and, if the Event of Default relating to reporting obligations
has not been cured or waived prior to such 180th calendar day, the Notes shall
be subject to acceleration as provided above if the Event of Default is
continuing.  The provisions described in this paragraph will not
affect the rights of Holders in the event of the occurrence of any other Event
of Default.  For the avoidance of doubt, the Special Interest shall
not begin accruing until the Company fails to perform the reporting obligations
set forth in Section 5.04 hereof or the failure to comply with the requirements
of Section 314(a)(1) of the Trust Indenture Act for a period of 60 calendar
days after written notice of such failure is given by the Company to the Trustee
or to the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of Notes then outstanding.  The Trustee shall be
entitled to assume that the Company is in compliance so long as a Responsible
Officer in the Corporate Trust Office has not received such written notice from
the Company or Noteholders.  The Trustee shall not be liable for any
interest due as a result of the Company’s non-compliance.

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
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    In case
the Trustee shall have proceeded to enforce any right under this Indenture and
such proceedings shall have been discontinued or abandoned because of such
waiver or rescission and annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case the Company,
the Noteholders, and the Trustee shall, subject to any determination in such
proceeding, be restored respectively to their several positions and rights
hereunder, and all rights, remedies and powers of the Company, the Noteholders,
and the Trustee shall continue as though no such proceeding had been
instituted.

     

    SECTION 6.02.
Payments of Notes on Default;
Suit Therefor.  In the event
that the Trustee or the holders of not less than 25% in aggregate principal
amount of the Notes then outstanding hereunder have declared the principal of,
and premium, if any, and accrued and unpaid interest, including Additional
Amounts and Additional Interest, on the Notes, to be due and payable immediately
in accordance with Section 6.01, and the Company shall have failed
forthwith to pay such amounts, the Trustee, in its own name and as trustee of an
express trust, after being furnished indemnity or security to its satisfaction
pursuant to Section 7.01, shall be entitled and empowered to institute any
actions or proceedings at law or in equity for the collection of the sums so due
and unpaid (including such further amounts as shall be sufficient to cover the
costs and expenses of collection, including compensation to the Trustee (which
for purposes of this Section 6.02 shall include its directors, officers,
employees and agents,) and each predecessor Trustee, their respective agents,
attorneys and in-house counsel, and any expenses or liabilities incurred, and
all advances made by the Trustee and each predecessor Trustee hereunder other
than through its gross negligence or bad faith), and may prosecute any such
action or proceeding to judgment or final degree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.

     

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Inc.

    Indenture

    
      
         

      

      
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    In case
there shall be pending proceedings for the bankruptcy or for the reorganization
of the Company or any other obligor on the Notes under Title 11 of the
United States Bankruptcy Code, or any other applicable law, or in case a
receiver, assignee, administrator or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Company or such other obligor, the property of the
Company or such other obligor, or in the case of any other judicial proceedings
relative to the Company or such other obligor upon the Notes, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of the Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Trustee shall have made any demand pursuant to the provisions of this
Section 6.02, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal premium, if any, and accrued and unpaid interest, including
Additional Amounts and Additional Interest, if any, in respect of the Notes,
and, in case of any judicial proceedings, to file such proofs of claim and other
papers or documents and to take such other actions as it may deem necessary or
advisable in order to have the claims of the Trustee (including any claim for
the compensation, expenses, disbursements and advances of the Trustee, and each
predecessor Trustee, and their respective agents, attorneys and in-house counsel
and for all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee) and of the Noteholders allowed in such
judicial proceedings relative to the Company or any other obligor on the Notes,
its or their creditors, or its or their property, and to collect and receive any
monies or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of any amounts due the Trustee under
Section 7.06; and any receiver, assignee, administrator, or trustee in
bankruptcy or reorganization, liquidator, custodian or similar official is
hereby authorized by each of the Noteholders to make such payments to the
Trustee, as administrative expenses, and, in the event that the Trustee shall
consent to the making of such payments directly to the Noteholders, to first pay
to the Trustee any amount due it for compensation, expenses, advances and
disbursements, including agents attorneys and in-house counsel fees, and
including any other amounts due to the Trustee and any predecessor Trustee under
Section 7.06 hereof, incurred by it up to the date of such
distribution.  To the extent that such payment of compensation,
expenses, advances and disbursements out of the estate in any such proceedings
shall be denied for any reason, payment of the same shall be secured by a lien
on, and shall be paid out of, any and all distributions, dividends, monies,
securities and other property which the holders of the Notes may be entitled to
receive in such proceedings, whether in liquidation or under any plan of
reorganization or arrangement or otherwise.

     

    Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Noteholder
or the rights of any Noteholder thereof, or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceeding.

     

    ShengdaTech,
Inc.

    Indenture

    

    
      
         

      

      
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    All
rights of action and of asserting claims under this Indenture, or under any of
the Notes, may be enforced by the Trustee without the possession of any of the
Notes, or the production thereof at any trial or other proceeding relative
thereto, and any such suit or proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the compensation, expenses,
disbursements and advances of the Trustee, and each predecessor Trustee and
their respective agents, attorneys, and in-house counsel, be for the ratable
benefit of the holders of the Notes.

     

    In any
proceedings brought by the Trustee (and in any proceedings involving the
interpretation of any provision of this Indenture to which the Trustee shall be
a party) the Trustee shall be held to represent all the holders of the Notes,
and it shall not be necessary to make any holders of the Notes parties to any
such proceedings.

     

    SECTION 6.03.
Application of Monies
Collected by Trustee.  Any monies
collected by the Trustee pursuant to this Article 6 with respect to the
Notes shall be applied in the order following, at the date or dates fixed by the
Trustee for the distribution of such monies, upon presentation of the several
Notes, and stamping thereon the payment, if only partially paid, and upon
surrender thereof, if fully paid:

     

    First, to
the payment of all amounts due the Trustee under Section 7.06;

     

    Second,
in case the principal of the outstanding Notes shall not have become due and be
unpaid, to the payment of interest (including Additional Amounts and Additional
Interest, if any) on the Notes in default in the order of the maturity of the
installments of such interest, with interest (to the extent that such interest
has been collected by the Trustee) upon the overdue installments of interest at
the rate borne by the Notes, such payments to be made ratably to the Persons
entitled thereto;

     

    Third, in
case the principal of the outstanding Notes shall have become due, by
declaration or otherwise, and be unpaid to the payment of the whole amount
(including, if applicable, payments in respect of the Conversion Obligation and
Additional Shares) then owing and unpaid upon the Notes for principal and
premium, if any, and interest (including Additional Amounts and Additional
Interest, if any) with interest at the rate borne by the Notes, on the overdue
principal and premium, if any, and (to the extent that such interest has been
collected by the Trustee) upon overdue installments of interest and in case such
monies shall be insufficient to pay in full the whole amounts so due and unpaid
upon the Notes, then to the payment of such principal and premium, if any, and
interest without preference or priority of principal and premium, if any, over
interest, or of interest over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of any Note
over any other Note, ratably to the aggregate of such principal and premium, if
any, and accrued and unpaid interest; and

     

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Inc.

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    Fourth,
to the payment of the remainder, if any, to the Company or any other Person
lawfully entitled thereto.

     

    SECTION 6.04.
Proceedings by
Noteholders.  No holder of any
Note shall have any right by virtue of or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture, or for the appointment of a
receiver, trustee, liquidator, custodian or other similar official, or for any
other remedy hereunder, unless such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Notes then outstanding shall have made written
request to the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such security or
indemnity satisfactory to it against any loss, liability or expense to be
incurred therein or thereby, and the Trustee for 60 days after its receipt
of such notice, request and offer of indemnity, shall have neglected or refused
to institute any such action, suit or proceeding and no direction that, in the
opinion of the Trustee, is inconsistent with such written request shall have
been given to the Trustee by the holders of a majority in principal amount of
the Notes outstanding pursuant to Section 6.07; it being understood and
intended, and being expressly covenanted by the holder of every Note with every
other holder and the Trustee, that no one or more Noteholders shall have any
right in any manner whatsoever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholder, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
Noteholders (except as otherwise provided herein).  For the protection
and enforcement of this Section 6.04, each and every Noteholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.

     

    Notwithstanding
any other provision of this Indenture and any provision of any Note, the right
of any Noteholder to receive payment of the principal of and premium, if any,
and accrued and unpaid interest, including Additional Amounts and Additional
Interest, if any, on such Note, on or after the respective due dates expressed
in such Note, or to institute suit for the enforcement of any such payment on or
after such respective dates against the Company shall not be impaired or
affected without the consent of such Noteholder.

     

    
      ShengdaTech,
Inc.

      Indenture

    

     

    
      
         

      

      
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    Anything
in this Indenture or the Notes to the contrary notwithstanding, the holder of
any Note, without the consent of either the Trustee or the holder of any other
Note, in his own behalf and for his own benefit, may enforce, and may institute
and maintain any proceeding suitable to enforce, his rights of conversion as
provided herein.

     

    SECTION 6.05. Proceedings by Trustee.  In case of an
Event of Default the Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as are necessary to protect and enforce any of such rights, either
by suit in equity or by action at law or by proceeding in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted in
this Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law.

     

    SECTION 6.06. Remedies Cumulative and
Continuing.  Except as
provided in the last paragraph of Section 2.08, all powers and remedies
given by this Article 6 to the Trustee or to the Noteholders shall, to the
extent permitted by law, be deemed cumulative and not exclusive of any thereof
or of any other powers and remedies available to the Trustee or the holders of
the Notes, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture, and no
delay or omission of the Trustee or of any holder of any of the Notes to
exercise any right or power accruing upon any default or Event of Default shall
impair any such right or power, or shall be construed to be a waiver of any such
default or any acquiescence therein; and, subject to the provisions of
Section 6.04, every power and remedy given by this Article 6 or by law
to the Trustee or to the Noteholders may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee or by the
Noteholders.

     

    SECTION 6.07. Direction of Proceedings and Waiver
of Defaults by Majority of Noteholders.  The holders of a
majority in aggregate principal amount of the Notes at the time outstanding
determined in accordance with Section 8.04 shall have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to Notes; provided, however,
that  such direction shall not be in conflict with any rule of law or
with this Indenture, and the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction.  The Trustee
may refuse to follow any direction that it determines is unduly prejudicial to
the rights of any other holder or that would involve the Trustee in personal
liability or to the extent that the Trustee does not receive indemnification to
its satisfaction.  The holders of a majority in aggregate principal
amount of the Notes at the time outstanding determined in accordance with
Section 8.04 may on behalf of the holders of all of the Notes and subject
to the provisions of Section 6.01 waive any past default or Event of
Default hereunder and its consequences except (i) a default in the payment of
premium, accrued and unpaid interest, including Additional Amounts, on, or the
principal of, the Notes when due which has not been cured pursuant to the
provisions of Section 6.01, (ii) a failure by the Company to deliver cash
and, if applicable, Shares (and cash in lieu of fractional Shares) upon
conversion of the Notes, or (iii) a default in respect of a covenant or
provisions hereof which under Article 10 cannot be modified or amended
without the consent of each holder of an outstanding Note affected
thereby.  Upon any such waiver the Company, the Trustee and the
holders of the Notes shall be restored to their former positions and rights
hereunder; but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.  Whenever any
Default or Event of Default hereunder shall have been waived as permitted by
this Section 6.07, said default or Event of Default shall for all purposes
of the Notes and this Indenture be deemed to have been cured and to be not
continuing; but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.

    
       

      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 6.08. Notice of Defaults.  The Trustee
shall, within 90 days after the occurrence and continuance of a Default of which
a Responsible Officer receives written notice, mail to all Noteholders as the
names and addresses of such holders appear upon the Note Register, notice of all
Defaults known to a Responsible Officer, unless such Defaults shall have been
cured or waived before the giving of such notice; and provided that except in the
case of a Default in the payment of the principal of, or premium, if any, and
accrued and unpaid interest (including Additional Amounts, if any), on any of
the Notes, then in any such event the Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer or a committee of trust
officers of the Trustee in good faith determine that the withholding of such
notice is in the interests of the Noteholders.

     

    The
Trustee shall not be charged with knowledge of any default or Event of Default
with respect to the Notes (other than a payment default under Sections 6.01(a)
and 6.01(b) hereof) unless written notice of such default or Event of Default
shall have been delivered to a Responsible Officer of the Trustee by the Company
or any holder of the Notes.

     

    SECTION 6.09. Undertaking to Pay Costs.  All parties to
this Indenture agree, and each holder of any Note by his acceptance thereof
shall be deemed to have agreed, that any court may, in its discretion, require,
in any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; provided that the provisions
of this Section 6.09 (to the extent permitted by law) shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Noteholder, or
group of Noteholders, holding in the aggregate more than 10% in principal amount
of the Notes at the time outstanding determined in accordance with
Section 8.04, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or premium, if any, and accrued
and unpaid interest, including Additional Amounts, on any Note on or after the
due date expressed in such Note or to any suit for the enforcement of the right
to convert any Note in accordance with the provisions of
Article 14.

    
       

      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    ARTICLE 7

    Concerning
the Trustee

     

    SECTION 7.01. Duties and Responsibilities of
Trustee.  The Trustee,
prior to the occurrence of an Event of Default and after the curing or waiver of
all Events of Default which may have occurred, undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture.  In case an Event of Default has occurred (which has not
been cured or waived) the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee, and use the same degree of care
and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs; provided that if an Event of
Default occurs and is continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under this Indenture at the request or
direction of any of the holders unless such holders have offered to the Trustee
indemnity or security against loss, liability or expense to its
satisfaction.

     

    No
provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act, its
own bad faith, or its own willful misconduct, except that:

     

    (a)           prior
to the occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred:

     

    (i)           the
duties and obligations of the Trustee shall be determined solely by the express
provisions of this Indenture and, after it has been qualified thereunder, the
Trust Indenture Act, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into this
Indenture and the Trust Indenture Act against the Trustee; and

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    (ii)           in
the absence of bad faith, gross negligence and willful misconduct on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture; but, in the case of any such statements,
certificates or opinions which by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture;

     

    (b)           the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer or Officers of the Trustee, unless it shall be established
by an appellate court of competent jurisdiction in a final non-appealable order
that the Trustee was negligent in ascertaining the pertinent facts;

     

    (c)           the
Trustee shall not be liable for the performance by any third party appointed by
the Company in relation to the Notes and, unless notified in writing to the
contrary, shall be entitled to assume due performance by such
parties;

     

    (d)           the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the holders of not
less than a majority in principal amount of the Notes at the time outstanding
determined as provided in Section 8.04 relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture;

     

    (e)           whether
or not therein provided, every provision of this Indenture relating to the
conduct or affecting the liability of, or affording protection to, the Trustee
shall be subject to the provisions of this Section;

     

    (f)       
    the Trustee shall not be liable in respect of any
payment (as to the correctness of amount, entitlement to receive or any other
matters relating to payment) or notice effected by the Company or any Paying
Agent or any records maintained by any co-registrar with respect to the
Notes;

     

    (g)           the
Trustee shall have no obligation or duty to monitor, determine or inquire as to
compliance with any covenants or obligations of the Company under this
Indenture;

     

    (h)           in
the absence of a written investment direction from the Company delivered to and
acknowledged in writing by the Trustee, all cash received by the Trustee shall
be placed in a non-interest bearing trust account.  In no event shall
the Trustee be liable for the selection of investments or for investment losses
incurred thereon or for losses incurred as a result of the liquidation of any
such investments prior to its stated maturity or the failure of the party
directing such investments prior to its stated maturity or the failure of the
party directing such investment to provide timely written investment direction,
and the Trustee shall have no obligation to invest or reinvest any amounts held
hereunder in the absence of such written investment direction from the
Company;

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    (i)     
      In no event shall the Trustee be responsible
or liable for any failure or delay in the performance of its obligations
hereunder arising out of or caused by, directly or indirectly, forces beyond its
control, including, without limitation, strikes, work stoppages, accidents, acts
of war or terrorism, civil or military disturbances, nuclear or natural
catastrophes or acts of God, and interruptions, loss or malfunctions of
utilities, communications or computer (software and hardware) services; it being
understood that the Trustee shall use reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances;

     

    (j)     
      the Trustee and any of its branches,
subsidiaries, representative offices affiliates or agents may transfer and
disclose any relevant information concerning the Notes, Noteholders or this
Indenture as required by any law, court order, or regulatory authority; and as
may be required, the Trustee shall have the right, in connection with the
establishment of anti-money-laundering procedures by the Secretary of the United
States Department of the Treasury, to share information with governmental
authorities with respect to investors in the Notes and to request such
information and take such actions as might be necessary to enable the Trustee to
comply with the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 or any
anti-money-laundering laws in any other relevant jurisdiction; and

     

    (k)       
   in the event that the Trustee is also acting as Custodian,
Note Registrar, Paying Agent, Conversion Agent or transfer agent hereunder, the
rights, privileges, protections, immunities and benefits given to the Trustee,
including without limitation, its right to be indemnified pursuant to this
Article 7 shall also be afforded to it in its capacity as such and other
Person employed by the Trustee to act hereunder.

     

    None of
the provisions contained in this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights,
discretions or powers.

     

    SECTION 7.02. Reliance on Documents, Opinions,
Etc.  Except as
otherwise provided in Section 7.01:

     

    (a)      
    the Trustee may conclusively rely and shall be fully
protected in acting, or refraining from acting, upon any resolution, officer’s
certificate or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, note, coupon or other paper or document
believed by it in good faith to be genuine and to have been signed or presented
by the proper party or parties;

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    (b)           any
request, direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by an Officers’ Certificate (unless other evidence in
respect thereof be herein specifically prescribed); and any resolution of the
Board of Directors may be evidenced to the Trustee by a copy thereof certified
by a director or executive officer of the Company;

     

    (c)           the
Trustee shall be entitled to receive and the Company shall deliver to it an
Officers’ Certificate setting forth the names of individuals authorized at such
time to take specified actions pursuant to this Indenture;

     

    (d)           the
Trustee may consult with counsel and require an Officers’ Certificate or an
Opinion of Counsel and any advice of such counsel or Opinion of Counsel shall be
full and complete authorization and protection in respect of any action taken or
omitted by it hereunder in good faith and in accordance with such advice,
Officers’ Certificate or Opinion of Counsel;

     

    (e)           the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request, order or direction of any of the
Noteholders pursuant to the provisions of this Indenture, unless such
Noteholders shall have offered to the Trustee security or indemnity satisfactory
to it against the fees, costs, expenses and liabilities which may be incurred
therein or thereby;

     

    (f)   
        the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee determines to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney; provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may require security
or indemnity satisfactory to the Trustee from the Noteholders against properly
incurred expenses or liability as a condition to so proceeding; the expenses of
every such examination shall be paid by the Company or, if paid by the Trustee
or any predecessor Trustee, shall be repaid by the Company upon
demand;

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    (g)           the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, custodians, nominees or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent, custodian, nominee or attorney appointed by
it with due care hereunder;

     

    (h)           the
Trustee shall not be liable for any action taken or omitted by it in good faith
and believed by it to be authorized or within the discretion, rights, or powers
conferred upon it by this Indenture, and shall in no way be liable for any
action taken by the Noteholders exclusive of the Trustee;

     

    (i)      
     the Trustee shall not be liable if prevented or
delayed in performing any of its duties by reason of any present or future law
applicable to it, by any governmental or regulatory authority; and

     

    (j)      
     the permissive rights of the Trustee enumerated
herein shall not be construed as duties.

     

    In no
event shall the Trustee be liable for any special, indirect, punitive or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), whether foreseeable or not, even if the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action.

     

    SECTION 7.03. No Responsibility for Recitals,
Etc.  The recitals
contained herein and in the Notes (except in the Trustee’s certificate of
authentication) shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for the correctness of the same.  The
Trustee makes no representations as to the validity or sufficiency of this
Indenture, the Shares, the Conversion Price, the Referenced Property, or of the
Notes.  The Trustee shall not be accountable for the use or
application by the Company of any Notes or the proceeds of any Notes
authenticated and delivered by the Trustee in conformity with the provisions of
this Indenture.  The Trustee shall not be responsible or liable for
any loss suffered in connection with any investment of funds made by it in
accordance with this Indenture or at the direction of the
Company.  Except for information provided by the Trustee concerning
the Trustee, the Trustee shall have no responsibility for any information in any
offering memorandum, prospectus or other disclosure material distributed with
respect to the Notes.

     

    SECTION 7.04. Trustee, Paying Agents, Conversion
Agents or Registrar May Own Notes.  The Trustee, any
Paying Agent, any Conversion Agent or Note Registrar, in its individual or any
other capacity, may become the owner or pledgee of Notes with the same rights it
would have if it were not Trustee, Paying Agent, Conversion Agent or Note
Registrar and may otherwise deal with the Company and receive, collect, hold and
retain collections from the Company with the same rights it would have if it
were not the Trustee or such agent.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 7.05. Monies to Be Held in
Trust.  Subject to the
provisions of Section 12.04, all monies received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received.  Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law.  The Trustee or its agents shall be under no liability for
interest on any money received by it hereunder.

     

    SECTION 7.06. Compensation and Indemnification of
Trustee.  The Company
covenants and agrees to pay to the Trustee (including in any other agent roles
it may perform as Conversion Agent and Principal Payment Agent) from time to
time, and the Trustee shall be entitled to, such compensation for all services
rendered by it hereunder in any capacity (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
as mutually agreed to in writing between the Trustee and the Company, and the
Company covenants and agrees to pay or reimburse the Trustee upon its request
for all properly incurred expenses, disbursements and advances properly incurred
or made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the compensation and the properly incurred expenses and
disbursements of its agents, attorneys and in-house counsel and of all persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence, willful misconduct, or bad
faith.  Without prejudice to any right of indemnity by law given to
trustees, the Company also covenants to indemnify the Trustee (which for
purposes of this Section 7.06 shall be deemed to include its officers,
agents, employees, directors, attorneys and in-house counsel) and any
predecessor Trustee in any capacity under this Indenture and any other document
or transaction entered into in connection herewith and its agents (including
anyone appointed by it or to whom any of its functions may be delegated by it or
to whom any of its functions may be delegated by it in carrying out its
functions in the fulfillment of its obligations under this Indenture) and any
authenticating agent for, and to hold them harmless against, any loss,
liability, damages, claim, judgment, liability or expense (including litigation
by the Company) incurred without gross negligence, willful misconduct or bad
faith on the part of the Trustee and arising out of or in connection with the
acceptance or administration of this trust or in any other capacity hereunder,
including, without limitation, taxes, duties, levies, other charges, value added
tax or similar tax charged or chargeable thereon (excluding any franchise,
income or similar taxes) and the costs and expenses of defending themselves
against any claim of liability in the premises.  The obligations of
the Company under this Section 7.06 to compensate or indemnify the Trustee
and to pay or reimburse the Trustee for expenses, disbursements and advances
shall be secured by a lien prior to that of the Notes upon all property and
funds held or collected by the Trustee as such, except, subject to the effect of
Section 6.03, funds held in trust herewith for the benefit of the holders
of particular Notes prior to the date of the accrual of such unpaid compensation
or indemnifiable claim.  The Trustee’s right to receive payment of any
amounts due under this Section 7.06 shall not be subordinate to any other
liability or indebtedness of the Company (even though the Notes may be so
subordinated).  The obligation of the Company under this
Section 7.06 shall survive the satisfaction and discharge of this Indenture
and the earlier resignation or removal of the Trustee.  The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.  The indemnification provided in this
Section 7.06 shall extend to the officers, directors, agents and employees
of the Trustee.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    If an
Event of Default shall have occurred or if the Trustee is requested by the
Company to undertake duties which are of an exceptional nature or otherwise
outside the scope of the Trustee’s normal duties under this Indenture, the
Company will pay such additional remuneration as they may agree in a signed
written agreement or, failing such agreement, as determined by an independent
international merchant or investment bank (acting as an expert) selected by the
Company.  The expenses involved in such nomination and such merchant
or investment bank’s fee will be paid by the Company.  The
determination of such merchant or investment bank will be conclusive and binding
on the Company, the Trustee and the Noteholders.

     

    When the
Trustee and its agents and any authenticating agent incur expenses or render
services after an Event of Default specified in Section 6.01(e) or
Section 6.01(f) occurs, the expenses and the compensation for the services
are intended to constitute expenses of administration under any bankruptcy,
insolvency or similar laws.

     

    SECTION 7.07. Officers’ Certificate as
Evidence.  Except as
otherwise provided in Section 7.01, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence, willful misconduct,
and bad faith on the part of the Trustee, be deemed to be conclusively proved
and established by an Officers’ Certificate delivered to the Trustee, and such
Officers’ Certificate, in the absence of gross negligence, willful misconduct,
and bad faith on the part of the Trustee, shall be full warrant to the Trustee
for any action taken or omitted by it under the provisions of this Indenture
upon the faith thereof.

     

    SECTION 7.08. Conflicting Interests of
Trustee.  If the Trustee
has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such interest or resign, to
the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 7.09. Eligibility of Trustee.  There shall at
all times be a Trustee hereunder which shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least US$50,000,000.  If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.  If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.

     

    SECTION 7.10. Resignation or Removal of
Trustee.

     

    (a)           The
Trustee may at any time resign by giving written notice of such resignation to
the Company and by mailing notice thereof to the Noteholders at their addresses
as they shall appear on the Note Register.  Upon receiving such notice
of resignation, the Company shall promptly appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee.  Any expenses properly incurred prior
to the appointment and acceptance of such appointment by a successor trustee
(including the reasonable fees and expenses of counsel) shall be payable by the
Company.  If no successor trustee shall have been so appointed and
have accepted appointment 60 days after the mailing of such notice of
resignation to the Noteholders, the resigning Trustee may at the expense of the
Company petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Noteholder who has been a bona fide holder of a Note
or Notes for at least six months may, subject to the provisions of
Section 6.09, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor
trustee.  Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor trustee.

     

    (b)           In
case at any time any of the following shall occur:

     

    (i)       
    the Trustee shall fail to comply with Section 7.08
within a reasonable time after written request therefor by the Company or by any
Noteholder who has been a bona fide holder of a Note or Notes for at least six
months, or

     

    (ii)           the
Trustee shall cease to be eligible in accordance with the provisions of
Section 7.09 and shall fail to resign after written request therefor by the
Company or by any such Noteholder, or

     

    (iii)          the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation,

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    then, in
any such case, the Company may by a Board Resolution remove the Trustee and
appoint a successor trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor trustee, or, subject to
the provisions of Section 6.09, any Noteholder who has been a bona fide
holder of a Note or Notes for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor
trustee.  Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.

     

    (c)           The
holders of a majority in aggregate principal amount of the Notes at the time
outstanding, as determined in accordance with Section 8.04, may at any time
remove the Trustee and nominate a successor trustee which shall be deemed
appointed as successor trustee unless within 10 days after notice to the Company
of such nomination the Company objects thereto, in which case the Trustee so
removed or any Noteholder, upon the terms and conditions and otherwise as in
Section 7.10(a) provided, may petition any court of competent jurisdiction
for an appointment of a successor trustee.

     

    (d)           Any
resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section 7.10 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 7.11.

     

    SECTION 7.11. Acceptance by Successor
Trustee.  Any successor
trustee appointed as provided in Section 7.10 shall execute, acknowledge
and deliver to the Company and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as trustee herein; but, nevertheless, on the
written request of the Company or of the successor trustee, the trustee ceasing
to act shall, upon payment of any amounts then due it pursuant to the provisions
of Section 7.06, execute and deliver an instrument transferring to such
successor trustee all the rights and powers of the trustee so ceasing to
act.  Upon request of any such successor trustee, the Company shall
execute any and all instruments in writing for more fully and certainly vesting
in and confirming to such successor trustee all such rights and
powers.  Any trustee ceasing to act shall, nevertheless, retain a lien
upon all property and funds held or collected by such trustee as such, except
for funds held in trust for the benefit of holders of particular Notes, to
secure any amounts then due it pursuant to the provisions of
Section 7.06.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    No
successor trustee shall accept appointment as provided in this Section 7.11
unless at the time of such acceptance such successor trustee shall be qualified
under the provisions of Section 7.08 and be eligible under the provisions
of Section 7.09.

     

    Upon
acceptance of appointment by a successor trustee as provided in this
Section 7.11, each of the Company and the successor trustee, at the written
direction and at the expense of the Company shall mail or cause to be mailed
notice of the succession of such trustee hereunder to the Noteholders at their
addresses as they shall appear on the Note Register.  If the Company
fails to mail such notice within 10 days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Company.

     

    SECTION 7.12. Succession by Merger,
Etc.  Any corporation
or other entity into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation or
other entity succeeding to all or substantially all of the corporate trust
business of the Trustee (including the administration of this Indenture), shall
be the successor to the Trustee hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto; provided that in the case of
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee such corporation shall be qualified under the provisions
of Section 7.08 and eligible under the provisions of
Section 7.09.

     

    In case
at the time such successor to the Trustee shall succeed to the trusts created by
this Indenture, any of the Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee or authenticating agent appointed by
such predecessor trustee, and deliver such Notes so authenticated; and in case
at that time any of the Notes shall not have been authenticated, any successor
to the Trustee or an authenticating agent appointed by such successor trustee
may authenticate such Notes either in the name of any predecessor trustee
hereunder or in the name of the successor trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Notes or in
this Indenture; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 7.13. Limitation on Rights of Trustee as
Creditor.  If and when the
Trustee shall be or become a creditor of the Company (or any other obligor upon
the Notes), the Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of the claims against the Company (or any
such other obligor).

     

    SECTION 7.14. Trustee’s Application for
Instructions from the Company.  Any application
by the Trustee for written instructions from the Company (other than with regard
to any action proposed to be taken or omitted to be taken by the Trustee that
affects the rights of the holders of the Notes under this Indenture) may, at the
option of the Trustee, set forth in writing any action proposed to be taken or
omitted by the Trustee under this Indenture and the date on and/or after which
such action shall be taken or such omission shall be effective.  The
Trustee shall not be liable for any action taken by, or omission of, the Trustee
in accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than three Business
Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to any
earlier date), unless, prior to taking any such action (or the effective date in
the case of any omission), the Trustee shall have received written instructions
in response to such proposal specifying the action to be taken or
omitted.

     

    ARTICLE 8

    Concerning
the Noteholders

     

    SECTION 8.01. Action by Noteholders.  Whenever in this
Indenture it is provided that the holders of a specified percentage in aggregate
principal amount of the Notes may take any action (including the making of any
demand or request, the giving of any notice, consent or waiver or the taking of
any other action), the fact that at the time of taking any such action, the
holders of such specified percentage have joined therein may be evidenced by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or by the record of the
Noteholders voting in favor thereof at any meeting of Noteholders duly called
and held in accordance with the provisions of Article 9, or by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders.  Whenever the Company or the Trustee solicits
the taking of any action by the holders of the Notes, the Company or the Trustee
may fix, but shall not be required to, in advance of such solicitation, a date
as the record date for determining Noteholders entitled to take such
action.  The record date if one is selected shall be not more than 15
days prior to the date of commencement of solicitation of such
action.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 8.02. Proof of Execution by
Noteholders.  Subject to the
provisions of Section 7.01, Section 7.02 and Section 9.05, proof
of the execution of any instrument by a Noteholder or his agent or proxy shall
be sufficient if made in accordance with such rules and regulations as may be
prescribed by the Trustee or in such manner as shall be satisfactory to the
Trustee.  The holding of Notes shall be proved by the Note Register or
by a certificate of the Note Registrar.  The record of any
Noteholders’ meeting shall be proved in the manner provided in
Section 9.06.

     

    SECTION 8.03. Who Are Deemed Absolute
Owners.  The Company, the
Trustee, any authenticating agent, any Paying Agent, any Conversion Agent and
any Note Registrar may deem the person in whose name such Note shall be
registered upon the Note Register to be, and may treat him as, the absolute
owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing thereon made by any
Person other than the Company or any Note Registrar) for the purpose of
receiving payment of or on account of the principal of, premium, if any, and
accrued and unpaid interest on such Note, for conversion of such Note and for
all other purposes; and neither the Company nor the Trustee nor any Paying Agent
nor any Conversion Agent nor any Note Registrar shall be affected by any notice
to the contrary.  All such payments so made to any holder for the time
being, or upon his order, shall be valid, and, to the extent of the sum or sums
so paid, effectual to satisfy and discharge the liability for monies payable
upon any such Note.  Notwithstanding anything to the contrary in this
Indenture or the Notes following an Event of Default, any holder of a beneficial
interest in a Global Note may directly enforce against the Company, without the
consent, solicitation, proxy, authorization or any other action of the
Depositary or any other person, such holder’s right to exchange such beneficial
interest for a Note in certificated form in accordance with the provisions of
this Indenture.

     

    SECTION 8.04. Company-Owned Notes
Disregarded.  In determining
whether the holders of the requisite aggregate principal amount of Notes have
concurred in any direction, consent, waiver or other action under this
Indenture, Notes that are owned by the Company or any other obligor on the Notes
or by any person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any other obligor on such
Notes shall be disregarded and deemed not to be outstanding for the purpose of
any such determination; provided that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, consent, waiver or other action only Notes that a Responsible
Officer knows are so owned shall be so disregarded.  Notes so owned
that have been pledged in good faith may be regarded as outstanding for the
purposes of this Section 8.04 if the pledgee shall establish to the
satisfaction of the Trustee the pledgee’s right to vote such Notes and that the
pledgee is not the Company, any other obligor on the Notes or a person directly
or indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor.  In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.  Upon request of the
Trustee, the Company shall furnish to the Trustee promptly an Officers’
Certificate listing and identifying all Notes, if any, known by the Company to
be owned or held by or for the account of any of the above described persons;
and, subject to Section 7.01, the Trustee shall be entitled to accept such
Officers’ Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Notes not listed therein are outstanding for the purpose of
any such determination.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 8.05. Revocation of Consents; Future
Holders Bound.  At any time
prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.01, of the taking of any action by the holders of the percentage
in aggregate principal amount of the Notes specified in this Indenture in
connection with such action, any holder of a Note that is shown by the evidence
to be included in the Notes the holders of which have consented to such action
may, by filing written notice with the Trustee at its Corporate Trust Office and
upon proof of holding as provided in Section 8.02, revoke such action so
far as concerns such Note.  Except as aforesaid, any such action taken
by the holder of any Note shall be conclusive and binding upon such holder and
upon all future holders and owners of such Note and of any Notes issued in
exchange or substitution therefor, irrespective of whether any notation in
regard thereto is made upon such Note or any Note issued in exchange or
substitution therefor.

     

    ARTICLE 9

    Noteholders’
Meetings

     

    SECTION 9.01. Purpose of Meetings.  A meeting of
Noteholders may be called at any time and from time to time pursuant to the
provisions of this Article 9 for any of the following
purposes:

     

    (a)           to
give any notice to the Company or to the Trustee or to give any directions to
the Trustee permitted under this Indenture, or to consent to the waiving of any
default or Event of Default hereunder and its consequences, or to take any other
action authorized to be taken by Noteholders pursuant to any of the provisions
of Article 6;

     

    (b)           to
remove the Trustee and nominate a successor trustee pursuant to the provisions
of Article 7;

     

    (c)           to
consent to the execution of an indenture or indentures supplemental hereto
pursuant to the provisions of Section 10.02; or

     

    (d)           to
take any other action authorized to be taken by or on behalf of the holders of
any specified aggregate principal amount of the Notes under any other provision
of this Indenture or under applicable law.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 9.02. Call of Meetings by
Trustee.  The Trustee may
at any time at the expense of the Company call a meeting of Noteholders to take
any action specified in Section 9.01, to be held at such time and at such
place as the Trustee shall determine.  Notice of every meeting of the
Noteholders, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting and the establishment of
any record date pursuant to Section 8.01, shall be mailed to holders of
such Notes at their addresses as they shall appear on the Note
Register.  Such notice shall also be mailed to the
Company.  Such notices shall be mailed not less than 20 nor more than
90 days prior to the date fixed for the meeting.

     

    Any
meeting of Noteholders shall be valid without notice if the holders of all Notes
then outstanding are present in person or by proxy or if notice is waived before
or after the meeting by the holders of all Notes outstanding, and if the Company
and the Trustee are either present by duly authorized representatives or have,
before or after the meeting, waived notice.

     

    SECTION 9.03. Call of Meetings by Company or
Noteholders.  In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least 10% in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within 20 days after receipt of such request, then the Company or such
Noteholders may determine the time and the place for such meeting and may call
such meeting to take any action authorized in Section 9.01, by mailing
notice thereof as provided in Section 9.02.

     

    SECTION 9.04. Qualifications for
Voting.  To be entitled
to vote at any meeting of Noteholders a person shall be a holder of one or more
Notes on the record date pertaining to such meeting or be a person appointed by
an instrument in writing as proxy by a holder of one or more
Notes.  The only persons who shall be entitled to be present or to
speak at any meeting of Noteholders shall be the persons entitled to vote at
such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.

     

    SECTION 9.05. Regulations.  Notwithstanding
any other provisions of this Indenture, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of Noteholders, in regard
to proof of the holding of Notes and of the appointment of proxies, and in
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall think
fit.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    The
Trustee shall, by an instrument in writing, appoint a temporary chairman of the
meeting, unless the meeting shall have been called by the Company or by
Noteholders as provided in Section 9.03, in which case the Company or the
Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman.  A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the holders of a majority
in principal amount of the Notes represented at the meeting and entitled to vote
at the meeting.

     

    Subject
to the provisions of Section 8.04, at any meeting of Noteholders each
Noteholder or proxyholder shall be entitled to one vote for each US$1,000
principal amount of Notes held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding.  The chairman of the meeting shall have no right to vote
other than by virtue of Notes held by him or instruments in writing as aforesaid
duly designating him as the proxy to vote on behalf of other
Noteholders.  Any meeting of Noteholders duly called pursuant to the
provisions of Section 9.02 or Section 9.03 may be adjourned from time
to time by the holders of a majority of the aggregate principal amount of Notes
represented at the meeting, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.

     

    SECTION 9.06. Voting.  The vote upon
any resolution submitted to any meeting of Noteholders shall be by written
ballot on which shall be subscribed the signatures of the Noteholders or of
their representatives by proxy and the principal amount of the Notes held or
represented by them.  The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at the
meeting.  A record in duplicate of the proceedings of each meeting of
Noteholders shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was mailed as provided in
Section 9.02.  The record shall show the principal amount of the
Notes voting in favor of or against any resolution.  The record shall
be signed and verified by the affidavits of the permanent chairman and secretary
of the meeting and one of the duplicates shall be delivered to the Company and
the other to the Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting.

     

    Any
record so signed and verified shall be conclusive evidence of the matters
therein stated.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 9.07. No Delay of Rights by
Meeting.  Nothing
contained in this Article 9 shall be deemed or construed to authorize or
permit, by reason of any call of a meeting of Noteholders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Noteholders under any of the provisions of this Indenture or
of the Notes.

     

    ARTICLE 10

    Supplemental
Indentures

     

    SECTION 10.01. Supplemental Indentures without
Consent of Noteholders.  (i)
Notwithstanding anything herein to the contrary, the Company and the Trustee,
without notice to or the consent of any holder and at the Company’s expense, may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for one or more of the following purposes:

     

    (a)           to
cure any ambiguity, omission, defect or inconsistency;

     

    (b)           to
provide for the assumption by a Successor Company, partnership, trust or limited
liability company of the obligations of the Company under this Indenture and the
Notes pursuant to Article 11;

     

    (c)           to
provide for uncertificated Notes in addition to or in place of certificated
Notes; provided that
the uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the uncertificated
Notes are described in Section 163(f)(2)(B) of the Code;

     

    (d)           to
add guarantees with respect to the Notes;

     

    (e)           to
secure the Company’s obligations in respect of the Notes;

     

    (f)      
     to add to the covenants of the Company for the
benefit of the holders or surrender any right or power conferred upon the
Company;

     

    (g)           to
make any changes to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act;

     

    (h)           to
evidence and provide for the acceptance of the appointment of a successor
Trustee under the Indenture;

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    (i)           to
make any change that does not materially adversely affect the rights of any
holder; provided that
any amendment made solely to conform the provisions of this Indenture or the
Notes to the “Description of Notes” as set forth in the Offering Memorandum will
not be deemed to materially adversely affect the rights of any holder;
or

     

    (j)           to
make any changes of a formal, minor or technical nature or necessary to correct
a manifest error to comply with mandatory provisions of applicable law as
evidenced by an Opinion of Counsel so long as such change does not adversely
affect the rights of Noteholders in any material respect;

     

    (ii)           Except
as provided in this Indenture, the holders of a majority in aggregate principal
amount of the outstanding Notes, by written notice to the Trustee, generally
may:

     

    (a)           waive
compliance by the Company with any provisions of this Indenture or the Notes;
and

     

    (b)           waive
any past Default or Event of Default and its consequences, except a Default or
Event of Default:

     

    (A)           in
the payment of principal of, premium, if any, or interest (including Additional
Interest, if any) on, any Note or in the payment of the Fundamental Change
Repurchase Price,

     

    (B)           arising
from the Company’s failure to convert any Note in accordance with this
Indenture, or

     

    (C)           in
respect of any provision under this Indenture that cannot be modified or amended
without the consent of the holders of each outstanding Note
affected.

     

    Upon the
written request of the Company, accompanied by a Board Resolution authorizing
the execution of such supplemental indenture, the Trustee is hereby authorized
to join with the Company in the execution of any such supplemental indenture, to
make any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to enter into any
supplemental indenture which affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise.

     

    Any
supplemental indenture authorized by the provisions of this Section 10.01
may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 10.02. Supplemental Indentures with Consent
of Noteholders.  With the consent
(evidenced as provided in Article 8) of the holders of at least a majority
in aggregate principal amount of the Notes at the time outstanding (determined
in accordance with Article 8 and including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes), the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; provided, however, that no
such supplemental indenture shall:

     

    (a)           reduce
the percentage in aggregate principal amount of Notes the holders of which must
consent to an amendment;

     

    (b)           reduce
the rate, or extend the stated time for payment, of interest (including
Additional Interest, if any) on any Note;

     

    (c)           reduce
the principal amount, or extend the Maturity Date, of any Note;

     

    (d)           change
the place, manner or currency of payment of principal or interest in respect of
any Note;

     

    (e)           make
any change that adversely affects the conversion rights of any
Notes;

     

    (f)     
      reduce the Fundamental Change Purchase Price
or Put Right Purchase Price of any Note or amend or modify in any manner adverse
to the holders of the Notes the Company’s obligation to make such payments,
whether through an amendment or waiver of provisions in the covenants,
definitions or otherwise;

     

    (g)           impair
the right of any holder to receive payment of principal of, and interest
(including Additional Interest, if any) on, such holder’s Notes on or after the
due dates therefor or to institute suit for the enforcement of any payment on or
with respect to such holder’s Note;

     

    (h)           make
any change to the provisions of this Article 10 that require each holder’s
consent or in the waiver provisions in Section 6.01 and
Section 6.07;

     

    (i)       
    change the Company’s obligation to pay Additional
Amounts; or

     

    (j)     
      modify the ranking provisions of this
Indenture in a manner adverse to Noteholders, in each
case without the consent of each holder of an outstanding Note
affected.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    Upon the
written request of the Company, accompanied by a copy of the Board Resolutions
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Noteholders as aforesaid,
the Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee’s own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.

     

    It shall
not be necessary for the consent of the Noteholders under this
Section 10.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.  After an amendment under this Indenture becomes
effective, the Company shall mail to the holders a notice briefly describing
such amendment.  However, the failure to give such notice to all the
holders, or any defect in the notice, will not impair or affect the validity of
the amendment.

     

    SECTION 10.03. Effect of Supplemental
Indentures.  Any supplemental
indenture executed pursuant to the provisions of this Article 10 shall
comply with the Trust Indenture Act, as then in effect, provided that this Section 10.03
shall not require such supplemental indenture or the Trustee to be qualified
under the Trust Indenture Act prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act, nor shall it constitute any
admission or acknowledgment by any party to such supplemental indenture that any
such qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act.  Upon the
execution of any supplemental indenture pursuant to the provisions of this
Article 10, this Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitation of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company and the Noteholders shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments
and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.

     

    SECTION 10.04. Notation on Notes.  Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to the provisions of this Article 10 may bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture.  If the Company shall so determine, new Notes so modified
as to conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may,
at the Company’s expense, be prepared and executed by the Company, authenticated
by the Trustee (or an authenticating agent duly appointed by the Trustee
pursuant to Section 16.11) and delivered in exchange for the Notes then
outstanding, upon surrender of such Notes then outstanding.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 10.05. Evidence of Compliance of
Supplemental Indenture to Be Furnished to Trustee.  In addition to
the documents required by Section 16.06, the Trustee shall receive an
Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article 10, the Trust Indenture Act and as to such other matters as
the Trustee may request.

     

    The
Trustee shall have no duty to determine whether a supplemental indenture need be
entered into or whether any provisions of any supplemental indenture are
correct.

     

    ARTICLE 11

    Consolidation,
Merger, Sale, Conveyance and Lease

     

    SECTION 11.01. Company May Consolidate, Etc. on
Certain Terms.

     

    Subject
to the provisions of Section 11.02, the Company shall not consolidate with,
merge with or into, or convey, transfer or lease all or substantially all of its
assets and properties to another Person, unless:

     

    (a)           the
resulting, surviving or transferee person (the “Successor Company”) if not the
Company shall be a person organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Notes and this Indenture;
and

     

    (b)           immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing.

     

    For
purposes of this Section 11.01, the sale, lease, conveyance, assignment,
transfer, or other disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of the Company, which properties and assets,
if held by the Company instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Company on a consolidated
basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 11.02. Successor Corporation to Be
Substituted.  In case of any
such consolidation, merger, conveyance, transfer or lease and upon the
assumption by the Successor Company, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any, and accrued and unpaid
interest on all of the Notes, the due and punctual conversion of the Notes and
the due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Company, such Successor Company shall succeed
to and be substituted for the Company and the Company shall be released from
those obligations, with the same effect as if it had been named herein as the
party of the first part.  Such Successor Company thereupon may cause
to be signed, and may issue either in its own name or in the name of the Company
any or all of the Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such
Successor Company instead of the Company and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver, or cause to be authenticated and delivered, any
Notes which previously shall have been signed and delivered by the officers of
the Company to the Trustee for authentication, and any Notes which such
Successor Company thereafter shall cause to be signed and delivered to the
Trustee for that purpose.  All the Notes so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Notes
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Notes had been issued at the date of the execution
hereof.  In the event of any such consolidation, merger, conveyance,
transfer or lease, the person named as the “Company” in the first paragraph of
this Indenture or any successor which shall thereafter have become such in the
manner prescribed in this Article 11 may be dissolved, wound up and
liquidated at any time thereafter and such person shall be released from its
liabilities as obligor and maker of the Notes and from its obligations under
this Indenture.

     

    In case
of any such consolidation, merger, conveyance, transfer or lease, such changes
in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.

     

    SECTION 11.03. Officers’ Certificate and Opinion of
Counsel to be Given Trustee.  No merger,
consolidation, sale transfer or lease shall be effective unless the Trustee
shall receive an Officers’ Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, conveyance, transfer or lease and
any such assumption complies with the provisions of this
Article 11.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    ARTICLE 12

    Satisfaction
and Discharge of Indenture

     

    SECTION 12.01. Discharge of Indenture.  When the Company
shall deliver to the Note Registrar for cancellation all Notes theretofore
authenticated (other than any Notes that have been destroyed, lost or stolen and
in lieu of or in substitution for which other Notes shall have been
authenticated and delivered) and not theretofore canceled, or all the Notes not
theretofore canceled or delivered to the Note Registrar for cancellation shall
have become due and payable, whether on the Maturity Date or on any earlier
Fundamental Change Purchase Date, Put Right Purchase Date, or otherwise, and the
Company shall deposit with the Trustee, in trust, cash or securities, as
applicable, sufficient to pay at maturity all of the Notes (other than any Notes
that shall have been mutilated, destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
not theretofore canceled or delivered to the Trustee for cancellation, including
principal and premium, if any, and accrued and unpaid interest (including any
Additional Interest) due thereon, and if the Company shall also pay or cause to
be paid all other sums payable hereunder by the Company, then this Indenture
shall cease to be of further effect except as to (i) the right of holders to
receive payments of principal of and premium, if any, and accrued and unpaid
interest if any (including any Additional Interest), and any unpaid Conversion
Obligation and Additional Shares, if any, on the Notes and the other rights,
duties and obligations of Noteholders, as beneficiaries hereof with respect to
the amounts, if any, so deposited with the Trustee, (ii) the rights, obligations
and immunities of the Trustee hereunder and (iii) the obligations of the Company
under Section 7.06, and the Trustee, on written demand of the Company
accompanied by an Officers’ Certificate and an Opinion of Counsel as required by
Section 16.06 and at the cost and expense of the Company, shall execute
proper instruments acknowledging satisfaction of and discharging this Indenture;
the Company, however, hereby agrees to reimburse the Trustee for any costs or
expenses thereafter properly incurred by the Trustee and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Notes.  For the
avoidance of doubt, the obligations of the Company to reimburse the Trustee
under this Section 12.01 shall survive the satisfaction and discharge of
this Indenture.

     

    SECTION 12.02. Deposited Monies to Be Held in Trust
by Trustee.  Subject to
Section 12.04, all monies deposited with the Trustee pursuant to
Section 12.01 shall be held in trust and applied by it to the payment,
either directly or through any Paying Agent (including the Company if acting as
its own Paying Agent), to the holders of the particular Notes for the payment of
which such monies have been deposited with the Trustee, of all sums due thereon
for principal and premium and accrued and unpaid interest.

     

    SECTION 12.03. Paying Agent to Repay Monies
Held.  Upon the
satisfaction and discharge of this Indenture, all monies then held by any Paying
Agent of the Notes (other than the Trustee) shall, upon written request of the
Company, be repaid to it or paid to the Trustee, and thereupon such Paying Agent
shall be released from all further liability with respect to such
monies.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
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    SECTION 12.04. Return of Unclaimed
Monies.  Subject to the
requirements of applicable law, any monies deposited with or paid to the Trustee
or any Paying Agent for payment of the principal of, premium, if any, or accrued
and unpaid interest on Notes and not applied but remaining unclaimed by the
Noteholders for two years after the date upon which the principal of, premium,
if any, or accrued and unpaid interest on such Notes, as the case may be, shall,
unless otherwise required by mandatory provisions of applicable abandoned
property laws have become due and payable, shall be repaid to the Company by the
Trustee or such Paying Agent on written request and all liability of the Trustee
or any Paying Agent shall thereupon cease with respect to such monies; and the
holder of any of the Notes shall thereafter look only to the Company for any
payment which such holder may be entitled to collect unless an applicable
abandoned property law designates another person.  The Trustee shall,
promptly after such payment of the principal of, premium, if any, or accrued and
unpaid interest on Notes, as described in this Section 12.04 and upon
written request of the Company, return to the Company any funds in excess of the
amount required for such payment.

     

    SECTION 12.05. Reinstatement.  If (i) the
Trustee or the Paying Agent is unable to apply any money in accordance with
Section 12.02 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application and (ii) the holders of at least a majority in principal amount of
the then outstanding Notes so request by written notice to the Trustee, the
Company’s obligations under this Indenture shall be revived and reinstated as
though no deposit had occurred pursuant to Section 12.01 until such time as
the Trustee or the Paying Agent is permitted to apply all such money in
accordance with Section 12.02; provided, however, that if
the Company makes any payment of interest (including any Additional Interest) on
or principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Noteholders to receive such
payment from the money held by the Trustee or Paying Agent.

     

    ARTICLE 13

    Immunity
of Incorporators, Stockholders, Officers and Directors

     

    SECTION 13.01. Indenture and Notes Solely Corporate
Obligations.  No recourse for
the payment of the principal of or premium, if any, or accrued and unpaid
interest on any Note, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture or in any Note,
or because of the creation of any indebtedness represented thereby, shall be had
against any past, present or future incorporator, stockholder, employee, agent,
officer or director or Subsidiary of the Company as such or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

     

    ARTICLE 14

    Conversion
of Notes

     

    SECTION 14.01. Conversion
Privilege.

     

    (a)           (i)           Subject
to the conditions described below and prior repurchase, and upon compliance with
the provisions of this Article 14, a Noteholder shall have the right, at
such holder’s option, to convert all or any portion (if the portion to be
converted is US$1,000 principal amount or an integral multiple thereof) of such
Note at any time prior to the close of business on the Business Day immediately
preceding the Maturity Date at a rate (the “Conversion Rate”) of
164.6904 Shares (subject to adjustment by the Company as provided in
Section 14.01(b) and Section 14.04) per US$1,000 principal amount Note
(the “Conversion
Obligation”) under the circumstances and during the periods set forth
below.  The Conversion Rate and the Conversion Price in effect at any
given time are referred to herein as the “applicable Conversion Rate”
and the “applicable Conversion
Price,” respectively.

     

    (ii)           Notes
in respect of which a holder has delivered a Put Right Purchase Notice or a
Fundamental Change Purchase Notice may not be surrendered for conversion until
the holder has withdrawn such relevant notice in accordance with
Article 15.

     

    (b)           (i)
If a Make-Whole Change in Control occurs prior to the Maturity Date and a
Noteholder elects to convert Notes in connection with a Make-Whole Change in
Control, the Conversion Rate applicable to each US$1,000 principal amount of
Notes so converted shall be increased by an additional number of Shares (the
“Additional Shares”) as
described below.  Settlement of Notes tendered for conversion to which
Additional Shares shall be added to the Conversion Rate as provided in this
subsection shall be settled pursuant to Section 14.03(d)
below.  For purposes of this Section 14.01(b), a conversion shall
be deemed to be “in connection” with a Make-Whole Change in Control if the
Conversion Notice with respect to such Notes is received by the Conversion Agent
from, and including, the Effective Date of the Make-Whole Change in Control up
to, and including the Business Day immediately prior to the related Fundamental
Change Purchase Date (or, in the case of an event that would have been a Change
in Control but for the proviso in clause (b) of
the definition thereof, the 35th Trading Day immediately following the Effective
Date of such Make-Whole Change in Control) and specifies that such Conversion
Notice is “in connection” with such Make-Whole Change in Control.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
        70

        
          

        

      

      
        
        

      

    

     

    On or
before the 15th day after the occurrence of a Make-Whole Change in Control that
does not also constitute a Change in Control, the Company will mail to the
Trustee and to all holders of Notes at their addresses shown in the Note
Register, and to Beneficial Owners of Notes, as required by applicable law, a
notice indicating that a Make-Whole Change in Control has occurred.

     

    (ii)           The
number of Additional Shares by which the Conversion Rate will be increased shall
be determined by reference to the table attached as Schedule A hereto,
based on the date on which the Make-Whole Change in Control occurs or becomes
effective (the “Effective
Date”), and the Common Stock Price; provided that if the actual
Common Stock Price is between two Common Stock Price amounts in the table or the
Effective Date is between two Effective Dates in the table, the number of
Additional Shares shall be determined by a straight-line interpolation between
the number of Additional Shares set forth for the next higher and next lower
Common Stock Price amounts and the two nearest Effective Dates set forth in such
table, as applicable, based on a 365-day year; provided further that if
(1) the Common Stock Price is greater than US$20.00 per Share (subject
to adjustment in the same manner as set forth in Section 14.04), no
Additional Shares will be added to the Conversion Rate, and (2) the Common Stock
Price is less than US$5.06 per Share (subject to adjustment in the same
manner as set forth in Section 14.04), no Additional Shares will be added
to the Conversion Rate.  Notwithstanding the foregoing, in no event
will the total number of Shares issuable upon conversion exceed
197.6285 per US$1,000 principal amount of Notes (subject to adjustment in
the same manner as set forth in Section 14.04).

     

    (iii)           The
Common Stock Prices set forth in the first row of the table in Schedule A hereto
shall be adjusted as of any date on which the Conversion Rate of the Notes is
otherwise adjusted.  The adjusted Common Stock Prices shall equal the
Common Stock Prices applicable immediately prior to such adjustment, multiplied
by a fraction, the numerator of which is the Conversion Rate in effect
immediately prior to the adjustment giving rise to the Common Stock Price
adjustment and the denominator of which is the Conversion Rate as so
adjusted.  The number of Additional Shares within the table shall be
adjusted in the same manner as the Conversion Rate as set forth in
Section 14.04 (other than by operation of an adjustment to the Conversion
Rate by adding Additional Shares).

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
        71

        
          

        

      

      
        
        

      

    

     

    (iv)           The Company shall obtain its
shareholders’ approval for (i) any Make-Whole Change
in Control prior to the consummation thereof and (ii) any issuance of Shares
(including the Additional Shares after giving effect to the adjustment to the Conversion Rate
pursuant to this Section 14.01(b)) upon conversion of the Notes in connection
with such Make-Whole Change in Control, which results in an issuance of Shares
or voting power at a price level that would require an approval of the Company’s shareholders under the Nasdaq
Listing Rule 5635, prior to such issuance in accordance
with the terms of the Indenture.

     

    SECTION 14.02. [Reserved]

     

    SECTION 14.03. Conversion
Procedure.

     

    (a)           Subject
to Section 14.03(b), the Company will satisfy the Conversion Obligation
with respect to each US$1,000 principal amount of Notes tendered for conversion
in fully paid Shares, if any, by delivering, on or prior to the third Trading
Day after the relevant Conversion Date, to the holder of a number of Shares
equal to (i) (A) the aggregate principal amount of Notes to be converted, divided by (B) 1,000, multiplied by (ii) the
applicable Conversion Rate; provided that the Company
will deliver cash in lieu of fractional Shares as set forth pursuant to clause
(k) below.

     

    (b)           Notwithstanding
Section 14.03(a), the Company shall satisfy the Conversion Obligation with
respect to each US$1,000 principal amount of Notes tendered for conversion to
which Additional Shares shall be added to the Conversion Rate as set forth in
Section 14.01(b) in the manner provided in Section 14.03(a) (based on
the Conversion Rate as increased by the applicable Additional
Shares).

     

    (c)           Before
any holder of a Note shall be entitled to convert the same as set forth above,
such holder shall (A) in the case of a Global Note, comply with the procedures
of the Depositary in effect at that time and, if required, pay funds equal to
interest payable on the next Interest Payment Date to which such holder is not
entitled as set forth in Section 14.03(i), and (B) in the case of a Note
issued in certificated form, (1) complete and manually sign and deliver an
irrevocable written notice to the Conversion Agent in the form on the reverse of
such certificated Note (or a facsimile thereof) attached hereto as part of Exhibit A (a “Conversion Notice”) at the
office of the Conversion Agent and shall state in writing therein the principal
amount of Notes to be converted and the name or names (with addresses) in which
such holder wishes the certificate or certificates for any Shares, if any, to be
delivered upon settlement of the Conversion Obligation to be registered, (2)
surrender such Notes, duly endorsed to the Company or in blank (and accompanied
by appropriate endorsement and transfer documents), at the office of the
Conversion Agent, and (3) if required, pay funds equal to interest payable on
the next Interest Payment Date to which such holder is not entitled as set forth
in Section 14.03(i).  A Note shall be deemed to have been
converted immediately prior to the close of business on the date (the “Conversion Date”) that the
holder has complied with the requirements set forth in this
Section 14.03(c).

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
        72

        
          

        

      

      
        
        

      

    

     

    No
Conversion Notice with respect to any Notes may be tendered by a holder thereof
if such holder has also tendered a Put Right Purchase Notice or a Fundamental
Change Purchase Notice and not validly withdrawn such Put Right Purchase Notice
or Fundamental Change Purchase Notice in accordance with the applicable
provisions of Section 15.01 or 15.02, as the case may be.

     

    If more
than one Note shall be surrendered for conversion at one time by the same
holder, the Conversion Obligation with respect to such Notes, if any, that shall
be payable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted thereby) so surrendered.

     

    (d)           Delivery
of the Shares to be delivered in satisfaction of the Conversion Obligation shall
be made by the Company in no event later than the date specified in
Section 14.03(a).  The Company shall make such delivery by
issuing, or causing to be issued, and delivering to the Conversion Agent or to
such holder, or such holder’s nominee or nominees, certificates or a book-entry
transfer through the Depositary for the number of full Shares to which such
holder shall be entitled as part of such Conversion Obligation (together with
any cash in lieu of fractional Shares).

     

    (e)           In
case any Note shall be surrendered for partial conversion, the Company shall
execute and the Trustee shall authenticate and deliver to or upon the written
order of the holder of the Note so surrendered, without charge to such holder, a
new Note or Notes in authorized denominations in an aggregate principal amount
equal to the unconverted portion of the surrendered Notes.

     

    
      ShengdaTech,
Inc.

      Indenture

       

    

    
      
        
        

      

      
        73

        
          

        

      

      
        
        

      

    

     

    (f)           If
a holder submits a Note for conversion, the Company will pay (i) all
documentary stamp or similar issue or transfer tax, if any, which may be imposed
by a Relevant Taxing Jurisdiction or the PRC or any political subdivision
thereof or taxing authority thereof or therein with respect to the issuance and
delivery of Shares, if any, upon the conversion; provided that, the holder
shall pay any such tax which is due because the holder requests any Shares to be
issued in a name other than the holder’s name, (ii) any taxes or duties due from
the holder or the Company in a Relevant Taxing Jurisdiction or the PRC upon the
issuance and delivery of any Shares to the holder upon conversion and any
capital gain or withholding tax related to the conversion of the Notes into
Shares, (iii) any issuance fees associated with delivery and receipt of Shares,
which shall be payable concurrently with the issuance and delivery of Shares by
the Company and (iv) any other costs or expenses incurred in connection with the
issuance and delivery of any Shares upon conversion.  The Conversion
Agent may refuse to deliver the certificates representing the Shares being
issued in a name other than the holder’s name until the Trustee receives written
certification that a sum sufficient to pay any tax which is due because the
Shares are to be issued in a name other than the holder’s name has been
paid.  The Conversion Agent shall be entitled to assume, without duty
to enquire, each converting holder has, as a condition precedent to exercising
its conversion right, paid all stamp, issue, registration, and similar taxes or
duties or transfer costs which it is required to pay.  None of the
Conversion Agent or the Trustee shall be responsible or liable
for:  (i) determining whether a holder or the Company is liable to pay
any taxes or the amounts payable (if any), (ii) any failure by any holder or the
Company to make any such payment to the relevant authorities; or (iii)
determining the sufficiency or insufficiency of any amounts so paid, nor shall
the Conversion Agent have any obligation to pay such taxes.

     

    (g)           Except
as provided in Section 14.04, no adjustment shall be made for dividends on
any Shares issued upon the conversion of any Note as provided in this
Article.

     

    (h)           Upon
the conversion of an interest in a Global Note, the Trustee, or the Custodian at
the direction of the Trustee, shall make a notation on such Global Note as to
the reduction in the principal amount represented thereby.  The
Company shall notify the Trustee in writing of any conversion of Notes effected
through any Conversion Agent other than the Trustee.

     

    (i)           Upon
conversion, a Noteholder will not receive any separate cash payment for accrued
and unpaid interest (including Additional Interest, if any), except as set forth
below.  The Company’s settlement of the Conversion Obligations as
described above shall be deemed to satisfy its obligation to pay the principal
amount of the Note and accrued and unpaid interest and Additional Interest, if
any, to, but not including, the Conversion Date.  As a result, accrued
and unpaid interest and Additional Interest, if any, to, but not including, the
Conversion Date shall be deemed to be paid in full rather than cancelled,
extinguished or forfeited.  Notwithstanding the preceding sentence, if
Notes are converted after the close of business on a regular record date and
prior to the opening of business of the next succeeding Interest Payment Date,
holders of such Notes as of the close of business on a regular record date will
receive the interest (including Additional Interest, if any) payable on such
Notes on the corresponding Interest Payment Date notwithstanding the
conversion.  Notes surrendered for conversion during the period from
the close of business on any regular record date to the opening of business on
the next succeeding Interest Payment Date must be accompanied by payment of an
amount equal to the interest (including Additional Interest, if any) payable on
the Notes so converted; provided, however, that no
such payment need be made (1) if the Company has specified a Fundamental Change
Purchase Date that is after a regular record date but on or prior to the next
succeeding Interest Payment Date, (2) in respect of any conversion that occurs
after the record date immediately preceding the applicable Maturity Date or (3)
to the extent of any overdue interest (including Additional Interest) existing
at the time of conversion with respect to such Note.  Except as
described above, no payment or adjustment will be made for accrued interest on
converted Notes.

    
       

      ShengdaTech,
Inc.

      Indenture

    

    
      
         

      

      
        74

        
          

        

      

      
         

      

    

    

      (j)          The
Person in whose name the certificate for any Shares issued upon conversion is
registered shall be treated as a record holder of Shares on and after the
Conversion Date; provided,
however, that no surrender of Notes on any date when the stock transfer
books of the Company shall be closed shall be effective to constitute the Person
or Persons entitled to receive the Shares upon such conversion as the record
holder or holders of such Shares on such date, but such surrender shall be
effective to constitute the Person or Persons entitled to receive such Shares as
the record holder or holders thereof for all purposes at the close of business
on the next succeeding day on which such stock transfer books are open; such
conversion shall be at the Conversion Rate in effect on the date that such Notes
shall have been surrendered for conversion, as if the stock transfer books of
the Company had not been closed.  Upon conversion of Notes, such
Person shall no longer be a Noteholder.

       

      (k)         No
fractional Shares shall be issued upon conversion of any Note or
Notes.  If more than one Note shall be surrendered for conversion at
one time by the same holder, the number of full Shares that shall be issued upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of the Notes (or specified portions thereof) so
surrendered.  Instead of any fractional Share that would otherwise be
issued upon conversion of any Note or Notes (or specified portions thereof), the
Company shall pay a cash adjustment in respect of such fraction (calculated to
the nearest one-100th of a Share) in an amount equal to the same fraction of the
Last Reported Sale Price of the Shares on the relevant Conversion
Date.

       

      SECTION 14.04.
Adjustment of Conversion
Rate.  The Conversion
Rate shall be adjusted from time to time by the Company as follows:

       

      (a)         In
case the Company shall issue Shares as a dividend or distribution to holders of
the outstanding Shares (including a Share bonus or as a result of the
capitalization of profit or reserves), or shall effect a subdivision into a
greater number of Shares or combination into a lesser number of Shares, the
Conversion Rate shall be adjusted based on the following formula:

       

      

         

        ShengdaTech,
Inc.

        Indenture

      

      
        
           

        

        
          75

          
            

          

        

        
           

        

      

      where

       

      
        	
              	
                CR0    
        =

              	
                the
      Conversion Rate in effect immediately prior to the Record Date for such
      dividend or distribution, or the effective date of such Share subdivision
      or Share combination, as the case may
be;

              

      

       

      
        	
              	
                CR ́      
      =

              	
                the
      Conversion Rate in effect immediately after the close of business on the
      Record Date for such dividend or distribution, or the effective date of
      such Share subdivision or Share combination, as the case may
      be;

              

      

       

      
        	
              	
                OS0     
       =

              	
                the
      number of Shares outstanding immediately prior to the Record Date for such
      dividend or distribution, or the effective date of such Share subdivision
      or Share combination, as the case may be;
and

              

      

       

      
        	
              	
                OS ́      
      =

              	
                the
      number of Shares outstanding immediately after the close of business on
      the Record Date for such dividend or distribution, or the effective date
      of such Share subdivision or Share combination, as the case may
      be.

              

      

       

      
        
          Such
adjustment shall become effective immediately prior to 9:00 a.m., New York City
time, on the Ex-Dividend Date for such dividend or distribution or the effective
date of such Share subdivision or Shares combination, as the case may
be.  If any dividend or distribution of the type described in this
Section 14.04(a) is declared but not so paid or made, or the outstanding
Shares are not subdivided or combined, as the case may be, the Conversion Rate
shall be immediately readjusted, effective as of the date the Board of Directors
determines not to pay such dividend or distribution, or subdivide or combine the
outstanding Shares, as the case may be, to the Conversion Rate that would then
be in effect if such dividend, distribution, subdivision or combination had not
been declared.

           

          (b)         In
case the Company shall issue to all or substantially all holders of its
outstanding Shares rights (including subscription bonuses) or warrants entitling
them (for a period expiring within 45 calendar days from the Record Date for
such distribution) to subscribe for or purchase Shares at a price per Share less
than the Last Reported Sale Price of the Shares on the Trading Day immediately
preceding the date of announcement of such distribution, the Conversion Rate
shall be adjusted based on the following formula:

        

      

       

      

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          76

          
            

          

        

        
           

        

      

      where

       

      
        	
              	
                CR0      
         =

              	
                the
      Conversion Rate in effect immediately prior to the Record Date for such
      distribution;

              

      

       

      
        	
              	
                CR ́     
       =

              	
                the
      Conversion Rate in effect immediately after the close of business on the
      Record Date for such distribution;

              

      

       

      
        	
              	
                OS0        
       =

              	
                the
      number of Shares outstanding immediately prior to the Ex-Dividend Date for
      such distribution;

              

      

       

      
        	
              	
                X         
       =

              	
                the
      total number of Shares issuable pursuant to such rights;
    and

              

      

       

      
        	
              	
                Y        
        =

              	
                the
      number of Shares equal to the aggregate price payable to exercise such
      rights or warrants divided by the average
      of the Last Reported Sale Prices of Shares over the 10 consecutive
      Trading-Day period ending on the Business Day immediately preceding the
      Record Date for such distribution.

              

      

      
         

        Such
adjustment shall be successively made whenever any such rights or warrants are
issued and shall become effective immediately prior to 9:00 a.m., New York City
time, on the Ex-Dividend Date for such distribution.  If such rights
or warrants are not so issued, the Conversion Rate shall again be adjusted to be
the Conversion Rate that would then be in effect if such Record Date for such
distribution had not been fixed.  To the extent that such rights or
warrants are not exercised prior to their expiration or Shares are not delivered
after the expiration of such rights or warrants, the Conversion Rate shall be
readjusted to the Conversion Rate that would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of Shares actually delivered.

         

        In
determining whether any rights or warrants entitle the holders to subscribe for
or purchase Shares at less than such Last Reported Sale Price, and in
determining the aggregate offering price of such Shares, there shall be taken
into account any consideration received by the Company for such rights or
warrants and any amount payable on exercise thereof, the value of such
consideration, if other than cash, to be determined by the Board of
Directors.

      

       

      
        (c)         In
case the Company shall, by dividend or otherwise, distribute to all or
substantially all holders of its Shares of any class of Capital Stock of the
Company (other than Shares as covered by Section 14.04(a)), evidences of
its indebtedness or other assets or property or rights to acquire Capital Stock
or other securities of the Company (including securities, but excluding rights
or warrants covered by Section 14.04(b) or dividends or distributions
covered by Section 14.04(a) and 14.04(d) and distributions described below
in this paragraph (c) with respect to Spin-Offs) (any of such shares of
Capital Stock, indebtedness, or other asset or property hereinafter in this
Section 14.04(c) called the “Distributed Property”), then,
in each such case the Conversion Rate shall be adjusted based on the following
formula:

      

       

      
        ShengdaTech,
Inc.

        Indenture

         

        
          
             

          

          
            77

            
              

            

          

          
             

          

        

      

       

      

       

      where

       

      
        	
              	
                CR0    
           =

              	
                the
      Conversion Rate in effect immediately prior to the Record Date for such
      distribution;

              

      

       

      
        	
              	
                CR ́      
      =

              	
                the
      Conversion Rate in effect immediately after the close of business on the
      Record Date for such distribution;

              

      

       

      
        	
              	
                SP0         
       =

              	
                the
      average of the Last Reported Sale Prices of the Shares over the 10
      consecutive Trading-Day period ending on the Trading Day immediately
      preceding the Ex-Dividend Date for such distribution;
  and

              

      

       

      
        	
              	
                FMV   
       =

              	
                the
      fair market value (as determined by the Board of Directors) of the
      Distributed Property distributed with respect to each outstanding Share on
      the Record Date for such
distribution.

              

      

       

      
        Such
adjustment shall become effective immediately prior to 9:00 a.m., New York City
time, on the Ex-Dividend Date for such distribution; provided that if the then
fair market value (as so determined) of the portion of the Distributed Property
so distributed applicable to one Share is equal to or greater than SP0 as set
forth above, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Noteholder shall have the right to receive, for each US$1,000
principal amount of Notes upon conversion, the amount of Distributed Property
such holder would have received had such holder owned a number of Shares equal
to the Conversion Rate on the Record Date.  If such dividend or
distribution is not so paid or made, the Conversion Rate shall again be adjusted
to be the Conversion Rate that would then be in effect if such dividend or
distribution had not been declared.  If the Board of Directors
determines the fair market value of any distribution for purposes of this
Section 14.04(c) by reference to the actual or when issued trading market
for any securities, it must in doing so consider the prices in such market over
the same period used in determining SP0
above.

         

      

      
        With
respect to an adjustment pursuant to this Section 14.04(c) where there has
been a payment of a dividend or other distribution on the Shares in shares of
Capital Stock of any class or series, or similar equity interest, of or relating
to a Subsidiary or other business unit (a “Spin-Off”), the Conversion
Rate will be adjusted based on the following formula:

      

       

      ShengdaTech,
Inc.

      Indenture

       

      
        
          
             

          

          
            78

            
              

            

          

          
             

          

        

      

       

      

       

      where

       

      
        	
              	
                CR0   
            =

              	
                the
      Conversion Rate in effect immediately prior to the end of the Valuation
      Period;

              

      

       

      
        	
              	
                CR ́       =

              	
                the
      Conversion Rate in effect immediately after the end of the Valuation
      Period;

              

      

       

      
        	
              	
                FMV0  
       =

              	
                the
      average of the Last Reported Sale Prices of the Capital Stock or similar
      equity interest distributed to holders of Shares applicable to one Share
      over the first 10 consecutive Trading-Day period beginning on and
      including the fifth Trading Day after the effective date of the Spin-Off
      (the “Valuation
      Period”); and

              

      

       

      
        	
              	
                MP0       
       =

              	
                the
      average of the Last Reported Sale Prices of Shares over the Valuation
      Period.

              

      

       

      Such
adjustment shall occur on the close of business on the 15th Trading Day
immediately following, and including, the effective date of the
Spin-Off.  As a result, any conversion within the 15th Trading Days
following the effective date of any Spin-Off will be deemed not to have occurred
until the end of such 15 Trading Day period.

       

      ShengdaTech,
Inc.

      Indenture

       

      
        
          
             

          

          
            79

            
              

            

          

          
             

          

        

      

      

      
        Rights or
warrants distributed by the Company to all holders of Shares, entitling the
holders thereof to subscribe for or purchase shares of the Company’s Capital
Stock, including Shares (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events (“Trigger
Event”):  (i) are deemed to be transferred with such Shares;
(ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Shares, shall be deemed not to have been distributed for purposes
of this Section 14.04(c) (and no adjustment to the Conversion Rate under
this Section 14.04(c) will be required) until the occurrence of the
earliest Trigger Event, whereupon such rights and warrants shall be deemed to
have been distributed and an appropriate adjustment (if any is required) to the
Conversion Rate shall be made under this Section 14.04(c).  If
any such rights or warrants, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to events, upon the
occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, property,
rights or warrants, then the date of the occurrence of any and each such event
shall be deemed to be the date of distribution and Ex-Dividend Date with respect
to new rights or warrants with such rights (and a termination or expiration of
the existing rights or warrants without exercise by any of the holders
thereof).  In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Rate under this Section 14.04(c) was made, (1) in the case of
any such rights or warrants that shall all have been redeemed or repurchased
without exercise by any holders thereof, the Conversion Rate shall be readjusted
upon such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per Share redemption or repurchase price received by a holder or holders
of Shares with respect to such rights or warrants (assuming such holder had
retained such rights or warrants), made to all holders of Shares as of the date
of such redemption or repurchase, and (2) in the case of such rights or warrants
that shall have expired or been terminated without exercise by any holders
thereof, the Conversion Rate shall be readjusted as if such rights and warrants
had not been issued.

         

      

      
        For
purposes of this Section 14.04(c), Section 14.04(a) and
Section 14.04(b), any dividend or distribution to which this
Section 14.04(c) is applicable that also includes Shares to which
Section 14.04(a) applies or rights or warrants to subscribe for or purchase
Shares to which Section 14.04(a) or Section 14.04(b) applies (or
both), shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, assets, property or shares of capital stock other
than such Shares or rights or warrants to which Section 14.04(b) applies
(and any Conversion Rate adjustment required by this Section 14.04(c) with
respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such Shares or such rights or
warrants (and any further Conversion Rate adjustment required by
Section 14.04(a) and Section 14.04(b) with respect to such dividend or
distribution shall then be made), except (A) the Ex-Dividend Date of such
dividend or distribution shall be substituted as “the Ex-Dividend Date for such
dividend or distribution” and “the Ex-Dividend Date for such distribution”
within the meaning of Section 14.04(a) and Section 14.04(b) and (B)
any Shares included in such dividend or distribution shall not be deemed
“outstanding immediately prior to the Ex-Dividend Date for such dividend or
distribution” within the meaning of Section 14.04(a).

         

      

      (d)         In
case the Company shall pay a dividend or make a distribution consisting
exclusively of cash to all or substantially all holders of its Shares (including
as a result of capital reductions and Share redemptions or amortizations), the
Conversion Rate shall be adjusted based on the following formula:

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          80

          
            

          

        

        
           

        

      

      

       

      where

       

      
        	
              	
                CR0   
            =

              	
                the
      Conversion Rate in effect immediately prior to the Record for such
      dividend or distribution;

              

      

       

      
        	
              	
                CR ́       =

              	
                the
      Conversion Rate in effect immediately after the close of business on the
      Record Date for such dividend or
distribution;

              

      

       

      
        	
              	
                SP0        
        =

              	
                the
      average of Last Reported Sale Prices of the Shares over the 10 consecutive
      Trading-Day period ending on the Trading Day immediately preceding the
      Record Date for such distribution;
and

              

      

       

      
        	
              	
                C         
       =

              	
                the
      full amount of such dividend or distribution per Share the Company
      distributes to holders of the
Shares.

              

      

       

      Such
adjustment shall become effective immediately prior to 9:00 a.m., New York City
time, on the Ex-Dividend Date for such dividend or distribution; provided that if the portion
of the cash so distributed applicable to one Share is equal to or greater than
SP0 as
above, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Noteholder shall have the right to receive upon conversion of a Note
(or any portion thereof) the amount of cash such holder would have received had
such holder owned a number of Shares equal to the Conversion Rate on the Record
Date.  If such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such dividend or distribution had not been
declared.

       

      
        For the
avoidance of doubt, for purposes of this Section 14.04(d), in the event of
any reclassification of the Shares, as a result of which the Notes become
convertible into more than one class of Shares, if an adjustment to the
Conversion Rate is required pursuant to this Section 14.04(d), references
in this Section to one Share or Last Reported Sale Price of one Share shall be
deemed to refer to a unit or to the price of a unit consisting of the number of
shares of each class of Shares into which the Notes are then convertible equal
to the numbers of shares of such class issued in respect of one Share in such
reclassification.  The above provisions of this paragraph shall
similarly apply to successive reclassifications.

         

      

      (e)         In
case the Company or any of its Subsidiaries makes a payment in respect of a
tender offer or exchange offer for all or any portion of the Shares, if (x) the
cash and value of any other consideration included in the payment per Share
exceeds (y) the Last Reported Sale Price of the Shares on the Trading Day
immediately following the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer (as it may be amended), the Conversion
Rate shall be adjusted based on the following formula:

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          81

          
            

          

        

        
           

        

      

      

       

      where

       

      
        	
              	
                CR0         
       =

              	
                the
      Conversion Rate in effect on the date immediately prior to the effective
      date of the adjustment;

              

      

       

      
        	
              	
                CR ́       =

              	
                the
      Conversion Rate in effect on the second day immediately following the
      effective date of the adjustment;

              

      

       

      
        	
              	
                AC      
       =

              	
                the
      aggregate value of all cash and any other consideration (as determined by
      the Board of Directors) paid or payable for Shares purchased in such
      tender or exchange offer;

              

      

       

      
        	
              	
                OS0        
       =

              	
                the
      number of Shares outstanding immediately prior to the date such tender or
      exchange offer expires;

              

      

       

      
        	
              	
                OS ́       =

              	
                the
      number of Shares outstanding immediately after the date such tender or
      exchange offer expires; and

              

      

       

      
        	
              	
                SP ́      
       =

              	
                the
      average of the Last Reported Sale Prices of Shares over the 10 consecutive
      Trading-Day period commencing on the Trading Day immediately after the
      date such tender or exchange offer
expires,

              

      

       

      such
adjustment to become effective at the close of business on the 10th Trading Day
from and including the Trading Day immediately following the date such tender or
exchange offer expires.  As a result, any conversion within such
10 Trading
Day period will be deemed not to have occurred until the end of such 10 Trading
Day period.  If the Company is obligated to purchase Shares pursuant
to any such tender or exchange offer, but the Company is permanently prevented
by applicable law from effecting all or any such purchases or all or any portion
of such purchases are rescinded, the Conversion Rate shall again be adjusted to
be the Conversion Rate that would then be in effect if such tender or exchange
offer had not been made or had only been made in respect of the purchases that
had been effected.

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          82

          
            

          

        

        
           

        

      

      (f)          The
applicable Conversion Rate will not be adjusted:

       

      
        (i)         if
(other than in connection with a share combination) the application of the
foregoing formulae set forth in paragraph (a), (b), (c), (d) or (e) of this
Section 14.04 would result in a decrease in the Conversion
Rate;

      

       

      (ii)        upon
the issuance of any Shares to any present or future plan providing for the
reinvestment of dividends or interest payable on the Company’s securities and
the investment of additional optional amounts in Shares under any such
plan;

       

      (iii)       upon
the issuance of any Shares or options or rights to purchase those Shares
pursuant to any present or future employee, director or consultant benefit plan
or program of or assumed by the Company or any of the Company’s
Subsidiaries;

       

      
        (iv)      upon
the issuance of any Shares pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security not described in
Section 14.04(c) and outstanding as of the date the Notes were first
issued;

      

       

      (v)        for
a change in the par value of the Shares;

       

      (vi)       for
accrued and unpaid interest, if any;

       

      
        (vii)     if
holders of the Notes participate, as a result of holding the Notes, at the same
time and in the same manner as holders of Shares, as if such holders of the
Notes held a number of Shares equal to the then-applicable Conversion Rate, in
any of the transactions described in paragraph (a), (b), (c), (d) or (e) of this
Section 14.04 without having to convert their Notes; or

      

       

      
        (viii)    if
holders of Shares are not eligible to participate in any of the transactions
described in paragraph (a), (b), (c), (d) or (e) of this
Section 14.04.

      

       

      
        (g)         For
purposes of this Section 14.04 the term “Record Date” shall mean, with
respect to any dividend, distribution or other transaction or event in which the
holders of Shares have the right to receive any cash, securities or other
property or in which the Shares (or other applicable security) is exchanged for
or converted into any combination of cash, securities or other property, the
date fixed for determination of stockholders entitled to receive such cash,
securities or other property (whether such date is fixed by the Board of
Directors or by statute, contract or otherwise).

         

      

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          83

          
            

          

        

        
           

        

      

      
        (h)         In
addition to those required by clauses (a), (b), (c), (d) and (e) of this
Section 14.04, and to the extent permitted by applicable law and subject to
the applicable rules of the Nasdaq, the Company from time to time may increase
the Conversion Rate by any amount for a period of at least 20 days if the Board
of Directors determines that such increase would be in the Company’s best
interest.  In addition, the Company may also (but is not required to)
increase the Conversion Rate to avoid or diminish any income tax to holders of
Shares or rights to purchase Shares in connection with any dividend or
distribution of Shares (or rights to acquire Shares ) or similar
event.  Whenever the Conversion Rate is increased pursuant to the
preceding sentence, the Company shall mail to the holder of each Note at his
last address appearing on the Note register provided for in Section 2.06 a
notice of the increase at least 15 days prior to the date the increased
Conversion Rate takes effect, and such notice shall state the increased
Conversion Rate and the period during which it will be in effect.

         

        (i)          All
calculations and other determinations under this Article 14 shall be made
by the Company (and not by the Conversion Agent or Trustee) and shall be made to
the nearest cent or to the nearest one-ten thousandth (1/10,000) of a Share, as
the case may be.  The Company shall make all these calculations in
good faith and, absent manifest error, its calculations shall be final and
binding on holders of Notes, the Conversion Agent and the
Trustee.  The Company shall provide a schedule of its calculations to
each of the Trustee and the Conversion Agent, and each of the Trustee and the
Conversion Agent is entitled to rely conclusively upon the accuracy of such
calculations without independent verification, and shall have no liability in
connection with the foregoing.  The Trustee shall forward such
calculations to any holder of Notes upon the request of that holder without any
representation or warranty.  No adjustment shall be made for the
Company’s issuance of Shares or any securities convertible into or exchangeable
for Shares or rights to purchase Shares or such convertible or exchangeable
securities, other than as provided in this Section 14.04.  No
adjustment shall be made to the Conversion Rate unless such adjustment would
require a change of at least 1% in the Conversion Rate then in effect at such
time.  The Company shall carry forward any adjustments that are less
than 1% of the Conversion Rate and make such carried forward adjustments,
regardless of whether the aggregate adjustment is less than 1%, within one year
of the first such adjustment carried forward, upon a Fundamental Change or upon
maturity.

         

        (j)          Whenever
the Conversion Rate is adjusted as herein provided, the Company shall promptly
file with the Trustee and the Conversion Agent an Officers’ Certificate setting
forth the Conversion Rate after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.  The Trustee and
Conversion Agent may conclusively rely on the accuracy of the Conversion Rate
adjustment provided by the Company.  Unless and until a Responsible
Officer of the Trustee shall have received such Officers’ Certificate, the
Trustee shall not be deemed to have knowledge of any adjustment of the
Conversion Rate and may assume without inquiry that the last Conversion Rate of
which it has been notified by the Company in writing is still in
effect.  Promptly after delivery of such certificate, the Company
shall prepare a notice of such adjustment of the Conversion Rate setting forth
the adjusted Conversion Rate and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Rate
to the holder of each Note at his last address appearing on the Note Register
provided for in Section 2.06 of this Indenture, within 20 days of the
effective date of such adjustment.  Failure to deliver such notice
shall not affect the legality or validity of any such adjustment.

         

      

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          84

          
            

          

        

        
           

        

      

      
        (k)         In
any case in which this Section 14.04 provides that an adjustment shall
become effective at the close of business on the 10th Trading Day from and
including the Trading Day immediately following the date such tender or exchange
offer expires pursuant to Section 14.04(e) (the “Adjustment Determination
Date”), the Company may elect to defer until the occurrence of the
Adjustment Event (as hereinafter defined) (x) issuing to the holder of any Note
converted after such Adjustment Determination Date and before the occurrence of
such Adjustment Event, the additional cash and, if applicable, Shares or other
securities issuable upon such conversion by reason of the adjustment required by
such Adjustment Event over and above the amounts deliverable upon such
conversion before giving effect to such adjustment and (y) paying to such holder
any amount in cash in lieu of any fraction pursuant to
Section 14.04.  For purposes of this Section 14.04(k), the
term “Adjustment Event”
shall mean the date a sale or exchange of Shares pursuant to such tender or
exchange offer is consummated and becomes irrevocable.

         

        (l)          For
purposes of this Section 14.04, the number of Shares at any time
outstanding, means shares that are outstanding for purposes of Nevada law and,
shall not include Shares held in the treasury of the Company, but shall include
Shares issuable in respect of scrip certificates issued in lieu of fractions of
Shares.

         

      

      SECTION 14.05.
Shares to Be Fully
Paid.  The Company
shall provide, free from preemptive rights, out of its authorized but unissued
Shares or Shares held in treasury, sufficient Shares to provide for conversion
of the Notes from time to time as such Notes are presented for
conversion.

       

      SECTION 14.06.
Effect of Reclassification,
Consolidation, Merger or Sale.

       

      If any of
the following events occur, namely (i) any reclassification or change of the
outstanding Shares (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a split,
subdivision or combination), (ii) any consolidation, merger or combination of
the Company with another person, or (iii) any sale or conveyance of all or
substantially all of the property and assets of the Company to any other person,
in either case as a result of which holders of Shares shall be entitled to
receive cash, securities or other property or assets with respect to or in
exchange for such Shares (any such event a “Merger Event”),
then:

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          85

          
            

          

        

        
           

        

      

      
        (a)         the
Company or the successor or purchasing person, as the case may be, shall execute
with the Trustee a supplemental indenture (which shall comply with the Trust
Indenture Act as in force at the date of execution of such supplemental
indenture if such supplemental indenture is then required to so comply)
permitted under Section 10.01(a) providing for the conversion and
settlement of the Notes as set forth in this Indenture.  Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
and the Trustee and Conversion Agent may conclusively rely on the determination
by the Company of the equivalency of such adjustments.  If, in the
case of any Merger Event, the Reference Property (as defined below) includes
shares of stock or other securities and assets of a corporation other than the
successor or purchasing corporation, as the case may be, in such
reclassification, change, consolidation, merger, combination, sale or
conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the holders of the Notes as the Board of Directors shall reasonably
consider necessary by reason of the foregoing, including to the extent required
by the Board of Directors and practicable the provisions providing for the
repurchase rights set forth in Article 15 herein.

         

      

      
        In the
event the Company shall execute a supplemental indenture pursuant to this
Section 14.06, the Company shall promptly file with the Trustee an
Officers’ Certificate briefly stating the reasons therefor, the kind or amount
of cash, securities or property or asset that will constitute the Reference
Property (as defined below) after any such Merger Event, any adjustment to be
made with respect thereto and that all conditions precedent have been complied
with, and shall promptly mail notice thereof to all Noteholders.

         

        (b)         Notwithstanding
the provisions of Section 14.03(a) and Section 14.03(b), and subject
to the provisions of Section 14.01, at the effective time of such Merger
Event, the right to convert each US$1,000 principal amount of Notes will be
changed to a right to convert such Note by reference to the kind and amount of
cash, securities or other property or assets that a holder of a number of Shares
equal to the Conversion Rate immediately prior to such transaction would have
owned or been entitled to receive (the “Reference Property”) such that
from and after the effective time of such transaction, a Noteholder will be
entitled thereafter to convert its Notes into the same type (and in the same
proportion) of Reference Property, based on the number of Shares that would have
been deliverable upon conversion had such Merger Event not
occurred.  For purposes of determining the constitution of Reference
Property, the type and amount of consideration that a holder of Shares would
have been entitled to in the case of reclassifications, consolidations, mergers,
sales or conveyance of assets or other transactions that cause the Shares to be
converted into the right to receive more than a single type of consideration
(determined based in part upon any form of shareholder election) will be deemed
to be the weighted average of the types and amounts of consideration received by
the holders of Shares that affirmatively make such an election.  The
Company shall not become a party to any such transaction unless its terms are
consistent with the preceding.  None of the foregoing provisions shall
affect the right of a holder of Notes to convert its Notes in accordance with
the provisions of Article 14 hereof prior to the effective
date.

      

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          86

          
            

          

        

        
           

        

      

      (c)         The
Company shall cause notice of the execution of such supplemental indenture to be
mailed to each Noteholder, at his address appearing on the Note Register
provided for in this Indenture, within 20 days after execution
thereof.  Failure to deliver such notice shall not affect the legality
or validity of such supplemental indenture.

       

      (d)         The
above provisions of this Section shall similarly apply to successive Merger
Events.

       

      SECTION 14.07.
Certain
Covenants.

       

      (a)         Before
taking any action which would cause an adjustment reducing the Conversion Price
below the then par value, if any, of the Shares issuable upon conversion of the
Notes, the Company shall take all corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue such Shares at such adjusted Conversion Price.

       

      (b)         The
Company covenants that all Shares issued upon conversion of Notes will be fully
paid and non-assessable by the Company and free from all taxes, liens and
changes with respect to the issue thereof.

       

      (c)          The
Company covenants that it will use its best efforts to ensure that it maintains
a listing or quotation for all Shares, including the Shares issued on conversion
of the Notes, on the Nasdaq or any other U.S. national securities exchange or
automated quotation system.

       

      SECTION 14.08.
Responsibility of
Trustee.  The Trustee and
any Conversion Agent shall not at any time be under any duty or responsibility
to any Noteholder to determine the Conversion Rate or whether any facts exist
which may require any adjustment of the Conversion Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same.  The Trustee and any
Conversion Agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any Shares, or of any securities or, Reference
Property or other property, which may at any time be issued or delivered upon
the conversion of any Note; and the Trustee and any Conversion Agent make no
representations with respect thereto.  Neither the Trustee nor any
Conversion Agent shall be responsible for any failure of the Company to issue,
transfer or deliver any Shares or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article.

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          87

          
            

          

        

        
           

        

      

      
        Without
limiting the generality of the foregoing, neither the Trustee nor any Conversion
Agent shall be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture entered into pursuant to
Section 14.06 relating either to the kind or amount of shares of stock or
securities or property (including cash) receivable by Noteholders upon the
conversion of their Notes after any event referred to in such Section 14.06
or to any adjustment to be made with respect thereto, but, subject to the
provisions of Section 7.01, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, the
Officers’ Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) and Opinion
of Counsel with respect thereto.

      

       

      Notwithstanding
any other provision herein, neither the Trustee nor the Conversion Agent has any
duty to determine how or when an adjustment under this Article 14 should be
made.  Neither the Trustee nor the Conversion Agent shall be
responsible for the Company’s failure to comply with this Article
14.

       

      SECTION 14.09.
Notice to Holders Prior to
Certain Actions.

       

      In
case:

       

      
        (a)         the
Company shall declare a dividend (or any other distribution) on its Shares that
would require an adjustment in the Conversion Rate pursuant to
Section 14.04; or

      

       

      
        (b)         the
Company shall authorize the granting to all or substantially all of the holders
of its Shares of rights or warrants to subscribe for or purchase any share of
any class or any other rights or warrants that would require an adjustment in
the Conversion Rate pursuant to Section 14.04; or

         

        (c)         of
any reclassification of the Shares of the Company (other than a subdivision or
combination of its outstanding Shares, or a change in par value, or from par
value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Company is a party and for which approval
of any shareholders of the Company is required, or of the sale or transfer of
all or substantially all of the assets of the Company; or

      

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          88

          
            

          

        

        
           

        

      

      (d)         of
the voluntary or involuntary dissolution, liquidation or winding-up of the
Company;

       

      
        the
Company shall cause to be filed with the Trustee and the Conversion Agent and to
be mailed to each Noteholder at his address appearing on the Note Register,
provided for in Section 2.06 of this Indenture, as promptly as possible but
in any event at least 20 days prior to the applicable date specified in
clause (x) or (y) below, as the case may be, a notice stating (x) the date
on which a record is to be taken for the purpose of such dividend, distribution
or rights or warrants, or, if a record is not to be taken, the date as of which
the holders of Shares of record to be entitled to such dividend, distribution or
rights are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective or occur, and the date as of which it is expected
that holders of Shares of record shall be entitled to exchange their Shares for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or
winding-up.  Failure to give such notice, or any defect therein, shall
not affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up.

      

       

      
        SECTION 14.10.
Share Rights Plans.  To the extent
that the Company has a Share rights plan, upon conversion of the Notes, the
holders shall receive, in addition to any Shares, the associated rights issued
under the Share rights plan unless, prior to conversion, the rights have
separated from the Shares, in which case the Conversion Rate will be adjusted at
the time of separation as if the Company distributed to all holders of Shares,
shares of the Company’s Capital Stock, evidences of indebtedness, assets,
property, rights or warrants as described under Section 14.03(c), subject
to readjustment in the event of the expiration, termination or redemption of
such rights.  If, and only if, the holders receive rights under such
shareholder rights plans as described in the preceding sentence upon conversion
of their Notes, then no other adjustment pursuant to this Article 14 shall
be made in connection with such Share rights plans.

      

       

      ARTICLE 15

      Purchase
of Notes at Option of Holders

       

      SECTION 15.01.
Purchase of Notes at Option of
the Holder.

       

      (a)         At
the option of the holder thereof, Notes shall be purchased by the Company in
accordance with the provisions of the Notes on December 15, 2013 (the “Put Right Purchase Date”) at a
purchase price per Note equal to 100% of the aggregate principal amount of the
Notes being purchased, together with any accrued and unpaid interest up to, but
excluding, such Put Right Purchase Date (the “Put Right Purchase
Price”).  However, the Company shall, on the Put Right Purchase
Date, pay the accrued and unpaid interest to, but excluding, such date to the
holder of record at the close of business on the immediately preceding record
date.  The holder submitting a Note for purchase shall not receive
this accrued and unpaid interest unless that holder was also the holder of
record at the close of business on the immediately preceding record
date.

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          89

          
            

          

        

        
           

        

      

      
        Purchases
of Notes by the Company pursuant to this Section 15.01 shall be made, at
the option of the holder thereof, upon:

      

       

      (i)        delivery
to the Trustee (or other Paying Agent appointed by the Company) and the Company
by the holder of a written notice of purchase (a “Put Right Purchase Notice”) in
the form set forth on the reverse of the Note at any time from the opening of
business on the date that is 25 Business Days prior to the applicable Put Right
Purchase Date until the close of business on the fifth Business Day prior to
such Put Right Purchase Date stating:

       

      (A)           if
certificated, the certificate numbers of the Notes to be delivered for
repurchase;

       

      (B)           the
principal amount of the Notes to be repurchased, which must be US$1,000 or an
integral multiple thereof, and

       

      (C)           that
the Notes are to be repurchased as of the applicable Put Right Purchase Date
pursuant to the terms and conditions specified in the Notes and in this
Indenture, and

       

      
        (ii)       delivery
of such Note to the Paying Agent at any time after delivery of the applicable
Put Right Purchase Notice and prior to the close of business on the Business Day
immediately preceding the applicable Put Right Purchase Date (together with all
necessary endorsements) at the offices of the Paying Agent, such delivery being
a condition to receipt by the holder of the Put Right Purchase Price therefor,
which shall be so paid pursuant to this Section 15.01 only if the Note so
delivered to the Paying Agent shall conform in all respects to the description
thereof in the related Put Right Purchase Notice, as determined by the
Company.

         

      

      
        The
Company shall purchase from the holder thereof, pursuant to this
Section 15.01, a portion of a Note if the principal amount of such portion
is US$1,000 or an integral multiple of US$1,000.  Provisions of this
Indenture that apply to the purchase of all of a Note also apply to the purchase
of such portion of such Note.

         

      

      
        Any
purchase by the Company contemplated pursuant to the provisions of this
Section 15.01 shall be consummated by the delivery of the consideration to
be received by the holder promptly following the later of the Put Right Purchase
Date and the time of delivery of the Note.

         

      

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          90

          
            

          

        

        
           

        

      

      
        The
Trustee (or other Paying Agent appointed by the Company) shall promptly notify
the Company of the receipt by it of any Put Right Purchase Notice or written
notice of withdrawal thereof in accordance with the provisions of
Section 15.01(d).

         

        In
connection with any purchase by the Company contemplated pursuant to the
provisions of this Section 15.01, the Company shall (a) comply with the
provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules
under the Exchange Act; (b) file a Schedule TO or any successor or similar
schedule, if required, under the Exchange Act; and (c) otherwise comply with all
federal and state securities laws in connection with any offer by the Company to
purchase the Notes.

         

        Any Note
that is to be repurchased only in part shall be surrendered to the Trustee
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by the holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
make available for delivery to the holder of such Note without service charge, a
new Note or Notes, containing identical terms and conditions, each in an
authorized denomination in aggregate principal amount equal to and in exchange
for the unrepurchased portion of the principal of the Note so
surrendered.

         

        (b)         In
connection with any purchase of Notes pursuant to this Section 15.01, the
Company shall give written notice of the Put Right Purchase Date to the holders
(the “Company Put Right
Notice”).

         

        The
Company Put Right Notice shall be sent by first-class mail to the Trustee and to
each holder (and to each beneficial owner as required by applicable law) not
less than 25 Business Days prior to any Put Right Purchase Date (the “Company Put Right Notice
Date”).  Each Company Put Right Notice shall include a form of
Put Right Purchase Notice to be completed by a Noteholder and shall
state:

         

      

      
        (i)         the
Put Right Purchase Price and the Conversion Price;

         

        (ii)        the
name and address of the Paying Agent and the Conversion Agent;

         

        (iii)       that
Notes as to which a Put Right Purchase Notice has been given may be converted
only in accordance with Article 14 hereof if the applicable Put Right
Purchase Notice has been withdrawn in accordance with the terms of this
Indenture;

         

        (iv)      that
Notes must be surrendered to the Paying Agent to collect payment;

         

      

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          91

          
            

          

        

        
           

        

      

      (v)       that
the Put Right Purchase Price for any Note as to which a Put Right Purchase
Notice has been given and not withdrawn will be paid promptly following the
later of the Put Right Purchase Date and the time of surrender of such Note as
described in subclause (iv) above;

       

      (vi)      the
procedures the holder must follow to exercise rights under this Section and a
brief description of those rights;

       

      (vii)     briefly,
the conversion rights of the Notes;

       

      
        (viii)    the
procedures for withdrawing a Put Right Purchase Notice (including pursuant to
the terms of Section 15.01(d));

        
        

      

      (ix)       that,
unless the Company defaults in making payment on Notes for which a Put Right
Purchase Notice has been submitted, interest on the Notes in respect of which a
Put Right Purchase Notice has been delivered and not withdrawn will cease to
accrue on the Put Right Purchase Date; and

       

      (x)        the
CUSIP number of the Notes.

       

      If any of
the Notes are to be repurchased in the form of a Global Note, the Company shall
modify such notice to the extent necessary to accord with the procedures of the
Depositary applicable to repurchases.

       

      At the
Company’s written request, the Trustee shall give such Company Put Right Notice
in the Company’s name and at the Company’s expense; provided, however, that, in
all cases, the text of such Company Put Right Notice shall be prepared by the
Company.

       

      
        (c)         Upon
receipt by the Trustee (or other Paying Agent appointed by the Company) of the
Put Right Purchase Notice specified in Section 15.01(a), the holder of the
Note in respect of which such Put Right Purchase Notice was given shall (unless
such Put Right Purchase Notice is withdrawn as specified in
Section 15.01(d)) thereafter be entitled to receive solely the Put Right
Purchase Price with respect to such Note.  Such Put Right Purchase
Price shall be paid to such holder, subject to receipt of funds by the Paying
Agent, promptly following the later of (x) the Put Right Purchase Date with
respect to such Note (provided the conditions in
Section 15.01(a) have been satisfied) and (y) the time of delivery of such
Note to the Paying Agent by the holder thereof in the manner required by
Section 15.01(a).  Notes in respect of which a Put Right Purchase
Notice has been given by the holder thereof may not be converted pursuant to
Article 14 hereof on or after the date of the delivery of such Put Right
Purchase Notice, unless such Put Right Purchase Notice has first been validly
withdrawn as specified in Section 15.01(d).

         

      

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          92

          
            

          

        

        
           

        

      

      (d)         A
Put Right Purchase Notice may be withdrawn by means of a written notice of
withdrawal delivered to the office of the Paying Agent in accordance with the
Put Right Purchase Notice at any time prior to the close of business on the
Business Day prior to the Put Right Purchase Date specifying:

       

      (i)         if
certificated Notes have been issued, the certificate numbers of the withdrawn
Notes,

       

      (ii)        the
principal amount of the Notes with respect to which such notice of withdrawal is
being submitted, and

       

      (iii)       the
principal amount, if any, of such Notes that remains subject to the original Put
Right Purchase Notice, which portion must be in principal amounts of US$1,000 or
an integral multiple of US$1,000;

       

      provided, however, that if
the Notes are not in certificated form, the notice must comply with appropriate
procedures of the Depositary.

       

      A written
notice of withdrawal of a Put Right Purchase Notice shall be in the form set
forth in the preceding paragraph.

       

      
        Upon
receipt of a written notice of withdrawal, the Paying Agent shall promptly
return to the holders thereof any Notes in respect of which a Put Right Purchase
Notice has been withdrawn in accordance with the provisions of
Section 15.01(e).

      

       

      
        (e)         There
shall be no purchase of any Notes pursuant to this Section 15.01 if there
has occurred (prior to, on or after, as the case may be, the giving, by the
holders of such Notes, of the required Put Right Purchase Notice) and is
continuing an Event of Default (other than a default in the payment of the Put
Right Purchase Price with respect to such Notes).  The Paying Agent
will promptly return to the respective holders thereof any Notes held by it
during the continuance of an Event of Default (other than a default in the
payment of the Put Right Purchase Price with respect to such Notes), in which
case, upon such return, the Put Right Purchase Notice with respect thereto shall
be deemed to have been withdrawn.

         

        (f)          No
later than 10 a.m., New York City time, 2 Business Days before the Put Right
Purchase Date, the Company shall deposit with the Trustee (or other Paying Agent
appointed by the Company or if the Company is acting as its own Paying Agent,
set aside, segregate and hold in trust as provided in Section 4.05) an
amount (in immediately available funds if deposited on such Business Day)
sufficient to pay the aggregate Put Right Purchase Price of all the Notes or
portions thereof which are to be purchased as of the Put Right Purchase
Date.  The manner in which the deposit required by this
Section 15.01(f) is made by the Company shall be by wire in immediately
available funds.

      

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          93

          
            

          

        

        
           

        

      

      
        If the
Trustee (or other Paying Agent appointed by the Company) holds, in accordance
with the terms hereof, money sufficient to pay the Put Right Purchase Price of
any Note on the Business Day after the Put Right Purchase Date, then on and
after the Put Right Purchase Date, (i) such Note will cease to be outstanding,
(ii) interest will cease to accrue (whether or not book-entry transfer of
the Notes is made or whether or not the Notes are delivered to the Transfer or
Paying Agent) and (iii) all the rights of the holder in respect thereof shall
terminate (other than the right to receive the Put Right Purchase Price upon
delivery of the Notes).

         

        To the
extent that the aggregate amount of cash deposited by the Company pursuant to
this Section 15.01(f) exceeds the aggregate Put Right Purchase Price of the
Notes or portions thereof that the Company is obligated to purchase, then
promptly after the Put Right Purchase Date the Trustee or a Paying Agent, as the
case may be, shall return any such excess cash to the Company.

         

      

      SECTION 15.02.
Purchase at Option of Holders
Upon a Fundamental Change.

       

      
        (a)          If
a Fundamental Change occurs at any time, then each Noteholder shall have the
right, at such holder’s option, to require the Company to purchase all of such
holder’s Notes or any portion thereof that is a multiple of US$1,000 principal
amount, for cash on the date (the “Fundamental Change Purchase
Date”) specified by the Company that is not less than 20 Business Days
and not more than 35 Business Days after the date of the Fundamental Change
Control Notice (as defined below) at a purchase price equal to 100% of the
principal amount thereof, together with accrued and unpaid interest (including
Additional Interest, if any) thereon to, but excluding, the Fundamental Change
Purchase Date (the “Fundamental
Change Purchase Price”).  However, if the Fundamental Change
Purchase Date occurs after a record date and on or prior to the corresponding
Interest Payment Date, the Company shall pay the full amount of accrued and
unpaid interest (including Additional Interest, if any) due on such Interest
Payment Date to the record holder on the record date corresponding to such
Interest Payment Date, and the Fundamental Change Purchase Price payable to the
holder who presents the note for purchase will be 100% of the principal amount
of such note and will not include any accrued and unpaid interest (including
Additional Interest, if any).

         

        Repurchases
of Notes under this Section 15.02 shall be made, at the option of the
holder thereof, upon:

         

        (i)        delivery
to the Trustee (or other Paying Agent appointed by the Company) by a holder of a
duly completed notice (the “Fundamental Change Purchase
Notice”) in the form set forth on the reverse of the Note by the close of
business on or before the fifth Business Day prior to the Fundamental Change
Purchase Date; and

      

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          94

          
            

          

        

        
           

        

      

       

      (ii)       delivery
or book-entry transfer of the Notes to the Trustee (or other Paying Agent
appointed by the Company) at any time after delivery of the Fundamental Change
Purchase Notice (together with all necessary endorsements) at the Corporate
Trust Office of the Trustee (or other Paying Agent appointed by the Company) in
the Borough of Manhattan, such delivery being a condition to receipt by the
holder of the Fundamental Change Purchase Price therefor; provided that such
Fundamental Change Purchase Price shall be so paid pursuant to this
Section 15.02 only if the Note so delivered to the Trustee (or other Paying
Agent appointed by the Company) shall conform in all respects to the description
thereof in the related Fundamental Change Purchase Notice.

       

      The
Fundamental Change Purchase Notice shall state:

       

      (A)           if
certificated, the certificate numbers of Notes to be delivered for
purchase;

       

      (B)           the
principal amount of Notes to be purchased, which must be US$1,000 or an integral
multiple thereof; and

       

      (C)           that
the Notes are to be purchased by the Company pursuant to the applicable
provisions of the Notes and this Indenture.

       

      Any
purchase by the Company contemplated pursuant to the provisions of this
Section 15.02 shall be consummated by the delivery of the consideration to
be received by the holder promptly following the later of the Fundamental Change
Purchase Date and the time of delivery of the Note.

       

      The
Trustee (or other Paying Agent appointed by the Company) shall promptly notify
the Company of the receipt by it of any Fundamental Change Purchase Notice or
written notice of withdrawal thereof in accordance with the provisions of
Section 15.02(c).

       

      In
connection with any purchase by the Company contemplated pursuant to the
provisions of this Section 15.02, the Company shall (a) comply with the
provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules
under the Exchange Act; (b) file a Schedule TO or any successor or similar
schedule, if required, under the Exchange Act; and (c) otherwise comply with all
federal and state securities laws in connection with any offer by the Company to
purchase the Notes.

       

      Any Note
that is to be purchased only in part shall be surrendered to the Trustee (with,
if the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by the holder thereof or his attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and make available
for delivery to the holder of such Note, a new Note or Notes, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the unpurchased portion of the
principal of the Note so surrendered.  Any expenses in connection
therewith shall be payable by the Company.

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          95

          
            

          

        

        
           

        

      

      (b)         On
or before the 20th Business Day after the occurrence of a Fundamental Change,
the Company shall provide to all holders of record of the Notes and the Trustee
and Paying Agent a notice (the “Fundamental Change Control
Notice”) of the occurrence of such Fundamental Change and of the purchase
right at the option of the holders arising as a result thereof.  Such
mailing shall be by first class mail.  Simultaneously with providing
such Fundamental Change Control Notice, the Company shall publish a notice
containing the information included therein once in a newspaper of general
circulation in The City of New York or publish such information on the Company’s
website or through such other public medium as the Company may use at such
time.

       

      Each
Fundamental Change Control Notice shall specify:

       

      (i)         the
events causing the Fundamental Change;

       

      (ii)        the
date of the Fundamental Change;

       

      (iii)       the
Fundamental Change Purchase Date and the last date on which a holder may
exercise the purchase right;

       

      (iv)       the
Fundamental Change Purchase Price;

       

      (v)        the
name and address of the Paying Agent and the Conversion Agent;

       

      (vi)       the
applicable Conversion Rate and any adjustments to the applicable Conversion Rate
(including the number of Additional Shares, if any);

       

      (vii)      that
the Notes with respect to which a Fundamental Change Purchase Notice has been
delivered by a holder may be converted only if the holder withdraws the
Fundamental Change Purchase Notice in accordance with the terms of this
Indenture;

       

      (viii)     that
the holder must exercise the purchase right on or prior to the close of business
on the fifth Business Day prior to the Fundamental Change Purchase Date (the
“Fundamental Change Expiration Time”);

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          96

          
            

          

        

        
           

        

      

      (ix)       that
the holder shall have the right to withdraw any Notes surrendered prior to the
close of business on the Business Day prior to the Fundamental Change Expiration
Time; and

       

      (x)        the
procedures that holders must follow to require the Company to purchase their
Notes.

       

      
        No
failure of the Company to give the foregoing notices and no defect therein shall
limit the Noteholders’ purchase rights or affect the validity of the proceedings
for the purchase of the Notes pursuant to this
Section 15.02.

      

       

      (c)         A
Fundamental Change Purchase Notice may be withdrawn by means of a written notice
of withdrawal delivered to the Paying Agent in accordance with the Fundamental
Change Control Notice at any time prior to the close of business on the Business
Day prior to the Fundamental Change Purchase Date, specifying:

       

      (i)         if
certificated Notes have been issued, the certificate numbers of the withdrawn
Notes,

       

      (ii)        the
principal amount of the Note with respect to which such notice of withdrawal is
being submitted, and

       

      (iii)       the
principal amount, if any, of such Note that remains subject to the original
Fundamental Change Purchase Notice, which portion must be in principal amounts
of US$1,000 or an integral multiple of US$1,000;

       

      provided, however, that if
the Notes are not in certificated form, the notice must comply with appropriate
procedures of the Depositary.

       

      
        (d)         No
later than 10 a.m., New York City time, 2 Business Days before the Fundamental
Change Purchase Date, the Company shall deposit with the Trustee (or other
Paying Agent appointed by the Company or if the Company is acting as its own
Paying Agent, set aside, segregate and hold in trust as provided in
Section 4.05) an amount of cash sufficient to purchase on the Fundamental
Change Purchase Date all of the Notes to be purchased on such date at the
Fundamental Change Purchase Price.  Subject to receipt of funds and/or
Notes by the Trustee (or other Paying Agent appointed by the Company), payment
for Notes surrendered for purchase (and not withdrawn) prior to the Fundamental
Change Expiration Time will be made promptly after the later of (x) the
Fundamental Change Purchase Date with respect to such Note (provided the holder has
satisfied the conditions to the payment of the Fundamental Change Purchase Price
in Section 15.02), and (y) the time of book-entry transfer or the delivery
of such Note to the Trustee (or other Paying Agent appointed by the Company) by
the holder thereof in the manner required by Section 15.02 by mailing
checks for the amount payable to the holders of such Notes entitled thereto as
they shall appear in the Note Register; provided, however, that
payments to the Depositary shall be made by wire transfer of immediately
available funds to the account of the Depositary or its nominee.  The
Trustee shall, promptly after such payment and upon written demand by the
Company, return to the Company any funds in excess of the Fundamental Change
Purchase Price.

           

      

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          97

          
            

          

        

        
           

        

      

      
        (e)         If
the Trustee (or other Paying Agent appointed by the Company) holds money or
securities sufficient to pay the Fundamental Change Purchase Price of any Note
on the Business Day following the Fundamental Change Purchase Date, then on and
after the Fundamental Change Purchase Date (i) such Notes will cease to be
outstanding, (ii) interest (including Additional Interest, if any) will cease to
accrue on such Notes (whether or not book-entry transfer of the Notes has been
made or the Notes have been delivered to the Trustee or Paying Agent), and (iii)
all other rights of the holders of such Notes will terminate (other than the
right to receive the Fundamental Change Purchase Price upon delivery of the
Notes).

         

        (f)    
     There shall be no purchase of any Notes pursuant
to this Section 15.02 if there has occurred (prior to, on or after, as the
case may be, the giving, by the holders of such Notes, of the required
Fundamental Change Purchase Notice) and is continuing an Event of Default (other
than a default in the payment of the Fundamental Change Purchase Price with
respect to such Notes).  The Paying Agent will promptly return to the
respective holders thereof any Notes held by it during the continuance of an
Event of Default (other than a default in the payment of the Fundamental Change
Purchase Price with respect to such Notes), in which case, upon such return, the
Fundamental Change Purchase Notice with respect thereto shall be deemed to have
been withdrawn.

      

       

      ARTICLE 16

      Miscellaneous
Provisions

       

      SECTION 16.01.
Provisions Binding on
Company’s Successors.  All the
covenants, stipulations, promises and agreements of the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.

       

      SECTION 16.02.
Official Acts by Successor
Corporation.  Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          98

          
            

          

        

        
           

        

      

      SECTION 16.03.
Addresses for Notices,
Etc.  Any notice or
demand which by any provision of this Indenture is required or permitted to be
given or served by the Trustee, Conversion Agent or by the Noteholders or by the
Company shall be deemed to have been sufficiently given or made, for all
purposes if given or served by being in writing, in the English language,
deposited postage prepaid by registered or certified mail in a post office
letter box, or by courier service, or by facsimile addressed (until another
address is filed by the Company with the Trustee) to:

       

      ShengdaTech,
Inc.

      Youth
Pioneer Park

      Tai’an
Economic and Technological Development Zone

      Tai’an
City, Shangdong Province 271000

      PRC

      Attention:  Xiangzhi
Chen

      Fax
No.:  +86.538.856.0687

       

      with a
copy to:

       

      Cadwalader
Wickersham & Taft LLP

      2301
China Central Place Tower 2

      No. 79
Jianguo Road

      Beijing
100025, PRC

      Attention:  Jiannan
Zhang, Esq.

      Fax
No.:  +86.10.6599.7300

       

      Any
notice, direction, request or demand hereunder to or upon the Trustee,
Conversion Agent, and Principal Paying Agent shall be deemed to have been
sufficiently given or made, for all purposes, if given or served by being in
writing, in the English language, deposited postage prepaid by registered or
certified mail in a post office letter box, or by courier service, or by
facsimile addressed to the Corporate Trust Office, with a copy to:

       

      The Bank
of New York Mellon

      Level 12,
Three Pacific Place

      1 Queen’s
Road East

      Hong
Kong

      Attention:  Global
Corporate Trust

      Fax
No.:  +852.2295.3283

      

      The
Trustee, by notice to the Company, may designate additional or different
addresses for subsequent notices or communications.

       

      Any
notice or communication mailed to a Noteholder shall be mailed to him by first
class mail, postage prepaid, at his address as it appears on the Note Register
or by courier and shall be sufficiently given to him if so mailed within the
time prescribed.

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          99

          
            

          

        

        
           

        

      

      Failure
to mail a notice or communication to a Noteholder or any defect in it shall not
affect its sufficiency with respect to other Noteholders.  If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.

       

      SECTION 16.04.
Governing
Law.  THIS INDENTURE
AND EACH NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE
OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO AND TO BE
PERFORMED THEREIN.  This Indenture is also subject to the Trust
Indenture Act of 1939, as amended, the provisions of which are hereby
incorporated by reference.

       

      SECTION 16.05.
Submission to Jurisdiction;
Waiver of Immunity.  Each
of the parties hereto hereby irrevocably submits to the non-exclusive
jurisdiction of any New York state or U.S. federal court sitting in the Borough
of Manhattan in The City of New York with respect to actions brought against it
as a defendant in respect of any suit, action or proceeding or arbitral award
arising out of or relating to this Indenture or the Notes or any transaction
contemplated hereby or thereby (a “Proceeding”), and irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.  Each of
the parties hereto irrevocably waives, to the fullest extent it may do so under
applicable law, trial by jury and any objection which it may now or hereafter
have to the laying of the venue of any such Proceeding brought in any such court
and any claim that any such Proceeding brought in any such court has been
brought in an inconvenient forum.  The Company irrevocably appoints CT
Corporation System (the “Process Agent”), with an
office at 111 Eighth Avenue, New York, New York 10011, as its authorized agent
to receive on behalf of it and its property service of copies of the summons and
complaint and any other process which may be served in any
Proceeding.  If for any reason such Person shall cease to be such
agent for service of process, the Company shall forthwith appoint a new agent of
recognized standing for service of process in the State of New York and deliver
to the Trustee a copy of the new agent’s acceptance of that appointment within
30 days.  Nothing herein shall affect the right of the Trustee, any
agent or any holder to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Company in any other
court of competent jurisdiction.

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          100

          
            

          

        

        
           

        

      

      The
Company hereby irrevocably appoints the Process Agent as its agent to receive,
on behalf of itself and its property, service of copies of the summons and
complaint and any other process which may be served in any such suit, action or
proceeding brought in such New York state or U.S. federal court sitting in
the Borough of Manhattan in The City of New York.  Such service
shall be made by delivering by hand a copy of such process to the Company in
care of the Process Agent at the address specified above.  The Company
hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf.  Failure of the Process Agent to give notice to
the Company, or failure of the Company to receive notice of such service of
process shall not affect in any way the validity of such service on the Process
Agent or the Company.  As an alternative method of service, the
Company also irrevocably consents to the service of any and all process in any
such Proceeding by the delivery by hand of copies of such process to the
Company, at its address specified in or at any other address previously
furnished in writing by the Company to the Trustee.  The Company
covenants and agrees that it shall take any and all reasonable action, including
the execution and filing of any and all documents, that may be necessary to
continue the designation of the Process Agent above in full force and effect
during the term of the Notes, and to cause the Process Agent to continue to act
as such.

       

      Nothing
in this Indenture shall affect the right of any party, including the Trustee,
any Agent or any holder, to serve legal process in any other manner permitted by
law or affect the right of any party to bring any action or proceeding against
any other party or its property in the courts of other competent
jurisdictions.

       

      The
Company irrevocably agrees that, in any proceedings anywhere (whether for an
injunction, specific performance or otherwise), no immunity (to the extent that
it may at any time exist, whether on the grounds of sovereignty or otherwise)
from such proceedings, from attachment (whether in aid of execution, before
judgment or otherwise) of its assets or from execution of judgment shall be
claimed by it or on its behalf or with respect to its assets, except to the
extent required by applicable law, any such immunity being irrevocably waived,
to the fullest extent permitted by applicable law.  The Company
irrevocably agrees that, where permitted by applicable law, it and its assets
are, and shall be, subject to such proceedings, attachment or execution in
respect of its obligations under this Indenture or the Notes.

       

      EACH OF
THE COMPANY, THE TRUSTEE, THE PRINCIPAL PAYING AGENT AND THE CONVERSION AGENT
HEREBY WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          101

          
            

          

        

        
           

        

      

      SECTION 16.06.
Evidence of Compliance with
Conditions Precedent; Certificates and Opinions of Counsel to
Trustee.  Upon any
application or demand by the Company to the Trustee to take any action under any
of the provisions of this Indenture, the Company shall furnish to the Trustee an
Officers’ Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
and an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with, and such other statement as the
Trustee may request.

       

      Each
certificate or opinion provided for by or on behalf of the Company in this
Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant provided for in this Indenture shall include (1) a
statement that the person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion contained in
such certificate or opinion is based; (3) a statement that, in the opinion of
such person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with;
and such other statements as the Trustee may request.

       

      SECTION 16.07.
Legal
Holidays.  In any case
where any Interest Payment Date, Fundamental Change Purchase Date, Put Right
Purchase Date, Conversion Date or Maturity Date will not be a Business Day, then
any action to be taken on such date need not be taken on such date, but may be
taken on the next succeeding Business Day with the same force and effect as if
taken on such date, and no interest shall accrue for the period from and after
such date to the next succeeding Business Day.

       

      SECTION 16.08.
No Security Interest
Created.  Nothing in this
Indenture or in the Notes, expressed or implied, shall be construed to
constitute a security interest under the Uniform Commercial Code or similar
legislation, as now or hereafter enacted and in effect, in any
jurisdiction.

       

      SECTION 16.09.
Benefits of
Indenture.  Nothing in this
Indenture or in the Notes, expressed or implied, shall give to any person, other
than the parties hereto, any Paying Agent, any authenticating agent, any Note
Registrar and their successors hereunder, the Noteholders, any benefit or any
legal or equitable right, remedy or claim under this Indenture.

       

      SECTION 16.10.
Table of Contents, Headings,
Etc.  The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.

       

      
        ShengdaTech,
Inc.

        Indenture

         

      

      
        
           

        

        
          102

          
            

          

        

        
           

        

      

       

      
        SECTION 16.11.
Authenticating
Agent.  The Trustee may
appoint an authenticating agent which shall be authorized to act on its behalf
and subject to its direction in the authentication and delivery of Notes in
connection with the original issuance thereof and transfers and exchanges of
Notes hereunder, including under Section 2.05, Section 2.06,
Section 2.08 and Section 2.09, as fully to all intents and purposes as
though the authenticating agent had been expressly authorized by this Indenture
and those Sections to authenticate and deliver Notes.  For all
purposes of this Indenture, the authentication and delivery of Notes by the
authenticating agent shall be deemed to be authentication and delivery of such
Notes “by the Trustee” and a certificate of authentication executed on behalf of
the Trustee by an authenticating agent shall be deemed to satisfy any
requirement hereunder or in the Notes for the Trustee’s certificate of
authentication.  Such authenticating agent shall at all times be a
person eligible to serve as trustee hereunder pursuant to
Section 7.09.

      

       

      Any
corporation into which any authenticating agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
consolidation or conversion to which any authenticating agent shall be a party,
or any corporation succeeding to the corporate trust business of any
authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor
corporation.

       

      Any
authenticating agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company.  The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination to such authenticating agent and to the Company.  Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time any authenticating agent shall cease to be eligible under this Section,
the Trustee shall promptly appoint a successor authenticating agent (which may
be the Trustee), shall give written notice of such appointment to the Company
and shall mail notice of such appointment to all Noteholders as the names and
addresses of such holders appear on the Note Register.

       

      The
Company agrees to pay to the authenticating agent from time to time compensation
for its services although the Company may terminate the authenticating agent, if
it determines such agent’s fees to be unreasonable.

       

      
        The
provisions of Section 7.02, Section 7.03, Section 7.04,
Section 8.03 and this Section 16.11 shall be applicable to any
authenticating agent.

         

        
          ShengdaTech,
Inc.

          Indenture

           

        

        
          
            
               

            

            
              103

              
                

              

            

            
               

            

          

        

         

      

      SECTION 16.12.
Currency
Indemnity.  U.S. Dollars are
the sole currency of account and payment for all sums payable by the Company
under or in connection with the Notes, including damages.  Any amount
received or recovered in a currency other than U.S. Dollars (whether as a result
of, or of the enforcement of, a judgment or order of a court of any
jurisdiction, in the winding-up or dissolution of the Company or otherwise) by
any holder of a Note or by the Trustee (including in its other agency capacities
hereunder) in respect of any sum expressed to be due to it from the Company
shall only constitute a discharge to the Company to the extent of the U.S.
Dollar amount which the recipient is able to purchase with the amount so
received or recovered in that other currency on the date of that receipt or
recovery (or, if it is not practicable to make that purchase on that date, on
the first date on which it is practicable to do so).  If that U.S.
Dollar amount is less than the U.S. Dollar amount expressed to be due to the
recipient under any Note, the Company shall indemnify such holder or the Trustee
or the agents against any loss sustained by it as a result, and if the amount of
U.S. Dollars so purchased is greater than the sum originally due to such holder,
such holder shall, by accepting a Note, be deemed to have agreed to repay such
excess.  In any event, the Company shall indemnify the recipient
against the cost of making any such purchase.

       

      
        For the
purposes of this Section 16.12, it shall be sufficient for the holder of a
Note or the Trustee or such agent to certify in a satisfactory manner
(indicating the sources of information used) that it would have suffered a loss
had an actual purchase of U.S. Dollars been made with the amount so received in
that other currency on the date of receipt or recovery (or, if a purchase of
U.S. Dollars on such date had not been practicable, on the first date on which
it would have been practicable, it being required that the need for a change of
date be certified in the manner mentioned above).  These indemnities
constitute a separate and independent obligation from the other obligations of
the Company, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by any holder of a Note or
the Trustee or such agent and shall continue in full force and effect despite
any other judgment, order, claim or proof for a liquidated amount in respect of
any sum due under any Note.

      SECTION 16.13. Execution in
Counterparts.  This Indenture
may be executed in any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute but one and the same
instrument.

       

      SECTION 16.14.
[Reserved]

      
        
        

        ShengdaTech,
Inc.

        Indenture

         

      

      
        
          
          

        

        
          104

          
            

          

        

        
          
          

        

      

    

     

    SECTION 16.15.
Calculations.  Except as
otherwise provided herein, the Company shall be responsible for making all
calculations called for under this Indenture and the Notes and the Trustee shall
not be required to confirm any such calculations.  The Company shall
make all such calculations in good faith and, absent manifest error, its
calculations shall be final and binding on holders.  The Company upon
request will provide a schedule of its calculations to each of the Trustee and
the Conversion Agent, and each of the Trustee and Conversion Agent is entitled
to rely conclusively upon the accuracy of the Company’s calculations without
independent verification.  The Trustee will deliver a copy of such
schedule to any holder upon the written request of such holder.

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    ShengdaTech,
Inc.

    Indenture

    
      
         

      

      
        105

        
          

        

      

      
         

      

    

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

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    SHENGDATECH,
      INC.

                                  
	 
      	 
      
	
                                    By:

                                  	/s/
      Xiangzhi Chen  
	 
      	
                                    Name:  Xiangzhi
      Chen

                                  
	 
      	
                                    Title:    Chairman
      and Chief Executive Officer

                                  
	 
      	 
      
	
                                    THE
      BANK OF NEW YORK MELLON 

                                    as
      Trustee

                                  
	 
      	 
      
	
                                    By:

                                  	  
	 
      	
                                    Name:

                                  
	 
      	
                                    Title:

                                  
	 
      	 
      
	
                                    THE
      BANK OF NEW YORK MELLON 

                                    as
      Principal Paying Agent

                                  
	 
      	 
      
	
                                    By:

                                  	  
	 
      	
                                    Name:

                                  
	 
      	
                                    Title:

                                  
	 
      	 
      
	
                                    THE
      BANK OF NEW YORK MELLON 

                                    as
      Conversion Agent

                                  
	 
      	 
      
	
                                    By:

                                  	  
	 
      	
                                    Name:

                                  
	 
      	
                                    Title:

                                  

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    SIGNATURE
PAGE TO INDENTURE

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
A

     

    
      
        
          
            	
                    Common
      Stock Price ($)

                  	 
	
                    Effective
      Date

                  	 	 	5.06	 	 	 	5.50	 	 	 	6.00	 	 	 	6.50	 	 	 	7.00	 	 	 	7.50	 	 	 	8.00	 	 	 	8.50	 	 	 	9.00	 	 	 	9.50	 	 	 	10.00	 	 	 	12.50	 	 	 	15.00	 	 	 	20.00	 
	
                    12/14/2010

                  	 	 	32.9381	 	 	 	31,1284	 	 	 	24.4983	 	 	 	19.4906	 	 	 	15.6349	 	 	 	12.6091	 	 	 	10.1962	 	 	 	8.2523	 	 	 	6.6644	 	 	 	5.3564	 	 	 	4.2787	 	 	 	1.1063	 	 	 	0.0739	 	 	 	0.0000	 
	
                    12/15/2011

                  	 	 	32.9381	 	 	 	29.7433	 	 	 	23.1875	 	 	 	18.2889	 	 	 	14.5558	 	 	 	11.6578	 	 	 	9.3746	 	 	 	7.5484	 	 	 	6.0686	 	 	 	4.8592	 	 	 	3.8628	 	 	 	0.9657	 	 	 	0.0512	 	 	 	0.0000	 
	
                    12/15/2012

                  	 	 	32.9381	 	 	 	27.1397	 	 	 	20.7863	 	 	 	16.1390	 	 	 	12.6767	 	 	 	10.0451	 	 	 	8.0094	 	 	 	6.4060	 	 	 	5.1204	 	 	 	4.0797	 	 	 	3.2285	 	 	 	0.7679	 	 	 	0.0252	 	 	 	0.0000	 
	
                    12/15/2013

                  	 	 	32.9381	 	 	 	25.2572	 	 	 	18.4103	 	 	 	13.6550	 	 	 	10.3131	 	 	 	7.9189	 	 	 	6.1661	 	 	 	4.8481	 	 	 	3.8280	 	 	 	3.0231	 	 	 	2.3748	 	 	 	0.5244	 	 	 	0.0049	 	 	 	0.0000	 
	
                    12/15/2014

                  	 	 	32.9381	 	 	 	21.9006	 	 	 	14.1810	 	 	 	9.3397	 	 	 	6.3646	 	 	 	4.5302	 	 	 	3.3696	 	 	 	2.5950	 	 	 	2.0395	 	 	 	1.6171	 	 	 	1.2781	 	 	 	0.2591	 	 	 	0.0000	 	 	 	0.0000	 
	
                    12/15/2015

                  	 	 	32.9381	 	 	 	17.1278	 	 	 	1.9763	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 

          

        

      

    

     

    ShengdaTech,
Inc.

    
    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A 

     

    [FORM OF
FACE OF NOTE]

       

    [Include
only for Global Notes]

     

    [UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     

    TRANSFERS
OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO IN THE
TERMS OF THE NOTE ATTACHED HERETO.]

     

    [Include
only for Definitive Notes]

     

    [THIS
SECURITY WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A GLOBAL
NOTE UNLESS THE HOLDER OF THIS SECURITY, SUBSEQUENT TO SUCH EXCHANGE, WILL HOLD
NO NOTES.]

     

    [Include
only for Notes that are Restricted Securities]

     

    [THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE.  BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
ACQUIRER:

     

    (1)           REPRESENTS
THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS (A) A “QUALIFIED
INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES
ACT), AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH
ACCOUNT, AND

     

    (2)           AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE
TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN EXCEPT
ONLY:

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

       

    
      	
               
      

            	
              (A)

            	
              TO
      THE COMPANY OR ANY SUBSIDIARY THEREOF,
OR

            

    

     

    
      	
               
      

            	
              (B)

            	
              PURSUANT
      TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
      SECURITIES ACT, OR

            

    

     

    
      	
               
      

            	
              (C)

            	
              TO
      A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
      THE SECURITIES ACT, OR

            

    

     

    
      	
               
      

            	
              (D)

            	
              TO
      AN INSTITUTIONAL ACCREDITED INVESTOR,
OR

            

    

     

    
      	
               
      

            	
              (E)

            	
              PURSUANT
      TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
      SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT.

            

    

     

    PRIOR TO
THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(C) OR (2)(D) ABOVE, A
DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM
THE TRUSTEE) MUST BE DELIVERED TO THE TRUSTEE.  PRIOR TO THE
REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, THE COMPANY AND
THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS,
CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO
DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.  NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

     

    IN ANY
CASE, THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY ENGAGE IN ANY HEDGING
TRANSACTIONS WITH REGARD TO THE NOTES OR THE SHARES ISSUABLE UPON CONVERSION OF
THE NOTE EXCEPT AS PERMITTED UNDER THE SECURITIES ACT.]

     

    [Include
only for Shares that are Restricted Securities]

     

    [THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.  BY ITS ACQUISITION
HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THERE;
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT; (C) TO A PERSON THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
ANOTHER QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT; (D) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT); OR (E) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT; AND (2) IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY FURNISH
TO THE TRANSFER AGENT AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS MAY BE REQUIRED TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

    SHENGDATECH,
INC.

     

    6.5%
Senior Convertible Notes due 2015

     

    
      
        
          	
                  No.___________

                	
                  US$___________

                

        

      

    

    
    

    CUSIP No.
___________

     

    SHENGDATECH,
INC., a Nevada corporation (herein called the “Company,” which term includes
any successor corporation under the Indenture referred to on the reverse
hereof), for value received hereby promises to pay to [CEDE & CO.], or
registered assigns, the principal sum of [·] U.S. Dollars [or such
other principal amount as shall be set forth on the Schedule I
hereto].

     

    This Note
shall bear interest at the rate of 6.5% per year from December 14, 2010, or from
the most recent date to which interest had been paid or
provided.  Interest is payable semi-annually in arrears on each
June 15 and December 15, commencing June 15, 2011, to holders of
record at the close of business on the preceding June 1 and December 1,
respectively.  Interest payable on each Interest Payment Date shall
equal the amount of interest accrued from and including the immediately
preceding Interest Payment Date (or from and including December 14, 2010 if no
interest has been paid hereon) to but excluding such Interest Payment Date.
Interest on the Notes shall be computed on the basis of a 360-day year comprised
of twelve 30-day months.

     

    The
payment of the principal of, premium, if any, and accrued and unpaid interest on
the Notes will be exclusively in such coin or currency of the United States as
at the time of payment will be legal tender for the payment of public and
private debts.  The Company shall, through the Principal Paying Agent,
pay the principal of the Notes at the office or agency designated by the Company
in the Borough of Manhattan, The City of New York.  Each installment
of accrued and unpaid interest on the Notes due on any Interest Payment Date may
be paid by mailing checks for the amount payable to or upon the written order of
the Noteholders entitled thereto as they shall appear on the registry books of
the Company; provided
that with respect to any Noteholder with an aggregate principal amount in excess
of US$5,000,000, at the application of such holder in writing to the Note
Registrar not later than the relevant record date and accrued and unpaid
interest on such holder’s Notes shall be paid by wire transfer in immediately
available funds to such holder’s account in the United States supplied by such
holder from time to time to the Trustee and Paying Agent (if different from
Trustee); provided
further that payments in respect of a Global Note shall be paid by wire
transfer in immediately available funds to the accounts specified by the
Depositary in accordance with such wire transfer instructions and other
procedures provided by the Depositary from time to time.

     

    Reference
is made to the further provisions of this Note set forth on the reverse hereof,
including, without limitation, provisions giving the holder of this Note the
right to convert this Note into Shares or cash and Shares, if any, of the
Company on the terms and subject to the limitations referred to on the reverse
hereof and as more fully specified in the Indenture.  Such further
provisions shall for all purposes have the same effect as though fully set forth
at this place.

    
      
         

      

      
        A-3

        
          

        

      

      
         

      

    

    
    

    This Note
shall be deemed to be a contract made under the laws of the State of New York,
and for all purposes shall be construed in accordance with the laws of the State
of New York applicable to contracts entered into and to be performed
therein.

     

    This Note
shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been manually signed by the Trustee or a duly
authorized authenticating agent under the Indenture.

       

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        A-4

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company has caused this Note to be duly
executed.

     

    
      
        
          
            
              	
                      SHENGDATECH,
      INC.

                    
	 
      	 
      
	
                      By:

                    	 
      
	 
      	
                      Name:

                    
	 
      	
                      Title:

                    
	 
      	 
      
	
                      By:

                    	 
      
	 
      	
                      Name:

                    
	 
      	
                      Title:

                    

            

          

        

      

    

     

    
      
         

      

      
        A-5

        
          

        

      

      
         

      

    

    TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

   

    THE BANK
OF NEW YORK MELLON, as Trustee, certifies that this is one of the Notes
described in the within-named Indenture.

    

    
      
        
          	
                  By:

                	  
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

    

    
    

    
      
         

      

      
        A-6

        
          

        

      

      
         

      

    

    [FORM OF
REVERSE OF NOTE]

       

    SHENGDATECH,
INC.

    6.5%
Senior Convertible Notes due 2015

     

    This Note
is one of a duly authorized issue of Notes of the Company, designated as its
6.5% Senior Convertible Notes due 2015 (herein called the “Notes”), issued under and
pursuant to an Indenture dated as of December 14, 2010 (herein called the “Indenture”), between the
Company, The Bank of New York Mellon, as Trustee (herein called the “Trustee”), as Conversion Agent
and as Principal Paying Agent (herein called the “Principal Paying Agent”), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Principal Paying Agent, the Company
and the holders of the Notes.  Additional Notes may be issued in an
unlimited aggregate principal amount, subject to certain conditions specified in
the Indenture.

     

    In case
an Event of Default, as defined in the Indenture, shall have occurred and be
continuing, the principal of, premium, if any, and interest on all Notes may be
declared, and upon said declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.

     

    Subject
to the terms and conditions of the Indenture, Additional Amounts will be paid in
connection with any payments in respect of the Notes so that the net amount a
holder receives after applicable withholding tax will equal the amount that the
holder would have received if no withholding tax had been applicable in certain
circumstances.

     

    Subject
to the terms and conditions of the Indenture, the Company will make all payments
and deliveries in respect of the Fundamental Change Purchase Price, the Put
Right Purchase Price and the principal amount on the Maturity Date, as the case
may be, to the holder who surrenders a Note to a Paying Agent to collect such
payments in respect of the Note.

     

    The
Indenture contains provisions permitting the Company and the Trustee in certain
circumstances, without the consent of the holders of the Notes, and in other
circumstances, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the rights
of the holders of the Notes; provided, however, that no
such supplemental indenture shall make any of the changes set forth in
Section 10.02 of the Indenture, without the consent of each holder of an
outstanding Note affected thereby.  It is also provided in the
Indenture that, prior to any declaration accelerating the maturity of the Notes,
the holders of a majority in aggregate principal amount of the Notes at the time
outstanding may on behalf of the holders of all of the Notes waive any past
default or Event of Default under the Indenture and its consequences except as
provided in the Indenture.  Any such consent or waiver by the holder
of this Note (unless revoked as provided in the Indenture) shall be conclusive
and binding upon such holder and upon all future holders and owners of this Note
and any Notes which may be issued in exchange or substitution hereof,
irrespective of whether or not any notation thereof is made upon this Note or
such other Notes.

    
      
         

      

      
        A-7

        
          

        

      

      
         

      

    

    
    

    No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, premium, if any, and accrued and
unpaid interest on this Note at the place, at the respective times, at the rate
and in the lawful money herein prescribed.

     

    The Notes
are issuable in registered form without coupons in denominations of US$1,000
principal amount and integral multiples thereof.  At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of other authorized denominations.

     

    The Notes
are not subject to redemption through the operation of any sinking
fund.

     

    Upon the
occurrence of a Fundamental Change, the holder has the right, at such holder’s
option, to require the Company to repurchase all of such holder’s Notes or any
portion thereof (in principal amounts of US$1,000 or integral multiples thereof)
on the Fundamental Change Purchase Date at a price equal to 100% of the
principal amount of the Notes such holder elects to require the Company to
repurchase, together with accrued and unpaid interest, to but excluding the
Fundamental Change Purchase Date.  The Company or, at the written
request of the Company, the Trustee shall mail to all holders of record of the
Notes a notice of the occurrence of a Fundamental Change and of the repurchase
right arising as a result thereof on or before the 20th day after the occurrence
of any Fundamental Change.

     

    On
December 15, 2013, the holder has the right, at such holder’s option, to require
the Company to repurchase all of such holder’s Notes or any portion thereof (in
principal amounts of US$1,000 or integral multiples thereof) at a price equal to
100% of the principal amount of the Notes such holder elects to require the
Company to repurchase, together with accrued and unpaid interest, to but
excluding the Put Right Purchase Date.  Holders shall submit their
Notes for repurchase to the Paying Agent at any time from the opening of
business on the date that is 25 Business Days prior to the applicable Put Right
Purchase Date until the close of business on the fifth Business Day prior to the
Put Right Purchase Date.

     

    
      
         

      

      
        A-8

        
          

        

      

      
         

      

    

    Subject
to the provisions of the Indenture, the holder hereof has the right, at its
option, prior to the close of business on the Business Day immediately preceding
the Maturity Date, to convert any Notes or portion thereof which is US$1,000 or
an integral multiple thereof, into cash and, if applicable, Shares, in each case
at the Conversion Rate specified in the Indenture, as adjusted from time to time
as provided in the Indenture, upon surrender of this Note, together with a
Conversion Notice, a form of which is attached to the Note, as provided in the
Indenture and this Note, to the Company at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
or at the option of such holder, the Corporate Trust Office, and, unless the
Shares issuable on conversion are to be issued in the same name as this Note,
duly endorsed by, or accompanied by instruments of transfer in form satisfactory
to the Company duly executed by, the holder or by his duly authorized
attorney.  The initial Conversion Rate shall be 164.6904 Shares for
each US$1,000 principal amount of Notes.  No fractional Shares will be
issued upon any conversion, but an adjustment in cash will be paid to the
holder, as provided in the Indenture, in respect of any fraction of a Share
which would otherwise be issuable upon the surrender of any Note or Notes for
conversion.  No adjustment shall be made for dividends or any Shares
issued upon conversion of such Note except as provided in the
Indenture.

     

    Upon due
presentment for registration of transfer of this Note at the office or agency of
the Company in the Borough of Manhattan, The City of New York, a new Note or
Notes of authorized denominations for an equal aggregate principal amount will
be issued to the transferee in exchange thereof, subject to the limitations
provided in the Indenture, without charge except for any tax, assessments or
other governmental charge imposed in connection therewith.

     

    The
Company, the Trustee, any authenticating agent, any Paying Agent, any Conversion
Agent and any Note Registrar may deem and treat the registered holder hereof as
the absolute owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment hereof, or on account hereof, for the conversion
hereof and for all other purposes, and neither the Company nor the Trustee nor
any other authenticating agent nor any Paying Agent nor any other Conversion
Agent nor any Note Registrar shall be affected by any notice to the
contrary.  All payments made to or upon the order of such registered
holder shall, to the extent of the sum or sums paid, satisfy and discharge
liability for monies payable on this Note.

     

    No
recourse for the payment of the principal of, or any premium, or accrued and
unpaid interest on, this Note, or for any claim based hereon or otherwise in
respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Note, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, employee, agent,
officer, director or subsidiary, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.

     

    Terms
used in this Note and defined in the Indenture are used herein as therein
defined.

     

    Customary
abbreviations may be used in the name of a holder or an assignee, such as TEN
COM (=tenants in common), TENANT (=tenants by the entireties), JT TEN (=joint
tenants with right of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

    
      
         

      

      
        A-9

        
          

        

      

      
         

      

    

    [FORM OF
CONVERSION NOTICE]

     

    To:  SHENGDATECH,
INC.

     

    c/o:  THE
BANK OF NEW YORK MELLON

    101
Barclay Street, Floor 4 East

    New York,
NY 10286

    U.S.A.

    Attention:  Global
Corporate Trust

    Facsimile
No.:  212.815.5802 OR 212.815.5803

     

    With a
copy to:

     

    THE BANK
OF NEW YORK MELLON

    Level 12,
Three Pacific Place

    1 Queen’s
Road East

    Hong
Kong

    Facsimile
No.:  852.2295.3283

    Attention:  Global
Corporate Trust

     

    The
undersigned registered owner of this Note hereby exercises the option to convert
this Note, or the portion hereof (which is US$1,000 principal amount or an
integral multiple thereof) below designated, into cash and Shares, if any, in
accordance with the terms of the Indenture referred to in this Note, and directs
that the Shares issuable and deliverable upon such conversion, if any, together
with any check in payment of the cash in respect of the remaining Conversion
Obligation (as defined in the Indenture) and for fractional Shares and any Notes
representing any unconverted principal amount hereof, be issued and delivered to
the registered holder hereof unless a different name has been indicated
below.  If Shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto.  Any amount
required to be paid to the undersigned on account of interest accompanies this
Note.

     

    
      
        
          
            
              	
                      Dated:

                    	 
      	 	 
      
	 
      	
                      Your
      Name (Print):

                       

                    	 	
                      Your
      Signature:

                       

                    
	
                      Signature
      Guarantee*:

                    	 
      	 	 
      
	 	 	 	 
	
                      Social
      Security or 

                      other
      Taxpayer 

                      Identification
      Number:

                    	 
      	 	 
      

            

          

        

      

    

     

    *Signature(s)
must be guaranteed by an eligible Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions) with membership in an approved
signature guarantee medallion program pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, if Shares are to be issued, or
Notes to be delivered, other than to and in the name of the registered
holder.

     

    
      
         

      

      
        A-10

        
          

        

      

      
         

      

    

    Fill in
for registration of Shares if to be issued, and Notes if to be delivered, other
than to and in the name of the registered holder:

     

    
      
        
          
            
              
                
                  	 
      	 
      
	
                          (Name
      – Print)

                        	 
      
	 	 
	 
      	 
      
	
                          (Street
      Address – Print)

                        	 
      
	 	 
	 
      	 
      
	
                          (City,
      State and Zip Code)

                        	 
      

                

              

            

          

        

      

    

     

    Principal
amount to be converted (if less than all):  US$

     

    CUSIP
number of Securities: 

     

    
      Representations:

    

     

    
      	
              1.

            	
              I/We
      hereby declare that any applicable condition to conversion of the Notes,
      if any, has been complied with by
me/us.

            

    

     

    
      	
              2.

            	
              I/We
      hereby declare that all stamp, issue, registration or similar taxes and
      duties payable on conversion, issue or delivery of Shares of any other
      property or cash have been paid.

            

    

     

    
      
         

      

      
        A-11

        
          

        

      

      
         

      

    

    
      [FORM OF
PUT RIGHT PURCHASE NOTICE]

    

     

    To:  SHENGDATECH,
INC. (the “Company”)

     

    c/o:  THE
BANK OF NEW YORK MELLON

    101
Barclay Street, Floor 4 East

    New York,
NY 10286

    U.S.A.

    Attention:  Global
Corporate Trust

    Facsimile
No.:  212.815.5802 OR 212.815.5803

     

    With a
copy to:

     

    THE BANK
OF NEW YORK MELLON

    Level 12,
Three Pacific Place

    1 Queen’s
Road East

    Hong
Kong

    Facsimile
No.:  852.2295.3283

    Attention:  Global
Corporate Trust

     

    The
undersigned hereby requests and instructs the Company to repay the entire
principal amount of this Note, or a portion hereof (which is US$1,000 principal
amount or an integral multiple thereof) below designated, on _________________,
____________ in accordance with the terms of the Indenture referred to in
this Note at the applicable Put Right Purchase Price, to the registered holder
hereof.

     

    
      
        
          
            
              	
                      Dated:

                    	 
      	 	 
      
	 
      	
                      Your
      Name (Print):

                       

                    	 	
                      Your
      Signature:

                       

                    
	
                      Social
      Security or 

                      other
      Taxpayer 

                      Identification
      Number:

                    	 
      	 	 
      

            

          

        

      

    

     

    NOTICE:  The
above signatures of the holder(s) hereof must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.

     

    Principal
amount to be repurchased (if less than all):  US$

     

    Note
Certificate Number (if applicable):

    
      
         

      

      
        A-12

        
          

        

      

      
         

      

    

    [FORM OF
FUNDAMENTAL CHANGE PURCHASE NOTICE]

     

    To:  SHENGDATECH,
INC. (the “Company”)

     

    c/o:  THE
BANK OF NEW YORK MELLON

    101
Barclay Street, Floor 4 East

    New York,
NY 10286

    U.S.A.

    Attention:  Global
Corporate Trust

    Facsimile
No.:  212.815.5802 OR 212.815.5803

     

    With a
copy to:

     

    THE BANK
OF NEW YORK MELLON

    Level 12,
Three Pacific Place

    1 Queen’s
Road East

    Hong
Kong

    Facsimile
No.:  852.2295.3283

    Attention:  Global
Corporate Trust

     

    The
undersigned registered owner of this Note hereby acknowledges receipt of a
notice from the Company as to the occurrence of a Fundamental Change with
respect to the Company and requests and instructs the Company to repay the
entire principal amount of this Note, or the portion thereof (which is US$1,000
principal amount or an integral multiple thereof) below designated, in
accordance with the terms of the Indenture referred to in this Note, to the
registered holder hereof.

     

    
      
        
          
            
              	
                      Dated:

                    	 
      	 	 
      
	 
      	
                      Your
      Name (Print):

                       

                    	 	
                      Your
      Signature:

                       

                    
	
                      Social
      Security or 

                      other
      Taxpayer 

                      Identification
      Number:

                    	 
      	 	 
      

            

          

        

      

    

     

    NOTICE:  The
above signatures of the holder(s) hereof must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.

     

    Principal
amount to be repurchased (if less than all):  US$

     

    Note
Certificate Number (if applicable):

     

    
      
         

      

      
        A-13

        
          

        

      

      
         

      

    

    [FORM OF
CERTIFICATE OF TRANSFER]

    

    ASSIGNMENT
FORM

     

    
      
        
          	
                  To
      assign this Note, fill in the form below:

                
	
                  I
      or we assign and transfer this Note to

                
	
                  _____________________________________________________

                
	
                  (Print
      or type assignee’s name, address and zip code)

                
	
                  __________________________________________

                
	
                  (Insert
      assignee’s soc. sec. or tax I.D. No.)

                
	
                  and
      irrevocably appoint ___________ agent to transfer this Note on the books
      of the Company.  The agent may substitute another to act for
      him.

                
	 
      
	 
      	 
	
                  Date:  __________________________

                	
                  Your
      Signature:  ____________________

                
	 
      
	
                  Signature
      Guarantee*:  ____________________________________________________

                
	
                  (Signature
      must be guaranteed)

                
	 
      
	
                  Sign
      exactly as your name appears on the other side of this
    Note.

                

        

      

    

    

    *The
signature(s) should be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program, pursuant to
Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.

     

    In
connection with any transfer or exchange of any of the Notes evidenced by this
certificate occurring prior to the date that is one year after the later of the
date of original issuance of such Notes and the last date, if any, on which such
Notes were owned by the Company or any Affiliate of the Company, the undersigned
confirms that such Notes are being:

     

    CHECK ONE
BOX BELOW:

     

    
      
        
          
            
              
                
                  	
                           ̈

                        	
                          1

                        	
                          acquired
      for the undersigned’s own account, or an account with respect to which the
      undersigned exercises sole investment discretion, without transfer;
      or

                        
	 	 	 
	
                           ̈

                        	
                          2

                        	
                          transferred
      to the Company or any subsidiary thereof; or

                        
	 	 	 
	
                           ̈

                        	
                          3

                        	
                          transferred
      pursuant to an effective registration statement under the United states
      Securities Act of 1933, as amended (the “Securities Act”);
      or

                        
	 	 	 
	
                           ̈

                        	
                          4

                        	
                          transferred
      to a qualified institutional buyer pursuant to and in compliance with
      Rule 144A under the Securities Act; or

                        
	 	 	 
	
                           ̈

                        	
                          5

                        	
                          Transferred
      to an institutional “accredited investor” (as defined in Rule 501(a)(1),
      (2), (3) or (7) under the Securities Act) that has furnished to the
      Trustee a duly completed and signed certificate (the form of which may be
      obtained from the Trustee); or

                        
	 	 	 
	
                           ̈

                        	
                          6

                        	
                          transferred
      pursuant to another available exemption from the registration requirements
      of the Securities
Act.

                        

                

              

            

          

        

      

    

     

    
      
         

      

      
        A-14

        
          

        

      

      
         

      

    

    

    Unless
one of the boxes is checked, the Trustee will refuse to register any of the
Notes evidenced by this certificate in the name of any Person other than the
registered holder thereof; provided, however, that if
box (6) is checked, the Trustee or the Company may require, prior to registering
any such transfer of the Notes, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended, such as the exemption
provided by Rule 144 under such Act.

    

    TO BE
COMPLETED BY PURCHASER IF BOX (1) OR (4) ABOVE IS CHECKED.

    

    The
undersigned represents and warrants that it is purchasing this Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act, and is aware that
the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned’s foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

    

    
      
        
          
            	
                    Dated:

                  	 
      	 	 
      
	 
      	
                    Your
      Name (Print):

                     

                  	 	
                    Your
      Signature:

                     

                  
	
                    Signature
      Guarantee*:

                  	 
      	 	 
      

          

        

      

    

     

    *Signature(s)
must be guaranteed by an eligible Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions) with membership in an approved
signature guarantee medallion program pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended.

    
      
         

      

      
        A-15

        
          

        

      

      
         

      

    

    Schedule
I*

     

    SHENGDATECH,
INC.

    6.5%
Senior Convertible Notes due 2015

     

    The
following changes in the aggregate principal amount of Notes represented by this
Note have been made:

     

    
      
        	
                
                  Date

                

              	 	
                
                  Principal
      Amount

                

              	 	
                
                  Notation
      Explaining 

                  Principal
      Amount 

                  Recorded

                

              	 	
                
                  Authorized
      

                  Signature
      of Trustee 

                  or
      Custodian

                

              
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      

      

    

    

    *This
schedule, as well as references made to Schedule I in the Note, should be
included only if the Note is issued in global form.

    
      
         

      

      
        A-16Exhibit
10.1

     

    ASSET
PURCHASE AGREEMENT 

     

    This ASSET PURCHASE AGREEMENT (the
"Agreement") is dated December 10, 2010 and is between Sinobiomed Inc., a
Delaware corporation, with offices at Room 4304, 43/F China Resources Building,
26 Harbour Road, Wan Chai, Hong Kong ("Buyer"), and Keychain, Ltd. (Keychain)
("Seller").

     

    1.              
PURCHASE OF ASSETS. On the terms and subject to the conditions set forth in this
Agreement, Seller agrees to sell and deliver to Buyer and Buyer agrees to
purchase from Seller on the Closing Date (as defined in Section 1.3), all of
Seller's right, title and interest in and to all the Keychain assets and
properties of Seller set forth on Schedule A (collectively, the
"Assets") free and clear of all liens, pledges, charges, claims, actions, suits,
proceedings, security interests or other encumbrances of any sort
("Liens").

     

    2.              
CONSIDERATION. The purchase price of the Assets shall be US$225,000.00,
deliverable in 4,500,000 shares of the Buyer’s Common Stock, par value .001 per
share (the “Purchase Shares”). Any and all sales, transfer and use taxes ("Sales
Taxes") imposed or levied by reason of the sale of the Assets to the Buyer shall
be paid by Seller.

     

    3.              
CLOSING. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place by exchange of documents among the Parties by fax or
courier, as appropriate, following the satisfaction or waiver of all conditions
to the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) not later than December 10, 2010 or such other
date as the Buyer and Seller may mutually determine (the “Closing Date”). 

     

    4.              
CLOSING DELIVERIES. At the Closing:

     

    a.              
Seller shall deliver to Buyer (i) an Assignee’s Bill of Sale for the Assets in
substantially the form of Exhibit A hereto selling and delivering to Buyer title
to all of Seller's right, title and interest in and to the Assets, free and
clear of all Liens; (ii) an Assignment and Assumption Agreement pursuant to
which Seller shall assign and Buyer shall assume and agree to pay the Assumed
Liabilities; and (iii) such other documents as may be reasonably requested by
Buyer in connection with the consummation of the transactions contemplated by
this Agreement. 

     

    b.              
Buyer shall deliver to Seller (i) the stock certificate(s) representing the
Purchase Shares; (ii) an executed counterpart of the Assignment and Assumption
Agreement; and (iii) such other documents as may be reasonably requested by
Seller in connection with the consummation of the transactions contemplated by
this Agreement. 

     

    5.              
ASSUMPTION OF LIABILITIES.

     

    a.              
ASSUMED LIABILITIES. At Closing Buyer shall assume and agree to pay, discharge
or perform as appropriate only the following liabilities and obligations (the
"Assumed Liabilities"): (i) all obligations with respect to the Assets arising
on or after Closing; and (ii) all obligations under the Contracts (as defined
below) arising on or after the Closing; 

     

    b.              
RETAINED LIABILITIES. Except for the Assumed Liabilities, Buyer is not assuming,
nor shall it in any way be liable or responsible for, any liabilities,
obligations or debts of Seller, whether accrued, absolute, contingent or
otherwise, arising before or after the Closing, whether or not such liabilities
are related to the Assets. 

     

    - 1 - 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.              
REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to
Buyer as follows: 

     

    a.              
AUTHORIZATION OF SELLER. Seller has the power and authority to execute, deliver
and perform its obligations under this Agreement and to sell, assign, transfer
and deliver to Buyer the Assets as contemplated hereby. No permit, consent,
approval or authorization of, or declaration, filing or registration with any
governmental or regulatory authority or consent of any third party is required
in connection with the execution and delivery by Seller of this Agreement and
the consummation of the transactions contemplated hereby. Seller is a
corporation validly existing and in good standing under the laws of the People’s
Republic of China.

     

    b.              
ENFORCEABILITY. This Agreement has been duly and validly executed by Seller, and
constitutes the valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting creditors' rights generally or by
limitations, on the availability of equitable remedies.

     

    c.              
TITLE TO ASSETS; NO ENCUMBRANCES. Seller has good and valid title to all of the
Assets and holds the Assets free and clear of all liens, charges, security
interests, encumbrances, claims of others, options, warrants, purchase rights,
contracts, commitments, equities or other claims or demands of any kind
(collectively, “Liens”), and upon delivery of the Assets to Buyer, Buyer will
acquire good, valid and marketable title thereto free and clear of all Liens.

     

    d.              
ABSENCE OF CERTAIN CHANGES AND EVENTS. Seller has previously provided Buyer with
a description of the Assets as of December 1, 2010, and since such date there
has not been any event or condition of any character which has materially
adversely affected, or may be expected to materially adversely affect the
condition of the Assets. As of the date hereof, there has been no material
adverse changes or developments in the condition (financial or otherwise) or
prospects of Seller that have resulted, or could reasonably be expected to
result, in a material adverse effect on the Assets. Seller has not taken any
steps to seek protection pursuant to any bankruptcy law nor does Sellerhave any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact that would reasonably
lead a creditor to do so. Seller is not as of the date hereof, and after giving
effect to the transactions contemplated hereby to occur at the Closing, will not
be Insolvent (as defined below). For purposes of this Section “Insolvent” means,
with respect to Seller, (i) the present fair saleable value of Seller’s assets
is less than the amount required to pay the Seller’s total liabilities (existing
or contingent), (ii) Seller is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, (iii) Seller intends to incur or believes that it will
incur debts that would be beyond its ability to pay as such debts mature or (iv)
Seller has unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be
conducted. 

     

    e.              
GOOD OPERATING CONDITION. The Assets are in good operating condition and are
suitable and adequate for their intended use and conform in all material
respects to all applicable laws.

     

    f.              
COMPLIANCE WITH LAWS. Seller has complied in all material respects with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of all applicable
governmental authorities, where the failure to comply would have a material
adverse effect on the Assets, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against Seller alleging any failure so to comply.

     

    - 2 - 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    g.              
NO CONFLICTS OR CONSENTS. Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby or compliance with
the terms and conditions hereof by Seller will violate or result in a breach of
any term or provision of any agreement to which Seller is bound or is a party,
or be in conflict with or constitute a default under, or cause the acceleration
of the maturity of any obligation of the Seller under any existing agreement or
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Seller or any properties or assets of Seller, including the
Assets. Seller is not required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court
or other federal, state, local or other governmental authority or other person
or entity in connection with the execution, delivery and performance by Seller
of this Agreement, including the transfer of the Assets, that have been made or
obtained prior to the date of this Agreement, other than the consents and
waivers set forth in 1.3(b)(ii) hereof. 

     

    h.              
PROPRIETARY RIGHTS. Seller (i) owns all right, title and interest in, (ii) is
validly licensed, or (iii) is otherwise entitled to exercise, without
restriction, all rights to all patents, trademarks, trade names, service marks,
copyrights, trade secrets and other intellectual property rights, documentation,
and all other tangible and intangible information or material in any form which
form part of the Assets (“Intellectual Property”), free and clear of any Liens.
All such Intellectual Property held by Seller are valid and enforceable.

     

    7.              
DEFAULT. If Seller fails to make the required deliveries at the Closing or
otherwise defaults under this Agreement, then Buyer shall have the right to
terminate this Agreement and thereupon this Agreement shall be null and void and
of no legal effect whatsoever. If so terminated, each party hereto shall suffer
their own losses, costs, expenses or damages arising out of, under or related to
this Agreement. 

     

    8.              
INDEMNITY. Seller shall indemnify, defend and hold Buyer harmless from and
against any and all losses, liabilities, damages, costs and obligations (or
actions or claims in respect thereof) (including reasonable counsel fees), which
Buyer may suffer or incur arising out of or based upon: the breach of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement; the Assumed Liabilities; and the use of any of the Purchased Assets
after the Closing. 

     

    9.              
CONDITIONS PRECEDENT TO CLOSING. The performance by Seller and Buyer of their
respective obligations under this Agreement is subject to the condition that on
the Closing Date (a) Seller has made the required deliveries at the Closing (b)
the representations of the Seller in Section 6 are true as of the Closing Date
and (c) and no suit, action or other proceeding shall be pending before any
court or governmental or regulatory authority which seeks to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated by this Agreement. 

     

    10.              
NOTICES. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by commercial delivery service,
or mailed by registered or certified mail (return receipt requested) or sent via
facsimile (with confirmation of receipt) to the parties at the following address
(or at such other address for a party as shall be specified by like notice):

     

    if to the Seller, to: 

     

    Keychain, Ltd. 
60 Market Square,
PO Box 364
Belize City, Belize
Attention: John
Madsen 
Telephone No.: +85268917797

     

    - 3 - 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    if to the Buyer, to: 

     

    Sinobiomed, Inc. 
Room 4304, 43/F
China Resources Building 
26 Harbour Road, Wan Chai 
Hong Kong HKSAR

Attention:
George Yu 
Telephone No.: 852-2511-0238 

     

    11.              
MISCELLANEOUS. 

     

    a.              
SURVIVAL. The representations, warranties and covenants contained herein shall
not survive the execution and delivery of this Agreement and Closing. 

     

    b.              
AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented only by written
agreement of Buyer and Seller c. SEVERABILITY. Any provision of this Agreement
that shall be prohibited or unenforceable shall be deemed ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. d. ENTIRE AGREEMENT. This Agreement sets forth all
of the promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and undertakings, inducements or
conditions, express or implied, oral or written. e. GOVERNING LAW. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the Hong Kong without giving effect to any choice or conflict of law
provision or rule (whether of Hong Kong or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than Hong Kong. f.
ARBITRATION. Any dispute, controversy or claim arising out of or relating to
this Agreement, including the validity, invalidity, breach or termination
thereof, shall be settled by arbitration in Hong Kong under the Hong Kong
International Arbitration Centre Administered Arbitration Rules in force when
the Notice of Arbitration is submitted in accordance with these Rules. g.
COUNTERPARTS. This Agreement may be executed in one or more counterparts all of
which when taken together constitute one and the same instruments. A signed
counterpart is as binding as an original. h. HEADINGS; EXHIBITS. The headings
used in this Agreement are for convenience only and shall not be used to limit
or construe the contents of any of the sections of this Agreement. All lettered
Exhibits are attached to and by this reference made a part of this Agreement. i.
BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of
the parties hereto, their successors and assigns. 

     

    [Signature
Pages Follow] 

     

    - 4 - 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, Buyer and Seller
have caused this Asset Purchase Agreement to be signed by their duly authorized
respective officers, all as of the date first written above.

     

    
      	 	BUYER: 	 
	 	SINOBIOMED INC. 	 
	 	  	 
	 	By:/s/
      George Yu 	 
	 	George Yu 	 
	 	Chief Executive Officer 	 
	 	  	 
	 	SELLER: 	 
	 	KEYCHAIN, LTD. 	 
	 	  	 
	 	By:/s/
      John Madsen 	 
	 	Name: John Madsen 	 
	 	Title: Director 	 

    

    Signature Page to Asset
Purchase Agreement 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE A 

     

    Description
of Assets 

     

    
      	QTY 	DESCRIPTION 
	  	  
	(10) 	Customized Industrial Grade
      Server each Cabinets (1100x600x2200mm) inclusive with the following:

	  	•     Dual
      topside cable trays to support separate power and network cabling 
	  	•    
      Detachable front, rear, & side doors with (2) Locks and (2) Individual
      Keys 
	  	•     (2)
      Interior Shelves and (2) cable trays 
	  	•    Dual
      13amp 220VAC outlets to Universal Power Supply 
	  	•    Dual
      13amp 220VAC outlets to Commercial Power Supply 
	  	•    Two
      interior 10 socket outlet strips with LED amp meter display 
	  	  
	(2) 	HP Proliant DL16x Servers 
	  	  
	(2) 	HP Proliant DL18x Servers 
	  	  
	(4) 	HP DL14x Servers

    

    Server
Specifications: 

     

    DL16x
Servers

     

    
      	1. 	DL160G5 Server 

    
 

    	1 x Quad-Core Intel® Xeon® processor E5430 (2.66 GHz, 80W, 1333MHz FSB)
        
	4 GB PC2-5300 DDR2 fully buffered DIMMs (667MHz)
        
	1 x HP SC40Ge SAS HBA with RAID
        
	1 x HP 1U 9.5mm DVD ROM Kit
        
	2x embedded NC105i PCIe Gigabit Server Adapters
        
	1 x PCI-e SCSI Card for Autoloader
        
	HP 1y 24x7 ProLiant DL14x/16x HW Supp
        
	Optional CD/DVD-ROM, DVD/CD RW
        
	(5) USB ports (two front, two rear & 1 internal) , 650W Power Supply
  (Non-Hot Plug, Autoswitching)

 

	1 HP 4GB FBD PC2-5300 2x2GB Kit
        
	2 HP 300GB 15K SAS 3.5 SP HDD
        
	1 HP 1U 9.5mm DVD ROM Kit
        
	1 HP SC11Xe HBA
        
	1 HP 1yr 24x7 ProLiant DL14x/16x HW Supp 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	2. 	HP Proliant DL160G5 Server 

    

    	Quad-Core Intel® Xeon® processor E5430 (2.66 GHz, 80W, 1333MHz FSB)
        
	2 GB PC2-5300 DDR2 fully buffered DIMMs (667MHz)
        
	2x 72GB 15K SAS 3.5 Hot Plug Hard Drive
        
	HP SC40Ge SAS HBA with RAID
        
	HP 1U 9.5mm DVD ROM Kit
        
	2x embedded NC105i PCIe Gigabit Server Adapters
        
	HP 1y 4h 24x7 ProLiant DL14x/16x HW Supp
        
	Optional CD/DVD-ROM, DVD/CD RW
        
	(5) USB ports (two front, two rear & 1 internal) , 650W Power Supply
  (Non-Hot Plug, Autoswitching) 

	1 HP 1GB FBD PC2-5300 2x512 Kit
        
	2 HP 72GB 15K SAS 3.5 Hot Plug Hard Drive
        
	1 HP 1U 9.5mm DVD ROM Kit
        
	1 HP 1y 4h 24x7 ProLiant DL14x/16x HW Supp 

    DL180x
Servers

     

    
      	1. 	HP Proliant DL180G5 Server 

    

    	1 x Quad-Core Intel® Xeon® processor E5420 (2.50 GHz, 80W, 1333 MHz FSB)
        
	4 GB PC2-5300 DIMMs (DDR2-667)
        
	2x 146GB 15K SAS 3.5 DP HDD
        
	2x 300GB 15K SAS 3.5 DP HDD
        
	HP Smart Array E200/128MB Controller
        
	HP Slim 12.7mm DVDRW Optical Kit
        
	HP NC105i PCI-E (embedded)
        
	1 x redundant Power Supply HP 1y 4h 24x7 ProLiant DL18x HW Support
  
 
        
	HP Embedded SATA RAID Controller, Supports up to four: 3.5" SATA or SAS
  hard drives
        
	Optional support up to 8 hard drives; Smart array controller and two
  cables (464830- B21) are required 

	(7) USB ports (2 front, 4 rear & 1 internal) , 750W Power Supply
  (Optional Redundant Non-Hot Plug, Autoswitching) 

    
      	2. 	HP Proliant DL180G5 Server

    

    	Quad-Core Intel® Xeon® processor E5420 (2.50 GHz, 80W, 1333 MHz FSB)
        
	4 GB PC2-5300 DIMMs (DDR2-667)
        
	4x 146GB 15K SAS 3.5 DP HDD
        
	HP Int SAS/SATA Multi-Lane Cable Kit
        
	HP Smart Array E200/128MB Controller
        
	HP Slim 12.7mm DVDRW Optical Kit
        
	HP NC105i PCI-E (embedded)
        
	1 x redundant Power Supply
        
	HP 1y 4h 24x7 ProLiant DL18x HW Support 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	  	  	HP DL180 G5 E5420 1GB LFF Svr [#1] 
	HP 	1 	HP DL180 G5 E5420 1GB 4LFF AP Svr 
	
            	
            	
              •    
      (1) Quad-Core Intel® Xeon® processor E5420 (2.50 GHz, 80 W, 1333 MHz FSB 2
      x 6MB L2 cache) 

               

            
	
            	
            	
              •    
      1GB (1 x 1GB) PC2-5300 DIMMs (DDR2-667)with ECC capabilities 

               

            
	
            	
            	
              •    
      One HP NC7781 (embedded) (Wake on LAN and PXE capable), Optional DVD or
      DVD RW drive 

               

            
	
            	
            	
              •    
      (1) low Profile x8 PCI-Express slot + (2) two full-length/full height x8
      PCI-Express (x4 electrical - Standard) or (2) PCI-X Slots (optional)

               

            
	
            	
            	
              •    
      HP Embedded SATA RAID Controller, Supports up to four: 3.5" SATA or SAS
      hard drives, 

               

            
	
            	
            	
              •    
      Optional support up to 8 hard drives; Smart array controller and two
      cables (464830-B21) are required 

               

            
	
            	
            	
              •    
      (7) USB ports (2 front, 4 rear & 1 internal) , 750W Power Supply
      (Optional Redundant Non-Hot Plug, Autoswitching) 

               

            
	  	  	
              •    
      One-year warranty on parts 

               

            
	HP 	1 	HP 2GB Reg PC2-5300 2x1GB Kit 
	HP 	1 	HP 1GB REG PC2-5300 1x1GB Kit 
	HP 	4 	HP 146GB 15K SAS 3.5 DP HDD 
	HP 	1 	HP Slim 12.7mm DVDRW Kit 
	HP 	1 	HP Int SAS/SATA Multi-Lane Cable Kit 
	HP 	1 	HP Smart Array E200/128MB Controller 
	HP 	1 	HP Rdnt Power Suply Kit 
	HP 	1 	HP 3y 4h 24x7 ProLiant DL18x HW Support
  

    

    DL14x Server
specifications

     

    	
        Intel Xeon 2.4
  GHz processor with 512-KB second level ECC cache standard, 533MHz
  front-side-bus supporting Hyper-Threading Technology 

         

      
	
        1 GB PC2100 DDR
  SDRAM running at 266MHz, with Advanced ECC capabilities 

         

      
	
        Integrated Dual
  Broadcom 10/100/1000 NICs (Wake on LAN and PXE capable) 

         

      
	
        Integrated Dual
  Channel Ultra ATA/100 Adapter (ATA Models) 

         

      
	
        Support for up
  to two 1" ATA/100 Non Hot Plug hard drives 

         

      
	
        One PCI-X
  64-bit/133MHz PCI slot operating at 3.3 volts 

         

      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT A 

     

    ASSIGNEE'S BILL OF
SALE

     

    For good and valuable consideration, receipt of which is
hereby acknowledged, the undersigned, authorized officer of Keychain , Ltd.
("Seller"), hereby assigns, conveys and transfers over unto Sinobiomed Inc.
("Buyer"), all of Seller’s right, title and interest, if any, in and to the
Assets as defined in that certain Asset Purchase Agreement between Seller and
Buyer dated December 10, 2010 (the "Purchase Agreement"). 

     

    The purchase price for the Assets is US$225,000, deliverable
in 4,500,000 shares of the Buyer’s Common Stock, par value .001 per share. THE
ASSETS ARE BEING SOLD "AS-IS, WHERE-IS" WITH NO WARRANTIES OR REPRESENTATIONS,
EXCEPT AS EXPRESSLY PROVIDED IN THE PURCHASE AGREEMENT, INCLUDING, WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

     

    IN WITNESS WHEREOF, the parties hereto have caused this Bill
of Sale to be executed as of the 10th day of December, 2010. 

     

    
      	 	Keychain, Ltd. 	 
	 	  	 
	 	By:
	 
	 	Name: 	 
	 	Title:

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