Document:

ex10_08.htm

    
      

    

    EXHIBIT
      10.08

    EXECUTION
      COPY

     

    SECOND
      AMENDMENT, dated as of September 10, 2007 (“Amendment”), to and under
CREDIT AND SECURITY AGREEMENT, dated as of July 28, 2004 (as
      amended from time to time, the “Credit Agreement”), by and among
AMERICAN/UNIVERSAL SUPPLY, INC., a New York corporation
      (“American”), THE RAL SUPPLY GROUP, INC., a New York
      corporation (“RAL”), UNIVERSAL SUPPLY GROUP, INC., a New York
      corporation (“Universal”; American, RAL and Universal are each individually
      referred to as a “Borrower” and are collectively referred to as the
“Borrowers”), S&A PURCHASING CORP., a New York corporation,
      to be renamed S&A Supply, Inc. immediately following the consummation of the
      transactions contemplated by the Purchase Agreement (as defined below)
      (“S&A”; each Borrower and S&A are individually referred to as a “Loan
      Party” and are collectively referred to as the “Loan Parties”), and
WELLS FARGO BANK, NATIONAL ASSOCIATION, acting through its
      Wells Fargo Business Credit operating division, as successor to Wells Fargo
      Business Credit, Inc. (the “Lender”).  Terms which are capitalized in
      this Amendment and not otherwise defined shall have the meanings ascribed to
      such terms in the Credit Agreement.

     

    WHEREAS,
      the Borrowers and Colonial have made in favor of the Lender that
      certain Guaranty By Corporations, dated as of July 28, 2004 (as amended,
      modified, supplemented or restated from time to time, the
“Guaranty”);

     

    WHEREAS,
      S&A is party to that certain Asset Purchase Agreement dated as of
      September 10, 2007 (the “Purchase Agreement”), among S&A, S&A Supply,
      Inc., a Massachusetts corporation, S&A Realty, Inc., a Massachusetts
      corporation, S&A Management, Inc., a Massachusetts corporation, Nancy A.
      Mead (“Nancy”), Nancy and Thomas H. Mead, as trustees of The Discretionary Trust
      under The Rodney P. Mead Revocable Trust, dated January 12, 1999, Sarah Mead,
      Brian Mead, Adam Mead and Colonial, pursuant to which S&A shall purchase
      certain assets of S&A Supply, Inc. and S&A Management,
      Inc.;

     

    WHEREAS,
      S&A desires to become a party to the Credit Agreement, the Guaranty
      and the other Loan Documents to which any Borrower is a party; and

     

    WHEREAS,
      the Loan Parties have requested, among other things, that the Lender
      (i) increase the Maximum Line to Twenty-Five Million Dollars ($25,000,000)
      and
      the inventory sublimit to Thirteen Million Five Hundred Thousand Dollars
      ($13,500,000), (ii) provide the Borrowers with an overadvance sublimit up to
      Five Hundred Thousand Dollars ($500,000) and a Structural Sublimit up to One
      Million Dollars ($1,000,000) and (iii) extend the maturity date of the Credit
      Agreement, and the Lender has agreed to the foregoing requests, on the terms
      and
      conditions set forth herein.

     

    NOW,
      THEREFORE, in consideration of the mutual promises contained herein,
      and for other good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, the Loan Parties and the Lender hereby agree
      as
      follows:

     

    Section
      One.  Addition of S&A as a
      Borrower.  Effective upon satisfaction
      of the conditions precedent set forth in Section Four hereof, S&A hereby
      agrees with the Lender as follows:

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    (i)           S&A
      hereby acknowledges, agrees and confirms that, by its execution of this
      Amendment, S&A will be deemed to be a party to the Credit Agreement, the
      Guaranty and each of the other Loan Documents to which any Borrower is a party
      and a “Borrower” and a “Guarantor” for all purposes of the Credit Agreement, the
      Guaranty and such other Loan Documents, and shall have all of the obligations
      of
      a Borrower or a Guarantor, as the case may be, thereunder as if it had executed
      the Credit Agreement, the Guaranty and such other Loan Documents on the
      respective dates thereof.  S&A hereby ratifies, as of the date
      hereof, and agrees to be bound by, all of the terms, provisions and conditions
      applicable to the Borrowers and the Guarantors, as the case may be, contained
      in
      the Credit Agreement, the Guaranty and such other Loan Documents.

     

    (ii)           Without
      limiting generality of the foregoing terms of paragraph (i), S&A hereby
      pledges, assigns and grants to the Lender a security interest in and a Lien
      upon
      all of the Collateral, as security for the payment and performance of the
      Obligations.  S&A acknowledges and agrees that, in applying the
      law of any jurisdiction and the provisions of Article 9 of the Uniform
      Commercial Code of any jurisdiction, the defined term Collateral covers all
      assets of S&A.  The Lender may at any time and from time to time
      file, pursuant to the provisions of Section 3.9 of the Credit Agreement,
      financing and continuation statements and amendments thereto reflecting the
      same.

     

    (iii)           S&A
      hereby represents and warrants to the Lender that:

     

    (a)           During
      its existence, S&A has done business solely under the names set forth in
Schedule 1 hereto.  S&A’s chief executive office and
      principal place of business is, and after giving effect to the transactions
      contemplated by the Purchase Agreement will be, located at the address set
      forth
      in Schedule 1 hereto, and all of S&A’s records relating to its
      business or the Collateral are kept at that location.  All Inventory
      and Equipment is, and after giving effect to the transactions contemplated
      by
      the Purchase Agreement will be, located at that location or at one of the other
      locations set forth in Schedule 1 hereto, which such locations are owned
      or leased by S&A, as indicated on Schedule 1
      hereto.  S&A’s tax identification number is correctly set forth in
Schedule 1 hereto.

     

    (b)           Set
      forth on Schedule 2 hereto is a list of all Subsidiaries of
      S&A.

     

    (c)           Set
      forth on Schedule 3 is a list of all actions, suits or proceedings
      pending, or to the knowledge of S&A, threatened against or affecting S&A
      or the properties of S&A before any court or governmental department,
      commission, board, bureau, agency or instrumentality, domestic or foreign,
      which, if determined adversely to S&A, could have a Material Adverse
      Effect.

     

    (d)           To
      the best of S&A’s knowledge, except as disclosed on Schedule 4
      hereto, the Premises are not and never have been listed on the National
      Priorities List, the Comprehensive Environmental Response, Compensation and
      Liability Information System or any similar federal, state or local list,
      schedule, log, inventory or database.

    
      
        
        

      

      
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    (e)           The
      exact legal name and jurisdiction of formation of S&A on the date hereof is
      as set forth in the first paragraph of this Amendment.

     

    (f)           Except
      as set forth on Schedule 5 hereto, S&A has not during the five years
      preceding the date hereof (i) changed its legal name, (ii) changed its
      jurisdiction of formation or (iii) been party to a merger, consolidation or
      other change in structure.

     

    (g)           S&A
      possesses all of the licenses, permits, patents, copyrights, trademarks and
      tradenames necessary to conduct its business, there has been no assertion or
      claim of violation or infringement with respect thereto and all such licenses,
      permits, patents, copyrights, trademarks and tradenames are listed on
Schedule 6 hereto.  S&A has paid all licensing and permit
      fees required to maintain all of the licenses and permits necessary for it
      to
      conduct its business as presently conducted.

     

    (h)           Except
      as set forth on Schedule 7 hereto and except for Permitted Liens, there
      are no Liens upon any of S&A’s assets.

     

    (i)           Debt
      of S&A in existence on the date hereof and after giving effect to the
      transactions contemplated by the Purchase Agreement  is listed on
Schedule 8 hereto.

     

    (j)           Guaranties,
      endorsements and other direct or contingent liabilities in connection with
      the
      obligations of other Persons, in existence on the date hereof and after giving
      effect to the transactions contemplated by the Purchase Agreement are listed
      on
Schedule 9 hereto.

     

    (k)           Loans
      and advances to, and investments and other interests in, any other Person in
      existence on the date hereof and after giving effect to the transactions
      contemplated by the Purchase Agreement are listed on Schedule 10
      hereto.

     

    Section
      Two.  Amendments to Credit
      Agreement.  Effective upon satisfaction
      of the conditions precedent set forth in Section Four
      hereof, the Credit Agreement is hereby amended as
      follows:

     

    (i)           Section
      1.1.  Definitions.  (1) The
      following defined terms contained in Section 1.1 of the Credit Agreement are
      amended and restated as follows:

     

    “Banking
      Day” means a day on which the Lender is open for business that is not a
      Saturday, Sunday or other day on which banks are required or permitted to be
      closed in Minneapolis, Minnesota, or New York, New York and, if such day relates
      to a LIBOR Advance, a day on which dealings are carried on in the London
      interbank eurodollar market.

     

    “Borrowing
      Base” means, with respect to any Borrower at any time, and subject to
      change from time to time in the Lender’s sole discretion, which discretion shall
      be exercised in a commercially reasonable manner, the lesser
      of:

    
      
        
        

      

      
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    (a)           the
      Maximum Line, minus the L/C Amount, minus the aggregate principal
      amount of outstanding Advances made to the other Borrowers; or

     

    (b)           the
      sum of:

     

    
      	
               

            	
              (i)

            	
              eighty-five
                percent (85%) of such Borrower’s Eligible Accounts,
                plus

            

    

     

    
      	
               

            	
              (ii)

            	
              the
                lesser of: (A) up to fifty-seven percent (57%) of the lower of the
                cost or
                fair market value, as determined in accordance with GAAP, of such
                Borrower’s Eligible Inventory, but in no event to exceed Thirteen Million
                Five Hundred Thousand Dollars ($13,500,000.00), minus the aggregate
                principal amount of outstanding Advances made to the other Borrowers
                pursuant to this clause (ii), and (B) up to ninety-five percent (95%)
                of
                the liquidation value of such Borrower’s Eligible Inventory, net of
                liquidation and other related expenses, as determined by the Lender
                in its
                sole discretion, which discretion shall be exercised in a commercially
                reasonable manner, but in no event to exceed Thirteen Million Five
                Hundred
                Thousand Dollars ($13,500,000.00), minus the aggregate principal
                amount of outstanding Advances made to the other Borrowers pursuant
                to
                this clause (ii), plus

            

    

     

    
      	
               

            	
              (iii)

            	
              the
                amount of the Structural Sublimit then in effect, minus the
                aggregate principal amount of outstanding Advances made to the other
                Borrowers pursuant to this clause (iii),
                plus

            

    

     

    
      	
               

            	
              (iv)

            	
              the
                amount of the Overadvance Sublimit then in effect, minus the
                aggregate principal amount of outstanding Advances made to the other
                Borrowers pursuant to this clause (iv),
                minus

            

    

     

    
      	
               

            	
              (v)

            	
              the
                amount of the Landlord Reserve then in effect, apportioned among
                the
                Borrowers in such manner as the Lender may determine from time to
                time in
                its sole discretion, which discretion shall be exercised in a commercially
                reasonable manner, minus

            

    

     

    
      	
               

            	
              (vi)

            	
              the
                amount of the Availability Reserve then in effect, apportioned among
                the
                Borrowers in such manner as the Lender may determine from time to
                time in
                its sole discretion, which discretion shall be exercised in a commercially
                reasonable manner, minus

            

    

    
      
        
        

      

      
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              (vii)

            	
              the
                portion of the L/C Amount relating to Letters of Credit issued for
                such
                Borrower’s account, plus, the aggregate L/C Amount relating to
                Letters of Credit  issued for the other Borrowers,
                minus

            

    

     

    
      	
               

            	
              (viii)

            	
              such
                other reserves as the Lender may establish from time to time in its
                sole
                discretion, which discretion shall be exercised in a commercially
                reasonable manner.

            

    

     

    Notwithstanding
      the foregoing, in the event that dilution for all Accounts during any ninety
      (90) consecutive day period, expressed as a percentage, as determined by the
      Lender in its sole discretion, exercised in a commercially reasonable manner,
      pursuant to its periodic examination of the Borrowers’ collateral reports and/or
      books and records, exceeds four percent (4%), then the Lender, in its sole
      discretion, may implement and maintain such reserves and/or reduce the advance
      percentages used in determining the Borrowing Base to adjust for such
      excess.

     

    “Default
      Rate” means an annual interest rate in effect during a Default Period
      or following the Termination Date, which interest rate shall be equal to three
      percent (3%) over the applicable Floating Rate or the LIBOR Advance Rate, as
      the
      case may be, as such rate may change from time to time.

     

    “Floating
      Rate” means, with respect to all Floating Rate Advances, an annual rate
      equal to the Prime Rate minus one-quarter of one percent (1⁄4 of 1%);
provided, that if the Borrowers’ Net Income for the fiscal year ending on
      or about December 31, 2007 exceeds One Million Dollars ($1,000,000), the
      Floating Rate shall be an annual rate equal to the Prime Rate minus
      one-half of one percent (1⁄2 of 1%), which annual rate, in each case, shall change
      when and as the Prime Rate changes.  Such reduction, if any, in the
      Floating Rate shall become effective on the first calendar day of the month
      following the month of receipt by the Lender of the unaudited financial
      statements for the fiscal year ending on or about December 31, 2007 as required
      under Section 6.1(a); provided, however, that such reduction shall
      become effective, retroactive, as of the first calendar day of the month of
      receipt by the Lender of such financial statements, if such financial statements
      are received by the Lender prior to the 25th day of
      such month;
provided, further, that (i) no such reduction in the Floating Rate
      will be made if a Default Period exists at the time that such reduction would
      otherwise be made and (ii) if such financial statements are amended or restated
      and such amended or restated financial statements do not indicate that the
      Borrowers’ Net Income for the fiscal year ending on or about December 31, 2007
      exceeded One Million Dollars ($1,000,000), the Floating Rate shall be increased
      to the Prime Rate minus one-quarter of one percent (1⁄4 of 1%) effective as
      of the date on which the Floating Rate was previously reduced and the Borrowers
      shall immediately pay to the Lender interest on the outstanding Advances at
      such
      higher Floating Rate from the effective date of such increase to the extent
      such
      interest has not been paid.

    
      
        
        

      

      
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    “Original
      Maturity Date” means August 1, 2012.

     

    “Overadvance
      Sublimit” means, from the period beginning on April 1 and ending on
      July 31 of each calendar year during the term of this Agreement, the amount
      of
      Five Hundred Thousand Dollars ($500,000), which amount shall be automatically
      reduced each week by the amount of One Hundred Thousand Dollars ($100,000)
      on
      August 1 of such calendar year and on each corresponding day of each
      following week thereafter, until reduced to zero (-0-).

     

    “Structural
      Sublimit” means, on the Acquisition Date, the sum of One Million
      Dollars ($1,000,000), which amount shall be automatically and permanently
      reduced on the first day of each month, beginning with the month of November
      2007, by the sum of Forty-One Thousand Six Hundred Sixty-Six Dollars and
      Sixty-Seven Cents ($41,666.67), until reduced to zero (-0-).

     

    (2)           The
      following defined terms are added to Section 1.1 of the Credit Agreement in
      their proper alphabetical sequence:

     

    “Acquisition
      Date” means the Closing Date as defined in the Purchase
      Agreement.

     

    “Floating
      Rate Advance” means an Advance bearing interest at the Floating
      Rate.

     

    “Interest
      Period” means the period that commences on (and includes) the Banking
      Day on which either a LIBOR Advance is made or continued, or on which a Floating
      Rate Advance is converted to a LIBOR Advance, and ending on (but excluding)
      the
      Banking Day numerically corresponding to such date that is one, three, six,
      or
      twelve months thereafter as designated by the Borrower, during which period
      the
      outstanding principal balance of the LIBOR Advance shall bear interest at the
      LIBOR Advance Rate; provided, however, that:

     

    (a)
      no
      Interest Period may be selected for an Advance for a principal amount less
      than
      Five Hundred Thousand Dollars ($500,000), and no more than three (3) different
      Interest Periods may be outstanding at any one time;

     

    (b)
      if an
      Interest Period would otherwise end on a day which is not a Banking Day, then
      the Interest Period shall end on the next Banking Day thereafter, unless that
      Banking Day is the first Banking Day of a month, in which case the Interest
      Period shall end on the last Banking Day of the preceding
      month;

    
      
        
        

      

      
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    (c)
      no
      Interest Period may end later than the Original Maturity Date; and

     

    (d)
      in no
      event shall the Borrower select Interest Periods with respect to Advances which,
      in the aggregate, would require payment of a contracted funds breakage fee
      under
      this Agreement in order to make required principal payments.

     

    “LIBOR”
      means the rate per annum (rounded upward, if necessary, to the nearest
      whole 1/16th of one percent (1%)) determined pursuant to the following
      formula:

     

    

    
      	
              LIBOR
                =

            	
              Base
                LIBOR

            
	 	
              100%
                - LIBOR Reserve Percentage

            

    

    

    (i)
      “Base LIBOR” means the rate per annum for United States dollar
      deposits quoted by the Lender as the Inter-Bank Market Offered Rate, with the
      understanding that such rate is quoted by the Lender for the purpose of
      calculating effective rates of interest for loans making reference thereto,
      on
      the first day of an Interest Period for delivery of funds on said date for
      a
      period of time approximately equal to the number of days in such Interest Period
      and in an amount approximately equal to the principal amount to which such
      Interest Period applies.  The Borrowers understand and agree that the
      Lender may base its quotation of the Inter-Bank Market Offered Rate upon such
      offers or other market indicators of the Inter-Bank Market as the Lender in
      its
      discretion deems appropriate including the rate offered for U.S. dollar deposits
      on the London Inter-Bank Market.

     

    (ii)
      “LIBOR Reserve Percentage” means the reserve percentage
      prescribed by the Board of Governors of the Federal Reserve System (or any
      successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the
      Federal Reserve Board, as amended), adjusted by the Lender for expected changes
      in such reserve percentage during the applicable Interest Period.

     

    “LIBOR
      Advance” means an Advance bearing interest at the LIBOR Advance
      Rate.

     

    “LIBOR
      Advance Rate” means, with respect to all LIBOR Advances, an annual
      interest rate equal to the sum of LIBOR plus two and one-half of one
      percent (2.5%); provided, that if the Borrowers’ Net Income for the
      fiscal year ending on or about December 31, 2007 exceeds One Million Dollars
      ($1,000,000), the LIBOR Advance Rate shall be an annual rate equal to the sum
      of
      LIBOR plus two and one-quarter of one percent (2.25%), such reduction, if
      any, in the LIBOR Advance Rate to become effective on the first calendar day
      of
      the month following the month of receipt by the Lender of the unaudited
      financial statement for the fiscal year ending on or about December 31, 2007
      as
      required under Section 6.1(a); provided, however, that such
      reduction shall become effective, retroactive, as of the first calendar day
      of
      the month of receipt by the Lender of such financial statements, if such
      financial statements are received by the Lender prior to the 25th day of
      such month;
provided, further, that (i) no such reduction in the LIBOR Advance
      Rate will be made if a Default Period exists at the time that such reduction
      would otherwise be made and (ii) if such financial statement is amended or
      restated and such amended or restated financial statement does not indicate
      that
      the Borrowers’ Net Income for the fiscal year ending on or about December 31,
      2007 exceeded One Million Dollars ($1,000,000), the Lender may increase the
      LIBOR Advance Rate to LIBOR plus two and one-half of one percent (2.5%)
      effective as of the date on which the LIBOR Advance Rate was previously reduced
      and the Borrowers shall immediately pay to the Lender interest on the
      outstanding Advances at such higher LIBOR Advance Rate from the effective date
      of such increase to the extent such interest has not been paid.

    
      
        
        

      

      
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    “Purchase
      Agreement” means that certain Asset Purchase Agreement dated as of
      September 10, 2007, among S&A Purchasing Corp., a New York corporation,
      S&A Supply, Inc., a Massachusetts corporation, S&A Realty, Inc., a
      Massachusetts corporation, S&A Management, Inc., a Massachusetts
      corporation, Nancy A. Mead (“Nancy”), Nancy and Thomas H. Mead, as trustees of
      The Discretionary Trust under The Rodney P. Mead Revocable Trust, dated January
      12, 1999, Sarah Mead, Brian Mead, Adam Mead and Colonial, pursuant to which
      S&A shall purchase certain assets of S&A Supply, Inc.

     

    (ii)           Section
      2.1.  Revolving
      Advances.  Sections 2.1(a) and (b) of
      the Credit Agreement are amended and restated as follows:

     

    (a)
      The
      Borrowing Agent will not request any Advance on behalf of a Borrower under
      this
      Section 2.1 if, after giving effect to such requested Advance, the sum of the
      outstanding and unpaid Advances made to such Borrower under this Section 2.1
      would exceed such Borrower’s Borrowing Base.  Each Advance shall be
      funded as either a Floating Rate Advance or a LIBOR Advance, as the Borrowing
      Agent shall specify in a request delivered to the Lender conforming to the
      requirements of Section 2.2(b); Floating Rate Advances and LIBOR Advances may
      be
      outstanding at the same time.  Each request for a LIBOR Advance shall
      be in multiples of One Hundred Thousand Dollars ($100,000), with a minimum
      request of at least Five Hundred Thousand Dollars ($500,000), provided
      that the Borrowing Agent may not request a LIBOR Advance if after giving effect
      thereto the aggregate principal amount of outstanding LIBOR Advances would
      exceed seventy-five percent (75%) of the aggregate principal amount of all
      outstanding Advances.  LIBOR Advances shall not be available during
      Default Periods.

    
      
        
        

      

      
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    (b)
      Each
      request by the Borrowing Agent for an Advance from the Lender shall be made
      before 11:00 a.m. (New York time) of the day of the requested Advance. Requests
      may be made in writing or by telephone, specifying the Borrower on behalf of
      which such Advance is being requested, the date of the requested
      Advance,  the amount thereof, whether the Advance shall be a Floating
      Rate Advance or a LIBOR Advance and, with respect to any LIBOR Advance, the
      Interest Period applicable thereto.  Each request shall be made by (A)
      any Authorized  Officer of the Borrowing Agent; or (B) any person
      designated as the Borrowing Agent’s agent by any Authorized Officer of the
      Borrowing Agent in a writing delivered to the Lender; or (C) any person whom
      the
      Lender reasonably believes to be an Authorized Officer of the Borrowing Agent
      or
      such a designated agent.

     

    (iii)           Section
      2.3.  Reduction of Structural
      Sublimit; Mandatory Prepayment of Structural Sublimit
      Advances.  Section 2.3 of the Credit Agreement is amended
      and restated as follows:

     

    Section
      2.3  [RESERVED]

     

    (iv)           Section
      2.7.  Interest; Default
      Interest; Usury.  Section 2.7(a) of the
      Credit Agreement is amended and restated as follows:

     

    (a)
      Interest.  Except as set forth in
      paragraphs (b) and (c) below and in Section 2.21, the outstanding principal
      amount of the Advances shall bear interest at the Floating Rate.

     

    (v)           Section
      2.8.  Fees.  Sections
      2.8(b) and (c) of the Credit Agreement are amended and restated as
      follows:

     

    (b)
      Collateral Monitoring Fees.  The Borrowers
      jointly and severally agree to pay the Lender a monthly collateral monitoring
      fee of $500 per month.  Such fee shall be payable and charged to the
      Borrowers’ accounts on the first day of each month with respect to the prior
      month.

     

    (c)
      Unused Line Fee.  In the event the average closing daily
      unpaid aggregate balance of all Advances hereunder during any calendar month
      is
      less than Twenty Million Dollars ($20,000,000), the Borrowers jointly and
      severally agree to pay to the Lender a fee at a rate per annum equal to
      one-quarter of one percent (1⁄4 of 1%) on the amount by which Twenty Million
      Dollars ($20,000,000) exceeds such average daily unpaid aggregate balance.
      Such
      fee shall be payable and charged to the Borrowers’ accounts on the first day of
      each month with respect to the prior month.  In the event that the
      Credit Facility is terminated on any day other than the first day of a month,
      the unused line fee for the month in which the Credit Facility is terminated
      shall be calculated for the portion of that month which elapsed prior to
      termination and shall be payable on the Termination Date.

    
      
        
        

      

      
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    (vi)        
      Section
      2.9.  Computation of Interest
      and Fees; When Interest Due and Payable.  Section 2.9 of
      the Credit Agreement is amended and restated as follows:

     

    Section
      2.9  Computation of Interest and Fees; When Interest Due and
      Payable.  Interest accruing on the outstanding principal balance
      of the Advances and fees hereunder outstanding from time to time shall be
      computed on the basis of actual number of days elapsed in a year of 360
      days.  Interest shall be payable in arrears on the first day of each
      month and on the Termination Date (each an “Interest Payment Date”), or if any
      such day is not a Banking Day, on the next succeeding Banking
      Day.  Interest will accrue from the most recent date to which interest
      has been paid or, if no interest has been paid, from the date of advance to
      the
      Interest Payment Date.  If an Interest Payment Date is not a Banking
      Day, payment shall be made on the next succeeding Banking
      Day. Interest accruing on each LIBOR Advance shall be due
      and payable on the last day of the applicable Interest Period; provided,
however, for Interest Periods that are longer than one month, interest
      shall nevertheless be due and payable monthly on the last day of each month,
      and
      on the last day of the Interest Period.

     

    (vii)           Section
      2.11.  Prepayment;
      Termination of Credit Facility by the Borrowers; Termination Fees; Breakage
      Fees.  Section 2.11 of the Credit
      Agreement is amended by (i) amending and restating paragraph (a) and (ii) adding
      a new paragraph (d) to the end thereof as follows:

     

    (a)
      Termination by the Borrowers.  Upon
      termination of the Credit Facility on the Maturity Date, the Borrowers shall
      provide the Lender with an executed release, in form and substance satisfactory
      to the Lender, of any and all claims which each Borrower may have or thereafter
      have under this Agreement, any Loan Document or otherwise.  The
      Borrowers may terminate the Credit Facility at any time by: (A) giving at least
      thirty (30) days’ prior written notice to the Lender of their intention to
      terminate the Credit Facility; (B) paying the Lender termination fees and
      contracted funds breakage fees in accordance with subsections (b) and (d),
      respectively, below if the Borrowers terminate the Credit Facility effective
      as
      of any date other than the Maturity Date; and (C) providing the Lender with
      an
      executed release in form and substance satisfactory to the Lender, of any and
      all claims which each Borrower may have or thereafter have under this Agreement,
      any Loan Document or otherwise.

     

    (d)
      Breakage Fees.  The Borrowers may prepay the
      principal amount of the Revolving Note at any time in any amount, whether
      voluntarily or by acceleration, provided, however, that if the
      principal amount of any LIBOR Advance is prepaid, the Borrowers shall pay to
      the
      Lender immediately upon demand a contracted funds breakage fee equal to the
      sum
      of the discounted monthly differences for each month from the month of
      prepayment through the month in which the related Interest Period ends,
      calculated as follows for each such month:

    
      
        
        

      

      
        -
          10 -

        
          

        

      

      
        
        

      

    

    (i)        
      Determine
      the amount of interest which would have accrued each month on the amount prepaid
      at the interest rate applicable to such amount had it remained outstanding
      until
      the last day of the applicable Interest Period.

     

    (ii)           Subtract
      from the amount determined in (i) above the amount of interest which would
      have
      accrued for the same month on the amount prepaid for the remaining term of
      such
      Interest Period at LIBOR in effect on the date of prepayment for new loans
      made
      for such term in a principal amount equal to the amount prepaid.

     

    (iii)           If
      the result obtained in (ii) for any month is greater than zero, discount that
      difference by LIBOR used in (ii) above.

     

    The
      Borrowers acknowledge that prepayment of the Revolving Note and any LIBOR
      Advance may result in the Lender incurring additional costs, expenses or
      liabilities, and that it is difficult to ascertain the full extent of such
      costs, expenses or liabilities.  The Borrowers therefore agree to pay
      the above-described contracted funds breakage fee and agrees that said amount
      represents a reasonable estimate of the contracted funds breakage costs,
      expenses and/or liabilities of the Lender.

     

    (viii)          
      Section 2.12.  Section 2.12 of the
      Credit Agreement is amended and restated as follows:

     

    Section
      2.12    Mandatory
      Prepayments.  Without notice or demand, if the outstanding
      principal balance of the Advances made to any Borrower, plus the L/C Amount
      allocable to such Borrower, shall at any time exceed such Borrower’s Borrowing
      Base, the Borrowers shall immediately repay the Advances to the extent necessary
      to eliminate such excess.  Any payment received by the Lender under
      this Section 2.12 or under Section 2.11 may be applied to the
      Advances, including interest thereon and any fees, commissions, costs and
      expenses hereunder and under the other Loan Documents, in such order and in
      such
      amounts as the Lender, in its discretion, may from time to time
      determine.  In furtherance and not in limitation of Section 2.3, the
      Borrowers jointly and severally agree to permanently repay the aggregate
      principal balance of the Structural Sublimit Advances (i) on the first Banking
      Day of each month, beginning with the month of November  2007, by an
      amount equal to Forty-One Thousand Six Hundred Sixty-Six Dollars and Sixty-Seven
      Cents ($41,666.67), until the aggregate principal balance of the Structural
      Sublimit Advances shall be reduced to zero (-0-).  In furtherance and
      not in limitation of Section 2.3, the Borrowers jointly and severally agree
      to
      repay the aggregate principal balance of the outstanding Overadvances, if any,
      weekly by an amount equal to One Hundred Thousand Dollars ($100,000.00)
      beginning on August 1 of each year and on the corresponding day of each week
      thereafter, until the aggregate principal balance of the Overadvances shall
      be
      reduced to zero (-0-).

    
      
        
        

      

      
        -
          11 -

        
          

        

      

      
        
        

      

    

    (ix)           Section
      2.13.  Payments.  Section
      2.13 of the Credit Agreement is amended and restated as follows:

     

    Section
      2.13    Payments.  Any
      payments of principal, interest, fees or any other amounts payable hereunder
      or
      under any other Loan Document shall be made to the Lender prior to 12:00 noon
      New York time on the due date thereof in immediately available
      funds.  All payments to the Lender shall be made in immediately
      available funds. For purposes of determining the balance of the Advances
      outstanding, the Lender will credit (conditional upon final collection) all
      such
      payments to the  account of the Borrowers upon receipt by the Lender
      of good funds in dollars of the United States of America in the Lender’s
      account, provided, however, for purposes of computing interest on the
      Obligations, the Lender will credit (conditional upon final collection) all
      such
      payments to the Borrowers’ account one (1) day after receipt by Lender of such
      immediately available funds in dollars of the United States of America in the
      Lender’s account.  Any amount received by the Lender after 12:00 noon
      New York time on any Banking Day shall be deemed received on the next Banking
      Day.  The Lender may hold all payments not constituting immediately
      available funds for one (1) additional day before applying them to the
      Obligations. Notwithstanding anything in Section 2.1, the Borrowers hereby
      authorize the Lender, in its discretion at any time or from time to time,
      without the request of any Borrower or the Borrowing Agent and even if the
      conditions set forth in Section 4.2 would not be satisfied, to make an Advance
      in an amount equal to the portion of the Obligations from time to time due
      and
      payable. Any sums expended by the Lender due to the failure of any Borrower
      to
      perform or comply with its obligations under this Agreement or any other Loan
      Document, including, but not limited to the payment of taxes, Liens, insurance
      premiums or leasehold obligations, shall be charged to the account of the
      Borrowers as an Advance and added to the Obligations; provided, that the Lender
      shall have no obligation to make any such payment and shall not by so doing
      be
      deemed to have assumed any obligation or liability of any Borrower.

     

    (x)           Article
      II.  Amount and Terms of the
      Credit Facility.  Article II of the
      Credit Agreement is amended by adding a new Section 2.21 thereto as
      follows:

     

    Section
      2.21    LIBOR
      Advances.

     

    (a)
      Converting Floating Rate Advances to LIBOR Advances;
      Procedures.  So long as no Default Period is in effect,
      the Borrowers may convert all or any part of the principal amount of any
      outstanding Floating Rate Advance into a LIBOR Advance by requesting that the
      Lender convert the same no later than 11:00 a.m. (New York time) on the Banking
      Day on which the Borrowers wish the conversion to become effective;
provided that the Borrowers may not convert any outstanding Floating Rate
      Advance into a LIBOR Advance (i) if after giving effect thereto the aggregate
      principal amount of outstanding LIBOR Advances would exceed seventy-five percent
      (75%) of the aggregate principal amount of all outstanding Advances or
      (ii)  during Default Periods.  Each request that conforms to
      the terms of this Agreement shall be effective upon receipt by the Lender and
      shall be confirmed in writing if the Lender so requests by any Officer or
      designated agent identified in Section 2.1(b) or a Person reasonably believed
      by
      the Lender to be such an Officer or designated agent, which request shall
      specify the Banking Day on which the conversion is to occur, the total amount
      of
      the Floating Rate Advance to be converted, and the applicable Interest
      Period.  Each such conversion shall occur on a Banking Day, and the
      aggregate amount of Floating Rate Advances converted to LIBOR Advances shall
      be
      in  multiples of One Hundred Thousand Dollars ($100,000), with a
      minimum conversion amount of at least Five Hundred Thousand Dollars
      ($500,000).

    
      
        
        

      

      
        -
          12 -

        
          

        

      

      
        
        

      

    

    (b)
      Procedures at End of an Interest
      Period.  Unless the Borrowers request a new LIBOR
      Advance in accordance with the procedures set forth below, or prepay the
      principal of an outstanding LIBOR Advance at the expiration of an Interest
      Period, the Lender shall automatically and without request of the Borrowers
      convert each LIBOR Advance to a Floating Rate Advance on the last day of the
      relevant Interest Period.  So long as no Default exists, the Borrowers
      may cause all or any part of any maturing LIBOR Advance to be renewed as a
      new
      LIBOR Advance by requesting that the Lender continue the maturing Advance as
      a
      LIBOR Advance no later than the Cut-off Time on the Banking Day constituting
      the
      first day of the new Interest Period; provided that the Borrowers may not
      continue a LIBOR Advance as such (i) if after giving effect thereto the
      aggregate principal amount of outstanding LIBOR Advances would exceed
      seventy-five percent (75%) of the aggregate principal amount of all outstanding
      Advances or (ii) during Default Periods.  Each such request shall be
      confirmed in writing upon the Lender’s request by any Officer or designated
      agent identified in Section 2.1(b) or a Person reasonably believed by the Lender
      to be such an Officer or designated agent, which confirmation shall specify
      the
      amount of the expiring LIBOR Advance to be continued and the applicable Interest
      Period.  Each new Interest Period shall begin on a Banking Day and the
      amount of each LIBOR Advance shall be in multiples of One Hundred Thousand
      Dollars ($100,000), with a minimum Advance of at least Five Hundred Thousand
      Dollars ($500,000).

     

    (c)
      Setting and Notice of Rates.  The Lender
      shall, with respect to any request for a LIBOR Advance under Section 2.1 or
      a
      conversion or renewal of a LIBOR Advance under this Section 2.21, provide the
      Borrowers with a LIBOR quote for each Interest Period identified by the
      Borrowers on the Banking Day on which the request was made, if the request
      is
      received by the Lender prior 11:00 a.m. (New York time), or for requests
      received by the Lender after 11:00 a.m. (New York time), on the next Banking
      Day
      or on the Banking Day on which the Borrowers have requested that the LIBOR
      Advance be made effective. If the Borrowers do not immediately accept a LIBOR
      quote, the quoted rate shall expire and any subsequent request from the
      Borrowers for a LIBOR quote shall be subject to redetermination by the Lender
      of
      the applicable LIBOR for the LIBOR Advance.  

    
      
        
        

      

      
        -
          13 -

        
          

        

      

      
        
        

      

    

    (d)
      Taxes and Regulatory Costs.  The Borrowers
      shall pay the Lender with respect to any LIBOR Advance, upon demand and in
      addition to any other amounts due or to become due hereunder, any and all (i)
      withholdings, interest equalization taxes, stamp taxes or other taxes (except
      income and franchise taxes) imposed by any domestic or foreign governmental
      authority and related in any manner to LIBOR, and (ii) future, supplemental,
      emergency or other changes in the LIBOR Reserve Percentage, assessment rates
      imposed by the Federal Deposit Insurance Corporation, or similar requirements
      or
      costs imposed by any domestic or foreign governmental authority or resulting
      from compliance by the Lender with any request or directive (whether or not
      having the force of law) from any central bank or other governmental authority
      and related in any manner to LIBOR to the extent they are not included in the
      calculation of LIBOR.  In determining which of the foregoing are
      attributable to any LIBOR option available to the Borrowers hereunder, any
      reasonable allocation made by the Lender among its operations shall be
      conclusive and binding upon the Borrowers.

     

    (xi)           Schedules
      to Credit Agreement.  Schedule
      5.1, Schedule 5.4, Schedule 5.6, Schedule 5.12,
Schedule 5.16, Schedule 7.1, Schedule 7.2, Schedule
      7.3 and Schedule 7.4 of the Credit Agreement are amended by annexing
      thereto and making a part thereof Schedule 1, Schedule 2,
Schedule 3, Schedule 4, Schedule 6, Schedule 7,
Schedule 8, Schedule 9 and Schedule
      10 hereto,
      respectively.

     

    Section
      Three.  Representations and
      Warranties.  To induce the Lender to
      enter into this Amendment, each Loan Party warrants and represents to the Lender
      as follows:

     

    (i)              
      all of the representations and warranties contained in the Credit Agreement
      and
      each other Loan Document, in each case, after giving effect to this Amendment,
      continue to be true and correct in all material respects as of the date hereof,
      as if repeated as of the date hereof, except for such representations and
      warranties which, by their terms, are only made as of a previous
      date;

     

    (ii)              
      the execution, delivery and performance by each Loan Party of this Amendment,
      the consummation of the transactions herein contemplated and the compliance
      with
      the provisions hereof have been duly authorized by all necessary corporate
      action and do not and will not (A) require any consent or approval of such
      Loan
      Party’s stockholders; (B) require any authorization, consent, license, permit or
      approval by, or registration, declaration or filing with, or notice to, any
      governmental department, commission, board, bureau, agency or instrumentality,
      domestic or foreign, or any third party, except such authorization, consent,
      license, permit, approval, registration, declaration, filing or notice as has
      been obtained, accomplished or given prior to the date hereof and such filings
      with the Securities and Exchange Commission as are required by applicable law;
      (C) violate any provision of any law, rule or regulation (including, without
      limitation, Regulation X of the Board of Governors of the Federal Reserve
      System) or of any order, writ, injunction or decree presently in effect having
      applicability to such Loan Party or of such Loan Party’s articles of
      incorporation or bylaws; (D) result in a breach of or constitute a default
      under
      any indenture or loan or credit agreement or any other material agreement,
      lease
      or instrument to which such Loan Party is a party or by which it or its
      properties may be bound or affected; or (E) result in, or require, the creation
      or imposition of any Lien (other than in favor of the Lender) upon or with
      respect to any of the properties now owned or hereafter acquired by such Loan
      Party;

    
      
        
        

      

      
        -
          14 -

        
          

        

      

      
        
        

      

    

    (iii)             
      upon its execution, this Amendment shall constitute the legal, valid and binding
      obligation of each Loan Party, enforceable against each Loan Party in accordance
      with its terms;

     

    (iv)             no
      Default or Event of Default has occurred and is continuing; and

     

    (v)             
      since the date of the audited financial statements of the Borrowers for the
      fiscal year ended December 31, 2006, there has been no material adverse change
      in any Borrower’s business, properties or condition (financial or
      otherwise).

     

    Section
      Four.  Conditions
      Precedent.  The addition of S&A as a
      Borrower and a Guarantor under and party to the Credit Agreement, the Guaranty
      and the other Loan Documents pursuant to Section One hereof and the amendments
      to the Credit Agreement set forth in Section Two hereof shall become effective
      upon the date on which all of the following events shall have
      occurred:

     

    (i)               
      the Lender shall have received this Amendment, duly executed by each Loan
      Party;

     

    (ii)             
      the Lender shall have received payment of all fees and disbursements incurred
      by
      the Lender in connection with the preparation, negotiation and closing of this
      Amendment and the transactions contemplated to occur hereunder;

     

    (iii)             
      no event has occurred and is continuing which constitutes a Default or an Event
      of Default, and no event or development which has had or is reasonably likely
      to
      have a Material Adverse Effect shall have occurred since the date of the
      Borrowers’ audited financial statements for the fiscal year ended December 31,
      2006;

     

    (iv)            
      the Lender shall have received a certificate of each Loan Party’s Secretary or
      Assistant Secretary certifying as to (A) the resolutions of such Loan Party’s
      directors and, if required, shareholders, authorizing the execution, delivery
      and performance of this Amendment, (B) such Loan Party’s articles of
      incorporation and bylaws, and (C) the signatures of such Loan Party’s officers
      or agents authorized to execute and deliver this Amendment and other
      instruments, agreements and certificates to be delivered in connection with
      this
      Amendment on such Loan Party’s behalf;

    
      
        
        

      

      
        -
          15 -

        
          

        

      

      
        
        

      

    

    (v)            
       the Lender shall have received a current good standing certificate issued
      by the Secretary of State of each Loan Party’s state of incorporation certifying
      that such Loan Party is in good standing in such state;

     

    (vi)            
      the Lender shall have received a Revolving Note in the principal amount of
      Twenty-Five Million Dollars ($25,000,000) duly executed and delivered by each
      Loan Party, in exchange for the Revolving Note dated July 28, 2004, in the
      principal amount of Fifteen Million Dollars ($15,000,000);

     

    (vii)        
         the Lender shall have received true and correct copies of all
      leases pursuant to which S&A is leasing any of the Premises, together with a
      landlord’s waiver and consent with respect to each such lease;

     

    (viii)           the
      Lender shall have received true and correct copies of any and all mortgages
      pursuant to which S&A has mortgaged any of the Premises, together with a
      mortgagee’s disclaimer and consent with respect to each such
      mortgage;

     

    (ix)            
       the Lender shall have received true and correct copies of any and all
      agreements pursuant to which S&A’s property is in the possession of any
      Person other than S&A together with (a) an acknowledgment and waiver of
      liens from each bailee, processor and subcontractor who has possession of
      S&A’s goods from time to time, (b) UCC financing statements sufficient
      to protect S&A’s and the Lender’s interests in such goods, and (c) UCC
      searches showing that no other secured party has filed a financing statement
      covering such Person’s property other than S&A, or if there exists any such
      secured party, evidence that each such secured party has received notice from
      S&A and the Lender sufficient to protect S&A’s and the Lender’s
      interests in S&A’s goods from any claim by such secured party;

     

    (x)             
       the Lender shall have received from William Pagano a duly executed
      original (or an executed facsimile copy) of the Support Agreement Confirmation
      in substantially the form attached hereto as Exhibit C;

     

    (xi)           
        the Lender shall have received an amendment to the Stock Pledge
      Agreement, dated as of July 28, 2004, made by Colonial in favor of the Lender,
      duly executed and delivered by Colonial, together with the stock certificates
      for all of the shares of issued and outstanding common stock of S&A,
      together with undated stock powers;

     

    (xii)          
        the Lender shall have received a duly executed original (or an
      executed facsimile copy) Post-Closing Undertaking Letter, dated as of the dated
      hereof, made by S&A in favor of the Lender;

     

    (xiii)    the
      Lender’s
      Credit Committee shall have given its final credit approval to the transactions
      contemplated to occur hereunder;

     

    (xiv)    the
      Lender
      shall have completed to its satisfaction an examination and inspection of the
      Collateral in which S&A has rights and the books and records of S&A, and
      the results thereof shall be satisfactory to the Lender;

    
      
        
        

      

      
        -
          16 -

        
          

        

      

      
        
        

      

    

    (xv)            the
      Lender shall have received the results of current searches of appropriate filing
      offices showing that (a) no state or federal tax liens have been filed and
      remain in effect against S&A, (b) no financing statements have been filed
      and remain in effect against S&A, and (c) the Lender has duly filed all
      financing statements necessary to perfect the Liens of the Lender under the
      Loan
      Documents with respect to the Collateral in which S&A has rights, to the
      extent such Liens are capable of being perfected by filing;

     

    (xvi)            the
      Lender shall have received evidence that S&A is duly licensed or qualified
      to transact business in all jurisdictions where the character of the property
      owned or leased or the nature of the business transacted by it makes such
      licensing or qualification necessary;

     

    (xvii)           the
      Lender shall have received a certificate of an officer of S&A confirming the
      representations and warranties set forth in Article V of the Credit Agreement,
      after giving effect to this Amendment;

     

    (xviii)          the
      Lender shall have received an opinion of counsel to each Loan Party, addressed
      to the Lender;

     

    (xix)             the
      Lender shall have received certificates of the insurance required under the
      Credit Agreement with respect to S&A, with all casualty, loss and hazard
      insurance policies containing the Lender’s loss payable endorsement in the
      Lender’s favor and with all liability insurance naming the Lender as an
      additional insured;

     

    (xx)             
      the Lender shall have received a copy of the fully executed Purchase Agreement,
      together with the exhibits and schedules thereto, which shall be satisfactory
      to
      the Lender;

     

    (xxi)             the
      Lender shall have received from each Guarantor (including S&A) a duly
      executed original (or an executed facsimile copy) of the Guarantor
      Acknowledgment and Consent in substantially the form attached hereto as Exhibit
      A;

     

    (xxii)            the
      Lender shall have received from each holder of Subordinated Debt a duly executed
      original (or an executed facsimile copy) of the Subordinated Lender
      Acknowledgment and Consent in substantially the form attached hereto as Exhibit
      B; and

     

    (xxiii)           the
      Lender shall have received such other documents as the Lender in its sole
      discretion, which discretion shall be exercised in a commercially reasonable
      manner, may require.

     

    Section
      Five.  General Provisions.

     

    (i)           Except
      as herein expressly amended, the Credit Agreement, the Guaranty and all of
      the
      other Loan Documents are ratified and confirmed in all respects and shall remain
      in full force and effect in accordance with their respective
      terms.

    
      
        
        

      

      
        -
          17 -

        
          

        

      

      
        
        

      

    

    (ii)         All
      references to the Credit Agreement, the Guaranty and the other Loan Documents
      in
      the Loan Documents shall mean the Credit Agreement, the Guaranty and the other
      Loan Documents as amended as of the effective date hereof, and as amended hereby
      and as hereafter amended, supplemented and modified from time to
      time.

     

    (iii)         This
      Amendment embodies the entire agreement between the parties hereto with respect
      to the subject matter hereof and supercedes all prior agreements, commitments,
      arrangements, negotiations or understandings, whether written or oral, of the
      parties with respect thereto.

     

    (iv)        This
      Amendment shall be governed by and construed in accordance with the internal
      laws of the State of New York, without regard to the conflicts of law principles
      thereof.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        -
          18 -

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Loan Parties and the Lender have signed below to
      indicate their agreement with the foregoing and their intent to be bound
      thereby.

     

    
      	 	
              AMERICAN/UNIVERSAL
                SUPPLY, INC. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                Vice President

            
	 	 	 
	 	
              THE
                RAL SUPPLY GROUP, INC. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                Executive Vice President

            
	 	 	 
	 	
              UNIVERSAL
                SUPPLY GROUP, INC. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                President

            
	 	 	 
	 	
              S&A
                PURCHASING CORP. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                President

            
	 	 	 
	 	
              WELLS
                FARGO BANK, NATIONAL ASSOCIATION, acting through its Wells Fargo
                Business
                Credit operating division 

            
	 	 
	 	
              By:

            	
              /s/
                Baraka Stewart

            
	 	 	
              Name:
                Baraka Stewart

            
	 	 	
              Title:
                Vice President

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      1

    

    Names,
      Chief Executive Offices and Collateral Locations

    

    

    Name:

    

    S&A
      Purchasing Corp.

    

    

    Chief
      Executive Office:

    

    S&A
      Purchasing Corp.

    275
      Wagaraw Road

    Hawthorne,
      NJ 07506

    

    

    Collateral
      Locations:

    

    S&A
      Purchasing Corp.

    20
&
      40 Maple Avenue

    Great
      Barrington, MA 01230

    

    S&A
      Purchasing Corp.

    1131
      East
      Street

    Pittsfield,
      MA 01201

    

    S&A
      Purchasing Corp.

    992
      Massachusetts Avenue

    North
      Adams, MA 01247

    

    

    Tax
      ID
      Number:

    

    26-0778121

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      2

    

    Subsidiaries

    

    

    None

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      3

    

    Litigation

    

    

    None

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      4

    

    Environmental
      Citations

    

    

    None

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      5

    

    Name
      and Structural Changes

    

    None

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      6

    

    Licenses,
      Permits and Intellectual Property

    

    

    None

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      7

    

    Existing
      Liens

    

    

    See
      Schedule 8

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        Schedule
          8

        

        Existing
          Debt

        

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        S&A
          SUPPLY, INC.

         

        VEHICLE
          LOANS PAYABLE (Per 7/31/07 TB)

         

        7/31/07

         

        
          	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                  Proj.

                
	
                   

                	
                    

                	
                   

                	
                   

                	
                   

                	
                   

                	
                  Bal.

                
	
                  G/L

                	
                  Bank

                	
                  Vehicle

                	
                  CI

                	
                  LT

                	
                  T

                	
                  9/10/07

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  242003

                  260603

                	
                  Legacy

                	
                  Ford
                    F-650 Box Truck

                	
                  9,934    

                	
                  21,841    

                	
                  31,775    

                	
                  30,823    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  242901

                  260901

                	
                  Greylock

                	
                  ’05
                    Toyota Tundra

                	
                  3,862    

                	
                  5,492    

                	
                  9,354    

                	
                  8,974    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  243001

                  267501

                	
                  GMAC

                	
                  ’04
                    GMC Rack Body

                	
                  6,470    

                	
                  4,461    

                	
                  10,931    

                	
                  10,391    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  243201

                  269001

                	
                  GMAC

                	
                  ’04
                    Chevy Colorado

                	
                  4,975    

                	
                  3,732    

                	
                  8,707    

                	
                  7,878    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  243203

                  267503

                	
                  Greylock

                	
                  ’07
                    Toyota Tundra

                	
                  7,111    

                	
                  17,182    

                	
                  24,293    

                	
                  23,817    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  243401

                  261501

                	
                  GMAC

                	
                  ’04
                    Chev. PU/w/plow

                  (Silverado)

                	
                  6,754    

                	
                  2,030    

                	
                  8,784    

                	
                  8,216    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  244501 

                  267801

                	
                  Greylock

                	
                  '05
                    Chev. 3⁄4 ton (Silverado)

                	
                  5,583    

                	
                  4,713    

                	
                  10,296    

                	
                  9,293    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  245005

                  267905

                	
                  Greylock

                	
                  ’06
                    Ford F350 Rack

                	
                  2,973    

                	
                  18,134    

                	
                  21,107    

                	
                  20,509    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  248603

                	
                  Berkshire

                	
                  ’03
                    Chev.

                	
                  493    

                	
                   

                	
                  493    

                	
                  -0-    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  248703

                  262003

                	
                  Greylock

                	
                  ’05
                    Chev. 1⁄2 ton (Silverado)

                	
                  5,401    

                	
                  4,543    

                	
                  9,944    

                	
                  8,954    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  249003

                  270003

                	
                  Greylock

                	
                  ’06
                    Ford F250 WH/RE

                	
                  3,538    

                	
                  11,552    

                	
                  15,090    

                	
                  14,421    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  249203

                  268003

                	
                  Ford
                    Credit

                	
                  ’03
                    Ford WH Van (E-150)

                	
                  3,799    

                	
                   (1,891)    

                	
                   1,908    

                	
                  772    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  250103

                  267303

                	
                  Berkshire

                	
                  ’06
                    GMC ExCab (K-25)

                	
                  4,794    

                	
                  11,414    

                	
                  16,208    

                	
                  15,022    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  251001

                  268101

                	
                  Legacy

                	
                  ’05
                    Ford F650 Box Truck

                	
                  9,934    

                	
                  21,841    

                	
                  31,775    

                	
                  30,823    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  ######

                  260503

                	
                  Ford
                    Credit

                	
                  ’03
                    Ford F-250

                	
                  -    

                	
                  (753)    

                	
                  (753)    

                	
                  -0-    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  ######

                  267403

                	
                  Berkshire

                	
                  ’07
                    GMC 3500 Rack

                	
                  -    

                	
                  24,442    

                	
                  24,442    

                	
                  25,119    

                
	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                	
                   

                
	
                  ######

                  267603

                	
                  Berkshire

                	
                  ’07
                    GMC 2500 P/UP

                	
                      -    

                	
                  23,563    

                	
                  23,563    

                	
                  24,003    

                
	
                   

                	
                   

                	
                  Total

                	
                   

                	
                   

                	
                  247,917    

                	
                  239,015    

                

        
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    Schedule
      9

    

    Existing
      Guaranties and Contingent
      Liabilities

    

    

    None

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      10

    

    Existing
      Investments and Loans

    

    See
      Schedule 8

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    

    Guarantor
      Acknowledgment and Consent

    

    The
      undersigned, each a guarantor with respect to the obligations of
      American/Universal Supply, Inc., a New York corporation (“American”), The RAL
      Supply Group, Inc., a New York corporation (“RAL”), Universal Supply Group,
      Inc., a New York corporation (“Universal”; American, RAL and Universal are
      collectively referred to as, the “Existing Borrowers”) and S&A Purchasing
      Corp., a New York corporation (the “New Borrower”; the Existing Borrowers and
      the New Borrower are collectively referred to as the “Borrowers”), to Wells
      Fargo Bank, National Association, acting through its Wells Fargo Business Credit
      operating division, as successor to Wells Fargo Business Credit, Inc. (the
      “Lender”), under the Credit and Security Agreement, dated as of
      July 28, 2004, as amended by the First Amendment, dated as of May 11, 2006
      (as
      further amended from time to time, the “Credit Agreement”), by and among the
      Borrowers and the Lender, hereby (i) acknowledges and consents to the execution,
      delivery and performance by the Borrowers of the Second Amendment, dated as
      of
      September 10, 2007 (the “Amendment”), to and under the Credit and Security
      Agreement, by and among, the Borrowers and the Lender, attached hereto as Annex
      A, (ii) reaffirms and agrees that the Guaranty by Corporations, dated as of
      July
      28, 2004, as supplemented by the Guarantor Acknowledgment and Consent, dated
      as
      of May 11, 2006 (as further supplemented or amended from time to time, the
      “Guaranty”), made by the undersigned (other than New Borrower) for the benefit
      of the Lender is in full force and effect, without defense, offset or
      counterclaim, and will remain in full force and effect from and after the
      effective date of the Amendment, and the undersigned acknowledges and guarantees
      the Indebtedness (as defined in the Guaranty), including, without limiting
      the
      generality of the foregoing, the obligations of the Borrowers under the Credit
      Agreement, as amended by the Amendment; and (iii) represents and warrants that
      the execution, delivery and performance of this Guarantor Acknowledgment and
      the
      performance of the Guaranty as supplemented by this Consent have been duly
      authorized by all necessary corporate action and do not and will not require
      any
      consent or approval of such undersigned’s stockholders, or require any
      authorization, consent, license, permit or approval by, or registration,
      declaration or filing with, or notice to, any governmental department,
      commission, board, bureau, agency or instrumentality, domestic or foreign,
      or
      any third party, except such authorization, consent, license, permit, approval,
      registration, declaration, filing or notice as has been obtained, accomplished
      or given prior to the date hereof, in order for this Consent or the Guaranty,
      as
      amended and supplemented by this Consent, to be effective and enforceable
      against the undersigned with respect to all of the Indebtedness (as defined
      in
      the Guaranty).

     

    In
      addition to the foregoing, Colonial Commercial Corp. (“Colonial”) hereby (i)
      reaffirms and agrees that each of the General Security Agreement, dated as
      of
      July 28, 2004 (as amended from time to time, the “Security Agreement”), entered
      into by Colonial and the Lender and the Securities Pledge Agreement, dated
      as of
      July 28, 2004, as amended by the First Amendment to the Securities Pledge
      Agreement, dated as of September 10, 2007 (as further amended from time to
      time,
      the “Pledge Agreement” and, together with the Security Agreement, the
“Collateral Documents”), made by Colonial in favor of the Lender is in full
      force and effect, and will remain in full force and effect from and after the
      effective date of the Amendment, and acknowledges that the Collateral (as
      defined in the Security Agreement) and the Pledged Collateral (as defined in
      the
      Pledge Agreement) will secure the Indebtedness (as defined in the Guaranty),
      and
      (ii) represents and warrants to the Lender that as of the date hereof, all
      of
      the representations and warranties of Colonial contained in the Collateral
      Documents, as supplemented by this Consent, continue to be true and correct
      in
      all material respects as of the date hereof, as if repeated as of the date
      hereof, except for such representations and warranties which, by their terms,
      are only made as of a previous date. Unless otherwise specified herein,
      capitalized terms used herein have the meanings specified in the
      Amendment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              AMERICAN/UNIVERSAL
                SUPPLY, INC. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                Vice President

            
	 	 	 
	 	
              THE
                RAL SUPPLY GROUP, INC. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                Executive Vice President

            
	 	 	 
	 	
              UNIVERSAL
                SUPPLY GROUP, INC. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                President

            
	 	 	 
	 	
              S&A
                PURCHASING CORP. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                President

            
	 	 	 
	 	
              COLONIAL
                COMMERCIAL CORP. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                Chief Executive Officer

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Annex
      A
      to Guarantor

    Acknowledgment
      and Consent

     

    Second
      Amendment

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      B

    

    Subordinated
      Lender Acknowledgment and Consent

    

    The
      undersigned, each a holder of Subordinated Debt (as defined in the Credit and
      Security Agreement, dated as of July 28, 2004 (as amended from time to time,
      the
“Credit Agreement”)), by and among American/Universal Supply, Inc., a New York
      corporation (“American”), The RAL Supply Group, Inc., a New York corporation
      (“RAL”), Universal Supply Group, Inc., a New York corporation (“Universal”), and
      S&A Purchasing Corp., a New York corporation (“S&A”; American together
      with RAL, Universal and S&A are collectively referred to as, the
“Borrowers”), and Wells Fargo Bank, National Association, acting through its
      Wells Fargo Business Credit operating division, as successor to Wells Fargo
      Business Credit, Inc., hereby (i) acknowledges and consents to the execution,
      delivery and performance by the Borrowers of the Second Amendment, dated as
      of
      September 10, 2007 (the “Amendment”), to and under the Credit Agreement,
      attached hereto as Annex A, (ii) reaffirms and agrees that the Subordination
      Agreement set forth on Annex B attached hereto to which it is a party (each
      as
      amended from time to time, the “Subordination Agreement”), is in full force and
      effect, and will remain in full force and effect from and after the effective
      date of the Amendment, and (iii) acknowledges that the execution, delivery
      and
      performance of this Subordinated Lender Acknowledgment and Consent (the
“Consent”) and the performance of the Subordination Agreement, as amended and
      supplemented by this Consent, do not and will not require any consent or
      approval of any other Person, or require any authorization, consent, license,
      permit or approval by, or registration, declaration or filing with, or notice
      to, any governmental department, commission, board, bureau, agency or
      instrumentality, domestic or foreign, or any third party, except such
      authorization, consent, license, permit, approval, registration, declaration,
      filing or notice as has been obtained, accomplished or given prior to the date
      hereof, in order for this Consent or the Subordination Agreement, as amended
      and
      supplemented by this Consent, to be effective and enforceable against the
      undersigned. Unless otherwise specified herein, capitalized terms used herein
      have the meanings specified in the Amendment.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              HILDEBRANDT
                PROPERTIES, LLC 

            
	 	 
	 	
              By:

            	
              /s/
                John A. Hildebrandt

            
	 	 	
              Name:
                John A. Hildebrandt

            
	 	 	
              Title:

            
	 	 	 
	 	 	
              /s/
                Paul H. Hildebrandt

            
	 	 	
              Paul
                H. Hildebrandt

            
	 	 	 
	 	
              COLONIAL
                COMMERCIAL CORP. 

            
	 	 
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                Chief Executive Officer

            
	 	 	 
	 	
              GOLDMAN
                ASSOCIATES OF NEW YORK, INC. 

            
	 	 
	 	
              By:

            	
              /s/
                Melissa Goldman-Williams

            
	 	 	
              Name:
                Melissa Goldman-Williams

            
	 	 	
              Title:
                Vice President of Operations

            
	 	 	 
	 	
              For
                Rita Folger, William Pagano, Paul H. Hildebrandt, John A. Hildebrandt,
                Eileen Goldman, William Salek, James Fallon, Richard A. Cancelosi
                and
                Margaret Friedrich by Power of Attorney 

            
	 	 	 
	 	 	
              /s/
                William Pagano

            
	 	 	
              William
                Pagano, Attorney-in-Fact

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Annex
      A
      to Subordinated Lender

    Acknowledgment
      and Consent

     

    Second
      Amendment

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Annex
      B
      to Subordinated Lender

    Acknowledgment
      and Consent

    

    Subordination
      Agreements

    

    Subordination
      Agreement, dated as of the 28th day of
      July, 2004,
      as amended from time to time, made by Hildebrandt Properties, LLC, for the
      benefit of Wells Fargo Business Credit, Inc.

     

    Subordination
      Agreement, dated as of the 28th day of
      July, 2004,
      as amended from time to time, made by Paul H. Hildebrandt, for the benefit
      of
      Wells Fargo Business Credit, Inc.

     

    Subordination
      Agreement, dated as of the 28th day of
      July, 2004,
      as amended from time to time, made by Colonial Commercial Corp. for the benefit
      of Wells Fargo Business Credit, Inc.

     

    Subordination
      Agreement, dated as of the 28th day of
      July, 2004,
      as amended from time to time, made by Goldman Associates of New York, Inc.,
      a
      New York corporation, for the benefit of Wells Fargo Business Credit,
      Inc.

     

    Subordination
      Agreement, dated as of the 28th day of July, 2004, as amended from time to
      time,
      made by Rita Folger, William Pagano, Paul H. Hildebrandt, John A. Hildebrandt,
      Eileen Goldman, William Salek, James Fallon, Richard A. Cancelosi and Margaret
      Friedrich, for the benefit of Wells Fargo Business Credit, Inc.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      C

    

    Support
      Agreement Confirmation

    

    The
      undersigned, each a party to that certain Support Agreement, dated as July
      28,
      2004 (as the same may be amended from time to time, the “Support Agreement”), by
      and among American/Universal Supply, Inc. (“American”), The RAL Supply Group,
      Inc. (“RAL”), Universal Supply Group, Inc. (“Universal”), and S&A Purchasing
      Corp., a New York corporation (“New Borrower”; American together with RAL,
      Universal and New Borrower are collectively referred to as, the “Borrowers”) and
      Wells Fargo Bank, National Association, acting through its Wells Fargo Business
      Credit operating division, as successor to Wells Fargo Business Credit, Inc.
      (the “Lender”), hereby (i) acknowledges and consents to the execution, delivery
      and performance by the Borrowers of the Second Amendment, dated as of September
      10, 2007 (the “Amendment”), to and under the Credit and Security Agreement, by
      and among, the Borrowers and the Lender, attached hereto as Annex A, and (ii)
      reaffirms and agrees that the Support Agreement, made by the undersigned for
      the
      benefit of the Lender is in full force and effect, and will remain in full
      force
      and effect from and after the effective date of the Amendment. Unless otherwise
      specified herein, capitalized terms used herein have the meanings specified
      in
      the Amendment.

     

    
      	 	 	
              /s/
                William Pagano

            
	 	 	
              William
                Pagano

            
	 	 	 
	 	
              AMERICAN/UNIVERSAL
                SUPPLY, INC. 

            
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                Vice President

            
	 	 	 
	 	
              THE
                RAL SUPPLY GROUP, INC. 

            
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                Executive Vice President

            
	 	 	 
	 	
              UNIVERSAL
                SUPPLY GROUP, INC. 

            
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                President

            
	 	 	 
	 	
              S&A
                PURCHASING CORP. 

            
	 	
              By:

            	
              /s/
                William Pagano

            
	 	 	
              Name:
                William Pagano

            
	 	 	
              Title:
                President

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Annex
      A
      to Support Agreement

    Confirmation

     

    Second
      AmendmentUnassociated Document

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of September 7, 2007, among Sino
      Gas International Holdings, Inc.,
      a Utah
      corporation (the “Company”),
      and
      the investors listed on the Schedule of Buyers attached hereto as Annex
      A
      and
      identified on the signature pages hereto (each, an “Investor”
      and
      collectively, the “Investors”).

     

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

     

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

     

    ARTICLE
      1.

    DEFINITIONS

     

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

     

    “2008
      Annual Report”
      means
      the Company’s Annual Report on Form 10-K or Form 10-KSB for the fiscal year
      ending December 31, 2008, as filed with the Commission.

     

    “2008
      Guaranteed ATNI”
      has the
      meaning set forth in Section 4.12.

     

    “2008
      Make Good Shares”
      has the
      meaning set forth in Section 4.12.

     

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

     

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

     

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

     

    “Buy-In”
has
      the
      meaning set forth in Section 4.1(c).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    “Closing
      Date”
      means
      the Business Day on which all of the conditions set forth in Sections 5.1 and
      5.2 hereof are satisfied, or such other date as the parties holding at least
      two-thirds (66-2/3%) of the Shares may agree.

     

    “Closing
      Escrow Agreement”
      means
      the Closing Escrow Agreement, dated as of the date hereof, between the Company,
      Roth Capital Partners, LLC and the escrow agent (the “Escrow
      Agent”)
      identified therein, in the form of Exhibit
      B
      hereto. 

     

    “Commission”
      means
      the Securities and Exchange Commission.

     

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

     

    “Company
      US Counsel”
      means
      Guzov Ofsink, LLC.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Lien”
      means
      any lien, charge, claim, encumbrance, security interest, right of first refusal,
      preemptive right or other restrictions of any kind.

     

    “Make
      Good Escrow Agreement” means
      the
      Make Good Escrow Agreement, dated as of the date hereof, among the Company,
      the
      Investors and the Escrow Agent identified therein, in the form of Exhibit
      C
      hereto.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Material
      Adverse Effect”
      means
      any of (i) a material and adverse effect on the legality, validity or
      enforceability of any Transaction Document, (ii) a material and adverse effect
      on the results of operations, assets, prospects, business or condition
      (financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
      or (iii) an adverse impairment to the Company’s ability to perform on a timely
      basis its obligations under any Transaction Document.

     

    “New
      York Courts”
      means
      the state and federal courts sitting in the City of New York, Borough of
      Manhattan.

     

    “Outside
      Date”
      means
      the thirtieth day following the date of this Agreement.

     

    “Per
      Share Purchase Price”
      equals
      $2.25.

     

    “Person”
      means an
      individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

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

     

    “PRC
      Counsel” shall
      mean The Global Law Firm.

     

    “Proceeding”
      means an
      action, claim, suit, investigation or proceeding (including, without limitation,
      an investigation or partial proceeding, such as a deposition), whether commenced
      or threatened.

     

    “Registration
      Rights Agreement”
      means
      the Registration Rights Agreement, dated as of the date of this Agreement,
      among
      the Company and the Investors, in the form of Exhibit
      A
      hereto.

     

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

     

    “Rule
      144”
      means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      rule.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

    “Subsidiary”
      means
      any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation S-X
      promulgated by the Commission under the Exchange Act.

     

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

     

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

     

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

     

    “Warrant
      Repurchase Agreement”
means
      the Warrant Purchase Agreement, Amendment and Waiver as of September __, 2007,
      by and among the Company, Vision Opportunity Master Fund, Ltd. and each of
      the
      other parties set forth on the signature pages thereof.

     

    ARTICLE
      2.

    PURCHASE
      AND SALE

     

    2.1. Closing.
      Subject to the terms and conditions set forth in this Agreement, at the Closing
      the Company shall issue and sell to each Investor, and each Investor shall,
      severally and not jointly, purchase from the Company, the Shares representing
      such Investor’s Investment Amount. The Closing shall take place at the offices
      of Bryan Cave LLP, 1290 Avenue of the Americas, New York, NY 10104 on the
      Closing Date or at such other location or time as the parties may
      agree.

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

    (ii) the
      legal
      opinion of Company Counsel and PRC Counsel, in agreed form, addressed to the
      Investors; 

     

    (iii) the
      Registration Rights Agreement, duly executed by the Company;

     

    (iv) the
      Closing Escrow Agreement, duly executed by all parties thereto; and

     

    (v) the
      Make
      Good Escrow Agreement, duly executed by all parties thereto; and

     

    (vi) the
      Warrant Repurchase Agreement, duly executed by all parties thereto.

     

    (b) At
      the
      Closing, each Investor shall deliver or cause to be delivered the following
      (the
“Investor
      Deliverables”):

     

    (i) Unless
      otherwise agreed by the Company, to the Escrow Agent, for deposit and
      disbursement in accordance with the Closing Escrow Agreement, its Investment
      Amount, in immediately available funds, by wire transfer to an account
      designated in writing by the Escrow Agent for such purpose; and

     

    (ii) to
      the
      Company, the Registration Rights Agreement and Make Good Escrow Agreement,
      duly
      executed by such Investor.

     

    ARTICLE
      3.

    REPRESENTATIONS
      AND WARRANTIES

     

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

     

    (a) Subsidiaries.
      The
      Company has no direct or indirect Subsidiaries other than as specified in the
      SEC Reports. Except as disclosed in the SEC Reports, the Company owns, directly
      or indirectly, all of the capital stock or comparable equity interests of each
      Subsidiary free and clear of any and all Liens, and all the issued and
      outstanding shares of capital stock or comparable equity interests of each
      Subsidiary are validly issued and are fully paid, non-assessable and free of
      preemptive and similar rights. 

     

    (b) Organization
      and Qualification.
      The
      Company and each Subsidiary are duly incorporated or otherwise organized,
      validly existing and in good standing under the laws of the jurisdiction of
      its
      incorporation or organization (as applicable), with the requisite power and
      authority to own and use its properties and assets and to carry on its business
      as currently conducted or as proposed to be conducted. Neither the Company
      nor
      any Subsidiary is in violation of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. The Company and each Subsidiary are duly qualified to conduct
      their respective businesses and are in good standing as a foreign corporation
      or
      other entity in each jurisdiction in which the nature of the business conducted
      or property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not,
      individually or in the aggregate, have or reasonably be expected to result
      in a
      Material Adverse Effect.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (c) Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company and no further
      consent or action is required by the Company, its Board of Directors or
      stockholders in connection therewith. Each Transaction Document has been (or
      upon delivery will have been) duly executed by the Company and, when delivered
      in accordance with the terms hereof, will constitute the valid and binding
      obligation of the Company enforceable against the Company in accordance with
      its
      terms, except as such enforceability may be limited by applicable bankruptcy,
      insolvency, reorganization, moratorium, liquidation or similar laws relating
      to,
      or affecting generally the enforcement of, creditors’ rights and remedies or by
      other equitable principles of general application.

     

    (d) No
      Conflicts.
      Except
      as set forth on Schedule
      3.1(d),
      the
      execution, delivery and performance of the Transaction Documents by the Company,
      the issuance and sale of the Shares and the consummation by the Company of
      the
      transactions contemplated thereby do not and will not (i) conflict with or
      violate any provision of the Company’s or any Subsidiary’s certificate or
      articles of incorporation, bylaws or other organizational or charter documents,
      or (ii) conflict with, or constitute a default (or an event that with notice
      or
      lapse of time or both would become a default) under, result in the creation
      of
      any Lien upon any of the properties or assets of the Company or any Subsidiary,
      or give to others any rights of termination, amendment, acceleration or
      cancellation (with or without notice, lapse of time or both) of, any agreement,
      credit facility, debt or other instrument (evidencing a Company or Subsidiary
      debt or otherwise) or other understanding to which the Company or any Subsidiary
      is a party or by which any property or asset of the Company or any Subsidiary
      is
      bound or affected, or (iii) result in a violation of any law, rule, regulation,
      order, judgment, injunction, decree or other restriction of any court or
      governmental authority to which the Company or a Subsidiary is subject
      (including federal and state securities laws and regulations and the rules
      and
      regulations of any self regulatory organization (including any Trading Market)
      to which the Company or its securities is subject), or by which any property
      or
      asset of the Company or a Subsidiary is bound or affected; except in the case
      of
      each of clauses (i), (ii) and (iii), such as could not, individually or in
      the
      aggregate, have or reasonably be expected to result in a Material Adverse
      Effect.

     

    (e) Filings,
      Consents and Approvals.
      Except
      as set forth on Schedule
      3.1(e), the
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any United
      States or PRC court or other federal, state, local or other governmental
      authority or other Person in connection with the execution, delivery and
      performance by the Company of the Transaction Documents, other than (i) the
      filing with the Commission of one or more Registration Statements in accordance
      with the requirements of the Registration Rights Agreement, (ii) filings
      required by state securities laws, (iii) the filing of a Notice of Sale of
      Securities on Form D with the Commission under Regulation D of the Securities
      Act, (iv) the filings required in accordance with Section 4.5, (v) those that
      have been made or obtained prior to the date of this Agreement. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (f) Issuance
      of the Shares.
      The
      Shares have been duly authorized and, when issued and paid for in accordance
      with the Transaction Documents, will be duly and validly issued, fully paid
      and
      nonassessable, free and clear of all Liens, other than those existing pursuant
      to federal securities laws. The Company has reserved from its duly authorized
      capital stock the shares of Common Stock issuable pursuant to this Agreement
      in
      order to issue the Shares and the 2008 Make Good Shares. When issued and
      delivered to the Investors pursuant to Section 4.12, the 2008 Make Good Shares
      will be duly and validly issued, fully paid and non-assessable. The 2008 Make
      Good Shares are free and clear of all Liens, other than those existing pursuant
      to federal securities laws.

     

    (g) Capitalization.
      Immediately prior to and immediately following the Closing, the number and
      class
      of all authorized, issued and outstanding capital stock of the Company, and
      all
      shares of Common Stock reserved for issuance under the Company’s various option
      and incentive plans, is set forth on Schedule 3.1(g). All outstanding shares
      of
      capital stock are duly authorized, validly issued, fully paid and non-assessable
      and have been issued in compliance with all applicable securities laws. Except
      as specified in the SEC Reports or as set forth as set forth on Schedule
      3.1(g),
      no
      securities of the Company are entitled to preemptive or similar rights, and
      no
      Person has any right of first refusal, preemptive right, right of participation,
      or any similar right to participate in the transactions contemplated by the
      Transaction Documents. Except as specified in the SEC Reports or as set forth
      as
      set forth on Schedule
      3.1(g),
      there
      are no outstanding options, warrants, scrip rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities, rights
      or
      obligations convertible into or exchangeable for, or giving any Person any
      right
      to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common Stock,
      or
      securities or rights convertible or exchangeable into shares of Common Stock.
      Except as set forth in Schedule
      3.1(g),
      the
      issue and sale of the Shares will not, immediately or with the passage of time,
      obligate the Company to issue shares of Common Stock or other securities to
      any
      Person (other than the Investors) and will not result in a right of any holder
      of Company securities to adjust the exercise, conversion, exchange or reset
      price under such securities. Except as set forth in Schedule
      3.1(g),
      the
      Company has not issued any capital stock in a transaction commonly referred
      to
      in the PRC as a “1 1⁄2 transaction.” 

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

    (j) Material
      Changes.
      Since
      the date of the latest audited financial statements included in the Company’s
      most recent Annual Report on Form 10-KSB, except as specifically disclosed
      in
      the SEC Reports, (i) there has been no event, occurrence or development that
      has
      had or that could reasonably be expected to result in a Material Adverse Effect,
      (ii) the Company has not incurred any liabilities (contingent or otherwise)
      other than (A) trade payables, accrued expenses and other liabilities incurred
      in the ordinary course of business consistent with past practice, (B)
      liabilities not required to be reflected in the Company’s financial statements
      pursuant to GAAP or not required to be disclosed in filings made with the
      Commission and (C) other liabilities that would not, individually, or in the
      aggregate, have a Material Adverse Effect, (iii) the Company has not altered
      its
      method of accounting or the identity of its auditors, (iv) the Company has
      not
      declared or made any dividend or distribution of cash or other property to
      its
      stockholders or purchased, redeemed or, except as set forth in Schedule
      3(j),
      made
      any agreements to purchase or redeem any shares of its capital stock, and (v)
      the Company has not issued any equity securities to any officer, director or
      Affiliate of the Company, except pursuant to existing Company stock option
      plans. The Company does not have pending before the Commission any request
      for
      confidential treatment of information or documents.
      The
      Company has not sustained any material loss or interference with the Company’s
      business from fire, explosion, flood or other calamity, whether or not covered
      by insurance, or from any labor disturbance or dispute or any action, order
      or
      decree of any court or arbitrator or governmental or regulatory
      authority.

     

    (k) Litigation.
      There
      is no Action (i) which adversely affects or challenges the legality, validity
      or
      enforceability of any of the Transaction Documents or the Shares or (ii) except
      as specifically disclosed in the SEC Reports, which could, if there were an
      unfavorable decision, individually or in the aggregate, have or reasonably
      be
      expected to result in a Material Adverse Effect. Neither the Company nor any
      Subsidiary, nor any director or officer thereof (in his or her capacity as
      such), is or has been the subject of any Action involving a claim or violation
      of or liability under federal or state securities laws or a claim of breach
      of
      fiduciary duty, except as specifically disclosed in the SEC Reports. There
      has
      not been, and to the knowledge of the Company, there is not pending or
      contemplated any investigation or inquiry by the Commission involving the
      Company or any current or former director or officer of the Company (in his
      or
      her capacity as such). The Commission has not issued any stop order or other
      order suspending the effectiveness of any registration statement filed by the
      Company or any Subsidiary under the Exchange Act or the Securities
      Act.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (l) Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company. The Company is not aware
      of
      any existing or imminent labor disturbance by the employees of any of its
      principal suppliers or contractors which would result in a Material Adverse
      Effect to the Company.

     

    (m) Compliance.
      Except
      as set forth on Schedule
      3(m),
      neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws relating to taxes,
      environmental protection, occupational health and safety, banking, product
      quality and safety and employment and labor matters, except in the cases of
      clauses (i) and (iii) above as could not, individually or in the aggregate,
      have
      or reasonably be expected to result in a Material Adverse Effect. The Company
      is
      in compliance with all effective requirements of the Sarbanes-Oxley Act of
      2002,
      as amended, and the rules and regulations thereunder, that are applicable to
      it,
      except where such noncompliance could not have or reasonably be expected to
      result in a Material Adverse Effect.

     

    (n) Regulatory
      Permits.
      The
      Company and the Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses as described in
      the
      SEC Reports, except where the failure to possess such permits could not,
      individually or in the aggregate, have or reasonably be expected to result
      in a
      Material Adverse Effect, and neither the Company nor any Subsidiary has received
      any notice of proceedings relating to the revocation or modification of any
      such
      permits.

     

    (o) Private
      Placement.
      Neither
      the Company nor any Person acting on the Company’s behalf has sold, offered to
      sell or solicited any offer to buy the Shares by means of any form of general
      solicitation or advertising. Neither the Company, any of its Affiliates nor
      any
      Person acting on the Company's behalf has, directly or indirectly, at any time
      within the past six months, made any offer or sale of any security or
      solicitation of any offer to buy any security under circumstances that would
      (A)
      eliminate the availability of the exemption from registration under Regulation
      D
      under the Securities Act in connection with the offer and sale of the Shares
      as
      contemplated hereby or (B) cause the offering of the Securities pursuant to
      the
      Transaction Documents to be integrated with prior offerings by the Company
      for
      purposes of any applicable law, regulation or stockholder approval provisions,
      including, without limitation, under the rules and regulations of any Trading
      Market. The Company is not a United States real property holding corporation
      within the meaning of the Foreign Investment in Real Property Tax Act of
      1980.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (p) Application
      of Takeover Protections.
      Except
      as described in the SEC Reports or as set forth on Schedule 3.1(p), the Company
      and its Board of Directors have taken all necessary action, if any, to render
      inapplicable any control share acquisition, poison pill (including any
      distribution under a rights agreement) or other similar anti-takeover provision
      under the Company’s charter documents or the laws of its state of incorporation
      that is or could become applicable to any of the Investors as a result of the
      Investors and the Company fulfilling their obligations or exercising their
      rights under the Transaction Documents, including, without limitation, as a
      result of the Company’s issuance of the Shares and the Investors’ ownership of
      the Shares. 

     

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

     

    (r) Patents
      and Trademarks.
      The
      Company and the Subsidiaries have, or have rights to use, all patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      copyrights, licenses and other similar rights that are necessary or material
      for
      use in connection with their respective businesses as described in the SEC
      Reports and which the failure to so have could, individually or in the
      aggregate, have or reasonably be expected to result in a Material Adverse Effect
      (collectively, the “Intellectual
      Property Rights”).
      Neither the Company nor any Subsidiary has received a written notice that the
      Intellectual Property Rights used by the Company or any Subsidiary violates
      or
      infringes upon the rights of any Person. Except as set forth in the SEC Reports,
      to the knowledge of the Company, such Intellectual Property Rights are
      enforceable and there is no existing infringement by another Person of any
      of
      the Intellectual Property Rights. To the Company’s knowledge, the Company has
      not infringed the intellectual property rights of third parties and no third
      party, to the Company’s knowledge, is infringing the Intellectual Property
      Rights, in each case, which could reasonably be expected to result in a Material
      Adverse Effect. Except as disclosed in the SEC Documents, there are no material
      options, licenses or agreements relating to the Intellectual Property Rights,
      nor is the Company bound by or a party to any material options, licenses or
      agreements relating to the patents, patent applications, patent rights,
      inventions, know-how, trade secrets, trademarks, trademark applications, service
      marks, service names, trade names or copyrights of any other person or
      entity.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (s) Insurance.
      Schedule
      3.1(s)
      sets
      forth a list of the insurance policies currently held by the Company and its
      Subsidiaries. Neither the Company nor any Subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be reasonably necessary to continue its business. 

     

    (t) Transactions
      With Affiliates and Employees.
      Except
      as set forth in the SEC Reports, none of the officers or directors of the
      Company and, to the knowledge of the Company, none of the employees of the
      Company is presently a party to any transaction with the Company or any
      Subsidiary (other than for services as employees, officers and directors),
      including any contract, agreement or other arrangement providing for the
      furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner. 

     

    (u) Internal
      Accounting Controls.
      Except
      as set forth in Schedule 3.1(u), the Company and the Subsidiaries maintain
      a
      system of internal accounting controls sufficient to provide reasonable
      assurance that (i) transactions are executed in accordance with management’s
      general or specific authorizations, (ii) transactions are recorded as necessary
      to permit preparation of financial statements in conformity with GAAP and to
      maintain asset accountability, (iii) access to assets is permitted only in
      accordance with management’s general or specific authorization, and (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate action is taken with respect to any
      differences. The Company has established disclosure controls and procedures
      (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
      designed such disclosure controls and procedures to ensure that material
      information relating to the Company, including its Subsidiaries, is made known
      to the certifying officers by others within those entities, particularly during
      the period in which the Company’s Form 10-KSB or 10-QSB, as the case may be, is
      being prepared. The Company’s certifying officers have evaluated the
      effectiveness of the Company’s controls and procedures in accordance with Item
      307 of Regulation S-B under the Exchange Act for the Company’s most recently
      ended fiscal quarter or fiscal year-end (such date, the “Evaluation
      Date”).
      The
      Company presented in its most recently filed Form 10-KSB or Form 10-QSB the
      conclusions of the certifying officers about the effectiveness of the disclosure
      controls and procedures based on their evaluations as of the Evaluation Date.
      Since the Evaluation Date, there have been no significant changes in the
      Company’s internal controls (as such term is defined in Item 308(c) of
      Regulation S-B under the Exchange Act) or, to the Company’s knowledge, in other
      factors that could significantly affect the Company’s internal
      controls.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (v) Solvency.
      Based
      on the financial condition of the Company as of the Closing Date (and assuming
      that the Closing shall have occurred), (i) the Company’s fair saleable value of
      its assets exceeds the amount that will be required to be paid on or in respect
      of the Company’s existing debts and other liabilities (including known
      contingent liabilities) as they mature, (ii) the Company’s assets do not
      constitute unreasonably small capital to carry on its business for the current
      fiscal year as now conducted and as proposed to be conducted including its
      capital needs taking into account the particular capital requirements of the
      business conducted by the Company, and projected capital requirements and
      capital availability thereof, and (iii) the current cash flow of the Company,
      together with the proceeds the Company would receive, were it to liquidate
      all
      of its assets, after taking into account all anticipated uses of the cash,
      would
      be sufficient to pay all amounts on or in respect of its debt when such amounts
      are required to be paid. The Company does not intend to incur debts beyond
      its
      ability to pay such debts as they mature (taking into account the timing and
      amounts of cash to be payable on or in respect of its debt). 

     

    (w) Certain
      Fees.
      Except
      as described in Schedule
      3.1(w),
      no
      brokerage or finder’s fees or commissions are or will be payable by the Company
      to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by this Agreement. The Investors shall have no obligation with
      respect to any fees or with respect to any claims (other than such fees or
      commissions owed by an Investor pursuant to written agreements executed by
      such
      Investor which fees or commissions shall be the sole responsibility of such
      Investor) made by or on behalf of other Persons for fees of a type contemplated
      in this Section that may be due in connection with the transactions contemplated
      by this Agreement.

     

    (x) Certain
      Registration Matters.
      Assuming the accuracy of the Investors’ representations and warranties set forth
      in Section 3.2(b)-(e), the offer and sale of the Shares by the Company to the
      Investors under the Transaction Documents is exempt from the registration
      requirements of the Securities Act. The Company is eligible to register its
      Common Stock for resale by the Investors under Form SB-2 promulgated under
      the
      Securities Act. Except as specified in Schedule
      3.1(x), the
      Company has not granted or agreed to grant to any Person any rights (including
      “piggy-back” registration rights) to have any securities of the Company
      registered with the Commission or any other governmental authority that have
      not
      been satisfied. 

     

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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    (dd) PFIC.
      Neither
      the Company nor any Subsidiary is or intends to become a “passive foreign
      investment company” within the meaning of Section 1297 of the U.S. Internal
      Revenue Code of 1986, as amended.

     

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

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (gg) Material
      Contracts.
      All
      material agreements that were required to be filed as exhibits to the SEC
      Documents under Item 601 of Regulation S-K (collectively, the “Material
      Agreements”) to which the Company or any Subsidiary of the Company is a party,
      or the property or assets of the Company or any Subsidiary of the Company are
      subject, have been filed as exhibits to the SEC Documents. All Material
      Agreements are valid and enforceable against the Company in accordance with
      their respective terms, except (i) as enforceability may be limited by
      applicable bankruptcy, insolvency, reorganization, or moratorium or similar
      laws
      affecting creditors’ and contracting parties’ rights generally, and (ii) as
      enforceability may be subject to general principles of equity and except as
      rights to indemnity and contribution may be limited by state or federal
      securities laws or public policy underlying such laws. The Company is not in
      breach of or default under any of the Material Agreements, and to the Company's
      knowledge, no other party to a Material Agreement is in breach of or default
      under such Material Agreement, except in each case, for such breaches or
      defaults as would not reasonably be expected to have a Material Adverse Effect.
      The Company has not received a notice of termination nor is the Company
      otherwise aware of any threats to terminate any of the Material
      Agreements.

     

    (hh) Environmental
      Matters.
      Except
      as otherwise described in Schedule
      3.2(hh)_or
      as
      would not have a Material Adverse Effect on the Company and the Subsidiaries,
      taken as a whole, (i) neither the Company nor any of its Subsidiaries is in
      violation of any Law, order, permit or other requirement relating to pollution
      or protection of human health or the environment (including, without limitation,
      ambient air, surface water, groundwater, land surface or subsurface strata)
      or
      wildlife, including without limitation, laws and regulations relating to
      emissions, discharges, releases or threatened releases of chemicals, pollutants,
      contaminants, wastes, toxic substances, hazardous substances, petroleum and
      petroleum products (collectively, “Materials
      of Environmental Concern”),
      or
      otherwise relating to the manufacture, processing, distribution, use, treatment,
      storage, disposal, transport or handling of Materials of Environmental Concern
      (collectively, “Environmental
      Laws”),
      which
      violation includes, but is not limited to, noncompliance with any permits or
      other governmental authorizations required for the operation of the business
      of
      the Company or its Subsidiaries under applicable Environmental Laws, or
      noncompliance with the terms and conditions thereof, nor has the Company or
      any
      of its Subsidiaries received any written communication, whether from a
      governmental authority, citizens group, employee or otherwise, that alleges
      that
      the Company or any of its Subsidiaries is in violation of any Environmental
      Law,
      except, in each case, as would not, individually or in the aggregate, expect
      to
      result in material expenditures or remediation costs by the Company or its
      Subsidiaries; (ii) there is no claim, action or cause of action filed with
      a
      court or Governmental Authority, no investigation with respect to which the
      Company has received written notice, and no written notice by any person or
      entity alleging potential liability for investigatory costs, cleanup costs,
      governmental responses costs, natural resources damages, property damages,
      personal injuries, attorneys’ fees or penalties arising out of, based on or
      resulting from the presence, or release into the environment, of any Material
      of
      Environmental Concern at any location owned, leased or operated by the Company
      or any of its Subsidiaries, now or in the past (collectively, “Environmental
      Claims”),
      pending or, to the Company’s knowledge, threatened against the Company or any of
      its Subsidiaries or any person or entity whose liability for any Environmental
      Claim the Company or any of its Subsidiaries has retained or assumed either
      contractually or by operation of law, except as would not, individually or
      in
      the aggregate expect to result in material expenditures or remediation costs
      by
      the Company or its Subsidiaries; (iii) to the Company’s knowledge, there are no
      past, present or anticipated future actions, activities, circumstances,
      conditions, events or incidents, including, without limitation, the release,
      emission, discharge, presence or disposal of any Material of Environmental
      Concern, that reasonably could result in a violation of any Environmental Law,
      require expenditures to be incurred pursuant to Environmental Law, except as
      would not, individually or in the aggregate expect to result in material
      expenditures or remediation costs by the Company or its Subsidiaries; and (iv)
      neither the Company nor any of its Subsidiaries is subject to any pending or,
      to
      the Company’s knowledge, threatened proceeding under Environmental Law to which
      a governmental authority is a party and which is reasonably likely to result
      in
      monetary sanctions of $50,000 or more. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (ii) Taxes.
      Each of
      the Company and its Subsidiaries has filed all necessary federal, state and
      foreign income and franchise tax returns and has paid or accrued all taxes
      shown
      as due thereon except for taxes being contested in good faith by the Company
      for
      which adequate reserves have been established, and neither the Company nor
      any
      of its Subsidiaries has knowledge of a tax deficiency which has been asserted
      in
      writing against it which would reasonably be expected to have a Material Adverse
      Effect. 

     

    (jj) Additional
      PRC Representations and Warranties.
      

     

    (i) All
      material consents, approvals, authorizations or licenses requisite under PRC
      law
      for the due and proper establishment and operation of the Company’s Subsidiaries
      doing business in the PRC (the “PRC
      Subsidiaries”)
      have
      been duly obtained from the relevant PRC governmental authorities and are in
      full force and effect.

     

    (ii) All
      filings and registrations with the PRC governmental authorities required in
      respect of the Company, GAS Investment China Co., Ltd. (“Gas
      BVI”)
      and
      the PRC Subsidiaries and their capital structure and operations including,
      without limitation, to the extent applicable, tax bureau and customs
      authorities, have been duly completed in accordance with the relevant PRC rules
      and regulations, except where the failure to complete such filings and
      registrations does not, and would not, individually or in the aggregate, have
      a
      Material Adverse Effect. The Company and the Subsidiaries have complied with
      all
      relevant PRC laws and regulations regarding the contribution and payment of
      the
      registered capital of the PRC Subsidiaries, the payment schedules of which
      have
      been approved by the relevant PRC governmental authorities. There are no
      outstanding rights of, or commitments made by the Company or any Subsidiary
      to
      sell any equity interests of any PRC Subsidiary.

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

    (v) With
      regard to employment and staff or labor, the Company and the Subsidiaries have
      complied with all applicable PRC laws and regulations in all material respects,
      including without limitation, laws and regulations pertaining to welfare fund
      contributions, social benefits, medical benefits, insurance, retirement
      benefits, pensions or the like.

     

    (vi) Each
      of
      the Company, the Subsidiaries and their respective directors are aware of the
      content of the PRC Rules
      on Mergers and Acquisitions of Domestic Enterprises by Foreign
      Investors
      jointly
      promulgated by the Ministry of Commerce (“MOFCOM”),
      the
      State Assets Supervision and Administration Commission, the State Tax
      Administration, the State Administration of Industry and Commerce, the China
      Securities Regulatory Commission (the “CSRC”)
      and
      the State Administration of Foreign Exchange of the PRC (“SAFE”)
      on
      August 8, 2006 (the “M&A
      Rules”),
      and,
      in particular, the relevant provisions thereof which purport to require offshore
      special purpose vehicles, or SPVs, formed for listing purposes and controlled
      directly or indirectly by PRC companies or individuals, to obtain the approval
      of the CSRC prior to the listing and trading of their securities on an overseas
      stock exchange. The Company has received legal advice specifically with respect
      to the M&A Rules from its PRC counsel to the effect that such approval
      requirements are not applicable to the Company or to the listing or quotation
      of
      the Company’s securities on any Trading Market. 

     

    (vii) The
      Company and the Subsidiaries have taken all necessary steps to comply with,
      and
      to ensure compliance by, each of their respective stockholders, option holders,
      directors, officers, and employees that is, or is directly or indirectly owned
      or controlled by, a PRC resident or citizen, with any applicable rules and
      regulations of the relevant PRC government agencies (including, without
      limitation, the Ministry of Commerce, National Development and Reform Commission
      and the State Administration of Foreign Exchange) relating to overseas
      investment by PRC residents and citizens or overseas listing by offshore special
      purpose vehicles controlled directly or indirectly by PRC companies and
      individuals(the “PRC
      Overseas Investment and Listing Regulations”),
      including, without limitation, ensuring that each such stockholder, option
      holder, director, officer and employee that is, or is directly or indirectly
      owned or controlled by, a PRC resident or citizen, complete any registration
      and
      other procedures required under applicable PRC Overseas Investment and Listing
      Regulations. 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (viii) Except
      as
      set forth in Schedule 3.1(ee), the PRC Subsidiaries are not currently
      prohibited, directly or indirectly, from paying any dividends to their
      respective equity holders, nor are any of them prohibited, from making any
      other
      distribution on their respective equity interests, or from repaying any loans
      or
      advances. Except as set forth in Schedule 3.1 (ee), any dividends or other
      distributions declared with respect to after-tax retained earnings on the equity
      interests of Beijing Zhong Ran Wei Ye Gas Co., Ltd. may lawfully be paid to
      Gas
      BVI in Renminbi that may be converted into U.S. dollars and freely transferred
      out of the PRC, free and clear of any tax, withholding or deduction in the
      PRC,
      and without the necessity of obtaining any governmental authorization in the
      PRC
      except for the routine PRC foreign exchange procedures.

     

    (ix) Neither
      the Company, nor any Subsidiary, nor any of their respective properties, assets
      or revenues has any right of immunity under BVI or PRC law, from any legal
      action, suit or proceeding, from the giving of any relief in any such legal
      action, suit or proceeding, from set-off or counterclaim, from the jurisdiction
      of any BVI, PRC, New York or U.S. federal court, from service of process,
      attachment upon or prior to judgment, or attachment in aid of execution of
      judgment, or from execution of a judgment, or other legal process or proceeding
      for the giving of any relief or for the enforcement of a judgment, in any such
      court, with respect to its obligations, liabilities or any other matter under
      or
      arising out of or in connection with the Transaction Documents; and, to the
      extent that the Company, or any Subsidiary or any of their respective
      properties, assets or revenues may have or may hereafter become entitled to
      any
      such right of immunity in any such court in which proceedings may at any time
      be
      commenced, each of the Company and the Subsidiaries waives or will waive such
      right to the extent permitted by law and has consented to such enforcement
      as
      provided in Section 6.9 of this Agreement. 

     

    (kk) Disclosure.
      The
      Company confirms that neither it nor any Person acting on its behalf has
      provided any Investor or its respective agents or counsel with any information
      that the Company believes constitutes material, non-public information except
      insofar as the existence and terms of the proposed transactions hereunder may
      constitute such information. The Company understands and confirms that the
      Investors will rely on the foregoing representations and covenants in effecting
      transactions in securities of the Company. The Company’s representations and
      warranties set forth in this Agreement are true and correct and do not contain
      any untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in light of the
      circumstances under which they were made, not misleading. Each Investor
      acknowledges and agrees that the Company has made or makes no representations
      or
      warranties with respect to its business or the transactions contemplated hereby
      other than those specifically set forth in this Section 3.1 and the Investor
      has
      relied solely on those representations and its review of the SEC Reports in
      making its investment decision. 

     

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

     

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

     

    
      
        
        

      

      
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    (b) Investment
      Intent.
      Such
      Investor is acquiring the Shares as principal for its own account for investment
      purposes only and not with a view to or for distributing or reselling such
      Shares or any part thereof, without prejudice, however, to such Investor’s right
      at all times to sell or otherwise dispose of all or any part of such Shares
      in
      compliance with applicable federal and state securities laws. Subject to the
      immediately preceding sentence, nothing contained herein shall be deemed a
      representation or warranty by such Investor to hold the Shares for any period
      of
      time. Such Investor is acquiring the Shares hereunder in the ordinary course
      of
      its business. Such Investor does not have any agreement or understanding,
      directly or indirectly, with any Person to distribute any of the
      Shares.

     

    (c) Investor
      Status.
      At the
      time such Investor was offered the Shares and at the time of sale, it was an
      “accredited investor” as defined in Rule 501(a) under the Securities Act. Such
      Investor is not a registered broker-dealer under Section 15 of the Exchange
      Act.
      Each Investor also has such sophistication, knowledge and skill as to be able
      to
      fully evaluate the risks of investing in the Company. 

     

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

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

    (g) Independent
      Investment Decision.
      Such
      Investor has independently evaluated the merits of its decision to purchase
      Shares pursuant to the Transaction Documents, and such Investor confirms that
      it
      has not relied on the advice of any other Investor’s business and/or legal
      counsel in making such decision. Such Investor has not relied on the business
      or
      legal advice of Roth Capital Partners, LLC or any of its agents, counsel or
      Affiliates in making its investment decision hereunder, and confirms that none
      of such Persons has made any representations or warranties to such Investor
      in
      connection with the transactions contemplated by the Transaction
      Documents.

     

    The
      Company acknowledges and agrees that no Investor has made or makes any
      representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in this Section 3.2.

     

    ARTICLE
      4.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1. (a) The
      Shares may only be disposed of by the Investors in compliance with state and
      federal securities laws. In connection with any transfer of the Shares other
      than pursuant to an effective registration statement, to the Company, to an
      Affiliate of an Investor or in connection with a pledge as contemplated in
      Section 4.1(b), the Company may require the transferor thereof to provide to
      the
      Company an opinion of counsel selected by the transferor, the form and substance
      of which opinion shall be reasonably satisfactory to the Company, to the effect
      that such transfer does not require registration of such transferred Shares
      under the Securities Act.

     

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

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT SECURED BY SUCH SECURITIES.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

    (c) Certificates
      evidencing Shares shall not contain any legend (including the legend set forth
      in Section 4.1(b)): (i) following a sale or transfer of such Shares pursuant
      to
      an effective registration statement (including a Registration Statement), or
      (ii) following a sale or transfer of such Shares pursuant to Rule 144 (assuming
      the transferee is not an Affiliate of the Company), or (iii) while such Shares
      are eligible for sale under Rule 144(k). If an Investor shall make a sale or
      transfer of Shares either (x) pursuant to Rule 144 or (y) pursuant to a
      registration statement and in each case shall have delivered to the Company
      or
      the Company’s transfer agent the certificate representing Shares containing a
      restrictive legend which are the subject of such sale or transfer
      and a representation letter in customary form (the
      date of
      such sale or transfer and Share delivery being the “Share
      Delivery Date”)
      and (1)
      the Company shall fail to deliver or cause to be delivered to such Investor
      a
      certificate representing such Shares that is free from all restrictive or other
      legends by the third Trading Day following the Share Delivery Date and (2)
      following such third Trading Day after the Share Delivery Date and prior to
      the
      time such Shares are received free from restrictive legends, the Investor,
      or
      any third party on behalf of such Investor, purchases (in an open market
      transaction or otherwise) shares of Common Stock to deliver in satisfaction
      of a
      sale by the Investor of such Shares (a “Buy-In”),
      then
      the Company shall pay in cash to the Investor (for costs incurred either
      directly by such Investor or on behalf of a third party) the amount by which
      the
      total purchase price paid for Common Stock as a result of the Buy-In (including
      brokerage commissions, if any) exceed the proceeds received by such Investor
      as
      a result of the sale to which such Buy-In relates. The Investor shall provide
      the Company written notice indicating the amounts payable to the Investor in
      respect of the Buy-In.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    4.2. Furnishing
      of Information. As long as Investors own the Shares, the Company covenants
      to timely file (or obtain extensions in respect thereof and file within the
      applicable grace period) all reports required to be filed by the Company after
      the date hereof pursuant to the Exchange Act. As long as any Investor the
      Shares, if the Company is not required to file reports pursuant to such laws,
      it
      will prepare and furnish to the Investors and make publicly available in
      accordance with Rule 144(c) such information as is required for the Investors
      to
      sell the Shares under Rule 144. The Company further covenants that it will
      take
      such further action as any holder of Shares may reasonably request, all to
      the
      extent required from time to time to enable such Person to sell the Shares
      without registration under the Securities Act within the limitation of the
      exemptions provided by Rule 144. 

     

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

     

    4.4 Subsequent
      Registrations. Except as set forth on Schedule 4.4, the Company may not file
      any registration statement (other than on Form S-8) with the Commission with
      respect to any securities of the Company prior to the time that all Shares
      are
      registered pursuant to one or more effective Registration Statement(s), and
      the
      prospectuses forming a portion of such Registration Statement(s) is available
      for the resale of all Shares. 

     

    4.5 Securities
      Laws Disclosure; Publicity. By 8:30 a.m. (New York time) on the Trading Day
      following the execution of this Agreement, and by 8:30 a.m. (New York time)
      on
      the Trading Day following the Closing Date, the Company shall issue press
      releases disclosing the transactions contemplated hereby and the Closing. On
      the
      Trading Day following the execution of this Agreement, the Company will file
      a
      Current Report on Form 8-K disclosing the material terms of the Transaction
      Documents (and attach as exhibits thereto the Transaction Documents), and on
      the
      Trading Day following the Closing Date the Company will file an additional
      Current Report on Form 8-K to disclose the Closing. In addition, the Company
      will make such other filings and notices in the manner and time required by
      the
      Commission and the Trading Market on which the Common Stock is listed.
      Notwithstanding the foregoing, the Company shall not publicly disclose the
      name
      of any Investor, or include the name of any Investor in any filing with the
      Commission (other than the Registration Statement and any exhibits to filings
      made in respect of this transaction in accordance with periodic filing
      requirements under the Exchange Act) or any regulatory agency or Trading Market,
      without the prior written consent of such Investor, except to the extent such
      disclosure is required by law or Trading Market regulations. The Company and
      the
      Investors shall consult with each other in issuing any press releases with
      respect to the transactions contemplated hereby, and neither the Company nor
      the
      Investors shall issue any such press release or otherwise make any such public
      statement without the prior consent of the Company, with respect to any press
      release of Investors, or without the prior consent of Investors, with respect
      to
      any press release of the Company, which consent shall not unreasonably be
      withheld or delayed, except if such disclosure is required by law, in which
      case
      the disclosing party shall promptly provide the other party with prior notice
      of
      such public statement or communication.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    4.6 Limitation
      on Issuance of Future Priced Securities.
      During
      the six months following the Closing Date, the Company shall not issue any
      “Future Priced Securities” as such term is described by NASD IM-4350-1.

     

    4.7 Indemnification
      of Investors.
      In
      addition to the indemnity provided in the Registration Rights Agreement, the
      Company will indemnify and hold the Investors and their directors, officers,
      shareholders, partners, employees and agents (each, an “Investor
      Party”)
      harmless from any and all losses, liabilities, obligations, claims,
      contingencies, damages, costs and expenses, including all judgments, amounts
      paid in settlements, court costs and reasonable attorneys’ fees and costs of
      investigation (collectively, “Losses”)
      that
      any such Investor Party may suffer or incur as a result of or relating to (i)
      any misrepresentation, breach or inaccuracy of any representation, warranty,
      covenant or agreement made by the Company in any Transaction Document or (ii)
      any action instituted against an Investor, or any of them or their respective
      Affiliates, by any stockholder of the Company who is not an Affiliate of such
      Investor, with respect to any of the transactions contemplated by the
      Transaction Documents (unless such action is based upon a breach of such
      Investor’s representation, warranties or covenants under the Transaction
      Documents or any agreements or understandings such Investor may have with any
      such stockholder or any violations by the Investor of state or federal
      securities laws or any conduct by such Investor which constitutes fraud, gross
      negligence, willful misconduct or malfeasance). In addition to the indemnity
      contained herein, the Company will reimburse each Investor Party for its
      reasonable legal and other expenses (including the cost of any investigation,
      preparation and travel in connection therewith) incurred in connection
      therewith, as such expenses are incurred. Except as otherwise set forth herein,
      the mechanics and procedures with respect to the rights and obligations under
      this Section 4.7 shall be the same as those set forth in Section 5 of the
      Registration Rights Agreement.

     

    4.8 Non-Public
      Information. The Company covenants and agrees that neither it nor any other
      Person acting on its behalf will provide any Investor or its agents or counsel
      with any information that the Company believes constitutes material non-public
      information, unless prior thereto such Investor shall have executed a written
      agreement regarding the confidentiality and use of such information. The Company
      understands and confirms that each Investor shall be relying on the foregoing
      representations in effecting transactions in securities of the Company. In
      the
      event of a breach of the foregoing covenant by the Company or any Person acting
      on its or their behalf, the Company shall, upon written notice of such breach,
      make public disclosure of such material non-public information. In the event
      that the Company has not made such public disclosure within two Business Days
      of
      such written notice, in addition to any other remedy provided herein or in
      the
      Transaction Documents or otherwise available, an Investor shall have the right
      to make a public disclosure, in the form of a press release, public
      advertisement or otherwise, of such material non-public information without
      the
      prior approval by the Company, its Subsidiaries, or any Person acting on its
      or
      their behalf. No Investor shall have any liability to the Company, its
      Subsidiaries, or any Person acting on its or their behalf for any such
      disclosure.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    4.9 Listing
      of Shares; Reservation of Shares. The Company agrees, (i) if the Company
      applies to have the Common Stock traded on any other Trading Market, it will
      include in such application the Shares, and will take such other action as
      is
      necessary or desirable to cause the Shares to be listed on such other Trading
      Market as promptly as possible, and (ii) it will take all action reasonably
      necessary to continue the listing and trading of its Common Stock on a Trading
      Market and will comply in all material respects with the Company’s reporting,
      filing and other obligations under the bylaws or rules of the Trading Market.
      As
      of the date hereof, the Company has reserved and the Company shall continue
      to
      reserve and keep available at all times, free of preemptive rights, a sufficient
      number of shares of Common Stock for the purpose of enabling the Company to
      issue the Shares and the 2008 Make Good Shares pursuant to this Agreement.
      

     

    4.10
      Outstanding Warrants. Set forth on Schedule 4.10 is a list of all
      outstanding warrants after giving effect to the warrant repurchases to be
      effected pursuant to the Warrant Repurchase Agreement. 

     

    4.11
      Use of Proceeds. The Company will use the net proceeds from the sale of
      the Shares hereunder for, among other things, the repurchase of the warrant
      to
      be repurchased pursuant to the Warrant Repurchase Agreement and for working
      capital purposes. 

     

    4.12 Make
      Good Obligation. 

     

    (a) The
      Company agrees that if (i) the After-Tax Net Income for the fiscal year ended
      December 31, 2008 reported in the 2008 Annual Report is less than $11,000,000
      (the “2008
      Guaranteed ATNI”)
      or (ii)
      if the evaluation of the Company’s internal controls for the fiscal year ended
      December 31, 2008 as required by Section 404 of the Sarbanes Oxley Act reveals
      a
“”Material Weakness” within the meaning of PCAOB Auditing Standard No 2, the
      Company shall transfer to each Investor on a pro rata basis (based upon such
      Investor’s Investment Amount relative to the aggregate Investment Amount of all
      Investors hereunder) for no additional consideration, 1,500,000 shares of Common
      Stock (the “2008
      Make Good Shares”).
“After
      Tax Net Income” means income
      after income taxes determined in accordance with GAAP plus (a) any cash or
      non-cash charges relating to the transaction contemplated by this Agreement
      and
      the Registration Rights Agreement, and (b) any cash or non cash charges for
      derivative instruments, or arising out of any non cash compensatory awards
      made
      to officers, directors, employees or consultants. If
      (i)
      the Company’s audited consolidated financial statements for the fiscal year
      ended December 31, 2008 as reported in the 2008 Annual Report indicates that
      the
      2008 Guaranteed ATNI has been achieved or exceeded, and (ii) if the Company’s
      2008 Annual Report does not disclose a “Material Weakness,” no transfer of the
      2008 Make Good Shares to the Investors shall be required by this Section and
      all
      2008 Make Good Shares deposited with the Make Good Escrow Agent (as defined
      in
      the Make Good Escrow Agreement) shall be returned to the Company in accordance
      with the Make Good Escrow Agreement. Transfers of 2008 Make Good Shares required
      under this Section shall be made to Investors within ten Business Days after
      the
      date which the 2008 Annual Report is filed with the Commission and otherwise
      in
      accordance with the Make Good Escrow Agreement. Notwithstanding anything to
      the contrary contained herein, in the event that the release of any
      2008 Make Good Shares to the Investors or the Company is deemed to be an expense
      or deduction from revenues or income of the Company for the fiscal year ended
      December 31, 2008, as required under GAAP, then such expense or deduction shall
      be excluded for purposes of determining whether or not the 2008 Guaranteed
      ATNI has been achieved by the Company. 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (b) In
      connection with the foregoing, the Company agrees that within one Trading Day
      following execution of this Agreement, the Company will deposit all 2008 Make
      Good Shares into escrow in accordance with the Make Good Escrow Agreement along
      with bank medallion guaranteed stock powers endorsed in blank, and the handling
      and disposition of the 2008 Make Good Shares shall be governed by this Section
      4.12 and the Make Good Escrow Agreement. The parties hereby agree that the
      Company’s obligation to transfer shares of Common Stock to Investors pursuant to
      this Section shall continue to run to the benefit of an Investor who shall
      have
      transferred or sold all or any portion of its Shares, and that Investors shall
      have the right to assign its rights to receive all or any such shares of Common
      Stock to other Persons in conjunction with negotiated sales or transfers of
      any
      of its Shares.

     

    (c)  The
      Company covenants and agrees that upon any transfer under this Section of 2008
      Make Good Shares to the Investors in accordance with Section 4 of the Make
      Good
      Escrow Agreement, the Company shall use its best efforts to cause its transfer
      agent to reissue as soon as is reasonably possible such 2008 Make Good Shares
      in
      the applicable Investor’s name and deliver the same as directed by such
      Investor.

     

    4.13 Equal
      Treatment of Investors.
      No
      consideration shall be offered or paid to any Person to amend or consent to
      a
      waiver or modification of any provision of this Agreement unless the same
      consideration is also offered to all of the parties to this
      Agreement.

     

    4.14 Lock-Up.
      The
      Company shall take such actions as are required to ensure that none of its
      directors and executive officers shall sell shares of Common Stock that such
      director or executive officer beneficially owns as of the Closing Date during
      the period commencing on the Closing Date and ending on the date that is 60
      days
      following the Effective Date without the consent of the Investors; provided,
      however,
      that a
      director or executive officer may transfer an unlimited number of shares of
      such
      Common Stock for estate or tax planning purposes, so long as such transfer
      is to
      a Person that is and remains at all times controlled by such executive officer
      and such Person enters into a lock-up agreement with the Company with respect
      to
      such transferred shares that contains provisions substantially similar to those
      provided for in this Section 4.14. The foregoing limitation shall expire with
      respect to any officer, upon his or her termination of employment with the
      Company.

     

    4.15 Promptly
      following the Closing, but in no event later than ninety (90) days after the
      Closing, the Company and the stockholders named below shall have delivered
      documentation to the Investors evidencing that each such stockholder has
      complied with the registration requirements under Circular 75 issued by the
      State Administration of Foreign Exchange of the PRC on October 21, 2005, titled
      "Notice Regarding Certain Administrative Measures on Financing and Inbound
      Investments by PRC Residents Through Offshore Special Purpose Vehicles",
      effective as of November 1, 2005 ("Circular 75"), or any successor rule or
      regulation under PRC law, in relation to their acquisition of shares of the
      Company. The stockholders to which the above sentence is applicable are as
      follows: Eloten Group Ltd., Leading King Investment Ltd., Zhong Zhi Min, Li
      Shu
      Wang, Chen Si, Xiang Shu Ying, Chong Shun, Liu Xiao Bing, Zhuo Qing Hui, Bian
      Shu Kui, Chen Fang, Shang Jian Zhong, and Wang Wei Dong. Notwithstanding the
      foregoing, the Company shall not be deemed to have breached this Section (i)
      if
      a stockholder completes and submits his, her or its application in good faith
      and in all material respects and either (A) the applicable governmental
      authority determines unilaterally not to approve such application or (B) such
      application is not approved with such 90 day period as a result of an adverse
      change in applicable law or interpretation of the law then in effect or (ii)
      in
      the event of abuse of discretion on the part of the applicable governmental
      authority which abuse is outside the control of the Company. 

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      5

    CONDITIONS
      PRECEDENT TO CLOSING

     

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

     

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

     

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

     

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

     

    (d) Adverse
      Changes.
      Since
      the date of execution of this Agreement, no event or series of events shall
      have
      occurred that reasonably could have or result in a Material Adverse
      Effect;

     

    (e) No
      Suspensions of Trading in Common Stock; Listing.
      Trading
      in the Common Stock shall not have been suspended by the Commission or any
      Trading Market (except for any suspensions of trading of not more than one
      Trading Day solely to permit dissemination of material information regarding
      the
      Company) at any time since the date of execution of this Agreement, and, at
      any
      time prior to the Closing Date, trading in securities generally as reported
      by
      Bloomberg Financial Markets shall not have been suspended or limited, or minimum
      prices shall not have been established on securities whose trades are reported
      by such service, or on any Trading Market, nor shall a banking moratorium have
      been declared either by the United States or New York State authorities nor
      shall there have occurred any material outbreak or escalation of hostilities
      or
      other national or international calamity of such magnitude in its effect on,
      or
      any material adverse change in, any financial market which, in each case, in
      the
      reasonable judgment of each Purchaser, makes it impracticable or inadvisable
      to
      purchase the Shares at the Closing and the Common Stock shall have been at
      all
      times since such date listed for trading on a Trading Market; 

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (f) Officer’s
      Certificate.
      The
      Chief Executive Officer or Chief Financial Officer of the Company shall provide
      a certificate addressed to the Investors to the effect that the conditions
      set
      forth in Sections 5.1(a)-(f) shall have been satisfied;

     

    (g) Warrant
      Purchase Agreement.
      The
      Warrant Purchase Agreement shall have been executed and all of the transactions
      contemplated thereby shall close simultaneously with the Closing; 

     

    (h) Secretary’s
      Certificate.
      The
      Secretary of the Company shall have delivered to the Investors a certificate,
      executed by the Secretary of the Company and dated as of the Closing Date,
      in a
      form reasonably acceptable to the Investors as to (i) the resolutions as adopted
      by the Company’s Board of Directors adopting and approving the Transaction
      Documents and authorizing the issuance of the Shares and the 2008 Make Good
      Shares, (ii) the Articles of Incorporation and (iii) the Bylaws, each as in
      effect at the Closing; and 

     

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

     

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

     

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

     

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

     

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

     

    (d) Investors
      Deliverables.
      Each
      Investor shall have delivered its Investors Deliverables in accordance with
      Section 2.2(b).

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      6.

    MISCELLANEOUS

     

    6.1. Fees
      and Expenses. Each party shall pay the fees and expenses of its advisers,
      counsel, accountants and other experts, if any, and all other expenses incurred
      by such party incident to the negotiation, preparation, execution, delivery
      and
      performance of the Transaction Documents. The Company shall pay all stamp and
      other taxes and duties levied in connection with the issuance of the
      Shares.

     

    6.2. Entire
      Agreement. The Transaction Documents, together with the Exhibits and
      Schedules thereto, contain the entire understanding of the parties with respect
      to the subject matter hereof and supersede all prior agreements, understandings,
      discussions and representations, oral or written, with respect to such matters,
      which the parties acknowledge have been merged into such documents, exhibits
      and
      schedules.

     

    6.3. Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile (provided the sender receives a
      machine-generated confirmation of successful transmission) at the facsimile
      number specified in this Section prior to 5:30 p.m. (New York City time) on
      a
      Trading Day, (b) the next Trading Day after the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile number
      specified in this Section on a day that is not a Trading Day or later than
      5:30
      p.m. (New York City time) on any Trading Day, (c) the Trading Day following
      the
      date of mailing, if sent by U.S. nationally recognized overnight courier
      service, or (d) upon actual receipt by the party to whom such notice is required
      to be given. The address for such notices and communications shall be as
      follows:

    

      
        	
                If
                  to the Company:

              	
                Sino
                  Gas International Holdings, Inc.

              
	 	
                The
                  Farmhouse

              
	 	
                558
                  Lime Rock Road

              
	 	
                Lime
                  Rock, Connecticut 06039

              
	 	
                Attention:
                  President

              
	 	 
	
                With
                  a copy to:

              	
                Guzov
                  Ofsink, LLC

              
	 	
                600
                  Madison Avenue, 14th
                  Floor

              
	 	
                New
                  York, New York 10022

              
	 	
                Facsimile:
                  (212) 688-7273

              
	 	
                Attn.:
                  Darren L. Ofsink, Esq.

              
	 	 
	
                If
                  to an Investor:

              	
                To
                  the address set forth under such Investor’s name on the signature pages
                  hereof;

              

      

    

     

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

     

    6.4. Amendments;
      Waivers; No Additional Consideration. No provision of this Agreement may be
      waived or amended except in a written instrument signed by the Company and
      the
      Investors holding at least two-thirds (66 2/3%) of the Shares. No waiver of
      any
      default with respect to any provision, condition or requirement of this
      Agreement shall be deemed to be a continuing waiver in the future or a waiver
      of
      any subsequent default or a waiver of any other provision, condition or
      requirement hereof, nor shall any delay or omission of either party to exercise
      any right hereunder in any manner impair the exercise of any such right. No
      consideration shall be offered or paid to any Investor to amend or consent
      to a
      waiver or modification of any provision of any Transaction Document unless
      the
      same consideration is also offered to all Investors who then hold
      Shares.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    6.5. Construction.
      The headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party. This Agreement shall be
      construed as if drafted jointly by the parties, and no presumption or burden
      of
      proof shall arise favoring or disfavoring any party by virtue of the authorship
      of any provisions of this Agreement or any of the Transaction
      Documents.

     

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

     

    6.7. No
      Third-Party Beneficiaries. This Agreement is intended for the benefit of the
      parties hereto and their respective successors and permitted assigns and is
      not
      for the benefit of, nor may any provision hereof be enforced by, any other
      Person, except as otherwise set forth in Section 4.12 (as to each Investor
      Party).

     

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

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    6.12. Rescission
      and Withdrawal Right. Notwithstanding anything to the contrary contained in
      (and without limiting any similar provisions of) the Transaction Documents,
      whenever any Investor exercises a right, election, demand or option under a
      Transaction Document and the Company does not timely perform its related
      obligations within the periods therein provided, then such Investor may rescind
      or withdraw, in its sole discretion from time to time upon written notice to
      the
      Company, any relevant notice, demand or election in whole or in part without
      prejudice to its future actions and rights.

     

    6.13. Replacement
      of Shares. If any certificate or instrument evidencing any Shares is
      mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
      issued in exchange and substitution for and upon cancellation thereof, or in
      lieu of and substitution therefor, a new certificate or instrument, but only
      upon receipt of evidence reasonably satisfactory to the Company of such loss,
      theft or destruction and customary and reasonable indemnity, if requested.
      The
      applicants for a new certificate or instrument under such circumstances shall
      also pay any reasonable third-party costs associated with the issuance of such
      replacement Shares. If a replacement certificate or instrument evidencing any
      Shares is requested due to a mutilation thereof, the Company may require
      delivery of such mutilated certificate or instrument as a condition precedent
      to
      any issuance of a replacement.

     

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

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    6.17. Limitation
      of Liability. Notwithstanding anything herein to the contrary, the Company
      acknowledges and agrees that the liability of an Investor arising directly
      or
      indirectly, under any Transaction Document of any and every nature whatsoever
      shall be satisfied solely out of the assets of such Investor, and that no
      trustee, officer, other investment vehicle or any other Affiliate of such
      Investor or any investor, shareholder or holder of shares of beneficial interest
      of such a Investor shall be personally liable for any liabilities of such
      Investor.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGES FOLLOW]

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    

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

    
      	 	 	 
	 	SINO
              GAS
              INTERNATIONAL HOLDINGS, INC.
	 
 	 
 	 
 
	Date: September
              7, 2007	By:  	
              /s/
                Chen Fang

              
                

              
Name: Chen Fang
	 	 	Title:
              Chief Financial Officer

    

     

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGES FOR INVESTORS FOLLOW]

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        	 	 	
                NAME
                  OF INVESTOR

              
	 	 	
              
	 	 	
                SEI
                  Private Trust Co FAO The JM Smucker Co Investor Trust

              
	 	 	
                

              
	 	 	
                By:

              	
                
                  /s/
                    Zach Easton
                    

                  

                

                Name:
                  Zach Easton

              
	 	 	 	
                
                  Title:

                

              
	 	 	 
	 	 	
                Investment
                  Amount: $

              	
                
                  250,000

                

                
                  

                

              
	 	 	 
	 	 	
                Tax ID No.:

              	
                 

                
                  

                

              
	 	 	 
	 	 	
                ADDRESS
                  FOR NOTICE

              
	 	 	 
	 	 	
                c/o:

              	
                 

                
                  

                

              
	 	 	
                Street:

              	
                 

                
                  

                

              
	 	 	
                City/State/Zip:

              	
                 

                
                  

                

              
	 	 	
                Attention:

              	
                 

                
                  

                

              
	 	 	
                Tel:

              	
                 

                
                  

                

              
	 	 	
                Fax:

              	
                 

                
                  

                

              
	 	 	 
	 	 	
                DELIVERY
                  INSTRUCTIONS

              
	 	 	
                (if
                  different from above)

              
	 	 	 
	 	 	
                c/o:

              	
                 

                
                  

                

              
	 	 	
                Street:

              	
                 

                
                  

                

              
	 	 	
                City/State/Zip:

              	
                 

                
                  

                

              
	 	 	
                Attention:

              	
                 

                
                  

                

              
	 	 	
                Tel:

              	
                 

                
                  

                

              

      

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    Ancora
                      Greater China Fund, LP

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      John
                      P. Micklitsch
                      

                    

                  

                  Name:
                    John
                    P. Micklitsch

                
	 	 	 	
                  
                    Title:
                      VP

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    350,000
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

    

     

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

     

    
      
        	 	 	
                NAME
                  OF INVESTOR

              
	 	 	
              
	 	 	
                
                  Jayhawk
                    Private Equity Co-Invest Fund, L.P.

                

              
	 	 	
                

              
	 	 	
                By:

              	
                
                  /s/
                    Michael
                    D. Schmitz
                    

                  

                

                Name:
                  Michael
                  D. Schmitz

              
	 	 	 	
                
                  Title:
                    CFO of GP of GP

                

              
	 	 	 
	 	 	
                Investment
                  Amount: $

              	
                
                  119,946
                    

                  

                

              
	 	 	 
	 	 	
                Tax ID No.:

              	
                 

                
                  

                

              
	 	 	 
	 	 	
                ADDRESS
                  FOR NOTICE

              
	 	 	 
	 	 	
                c/o:

              	
                 

                
                  

                

              
	 	 	
                Street:

              	
                 

                
                  

                

              
	 	 	
                City/State/Zip:

              	
                 

                
                  

                

              
	 	 	
                Attention:

              	
                 

                
                  

                

              
	 	 	
                Tel:

              	
                 

                
                  

                

              
	 	 	
                Fax:

              	
                 

                
                  

                

              
	 	 	 
	 	 	
                DELIVERY
                  INSTRUCTIONS

              
	 	 	
                (if
                  different from above)

              
	 	 	 
	 	 	
                c/o:

              	
                 

                
                  

                

              
	 	 	
                Street:

              	
                 

                
                  

                

              
	 	 	
                City/State/Zip:

              	
                 

                
                  

                

              
	 	 	
                Attention:

              	
                 

                
                  

                

              
	 	 	
                Tel:

              	
                 

                
                  

                

              

      

    

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    Jayhawk
                      Private Equity Fund, L.P.

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      Michael
                      D. Schmitz
                      

                    

                  

                  Name:
                    Michael
                    D. Schmitz

                
	 	 	 	
                  
                    Title:

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    1,905,054
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

    

     

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

     

    
      
        	 	 	
                NAME
                  OF INVESTOR

              
	 	 	
              
	 	 	
                
                  Enable
                    Opportunity Partners LP

                

              
	 	 	
                

              
	 	 	
                By:

              	
                
                  /s/
                    Brendan
                    O’Neil
                    

                  

                

                Name:
                  Brendan
                  O’Neil

              
	 	 	 	
                
                  Title:
                    Principal & Portfolio Manager

                

              
	 	 	 
	 	 	
                Investment
                  Amount: $

              	
                
                  339,999.75
                    

                  

                

              
	 	 	 
	 	 	
                Tax ID No.:

              	
                 

                
                  

                

              
	 	 	 
	 	 	
                ADDRESS
                  FOR NOTICE

              
	 	 	 
	 	 	
                c/o:

              	
                 

                
                  

                

              
	 	 	
                Street:

              	
                 

                
                  

                

              
	 	 	
                City/State/Zip:

              	
                 

                
                  

                

              
	 	 	
                Attention:

              	
                 

                
                  

                

              
	 	 	
                Tel:

              	
                 

                
                  

                

              
	 	 	
                Fax:

              	
                 

                
                  

                

              
	 	 	 
	 	 	
                DELIVERY
                  INSTRUCTIONS

              
	 	 	
                (if
                  different from above)

              
	 	 	 
	 	 	
                c/o:

              	
                 

                
                  

                

              
	 	 	
                Street:

              	
                 

                
                  

                

              
	 	 	
                City/State/Zip:

              	
                 

                
                  

                

              
	 	 	
                Attention:

              	
                 

                
                  

                

              
	 	 	
                Tel:

              	
                 

                
                  

                

              

      

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    Enable
                      Growth Partners LP

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      Brendan O’Neil
                      

                    

                  

                  Name:
                    Brendan
                    O’Neil

                
	 	 	 	
                  
                    Title:
                      Principal & Portfio Manager

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    2,902,500
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

    

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    Pierce
                      Diversified Strategy Master Fund LLC

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/ Brendan
                      O’Neil
                      

                    

                  

                  Name:
                    Brendan
                    O’Neil

                
	 	 	 	
                  
                    Title:
                      Principal & Portfolio Manager

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    157,500
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        	 	 	
                NAME
                  OF INVESTOR

              
	 	 	
              
	 	 	
                
                  Heller
                    Capital Investments, LLC

                

              
	 	 	
                

              
	 	 	
                By:

              	
                
                  /s/
                    Ronald
                    J. Heller
                    

                  

                

                Name:
                  Ronald
                  J. Heller

              
	 	 	 	
                
                  Title:
                    CEO

                

              
	 	 	 
	 	 	
                Investment
                  Amount: $

              	
                
                  1,000,000
                    

                  

                

              
	 	 	 
	 	 	
                Tax ID No.:

              	
                 

                
                  

                

              
	 	 	 
	 	 	
                ADDRESS
                  FOR NOTICE

              
	 	 	 
	 	 	
                c/o:

              	
                 

                
                  

                

              
	 	 	
                Street:

              	
                 

                
                  

                

              
	 	 	
                City/State/Zip:

              	
                 

                
                  

                

              
	 	 	
                Attention:

              	
                 

                
                  

                

              
	 	 	
                Tel:

              	
                 

                
                  

                

              
	 	 	
                Fax:

              	
                 

                
                  

                

              
	 	 	 
	 	 	
                DELIVERY
                  INSTRUCTIONS

              
	 	 	
                (if
                  different from above)

              
	 	 	 
	 	 	
                c/o:

              	
                 

                
                  

                

              
	 	 	
                Street:

              	
                 

                
                  

                

              
	 	 	
                City/State/Zip:

              	
                 

                
                  

                

              
	 	 	
                Attention:

              	
                 

                
                  

                

              
	 	 	
                Tel:

              	
                 

                
                  

                

              

      

    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    
                      CGM
                        as c/f Ronald I. Heller IRA

                    

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      Ronald
                      J. Heller
                      

                    

                  

                  Name:
                    Ronald
                    J. Heller

                
	 	 	 	
                  
                    Title:
                      

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    500,000
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    
                      Whitebox
                        Intermarket Partners, LP

                    

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      Jonathan
                      Wood
                      

                    

                  

                  Name:
                    Jonathan
                    Wood

                
	 	 	 	
                  
                    Title:
                      Director / CEO

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    750,000
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    
                      Midsouth
                        Investor Fund LP

                    

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      Lyman
                      Heidtke
                      

                    

                  

                  Name:
                    Lyman
                    Heidtke

                
	 	 	 	
                  
                    Title:
                      General Partner

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    500,000
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    
                      Precept
                        Capital Management

                    

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      D.
                      Blair Baker
                      

                    

                  

                  Name:
                    D.
                    Blair Baker

                
	 	 	 	
                  
                    Title:
                      Managing Member of Precept Management LLC.

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    350,000
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    Straus
                      Partners LP

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      Craig
                      Connors
                      

                    

                  

                  Name:
                    Craig
                    Connors

                
	 	 	 	
                  
                    Title:
                      CFO

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    506,250
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

      
         

        
          
            
            

          

          
            44

            
              

            

          

          
            
            

          

           

        

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

         

        
          
            	 	 	
                    NAME
                      OF INVESTOR

                  
	 	 	
                  
	 	 	
                    
                      
                        Straus
                          GEPT Partners LP

                      

                    

                  
	 	 	
                    

                  
	 	 	
                    By:

                  	
                    
                      /s/
                        Craig
                        Connors
                        

                      

                    

                    Name:
                      Craig
                      Connors

                  
	 	 	 	
                    
                      Title:
                        CFO

                    

                  
	 	 	 
	 	 	
                    Investment
                      Amount: $

                  	
                    
                      618,750
                        

                      

                    

                  
	 	 	 
	 	 	
                    Tax ID No.:

                  	
                     

                    
                      

                    

                  
	 	 	 
	 	 	
                    ADDRESS
                      FOR NOTICE

                  
	 	 	 
	 	 	
                    c/o:

                  	
                     

                    
                      

                    

                  
	 	 	
                    Street:

                  	
                     

                    
                      

                    

                  
	 	 	
                    City/State/Zip:

                  	
                     

                    
                      

                    

                  
	 	 	
                    Attention:

                  	
                     

                    
                      

                    

                  
	 	 	
                    Tel:

                  	
                     

                    
                      

                    

                  
	 	 	
                    Fax:

                  	
                     

                    
                      

                    

                  
	 	 	 
	 	 	
                    DELIVERY
                      INSTRUCTIONS

                  
	 	 	
                    (if
                      different from above)

                  
	 	 	 
	 	 	
                    c/o:

                  	
                     

                    
                      

                    

                  
	 	 	
                    Street:

                  	
                     

                    
                      

                    

                  
	 	 	
                    City/State/Zip:

                  	
                     

                    
                      

                    

                  
	 	 	
                    Attention:

                  	
                     

                    
                      

                    

                  
	 	 	
                    Tel:

                  	
                     

                    
                      

                    

                  

          

        

         

        
          
            
            

          

          
            45

            
              

            

          

          
            
            

          

        

      

    

    
       

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    
                      
                        T.
                          Rowe Price Small Cap Value Fund, Inc.

                      

                    

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      Gregory
                      A. McCrickard
                      

                    

                  

                  Name:
                    Gregory
                    A. McCrickard

                
	 	 	 	
                  
                    Title:
                      VP

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    5,499,999
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

       

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

    

     

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

       

      
        
          	 	 	
                  NAME
                    OF INVESTOR

                
	 	 	
                
	 	 	
                  
                    
                      
                        Vision
                          Opportunity Master Fund, Ltd.

                      

                    

                  

                
	 	 	
                  

                
	 	 	
                  By:

                	
                  
                    /s/
                      Adam
                      Benowitz
                      

                    

                  

                  Name:
                    Adam
                    Benowitz

                
	 	 	 	
                  
                    Title:
                      VP

                  

                
	 	 	 
	 	 	
                  Investment
                    Amount: $

                	
                  
                    3,016,725
                      

                    

                  

                
	 	 	 
	 	 	
                  Tax ID No.:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  ADDRESS
                    FOR NOTICE

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                
	 	 	
                  Fax:

                	
                   

                  
                    

                  

                
	 	 	 
	 	 	
                  DELIVERY
                    INSTRUCTIONS

                
	 	 	
                  (if
                    different from above)

                
	 	 	 
	 	 	
                  c/o:

                	
                   

                  
                    

                  

                
	 	 	
                  Street:

                	
                   

                  
                    

                  

                
	 	 	
                  City/State/Zip:

                	
                   

                  
                    

                  

                
	 	 	
                  Attention:

                	
                   

                  
                    

                  

                
	 	 	
                  Tel:

                	
                   

                  
                    

                  

                

        

      

       

      
        
          
          

        

        
          47

          
            

          

        

        
          
          

        

      

    

     

    
      
        	
                SCHEDULE
                  OF
                  INVESTORS

              	 	
                Annex
                  A.

              	 
	 	 	 	 	 	 
	
                1
                  T. Rowe Price

              	 	 	
                2,444,444

              	 	
                $

              	
                5,499,999.00

              	 
	
                2
                  Vision Opportunity Master Fund, Ltd.

              	 	 	
                1,340,765

              	 	 	
                3,016,721.25

              	 
	
                3
                  Enable Growth Partners LP

              	 	 	
                1,290,000

              	 	 	
                2,902,500.00

              	 
	
                4
                  Enable Opportunity Partners LP

              	 	 	
                151,111

              	 	 	
                339,999.75

              	 
	
                5
                  Pierce Diversified Strategy Master Fund LLC, Ena

              	 	 	
                70,000

              	 	 	
                157,500.00

              	 
	
                6
                  Jayhawk Private Equity Fund, L.P.

              	 	 	
                846,691

              	 	 	
                1,905,054.75

              	 
	
                7
                  Jayhawk Private Equity Co-Invest Fund, L.P.

              	 	 	
                53,309

              	 	 	
                119,946.00

              	 
	
                8
                  Heller Capital Investments, LLC

              	 	 	
                444,444

              	 	 	
                1,000,000.00

              	 
	
                9
                  CGM as c/f Ronald I. Heller IRA

              	 	 	
                222,222

              	 	 	
                500,000.00

              	 
	
                10
                  Straus Partners LP

              	 	 	
                225,000

              	 	 	
                506,250.00

              	 
	
                11
                  Straus-GEPT Partners LP

              	 	 	
                275,000

              	 	 	
                618,750.00

              	 
	
                12
                  Whitebox Intermarket Partners, LP

              	 	 	
                333,333

              	 	 	
                750,001.50

              	 
	
                13
                  Midsouth Investor Fund LP

              	 	 	
                222,222

              	 	 	
                500,000.00

              	 
	
                14
                  Precept Capital Master Fund, G.P.

              	 	 	
                155,555

              	 	 	
                350,000.00

              	 
	
                15
                  Ancora Greater China Fund, LP

              	 	 	
                155,555

              	 	 	
                349,998.80

              	 
	
                16
                  SEI Private Trust Co FAO The JM Smucker Co Investor Trust

              	 	 	
                111,111

              	 	 	
                250,000.00

              	 
	
                 

              	 	 	
                8,340,762

              	 	 	
                18,766,721.05

              	 

      

    

     

    
      
        
        

      

      
        48

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]