Document:

Point Acquisition Corp.: Exhibit 10.1 - Prepared by TNT Filings Inc.

  

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of April 25, 2007, by and among Point Acquisition Corporation, a Nevada corporation, and all predecessors thereto (collectively, the “Company”) and the investors identified on the signature pages hereto (each, an “Investor” and collectively, the “Investors”).
 

 

WHEREAS, the Company has concurrently herewith entered into a Share Exchange Agreement (the “Exchange Agreement”) with Powersmart Holdings Limited, a British Virgin Islands company (“Powersmart”), and certain other parties named therein, pursuant to which the Company has, subject to the terms and conditions thereof, acquired all of the equity interest of Powersmart (the “Exchange”).

WHEREAS, the closing of the Exchange is conditioned, among other things, on the concurrent consummation of the financing contemplated by this Agreement.

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:

“2007 Annual Report” means the Annual Report on Form 10-K of the Company for the fiscal year ending December 31, 2007, as filed with the Commission.

“2007 Guaranteed ATNI” has the meaning set forth in Section 4.11.

“2007 Make Good Shares” has the meaning set forth in Section 4.11.

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

“2008 Guaranteed ATNI” has the meaning set forth in Section 4.11.

 

 

“2008 Make Good Shares” has the meaning set forth in Section 4.11.

“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 which is a federal legal holiday or a day on which banking institutions in the State of New York, the State of Texas, or the Henan Province of the PRC 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 issuable 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 may agree.

"Closing Escrow Agreement" means the Closing Escrow Agreement, dated as of the date hereof, between the Company, the Investors 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 or for which it may be exchanged as a class.

“Common Stock Equivalents” means any securities of the Company or any Subsidiary which entitle the holder thereof to acquire Common Stock at any time, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other securities that entitle the holder to receive, directly or indirectly, Common Stock.

“Company Counsel” means Thelen Reid Brown Raysman & Steiner LLP.

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

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

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“Effective Date” means the date that the 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, encumbrance, security interest, right of first refusal, right of participation or other restrictions of any kind.

“Lockup Agreement” means that certain Lockup Agreement, dated as of the Closing Date, by and between the Company and Mr. Shunqing Zhang.

“Make Good Escrow Agreement”  
means the Make Good Escrow Agreement, dated as of the date hereof, among the Company, Brean Murray, Carret & Co., LLC, as agent, Securities Transfer Corporation, as escrow agent (the “Make Good Escrow Agent”) and the Make Good Pledgor, in the form of Exhibit C hereto.

“Make Good Pledgor”  means Mr. Shunqing Zhang.

“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.

“Money Laundering Laws” has the meaning set forth in Section 3.1(ff).

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

“OFAC” has the meaning set forth in Section 3.1(ee).

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

“Per Share Purchase Price” equals $1.87.

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“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.

“Potential 2007 Make Good Shares” means 1,336,898 shares of Common Stock.

“Potential 2008 Make Good Shares”  
means 1,336,898 shares of Common Stock.

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

“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 being offered and sold to the Investors by the Company hereunder.

“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.  The term “Subsidiaries” shall be deemed to include Powersmart, Henan Gengsheng Refractories Co., Ltd. (“Refractories”) and their respective subsidiaries, with the effect that all references to Subsidiaries of the Company in this Agreement shall also refer to Powersmart, Refractories and their respective subsidiaries.

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“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, the Make Good Escrow Agreement, the Lockup Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

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

 

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

(i)

the Closing Escrow Agreement, duly executed by all parties thereto;

(ii)

the Make Good Escrow Agreement, duly executed by all parties thereto;

(iii)

the legal opinion of Company Counsel, in agreed form, addressed to the Investors;
 

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(iv)

the legal opinion of special British Virgin Islands counsel to Powersmart, in agreed form;
 

(v)

the Registration Rights Agreement, duly executed by the Company; and

(vi)

the Lockup Agreement, duly executed by the Company and Mr. Shunqing Zhang.

(b)

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

(i)

to the Escrow Agent for deposit and disbursement in accordance with the Closing Escrow Agreement, its Investment Amount, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose; and

(ii)

to the Company, the Closing Escrow Agreement, duly executed by such Investor; and

(iii)

to the Company, the Registration Rights Agreement, duly executed by such Investor.

(c)

As soon as practicable following the Closing Date, but in no event later than five (5) Business Days following the Closing Date, the Company shall deliver to each Investor one or more stock certificates, evidencing Shares with a stated value equal to such Investor’s Investment Amount, registered in the name of 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 Schedule 3.1(a).  The Company owns, directly or indirectly, the capital stock of each Subsidiary in the percentages set forth in Schedule 3.1(a), free and clear of any and all Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.  Immediately prior to the Closing, the Company shall own 100% of the equity interests of Powersmart in accordance with the Exchange Agreement, free and clear of all Liens.    

(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.  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 its 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.  

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(c)

Authorization; Enforcement.  The Company and Subsidiaries have 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 each Subsidiary (to the extent such Subsidiary is a party thereto) and the consummation by each of them of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and each Subsidiary and no further action is required by the Company or Subsidiaries in connection therewith.  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company (and each Subsidiary to the extent any such Subsidiary is a party thereto) and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company (and each such Subsidiary, as applicable) enforceable against the Company (and each such Subsidiary, as applicable) 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.  The execution, delivery and performance of the Transaction Documents by the Company (and each such Subsidiary to the extent a party thereto) and the consummation by the Company (and each such Subsidiary, as applicable) 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, 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 United States or PRC 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), 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 (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.  Neither the Company nor any Subsidiary is 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 and each Subsidiary to the extent a party thereto 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 and (v) those that have been made or obtained prior to the date of this Agreement.

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(f)

Issuance of the Shares.  The Shares are 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.  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.

(g)

Capitalization.  The number of shares and type 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 specified in Schedule 3.1(g).  The Company owns, directly or indirectly, the capital stock of each Subsidiary in the percentages set forth in Schedule 3.1(g), free and clear of any and all Liens.  Except as specified in the SEC Reports, 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, 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.  The issuance and sale of the Shares will not, immediately or with the passage of time, obligate the Company or any Subsidiary 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 or Subsidiary securities to adjust the exercise, conversion, exchange or reset price under such securities.

(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 (or such shorter period as the Company was required by law to file such reports) (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”) on a timely basis or has timely filed a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  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.  The Powersmart Financial Statements 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.  The Powersmart 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 Powersmart 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.

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(i)

Press Releases.  The press releases disseminated by the Company during the twelve months preceding the date of this Agreement 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 within the SEC Reports, 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 and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (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 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, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information.

(k)

Litigation.  There is no Action which (i) 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, 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 of 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 any investigation 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.

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(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.  Except as set forth on Schedule 3.1(l), neither the Company nor any Subsidiary has any employment or labor contracts, agreements or other understandings with any Person.  All such contracts, agreements and/or other understandings set forth on Schedule 3.1(l) are in full force and effect.  

(m)

Indebtedness; Compliance.  Except as disclosed on Schedule 3.1(m), neither the Company nor any Subsidiary is a party to any indenture, debt, loan or credit agreement by which it or any of its properties is bound.  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, product quality and safety and employment and labor matters, except in each case as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.  The Exchange Agreement complies with all applicable laws, rules and regulations of the United States and the PRC.  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)

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 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.

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(p)

Patents and Trademarks.  The Company and the Subsidiaries have, or have rights to use, all patents (including patent number ZL 00137106.1), 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, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  No former or current employee, no former or current consultant, and no third-party joint developer of the Company or any Subsidiary has any Intellectual Property Rights made, developed, conceived, created or written by the aforesaid employee or consultant during the period of his or her retention by the Company or any Subsidiary, as the case may be, which can be asserted against the Company or any Subsidiary, as the case may be.

(q)

Insurance.  Except as specified in Schedule 3.1(q), the Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.  The Company has no reason to believe that it will not be able to renew its and the Subsidiaries’ existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business on terms consistent with market for the Company’s and such Subsidiaries’ respective lines of business.

(r)

Transactions With Affiliates and Employees; Customers.  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.  No material customer of the Company or any Subsidiary has indicated their intention to diminish their relationship with the Company or any Subsidiary (as the case may be) and neither the Company nor any Subsidiary has any knowledge from which it could reasonably conclude that any such customer relationship may be adversely affected.

(s)

Internal Accounting Controls.  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-K or 10-Q, 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-K 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-K or Form 10-Q 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-K under the Exchange Act) or, to the Company’s knowledge, in other factors that could significantly affect the Company’s internal controls.

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(t)

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).

(u)

Certain Fees.  Except as described in Schedule 3.1(u), 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.

(v)

Certain Registration Matters. Assuming the accuracy of the Investors’ representations and warranties set forth in Section 3.2(b)-(e), no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Investors under the Transaction Documents.  The Company is eligible to register its Common Stock for resale by the Investors under Form S-1 promulgated under the Securities Act.  Except as specified in Schedule 3.1(v), 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.

12

 

(w)

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 stockholders of the Company thereunder is required for the Company to issue and deliver to the Investors the Shares contemplated by the Transaction Documents.

(x)

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.

(y)

Application of Takeover Protections.  The Company has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Articles of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to 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 the Company’s issuance of the Shares and the Investors’ ownership of the Shares.

(z)

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.

(aa)

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.

(bb)

Make Good Shares.  Make Good Pledgor is the sole record and beneficial owner of the 2007 Make Good Shares and 2008 Make Good Shares, and holds such shares free and clear of all pledges, liens and encumbrances.

(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 Securities, 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) has violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

13

 

(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 Securities, 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.

(gg)

Representations and Warranties Relating to Refractories.
 

(i)

All material consents, approvals, authorizations or licenses requisite under PRC law for the due and proper establishment and operation of Refractories 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 Refractories and its operations including, without limitation, the registration with the Ministry of Commerce, the State Administration of Industry and Commerce, the State Administration for Foreign Exchange, 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.

14

 

(iii)

Refractories has complied with all relevant PRC laws and regulations regarding the contribution and payment of its registered share capital, the payment schedule of which has 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 interest in Refractories.

(iv)

Refractories is not in receipt of any letter or notice from any relevant PRC governmental authority notifying it of revocation of any licenses or qualifications issued to it or any subsidy granted to it by any PRC governmental authority for non-compliance with the terms thereof or with applicable PRC laws, or the need for compliance or remedial actions in respect of the activities carried out by Refractories, except such revocation does not, and would not, individually or in the aggregate, have a Material Adverse Effect.

(v)

Refractories has conducted its business activities within the permitted scope of business or has otherwise operated its business 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 Refractories’ business which is subject to periodic renewal, the Company has no knowledge of any grounds on which such requisite renewals will not be granted by the relevant PRC governmental authorities.

(vi)

With regard to employment and staff or labor, Refractories has complied with all applicable PRC laws and regulations in all material respects, including without limitation, laws and regulations pertaining to welfare funds, social benefits, medical benefits, insurance, retirement benefits, pensions or the like, other than such non-compliance that do not, and would not, individually or in the aggregate, have a Material Adverse Effect.

(hh)

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 concerning the Company, the Subsidiaries or their respective businesses, except insofar as the existence and terms of the proposed transactions contemplated 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.  All disclosure provided to the Investors regarding the Company, the Subsidiaries or their respective businesses and the transactions contemplated hereby, furnished by or on behalf of the Company and each Subsidiary (including the representations and warranties of the Company 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.  Notwithstanding the foregoing, any draft of the Registration Statement to be filed on Form S-1 in connection with the transactions contemplated hereby that was provided to the Investors prior to the date hereof was incomplete in the form distributed, and such Investor is not relying on such draft on Form S-1 in making its decision to enter into the transactions contemplated hereby.

15

 

Each Investor acknowledges and agrees that the Company has not made nor makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.1.

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 or partnership 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.

(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, it was, and at the date hereof it is, 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.

(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 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 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.  Such Investor acknowledges that notwithstanding the foregoing, any draft of the Registration Statement to be filed on Form S-1 in connection with the transactions contemplated hereby that was provided to such Investor prior to the date hereof was incomplete in the form distributed, and such Investor is not relying on such draft on Form S-1 in making its decision to enter into the transactions contemplated hereby.

16

 

(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 earlier to occur of (1) the time that such Investor was first contacted by the Company or Brean Murray, Carret & Co., LLC regarding an investment in the Company and (2) the 30th day prior to the date of 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 the 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 Brean Murray, Carret & Co., 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)            Shares may only be disposed of 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.

17

 

(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.

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) while a registration statement (including the Registration Statement) covering such Shares is then effective, or (ii) following a sale or transfer of such Shares pursuant to Rule 144 (assuming the transferor is not an Affiliate of the Company), or (iii) while such Shares are eligible for sale under Rule 144(k).  If a registration statement covering such Shares is then effective, and an Investor shall have delivered to the Company or the Company’s transfer agent the certificate representing Shares containing a restrictive legend, the Company shall 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 delivery of such Shares to the Company or the Company’s transfer agent.  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.

18

 

4.2.

Furnishing of Information

   As long as any Investor owns 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 owns 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 in a manner that would require stockholder
approval of the sale of the Shares to the Investors.

4.4.

Subsequent Registrations

   Other than pursuant to the Registration Statement, prior
to the Effective Date, 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.

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4.5.

Securities Laws Disclosure; Publicity

   By 9:30 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.  Within two (2) Business Days
following the Closing Date the Company will file a Current Report on Form 8-K
disclosing the Closing and the material terms of the Transaction Documents (and
attach as exhibits thereto the Transaction Documents).  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.

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 any misrepresentation, breach or inaccuracy of any representation, warranty, covenant or agreement made by the Company in any Transaction Document.  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.

4.9.

Listing 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.

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4.10.

Use of Proceeds

   The Company will use the net proceeds from the sale of the Shares hereunder to support the launch of Powersmart’s Fine Precision Abrasives product line as well as for working capital purposes and not for the satisfaction of any portion of the Company’s debt (other than payment of trade payables and accrued expenses in the ordinary course of the Company’s business and consistent with prior practices), or to redeem any Common Stock or Common Stock Equivalents.

4.11.

Make Good Shares.  

(a)

The Make Good Pledgor agrees that in the event that the after tax net income reported in the 2007 Annual Report is less than $8,200,000 (the “2007 Guaranteed ATNI”), the Make Good Pledgor will transfer (in accordance with the Make Good Escrow Agreement) to the Investors on a pro-rata basis (determined by dividing each Investor’s Investment Amount by the aggregate of all Investment Amounts delivered to the Company by the Investors hereunder) for no consideration other than their part of their respective Investment Amount at Closing, a number of shares of Common Stock (as equitably adjusted for any stock splits, stock combinations, stock dividends or similar transactions) in accordance with the table below, based on the level of after tax net income reported in the 2007 Annual Report (such shares issuable to the Investors, the “2007 Make Good Shares”):

	
    Percentage of Potential 2007 Make	After
    Tax Net Income Reported in
	Good
    Shares Issuable to Investors	2007
    Annual Report
	25%	
    $7,000,000-$8,199,999.99
	50%	
    $6,000,000-$6,999,999.99
	75%	
    $5,000,000-$5,999,999.99
	100%	Less
    than $5,000,000
	 	 

In the event that the after tax net income reported in the 2008 Annual Report is less than $13,500,000 (the “2008 Guaranteed ATNI”), the Make Good Pledgor will transfer (in accordance with the Make Good Escrow Agreement) to the Investors on a pro rata basis (determined by dividing each Investor’s Investment Amount by the aggregate of all Investment Amounts delivered to the Company by the Investors hereunder) for no consideration other than their part of their respective Investment Amount at Closing, a number of shares of Common Stock (as equitably adjusted for any stock splits, stock combinations, stock dividends or similar transactions) in accordance with the table below, based on the level of after tax net income reported in the 2008 Annual Report (such shares issuable to the Investors, the “2008 Make Good Shares”):

	
    Percentage of Potential 2008 Make	After
    Tax Net Income Reported in
	Good
    Shares Issuable to Investors	2008
    Annual Report
	25%	
    $12,000,000-$13,499,999.99
	50%	
    $10,500,000-$11,999,999.99
	75%	
    $9,000,000-$10,499,999.99
	
    100%
	
    Less than $9,000,000

	 	 

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In the event that the after tax net income reported in the 2007 Annual Report is equal to or greater than the 2007 Guaranteed ATNI, no transfer of the Potential 2007 Make Good Shares shall be required by the Make Good Pledgor to the Investors and such Potential 2007 Make Good Shares shall be returned to the Make Good Pledgor in accordance with the Make Good Escrow Agreement.  In the event that the after tax net income reported in the 2008 Annual Report is equal to or greater than the 2008 Guaranteed ATNI, no transfer of the Potential 2008 Make Good Shares shall be required by the Make Good Pledgor to the Investors and such Potential 2008 Make Good Shares shall be returned to the Make Good Pledgor in accordance with the Make Good Escrow Agreement.  Any such transfer of 2007 Make Good Shares or 2008 Make Good Shares shall be made to the Investors within 10 Business Days after the date on which the 2007 Annual Report or 2008 Annual Report, as applicable, is filed.  Notwithstanding the foregoing, the parties agree that for purposes of determining whether or not the 2007 Guaranteed ATNI or the 2008 Guaranteed ATNI have been achieved, the release of the Potential 2007 Make Good Shares or the Potential 2008 Make Good Shares to the Make Good Pledgor as a result of the operation of the Make Good Escrow Agreement shall not be deemed to be an expense, charge, or other deduction from revenues even though GAAP may require contrary treatment.

(b)

In connection with the foregoing, the Make Good Pledgor agrees that within three Trading Days following the Closing, the Make Good Pledgor will deposit all Potential 2007 Make Good Shares and Potential 2008 Make Good Shares into escrow in accordance with the Make Good Escrow Agreement along with bank signature stamped stock powers executed in blank (or such other signed instrument of transfer acceptable to the Company’s transfer agent), and the handling and disposition of the Potential 2007 Make Good Shares and Potential 2008 Make Good Shares shall be governed by this Section 4.11 and the Make Good Escrow Agreement.  The Make Good Pledgor’s obligation to transfer shares of Common Stock to Investors pursuant to this Section 4.11 shall run only to the benefit of the Investors who hold Shares when the 2007 Guaranteed ATNI and the 2008 Guaranteed ATNI are calculated, and any release of the 2007 Make Good Shares or the 2008 Make Good Shares to the Investors shall be distributed on a pro rata basis, based on the number of Shares then held by each such Investor, for no additional consideration.

(c)

The Company covenants and agrees that upon any transfer of 2007 Make Good Shares or 2008 Make Good Shares to the Investors in accordance with the Make Good Escrow Agreement, the Company shall promptly instruct its transfer agent to reissue such 2007 Make Good Shares or 2008 Make Good Shares in the applicable Investor’s name and deliver the same as directed by such Investor.

(d)

If any term or provision of this Section 4.11 is in contradiction of or conflicts with any term or provision of the Make Good Escrow Agreement, the terms of the Make Good Escrow Agreement shall control.

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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 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 or a material adverse change with respect to Powersmart;

(e)

Powersmart Financial Statements.  Powersmart shall have delivered to the Company audited financial statements for the fiscal years ended December 31, 2006, 2005 and 2004 (collectively, the “Powersmart Financial Statements”);

(f)

PRC Opinion.  The Company shall have delivered to the Investors, and the Investors shall be able to rely upon, the legal opinion that Powersmart shall have received from its legal counsel in the PRC that confirms the legality under Chinese law of the restructuring being effected by Powersmart in connection with the Exchange Agreement, the obligations of which having been assigned to and assumed by the Company, and that is otherwise satisfactory to the Company, the shareholders of Powersmart, Powersmart and the Investors;

(g)

Exchange Agreement Form 8-K.  Concurrently with the Closing, the Company shall have acquired all of the outstanding equity interests of Powersmart pursuant to the Exchange Agreement, and the Company shall provide the Investors with a draft of the Current Report on Form 8-K to be filed with two (2) Business Days following the Closing Date, containing the requisite audited financial statements of Powersmart and other required disclosure with respect to Powersmart, which draft provided to the Investors will remain subject to further revision by the Company prior to filing within two (2) Business Days following the Closing Date;

(h)

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

23

 

(i)

Termination.  This Agreement shall not have been terminated as to such Investor in accordance with Section 6.5.

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;

(d)

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

(e)

Termination.  This Agreement shall not have been terminated as to such Investor in accordance with Section 6.5.

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 sale 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:

24

 

If to the Company:

Point Acquisition Corporation

No. 88 Gengsheng Road, Dayugou Town

Gongyi, Henan China  451271

Facsimile: 86-371-64059846

Attn: Shunqing Zhang

  

With a copy to:

Thelen Reid Brown Raysman & Steiner LLP

701 8th Street NW

Washington, D.C. 20001

Facsimile:  (202) 508-4321

Attn.:  Joseph R. Tiano, Jr., 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 a
majority 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.  In the event of any discrepancy between this
Agreement and the Make Good Escrow Agreement, the terms of the Make Good Escrow
Agreement shall apply to the extent of such discrepancy.

6.5.

Termination

   This Agreement may be terminated prior to Closing:

(a)

by written agreement of the Investors and the Company; and

(b)

by the Company or an Investor (as to itself but no other Investor) upon written notice to the other, if the Closing shall not have taken place by 6:30 p.m. Eastern time on the Outside Date; provided, that the right to terminate this Agreement under this Section 6.5(b) shall not be available to any Person whose failure to comply with its obligations under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such time.

25

 

In the event of a termination pursuant to this Section, the Company shall promptly notify all non-terminating Investors. Upon a termination in accordance with this Section 6.5, the Company and the terminating Investor(s) shall not have any further obligation or liability (including as arising from such termination) to the other and no Investor will have any liability to any other Investor under the Transaction Documents as a result therefrom.

6.6.

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.

6.7.

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.”

6.8.

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 4.7 (as to each Investor Party).

6.9.

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.

26

 

6.10.

Survival

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

6.11.

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.

6.12.

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.

6.13.

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.

6.14.

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.

6.15.

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.

27

 

6.16.

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.

6.17.

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.

6.18.

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]

28

 

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.

POINT ACQUISITION CORPORATION

By:______________________________

Name: Shunqing Zhang

Title: Chairman and CEO

Only as to Section 4.11 herein:

_____________

Mr. Shunqing Zhang

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOR INVESTORS FOLLOW]

 

29

 

Signature Page to Securities Purchase Agreement  

 
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
	 
	 
	 
	By:  
      _____________________________________
	
      Name:

	
      Title:

	Investment Amount: $
      ________________________
	 
	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:
      _____________________________________Point Acquisition Corporation - Exhibit 10.2 - Prepared By TNT Filings
Inc.

Exhibit 10.2 

CLOSING ESCROW AGREEMENT 

THIS CLOSING ESCROW
AGREEMENT, dated April 25, 2007 ("Escrow
Agreement"), is entered into by and between Point Acquisition Corporation, a
Nevada corporation (the "Company"), Thelen Reid Brown Raysman & Steiner
LLP (the "Escrow Agent"), 
Brean Murray, Carret & Co., LLC, as agent ("Brean Murray"),
and the investors identified on the signature pages hereto (each, an 
"Investor" and collectively, the "Investors").

WHEREAS,
concurrently herewith the Company and Investors are entering into a Securities
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"),
pursuant to which each Investor (as defined therein) has agreed to purchase from
the Company, and the Company has agreed to sell to each Investor, the number of
Shares identified therein (capitalized terms used and not otherwise defined
herein shall have the meanings given such terms on Annex A to this Escrow
Agreement); 

WHEREAS,
pursuant to the Purchase Agreement, the Company and the Investors have
agreed to establish an escrow on the terms and conditions set forth in this
Escrow Agreement; and 

WHEREAS, the Escrow Agent is willing to accept appointment as Escrow Agent
for only the expressed duties outlined herein. 

NOW, THEREFORE, in consideration
of the premises set forth above and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Proceeds to be Escrowed. 
A copy of the Purchase Agreement is attached as Exhibit A. All
amounts provided by the Investors in connection with their acquisition of the
Shares as set forth in the Purchase Agreement shall be deposited directly with
the Escrow Agent in immediately available funds by federal wire transfer, such
funds being referred to herein as the "Escrow Funds." The Escrow Funds
shall be retained in escrow by the Escrow Agent in a separate account and
invested as stated below. 

2.
Identity of Investors. 
Concurrent with the execution of the Escrow Agreement, the Company shall furnish
to the Escrow Agent the information comprising the identity of the Investors in
the format set forth in the "List of Investors" attached as Exhibit B, or
in an electronic spreadsheet format with the same information. All Escrow Funds
shall remain the property of the Investors and shall not be subject to any liens
or charges by the Company or the Escrow Agent or judgments or creditors' claims
against the Company, until released to the Company as hereinafter provided.
Escrow Agent will not use the information provided to it by the Company for any
purpose other than to fulfill its obligations as Escrow Agent. The Company and
the Escrow Agent will treat all Investor information as confidential. 

3.
Disbursement of Funds.

(a) The Escrow
Agent shall continue to hold the Escrow Funds delivered for deposit hereunder by
an Investor until the earlier of: (1) receipt of a joint written notice from the
Company and the Investors evidencing termination under Section 6.5(a) of the
Purchase Agreement, (2) receipt of a written notice from the Company or such
Investor evidencing termination under Section 6.5(b) of the Purchase Agreement
(each of (1) and (2), a "Termination Election") and (3) receipt of both
(x) written notice from the Company that the conditions to closing under Section
5.1 of the Purchase Agreement have been satisfied and (y) joint written notice
from the Company and Brean Murray, who acted as placement agent in connection
with the transactions contemplated by the Purchase Agreement, to effect the
Closing. 

(b) If the Escrow
Agent receives a Termination Election prior to its receipt of the notices
contemplated under Section 3(a)(3), then the Escrow Agent shall return the
Escrow Funds delivered by such Investor as directed by such Investor. If the
Escrow Agent receives the notices contemplated under Section 3(a)(3) prior to a
Termination Election, then the Escrow Agent shall disburse the portion of the
Escrow Funds for which the foregoing is the case in accordance with Exhibit C to
this Escrow Agreement. 

4. Duty and Limitation on Liability of the
Escrow Agent. The sole duty of the Escrow Agent shall
be to receive the Escrow Funds and to hold them subject to release, in
accordance herewith, and the Escrow Agent shall be under no duty to determine
whether the Company is complying with requirements of the Escrow Agreement or
the Purchase Agreement. The Escrow Agent may conclusively rely upon and shall be
protected in acting upon any statement, certificate, notice, request, consent,
order or other document believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall have no duty or
liability to verify any such statement, certificate, notice, request, consent,
order or other document, and its sole responsibility shall be to act only as
expressly set forth in the Escrow Agreement. The Escrow Agent shall be under no
obligation to institute or defend any action, suit or proceeding in connection
with the Escrow Agreement unless first indemnified to its satisfaction. The
Escrow Agent may consult counsel of its own choice with respect to any question
arising under the Escrow Agreement and the Escrow Agent shall not be liable for
any action taken or omitted in good faith upon advice of such counsel. 

In no event shall the Escrow Agent be liable,
directly or indirectly, for any (a) damages or expenses arising out of the
services provided hereunder, other than damages which result from the Escrow
Agent’s gross negligence or willful misconduct or (b) special or consequential
damages, even if the Escrow Agent has been advised of the possibility of such
damages. 

The Escrow Agent shall be obligated only to
perform the duties specifically set forth in this Escrow Agreement, which shall
be deemed purely ministerial in nature, and shall under no circumstances be
deemed to be a fiduciary to the Company, Brean Murray or any other person. The
Escrow Agent shall not assume any responsibility for the failure of the Company
to perform in accordance with this Escrow Agreement. This Escrow Agreement sets
forth all matters pertinent to the escrow contemplated hereunder, and no
additional obligations of the Escrow 

2 

Agent shall be implied by nor inferred from the terms of any
other agreement, including, without limitation, the Purchase Agreement. 

Under no circumstances shall the Escrow Agent be expected or
required to use, risk or advance its own funds in the performance of its duties
or exercise of its rights hereunder. 

5. Interpleader. The Escrow Agent may at any time
commence an action in the nature of interpleader or other legal proceedings and
may deposit the Escrow Deposit with the clerk of the court. In the event of any
dispute regarding who is entitled to the Escrow Deposit at any time, the Escrow
Agent may determine not to release the Escrow Deposit to either any Investor or
the Company and may commence an interpleader action as aforesaid or may cause
the Escrow Deposit to be deposited with a court of competent jurisdiction
whereupon it shall cease to have any further obligation hereunder. Upon any
delivery or deposit of the Escrow Deposit as provided in this Section 5, the
Escrow Agent shall be released and discharged from any further obligation under
this Agreement. 

6. Investment of Proceeds. 
The Escrow Funds shall be credited by Escrow Agent and recorded
in a non-interest bearing escrow account. The Company agrees to indemnify and
hold Escrow Agent harmless from and against any taxes, additions for late
payment, interest, penalties and other expenses that may be assessed against
Escrow Agent on or with respect to any payment or other activities under this
Escrow Agreement unless any such tax, addition for late payment, interest,
penalties and other expenses shall arise out of or be caused by the gross
negligence or willful misconduct of the Escrow Agent. 

The Company acknowledges that Escrow Agent is not providing
investment supervision, recommendations or advice. 

7. Notices. All notices, requests, demands and other
communications under the Escrow Agreement shall be in writing and shall be
deemed to have been duly given (a) on the date of service if served personally
on the party to whom notice is to be given, (b) on the day of transmission if
sent by facsimile/email transmission to the facsimile number/email address given
below, and telephonic confirmation of receipt is obtained promptly after
completion of transmission, (c) on the day after delivery to Federal Express or
similar overnight courier or the Express Mail service maintained by the United
States Postal Service or (d) on the fifth day after mailing, if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, return receipt requested, to
the party as follows: 

	
    If to the Company:
	Point Acquisition
    Corporation
	
     
	No. 88 Gengsheng Road,
    Dayugou Town
	
     
	Gongyi, Henan China
    451271
	
     
	Attn: Shunqing Zhang
	
     
	Facsimile:
    86-371-64059846
	
     
	 
	
     
	 
	
    If to Escrow Agent:
	Thelen Reid Brown
    Raysman & Steiner LLP

3 

	
     
	 
	
     
	701 8th Street NW
	
     
	Washington, D.C. 20001
	
     
	Attn.: Joseph R. Tiano, Jr., Esq.
	
     
	Facsimile: (202) 508-4321
	
     
	 
	
    If to Brean Murray:
	Brean Murray, Carret & Co., LLC
	
     
	570 Lexington Avenue
	
     
	New York, NY 10022.6822
	
     
	Attn.: John Fletcher
	
     
	Facsimile: (212)702-6649
	
     
	 
	
    If to an Investor:
	To the address set forth under such
    Investor’s name on
	
     
	its signature page to the Purchase Agreement.

Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above. 

8. Indemnification of Escrow Agent. 
Each of the Company and the Investors hereby
indemnifies and holds harmless the Escrow Agent from and against any and all
loss, liability, cost, damage and expense, including, without limitation,
reasonable counsel fees, which the Escrow Agent may suffer or incur by reason of
any action, claim or proceeding brought against the Escrow Agent arising out of
or relating in any way to the Escrow Agreement or any transaction to which the
Escrow Agreement relates unless such action, claim or proceeding is the result
of the willful misconduct or gross negligence of the Escrow Agent. 

9. Successors and Assigns. Except as otherwise provided
in the Escrow Agreement, no party hereto shall assign the Escrow Agreement or
any rights or obligations hereunder without the prior written consent of the
other parties hereto, each Investor and Brean Murray and any such attempted
assignment without such prior written consent shall be void and of no force and
effect. The Escrow Agreement shall inure to the benefit of and shall be binding
upon the successors and permitted assigns of the parties hereto. 

10. Governing Law; Jurisdiction. The Escrow Agreement
shall be construed, performed and enforced in accordance with, and governed by
the internal laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof. 

11. Severability. In the event that any part of the
Escrow Agreement is declared by any court or other judicial or administrative
body to be null, void, or unenforceable, said provision shall survive to the
extent it is not so declared, and all of the other provisions of the Escrow
Agreement shall remain in full force and effect. 

12. Amendments; Waivers. The Escrow Agreement may be
amended or modified, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by each of the Company, the Escrow Agent, Brean Murray and each
Investor. Any waiver by any party of any condition or of the breach of any
provision, term, covenant, representation or warranty contained in the Escrow
Agreement, in any one or more instances, shall not be deemed to be nor construed
as further or continuing waiver of any such condition, or of the breach of any
other provision, term, covenant, representation or warranty of the Escrow
Agreement. 

4

13. Entire Agreement. The Escrow Agreement contains the
entire understanding among the parties hereto with respect to the escrow
contemplated hereby and supersedes and replaces all prior and contemporaneous
agreements and understandings, oral or written, with regard to such escrow. 

14. Section Headings. The section headings in the Escrow Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of the Escrow Agreement. 

15. Counterparts. The Escrow Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same instrument. 

16. Resignation. Escrow Agent may resign upon 30 days
advance written notice to the Company. If a successor escrow agent is not
appointed within the 30-day period following such notice, Escrow Agent may
petition any court of competent jurisdiction to name a successor escrow agent or
interplead the Escrow Funds with such court, whereupon Escrow Agent’s duties
hereunder shall terminate. 

17. 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 or entity, except for
the Investors and Brean Murray. 

[Signature page follows]

5

IN WITNESS WHEREOF, the parties
hereto have caused the Escrow Agreement to be executed the day and year first
set forth above. 

POINT ACQUISITION CORPORATION 

______________ 

By: Shunqing Zhang 

Its: CEO and President 

THELEN REID BROWN RAYSMAN & STEINER LLP

By: _______________ 

Name: 

Title: Partner 

BREAN MURRAY, CARRET & CO., LLC 

__________________ ____ 

By: 

Its: 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 

SIGNATURE PAGES FOR INVESTORS FOLLOW]

IN WITNESS WHEREOF, the undersigned Investor hereby executes this Agreement
as of the date first above written. 

	 	For Individuals:
	 	 
	 	__________________________
	 	Print Name Above
	 	 
	 	__________________________
	 	Sign Name Above
	 	 
	 	For Entities:
	 	 
	 	__________________________
	 	Print Name Above
	 	 
	 	By: 
    _______________________
	 	Name:
	 	Title:
	 	 
	 	 

Annex A 

DEFINED TERMS 

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

"Closing" means the closing of the purchase and sale of
the Shares pursuant to Article II of the Purchase Agreement. 

"Closing Date" means the Business Day
on which all of the conditions set forth in Sections 5.1 and 5.2 of the Purchase
Agreement are satisfied, or such other date as the parties thereto may agree.

"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 or for which it may
be exchanged as a class. 

"Investment Amounts" means, with respect to each
Investor, the Investment Amount indicated on such Investor’s signature page to
the Purchase Agreement. 

"Investors" means the investors identified on the
signature pages to the Purchase Agreement. 

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

"Shares" means the shares of Common Stock being offered and sold to the
Investors by the Company hereunder.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]