Document:

EXCLUSIVE
      DISTRIBUTION AGREEMENT

    

    PARTY
      A: ZHEJIANG
      XINCHAI HOLDING GROUP CO., LTD.

     

    CHINESE
      NAME: ZHEJIANG XINCHAI KONGGU JITUAN YOUXIAN GONGSI

     

    ADDRESS: XINXIN
      INDUSTRIAL PARK, XINCHANG, ZHEJIANG, CHINA

    POSTCODE: 312500

     

    TELEPHONE:
      0575-623-6603

     

    REPRESENTATIVE:
      ZHU XIANWEI CONTACT TELEPHONE: 0575-623-6603

     

    MOBILE
      PHONE: 135-6751-1288

    

    PARTY
      B: ZHEJIANG
      ZHONGCHAI MACHINERY CO., LTD

     

    CHINESE
      NAME: ZHEJIANG ZHONGCHAI JIQI YOUXIAN GONGSI

     

    ADDRESS: JINXING
      CHUN, HIGH-TECH PARK, XINCHANG, ZHEJIANG, CHINA

     

    POSTCODE: 312500

     

    TELEPHONE:
      0575-629-5699

     

    REPRESENTATIVE:
      SHI RONG CONTACT
      TELEPHONE: 0575-629-5699

     

    MOBILE
      PHONE: 139-6758-1220

    

    RECITALS

    

    WHEREAS,
      the parties have thoroughly discussed and negotiated the terms and conditions
      of
      the exclusive distribution agreement herein contained; and

    

    WHEREAS,
      Party A is a corporation with limited liability organized under the laws of
      the
      People’s Republic of China and is engaged in the business of manufacturing
      diesel engines and related parts and accessories; and

    

    WHEREAS,
      for the purposes of this distribution agreement Party A shall be deemed to
      include all of its upstream parent corporations or entities, all of its direct
      and indirect, wholly and partially owned subsidiaries or entities, interlocking
      companies or entities, joint ventures and partnerships of which Party A is
      a
      direct or indirect and partial or whole owner in whatever capacity, and other
      affiliates of any nature, each as may exist from time to time, and Zhu Xianwei
      (an individual); and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    WHEREAS,
      Party B is a foreign joint-venture company organized by Party A and Usunco
      Automotive Limited (“Usunco”) under the laws of the Peoples Republic of China;
      and

    

    WHEREAS,
      Party A desires that Party B become the exclusive worldwide distributor of
      Party
      A’s existing and future products and services; and

    

    WHEREAS,
      Party A and Party B desire to enter into this distribution agreement, which
      will
      govern the aforementioned distribution arrangement and will operate for the
      mutual business interests and benefits of the parties hereto and protect the
      business interests and benefits of both parties in connection with the
      distribution arrangement contemplated hereby.

    

    AGREEMENT

    

    NOW,
      THEREFORE, in consideration of the mutual promises and agreements contained
      herein, the parties agree and under take the following agreements:

    

    1. Party
      B is
      hereby appointed by Party A to be exclusively in charge of the worldwide
      distribution of all the current and future diesel engine and diesel engine
      related products of Party A (the “Products”). In furtherance, and not in
      limitation, of the foregoing appointment, Party A hereby grants to Party B
      the
      exclusive right and authority to sell and distribute the Products anywhere
      in
      the world. Party B hereby accepts such appointment. Party A will not appoint
      any
      third party as a distributor, sales or other agent or representative for the
      distribution, marketing, sale, commercialization or other disposition of any
      of
      the Products, regardless of whether any such other appointment is on a limited
      product basis or limited territory basis, and Party A and shall not, directly
      or
      indirectly, sell, transfer or license, commercialize or otherwise make available
      the Products anywhere in the world to any person other than Party B.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    2. Party
      A
      shall not take any action designed to develop an internal sales team with
      respect to the Products, other than for the sole benefit of, and at the
      direction of, Party B and it sales efforts for the Products. Party A shall
      immediately refer all sales inquires and requests about the Products to Party
      B.

     

    3. Party
      B
      shall use commercially reasonable efforts to sell, distribute and export the
      Products. Notwithstanding the foregoing, Usunco, the controlling stockholder
      of
      Party B, and its affiliates, including, without limitation, any direct or
      indirect subsidiaries that Usunco forms to operate within the People’s Republic
      of China, is not restricted in any way from selling, distributing or otherwise
      commercializing products manufactured, assembled or otherwise produced by
      parties other than Party A, whether or not such products compete in any way
      with
      the Products. 

     

    4. This
      agreement and the exclusive distribution rights set forth herein will apply
      to
      all current and future products (including parts) created, developed, modified,
      enhanced and licensed for manufacture, fabrication, assembly and production
      by
      Party A during the term of this distribution agreement as it may be amended
      or
      modified from time to time and all such products fall within the definition
      of
“Product” as used herein. In addition, Party B will have the right of first
      refusal to act as the exclusive, worldwide distributor of any other product
      that
      may be conceived, developed, licensed to, manufactured, assembled or produced
      by
      Party A (“collectively “Future Products”), which other products will be governed
      by this distribution agreement. In the event that Party A has a Future Product,
      it shall notify Party B of such Future Product, and provide to Party B any
      and
      all information about the Future Product as shall be reasonably requested by
      Party B to evaluate the Future Product and its marketability by Party B. Party
      B
      shall have not less than 90 days to elect to undertake the distribution of
      the
      Future Product hereunder by the giving of written notice to Party A of its
      acceptance of the distribution of such Future Product. If Party B does not
      give
      notice of its undertaking to distribute such Future Product, then Party A will
      be free to market or commercialize such Future Product in any way it determines.
      For the purposes of clarity, the right of first refusal apply to each and every
      Future Product individually and the procedure of notification, evaluation and
      acceptance must be done for each such product.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5. Party
      A
      will sell the Products to Party B at a competitive price designed to allow
      Party
      A to make a reasonable profit consistent with industry margins for similar
      distribution companies in similar industries. Party A has delivered to Party
      B
      the initial price list for the Products on the date hereof. Without limiting
      the
      generality of the foregoing, Party A may change the prices for its Products,
      from time to time in its discretion on 120 days’ prior written notice to Party
      B; provided, however, that Party A shall not increase the price of any Product
      by more than 5% in any one year as compared to the prior year. Notwithstanding
      the foregoing, Party A and Party B may mutually agree to adjust the pricing
      from
      time to time.

     

    6. Party
      B
      shall have the right to use sub-distributors, sales agents or other companies,
      persons or organizations for the sale and/or distribution of the Products and
      Party A hereby approves the use of such sub-distributors, sales agents and
      other
      companies, persons or organizations. 

     

    7. If
      Party
      A desires to discontinue the manufacture, assembly or production of any of
      the
      Products, Party A shall provide to Party B at least six months’ prior notice of
      such discontinuance. In the event of such discontinuance, Party A shall
      reimburse Party B for any extraordinary costs associated with the termination
      of
      such item hereunder and repurchase any inventory held by Party B at the time
      of
      termination. Party B may give at least six months’ prior notice of its intention
      not to sell and distribute any of the Products, which will include the
      discontinuance of any marketing and sales support of such Products commencing
      the date of notice. In the event that Party B terminates this agreement in
      respect to an item included in the Products, Party A agrees that it will not
      sell such item itself after the termination at a price that is less than the
      last list price of Party B for the item.

     

    8. Party
      A
      shall, during the term hereof, render such technical assistance to Party B
      as
      shall reasonably be required to assist Party B in distributing the Products
      and
      shall provide product support, including but not limited to: (i) complete
      maintenance and service instructions, and an operator’s manual for each of the
      Products; (ii) installation kits with installation instructions; and (iii)
      any
      other information as may reasonably be requested by Party B for the Products.
      Party A shall provide the foregoing free of cost to Party B.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    9. Party
      A
      shall provide Party B with technical personnel with the training necessary
      to:
      (a) inform customers properly concerning the features and capabilities of the
      Products; (b) support the Products; and (c) otherwise carry out the obligations
      and responsibilities of Party B under this distribution agreement. Party A
      shall
      provide any and all such training free of cost to Party B.

     

    10. Party
      A
      and Party B shall each comply with all applicable local and international laws
      and regulations in performing their respective duties hereunder and in any
      of
      their respective dealings with respect to the Products.

     

    11. Party
      A
      hereby represents and warrants to Party B as follows:

     

    (a) Party
      A
      is the exclusive owner of the Intellectual Property (as defined below) and
      the
      Products and that its entry into this distribution agreement does not violate
      any agreement between Party A and any third party. 

     

    (b) All
      Products are and shall remain free from defects in workmanship or material
      for a
      period of least one year from the date of purchase of such Product by an
      end-user.

     

    12. Party
      B
      represents and warrants to Party A that Party B’s entry into this distribution
      agreement does not violate any agreement between Party B and any third
      party.

     

    13. To
      protect the exclusivity of the distribution arrangement, Party A shall cause
      all
      of its high-level managers and employees, members of its board of directors
      or
      similar governing body, shareholders and such other parties as Party B may
      reasonably request (“Party A Executives”), to enter into non-competition
      agreements and intellectual property protection agreements in form and substance
      satisfactory to Party B. Part A shall use its best efforts to ensure that (a)
      no
      Party A Executive competes with Party A or Party B and that no Party A Executive
      invests in, is employed by, acts as a consultant, advisor or board member to,
      or
      otherwise provides services or advice to, any entity that competes with Party
      A
      or Party B anywhere in the world, and (b) no Party A Executive solicits
      employees or customers from Party A anywhere in the world. In the event of
      breach this distribution agreement, Party B or Usunco shall have the right
      to
      take legal action to protect their legal rights against Party A and the Party
      A
      Executives.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    14. Party
      A
      hereby grants to Party B the the right to use its copyrights, trademarks and
      similar and related intellectual property in the marketing and distribution
      of
      the Products as contemplated by this distribution agreement and in connection
      with its obligations and rights under this distribution agreement in any manner
      as long as such use complies with all applicable laws.

     

    15. Party
      A
      shall not, without prior written consent of Party B, take any action whether
      from an operational, contractual, investment or other perspective, that would
      negatively affect the exclusive distribution agreement contemplated hereunder.
      

     

    16. Once
      each
      calendar year during the term of this distribution agreement, within 60 days
      after the close of the fiscal year of Party A, there will be provided to Party
      B, at no cost to Party B, the financial statements of Party A, prepared in
      accordance with generally accepted accounting principals of the PRC,
      consistently applied.

     

    17. As
      soon
      as practicable after Party B commences its marketing and distribution, upon
      notice to Party A, Party A will notify its current and past customers of the
      Products of this distribution agreement and the grant of the distribution rights
      to Party B, such notice to be as mutually determined by Party A and Party B.
      In
      addition, Party A will secure from each of its past and current customers an
      acknowledgement that all future inquiries and purchases of the Products are
      to
      be made to and through Party B.

     

    18. If
      in the
      event of a breach of the exclusive distribution arrangement by any party, then
      the breaching party will be responsible to the non-breaching party for all
      the
      monetary losses and damages and other legal remedies to which it may be entitled
      under the law or any provision of this distribution agreement.

     

    19. In
      addition to the foregoing provision, Party A acknowledges and agrees that Party
      B will be incurring significant expense in order to fulfill its obligations
      hereunder. Party a further acknowledges that its breach of this distribution
      agreement would cause Part B and its stockholders significant damage and perhaps
      the complete cessation of its business. Since the exact amount of such damages
      would be extremely difficult, if not impossible to calculate, Party A agrees
      that in the event of the termination of this distribution agreement as a result
      of Party A materially breaching it, which breach has not been cured within
      a
      reasonable time not to exceed 30 calendar days, then Party B shall have the
      right to liquidated damages from Party A in an amount equal to the higher of
      (a)
      five times the annualized net income derived from the sale of the Products
      (as
      determined in accordance with United States GAAP, consistently applied) of
      Party
      B for the last four completed fiscal quarters, or (b) $50,000,000.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    20. This
      distribution agreement shall remain in effect for a period of twenty-five (25)
      years commencing on the date that both parties have signed this distribution
      agreement. This distribution agreement shall be effective immediately after
      the
      execution thereof for fifteen years. 

     

    21. Upon
      the
      occurrence of any one of the following events, the party not responsible for
      the
      event of termination specified below shall, upon giving the other party written
      notice and without further obligation other than as expressly specified herein,
      have the right to terminate this distribution agreement: (a) material breach
      by
      either party in fulfilling any one or more of the obligations undertaken by
      it
      pursuant to this distribution agreement, which breach is not cured within 120
      days after notice advising of such breach; (b) either party is declared
      insolvent or bankrupt, or makes an assignment of a substantial portion of its
      assets for the benefit of creditors; or a trustee, receiver or other officer
      of
      court is appointed to control a substantial portion of the assets of the other
      party, or if bankruptcy, liquidation or reorganization proceedings are
      instituted by or against the other party; or (c) either party is prevented
      from
      fulfilling its obligations hereunder for a period in excess of 180 consecutive
      days as a result of the occurrence of an event of Force Majeure (as defined
      below).

     

    22. Upon
      termination of this distribution agreement for any reason whatsoever: Party
      A
      shall: (a) be responsible for the support or maintenance of the Products owned
      by end-users and shall bear all expenses related thereto; and (b) purchase
      from
      Party B all Products in Party B's possession, which have not been sold to an
      end-user, including all charges for return of the same to Party A. Party B
      shall
      ship such Products to Party A in accordance with the instructions supplied
      by
      Party A at no cost to Party B.

     

    23. Each
      party to this distribution agreement (the “Indemnitor”) agrees to indemnify and
      hold the other party (the “Indemnitee”), its partners, shareholders, directors,
      officers, employees, agents, and assignees harmless against any liability for
      any claims arising out of any breach by the Indemnitor of its duties under
      this
      distribution agreement or any other agreement between the parties. For purposes
      of this clause, “claims” includes any and all claimed liabilities or
      obligations, incurred or claimed to have been incurred in connection with
      business conducted by the Indemnitee. This indemnity shall continue in effect
      after the termination of this distribution agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    24. Any
      notice or consent required by this distribution agreement shall be in writing,
      and the notice will be either personally delivered or mailed by prepaid
      registered or certified mail, return receipt requested, or conveyed by other
      then legally acceptable means, to such party at its address as specified on
      the
      signature page hereto. Such notices shall be deemed delivered on the date of
      receipt, or upon attempted delivery if acceptance of delivery is
      refused.

     

    25. No
      waiver
      of any breach of any of the provisions of this distribution agreement shall
      be
      deemed a waiver of any preceding or succeeding breach of the same or any other
      provisions hereof. No such waiver shall be effective unless in writing and
      then
      only to the extent expressly set forth in writing. This distribution agreement
      may not be modified, altered or amended except by written instrument duly
      executed by both parties.

     

    26. This
      distribution agreement and performance hereunder shall be construed and governed
      by the laws of People’s Republic of China without giving effect to conflict of
      law principles thereof. All disputes arising out of or in connection with this
      distribution agreement or the performance of its provisions by either party
      hereto shall be referred to binding arbitration before three arbitrators and
      the
      arbitration will be conduced in accordance with the UNCITRAL Arbitration Rules
      at a venue before the Hong Kong International Arbitration Center. Each party
      will select one arbitrator in accordance with the UNCITRAL Arbitration Rules
      and
      then the two arbitrators so selected will select the remaining arbitrator in
      accordance with the UNCITRAL Arbitration Rules. The decision of the arbitrators
      will be final and binding upon the parties and will be enforceable in any court
      of competent jurisdiction. Each party will be responsible for its won costs
      of
      the arbitration, including the costs of legal counsel. The parties will share
      equally in the cost of the arbitration, including the fees and expenses of
      the
      arbitrator, venue and enforcement, unless the arbitration award provides to
      the
      contrary.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    27. This
      distribution agreement is being executed in both English and Chinese versions.
      If there is any ambiguity or inconsistency between the two versions, the Chinese
      version of this distribution agreement shall prevail and be instructive of
      the
      parties obligations hereunder.

     

    28. In
      case
      any one or more of the provisions contained herein shall, for any reason, be
      held to be invalid, illegal, or unenforceable in any respect, such invalidity,
      illegality or unenforceability shall not affect any other provisions of this
      distribution agreement, and this distribution agreement shall be construed
      as if
      such provision(s) had never been contained herein, provided that such
      provision(s) shall be curtailed, limited or eliminated only to the extent
      necessary to remove the invalidity, illegality or unenforceability.

     

    29. Any
      delay
      or failure in the performance of any part or the whole of this distribution
      agreement by either party hereto shall be excused, subject to the other
      provisions hereof, if and to the extent caused by earthquake, typhoon, or other
      natural disaster, war, warlike condition, revolution, terrorist attack,
      blockade, embargo or governmental order, rule or restriction (“Force Majeure”),
      and the affected part of this distribution agreement shall be suspended until
      such Force Majeure has ended. 

     

    30. The
      parties agree that this distribution agreement is the complete and exclusive
      statement of the agreement between the parties, which supersedes and merges
      all
      prior proposals, understandings and other agreements, oral or written, between
      the parties relating to this distribution agreement, including any letter of
      intent, memorandum of understanding or similar agreement or instrument
      previously existing between the parties.

     

    31. This
      distribution agreement shall be effective after signed by representatives of
      both parties and there shall be two original copies, each party shall have
      one
      copy.

     

    [Signature
      Page Follows]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
      parties to this distribution agreement are evidencing their intention to be
      legally bound by this distribution agreement by signing in the space provided
      below as of January ___, 2007. Each such signing party hereby represents and
      warrants to the other parties that it is authorized to execute and deliver
      this
      distribution agreement.

     

    
      	Party A: 	
              Zhejiang
                Xinchai Holding Group Co., Ltd.

            
	 	 
	
              Representative
                Signature:

            	
              /S/
                Zhu, Xianwei 

                

              

            
	
              Print
                Name:

            	
              Zhu
                Xianwei

            
	
              Print
                Title:

            	
              Chairman 
                

            
	
              Print
                Address for Notices: 

            	
               

              
                

              

            
	 	 
	
              Party
                B:

            	
              Zhejiang
                Zhongchai Machinery Co., Ltd.

            
	 	 
	
              Representative
                Signature:

            	
              /S/
                Shi Rong

              
                

              

            
	
              Print
                Name:

            	
              Shi
                Rong

            
	
              Print
                Title:

            	
              General
                Manager

            
	
              Print
                Address for Notices:SHARE
      EXCHANGE AGREEMENT

     

    This
      SHARE EXCHANGE AGREEMENT (this “Agreement”),
      dated
      as of March 7, 2007, is by and among Equicap, Inc., a Nevada corporation (the
      “Parent”),
      Usunco Automotive Limited, a British Virgin Islands company (the “Company”),
      and
      the Stockholders of the Company signatory hereto (the “Stockholders”).
      Each
      of the parties to this Agreement is individually referred to herein as a
“Party”
and
      collectively, as the “Parties.”

     

    BACKGROUND

    

    The
      Company has 46,491 shares of capital stock (the “Company
      Stock”)
      outstanding, all of which are held by the Stockholders. Each of the Stockholders
      is the record and beneficial owner of the number of shares of Company Stock
      set
      forth opposite such Stockholder’s name on Exhibit
      A.
      Each of
      the Stockholders has agreed to transfer all of his, her or its (hereinafter
      “its”)
      shares
      of Company Stock in exchange for a number of newly issued shares of Common
      Stock, $0.001 par value, of the Parent (the “Parent
      Stock”)
      that
      will, in the aggregate, constitute approximately 95% of the issued and
      outstanding capital stock of the Parent on a fully-diluted basis as of and
      immediately after the Closing, and before giving effect to the Financing (as
      defined in Section 7.12 hereof). The number of shares of Parent Stock to be
      received by each Stockholder shall be as listed opposite such Stockholder’s name
      on Exhibit
      A
      to this
      Agreement. The aggregate number of shares of Parent Stock that will be reflected
      on Exhibit
      A
      is
      referred to herein as the “Shares”.

     

    The
      exchange of Company Stock for Parent Stock is intended to constitute a
      reorganization within the meaning of Section 368(a)(1)(B) of the Internal
      Revenue Code of 1986 (the “Code”),
      as
      amended or such other tax free reorganization exemptions that may be available
      under the Code.

     

    The
      Board
      of Directors of the Parent and the Company have determined that it is desirable
      to effect this plan of reorganization and share exchange.

     

    AGREEMENT

    

    NOW
      THEREFORE, the parties agree as follows:

     

    ARTICLE
      I

     

    Exchange
      of Shares

     

    SECTION
      1.01. Exchange
      by Stockholders.
      At the
      Closing (as defined in Section 1.02), each of the Stockholders shall sell,
      transfer, convey, assign and deliver to the Parent its Company Stock free and
      clear of all Liens (as defined below) in exchange for the Parent Stock to be
      listed on Exhibit
      A
      opposite
      such Stockholder’s name.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    SECTION
      1.02. Closing.
      The
      closing (the “Closing”)
      of the
      transactions contemplated hereby (the “Transactions”)
      shall
      take place at the offices of Graubard Miller in New York commencing at 9:00
      a.m.
      local time on the second business day following the satisfaction or waiver
      of
      all conditions to the obligations of the parties to consummate the Transactions
      contemplated hereby (other than conditions with respect to actions the
      respective parties will take at the Closing itself), or such other date and
      time
      as the parties may mutually determine (the “Closing
      Date“).

     

    ARTICLE
      II

     

    Representations
      and Warranties of Stockholders

     

    Each
      of
      the Stockholders hereby severally (and not jointly) represents and warrants
      to
      the Parent with respect to itself, as follows:

     

    SECTION
      2.01. Good
      Title.
      The
      Stockholder is the record and beneficial owner, and has good title to its
      Company Stock, with the right and authority to sell and deliver such Company
      Stock. Upon delivery of any certificate or certificates duly assigned,
      representing the same as herein contemplated and/or upon registering of the
      Parent as the new owner of such Company Stock in the share register of the
      Company, the Parent will receive good title to such Company Stock, free and
      clear of all liens, security interests, pledges, equities and claims of any
      kind, voting trusts, stockholder agreements and other encumbrances
      (collectively, “Liens”).

     

    SECTION
      2.02. Organization.
      Each
      Stockholder that is an entity is duly organized and validly existing in its
      jurisdiction of organization.

     

    SECTION
      2.03. Power
      and Authority.
      Each
      Stockholder that is an entity has the legal power and authority to execute
      and
      deliver this Agreement and to perform its obligations hereunder. All acts
      required to be taken by the Stockholder to enter into this Agreement and to
      carry out the Transactions have been properly taken. This Agreement constitutes
      a legal, valid and binding obligation of the Stockholder, enforceable against
      such Stockholder in accordance with the terms hereof.

     

    SECTION
      2.04. No
      Conflicts.
      The
      execution and delivery of this Agreement by the Stockholder and the performance
      by the Stockholder of its obligations hereunder in accordance with the terms
      hereof: (i) will not require the consent of any third party or any federal,
      state, local or foreign government or any court of competent jurisdiction,
      administrative agency or commission or other governmental authority or
      instrumentality, domestic or foreign (“Governmental
      Entity”)
      under
      any statutes, laws, ordinances, rules, regulations, orders, writs, injunctions,
      judgments, or decrees (collectively, “Laws”);
      (ii)
      will not violate any Laws applicable to such Stockholder and (iii) will not
      violate or breach any contractual obligation to which such Stockholder is a
      party. 

     

    SECTION
      2.05. No
      Finder’s Fee.
      The
      Stockholder has not created any obligation for any finder’s, investment banker’s
      or broker’s fee in connection with the Transactions. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    SECTION
      2.06. Purchase
      Entirely for Own Account.
      The
      Parent Stock proposed to be acquired by the Stockholder hereunder will be
      acquired for investment for its own account, and not with a view to the resale
      or distribution of any part thereof, and the Stockholder has no present
      intention of selling or otherwise distributing the Parent Stock, except in
      compliance with applicable securities laws.

     

    SECTION
      2.07. Available
      Information.
      The
      Stockholder has such knowledge and experience in financial and business matters
      that it is capable of evaluating the merits and risks of investment in the
      Parent.

     

    SECTION
      2.08. Non-Registration.
      The
      Stockholder understands that the Parent Stock has not been registered under
      the
      Securities Act of 1933, as amended (the “Securities
      Act”)
      and,
      if issued in accordance with the provisions of this Agreement, will be issued
      by
      reason of a specific exemption from the registration provisions of the
      Securities Act which depends upon, among other things, the bona fide nature
      of
      the investment intent and the accuracy of the Stockholder’s representations as
      expressed herein.

     

    SECTION
      2.09. Restricted
      Securities.
      The
      Stockholder understands that the Parent Stock is characterized as “restricted
      securities” under the Securities Act inasmuch as this Agreement contemplates
      that, if acquired by the Stockholder pursuant hereto, the Parent Stock would
      be
      acquired in a transaction not involving a public offering. The Stockholder
      further acknowledges that if the Parent Stock is issued to the Stockholder
      in
      accordance with the provisions of this Agreement, such Parent Stock may not
      be
      resold without registration under the Securities Act or the existence of an
      exemption therefrom. The Stockholder represents that it is familiar with Rule
      144 promulgated under the Securities Act, as presently in effect, and
      understands the resale limitations imposed thereby and by the Securities
      Act.

     

    SECTION
      2.10. Legends.
      It is
      understood that the Parent Stock will bear the following legend or one that
      is
      substantially similar to the following legend:

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) OR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
      TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
      ACT
      AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS
      FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO THE COMPANY AN
      OPINION OF COUNSEL (WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY)
      CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION. THESE SECURITIES MAY BE PLEDGED
      IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES TO
      THE
      EXTENT PERMITTED BY APPLICABLE FEDERAL AND STATE SECURITIES
      LAWS.

     

    (a) Any
      legend required by the “blue sky” laws of any state to the extent such laws are
      applicable to the securities represented by the certificate so
      legended.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    SECTION
      2.11. Accredited
      Investor.
      The
      Stockholder is an “accredited investor” within the meaning of Rule 501
      under the Securities Act and was not organized for the specific purpose of
      acquiring the Parent Stock.

     

    ARTICLE
      III

     

    Representations
      and Warranties of the Company

     

    The
      Company represents and warrants to the Parent that, except as set forth in
      the
      Company Disclosure Letter (as defined below, and regardless of whether or not
      the Company Disclosure Letter is referenced below with respect to any particular
      representation or warranty), which will be delivered by the Company to the
      Parent in accordance with Section 7.09 hereof (the “Company
      Disclosure Letter”):

     

    SECTION
      3.01. Organization,
      Standing and Power.
      Each of
      the Company and its subsidiaries (the “Company
      Subsidiaries”)
      is
      duly organized, validly existing and in good standing under the laws of the
      jurisdiction in which it is organized and has the corporate power and authority
      and other than the requirement to fully fund the capital of a Subsidiary,
      Zhejiang Zhongchai Machinery Co., Ltd. (“Zhongchai Machinery”) and complete the
      corporate registration of Zhongchai Machinery possesses all governmental
      franchises, licenses, permits, authorizations and approvals necessary to enable
      it to own, lease or otherwise hold its properties and assets and to conduct
      its
      businesses as presently conducted, other than such franchises, licenses,
      permits, authorizations and approvals the lack of which, individually or in
      the
      aggregate, has not had and would not reasonably be expected to have a material
      adverse effect on the Company, a material adverse effect on the ability of
      the
      Company to perform its obligations under this Agreement or on the ability of
      the
      Company to consummate the Transactions (a “Company
      Material Adverse Effect”).
      The
      Company and each Company Subsidiary, other than Zhongchai Machinery is duly
      qualified to do business in each jurisdiction where the nature of its business
      or its ownership or leasing of its properties make such qualification necessary
      except where the failure to so qualify would not reasonably be expected to
      have
      a Company Material Adverse Effect. The Company has delivered to the Parent
      true
      and complete copies of the memorandum and articles of association of the Company
      and such other constituent instruments of the Company as may exist, each as
      amended to the date of this Agreement (as so amended, the “Company
      Constituent Instruments”),
      and
      the comparable charter, organizational documents and other constituent
      instruments of each Company Subsidiary, in each case as amended through the
      date
      of this Agreement. 

     

    SECTION
      3.02. Company
      Subsidiaries; Equity Interests.
      

     

    (a) The
      Company Disclosure Letter lists each Company Subsidiary and its jurisdiction
      of
      organization. Except as specified in the Company Disclosure Letter, all the
      outstanding shares of capital stock or equity investments of each Company
      Subsidiary have been validly issued and are fully paid and nonassessable and
      are
      as of the date of this Agreement owned by the Company, by another Company
      Subsidiary or by the Company and another Company Subsidiary, free and clear
      of
      all Liens.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b) Except
      for its interests in the Company Subsidiaries, the Company does not as of the
      date of this Agreement own, directly or indirectly, any capital stock,
      membership interest, partnership interest, joint venture interest or other
      equity interest in any person. 

     

    SECTION
      3.03. Capital
      Structure.
      The
      authorized capital stock of the Company consists of 50,000 ordinary shares,
      $1.00 par value, of which 46,491 shares are issued and outstanding. Except
      as
      set forth above, no shares of capital stock or other voting securities of the
      Company are issued, reserved for issuance or outstanding. Except as specified
      in
      the Company Disclosure Letter, the Company is the sole record and beneficial
      owner of all of the issued and outstanding capital stock of each Company
      Subsidiary. All outstanding shares of the capital stock of the Company and
      each
      Company Subsidiary are duly authorized, validly issued, fully paid and
      nonassessable and not subject to or issued in violation of any purchase option,
      call option, right of first refusal, preemptive right, subscription right or
      any
      similar right under any provision of the applicable corporate laws of the
      British Virgin Islands, the Company Constituent Instruments or any Contract
      (as
      defined in Section 3.05) to which the Company is a party or otherwise bound.
      Except as set forth in this section 3.03 and in the Company Disclosure Letter,
      there are not any bonds, debentures, notes or other indebtedness of Company
      or
      any Company Subsidiary having the right to vote (or convertible into, or
      exchangeable for, securities having the right to vote) on any matters on which
      holders of Company Stock or the common stock of any Company Subsidiary may
      vote
      (“Voting
      Company Debt”).
      Except as set forth above, as of the date of this Agreement, there are not
      any
      options, warrants, rights, convertible or exchangeable securities, “phantom”
stock rights, stock appreciation rights, stock-based performance units,
      commitments, Contracts, arrangements or undertakings of any kind to which the
      Company or any Company Subsidiary is a party or by which any of them is bound
      (i) obligating the Company or any Company Subsidiary to issue, deliver or sell,
      or cause to be issued, delivered or sold, additional shares of capital stock
      or
      other equity interests in, or any security convertible or exercisable for or
      exchangeable into any capital stock of or other equity interest in, the Company
      or any Company Subsidiary or any Voting Company Debt, (ii) obligating the
      Company or any Company Subsidiary to issue, grant, extend or enter into any
      such
      option, warrant, call, right, security, commitment, Contract, arrangement or
      undertaking or (iii) that give any person the right to receive any economic
      benefit or right similar to or derived from the economic benefits and rights
      occurring to holders of the capital stock of the Company or of any Company
      Subsidiary. Except as set forth in the Company Disclosure Letter, as of the
      date
      of this Agreement, there are not any outstanding contractual obligations of
      the
      Company to repurchase, redeem or otherwise acquire any shares of capital stock
      of Parent. 

     

    SECTION
      3.04. Authority;
      Execution and Delivery; Enforceability.
      The
      Company has all requisite corporate power and authority to execute and deliver
      this Agreement and to consummate the Transactions. The execution and delivery
      by
      the Company of this Agreement and the consummation by the Company of the
      Transactions have been duly authorized and approved by the Board of Directors
      of
      the Company and no other corporate proceedings on the part of the Company are
      necessary to authorize this Agreement and the Transactions. When executed and
      delivered, this Agreement will be enforceable against the Company in accordance
      with its terms. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.05. No
      Conflicts; Consents.
      

     

    (a) Except
      as
      set forth in the Company Disclosure Letter, the execution and delivery by the
      Company of this Agreement does not, and the consummation of the Transactions
      and
      compliance with the terms hereof and thereof will not, conflict with, or result
      in any violation of or default (with or without notice or lapse of time, or
      both) under, or give rise to a right of termination, cancellation or
      acceleration of any obligation or to loss of a material benefit under, or result
      in the creation of any Lien upon any of the properties or assets of the Company
      or any Company Subsidiary under, any provision of (i) the Company Constituent
      Instruments or the comparable charter or organizational documents of any Company
      Subsidiary, (ii) any material contract, lease, license, indenture, note, bond,
      agreement, permit, concession, franchise or other instrument (a “Contract”)
      to
      which the Company or any Company Subsidiary is a party or by which any of their
      respective properties or assets is bound or (iii) subject to the filings and
      other matters referred to in Section 3.05(b), any material judgment, order
      or
      decree (“Judgment”)
      or
      material Law applicable to the Company or any Company Subsidiary or their
      respective properties or assets, other than, in the case of clauses (ii) and
      (iii) above, any such items that, individually or in the aggregate, have not
      had
      and would not reasonably be expected to have a Company Material Adverse
      Effect.

     

    (b) Except
      as
      set forth in the Company Disclosure Letter and except for required filings
      with
      the Securities and Exchange Commission (the “SEC”)
      and
      applicable “Blue Sky” or state securities commissions, no
      material consent, approval, license, permit, order or authorization
      (“Consent”)
      of, or
      registration, declaration or filing with, or permit from, any Governmental
      Entity is required to be obtained or made by or with respect to the Company
      or
      any Company Subsidiary in connection with the execution, delivery and
      performance of this Agreement or the consummation of the
      Transactions.

     

    SECTION
      3.06. Taxes.
      

     

    (a) Each
      of
      the Company and each Company Subsidiary has timely filed, or has caused to
      be
      timely filed on its behalf, all Tax Returns required to be filed by it, and
      all
      such Tax Returns are true, complete and accurate, except to the extent any
      failure to file or any inaccuracies in any filed Tax Returns, individually
      or in
      the aggregate, have not had and would not reasonably be expected to have a
      Company Material Adverse Effect. All Taxes shown to be due on such Tax Returns,
      or otherwise owed, have been timely paid, except to the extent that any failure
      to pay, individually or in the aggregate, has not had and would not reasonably
      be expected to have a Company Material Adverse Effect. There are no unpaid
      taxes
      in any material amount claimed to be due by the taxing authority of any
      jurisdiction, and the officers of the Company know of no basis for any such
      claim.

     

    (b) The
      Company Financial Statements (as defined in Section 3.15) reflect an adequate
      reserve for all Taxes payable by the Company and the Company Subsidiaries (in
      addition to any reserve for deferred Taxes to reflect timing differences between
      book and Tax items) for all Taxable periods and portions thereof through the
      date of such financial statements. No deficiency with respect to any Taxes
      has
      been proposed, asserted or assessed against the Company or any Company
      Subsidiary, and no requests for waivers of the time to assess any such Taxes
      are
      pending, except to the extent any such deficiency or request for waiver,
      individually or in the aggregate, has not had and would not reasonably be
      expected to have a Company Material Adverse Effect.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c) For
      purposes of this Agreement:

     

    “Taxes”
      includes all forms of taxation, whenever created or imposed, and whether of
      the
      United States or elsewhere, and whether imposed by a local, municipal,
      governmental, state, foreign, federal or other Governmental Entity, or in
      connection with any agreement with respect to Taxes, including all interest,
      penalties and additions imposed with respect to such amounts.

     

    “Tax
      Return”
means
      all federal, state, local, provincial and foreign Tax returns, declarations,
      statements, reports, schedules, forms and information returns and any amended
      Tax return relating to Taxes.

     

    SECTION
      3.07. Benefit
      Plans.
      

     

    (a) Except
      as
      set forth in the Company Disclosure Letter, the Company does not have or
      maintain any collective bargaining agreement or any bonus, pension, profit
      sharing, deferred compensation, incentive compensation, stock ownership, stock
      purchase, stock option, phantom stock, retirement, vacation, severance,
      disability, death benefit, hospitalization, medical or other plan, arrangement
      or understanding (whether or not legally binding) providing benefits to any
      current or former employee, officer or director of the Company or any Company
      Subsidiary (collectively, “Company
      Benefit Plans”).
      Except as set forth in the Company Disclosure Letter, as of the date of this
      Agreement there are not any severance or termination agreements or arrangements
      between the Company or any Company Subsidiary and any current or former
      employee, officer or director of the Company or any Company Subsidiary, nor
      does
      the Company or any Company Subsidiary have any general severance plan or
      policy.

     

    (b) Since
      June 30, 2006, there has not been any adoption or amendment in any material
      respect by the Company or any Company Subsidiary of any Company Benefit
      Plan.

     

    SECTION
      3.08. Litigation.
      There
      is no 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 (“Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of this Agreement or the Shares or (ii) could, if there were an unfavorable
      decision, individually or in the aggregate, have or reasonably be expected
      to
      result in a Company Material Adverse Effect. Neither the Company nor any
      subsidiary, nor any director or officer thereof (in his or her capacity as
      such), is or has been the subject of any Action involving a claim or violation
      of or liability under federal or state securities laws or a claim of breach
      of
      fiduciary duty.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.09. Compliance
      with Applicable Laws.
      The
      Company and the Company Subsidiaries are in compliance with all applicable
      Laws,
      including those relating to occupational health and safety and the environment,
      except for instances of noncompliance that, individually and in the aggregate,
      have not had and would not reasonably be expected to have a Company Material
      Adverse Effect. Except as set forth in the Company Disclosure Letter, the
      Company has not received any written communication during the past two years
      from a Governmental Entity that alleges that the Company is not in compliance
      in
      any material respect with any applicable Law. This Section 3.09 does not relate
      to matters with respect to Taxes, which are the subject of Section
      3.06.

     

    SECTION
      3.10. Brokers;
      Schedule of Fees and Expenses.
      No
      broker, investment banker, financial advisor or other person is entitled to
      any
      broker’s, finder’s, financial advisor’s or other similar fee or commission in
      connection with the Transactions based upon arrangements made by or on behalf
      of
      the Company. 

     

    SECTION
      3.11. Contracts.
      Except
      as disclosed in the Company Disclosure Letter, there are no Contracts that
      are
      material to the business, properties, assets, condition (financial or
      otherwise), results of operations or prospects of the Company and its
      subsidiaries taken as a whole. Neither the Company nor any Company Subsidiary
      is
      in violation of or in default under (nor does there exist any condition which
      upon the passage of time or the giving of notice would cause such a violation
      of
      or default under) any Contract to which it is a party or by which it or any
      of
      its properties or assets is bound, except for violations or defaults that would
      not, individually or in the aggregate, reasonably be expected to result in
      a
      Company Material Adverse Effect.

     

    SECTION
      3.12. Title
      to Properties.
      Except
      as set forth in the Disclosure Letter, the Company and the Company Subsidiaries
      do not own any real property. Each of the Company and the Company Subsidiaries
      has sufficient title to, or valid leasehold interests in, all of its properties
      and assets used in the conduct of its businesses. All such assets and
      properties, other than assets and properties in which the Company or any of
      the
      Company Subsidiaries has leasehold interests, are free and clear of all Liens
      other than those set forth in the Company Disclosure Letter and except for
      Liens
      that, in the aggregate, do not and will not materially interfere with the
      ability of the Company and the Company Subsidiaries to conduct business as
      currently conducted.

     

    SECTION
      3.13. Intellectual
      Property.
      The
      Company and the Company Subsidiaries own, or are validly licensed or otherwise
      have the right to use, all patents, patent rights, trademarks, trademark rights,
      trade names, trade name rights, service marks, service mark rights, copyrights
      and other proprietary intellectual property rights and computer programs
      (collectively, “Intellectual
      Property Rights”)
      which
      are material to the conduct of the business of the Company and the Company
      Subsidiaries taken as a whole. The Company Disclosure Letter sets forth a
      description of all Intellectual Property Rights which are material to the
      conduct of the business of the Company and the Company Subsidiaries taken as
      a
      whole. There are no claims pending or, to the knowledge of the Company,
      threatened that the Company or any of the Company Subsidiaries is infringing
      or
      otherwise adversely affecting the rights of any person with regard to any
      Intellectual Property Right. To the knowledge of the Company, no person is
      infringing the rights of the Company or any of the Company Subsidiaries with
      respect to any Intellectual Property Right.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.14. Labor
      Matters.
      There
      are no collective bargaining or other labor union agreements to which the
      Company or any of the Company Subsidiaries is a party or by which any of them
      is
      bound. No material labor dispute exists or, to the knowledge of the Company,
      is
      imminent with respect to any of the employees of the Company.

     

    SECTION
      3.15. Financial
      Statements.
      Prior
      to the Closing the Company will deliver to the Parent its audited consolidated
      financial statements for the fiscal years ended June 30, 2005 and 2006 and
      unaudited consolidated financial statements for the quarter ended December
      31,
      2006 (collectively, the “Company
      Financial Statements”).
      Upon
      delivery, the Company Financial Statements will have been prepared in accordance
      with generally accepted accounting principles applied on a consistent basis
      throughout the periods indicated and in respect of interim periods subject
      to
      year end adjustments. The Company Financial Statements will fairly present
      in
      all material respects the financial condition and operating results of the
      Company, as of the dates, and for the periods, indicated therein. The Company
      will not have any material liabilities or obligations, contingent or otherwise,
      other than (i) liabilities incurred in the ordinary course of business
      subsequent to December 31, 2006, and (ii) obligations under contracts and
      commitments incurred in the ordinary course of business and not required under
      generally accepted accounting principles to be reflected in the Company
      Financial Statements, which, in both cases, individually and in the aggregate
      would not be reasonably expected to result in a Company Material Adverse
      Effect.

     

    SECTION
      3.16. Insurance.
      The
      Company and its subsidiaries are not insured. The Company has no reason to
      believe that it will not be able to obtain insurance coverage as and when such
      coverage as may be necessary to continue its business on terms consistent with
      market for the Company’s and such subsidiaries’ respective lines of
      business.

     

    SECTION
      3.17. Transactions
      With Affiliates and Employees.
      Except
      as set forth in the Company Disclosure Letter and Company Financial Statements,
      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.

     

    SECTION
      3.18. Internal
      Accounting Controls.
      The
      Company and its 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 generally accepted accounting principles 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
      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 officers by others within those entities. The Company's
      officers have evaluated the effectiveness of the Company's controls and
      procedures. Since December 31, 2006, there have been no significant changes
      in
      the Company’s internal controls or, to the Company's knowledge, in other factors
      that could significantly affect the Company's internal controls.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.19. 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).

     

    SECTION
      3.20. 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 charter documents or the laws of its state of incorporation
      that is or could become applicable to the Stockholders as a result of the
      Stockholders and the Company fulfilling their obligations or exercising their
      rights under this Agreement, including, without limitation, the issuance of
      the
      Shares and the Stockholders' ownership of the Shares.

     

    SECTION
      3.21. No
      Additional Agreements.
      The
      Company does not have any agreement or understanding with any Stockholders
      with
      respect to the transactions contemplated by this Agreement other than as
      specified in this Agreement.

     

    SECTION
      3.22. 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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.23. Disclosure.
      The
      Company confirms that neither it nor any person acting on its behalf has
      provided any Stockholder or its respective agents or counsel with any
      information that the Company believes constitutes material, non-public
      information except insofar as the existence and terms of the proposed
      transactions hereunder may constitute such information and
      except for information that will be disclosed by the Parent under a current
      report on Form 8-K filed within one business days after the Closing.
      The
      Company understands and confirms that the Stockholders will rely on the
      foregoing representations and covenants in effecting transactions in securities
      of the Company. All disclosure provided to the Stockholders regarding the
      Company, its business and the transactions contemplated hereby, furnished by
      or
      on behalf of the Company (including the Company’s representations and warranties
      set forth in this Agreement) are true and correct and do not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements made therein, in light of the circumstances under
      which they were made, not misleading.

     

    SECTION
      3.24. Information
      Supplied.
      None of
      the information supplied or to be supplied by the Company for inclusion or
      incorporation by reference in the notice that is required to be sent to the
      stockholders of the Parent pursuant to Rule 14f-1 (the “14f-1
      Notice”)
      promulgated under the Securities Exchange Act of 1934 (the “Exchange
      Act”)
      will,
      at the date it is first mailed to the Parent’s stockholders, contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary in order to make the statements therein, in light
      of
      the circumstances under which they are made, not misleading. 

     

    SECTION
      3.25. Absence
      of Certain Changes or Events.
      Except
      as disclosed in the Company Financial Statements or in the Company Disclosure
      Letter, from December 31, 2006 to the date of this Agreement, the Company has
      conducted its business only in the ordinary course, and during such period
      there
      has not been:

     

    (a) any
      change in the assets, liabilities, financial condition or operating results
      of
      the Company or any Company Subsidiary, except changes in the ordinary course
      of
      business that have not caused, in the aggregate, a Company Material Adverse
      Effect;

     

    (b) any
      damage, destruction or loss, whether or not covered by insurance, that would
      have a Company Material Adverse Effect;

     

    (c) any
      waiver or compromise by the Company or any Company Subsidiary of a valuable
      right or of a material debt owed to it;

     

    (d) any
      satisfaction or discharge of any lien, claim, or encumbrance or payment of
      any
      obligation by the Company or any Company Subsidiary, except in the ordinary
      course of business and the satisfaction or discharge of which would not have
      a
      Company Material Adverse Effect;

     

    (e) any
      material change to a material Contract by which the Company or any Company
      Subsidiary or any of its respective assets is bound or subject;

     

    
      
        
        

      

      
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    (f) any
      mortgage, pledge, transfer of a security interest in, or lien, created by the
      Company or any Company Subsidiary, with respect to any of its material
      properties or assets, except liens for taxes not yet due or payable and liens
      that arise in the ordinary course of business and do not materially impair
      the
      Company’s or such Company Subsidiary’s ownership or use of such property or
      assets;

     

    (g) any
      loans
      or guarantees made by the Company or any Company Subsidiary to or for the
      benefit of its employees, officers or directors, or any members of their
      immediate families, other than travel advances and other advances made in the
      ordinary course of its business;

     

    (h) any
      alteration of the Company’s method of accounting or the identity of its
      auditors; 

     

    (i) any
      declaration or payment of dividend or distribution of cash or other property
      to
      Stockholders or any purchase, redemption or agreements to purchase or redeem
      any
      shares of Company Stock; 

     

    (j) any
      issuance of equity securities to any officer, director or affiliate, except
      pursuant to existing Company stock option plans; or

     

    (k) any
      arrangement or commitment by the Company or any Company Subsidiary to do any
      of
      the things described in this Section 3.25.

     

    SECTION
      3.26. No
      Undisclosed Events, Liabilities, Developments or Circumstances.
      No
      event, liability, development or circumstance has occurred or exists, or is
      contemplated to occur with respect to the Company, its subsidiaries or their
      respective business, properties, prospects, operations or financial condition,
      that would be required to be disclosed by the Company under applicable
      securities laws on a registration statement on Form S-1 filed with the SEC
      relating to an issuance and sale by the Company of its Common Stock and which
      has not been publicly announced.

     

    SECTION
      3.27. Foreign
      Corrupt Practices.
      Neither
      the Company, nor any of its subsidiaries, nor, to the Company’s knowledge, any
      director, officer, agent, employee or other person acting on behalf of the
      Company or any of its subsidiaries has, in the course of its actions for, or
      on
      behalf of, the Company (i) used any corporate funds for any unlawful
      contribution, gift, entertainment or other unlawful expenses relating to
      political activity; (ii) made any direct or indirect unlawful payment to any
      foreign or domestic government official or employee from corporate funds; (iii)
      violated or is in violation of any provision of the U.S. Foreign Corrupt
      Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
      payoff, influence payment, kickback or other unlawful payment to any foreign
      or
      domestic government official or employee.

     

    
      
        
        

      

      
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    ARTICLE
      IV

     

    Representations
      and Warranties of the Parent

     

    The
      Parent represents and warrants to each of the Stockholders and the Company
      that,
      except as set forth in the reports, schedules, forms, statements and other
      documents filed by Parent with the SEC and publicly available prior to the
      date
      of the Agreement (the “Filed
      Parent SEC Documents”)
      or in
      the letter, which will be delivered by the Parent to the Company and the
      Stockholders in accordance with Section 7.09 hereof (the “Parent
      Disclosure Letter”):

     

    SECTION
      4.01. Organization,
      Standing and Power.
      Parent
      is duly organized, validly existing and in good standing under the laws of
      the
      State of Nevada and has full corporate power and authority and possesses all
      governmental franchises, licenses, permits, authorizations and approvals
      necessary to enable it to own, lease or otherwise hold its properties and assets
      and to conduct its businesses as presently conducted, other than such
      franchises, licenses, permits, authorizations and approvals the lack of which,
      individually or in the aggregate, has not had and would not reasonably be
      expected to have a material adverse effect on Parent, a material adverse effect
      on the ability of Parent to perform its obligations under this Agreement or
      on
      the ability of Parent to consummate the Transactions (a “Parent
      Material Adverse Effect”).
      Parent is duly qualified to do business in each jurisdiction where the nature
      of
      its business or their ownership or leasing of its properties make such
      qualification necessary and where the failure to so qualify would reasonably
      be
      expected to have a Parent Material Adverse Effect. Parent has delivered to
      the
      Company true and complete copies of the certificate or articles of incorporation
      of Parent, as amended to the date of this Agreement (as so amended, the
“Parent
      Charter”),
      and
      the Bylaws of Parent, as amended to the date of this Agreement (as so amended,
      the “Parent
      Bylaws”).
      

     

    SECTION
      4.02. Subsidiaries;
      Equity Interests.
      Parent
      does not own, directly or indirectly, any capital stock, membership interest,
      partnership interest, joint venture interest or other equity interest in any
      person.

     

    SECTION
      4.03. Capital
      Structure.
      The
      authorized capital stock of Parent consists of 500,000,000 shares of Parent
      Common Stock, $0.001 par value per share, and 10,000,000 shares of preferred
      stock, $0.001 par value. As of the date hereof (i) 990,100 shares of Parent
      Common Stock are issued and outstanding, (ii) no shares of preferred stock
      are
      outstanding and (iii) no shares of Parent Common Stock or preferred stock are
      held by Parent in its treasury. Except as set forth above, no shares of capital
      stock or other voting securities of Parent were issued, reserved for issuance
      or
      outstanding. All outstanding shares of the capital stock of Parent are, and
      all
      such shares that may be issued prior to the date hereof will be when issued,
      duly authorized, validly issued, fully paid and nonassessable and not subject
      to
      or issued in violation of any purchase option, call option, right of first
      refusal, preemptive right, subscription right or any similar right under any
      provision of the General Corporation Law of the State of Nevada, the Parent
      Charter, the Parent Bylaws or any Contract to which Parent is a party or
      otherwise bound. As of December 31, 2006, Parent had issued a convertible note
      in the amount of $99,896 (“Convertible Note”) to Fountainhead Capital Partners
      Limited. The Convertible Note bears interest at a rate of 3% per annum, is
      due
      on December 31, 2007 and is convertible by the holder at any time prior to
      maturity into a number of shares of Parent Common Stock to be determined by
      Parent’s board of directors. The Convertible Note shall have been fully
      converted into 702,132 shares of Parent Common Stock pursuant to a Convertible
      Note Conversion Agreement with the holder at or prior to the Closing. Other
      than
      the Convertible Note, there are not any bonds, debentures, notes or other
      indebtedness of Parent having the right to vote (or convertible into, or
      exchangeable for, securities having the right to vote) on any matters on which
      holders of Parent Common Stock may vote (“Voting
      Parent Debt”).
      Except as set forth above, as of the date of this Agreement, there are not
      any
      options, warrants, rights, convertible or exchangeable securities, “phantom”
stock rights, stock appreciation rights, stock-based performance units,
      commitments, Contracts, arrangements or undertakings of any kind to which Parent
      is a party or by which it is bound (i) obligating Parent to issue, deliver
      or
      sell, or cause to be issued, delivered or sold, additional shares of capital
      stock or other equity interests in, or any security convertible or exercisable
      for or exchangeable into any capital stock of or other equity interest in,
      Parent or any Voting Parent Debt, (ii) obligating Parent to issue, grant, extend
      or enter into any such option, warrant, call, right, security, commitment,
      Contract, arrangement or undertaking or (iii) that give any person the right
      to
      receive any economic benefit or right similar to or derived from the economic
      benefits and rights occurring to holders of the capital stock of the Parent.
      As
      of the date of this Agreement, there are not any outstanding contractual
      obligations of Parent to repurchase, redeem or otherwise acquire any shares
      of
      capital stock of Parent. Except as set forth in Schedule
      4.03, the
      Parent is not a party to any agreement granting any securityholder of the Parent
      the right to cause the Parent to register shares of the capital stock or other
      securities of the Parent held by such securityholder under the Securities Act.
      The stockholder list to be provided at closing to the Company shall be a current
      shareholder list generated by its stock transfer agent, and such list shall
      accurately reflect all of the issued and outstanding shares of the Parent’s
      Common Stock.

     

    
      
        
        

      

      
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    SECTION
      4.04. Authority;
      Execution and Delivery; Enforceability.
      The
      execution and delivery by the Parent of this Agreement and the consummation
      by
      the Parent of the Transactions have been duly authorized and approved by the
      Board of Directors of the Parent and no other corporate proceedings on the
      part
      of the Parent are necessary to authorize this Agreement and the Transactions.
      This Agreement constitutes a legal, valid and binding obligation of the Parent,
      enforceable against the Parent in accordance with the terms hereof.

     

    SECTION
      4.05. No
      Conflicts; Consents.
      

     

    (a) Except
      as
      set forth in the Parent Disclosure Letter, the execution and delivery by Parent
      of this Agreement, does not, and the consummation of Transactions and compliance
      with the terms hereof and thereof will not, conflict with, or result in any
      violation of or default (with or without notice or lapse of time, or both)
      under, or give rise to a right of termination, cancellation or acceleration
      of
      any obligation or to loss of a material benefit under, or to increased,
      additional, accelerated or guaranteed rights or entitlements of any person
      under, or result in the creation of any Lien upon any of the properties or
      assets of Parent under, any provision of (i) Parent Charter or Parent Bylaws,
      (ii) any material Contract to which Parent is a party or by which any of its
      properties or assets is bound or (iii) subject to the filings and other matters
      referred to in Section 4.05(b), any material Judgment or material Law applicable
      to Parent or its properties or assets, other than, in the case of clauses (ii)
      and (iii) above, any such items that, individually or in the aggregate, have
      not
      had and would not reasonably be expected to have a Parent Material Adverse
      Effect.

     

    
      
        
        

      

      
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    (b) No
      Consent of, or registration, declaration or filing with, or permit from, any
      Governmental Entity is required to be obtained or made by or with respect to
      Parent in connection with the execution, delivery and performance of this
      Agreement or the consummation of the Transactions, other than the (A) filing
      with the SEC of a 14f-1 Notice and (B) filing with the SEC of reports under
      Sections 13 and 16 of the Exchange Act, and (C) filings under state “blue sky”
laws, as may be required in connection with this Agreement and the
      Transactions.

     

    SECTION
      4.06. SEC
      Documents; Undisclosed Liabilities.
      

     

    (a) Parent
      has filed all reports, schedules, forms, statements and other documents required
      to be filed by Parent with the SEC since December 31, 2006, pursuant to Sections
      13(a), 14 (a) and 15(d) of the Exchange Act (the “Parent
      SEC Documents”).

     

    (b) As
      of its
      respective filing date, each Parent SEC Document complied in all material
      respects with the requirements of the Exchange Act and the rules and regulations
      of the SEC promulgated thereunder applicable to such Parent SEC Document, and
      did 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,
      not misleading. Except to the extent that information contained in any Parent
      SEC Document has been revised or superseded by a later filed Parent SEC
      Document, none of the Parent SEC Documents contains any untrue statement of
      a
      material fact or omits to state any 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 consolidated
      financial statements of Parent included in the Parent SEC Documents comply
      as to
      form in all material respects with applicable accounting requirements and the
      published rules and regulations of the SEC with respect thereto, have been
      prepared in accordance with the U.S. generally accepted accounting principals
      (“GAAP”) (except, in the case of unaudited statements, as permitted by the rules
      and regulations of the SEC) applied on a consistent basis during the periods
      involved (except as may be indicated in the notes thereto) and fairly present
      the consolidated financial position of Parent and its consolidated subsidiaries
      as of the dates thereof and the consolidated results of their operations and
      cash flows for the periods shown (subject, in the case of unaudited statements,
      to normal year-end audit adjustments).

     

    (c) Except
      as
      set forth in the Filed Parent SEC Documents, Parent has no liabilities or
      obligations of any nature (whether accrued, absolute, contingent or otherwise)
      required by GAAP to be set forth on a balance sheet of Parent or in the notes
      thereto. The Parent Disclosure Letter sets forth all financial and contractual
      obligations and liabilities (including any obligations to issue capital stock
      or
      other securities of the parent) due after the date hereof. As of the date hereof
      the Parent has total liabilities of less than $10,000, all of which liabilities
      shall be paid off at or prior to the Closing and shall in no event remain
      liabilities of the Parent, the Company or the Stockholders following the
      Closing.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (d) Since
      the
      date of the latest audited financial statements included within the SEC Reports,
      except as specifically disclosed in the Filed Parent SEC Documents or the Parent
      Disclosure Letter, the Parent has not changed its auditors and the Parent does
      not have pending before the SEC any request for confidential treatment of
      information.

     

    SECTION
      4.07. Information
      Supplied.
      None of
      the information supplied or to be supplied by Parent for inclusion or
      incorporation by reference in the 14f-1 Notice will, at the date it is first
      mailed to the Parent’s stockholders, contain any untrue statement of a material
      fact or omit to state any material fact required to be stated therein or
      necessary in order to make the statements therein, in light of the circumstances
      under which they are made, not misleading. 

     

    SECTION
      4.08. Absence
      of Certain Changes or Events.
      Except
      as disclosed in the Filed Parent SEC Documents or in the Parent Disclosure
      Letter, from the date of the most recent audited financial statements included
      in the Filed Parent SEC Documents to the date of this Agreement, Parent has
      conducted its business only in the ordinary course, and during such period
      there
      has not been:

     

    (a) any
      change in the assets, liabilities, financial condition or operating results
      of
      the Parent from that reflected in the Parent SEC Documents, except changes
      in
      the ordinary course of business that have not caused, in the aggregate, a Parent
      Material Adverse Effect;

     

    (b) any
      damage, destruction or loss, whether or not covered by insurance, that would
      have a Parent Material Adverse Effect;

     

    (c) any
      waiver or compromise by the Parent of a valuable right or of a material debt
      owed to it;

     

    (d) any
      satisfaction or discharge of any lien, claim, or encumbrance or payment of
      any
      obligation by the Parent, except in the ordinary course of business and the
      satisfaction or discharge of which would not have a Parent Material Adverse
      Effect;

     

    (e) any
      material change to a material Contract by which the Parent or any of its assets
      is bound or subject;

     

    (f) any
      material change in any compensation arrangement or agreement with any employee,
      officer, director or stockholder;

     

    (g) any
      resignation or termination of employment of any officer of the Parent;

     

    (h) any
      mortgage, pledge, transfer of a security interest in, or lien, created by the
      Parent, with respect to any of its material properties or assets, except liens
      for taxes not yet due or payable and liens that arise in the ordinary course
      of
      business and do not materially impair the Parent’s ownership or use of such
      property or assets;

     

    
      
        
        

      

      
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    (i) any
      loans
      or guarantees made by the Parent to or for the benefit of its employees,
      officers or directors, or any members of their immediate families, other than
      travel advances and other advances made in the ordinary course of its
      business;

     

    (j) any
      declaration, setting aside or payment or other distribution in respect of any
      of
      the Parent’s capital stock, or any direct or indirect redemption, purchase, or
      other acquisition of any of such stock by the Parent; 

     

    (k) any
      alteration of the Parent’s method of accounting or the identity of its auditors;

     

    (l) any
      issuance of equity securities to any officer, director or affiliate, except
      pursuant to existing Parent stock option plans; or

     

    (m) any
      arrangement or commitment by the Parent to do any of the things described in
      this Section 4.08.

     

    SECTION
      4.09. Taxes.
      

     

    (a) Parent
      has timely filed, or has caused to be timely filed on its behalf, all Tax
      Returns required to be filed by it, and all such Tax Returns are true, complete
      and accurate, except to the extent any failure to file or any inaccuracies
      in
      any filed Tax Returns, individually or in the aggregate, have not had and would
      not reasonably be expected to have a Parent Material Adverse Effect. All Taxes
      shown to be due on such Tax Returns, or otherwise owed, has been timely paid,
      except to the extent that any failure to pay, individually or in the aggregate,
      has not had and would not reasonably be expected to have a Parent Material
      Adverse Effect.

     

    (b) The
      most
      recent financial statements contained in the Filed Parent SEC Documents reflect
      an adequate reserve for all Taxes payable by Parent (in addition to any reserve
      for deferred Taxes to reflect timing differences between book and Tax items)
      for
      all Taxable periods and portions thereof through the date of such financial
      statements. No deficiency with respect to any Taxes has been proposed, asserted
      or assessed against Parent, and no requests for waivers of the time to assess
      any such Taxes are pending, except to the extent any such deficiency or request
      for waiver, individually or in the aggregate, has not had and would not
      reasonably be expected to have a Parent Material Adverse Effect.

     

    (c) There
      are
      no Liens for Taxes (other than for current Taxes not yet due and payable) on
      the
      assets of Parent. Parent is not bound by any agreement with respect to
      Taxes.

     

    SECTION
      4.10. Absence
      of Changes in Benefit Plans.
      From
      the date of the most recent audited financial statements included in the Filed
      Parent SEC Documents to the date of this Agreement, there has not been any
      adoption or amendment in any material respect by Parent of any collective
      bargaining agreement or any bonus, pension, profit sharing, deferred
      compensation, incentive compensation, stock ownership, stock purchase, stock
      option, phantom stock, retirement, vacation, severance, disability, death
      benefit, hospitalization, medical or other plan, arrangement or understanding
      (whether or not legally binding) providing benefits to any current or former
      employee, officer or director of Parent (collectively, “Parent
      Benefit Plans”).
      As of
      the date of this Agreement there are not any employment, consulting,
      indemnification, severance or termination agreements or arrangements between
      the
      Parent and any current or former employee, officer or director of the Parent,
      nor does the Parent have any general severance plan or policy.

     

    
      
        
        

      

      
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    SECTION
      4.11. ERISA
      Compliance; Excess Parachute Payments.
      The
      Parent does not, and since its inception never has, maintained, or contributed
      to any “employee pension benefit plans” (as defined in Section 3(2) of ERISA),
“employee welfare benefit plans” (as defined in Section 3(1) of ERISA) or any
      other Parent Benefit Plan for the benefit of any current or former employees,
      consultants, officers or directors of Parent. 

     

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

     

    SECTION
      4.13. Compliance
      with Applicable Laws.
      Except
      as disclosed in the Filed Parent SEC Documents or in the Parent Disclosure
      Letter, Parent is in compliance with all applicable Laws, including those
      relating to occupational health and safety and the environment, except for
      instances of noncompliance that, individually and in the aggregate, have not
      had
      and would not reasonably be expected to have a Parent Material Adverse Effect.
      Except as set forth in the Filed Parent SEC Documents or in the Parent
      Disclosure Letter, Parent has not received any written communication during
      the
      past two years from a Governmental Entity that alleges that Parent is not in
      compliance in any material respect with any applicable Law. The Parent 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 Parent Material Adverse Effect. This Section 4.13 does not relate
      to
      matters with respect to Taxes, which are the subject of Section
      4.09.

     

    SECTION
      4.14. Contracts.
      The
      Parent has entered into a Consulting Agreement with Fountainhead Capital
      Partners Limited which provides for the payment of $450,000 cash concurrent
      with
      the Closing. Other than such payment, this Agreement does not provide for any
      rights or obligations which survive the Closing. With this exception and except
      as disclosed in the Parent Filed SEC Documents, there are no Contracts that
      are
      material to the business, properties, assets, condition (financial or
      otherwise), results of operations or prospects of the Parent taken as a whole.
      Parent is not in violation of or in default under (nor does there exist any
      condition which upon the passage of time or the giving of notice would cause
      such a violation of or default under) any Contract to which it is a party or
      by
      which it or any of its properties or assets is bound, except for violations
      or
      defaults that would not, individually or in the aggregate, reasonably be
      expected to result in a Parent Material Adverse Effect.

     

    
      
        
        

      

      
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    SECTION
      4.15. Title
      to Properties.
      Parent
      has good title to, or valid leasehold interests in, all of its properties and
      assets used in the conduct of its businesses. All such assets and properties,
      other than assets and properties in which the Parent has leasehold interests,
      are free and clear of all Liens other than those set forth in the Parent
      Disclosure Letter and except for Liens that, in the aggregate, do not and will
      not materially interfere with the ability of the Parent to conduct business
      as
      currently conducted. Parent has complied in all material respects with the
      terms
      of all material leases to which it is a party and under which it is in
      occupancy, and all such leases are in full force and effect. Parent enjoys
      peaceful and undisturbed possession under all such material leases.

     

    SECTION
      4.16. Intellectual
      Property.
      Parent
      owns, or is validly licensed or otherwise has the right to use, all Intellectual
      Property Rights which are material to the conduct of the business of the Parent
      taken as a whole. The Parent Disclosure Letter sets forth a description of
      all
      Intellectual Property Rights which are material to the conduct of the business
      of the Parent taken as a whole. Except as set forth in the Parent Disclosure
      Letter no claims are pending or, to the knowledge of the Parent, threatened
      that
      the Parent is infringing or otherwise adversely affecting the rights of any
      person with regard to any Intellectual Property Right. To the knowledge of
      the
      Parent, no person is infringing the rights of the Parent with respect to any
      Intellectual Property Right.

     

    SECTION
      4.17. Labor
      Matters.
      There
      are no collective bargaining or other labor union agreements to which the Parent
      is a party or by which it is bound. No material labor dispute exists or, to
      the
      knowledge of the Parent,
      is
      imminent with respect to any of the employees of the Parent.

     

    SECTION
      4.18. Market
      Makers.
      The
      Parent has at least two market makers for its common shares and such market
      makers have obtained all permits and made all filings necessary in order for
      such market makers to continue as market makers of the Parent. 

     

    SECTION
      4.19. Transactions
      With Affiliates and Employees.
      Except
      as set forth in the Filed Parent SEC Documents and Parent Disclosure Letter,
      none of the officers or directors of the Parent and, to the knowledge of the
      Parent, none of the employees of the Parent is presently a party to any
      transaction with the Parent 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
      Parent, any entity in which any officer, director, or any such employee has
      a
      substantial interest or is an officer, director, trustee or
      partner.

     

    
      
        
        

      

      
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    SECTION
      4.20. Internal
      Accounting Controls.
      The
      Parent maintains 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
      generally accepted accounting principles 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 Parent has established disclosure
      controls and procedures for the Parent and designed such disclosure controls
      and
      procedures to ensure that material information relating to the Parent is made
      known to the officers by others within those entities. The Parent's officers
      have evaluated the effectiveness of the Parent's controls and procedures. Since
      December 31, 2005, there have been no significant changes in the Parent’s
      internal controls or, to the Parent's knowledge, in other factors that could
      significantly affect the Parent's internal controls.

     

    SECTION
      4.21. Solvency.
      Based
      on the financial condition of the Parent
      as of
      the closing date (and assuming that the closing shall have occurred), (i) the
      Parent's fair saleable value of its assets exceeds the amount that will be
      required to be paid on or in respect of the Parent's existing debts and other
      liabilities (including known contingent liabilities) as they mature, (ii) the
      Parent'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 Parent, and projected capital
      requirements and capital availability thereof, and (iii) the current cash flow
      of the Parent, together with the proceeds the Parent 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 Parent 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).

     

    SECTION
      4.22. Application
      of Takeover Protections.
      The
      Parent 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 Parent's charter documents or the laws of its state of incorporation
      that is or could become applicable to the Stockholders as a result of the
      Stockholders and the Parent fulfilling their obligations or exercising their
      rights under this Agreement, including, without limitation, the issuance of
      the
      Shares and the Stockholders' ownership of the Shares.

     

    SECTION
      4.23. No
      Additional Agreements.
      The
      Parent does not have any agreement or understanding with the Stockholders with
      respect to the transactions contemplated by this Agreement other than as
      specified in this Agreement.

     

    SECTION
      4.24. Investment
      Company.
      The
      Parent 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.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    SECTION
      4.25. Disclosure.
      The
      Parent confirms that neither it nor any person acting on its behalf has provided
      any Stockholder or its respective agents or counsel with any information that
      the Parent believes constitutes material, non-public information except insofar
      as the existence and terms of the proposed transactions hereunder may constitute
      such information and except for information that will be disclosed by the Parent
      under a current report on Form 8-K filed within one business days after the
      Closing. The Parent understands and confirms that the Stockholders will rely
      on
      the foregoing representations and covenants in effecting transactions in
      securities of the Parent. All disclosure provided to the Stockholders regarding
      the Parent, its business and the transactions contemplated hereby, furnished
      by
      or on behalf of the Parent (including the Parent’s representations and
      warranties set forth in this Agreement) are true and correct and do not contain
      any untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in light of the
      circumstances under which they were made, not misleading.

     

    SECTION
      4.26. Certain
      Registration Matters.
      Except
      as specified in the Parent Disclosure Letter and Filed Parent SEC Documents
      and
      except for registration rights granted to Stephen Siedow, Thomas W. Colligan,
      La
      Pergola Investments Limited, Fountainhead Investments, Inc., Gaha Ventures
      LLC,
      G4, LLC and Fountainhead Capital Partners Limited (pursuant to a Convertible
      Note Conversion Agreement), the Parent has not granted or agreed to grant to
      any
      person any rights (including “piggy-back” registration rights) to have any
      securities of the Parent registered with the SEC or any other governmental
      authority that have not been satisfied.

     

    SECTION
      4.27. Listing
      and Maintenance Requirements.
      The
      Parent 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 Parent Stock on the trading market
      on
      which the Parent
      Stock are
      currently listed or quoted. The issuance and sale of the Shares under this
      Agreement does not contravene the rules and regulations of the trading market
      on
      which the Parent Stock are currently listed or quoted, and no approval of the
      stockholders of the Parent is required for the Parent to issue and deliver
      to
      the Stockholders the Shares contemplated by this Agreement.

     

    SECTION
      4.28. No
      Undisclosed Events, Liabilities, Developments or Circumstances.
      No
      event, liability, development or circumstance has occurred or exists, or is
      contemplated to occur with respect to the Parent, its subsidiaries or their
      respective business, properties, prospects, operations or financial condition,
      that would be required to be disclosed by the Parent under applicable securities
      laws on a registration statement on Form S-1 filed with the SEC relating to
      an
      issuance and sale by the Parent of its Common Stock and which has not been
      publicly announced.

     

    SECTION
      4.29. Foreign
      Corrupt Practices.
      Neither
      the Parent, nor any of its subsidiaries, nor, to the Parent’s knowledge, any
      director, officer, agent, employee or other person acting on behalf of the
      Parent or any of its subsidiaries has, in the course of its actions for, or
      on
      behalf of, the Parent (i) used any corporate funds for any unlawful
      contribution, gift, entertainment or other unlawful expenses relating to
      political activity; (ii) made any direct or indirect unlawful payment to any
      foreign or domestic government official or employee from corporate funds; (iii)
      violated or is in violation of any provision of the U.S. Foreign Corrupt
      Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
      payoff, influence payment, kickback or other unlawful payment to any foreign
      or
      domestic government official or employee.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      V

     

    Deliveries

     

    SECTION
      5.01. Deliveries
      of the Stockholders.
      

     

    (a) Concurrently
      herewith each Stockholder is delivering to the Parent this Agreement executed
      by
      the Stockholder.

     

    (b) At
      or
      prior to the Closing, each Stockholder shall deliver to the Parent:

     

    (i) certificates
      representing its Company Stock; and

     

    (ii) duly
      executed stock powers for transfer by the Stockholder of its Company Stock
      to
      the Parent.

     

    SECTION
      5.02. Deliveries
      of the Parent.
      

     

    (a) Concurrently
      herewith, the Parent is delivering:

     

    (i) to
      each
      Stockholder and to the Company, a copy of this Agreement executed by
      Parent;

     

    (ii) to
      the
      Company, a certificate from the Parent, signed by its Secretary or Assistant
      Secretary certifying that the attached copies of the Parent Charter, Parent
      Bylaws and resolutions of the Board of Directors of the Parent approving the
      Agreement and the Transactions, are all true, complete and correct and remain
      in
      full force and effect;

     

    (b) At
      or
      prior to the Closing, the Parent shall deliver:

     

    (i) to
      the
      Company, a letter of resignation of Thomas W. Colligan from all offices he
      holds
      with the Parent effective upon the Closing and from his position as a director
      of the Parent that will become effective upon the
      10th
      day
      following the mailing by the Parent to its stockholders the 14f-1
      Notice;
      

     

    (ii) to
      the
      Company, evidence of the election of Peter Wang, as a director and as the
      Chairman and Chief Executive Officer of the Parent effective upon the
      Closing;

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (iii) to
      the
      Company, such pay-off letters and releases relating to liabilities as the
      Company shall request and such pay-off letters and releases shall be in form
      and
      substance satisfactory to the Company; 

     

    (iv) to
      the
      Company the results of UCC, judgment lien and tax lien searches with respect
      to
      the Parent, the results of which indicate no liens on the assets of the Parent;

     

    (v) to
      the
      Company, originals or certified copies of all existing corporate records,
      accounting books and records (including without limitation, journals, schedules,
      work papers, breakdowns, software records), lists of bank accounts and
      signatories thereon, locations of safe deposit boxes with a list of signatories,
      the name, address, contact numbers and contact persons of the Parent’s current
      independent auditors and controller and chief financial officer, and all other
      administrative and financial documentation, files, records of the Parent;
      and

     

    (c) At
      or
      within 5 business days following the Closing, the Parent shall
      deliver:

     

    (i) to
      each
      Stockholder, certificates representing the new shares of Parent Common Stock
      issued to such Stockholder as set forth on Exhibit
      A;
      and

     

    (ii) to
      the
      Company, consent letters of the accounting firms of Parent confirming each
      such
      firm’s respective consent to the use by the Parent of reports prepared by such
      firm regarding the financial statements of the Parent in all future registration
      statements filed with the SEC.

     

    SECTION
      5.03. Deliveries
      of the Company.
      

     

    (a) Concurrently
      herewith, the Company is delivering to the Parent:

     

    (i) this
      Agreement executed by Company; and

     

    (ii) a
      certificate from the Company, signed by its authorized officer certifying that
      the attached copies of the Company Constituent Instruments and resolutions
      of
      the Board of Directors of the Company approving the Agreement and the
      Transactions are all true, complete and correct and remain in full force and
      effect.

     

    (b) At
      or
      prior to the Closing, the Company shall deliver:

     

    (i) To
      the
      Parent, a form of Current Report on Form 8-K, which is substantially in the
      form
      to be filed, which includes the financial statements and pro forma financial
      statements required by the Form 8-K for a reverse merger - shell transaction,
      together with a signed audit report of the independent accountants for the
      Company.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VI

     

    Conditions
      to Closing

    

    SECTION
      6.01. Stockholder
      and Company Conditions Precedent.
      The
      obligations of the Stockholders and the Company to enter into and complete
      the
      Closing is subject, at the option of the Stockholders and the Company, to the
      fulfillment on or prior to the Closing Date of the following conditions.

     

    (a) Representations
      and Covenants.
      The
      representations and warranties of the Parent contained in this Agreement shall
      be true in all material respects on and as of the Closing Date with the same
      force and effect as though made on and as of the Closing Date. The Parent shall
      have performed and complied in all material respects with all covenants and
      agreements required by this Agreement to be performed or complied with by the
      Parent on or prior to the Closing Date. The Parent shall have delivered to
      the
      Stockholders and the Company, a certificate, dated the Closing Date, to the
      foregoing effect. 

     

    (b) Litigation.
      No
      action, suit or proceeding shall have been instituted before any court or
      governmental or regulatory body or instituted or threatened by any governmental
      or regulatory body to restrain, modify or prevent the carrying out of the
      Transactions or to seek damages or a discovery order in connection with such
      Transactions, or which has or may have, in the reasonable opinion of the Company
      or any Stockholders, a materially adverse effect on the assets, properties,
      business, operations or condition (financial or otherwise) of the Parent or
      the
      Company. 

     

    (c) No
      Material Adverse Change.
      There
      shall not have been any occurrence, event, incident, action, failure to act,
      or
      transaction since December 31, 2006 which has had or is reasonably likely to
      cause a Parent Material Adverse Effect.

     

    (d) Post-Closing
      Capitalization.
      At, and
      immediately after, the Closing, the authorized capitalization, and the number
      of
      issued and outstanding shares of the capital stock of the Company and the
      Parent, on a fully-diluted basis, as indicated on a schedule to be delivered
      by
      the Parties at or prior to the Closing, shall be acceptable to the Stockholders
      in their sole and absolute discretion.

     

    (e) SEC
      Reports.
      The
      Parent shall have filed all reports and other documents required to be filed
      by
      Parent under the U.S. federal securities laws through the Closing Date. The
      Parent shall have filed the Annual Report for the fiscal year ended December
      31,
      2006 with the SEC.

     

    (f) OTCBB
      Quotation.
      The
      Parent shall have maintained its status as a Company whose common stock is
      quoted on the Over-the-Counter Bulletin Board and no reason shall exist as
      to
      why such status shall not continue immediately following the
      Closing.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (g) Deliveries.
      The
      deliveries specified in Section 5.02 shall have been made by the Parent.

     

    (h) No
      Suspensions of Trading in Parent Stock; Listing.
      Trading
      in the Parent Stock shall not have been suspended by the SEC or any trading
      market (except for any suspensions of trading of not more than one trading
      day
      solely to permit dissemination of material information regarding the Parent)
      at
      any time since the date of execution of this Agreement, and the Parent Stock
      shall have been at all times since such date listed for trading on a trading
      market.

     

    (i) Satisfactory
      Completion of Due Diligence.
      The
      Company and the Stockholders shall have completed their legal, accounting and
      business due diligence of the Parent and the results thereof shall be
      satisfactory to the Company and the Stockholders in their sole and absolute
      discretion.

     

    (j) Delivery
      of Audit Report and Financial Statements.
      The
      Company shall have completed the Company Financial Statements and shall have
      received an audit report from an independent audit firm that is registered
      with
      the Public Company Accounting Oversight Board relating to the fiscal years
      ended
      June 30, 2005 and 2006.

     

    (k) Completion
      of Financing.
      The
      Financing (as defined in Section 7.12 below) shall have been completed or shall
      be completed simultaneously with the Closing.

     

    (l) Delivery
      of PRC Legal Opinion.
      The
      Company shall have received an opinion from its legal counsel in the People’s
      Republic of China that is otherwise satisfactory to the Company, the
      Stockholders, the Parent and the investors investing in the
      Financing.

     

    (m) Agreement
      as to Exchange Ratio.
      The
      Company and the Stockholders shall have agreed with the Parent regarding the
      exchange ratio of shares of Parent Stock for Shares of Company Stock and each
      of
      the Parties shall have mutually agreed on the completion of Exhibit A
      hereto.

     

    (n) Conversion
      of Note.
      The
      Parent shall have entered into the Convertible Note Conversion Agreement with
      Fountainhead Capital Partners Limited.

     

    (o) Consulting
      Agreement.
      The
      Parent shall have entered into the Consulting Agreement with Fountainhead
      Capital Partners Limited.

     

    SECTION
      6.02. Parent
      Conditions Precedent.
      The
      obligations of the Parent to enter into and complete the Closing is subject,
      at
      the option of the Parent, to the fulfillment on or prior to the Closing Date
      of
      the following conditions, any one or more of which may be waived by the Parent
      in writing. 

     

    (a) Representations
      and Covenants.
      The
      representations and warranties of the Stockholders and the Company contained
      in
      this Agreement shall be true in all material respects on and as of the Closing
      Date with the same force and effect as though made on and as of the Closing
      Date. The Stockholders and the Company shall have performed and complied in
      all
      material respects with all covenants and agreements required by this Agreement
      to be performed or complied with by the Stockholders and the Company on or
      prior
      to the Closing Date. The Company shall have delivered to the Parent, if
      requested, a certificate, dated the Closing Date, to the foregoing effect.
      

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (b) Litigation.
      No
      action, suit or proceeding shall have been instituted before any court or
      governmental or regulatory body or instituted or threatened by any governmental
      or regulatory body to restrain, modify or prevent the carrying out of the
      Transactions or to seek damages or a discovery order in connection with such
      Transactions, or which has or may have, in the reasonable opinion of the Parent,
      a materially adverse effect on the assets, properties, business, operations
      or
      condition (financial or otherwise) of the Parent.

     

    (c) No
      Material Adverse Change.
      There
      shall not have been any occurrence, event, incident, action, failure to act,
      or
      transaction since December 31, 2006 which has had or is reasonably likely to
      cause a Company Material Adverse Effect. 

     

    (d) Deliveries.
      The
      deliveries specified in Section 5.01 and Section 5.03 shall have been made
      by
      the Stockholders and the Company, respectively. 

     

    (e) Audited
      Financial Statements and Form 10 Disclosure.
      The
      Company shall have provided the Parent and the Stockholders with reasonable
      assurances that the Parent will be able to comply with its obligation to file
      a
      current report on Form 8-K within one (1) business days following the Closing
      containing the requisite audited consolidated financial statements of the
      Company and the requisite Form 10-type disclosure regarding the Company.

     

    (f) Post-Closing
      Capitalization.
      At, and
      immediately after, the Closing, the authorized capitalization, and the number
      of
      issued and outstanding shares of the capital stock of the Company and the
      Parent, on a fully-diluted basis, as indicated on a schedule to be delivered
      by
      the Parties at or prior to the Closing, shall be acceptable to the Parent in
      its
      sole and absolute discretion.

     

    (g) Satisfactory
      Completion of Due Diligence.
      The
      Parent shall have completed its legal, accounting and business due diligence
      of
      the Company and the Stockholders and the results thereof shall be satisfactory
      to the Parent in its sole and absolute discretion.

     

    (h) Delivery
      of Audit Report and Financial Statements.
      The
      Company shall have completed the Company Financial Statements and shall have
      received an audit report from an independent audit firm that is registered
      with
      the Public Company Accounting Oversight Board relating to the fiscal years
      ended
      December 31, 2006 and December 31, 2005. The form and substance of the Financial
      Statements shall be satisfactory to the Parent in its sole and absolute
      discretion.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (i) Completion
      of Financing.
      The
      Financing (as defined in Section 7.12 below) shall have been completed or shall
      be completed simultaneously with the Closing.

     

    (j) Delivery
      of PRC Legal Opinion.
      The
      Parent shall have received an opinion from the Company’s legal counsel in the
      People’s Republic of China that is otherwise satisfactory to the Company, the
      Stockholders, the Parent and the investors investing in the
      Financing.

     

    (k) Agreement
      as to Exchange Ratio.
      The
      Company and the Stockholders shall have agreed with the Parent regarding the
      exchange ratio of shares of Parent Stock for Shares of Company Stock and each
      of
      the Parties shall have mutually agreed on the completion of Exhibit A
      hereto.

     

    (l) Registration
      Rights Agreement.
      The
      Company shall have entered into a registration rights agreement with such
      parties as indicated by the Parent and the form and substance of such
      registration rights agreement shall be reasonably satisfactory to the
      Parent.

     

    (m) Indemnification
      Agreement.
      Parent
      shall have entered into the Indemnification Agreement with Thomas W.
      Colligan.

     

    ARTICLE
      VII

     

    Covenants

    

    SECTION
      7.01. Preparation
      of the 14f-1 Notice; Blue Sky Laws 

     

    (a) As
      soon
      as possible following the Closing and in any event, within two business days
      thereafter, the Company and Parent shall prepare and file with the SEC the
      14f-1
      Notice in connection with the consummation of this Agreement. The Parent shall
      cause the 14f-1 Notice to be mailed to the Parent’s stockholders as promptly as
      practicable thereafter. 

     

    (b) Parent
      shall take any action (other than qualifying to do business in any jurisdiction
      in which it is not now so qualified) required to be taken under any applicable
      state securities laws in connection with the issuance of Parent Stock in
      connection with this Agreement.

     

    SECTION
      7.02. Public
      Announcements.
      Parent
      and the Company will consult with each other before issuing, and provide each
      other the opportunity to review and comment upon, any press release or other
      public statements with respect to the Agreement and the Transactions and shall
      not issue any such press release or make any such public statement prior to
      such
      consultation, except as may be required by applicable Law, court process or
      by
      obligations pursuant to any listing agreement with any national securities
      exchange.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.03. Fees
      and Expenses.
      All
      fees and expenses incurred in connection with this Agreement shall be paid
      by
      the Party incurring such fees or expenses, whether or not this Agreement is
      consummated. 

     

    SECTION
      7.04. Continued
      Efforts.
      Each
      Party shall use commercially reasonable efforts to (a) take all action
      reasonably necessary to consummate the Transactions, and (b) take such
      steps and do such acts as may be necessary to keep all of its representations
      and warranties true and correct as of the Closing Date with the same effect
      as
      if the same had been made, and this Agreement had been dated, as of the Closing
      Date. 

     

    SECTION
      7.05. Conduct
      of Business. 
      During
      the period from the date hereof through the Closing Date, Parent and the Company
      shall carry on their respective businesses in the ordinary and usual course
      consistent with past practice.

     

    SECTION
      7.06. Exclusivity.
      The
      Parent shall not (i) solicit, initiate, or encourage the submission of any
      proposal or offer from any person relating to the acquisition of any capital
      stock or other voting securities of the Parent, or any assets of the Parent
      (including any acquisition structured as a merger, consolidation, share exchange
      or other business combination), (ii) participate in any discussions or
      negotiations regarding, furnish any information with respect to, assist or
      participate in, or facilitate in any other manner any effort or attempt by
      any
      person to do or seek any of the foregoing, or (iii) take any other action that
      is inconsistent with the Transactions and that has the effect of avoiding the
      Closing contemplated hereby. The Parent shall notify the Company immediately
      if
      any person makes any proposal, offer, inquiry, or contact with respect to any
      of
      the foregoing.

     

    SECTION
      7.07. Filing
      of 8-K and Press Release.
      Parent
      shall file, within one business day of the Closing Date, a current report on
      Form 8-K and attach as exhibits all relevant agreements with the SEC disclosing
      the terms of this Agreement and other requisite disclosure regarding the
      Transactions and including the requisite audited consolidated financial
      statements of the Company and the requisite Form 10 disclosure regarding the
      Company. In addition, the Parent shall issue a press release prior to 9:30
      a.m.
      (New York Time) on the business day following the Closing Date, announcing
      the
      closing of the transaction.

     

    SECTION
      7.08. Furnishing
      of Information.
      As long
      as any Stockholder owns the Shares, the Parent 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 Parent after the date hereof
      pursuant to the Exchange Act. As long as any Stockholder owns Shares, if the
      Parent is not required to file reports pursuant to such laws, it will prepare
      and furnish to the Stockholders and make publicly available in accordance with
      Rule 144(c) promulgated by the SEC pursuant to the Securities Act, such
      information as is required for the Stockholder to sell the Shares under Rule
      144. The Parent 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.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.09. Preparation
      of Disclosure Letters.
      The
      Parties acknowledge and agree that (i) neither the Company nor the Parent has
      yet delivered the Company Disclosure Letter or the Parent Disclosure Letter,
      respectively, and (ii) none of the Company, the Stockholders nor the Parent
      has
      completed its respective due diligence investigation of the Parent or the
      Company and the Stockholders, respectively, nor has any of them been provided
      with copies of, nor had an opportunity to review, the items to be referred
      to on
      the Company Disclosure Letter or the Parent Disclosure Letter. The Company
      and
      the Stockholders shall deliver to the Parent the Company Disclosure Letter
      and
      the Parent shall deliver to the Company and the Stockholders the Parent
      Disclosure Letter, including copies of all agreements, and other documents
      referred to thereon, in final form within at least 10 business days prior to
      the
      Closing. The Parent, on the one hand, and the Company and the Stockholders,
      on
      the other hand, shall have 10 business days following delivery of the Company
      Disclosure Letter and the Parent Disclosure Letter, along with all related
      agreements and other documents referred to thereon, respectively, in which
      to
      terminate this Agreement if the Parent or the Company and the Stockholders,
      as
      the case may be, object to any information contained in such disclosure letters
      or the contents of any such agreement or other document and the Parties cannot
      agree on mutually satisfactory modifications thereto.

     

    SECTION
      7.10. Access. Each
      Party shall permit representatives of each other Party to have full access
      to
      all premises, properties, personnel, books, records (including Tax records),
      contracts, and documents of or pertaining to such Party.

     

    SECTION
      7.11. Preservation
      of Business.
      From the
      date of this Agreement until the Closing Date, each of the Company and the
      Parent shall operate only in the ordinary and usual course of business
      consistent with past practice (provided, however, that Parent shall not issue
      any securities without the prior written consent of the Company), and shall
      use
      reasonable commercial efforts to (a) preserve intact its respective business
      organization, (b) preserve the good will and advantageous relationships with
      customers, suppliers, independent contractors, employees and other Persons
      material to the operation of its respective business, and (c) not permit any
      action or omission which would cause any of its respective representations
      or
      warranties contained herein to become inaccurate or any of its respective
      covenants to be breached in any material respect. 

     

    SECTION
      7.12. Financing.
      Parent
      shall use commercially reasonable efforts to raise at least $12 million in
      an
      equity financing transaction on terms that are satisfactory to the Company
      and
      the Stockholders (the “Financing”),
      which
      Financing shall be consummated simultaneously with the Closing.

     

    SECTION
      7.13 Legal
      Opinion re: Transfers of Certain Parent Shares.
      Any
      legal opinion required to be rendered in connection with any transfer of the
      Parent’s shares held by La Pergola Investments Limited, Fountainhead
      Investments, Inc., Gaha Ventures, LLC, G4, LLC, Stephen Siedow and Fountainhead
      Capital Partners Limited (including but not limited to shares issuable on the
      conversion of the Convertible Note) shall be rendered by Robert L. B. Diener
      or
      his duly-appointed designee.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VIII

     

    Miscellaneous

     

    SECTION
      8.01. Notices.
      All
      notices, requests, claims, demands and other communications under this Agreement
      shall be in writing and shall be deemed given upon receipt by the Parties at
      the
      following addresses (or at such other address for a Party as shall be specified
      by like notice):

     

    If
      to the
      Parent, to:

    

    Equicap,
      Inc.

    c/o
      Robert L. B. Diener

    122
      Ocean
      Park Blvd., Suite 307

    Santa
      Monica, CA 90405

    Facsimile:
      +1 (310) 362-8887-

    

    If
      to the
      Company, to:

     

    Usunco
      Automotive Limited

    10510
      Hillsboro Road

    Santa
      Ana, CA 92705

    Attention:
      Jason LuExecutive Director

    Facsimile:
      +1(909) 697-2111

     

    If
      to
      Stockholders at the addresses set forth in Exhibit A hereto. 

     

    with
      a
      copy to:

     

    Graubard
      Miller

    The
      Chrysler Building

    405
      Lexington Avenue, 19th
      Floor

    New
      York,
      NY 10174

    Attention:
      Andrew D. Hudders, Esq.

    Facsimile:
      (212) 818-8614

     

    SECTION
      8.02. Amendments;
      Waivers; No Additional Consideration.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed by the Company, Parent and the Stockholders 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 Stockholder
      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
      Stockholders who then hold Shares.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    SECTION
      8.03. Termination.

     

    (a) Termination
      of Agreement.
      The
      Parties may terminate this Agreement as provided below:

     

    (i) The
      Company, the Stockholders and the Parent may terminate this Agreement by mutual
      written consent at any time prior to the Closing;

     

    (ii) The
      Parent may terminate this Agreement by giving written notice to the Company
      and
      the Stockholders at any time prior to the Closing (A) in the event the Company
      or any of the Stockholders have breached any material representation, warranty,
      or covenant contained in this Agreement in any material respect, the Parent
      has
      notified the Company and/or the Stockholders of the breach, and the breach
      has
      continued without cure for a period of twenty days after the notice of breach,
      or (B) if the Closing shall not have occurred on or before March
      16,
      2007 by reason of the failure of any condition precedent under Section 6.02
      hereof (unless the failure results primarily from the Parent itself breaching
      any representation, warranty, or covenant contained in this Agreement);
      and

     

    (iii) The
      Company may terminate this Agreement by giving written notice to the Parent
      at
      any time prior to the Closing (A) in the event the Parent has breached any
      material representation, warranty, or covenant contained in this Agreement
      in
      any material respect, the Company has notified the Parent of the breach, and
      the
      breach has continued without cure for a period of twenty days after the notice
      of breach or (B) if the Closing shall not have occurred on or before March
      16,
      2007, by reason of the failure of any condition precedent under Section 6.01
      hereof (unless the failure results primarily from the Company or the
      Stockholders themselves breaching any representation, warranty, or covenant
      contained in this Agreement).

     

    (b) Effect
      of Termination.
      If any
      Party terminates this Agreement pursuant to Section 8.03(a) above, all rights
      and obligations of the Parties hereunder shall terminate without any Liability
      of any Party to any other Party. 

     

    SECTION
      8.04. Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Shares is mutilated, lost, stolen
      or
      destroyed, the Parent 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 Parent 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 Parent may require delivery of such mutilated
      certificate or instrument as a condition precedent to any issuance of a
      replacement.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    SECTION
      8.05. Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Stockholders, Parent and the
      Company will be entitled to specific performance under this Agreement. 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.

     

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

     

    SECTION
      8.07. Limitation
      of Liability.
      Notwithstanding anything herein to the contrary, each of the Parent and the
      Company acknowledge and agree that the liability of a Stockholder arising
      directly or indirectly, under any transaction document of any and every nature
      whatsoever shall be satisfied solely out of the assets of such Stockholder,
      and
      that no trustee, officer, other investment vehicle or any other affiliate of
      such Stockholder or any investor, shareholder or holder of shares of beneficial
      interest of such Stockholder shall be personally liable for any liabilities
      of
      such Stockholder.

     

    SECTION
      8.08. Interpretation.
      When a
      reference is made in this Agreement to a Section, such reference shall be to
      a
      Section of this Agreement unless otherwise indicated. Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
      deemed to be followed by the words “without limitation”. 

     

    SECTION
      8.09. Severability.
      If any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced by any rule or Law, or public policy, all other conditions and
      provisions of this Agreement shall nevertheless remain in full force and effect
      so long as the economic or legal substance of the Transactions contemplated
      hereby is not affected in any manner materially adverse to any Party. Upon
      such
      determination that any term or other provision is invalid, illegal or incapable
      of being enforced, the Parties shall negotiate in good faith to modify this
      Agreement so as to effect the original intent of the Parties as closely as
      possible in an acceptable manner to the end that Transactions contemplated
      hereby are fulfilled to the extent possible.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    SECTION
      8.10. Counterparts;
      Facsimile Execution.
      This
      Agreement may be executed in one or more counterparts, all of which shall be
      considered one and the same agreement and shall become effective when one or
      more counterparts have been signed by each of the Parties and delivered to
      the
      other Parties. Facsimile execution and delivery of this Agreement is legal,
      valid and binding for all purposes.

     

    SECTION
      8.11. Entire
      Agreement; Third Party Beneficiaries.
      This
      Agreement, taken together with the Company Disclosure Letter and the Parent
      Disclosure Letter, (a) constitute the entire agreement, and supersede all prior
      agreements and understandings, both written and oral, among the Parties with
      respect to the Transactions and (b) are not intended to confer upon any person
      other than the Parties any rights or remedies.

     

    SECTION
      8.12. Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of New York, regardless of the laws that might otherwise govern under
      applicable principles of conflicts of laws thereof, except to the extent the
      laws of Nevada are mandatorily applicable to the Transactions.

     

    SECTION
      8.13. Assignment.
      Neither
      this Agreement nor any of the rights, interests or obligations under this
      Agreement shall be assigned, in whole or in part, by operation of law or
      otherwise by any of the Parties without the prior written consent of the other
      Parties. Any purported assignment without such consent shall be void. Subject
      to
      the preceding sentences, this Agreement will be binding upon, inure to the
      benefit of, and be enforceable by, the Parties and their respective successors
      and assigns.

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    The
      Parties hereto have executed and delivered this Share Exchange Agreement as
      of
      the date first above written.

     

    The
      Parent:

    
      	 	 	 
	 	
              EQUICAP,
                INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              Thomas W. Colligan
	 	Title:
              CEO and President

    

     

    The
      Company:

    
      	 	 	 
	 	
              USUNCO
                AUTOMOTIVE LIMITED

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              Peter Wang
	 	Title:
              Chairman and President

    

     

    [Stockholder
      Share Exchange Agreement Signature Pages Follow]

     

    
      [Signature
        Page to Share Exchange Agreement]

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    The
      undersigned Stockholder hereby executes this Share Exchange Agreement
      as
      of the date first above written.

     

    
      	 	 	 	 
	 	 	 	
              For
                Individuals:

            
	 	 	 	 
	 	 	 	/s/
              Phillip
              Widmann
	
            	 	 	
              
Print
              Name Above
	 	 	 	
               

               

            
	 	 	 	
              
                

              

              Sign Name Above

            

    

     

    
      	 	 	 	 
	 	 	 	/s/
              Ruth
              Kirschner
	
            	 	 	
              
Print
              Name Above
	 	 	 	
               

               

            
	 	 	 	
              
Sign
              Name Above

    

     

    
      
        	 	 	 	 
	 	 	 	/s/
                Thomas
                Hsu
	
              	 	 	
                
Print
                Name Above
	 	 	 	
                 

                 

              
	 	 	 	
                

                Sign
                  Name Above

              

      

      
         

        
          
            	 	 	 	 
	 	 	 	/s/
                    Gong Chen 
	
                  	 	 	
                    
Print
                    Name Above
	 	 	 	
                     

                     

                  
	 	 	 	
                    

                    Sign
                      Name Above

                  

          

          
             

            
              
                	 	 	 	 
	 	 	 	/s/
                        Jason
                        Lu
	
                      	 	 	
                        
Print
                        Name Above
	 	 	 	
                         

                         

                      
	 	 	 	
                        

                        Sign
                          Name
                          Above

                      

              

            

          

        

      

    

     

    
      [Signature
        Page to Share Exchange Agreement]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      	 	 	 
	 	
              For
                Entities:

               

              SOLARIS
                CAPITAL LIMITED

            
	 
 	 
 	 
 
	 	By:  	
            
	 	
              
Name:
	 	Title:

       

      
        	 	 	 
	 	
                KARMEN
                  EQUITIES LIMITED.

              
	 
 	 
 	 
 
	 	By:  	
              
	 	
                
Name:
	 	Title:

        
           

          
            	 	 	 
	 	
                    
                      SINOQUEST
                        MANAGEMENT LTD.

                    

                  
	 
 	 
 	 
 
	 	By:  	
                  
	 	
                    
Name:
	 	Title:

             

          

        

        
          	 	 	 
	 	
                  
                    SIJ
                      HOLDING LTD.

                  

                
	 
 	 
 	 
 
	 	By:  	
                
	 	
                  
Name:
	 	Title:

          [Signature
            Page to Share Exchange Agreement]

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        

      

    

    EXHIBIT
      A 

    

    Shareholders
      of Usunco
      Automotive Limited

     

    As
      of the
      date of this Agreement, this Exhibit A shall only contain the name and address
      of each Stockholder and the number of shares of Company Stock held by each
      stockholder. Prior to the Closing, this Exhibit A shall be amended in a manner
      that is satisfactory to all of the Parties so that the missing information
      is
      provided.

     

    
      
        	
                Name
                  and Address of Stockholder

              	 	
                Tax
                  ID Number of Stockholder (if Applicable)

              	 	
                Number
                  of Shares of Company Stock Being Exchanged

              	 	
                Percentage
                  of Total Company Shares Represented By Shares Being
                  Exchanged

              	 	
                Number
                  of Shares of Parent Stock to be Received by
                  Stockholder

              	 
	
                 

                Phillip
                  Widmann

                10510
                  Hillsboro Road

                Santa
                  Ana, CA 92705

              	 	 	 	 	 	
                
                

                6,826

              	 	 	
                
                

                15.0

              	
                
                

                %

              	 	
                
                

                2,690,397

              	 
	
                 

                Solaris
                  Capital Limited

                7
                  New Road, Belize City

                Belize

              	 	 	 	 	 	
                
                

                1,840

              	 	 	
                
                

                4.0

              	
                
                

                %

              	 	
                
                

                732,217

              	 
	
                 

                Ruth
                  Kirschner

                22681
                  Oak Grove Ave.

                Aliso
                  Viejo, CA 92656

              	 	 	 	 	 	
                
                

                644

              	 	 	
                
                

                1.0

              	
                
                

                %

              	 	
                
                

                253,826

              	 
	
                 

                Thomas
                  Hsu

                4031
                  Via de la Paz

                Oceanside,
                  CA 92057

              	 	 	 	 	 	
                
                

                644

              	 	 	
                
                

                1.0

              	
                
                

                %

              	 	
                
                

                253,826

              	 
	
                 

                Karmen
                  Equities Limited

                Suite
                  504 Hollywood Centre

                233
                  Hollywood Road Central

                Hong
                  Kong

              	 	 	 	 	 	
                
                

                491

              	 	 	
                
                

                1.0

              	
                
                

                %

              	 	
                
                

                193,523

              	 
	
                 

                Gong
                  Chen

                210
                  East 85th
                  Street

                Suite
                  16

                New
                  York, NY 10028

              	 	 	 	 	 	
                
                

                460

                
                

              	 	 	
                
                

                1.0

                
                

              	
                
                

                %

                
                

              	 	
                
                

                181,304

              	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
           

          
            
              	
                      Name
                        and Address of Stockholder

                    	 	
                      Tax
                        ID Number of Stockholder (if Applicable)

                    	 	
                      Number
                        of Shares of Company Stock Being Exchanged

                    	 	
                      Percentage
                        of Total Company Shares Represented By Shares Being
                        Exchanged

                    	 	
                      Number
                        of Shares of Parent Stock to be Received by
                        Stockholder

                    	 

            

          

        

      

      
        	
                Sinoquest
                  Management Ltd

                75
                  Shuguang Lu, Building B

                Hangzhou,
                  310007 P.R.C.

              	 	 	 	 	 	
                
                

                15,640

              	 	 	
                
                

                34.0

              	
                
                

                %

              	 	
                
                

                6,164,343

              	 
	
                 

                Jason
                  Lu

                7531
                  Wynstone Place

                Fontana,
                  CA 92336

              	 	 	 	 	 	
                
                

                13,046

              	 	 	
                
                

                28.0

              	
                
                

                %

              	 	
                
                

                5,141,945

              	 
	
                 

                SIJ
                  Holding Ltd.

                75
                  Shuguang Lu, Building B

                Hangzhou,
                  310007 P.R.C.

              	 	 	 	 	 	
                
                

                6,900

              	 	 	
                
                

                15.0

              	
                
                

                %

              	 	
                
                

                2,719,563

              	 
	
                TOTAL:

              	 	 	 	 	 	
                46,491

              	 	 	
                100

              	
                %

              	 	
                18,330,944

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]