Document:

SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE

     

    AGREEMENT

     

    Dated
      as of June 5, 2007

     

    among

     

    NATIONAL
      REALTY AND MORTGAGE, INC

     

    and

     

    THE
      PURCHASERS LISTED ON EXHIBIT A

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              ARTICLE
                I Purchase
                and Sale of Preferred Stock

            	 	
              1

            
	 	 	 	 
	
              Section
                1.1

            	
              Purchase
                and Sale of Stock

            	 	
              1

            
	 	 	 	 
	
              Section
                1.2

            	
              Warrants

            	 	
              1

            
	 	 	 	 
	
              Section
                1.3

            	
              Conversion
                Shares

            	 	
              2

            
	 	 	 	 
	
              Section
                1.4

            	
              Purchase
                Price and Closing

            	 	
              2

            
	 	 	 	 
	
              Section
                1.5

            	
              Share
                Exchange Transaction

            	 	
              3

            
	 	 	 
	
              ARTICLE
                II Representations
                and Warranties

            	 	
              3

            
	 	 	 	 
	
              Section
                2.1

            	
              Representations
                and Warranties of the Company

            	 	
              3

            
	 	 	 	 
	
              Section
                2.2

            	
              Representations
                and Warranties of the Purchasers

            	 	
              15

            
	 	 	 
	
              ARTICLE
                III Covenants

            	 	
              17

            
	 	 	 	 
	
              Section
                3.1

            	
              Securities
                Compliance

            	 	
              17

            
	 	 	 	 
	
              Section
                3.2

            	
              Registration
                and Listing

            	 	
              17

            
	 	 	 	 
	
              Section
                3.3

            	
              Inspection
                Rights

            	 	
              18

            
	 	 	 	 
	
              Section
                3.4

            	
              Compliance
                with Laws

            	 	
              18

            
	 	 	 	 
	
              Section
                3.5

            	
              Keeping
                of Records and Books of Account

            	 	
              18

            
	 	 	 	 
	
              Section
                3.6

            	
              Reporting
                Requirements

            	 	
              18

            
	 	 	 	 
	
              Section
                3.7

            	
              Amendments

            	 	
              19

            
	 	 	 	 
	
              Section
                3.8

            	
              Other
                Agreements

            	 	
              19

            
	 	 	 	 
	
              Section
                3.9

            	
              Distributions

            	 	
              19

            
	 	 	 	 
	
              Section
                3.10

            	
              Use
                of Proceeds

            	 	
              19

            
	 	 	 	 
	
              Section
                3.11

            	
              Reservation
                of Shares

            	 	
              19

            
	 	 	 	 
	
              Section
                3.12

            	
              Transfer
                Agent Instructions

            	 	
              19

            
	 	 	 	 
	
              Section
                3.13

            	
              Disposition
                of Assets

            	 	
              20

            
	 	 	 	 
	
              Section
                3.14

            	
              Reporting
                Status

            	 	
              20

            
	 	 	 	 
	
              Section
                3.15 

            	
              Disclosure
                of Transaction

            	 	
              20

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                3.16

            	
              Disclosure
                of Material Information

            	 	
              21

            
	 	 	 	 
	
              Section
                3.17

            	
              Pledge
                of Securities

            	 	
              21

            
	 	 	 	 
	
              Section
                3.18

            	
              Form
                SB-2 Eligibility

            	 	
              21

            
	 	 	 	 
	
              Section
                3.19

            	
              Lock-Up
                Agreement

            	 	
              21

            
	 	 	 	 
	
              Section
                3.20

            	
              Investor
                and Public Relations Escrow

            	 	
              21

            
	 	 	 	 
	
              Section
                3.22

            	
              DTC

            	 	
              22

            
	 	 	 	 
	
              Section
                3.23

            	
              Subsequent
                Financings.

            	 	
              22

            
	 	 	 	 
	
              Section
                3.24

            	
              Sarbanes-Oxley
                Act

            	 	
              23

            
	 	 	 	 
	
              Section
                3.25

            	
              Exchange
                Listing

            	 	
              23

            
	 	 	 	 
	
              Section
                3.26

            	
              No
                Commissions in connection with Conversion of Preferred
                Shares

            	 	
              24

            
	 	 	 
	
              ARTICLE
                IV CONDITIONS

            	 	
              24

            
	 	 	 	 
	
              Section
                4.1

            	
              Conditions
                Precedent to the Obligation of the Company to Sell the
                Shares

            	 	
              24

            
	 	 	 	 
	
              Section
                4.2

            	
              Conditions
                Precedent to the Obligation of the Purchasers to Purchase the
                Shares

            	 	
              25

            
	 	 	 	 
	
              ARTICLE
                V

            	
              Stock
                Certificate Legend

            	 	
              28

            
	 	 	 	 
	
              Section
                5.1

            	
              Legend

            	 	
              28

            
	 	 	 	 
	
              ARTICLE
                VI

            	
              Indemnification

            	 	
              29

            
	 	 	 	 
	
              Section
                6.1

            	
              General
                Indemnity

            	 	
              29

            
	 	 	 	 
	
              Section
                6.2

            	
              Indemnification
                Procedure

            	 	
              29

            
	 	 	 
	
              ARTICLE
                VII Miscellaneous

            	 	
              30

            
	 	 	 	 
	
              Section
                7.1

            	
              Fees
                and Expenses

            	 	
              30

            
	 	 	 	 
	
              Section
                7.2

            	
              Specific
                Enforcement, Consent to Jurisdiction.

            	 	
              31

            
	 	 	 	 
	
              Section
                7.3

            	
              Entire
                Agreement; Amendment

            	 	
              31

            
	 	 	 	 
	
              Section
                7.4

            	
              Notices

            	 	
              32

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                7.5

            	
              Waivers

            	 	
              33

            
	 	 	 	 
	
              Section
                7.6

            	
              Headings

            	 	
              33

            
	 	 	 	 
	
              Section
                7.7

            	
              Successors
                and Assigns

            	 	
              33

            
	 	 	 	 
	
              Section
                7.8

            	
              No
                Third Party Beneficiaries

            	 	
              33

            
	 	 	 	 
	
              Section
                7.9

            	
              Governing
                Law

            	 	
              33

            
	 	 	 	 
	
              Section
                7.10

            	
              Survival

            	 	
              33

            
	 	 	 	 
	
              Section
                7.11

            	
              Counterparts

            	 	
              33

            
	 	 	 	 
	
              Section
                7.12

            	
              Publicity

            	 	
              33

            
	 	 	 	 
	
              Section
                7.13

            	
              Severability

            	 	
              33

            
	 	 	 	 
	
              Section
                7.14

            	
              Further
                Assurances

            	 	
              34

            

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

     

    This
      SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”)
      is
      dated as of June 5, 2007 by and among National Realty and Mortgage, Inc., a
      Nevada corporation (the “Company”),
      and
      each of the Purchasers of shares of Series B Convertible Preferred Stock of
      the
      Company whose names are set forth on Exhibit
      A
      hereto
      (individually, a “Purchaser”
and
      collectively, the “Purchasers”).

     

    The
      parties hereto agree as follows:

     

    ARTICLE
      I

     

    Purchase
      and Sale of Preferred Stock

     

    Section
      1.1 Purchase
      and Sale of Stock.
      Upon
      the following terms and conditions, the Company shall issue and sell to the
      Purchasers and each of the Purchasers shall purchase from the Company, the
      number of shares of the Company’s Series B Convertible Preferred Stock, par
      value $0.001 per share and at a purchase price of $40.50 per share (the
“Preferred
      Shares”),
      convertible into shares of the Company’s common stock, par value $0.001 per
      share (the “Common
      Stock”),
      in
      the amounts set forth opposite such Purchaser’s name on Exhibit A hereto. The
      designation, rights, preferences and other terms and provisions of the Series
      B
      Convertible Preferred Stock are set forth in the Series B Certificate of
      Designation of the Relative Rights and Preferences of the Series B Convertible
      Preferred Stock attached hereto as Exhibit
      B
      (the
“Series
      B Certificate of Designation”).
      The
      Company and the Purchasers are executing and delivering this Agreement in
      accordance with and in reliance upon the exemption from securities registration
      afforded by Rule 506 of Regulation D (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“Commission”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”)
      or
      Section 4(2) of the Securities Act.

     

    Section
      1.2 Warrants.
      Upon
      the following terms and conditions and for no additional consideration, (i)
      each
      of the Purchasers shall be issued (x) Series A Warrants, in substantially the
      form attached hereto as Exhibit C-1 (the “Series
      B Warrants”),
      to
      purchase the number of shares of Common Stock equal to One Hundred percent
      (100%) of the number of shares of Common Stock issuable upon conversion of
      the
      Preferred Shares purchased by each Purchaser pursuant to the terms of this
      Agreement, as set forth opposite such Purchaser’s name on Exhibit A hereto,
      (y) Series B Warrants, in substantially the form attached hereto as Exhibit
      C-2 (the “Series
      B Warrants”)
      to
      purchase the number of shares of Common Stock equal to fifty percent (50%)
      of
      the number of shares of Common Stock issuable upon conversion of the Preferred
      Shares purchased by each Purchaser pursuant to the terms of this Agreement,
      as
      set forth opposite such Purchaser’s name on Exhibit A hereto and (ii) each of
      the Purchasers shall also be issued (x) a Series J Warrant, in substantially
      the
      form attached hereto as Exhibit C-3 (the “Series
      J Warrant”),
      to
      purchase the number of shares of Common Stock equal to the Purchase Price (as
      defined below) paid by the Purchasers pursuant to this Agreement as set forth
      opposite such Purchaser’s name on Exhibit A hereto divided by $1.49, (y) a
      Series C Warrant, in substantially the form attached hereto as Exhibit C-4
      (the
“Series
      C Warrant”)
      to
      purchase the number of shares of Common Stock equal to one hundred percent
      (100%) of the number of shares of Common Stock purchased by such Purchaser
      pursuant to the Series J Warrant, and (z) a Series D Warrant, in substantially
      the form attached hereto as Exhibit C-5 (the “Series
      D Warrant”
and,
      together with the Series B Warrants, the Series B Warrants, the Series J Warrant
      and the Series C Warrant, the “Warrants”)
      to
      purchase the number of shares of Common Stock equal to fifty percent (50%)
      of
      the number of shares of Common Stock purchased by such Purchaser pursuant to
      the
      Series J Warrant. The Warrants shall expire five (5) years following the Closing
      Date, except for the Series J Warrant, which shall expire twelve (12) months
      following the Closing Date. Each of the Warrants shall have an exercise price
      per share equal to the Warrant Price (as defined in the applicable
      Warrant).

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Section
      1.3 Conversion
      Shares.
      The
      Company has authorized and has reserved and covenants to continue to reserve,
      free of preemptive rights and other similar contractual rights of stockholders,
      a number of shares of Common Stock equal to one hundred fifty percent (150%)
      of
      the number of shares of Common Stock as shall from time to time be sufficient
      to
      effect the conversion of all of the Preferred Shares and exercise of the
      Warrants then outstanding. Any shares of Common Stock issuable upon conversion
      of the Preferred Shares and exercise of the Warrants (and such shares when
      issued) are herein referred to as the “Conversion
      Shares”
and
      the
“Warrant
      Shares”,
      respectively. The Preferred Shares, the Conversion Shares and the Warrant Shares
      are sometimes collectively referred to as the “Shares”.

     

    Section
      1.4 Purchase
      Price and Closing.
      Subject
      to the terms and conditions hereof, the Company agrees to issue and sell to
      the
      Purchasers and, in consideration of and in express reliance upon the
      representations, warranties, covenants, terms and conditions of this Agreement,
      the Purchasers, severally but not jointly, agree to purchase the Preferred
      Shares and the Warrants for an aggregate purchase price of up to $6,700,000
      (the
“Purchase
      Price”).
      The
      closing of the purchase and sale of the Preferred Shares and the Warrants to
      be
      acquired by the Purchasers from the Company under this Agreement shall take
      place at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, New York
      10154 (the “Closing”)
      at
      10:00 a.m., New York time on such date as the Purchasers and the Company may
      agree upon; provided,
      that
      all of the conditions set forth in Article IV hereof and applicable to the
      Closing shall have been fulfilled or waived in accordance herewith (the
“Closing
      Date”).
      Subject to the terms and conditions of this Agreement, at the Closing the
      Company shall deliver or cause to be delivered to each Purchaser (x) a
      certificate for the number of Preferred Shares set forth opposite the name
      of
      such Purchaser on Exhibit A hereto, (y) its Warrants to purchase such number
      of
      shares of Common Stock as is set forth opposite the name of such Purchaser
      on
      Exhibit A attached hereto and (z) any other documents required to be delivered
      pursuant to Article IV hereof. At the Closing, each Purchaser shall deliver
      its
      Purchase Price by wire transfer to the escrow account pursuant to the Escrow
      General Agreement (as hereafter defined). In addition, the parties acknowledge
      that (i) Five Hundred Thousand Dollars ($500,000) of the Purchase Price funded
      on the Closing Date shall be deposited in an escrow account pursuant to the
      Escrow General Agreement to be used by the Company in connection with investor
      and public relations and securities law compliance, including related legal
      fees
      and legal fees relating to minor post-closing corporate matters in the British
      Virgin Islands, in accordance with Section 3.20 hereof and (ii) Two Hundred
      Thousand Dollars ($200,000) of the Purchase Price funded on the Closing Date
      shall be deposited in an escrow account pursuant to the Escrow General Agreement
      to fund, the Company’s various working capital usages in the United States in
      accordance with Section 3.21 hereof.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Section
      1.5 Share
      Exchange Transaction.
      The
      parties acknowledge that immediately prior to the consummation of the
      transactions contemplated by this Agreement, the Company will issue shares
      of
      its Common Stock to Rise Elite International Limited, a company organized in
      the
      British Virgin Islands (“Elite”),
      pursuant to that certain Share Exchange Agreement dated as of the date hereof
      by
      and among the Company and Elite (the “Share
      Exchange Agreement”),
      and
      upon the consummation of the transactions contemplated by the Share Exchange
      Agreement, World Through Limited, a company organized in the British Virgin
      Islands and a direct wholly-owned subsidiary of Elite immediately prior to
      the
      consummation of the transactions contemplated by the Share Exchange Agreement,
      will become a wholly-owned subsidiary of the Company (the “Share
      Exchange Transaction”).

     

    ARTICLE
      II

     

    Representations
      and Warranties

     

    Section
      2.1 Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Purchasers, as of the date hereof
      and the Closing Date (except as set forth on the Schedule of Exceptions attached
      hereto with each numbered Schedule corresponding to the section number herein),
      as follows:

     

    (a) Organization,
      Good Standing and Power.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Nevada and has the requisite corporate
      power to own, lease and operate its properties and assets and to conduct its
      business as it is now being conducted. The Company does not have any
      subsidiaries except as set forth in the Company’s Form 10-KSB for the year ended
      December 31, 2006, including the accompanying financial statements (the
“Form
      10-KSB”),
      or in
      the Quarterly Reports on Form 10-QSB for its fiscal quarters ended June 30,
      2006, September 30, 2006 and March 31, 2007 (collectively, the “Form
      10-QSBs”).
      Except as set forth on Schedule
      2.1(a),
      the
      Company and each such subsidiary is duly qualified as a foreign corporation
      to
      do business and is in good standing in every jurisdiction in which the nature
      of
      the business conducted or property owned by it makes such qualification
      necessary except for any jurisdiction(s) (alone or in the aggregate) in which
      the failure to be so qualified will not have a Material Adverse Effect (as
      defined in Section 2.1(c) hereof) on the Company’s financial
      condition.

     

    (b) Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and
      perform this Agreement, the Registration Rights Agreement in the form attached
      hereto as Exhibit
      D
      (the
“Registration
      Rights Agreement”),
      the
      Lock-Up Agreement (as defined in Section 3.20 hereof) in the form attached
      hereto as Exhibit
      E,
      the
      Escrow General Agreement by and among the Company, the Purchasers and the escrow
      agent named therein, dated as of the date hereof, substantially in the form
      of
Exhibit
      F-1
      attached
      hereto (the “Escrow
      General Agreement”)
      the
      Securities Escrow Agreement by and among the Company, the Purchasers and the
      escrow agent named therein, dated as of the date hereof, substantially in the
      form of Exhibit
      F-2
      attached
      hereto (the “Securities
      Escrow Agreement”
and
      together with the Escrow General Agreement the “Escrow
      Agreements”),
      the
      Irrevocable Transfer Agent Instructions (as defined in Section 3.13), the Series
      B Certificate of Designation, and the Warrants (collectively, the “Transaction
      Documents”)
      and to
      issue and sell the Shares and the Warrants in accordance with the terms hereof.
      The execution, delivery and performance of the Transaction Documents by the
      Company and the consummation by it of the transactions contemplated hereby
      and
      thereby have been duly and validly authorized by all necessary corporate action,
      and no further consent or authorization of the Company or its Board of Directors
      or stockholders is required. This Agreement has been duly executed and delivered
      by the Company. The other Transaction Documents will have been duly executed
      and
      delivered by the Company at the Closing. Each of the Transaction Documents
      constitutes, or shall constitute when executed and delivered, a valid and
      binding obligation of the Company enforceable against the Company in accordance
      with its terms, except as such enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation,
      conservatorship, receivership or similar laws relating to, or affecting
      generally the enforcement of, creditor’s rights and remedies or by other
      equitable principles of general application.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (c) Capitalization.
      The
      authorized capital stock of the Company and the shares thereof currently issued
      and outstanding as of the date hereof are set forth on Schedule
      2.1(c)
      hereto.
      All of the outstanding shares of the Common Stock and the Preferred Shares
      have
      been duly and validly authorized. Except as contemplated by the Transaction
      Documents or as set forth on Schedule
      2.1(c)
      hereto,
      no shares of Common Stock are entitled to preemptive rights or registration
      rights and there are no outstanding options, warrants, scrip, rights to
      subscribe to, call or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company. Except as contemplated by the Transaction Documents, there are no
      contracts, commitments, understandings, or arrangements by which the Company
      is
      or may become bound to issue additional shares of the capital stock of the
      Company or options, securities or rights convertible into shares of capital
      stock of the Company. Except as contemplated by the Transaction Documents or
      as
      set forth on Schedule
      2.1(c)
      hereto,
      the Company is not a party to any agreement granting registration or
      anti-dilution rights to any person with respect to any of its equity or debt
      securities. The Company is not a party to, and it has no knowledge of, any
      agreement restricting the voting or transfer of any shares of the capital stock
      of the Company. The offer and sale of all capital stock, convertible securities,
      rights, warrants, or options of the Company issued prior to the Closing complied
      with all applicable Federal and state securities laws, and no stockholder has
      a
      right of rescission or claim for damages with respect thereto which would have
      a
      Material Adverse Effect (as defined below). The Company has furnished or made
      available to the Purchasers true and correct copies of the Company’s Articles of
      Incorporation as in effect on the date hereof (the “Articles”),
      and
      the Company’s Bylaws as in effect on the date hereof (the “Bylaws”).
      For
      the purposes of this Agreement, “Material
      Adverse Effect”
means
      any material adverse effect on the business, operations, properties, or
      financial condition of the Company and its subsidiaries and/or any condition,
      circumstance, or situation that would prohibit or otherwise materially interfere
      with the ability of the Company to perform any of its obligations under this
      Agreement in any material respect.

     

    (d) Issuance
      of Shares.
      The
      Preferred Shares and the Warrants to be issued at the Closing have been duly
      authorized by all necessary corporate action and the Preferred Shares, when
      paid
      for or issued in accordance with the terms hereof, shall be validly issued
      and
      outstanding, fully paid and nonassessable and entitled to the rights and
      preferences set forth in the Series B Certificate of Designation. When the
      Conversion Shares and the Warrant Shares are issued in accordance with the
      terms
      of the Series B Certificate of Designation and the Warrants, respectively,
      such
      shares will be duly authorized by all necessary corporate action and validly
      issued and outstanding, fully paid and nonassessable, and the holders shall
      be
      entitled to all rights accorded to a holder of Common Stock.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (e) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated herein
      and
      therein do not and will not (i) violate any provision of the Company’s Articles
      or Bylaws, (ii) conflict with, or constitute a default (or an event which with
      notice or lapse of time or both would become a default) under, or give to others
      any rights of termination, amendment, acceleration or cancellation of, any
      agreement, mortgage, deed of trust, indenture, note, bond, license, lease
      agreement, instrument or obligation to which the Company is a party or by which
      it or its properties or assets are bound, (iii) create or impose a lien,
      mortgage, security interest, charge or encumbrance of any nature on any property
      of the Company under any agreement or any commitment to which the Company is
      a
      party or by which the Company is bound or by which any of its respective
      properties or assets are bound, or (iv) result in a violation of any federal,
      state, local or foreign statute, rule, regulation, order, judgment or decree
      (including Federal and state securities laws and regulations) applicable to
      the
      Company or any of its subsidiaries or by which any property or asset of the
      Company or any of its subsidiaries are bound or affected, except, in all cases
      other than violations pursuant to clauses (i) and (iv) above, for such
      conflicts, defaults, terminations, amendments, accelerations, cancellations
      and
      violations as would not, individually or in the aggregate, have a Material
      Adverse Effect. The business of the Company and its subsidiaries is not being
      conducted in violation of any laws, ordinances or regulations of any
      governmental entity, except for possible violations which singularly or in
      the
      aggregate do not and will not have a Material Adverse Effect. The Company is
      not
      required under Federal, state or local law, rule or regulation to obtain any
      consent, authorization or order of, or make any filing or registration with,
      any
      court or governmental agency in order for it to execute, deliver or perform
      any
      of its obligations under the Transaction Documents, or issue and sell the
      Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares
      in
      accordance with the terms hereof or thereof (other than (x) any consent,
      authorization or order that has been obtained as of the date hereof, (y) any
      filing or registration that has been made as of the date hereof or (z) any
      filings which may be required to be made by the Company with the Commission
      or
      state securities administrators subsequent to the Closing; provided,
      that,
      for purposes of the representation made in this sentence, the Company is
      assuming and relying upon the accuracy of the relevant representations and
      agreements of the Purchasers herein.

     

    (f) Commission
      Documents, Financial Statements.
      The
      Common Stock is currently registered pursuant to Section 12(g) of the Securities
      Exchange Act of 1934, as amended the “Exchange
      Act”),
      and
      the Company has filed all reports, schedules, forms, statements and other
      documents required to be filed by it with the Commission pursuant to the
      reporting requirements of the Exchange Act, including material filed pursuant
      to
      Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including
      filings incorporated by reference therein being referred to herein as the
“Commission
      Documents”).
      At
      the request of such Purchaser, the Company has delivered or made available
      to
      each of the Purchasers true and complete copies of the Commission Documents.
      The
      Company has not provided to the Purchasers any material non-public information
      or other information which, according to applicable law, rule or regulation,
      was
      required to have been disclosed publicly by the Company but which has not been
      so disclosed, other than with respect to the transactions contemplated by this
      Agreement. At the times of their respective filings, the Form 10-KSB and the
      Form 10-QSBs and the current report on Form 8-K that is required to be and
      shall
      be filed by the Company within four business days after the Closing Date to
      disclose the transactions contemplated hereby and under the other Transaction
      Documents and the transactions contemplated by the Share Exchange Agreement
      and
      the Restructuring Agreements (as defined in Section 2.1(gg) hereof) (the
“Form
      8-K”),
      complied and, in the case of the Form 8-K, will comply in all material respects
      with the requirements of the Exchange Act and the rules and regulations of
      the
      Commission promulgated thereunder and other federal, state and local laws,
      rules
      and regulations applicable to such documents, and, as of respective dates,
      neither the Form 10-KSB nor the Form 10-QSBs contained or, in the case of the
      Form 8-K, contain any untrue statement of a material fact or omitted to state
      a
      material fact required to be stated therein or necessary in order to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. The financial statements of the Company included in the
      Commission Documents comply as to form in all material respects with applicable
      accounting requirements and the published rules and regulations of the
      Commission or other applicable rules and regulations with respect thereto.
      Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles (“GAAP”)
      applied on a consistent basis during the periods involved (except (i) as may
      be
      otherwise indicated in such financial statements or the notes thereto or (ii)
      in
      the case of unaudited interim statements, to the extent they may not include
      footnotes or may be condensed or summary statements), and fairly present in
      all
      material respects the financial position of the Company and its subsidiaries
      as
      of the dates thereof and the results of operations and cash flows for the
      periods then ended (subject, in the case of unaudited statements, to normal
      year-end audit adjustments). The Sunway Financial Statements (as defined in
      Section 4.2(t) hereof) comply in all material respects with applicable
      accounting requirements and the rules and regulations of the Commission with
      respect thereto as in effect at the time of filing. The Sunway Financial
      Statements have been prepared in accordance with GAAP applied on a consistent
      basis during the periods involved and fairly present in all material respects,
      the financial of Sunway has defined in Section 4.2(t) hereof and its
      subsidiaries as of the dates thereof and the results of operations and cash
      flows for the periods then ended. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (g) Subsidiaries.
      Schedule
      2.1(g)
      hereto
      sets forth each subsidiary of the Company, showing the jurisdiction of its
      incorporation or organization and showing the percentage of each person’s
      ownership. For the purposes of this Agreement, “subsidiary”
shall
      mean any corporation or other entity of which at least a majority of the
      securities or other ownership interest having ordinary voting power (absolutely
      or contingently) for the election of directors or other persons performing
      similar functions are at the time owned directly or indirectly by the Company
      and/or any of its other subsidiaries. All of the outstanding shares of capital
      stock of each subsidiary have been duly authorized and validly issued, and
      are
      fully paid and nonassessable. Other than as contemplated by the Transaction
      Documents, there are no outstanding preemptive, conversion or other rights,
      options, warrants or agreements granted or issued by or binding upon any
      subsidiary for the purchase or acquisition of any shares of capital stock of
      any
      subsidiary or any other securities convertible into, exchangeable for or
      evidencing the rights to subscribe for any shares of such capital stock. Other
      than as contemplated by the Transaction Documents, neither the Company nor
      any
      subsidiary is subject to any obligation (contingent or otherwise) to repurchase
      or otherwise acquire or retire any shares of the capital stock of any subsidiary
      or any convertible securities, rights, warrants or options of the type described
      in the preceding sentence. Neither the Company nor any subsidiary is party
      to,
      nor has any knowledge of, any agreement restricting the voting or transfer
      of
      any shares of the capital stock of any subsidiary.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (h) No
      Material Adverse Effect.
      Other
      than as disclosed in the Company’s Commission Documents, since March 31, 2007,
      the Company nor any of its subsidiaries has experienced or suffered any Material
      Adverse Effect. 

     

    (i) No
      Undisclosed Liabilities.
      Except
      as disclosed in the Form 10-KSB, the Form 10-QSBs and the Form 8-K, neither
      the
      Company nor any of its subsidiaries has any liabilities, obligations, claims
      or
      losses (whether liquidated or unliquidated, secured or unsecured, absolute,
      accrued, contingent or otherwise) other than those incurred in the ordinary
      course of the Company’s or its subsidiaries respective businesses since March
      31, 2007 and which, individually or in the aggregate, do not or would not have
      a
      Material Adverse Effect on the Company or its subsidiaries.

     

    (j) No
      Undisclosed Events or Circumstances.
      To the
      Company’s knowledge, no event or circumstance has occurred or exists with
      respect to the Company or its subsidiaries or their respective businesses,
      properties, prospects, operations or financial condition, which, under
      applicable law, rule or regulation, requires public disclosure or announcement
      by the Company but which has not been so publicly announced or
      disclosed.

     

    (k) Indebtedness.
      The
      Form 10-KSB, Form 10-QSBs and the Form 8-K set forth all outstanding secured
      and
      unsecured Indebtedness of the Company or any subsidiary, or for which the
      Company or any subsidiary has commitments. For the purposes of this Agreement,
      “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      Indebtedness of others, whether or not the same are or should be reflected
      in
      the Company’s balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments in excess of $25,000 due under leases required to be
      capitalized in accordance with GAAP. Except as set forth in Schedule 2.1(k),
      neither the Company nor any subsidiary is in default with respect to any
      Indebtedness.

     

    (l) Title
      to Assets.
      Each of
      the Company and the subsidiaries has good and marketable title to all of its
      real and personal property reflected in the Form 10-KSB, the Form 10-QSBs and
      the Form 8-K free and clear of any mortgages, pledges, charges, liens, security
      interests or other encumbrances, all properties and assets (i) purportedly
      owned
      or used by them as reflected in the Form 10-KSB, Form 10-QSBs, and the Form
      8-K
      or (ii) necessary for the conduct of their business as currently conducted
      except for those disclosed in the Form 10-KSB, Form 10-QSBs and the Form 8-K.
      All leases of the Company and each of its subsidiaries are valid and subsisting
      and in full force and effect.

     

    (m) Actions
      Pending.
      There
      is no action, suit, claim, investigation, arbitration, alternate dispute
      resolution proceeding or any other proceeding pending or, to the knowledge
      of
      the Company, threatened against the Company or any subsidiary which questions
      the validity of this Agreement or any of the other Transaction Documents or
      the
      transactions contemplated hereby or thereby or any action taken or to be taken
      pursuant hereto or thereto. There is no action, suit, claim, investigation,
      arbitration, alternate dispute resolution proceeding or any other proceeding
      pending or, to the knowledge of the Company, threatened, against or involving
      the Company, any subsidiary or any of their respective properties or assets.
      There are no outstanding orders, judgments, injunctions, awards or decrees
      of
      any court, arbitrator or governmental or regulatory body against the Company
      or
      any subsidiary or any executive officers or directors of the Company or
      subsidiary in their capacities as such.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (n) Compliance
      with Law.
      The
      business of the Company and the subsidiaries has been and is presently being
      conducted in material compliance with all applicable federal, state and local
      governmental laws, rules, regulations and ordinances. The Company and each
      of
      its subsidiaries have all franchises, permits, licenses, consents and other
      governmental or regulatory authorizations and approvals necessary for the
      conduct of its business in all material respects as now being conducted by
      it
      unless the failure to possess such franchises, permits, licenses, consents
      and
      other governmental or regulatory authorizations and approvals, individually
      or
      in the aggregate, could not reasonably be expected to have a Material Adverse
      Effect.

     

    (o) Taxes.
      The
      Company and each of the subsidiaries has accurately prepared and filed all
      federal, state and other tax returns required by law to be filed by it, has
      paid
      or made provisions for the payment of all taxes shown to be due and all
      additional assessments, and adequate provisions have been and are reflected
      in
      the financial statements of the Company and the subsidiaries for all current
      taxes and other charges to which the Company or any subsidiary is subject and
      which are not currently due and payable. None of the federal income tax returns
      of the Company or any subsidiary have been audited by the Internal Revenue
      Service. The Company has no knowledge of any additional assessments, adjustments
      or contingent tax liability (whether federal or state) of any nature whatsoever,
      whether pending or threatened against the Company or any subsidiary for any
      period, nor of any basis for any such assessment, adjustment or
      contingency.

     

    (p) Certain
      Fees.
      Except
      as set forth on Schedule
      2.1(p)
      hereto,
      no brokers, finders or financial advisory fees or commissions will be payable
      by
      the Company or any subsidiary or any Purchaser with respect to the transactions
      contemplated by this Agreement and the other Transaction Documents.

     

    (q) Disclosure.
      Except
      as set forth in Schedule
      2.1(q),
      neither
      this Agreement nor the Schedules hereto nor any other documents, certificates
      or
      instruments furnished to the Purchasers by or on behalf of the Company or any
      subsidiary in connection with the transactions contemplated by this Agreement
      contain any untrue statement of a material fact or omit to state a material
      fact
      necessary in order to make the statements made herein or therein, taken as
      a
      whole and in the light of the circumstances under which they were made herein
      or
      therein, not false or misleading.

     

    (r) Operation
      of Business.
      The
      Company and each of the subsidiaries owns or possesses all patents, trademarks,
      domain names (whether or not registered) and any patentable improvements or
      copyrightable derivative works thereof, websites and intellectual property
      rights relating thereto, service marks, trade names, copyrights, licenses and
      authorizations, and all rights with respect to the foregoing, which are
      necessary for the conduct of its business as now conducted without any conflict
      with the rights of others, except where the failure to so own or possess would
      not have a Material Adverse Effect.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (s) Environmental
      Compliance.
      Since
      their inception, neither the Company, nor any of its subsidiaries have been,
      in
      violation of any applicable law relating to the environment or occupational
      health and safety, where such violation would have a material adverse effect
      on
      the business or financial condition of any of the Company and its Subsidiaries.
      Each of Company and its Subsidiaries has operated all facilities and properties
      owned, leased or operated by it in material compliance with the Environmental
      Laws. “Environmental
      Laws”
shall
      mean all applicable laws relating to the protection of the environment
      including, without limitation, all requirements pertaining to reporting,
      licensing, permitting, controlling, investigating or remediating emissions,
      discharges, releases or threatened releases of hazardous substances, chemical
      substances, pollutants, contaminants or toxic substances, materials or wastes,
      whether solid, liquid or gaseous in nature, into the air, surface water,
      groundwater or land, or relating to the manufacture, processing, distribution,
      use, treatment, storage, disposal, transport or handling of hazardous
      substances, chemical substances, pollutants, contaminants or toxic substances,
      material or wastes, whether solid, liquid or gaseous in nature. The Company
      has
      all necessary governmental approvals required under all Environmental Laws
      and
      used in its business or in the business of any of its subsidiaries. The Company
      and each of its subsidiaries are also in compliance with all other limitations,
      restrictions, conditions, standards, requirements, schedules and timetables
      required or imposed under all Environmental Laws. There are no past or present
      events, conditions, circumstances, incidents, actions or omissions relating
      to
      or in any way affecting the Company or its subsidiaries that violate or may
      violate any Environmental Law after the Closing Date or that may give rise
      to
      any environmental liability, or otherwise form the basis of any claim, action,
      demand, suit, proceeding, hearing, study or investigation (i) under any
      Environmental Law, or (ii) based on or related to the manufacture, processing,
      distribution, use, treatment, storage (including without limitation underground
      storage tanks), disposal, transport or handling, or the emission, discharge,
      release or threatened release of any hazardous substance.

     

    (t) Books
      and Record Internal Accounting Controls.
      Except
      as otherwise disclosed in the Form 10-KSB, the Form 10-QSBs or the Form 8-K,
      the
      books and records of the Company and its subsidiaries accurately reflect in
      all
      material respects the information relating to the business of the Company and
      the subsidiaries, the location and collection of their assets, and the nature
      of
      all transactions giving rise to the obligations or accounts receivable of the
      Company or any subsidiary. The Company and each of its subsidiaries maintain
      a
      system of internal accounting controls sufficient, in the judgment of the
      Company, to provide reasonable assurance that (i) transactions are executed
      in
      accordance with management’s general or specific authorizations, (ii)
      transactions are recorded as necessary to permit preparation of financial
      statements in conformity with GAAP and to maintain asset accountability, (iii)
      access to assets is permitted only in accordance with management’s general or
      specific authorization and (iv) the recorded accountability for assets is
      compared with the existing assets at reasonable intervals and appropriate
      actions are taken with respect to any differences.

     

    (u) Material
      Agreements.
      Neither
      the Company nor any subsidiary is a party to any written or oral contract,
      instrument, agreement, commitment, obligation, plan or arrangement, a copy
      of
      which would be required to be filed with the Commission as an exhibit to a
      registration statement on Form SB-2 (collectively, the “Material
      Agreements”)
      if the
      Company or any subsidiary were registering securities under the Securities
      Act.
      The Company and each of its subsidiaries has in all material respects performed
      all the obligations required to be performed by them to date under the foregoing
      agreements, have received no notice of default and are not in default under
      any
      Material Agreement now in effect the result of which would cause a Material
      Adverse Effect. Except as restricted under applicable laws and regulations,
      the
      incorporation documents, certificates of designations or the Transaction
      Documents, no written or oral contract, instrument, agreement, commitment,
      obligation, plan or arrangement of the Company or of any subsidiary limits
      or
      shall limit the payment of dividends on the Company’s Preferred Shares, other
      preferred stock, if any, or its Common Stock.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (v) Transactions
      with Affiliates.
      Except
      as set forth in the Commission Documents or the Transaction Documents, there
      are
      no loans, leases, agreements, contracts, royalty agreements, management
      contracts or arrangements or other continuing transactions between (a) the
      Company or any subsidiary on the one hand, and (b) on the other hand, any
      officer, employee, consultant or director of the Company, or any of its
      subsidiaries, or any person owning any capital stock of the Company or any
      subsidiary or any member of the immediate family of such officer, employee,
      consultant, director or stockholder or any corporation or other entity
      controlled by such officer, employee, consultant, director or stockholder,
      or a
      member of the immediate family of such officer, employee, consultant, director
      or stockholder.

     

    (w) Securities
      Act of 1933.
      Based
      in material part upon the representations herein of the Purchasers, the Company
      has complied and will comply with all applicable federal and state securities
      laws in connection with the offer, issuance and sale of the Shares and the
      Warrants hereunder. Neither the Company nor anyone acting on its behalf,
      directly or indirectly, has or will sell, offer to sell or solicit offers to
      buy
      any of the Shares, the Warrants or similar securities to, or solicit offers
      with
      respect thereto from, or enter into any preliminary conversations or
      negotiations relating thereto with, any person, or has taken or will take any
      action so as to bring the issuance and sale of any of the Shares and the
      Warrants in violation of the registration provisions of the Securities Act
      and
      applicable state securities laws, and neither the Company nor any of its
      affiliates, nor any person acting on its or their behalf, has engaged in any
      form of general solicitation or general advertising (within the meaning of
      Regulation D under the Securities Act) in connection with the offer or sale
      of
      any of the Shares and the Warrants.

     

    (x) Governmental
      Approvals.
      Except
      for the filing of any notice prior or subsequent to the Closing Date that may
      be
      required under applicable state and/or Federal securities laws (which if
      required, shall be filed on a timely basis), including the filing of a Form
      D
      and a registration statement or statements pursuant to the Registration Rights
      Agreement, and the filing of the Series B Certificate of Designation with the
      Secretary of State for the State of Nevada, no authorization, consent, approval,
      license, exemption of, filing or registration with any court or governmental
      department, commission, board, bureau, agency or instrumentality, domestic
      or
      foreign, is or will be necessary for, or in connection with, the execution
      or
      delivery of the Preferred Shares and the Warrants, or for the performance by
      the
      Company of its obligations under the Transaction Documents.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (y) Employees.
      Except
      as disclosed in the Commission Documents or the Form 8-K, neither the Company
      nor any subsidiary has any collective bargaining arrangements or agreements
      covering any of its employees. Except as disclosed in the Commission Documents
      or the Form 8-K, neither the Company nor any subsidiary has any employment
      contract, agreement regarding proprietary information, non-competition
      agreement, non-solicitation agreement, confidentiality agreement, or any other
      similar contract or restrictive covenant, relating to the right of any officer,
      employee or consultant to be employed or engaged by the Company or such
      subsidiary required to be disclosed in the Commission Documents on the Form
      8-K
      that is not so disclosed. Since March 31, 2007, no officer, consultant or key
      employee of the Company or any subsidiary whose termination, either individually
      or in the aggregate, would have a Material Adverse Effect, has terminated or,
      to
      the knowledge of the Company, has any present intention of terminating his
      or
      her employment or engagement with the Company or any subsidiary.

     

    (z) Absence
      of Certain Developments.
      Since
      March 31, 2007, neither the Company nor any subsidiary has:

     

    (i) issued
      any stock, bonds or other corporate securities or any rights, options or
      warrants with respect thereto;

     

    (ii) borrowed
      any amount or incurred or become subject to any liabilities (absolute or
      contingent) except current liabilities incurred in the ordinary course of
      business which are comparable in nature and amount to the current liabilities
      incurred in the ordinary course of business during the comparable portion of
      its
      prior fiscal year, as adjusted to reflect the current nature and volume of
      the
      Company’s or such subsidiary’s business;

     

    (iii) discharged
      or satisfied any lien or encumbrance or paid any obligation or liability
      (absolute or contingent), other than current liabilities paid in the ordinary
      course of business;

     

    (iv) declared
      or made any payment or distribution of cash or other property to stockholders
      with respect to its stock, or purchased or redeemed, or made any agreements
      so
      to purchase or redeem, any shares of its capital stock;

     

    (v) sold,
      assigned or transferred any other tangible assets, or canceled any debts or
      claims, except in the ordinary course of business;

     

    (vi) sold,
      assigned or transferred any patent rights, trademarks, trade names, copyrights,
      trade secrets or other intangible assets or intellectual property rights, or
      disclosed any proprietary confidential information to any person except to
      customers in the ordinary course of business or to the Purchasers or their
      representatives;

     

    (vii) suffered
      any substantial losses or waived any rights of material value, whether or not
      in
      the ordinary course of business, or suffered the loss of any material amount
      of
      prospective business;

     

    (viii) made
      any
      changes in employee compensation except in the ordinary course of business
      and
      consistent with past practices;

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (ix) made
      capital expenditures or commitments therefor that aggregate in excess of
      $50,000;

     

    (x) entered
      into any other transaction other than in the ordinary course of business, or
      entered into any other material transaction, whether or not in the ordinary
      course of business;

     

    (xi) made
      charitable contributions or pledges in excess of $10,000;

     

    (xii) suffered
      any material damage, destruction or casualty loss, whether or not covered by
      insurance;

     

    (xiii) experienced
      any material problems with labor or management in connection with the terms
      and
      conditions of their employment;

     

    (xiv) effected
      any two or more events of the foregoing kind which in the aggregate would be
      material to the Company or its subsidiaries; or

     

    (xv) entered
      into an agreement, written or otherwise, to take any of the foregoing
      actions.

     

    (aa) Public
      Utility Holding Company Act and Investment Company Act Status.
      The
      Company is not a “holding company” or a “public utility company” as such terms
      are defined in the Public Utility Holding Company Act of 1935, as amended.
      The
      Company is not, and as a result of and immediately upon the Closing will not
      be,
      an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
      amended.

     

    (bb) ERISA.
      No
      liability to the Pension Benefit Guaranty Corporation has been incurred with
      respect to any Plan (as defined below) by the Company or any of its subsidiaries
      which is or would be materially adverse to the Company and its subsidiaries.
      The
      execution and delivery of this Agreement and the other Transaction Documents
      and
      the issuance and sale of the Preferred Shares and the Warrants will not involve
      any transaction which is subject to the prohibitions of Section 406 of ERISA
      or
      in connection with which a tax could be imposed pursuant to Section 4975 of
      the
      Internal Revenue Code of 1986, as amended, provided, that, if any of the
      Purchasers, or any person or entity that owns a beneficial interest in any
      of
      the Purchasers, is an “employee pension benefit plan” (within the meaning of
      Section 3(2) of ERISA) with respect to which the Company is a “party in
      interest” (within the meaning of Section 3(14) of ERISA), the requirements of
      Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in
      this
      Section 2.1(ac), the term “Plan”
shall
      mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which
      is or has been established or maintained, or to which contributions are or
      have
      been made, by the Company or any subsidiary or by any trade or business, whether
      or not incorporated, which, together with the Company or any subsidiary, is
      under common control, as described in Section 414(b) or (c) of the
      Code.

     

    (cc) Dilutive
      Effect.
      The
      Company understands and acknowledges that it has an obligation to issue
      Conversion Shares upon conversion of the Preferred Shares in accordance with
      this Agreement and the Series B Certificate of Designation and to issue the
      Warrant Shares upon the exercise of the Warrants in accordance with this
      Agreement and the Warrants regardless of the dilutive effect that such issuance
      may have on the ownership interest of other stockholders of the
      Company.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (dd) No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offering of the Shares pursuant to this Agreement to be integrated with
      prior offerings by the Company for purposes of the Securities Act which would
      prevent the Company from selling the Shares pursuant to Rule 506 under the
      Securities Act, or any applicable exchange-related stockholder approval
      provisions, nor will the Company or any of its affiliates or subsidiaries take
      any action or steps that would cause the offering of the Shares to be integrated
      with other offerings. The Company does not have any registration statement
      pending before the Commission or currently under the Commission’s review and
      since January 1, 2007, except as contemplated under the Transaction Documents,
      the Company has not offered or sold any of its equity securities or debt
      securities convertible into shares of Common Stock.

     

    (ee) Independent
      Nature of Purchasers.
      The
      Company acknowledges that the obligations of each Purchaser under the
      Transaction Documents are several and not joint with the obligations of any
      other Purchaser, and no Purchaser shall be responsible in any way for the
      performance of the obligations of any other Purchaser under the Transaction
      Documents. The Company acknowledges that the decision of each Purchaser to
      purchase securities pursuant to this Agreement has been made by such Purchaser
      independently of any other purchase and independently of any information,
      materials, statements or opinions as to the business, affairs, operations,
      assets, properties, liabilities, results of operations, condition (financial
      or
      otherwise) or prospects of the Company or of its Subsidiaries which may have
      made or given by any other Purchaser or by any agent or employee of any other
      Purchaser, and no Purchaser or any of its agents or employees shall have any
      liability to any Purchaser (or any other person) relating to or arising from
      any
      such information, materials, statements or opinions. The Company acknowledges
      that nothing contained herein, or in any Transaction Document, and no action
      taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute
      the Purchasers as a partnership, an association, a joint venture or any other
      kind of entity, or create a presumption that the Purchasers are in any way
      acting in concert or as a group with respect to such obligations or the
      transactions contemplated by the Transaction Documents. The Company acknowledges
      that each Purchaser shall be entitled to independently protect and enforce
      its
      rights, including without limitation, the rights arising out of this Agreement
      or out of the other Transaction Documents, and it shall not be necessary for
      any
      other Purchaser to be joined as an additional party in any proceeding for such
      purpose. The Company acknowledges that for reasons of administrative convenience
      only, the Transaction Documents have been prepared by counsel for one of the
      Purchasers and such counsel does not represent all of the Purchasers but only
      such Purchaser and the other Purchasers have retained their own individual
      counsel with respect to the transactions contemplated hereby. The Company
      acknowledges that it has elected to provide all Purchasers with the same terms
      and Transaction Documents for the convenience of the Company and not because
      it
      was required or requested to do so by the Purchasers.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (ff) Transfer
      Agent.
      The
      name, address, telephone number, fax number, contact person and email address
      of
      the Company’s current transfer agent is set forth on Schedule
      2.1(ff)
      hereto.

     

    (gg) Subject
      to the consummation of the Share Exchange Transaction, the Company represents
      on
      behalf of Sunway World Through Technology (Daqing) Co., Ltd. (“WFOE”),
      a
“wholly-owned foreign enterprise” organized under the laws of the People’s
      Republic of China (the “PRC”)
      and,
      upon consummation of the Share Exchange Transaction, an indirect wholly-owned
      subsidiary of the Company:

     

    (i) that
      WFOE
      has the legal right, power and authority (corporate and other) to enter into
      and
      perform its obligations under each of agreements as set forth on Schedule
      2.1(gg)
      (collectively, the “Restructuring
      Agreements”)
      to
      which it is a party and has taken all necessary corporate action to authorize
      the execution, delivery and performance of, and has authorized, executed and
      delivered, each of the Restructuring Agreements to which it is a party; and
      each
      of the Restructuring Agreements to which WFOE is a party constitutes a valid
      and
      legally binding obligation of WFOE, enforceable in accordance with its terms,
      subject, as to enforceability, to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors’ rights and to general equity principles.

     

    (ii) that
      WFOE
      does not own or lease properties or conduct any business outside of the PRC
      and
      that WFOE does not need to be duly qualified as a foreign corporation for the
      transaction of business under the laws of any jurisdiction in which it is not
      now so qualified.

     

    (iii) that
      the
      execution and delivery by WFOE of, and the performance by WFOE of its
      obligations under, each of the Restructuring Agreements to which it is a party
      and the consummation by WFOE of the transactions contemplated therein will
      not:
      (A) conflict with or result in a breach or violation of any of the terms or
      provisions of, or constitute a default under, any indenture, mortgage, deed
      of
      trust, loan agreement or other agreement or instrument to which WFOE is a party
      or by which WFOE is bound or to which any of the properties or assets of WFOE
      is
      subject; (B) result in any violation of the provisions of the articles of
      association or business license of WFOE; and (C) will not result in any
      violation of any laws, regulations, rules, orders, decrees, guidelines or
      notices of the PRC, except that, with respect to (A) and (C), such conflict,
      breach or violation would not reasonably be expected to have a Material Adverse
      Effect on WFOE.

     

    (iv) that
      each
      of the Restructuring Agreements is in proper and enforceable legal form under
      the laws of the PRC and to ensure the legality, validity, enforceability or
      admissibility in evidence of each of the Restructuring Agreements in the PRC,
      it
      is not necessary that any such document be filed or recorded with any court
      or
      other authority in the PRC or that any stamp or similar tax be paid on or in
      respect of any of the Restructuring Agreements, except as set forth on
Schedule
      2.1(gg)(iv).

     

    
      
        
        

      

      
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    Section
      2.2 Representations
      and Warranties of the Purchasers.
      Each
      Purchaser hereby makes the following representations and warranties to the
      Company as of the date hereof and Closing Date, with respect solely to itself
      and not with respect to any other Purchaser:

     

    (a) Organization
      and Good Standing of the Purchasers.
      If the
      Purchaser is an entity, such Purchaser is a corporation, partnership or limited
      liability company duly incorporated or organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation or
      organization.

     

    (b) Authorization
      and Power.
      Each
      Purchaser has the requisite power and authority to enter into and perform this
      Agreement and each of the other Transaction Documents to which such Purchaser
      is
      a party and to purchase the Preferred Shares and Warrants being sold to it
      hereunder. The execution, delivery and performance of this Agreement and each
      of
      the other Transaction Documents to which such Purchaser is a party by such
      Purchaser and the consummation by it of the transactions contemplated hereby
      and
      thereby have been duly authorized by all necessary corporate or partnership
      action, and no further consent or authorization of such Purchaser or its Board
      of Directors, stockholders, or partners, as the case may be, is required. This
      Agreement and each of the other Transaction Documents to which such Purchaser
      is
      a party has been duly authorized, executed and delivered by such Purchaser
      and
      constitutes, or shall constitute when executed and delivered, a valid and
      binding obligation of such Purchaser enforceable against such Purchaser in
      accordance with the terms thereof.

     

    (c) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and each of the other
      Transaction Documents to which such Purchaser is a party and the consummation
      by
      such Purchaser of the transactions contemplated hereby and thereby or relating
      hereto do not and will not (i) result in a violation of such Purchaser’s charter
      documents, bylaws, operating agreement, partnership agreement or other
      organizational documents or (ii) conflict with, or constitute a default (or
      an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of any agreement, indenture or instrument or obligation to which
      such Purchaser is a party or by which its properties or assets are bound, or
      result in a violation of any law, rule, or regulation, or any order, judgment
      or
      decree of any court or governmental agency applicable to such Purchaser or
      its
      properties (except for such conflicts, defaults and violations as would not,
      individually or in the aggregate, have a material adverse effect on such
      Purchaser). Such Purchaser is not required to obtain any consent, authorization
      or order of, or make any filing or registration with, any court or governmental
      agency in order for it to execute, deliver or perform any of its obligations
      under this Agreement or any other Transaction Document to which such Purchaser
      is a party or to purchase the Preferred Shares or acquire the Warrants in
      accordance with the terms hereof, provided, that for purposes of the
      representation made in this sentence, such Purchaser is assuming and relying
      upon the accuracy of the relevant representations and agreements of the Company
      herein.

     

    (d) Acquisition
      for Investment.
      Each
      Purchaser is acquiring the Preferred Shares and the Warrants solely for its
      own
      account for the purpose of investment and not with a view to or for sale in
      connection with distribution. Each Purchaser does not have a present intention
      to sell the Preferred Shares or the Warrants, nor a present arrangement (whether
      or not legally binding) or intention to effect any distribution of the Shares
      or
      the Warrants to or through any person or entity; provided,
      however,
      that by
      making the representations herein and subject to Section 2.2(h) below, such
      Purchaser does not agree to hold the Shares or the Warrants for any minimum
      or
      other specific term and reserves the right to dispose of the Shares or the
      Warrants at any time in accordance with Federal and state securities laws
      applicable to such disposition. Each Purchaser acknowledges that it is able
      to
      bear the financial risks associated with an investment in the Shares and the
      Warrants and that it has been given full access to such records of the Company
      and the subsidiaries and to the officers of the Company and the subsidiaries
      and
      received such information as it has deemed necessary or appropriate to conduct
      its due diligence investigation and has sufficient knowledge and experience
      in
      investing in companies similar to the Company in terms of the Company’s stage of
      development so as to be able to evaluate the risks and merits of its investment
      in the Company. Each Purchaser further acknowledges that such Purchaser
      understands the risks of investing in companies domiciled and/or which operate
      primarily in the People’s Republic of China and that the purchase of the Shares
      and Warrants involves substantial risks.

     

    
      
        
        

      

      
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    (e) Status
      of Purchasers.
      Each
      Purchaser is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act. Such Purchaser is not required to be registered as
      a
      broker-dealer under Section 15 of the Exchange Act and such Purchaser is not
      a
      broker-dealer.

     

    (f) Opportunities
      for Additional Information.
      Each
      Purchaser acknowledges that such Purchaser has had the opportunity to ask
      questions of and receive answers from, or obtain additional information from,
      the executive officers of the Company concerning the financial and other affairs
      of the Company. In making the decision to invest in the Company and its
      business, each Purchaser hereby acknowledges that such Purchaser has relied
      solely upon the Sunway Financial Statements, the Draft Form 8-K (defined in
      Section 4.2(v) hereto) and other written information provided to such Purchaser
      by the Company and Sunway.

     

    (g) No
      General Solicitation.
      Each
      Purchaser acknowledges that the Preferred Shares and the Warrants were not
      offered to such Purchaser by means of any form of general or public solicitation
      or general advertising, or publicly disseminated advertisements or sales
      literature, including (i) any advertisement, article, notice or other
      communication published in any newspaper, magazine, or similar media, or
      broadcast over television or radio, or (ii) any seminar or meeting to which
      such
      Purchaser was invited by any of the foregoing means of
      communications.

     

    (h) Rule
      144.
      Such
      Purchaser understands that the Shares must be held indefinitely unless such
      Shares are registered under the Securities Act or an exemption from registration
      is available. Such Purchaser acknowledges that such Purchaser is familiar with
      Rule 144 of the rules and regulations of the Commission, as amended, promulgated
      pursuant to the Securities Act (“Rule
      144”),
      and
      that such person has been advised that Rule 144 permits resales only under
      certain circumstances. Such Purchaser understands that to the extent that Rule
      144 is not available, such Purchaser will be unable to sell any Shares without
      either registration under the Securities Act or the existence of another
      exemption from such registration requirement.

     

    (i) General.
      Such
      Purchaser understands that the Shares are being offered and sold in reliance
      on
      a transactional exemption from the registration requirement of Federal and
      state
      securities laws and the Company is relying upon the truth and accuracy of the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Purchaser set forth herein in order to determine the applicability of
      such
      exemptions and the suitability of such Purchaser to acquire the
      Shares.

     

    
      
        
        

      

      
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    (j) Independent
      Investment.
      Except
      as may be disclosed in any filings with the Commission by the Purchasers under
      Section 13 and/or Section 16 of the Exchange Act, no Purchaser has agreed to
      act
      with any other Purchaser for the purpose of acquiring, holding, voting or
      disposing of the Shares purchased hereunder for purposes of Section 13(d) under
      the Exchange Act, and each Purchaser is acting independently with respect to
      its
      investment in the Shares.

     

    (k) Trading
      Activities.
      Each
      Purchaser agrees that it shall not, directly or indirectly, engage in any short
      sales with respect to the Common Stock for a period of one (1) year following
      the Closing.

     

    ARTICLE
      III

     

    Covenants

     

    The
      Company covenants with each of the Purchasers as follows, which covenants are
      for the benefit of the Purchasers and their permitted assignees (as defined
      herein).

     

    Section
      3.1 Securities
      Compliance.
      The
      Company shall notify the Commission in accordance with their rules and
      regulations, of the transactions contemplated by any of the Transaction
      Documents, including filing a Form D with respect to the Preferred Shares,
      Warrants, Conversion Shares and Warrant Shares as required under Regulation
      D
      and applicable “blue sky” laws, and shall take all other necessary action and
      proceedings as may be required and permitted by applicable law, rule and
      regulation, for the legal and valid issuance of the Preferred Shares, the
      Warrants, the Conversion Shares and the Warrant Shares to the Purchasers or
      subsequent holders.

     

    Section
      3.2 Registration
      and Listing.
      The
      Company shall (a) comply in all respects with its reporting and filing
      obligations under the Exchange Act, (b) comply with all requirements related
      to
      any registration statement filed pursuant to this Agreement or the Registration
      Rights Agreement, and (c) not take any action or file any document (whether
      or
      not permitted by the Securities Act or the rules promulgated thereunder) to
      terminate or suspend such registration or to terminate or suspend its reporting
      and filing obligations under the Exchange Act or Securities Act except as
      permitted under the Transaction Documents. The Company will take all action
      necessary to continue the quotation or listing of its Common Stock on the OTC
      Bulletin Board or other exchange or market on which the Common Stock is trading
      or may be traded in the future. Subject to the terms of the Transaction
      Documents, the Company further covenants that it will take such further action
      as the Purchasers may reasonably request, all to the extent required from time
      to time to enable the Purchasers to sell the Shares without registration under
      the Securities Act within the limitation of the exemptions provided by Rule
      144
      promulgated under the Securities Act. Upon the request of the Purchasers, the
      Company shall deliver to the Purchasers a written certification of a duly
      authorized officer as to whether it has complied with such
      requirements.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    Section
      3.3 Inspection
      Rights.
      The
      Company shall permit, during normal business hours and upon reasonable request
      and reasonable notice, each Purchaser or any employees, agents or
      representatives thereof, so long as such Purchaser shall be obligated hereunder
      to purchase the Preferred Shares or shall beneficially own any Preferred Shares,
      or shall own Conversion Shares which, in the aggregate, represent more than
      2%
      of the total combined voting power of all voting securities then outstanding,
      for purposes reasonably related to such Purchaser’s interests as a stockholder
      to examine and make reasonable copies of and extracts from the records and
      books
      of account of, and visit and inspect the properties, assets, operations and
      business of the Company and any subsidiary, and to discuss the affairs, finances
      and accounts of the Company and any subsidiary with any of its officers,
      consultants, directors, and key employees. Such Purchaser agrees that such
      Purchaser and its employees, agents and representatives will keep confidential
      and will not disclose, divulge or use (other than for purposes of monitoring
      its
      investment in the Company) any confidential information which such Purchaser
      may
      obtain from the Company pursuant to financial statements, reports and other
      materials submitted by the Company to such Purchaser pursuant to this Agreement
      or pursuant to inspection rights granted hereunder, unless such information
      is
      known to the public through no fault of such Purchaser or his or its employees
      or representatives; provided,
      however,
      that a
      Purchaser may disclose such information (i) to its attorneys, accountants and
      other professionals in connection with their representation of such Purchaser
      in
      connection with such Purchaser’s investment in the Company, (ii) to any
      prospective permitted transferee of the Preferred Shares, so long as the
      prospective transferee agrees to be bound by the provisions of this Section
      3.3,
      (iii) to any general partner or affiliate of such Purchaser. The Company may
      require each Purchaser to execute a separate confidentiality agreement in form
      and substance reasonably acceptable to the Company as a prerequisite to the
      exercise of such Purchaser’s inspection rights pursuant to this Section
      3.3.

     

    Section
      3.4 Compliance
      with Laws.
      The
      Company shall comply, and cause each subsidiary to comply in all material
      respects, with all applicable laws, rules, regulations and orders.

     

    Section
      3.5 Keeping
      of Records and Books of Account.
      The
      Company shall keep and cause each subsidiary to keep adequate records and books
      of account, in which complete entries will be made in accordance with GAAP
      consistently applied, reflecting all financial transactions of the Company
      and
      its subsidiaries, and in which, for each fiscal year, all proper reserves for
      depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
      purposes in connection with its business shall be made.

     

    Section
      3.6 Reporting
      Requirements.
      If the
      Commission ceases making periodic reports filed under the Exchange Act available
      via the Internet, then at a Purchaser’s request the Company shall furnish the
      following to such Purchaser so long as such Purchaser shall beneficially own
      any
      Shares:

     

    (a) Quarterly
      Reports filed with the Commission on Form 10-QSB as soon as practical after
      the
      document is filed with the Commission, and in any event within five (5) days
      after the document is filed with the Commission;

     

    
      
        
        

      

      
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    (b) Annual
      Reports filed with the Commission on Form 10-KSB as soon as practical after
      the
      document is filed with the Commission, and in any event within five (5) days
      after the document is filed with the Commission; and

     

    (c) Copies
      of
      all notices and information, including without limitation notices and proxy
      statements in connection with any meetings, that are provided to holders of
      shares of Common Stock, contemporaneously with the delivery of such notices
      or
      information to such holders of Common Stock.

     

    Section
      3.7 Amendments.
      The
      Company shall not amend or waive any provision of the Articles or Bylaws of
      the
      Company in any way that would adversely affect the liquidation preferences,
      dividends rights, conversion rights, voting rights or redemption rights of
      the
      Preferred Shares; provided,
      however,
      that
      while the Preferred Shares are outstanding, any creation and issuance of another
      series of Junior Stock (as defined in the Series B Certificate of Designation)
      or any other class or series of equity securities which by its terms shall
      rank
      on parity with the Preferred Shares shall not be deemed to materially and
      adversely affect such rights, preferences or privileges.

     

    Section
      3.8 Other
      Agreements.
      The
      Company shall not enter into any agreement in which the terms of such agreement
      would restrict or impair the right or ability to perform of the Company or
      any
      subsidiary under any Transaction Document.

     

    Section
      3.9 Distributions.
      So long
      as any Preferred Shares remain outstanding, the Company agrees that it shall
      not
      (i) declare or pay any dividends or make any distributions to any holder(s)
      of
      Common Stock unless such dividends or distributions are also simultaneously
      paid
      or made to the holders of the Preferred Shares on an as-converted basis or
      (ii)
      purchase or otherwise acquire for value, directly or indirectly, any Common
      Stock or other equity security of the Company.

     

    Section
      3.10 Use
      of
      Proceeds.
      The net
      proceeds from the sale of the Shares hereunder shall be used by the Company
      for
      working capital and general corporate purposes and not to redeem any Common
      Stock or securities convertible, exercisable or exchangeable into Common Stock
      or to settle any outstanding litigation.

     

    Section
      3.11 Reservation
      of Shares.
      So long
      as any of the Preferred Shares or Warrants remain outstanding, the Company
      shall
      take all action necessary to at all times have authorized, and reserved for
      the
      purpose of issuance, no less than one hundred fifty percent (150%) of the
      aggregate number of shares of Common Stock needed to provide for the issuance
      of
      the Conversion Shares and the Warrant Shares.

     

    Section
      3.12 Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates, registered in the name of
      each
      Purchaser or its respective nominee(s), for the Conversion Shares and the
      Warrant Shares in such amounts as specified from time to time by each Purchaser
      to the Company upon conversion of the Preferred Shares or exercise of the
      Warrants in the form of Exhibit
      G
      attached
      hereto (the “Irrevocable
      Transfer Agent Instructions”).
      Prior
      to registration of the Conversion Shares and the Warrant Shares under the
      Securities Act, all such certificates shall bear the restrictive legend
      specified in Section 5.1 of this Agreement. The Company warrants that no
      instruction other than the Irrevocable Transfer Agent Instructions referred
      to
      in this Section 3.12 will be given by the Company to its transfer agent and
      that
      the Shares shall otherwise be freely transferable on the books and records
      of
      the Company as and to the extent provided in this Agreement and the Registration
      Rights Agreement. If a Purchaser provides the Company with an opinion of
      counsel, in a generally acceptable form, to the effect that a public sale,
      assignment or transfer of the Shares may be made without registration under
      the
      Securities Act or the Purchaser provides the Company with reasonable assurances
      that such Shares can be sold pursuant to Rule 144 without any restriction as
      to
      the number of securities acquired as of a particular date that can then be
      immediately sold, the Company shall permit the transfer, and, in the case of
      the
      Conversion Shares and the Warrant Shares, promptly instruct its transfer agent
      to issue one or more certificates in such name and in such denominations as
      specified by such Purchaser and without any restrictive legend. The Company
      acknowledges that a breach by it of its obligations under this Section 3.12
      will
      cause irreparable harm to the Purchasers by vitiating the intent and purpose
      of
      the transaction contemplated hereby. Accordingly, the Company acknowledges
      that
      the remedy at law for a breach of its obligations under this Section 3.12 will
      be inadequate and agrees, in the event of a breach or threatened breach by
      the
      Company of the provisions of this Section 3.12, that the Purchasers shall be
      entitled, in addition to all other available remedies, to an order and/or
      injunction restraining any breach and requiring immediate issuance and transfer,
      without the necessity of showing economic loss and without any bond or other
      security being required.

     

    
      
        
        

      

      
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    Section
      3.13 Disposition
      of Assets.
      So long
      as any Preferred Shares remain outstanding, neither the Company nor any
      Subsidiary shall sell, transfer or otherwise dispose of any of its properties,
      assets and rights including, without limitation, its software and intellectual
      property, to any person except for (i) sales to customers in the ordinary course
      of business (ii) sales or transfers between the Company and its Subsidiaries
      or
      between Subsidiaries of the Company, (iii) sales or transfers between the
      Company, any of its Subsidiaries and Daqing Sunway Science and Technology Co.,
      Ltd. (“Sunway”)
      or
      (iv) otherwise with the prior written consent of the holders of a majority
      of
      the Preferred Shares then outstanding.

     

    Section
      3.14 Reporting
      Status.
      So long
      as a Purchaser beneficially owns any of the Shares, the Company shall timely
      file all reports required to be filed with the Commission pursuant to the
      Exchange Act, and the Company shall not terminate its status as an issuer
      required to file reports under the Exchange Act even if the Exchange Act or
      the
      rules and regulations thereunder would permit such termination.

     

    Section
      3.15 Disclosure
      of Transaction.
      The
      Company shall issue a press release describing the material terms of the
      transactions contemplated hereby (the “Press
      Release”)
      as
      soon as practicable after the Closing but in no event later than 9:00 A.M.
      Eastern Time on the first Trading Day following the Closing. The Company shall
      also file with the Commission, the Form 8-K describing the material terms of
      the
      transactions contemplated hereby and by the Share Exchange Agreement (and
      attaching as exhibits thereto this Agreement, the Registration Rights Agreement,
      the Series B Certificate of Designation, the Lock-Up Agreement, the Escrow
      General Agreement, forms of each of the Warrants, the Press Release, the Share
      Exchange Agreement and each of the Restructuring Agreements) as soon as
      practicable following the Closing Date but in no event more than four (4)
      Trading Days following the Closing Date, which Press Release and Form 8-K shall
      be subject to prior review and comment by counsel for the Purchasers.
“Trading
      Day”
means
      any day during which the OTC Bulletin Board (or other quotation venue or
      principal exchange on which the Common Stock is traded) shall be open for
      trading.

     

    
      
        
        

      

      
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    Section
      3.16 Disclosure
      of Material Information.
      The
      Company covenants and agrees that neither it nor any other person acting on
      its
      behalf has provided or will provide any Purchaser or its agents or counsel
      with
      any information that the Company believes constitutes material non-public
      information (other than with respect to the transactions contemplated by this
      Agreement), unless prior thereto such Purchaser shall have executed a written
      agreement regarding the confidentiality and use of such information. The Company
      understands and confirms that each Purchaser shall be relying on the foregoing
      representations in effecting transactions in securities of the
      Company.

     

    Section
      3.17 Pledge
      of Securities.
      The
      Company acknowledges and agrees that the Shares may be pledged by a Purchaser
      in
      connection with a bona fide
      margin
      agreement or other loan or financing arrangement that is secured by the Common
      Stock. The pledge of Common Stock shall not be deemed to be a transfer, sale
      or
      assignment of the Common Stock hereunder, and no Purchaser effecting a pledge
      of
      Common Stock shall be required to provide the Company with any notice thereof
      or
      otherwise make any delivery to the Company pursuant to this Agreement or any
      other Transaction Document; provided,
      that a
      Purchaser and its pledgee shall be required to comply with the provisions of
      Article V hereof in order to effect a sale, transfer or assignment of Common
      Stock to such pledgee. At the Purchasers’ expense, the Company hereby agrees to
      execute and deliver such documentation as a pledgee of the Common Stock may
      reasonably request in connection with a pledge of the Common Stock to such
      pledgee by a Purchaser.

     

    Section
      3.18 Form
      SB-2 Eligibility.
      The
      Company currently meets the “registrant eligibility” and transaction
      requirements set forth in the general instructions to Form SB-2 applicable
      to
“resale” registrations on Form SB-2 and the Company shall file all reports
      required to be filed by the Company with the Commission in a timely
      manner.

     

    Section
      3.19 Lock-Up
      Agreement.
      The
      persons listed on Schedule
      3.20
      attached
      hereto shall be subject to the terms and provisions of a lock-up agreement
      in
      substantially the form as Exhibit
      E
      hereto
      (the “Lock-Up
      Agreement”),
      which
      shall provide the manner in which such persons will sell, transfer or dispose
      of
      their shares of Common Stock.

     

    Section
      3.20 Investor
      and Public Relations Escrow.
      The
      Company shall cause to be deposited pursuant to the terms of the Escrow General
      Agreement Five Hundred Thousand Dollars ($500,000) of the Purchase Price funded
      on the Closing Date in an escrow account to be used by the Company in connection
      with investor and public relations and securities law compliance, including
      related legal fees and legal fees relating to minor post-closing corporate
      matters in the British Virgin Islands.

     

    
      
        
        

      

      
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    Section
      3.21 Working
      Capital Escrow.
      The
      Company shall cause to be deposited pursuant to the terms of the Escrow General
      Agreement Two Hundred Thousand Dollars ($200,000) of the Purchase Price funded
      on the Closing Date in an escrow account to be used to fund the Company’s
      various working capital usages in the United States.

     

    Section
      3.22 DTC.
      Not
      later than the effective date of the Registration Statement (as defined in
      the
      Registration Rights Agreement), the Company shall cause its Common Stock to
      be
      eligible for transfer with its transfer agent pursuant to the Depository Trust
      Company Automated Securities Transfer Program.

     

    Section
      3.23 Subsequent
      Financings.
      

     

    (a) For
      a
      period of two (2) years following the effective date of the initial Registration
      Statement (as defined in the Registration Rights Agreement), the Company
      covenants and agrees to promptly notify (in no event later than five (5) days
      after making or receiving an applicable offer) in writing (a “Rights
      Notice”)
      each
      holder of Preferred Shares (each, a “Preferred
      Stockholder”
and
      collectively the “Preferred
      Stockholders”)
      of the
      terms and conditions of any proposed offer or sale to, or exchange with (or
      other type of distribution to) any third party (a “Subsequent
      Financing”),
      of
      Common Stock or any debt or equity securities convertible, exercisable or
      exchangeable into Common Stock; provided,
      however,
      prior
      to delivering to each Preferred Stockholder a Rights Notice, the Company shall
      first deliver to each Preferred Stockholder a written notice of its intention
      to
      effect a Subsequent Financing (“Pre-Notice”)
      within
      three (3) Trading Days of receiving an applicable offer, which Pre-Notice shall
      ask such Preferred Stockholder if it wants to review the details of such
      financing. Upon the request of a Preferred Stockholder, and only upon a request
      by such Preferred Stockholder within three (3) Trading Days of receipt of a
      Pre-Notice, the Company shall promptly, but no later than two (2) Trading Days
      after such request, deliver a Rights Notice to such Preferred Stockholder.
      The
      Rights Notice shall describe, in reasonable detail, the proposed Subsequent
      Financing, the names and investment amounts of all investors participating
      in
      the Subsequent Financing (if known), the proposed closing date of the Subsequent
      Financing, which shall be no earlier than ten (10) Trading Days from the date
      of
      the Rights Notice, and all of the terms and conditions thereof and proposed
      definitive documentation to be entered into in connection therewith. The Rights
      Notice shall provide each Preferred Stockholder an option (the “Rights
      Option”)
      during
      the ten (10) Trading Days following delivery of the Rights Notice (the
“Option
      Period”)
      to
      inform the Company whether such Preferred Stockholder will purchase up to its
      pro rata portion of all or a portion of the securities being offered in such
      Subsequent Financing on the same, absolute terms and conditions as contemplated
      by such Subsequent Financing, provided the amount of such purchase shall not
      exceed the Purchase Price hereunder of the Preferred Shares held by such
      Preferred Stockholder except as allowed by the following sentence. If any
      Preferred Stockholder elects not to participate in such Subsequent Financing,
      the other Preferred Stockholders may participate on a pro-rata basis so long
      as
      such participation in the aggregate does not exceed the total Purchase Price
      hereunder. For purposes of this Section, all references to “pro rata” means, for
      any Preferred Stockholder electing to participate in such Subsequent Financing,
      the percentage obtained by dividing (x) the number of Preferred Shares held
      by
      such Preferred Stockholder at the Closing by (y) the total number of all of
      the
      Preferred Shares issued hereunder. Delivery of any Rights Notice constitutes
      a
      representation and warranty by the Company that there are no other material
      terms and conditions, arrangements, agreements or otherwise except for those
      disclosed in the Rights Notice, to provide additional compensation to any party
      participating in any proposed Subsequent Financing, including, but not limited
      to, additional compensation based on changes in the Purchase Price or any type
      of reset or adjustment of a purchase or conversion price or to issue additional
      securities at any time after the closing date of a Subsequent Financing. If
      the
      Company does not receive notice of exercise of the Rights Option from the
      Preferred Stockholder within the Option Period, the Company shall have the
      right
      to close the Subsequent Financing on the scheduled closing date with a third
      party; provided,
      that
      all of the material terms and conditions of the closing are the same as those
      provided to the Preferred Stockholder in the Rights Notice. If the closing
      of
      the proposed Subsequent Financing does not occur that date, any closing of
      the
      contemplated Subsequent Financing or any other Subsequent Financing shall be
      subject to all of the provisions of this Section 3.21(a), including, without
      limitation, the delivery of a new Rights Notice. The provisions of this Section
      3.21(a) shall not apply to issuances of securities in a Permitted
      Financing.

     

    
      
        
        

      

      
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    (b) For
      purposes of this Agreement, a Permitted Financing (as defined hereinafter)
      shall
      not be considered a Subsequent Financing. A “Permitted
      Financing”
shall
      mean (i) securities issued (other than for cash) in connection with a merger,
      acquisition, or consolidation, (ii) securities issued pursuant to the conversion
      or exercise of convertible or exercisable securities issued or outstanding
      on or
      prior to the date of this Agreement or issued pursuant to this Agreement or
      any
      of the other Transaction Documents (so long as the conversion or exercise price
      in such securities are not amended to lower such price and/or adversely affect
      the Purchasers), (iii) securities issued in connection with bona fide strategic
      license agreements or other partnering arrangements so long as such issuances
      are not for the purpose of raising capital, (iv) Common Stock issued or the
      issuance or grants of options to purchase Common Stock pursuant to the Company’s
      stock option plans and employee stock purchase plans outstanding as they exist
      on the date of this Agreement, and (v) any warrants issued to the placement
      agent, financial advisors and their respective designees for the transactions
      contemplated by the Transaction Documents.

     

    (c) Nothing
      herein shall prohibit the Company from establishing an employee stock option,
      restricted stock or other form of equity incentive plan for employees, officers
      or directors of the Company, and any awards made under such plan or exercises
      of
      such awards by the recipients thereof shall be deemed to be a Permitted
      Financing.

     

    Section
      3.24 Sarbanes-Oxley
      Act.
      The
      Company shall use its best efforts to be in compliance with the applicable
      provisions of the Sarbanes-Oxley Act of 2002, and the rules and regulations
      promulgated thereunder, as required under such Act.

     

    Section
      3.25 Exchange
      Listing.
      The
      Company shall list and trade its shares of Common Stock on the Nasdaq Capital
      Market or the Nasdaq Global Market or any successor market thereto
      (collectively, “Nasdaq”),
      or
      American Stock Exchange or any successor market thereto (together with Nasdaq,
      each a “National
      Stock Exchange”)
      no
      later than December 31, 2008. In the event the shares of Common Stock are not
      listed and trading on a National Stock Exchange by December 31, 2008, each
      of
      the stockholders of the Company as listed on Schedule
      3.25
      (each a
“Principal
      Stockholder”;
      collectively, the “Principal
      Stockholders”)
      shall
      transfer such number of shares of Common Stock held by such Principal
      Stockholder as set forth opposite such Principal Stockholder’s name on
Schedule
      3.25
      (the
“Listing
      Penalty Shares”)
      to the
      Purchasers to be distributed to the Purchasers on a pro rata basis. The number
      of Listing Penalty Shares to be transferred by each Principal Stockholder to
      the
      Purchasers shall be equal to 1,000,000 shares of Common Stock times a fraction,
      the numerator of which is the number of shares of Common Stock held by such
      Principal Stockholder and the denominator of which is the total number of shares
      of Common Stock held by the Principal Stockholders. In connection with the
      foregoing, each Purchaser may elect, at each Purchaser’s sole discretion, to
      receive (i) shares of Common Stock owned by the Principal Stockholders or (ii)
      upon notice to the Company, Escrow Agent and Principal Stockholders (each as
      defined in the Securities Escrow Agreement), a portion of the Escrow Shares
      (as
      defined in the Securities Escrow Agreement) in such amount as set forth in
      the
      preceding sentence. In the event a Purchaser elects to receive shares of Common
      Stock from the Escrow Shares pursuant to the foregoing and if the Escrow Shares
      then remaining are insufficient to satisfy the Principal Stockholders’
obligations under Sections 1.3 and 1.4 of the Securities Escrow Agreement,
      the
      Principal Stockholders shall, on a pro rata basis, deliver to the Escrow Agent
      additional shares of Common Stock owned by them in the amounts released to
      such
      Purchaser within thirty (30) days of the release of such shares from
      escrow.

     

    
      
        
        

      

      
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    Section
      3.26 No
      Commissions in connection with Conversion of Preferred Shares.
      In
      connection with the conversion of the Preferred Shares into Conversion Shares,
      neither the Company nor any Person acting on its behalf will take any action
      that would result in the Conversion Shares being exchanged by the Company other
      than with the then existing holders of the Preferred Shares exclusively where
      no
      commission or other remuneration is paid or given directly or indirectly for
      soliciting the exchange in compliance with Section 3(a)(9) of the Securities
      Act.

     

    Section
      3.27 Hiring
      of New Chief Financial Officer
      The
      Company agrees that it shall hire a new assistant to its Chief Financial
      Officer, which person shall be knowledgeable with respect to the capital markets
      in the United States, familiar with SEC reporting, proficient in the English
      language and acceptable to the Purchasers by no later than the date which is
      four months after the Closing Date. 

     

    ARTICLE
      IV

     

    CONDITIONS

     

    Section
      4.1 Conditions
      Precedent to the Obligation of the Company to Sell the Shares.
      The
      obligation hereunder of the Company to issue and sell the Preferred Shares
      and
      the Warrants to the Purchasers is subject to the satisfaction or waiver, at
      or
      before the Closing, of each of the conditions set forth below. These conditions
      are for the Company’s sole benefit and may be waived by the Company at any time
      in its sole discretion.

     

    (a) Accuracy
      of Each Purchaser’s Representations and Warranties.
      The
      representations and warranties of each Purchaser in this Agreement and each
      of
      the other Transaction Documents to which such Purchaser is a party shall be
      true
      and correct in all material respects as of the date when made and as of the
      Closing Date as though made at that time, except for representations and
      warranties that are expressly made as of a particular date, which shall be
      true
      and correct in all material respects as of such date.

     

    
      
        
        

      

      
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    (b) Performance
      by the Purchasers.
      Each
      Purchaser shall have performed, satisfied and complied in all respects with
      all
      covenants, agreements and conditions required by this Agreement to be performed,
      satisfied or complied with by such Purchaser at or prior to the
      Closing.

     

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

     

    (d) Delivery
      of Purchase Price.
      The
      Purchase Price for the Preferred Shares and Warrants has been delivered to
      the
      escrow agent pursuant to the Escrow General Agreement.

     

    (e) Delivery
      of Transaction Documents.
      The
      Transaction Documents to which the Purchasers are parties have been duly
      executed and delivered by the Purchasers to the Company.

     

    (f) Share
      Exchange Transaction.
      Prior
      to the Closing, the Share Exchange Transaction shall have been
      consummated.

     

    Section
      4.2 Conditions
      Precedent to the Obligation of the Purchasers to Purchase the
      Shares.
      The
      obligation hereunder of each Purchaser to acquire and pay for the Preferred
      Shares and the Warrants is subject to the satisfaction or waiver, at or before
      the Closing, of each of the conditions set forth below. These conditions are
      for
      each Purchaser’s sole benefit and may be waived by such Purchaser at any time in
      its sole discretion.

     

    (a) Accuracy
      of the Company’s Representations and Warranties.
      Each of
      the representations and warranties of the Company in this Agreement and the
      other Transaction Documents shall be true and correct in all respects as of
      the
      date when made and as of the Closing Date as though made at that time (except
      for representations and warranties that are expressly made as of a particular
      date), which shall be true and correct in all respects as of such
      date.

     

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

     

    (c) No
      Suspension, Etc.
      Quotation of the Common Stock shall not have been suspended by the Commission
      or
      the OTC Bulletin Board (except for any suspension of trading of limited duration
      agreed to by the Company, which suspension shall be terminated prior to the
      Closing), and, at any time prior to the Closing Date, trading in securities
      generally as reported by Bloomberg Financial Markets (“Bloomberg”)
      shall
      not have been suspended or limited, or minimum prices shall not have been
      established on securities whose trades are reported by Bloomberg, or on the
      New
      York Stock Exchange, nor shall a banking moratorium have been declared either
      by
      the United States or New York State authorities, nor shall there have occurred
      any material outbreak or escalation of hostilities or other national or
      international calamity or crisis of such magnitude in its effect on, or any
      material adverse change in any financial market which, in each case, in the
      judgment of such Purchaser, makes it impracticable or inadvisable to purchase
      the Preferred Shares.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (d) No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement.

     

    (e) No
      Proceedings or Litigation.
      No
      action, suit or proceeding before any arbitrator or any governmental authority
      shall have been commenced, and no investigation by any governmental authority
      shall have been threatened, against the Company or any subsidiary, or any of
      the
      officers, directors or affiliates of the Company or any subsidiary seeking
      to
      restrain, prevent or change the transactions contemplated by this Agreement,
      or
      seeking damages in connection with such transactions.

     

    (f) Series
      B Certificate of Designation of Rights and Preferences.
      Prior
      to the Closing, the Series B Certificate of Designation in the form of Exhibit
      B
      attached hereto shall have been filed with the Secretary of State of Nevada.
      

     

    (g) Opinions
      of Counsel, Etc.
      At the
      Closing, the Purchasers shall have received an opinion of counsel to the
      Company, dated the date of the Closing, in substantially the form of Exhibit
      H-1
      hereto, and such other certificates and documents as the Purchasers or its
      counsel shall reasonably require incident to the Closing. At the Closing, the
      Purchasers shall have received an opinion of PRC counsel to Sunway, dated the
      date of the Closing with respect to the Restructuring Agreements and such other
      matters as the Purchasers may reasonably request, in substantially the form
      of
      Exhibit H-2 hereto. 

     

    (h) Registration
      Rights Agreement.
      At the
      Closing, the Company shall have executed and delivered the Registration Rights
      Agreement to each Purchaser.

     

    (i) Certificates.
      The
      Company shall have executed and delivered to the Purchasers the certificates
      (in
      such denominations as such Purchaser shall request) for the Preferred Shares
      and
      the Warrants being acquired by such Purchaser at the Closing (in such
      denominations as such Purchaser shall request).

     

    (j) Resolutions.
      The
      Board of Directors of the Company shall have adopted resolutions consistent
      with
      Section 2.1(b) hereof in a form reasonably acceptable to such Purchaser (the
      “Resolutions”).

     

    (k) Reservation
      of Shares.
      As of
      the Closing Date, the Company shall have reserved out of its authorized and
      unissued Common Stock, solely for the purpose of effecting the conversion of
      the
      Preferred Shares and the exercise of the Warrants, a number of shares of Common
      Stock equal to one hundred fifty percent (150%) of the aggregate number of
      Conversion Shares issuable upon conversion of the Preferred Shares issued or
      to
      be issued pursuant to this Agreement and the number of Warrant Shares issuable
      upon exercise of the number of Warrants issued or to be issued pursuant to
      this
      Agreement.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (l) Transfer
      Agent Instructions.
      As of
      the Closing Date, the Irrevocable Transfer Agent Instructions, in the form
      of
      Exhibit G attached hereto, shall have been delivered to and acknowledged in
      writing by the Company’s transfer agent.

     

    (m) Lock-Up
      Agreement.
      As of
      the Closing Date, the persons listed on Schedule
      3.20
      hereto
      shall have delivered to the Purchasers a fully executed Lock-Up Agreement in
      the
      form of Exhibit
      E
      attached
      hereto.

     

    (n) Secretary’s
      Certificate.
      The
      Company shall have delivered to such Purchaser a secretary’s certificate, dated
      as of the Closing Date, as to (i) the Resolutions, (ii) the Articles, (iii)
      the
      Bylaws, (iv) the Series B Certificate of Designation, each as in effect at
      the
      Closing, and (iv) the authority and incumbency of the officers of the Company
      executing the Transaction Documents and any other documents required to be
      executed or delivered in connection therewith.

     

    (o) Officer’s
      Certificate.
      The
      Company shall have delivered to the Purchasers a certificate of an executive
      officer of the Company, dated as of the Closing Date, confirming the accuracy
      of
      the Company’s representations, warranties and covenants as of the Closing Date
      and confirming the compliance by the Company with the conditions precedent
      set
      forth in this Section 4.2 as of the Closing Date.

     

    (p) Escrow
      General Agreement.
      At the
      Closing, the Company and the escrow agent shall have executed and delivered
      the
      Escrow General Agreement in the form of Exhibit
      F-1
      attached
      hereto to each Purchaser.

     

    (q) Securities
      Escrow Agreement.
      The
      Securities Escrow Agreement shall have been executed by the parties thereto
      and
      the Escrow Shares (as defined in the Securities Escrow Agreement) shall have
      been deposited into the escrow account pursuant to the terms of the Securities
      Escrow Agreement in the form of Exhibit
      F-2
      attached
      hereto.

     

    (r) Material
      Adverse Effect.
      No
      Material Adverse Effect shall have occurred at or before the Closing
      Date.

     

    (s) Share
      Exchange Transaction.
      Prior
      to the Closing, the Share Exchange Transaction shall have been
      consummated.

     

    (t) Financial
      Statements.
      No
      later than the fifth Business Day prior to the Closing Date, the Company shall
      have delivered to the Purchasers the audited financial statements of Daqing
      Sunway Technology Co., Ltd. (“Sunway”)
      for
      the fiscal years ended December 31, 2006 and 2005 prepared by Samuel H. Wong
      & Co., LLP, certified public accountants (the “Sunway
      Financial Statements”),
      which
      Sunway Financial Statements shall be acceptable to the Purchasers. On or prior
      to the Closing Date, the Company shall have prepared and filed with the
      Securities and Exchange Commission its Quarterly Report on Form 10-QSB for
      its
      fiscal quarter ended March 31, 2007. 

     

    (u) Capitalization
      Table.
      No later
      than the third Business Day prior to the Closing Date, the Company shall have
      delivered to each of the Purchasers a capitalization table setting forth (i)
      its
      capitalization, on a fully diluted basis immediately prior to the Closing and
      (ii) its pro forma capitalization, on a fully diluted basis, giving effect
      to
      the consummation of the transactions contemplated by this Agreement. In each
      case, the table shall list all outstanding options, warrants and other
      securities convertible into equity of the Company. 

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (v) Draft
      Form 8-K No
      later
      than one (1) Business Day prior to the Closing Date, the Company shall have
      delivered to each of the Purchasers, a draft of the “Business”, “Management’s
      Discussion and Analysis”, “Management” and “Related Party Transactions” of the
      Form 8-K (the “Draft
      Form 8-K”),
      in
      substantially final form (except that such draft shall not be required to
      include a description of the financing contemplated by the Transaction
      Documents), that it proposes to file with the Securities and Exchange
      Commission, which sections of the Draft Form 8-K shall be reasonably acceptable
      to the Purchasers.

     

    ARTICLE
      V

     

    Stock
      Certificate Legend

     

    Section
      5.1 Legend.
      Each
      certificate representing the Preferred Shares and the Warrants, and, if
      appropriate, securities issued upon conversion thereof, shall be stamped or
      otherwise imprinted with a legend substantially in the following form (in
      addition to any legend required by applicable state securities or “blue sky”
laws):

     

    THESE
      SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
      OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
      THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
      PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

     

    The
      Company agrees to reissue certificates representing any of the Conversion Shares
      and the Warrant Shares, without the legend set forth above if at such time,
      prior to making any transfer of any such securities, such holder thereof shall
      give written notice to the Company describing the manner and terms of such
      transfer and removal as the Company may reasonably request. Such proposed
      transfer and removal will not be effected until: (a) either (i) the Company
      has
      received an opinion of counsel reasonably satisfactory to the Company, to the
      effect that the registration of the Conversion Shares or the Warrant Shares
      under the Securities Act is not required in connection with such proposed
      transfer, (ii) a registration statement under the Securities Act covering such
      proposed disposition has been filed by the Company with the Commission and
      has
      become effective under the Securities Act, (iii) the Company has received other
      evidence reasonably satisfactory to the Company that such registration and
      qualification under the Securities Act and state securities laws are not
      required, or (iv) the holder provides the Company with reasonable assurances
      that such security can be sold pursuant to Rule 144 under the Securities Act;
      and (b) either (i) the Company has received an opinion of counsel reasonably
      satisfactory to the Company, to the effect that registration or qualification
      under the securities or “blue sky” laws of any state is not required in
      connection with such proposed disposition, or (ii) compliance with applicable
      state securities or “blue sky” laws has been effected or a valid exemption
      exists with respect thereto. The Company will respond to any such notice from
      a
      holder within five (5) business days. In the case of any proposed transfer
      under
      this Section 5.1, the Company will use reasonable efforts to comply with any
      such applicable state securities or “blue sky” laws, but shall in no event be
      required, (x) to qualify to do business in any state where it is not then
      qualified, (y) to take any action that would subject it to tax or to the general
      service of process in any state where it is not then subject, or (z) to comply
      with state securities or “blue sky” laws of any state for which registration by
      coordination is unavailable to the Company. The restrictions on transfer
      contained in this Section 5.1 shall be in addition to, and not by way of
      limitation of, any other restrictions on transfer contained in any other section
      of this Agreement. Whenever a certificate representing the Conversion Shares
      or
      Warrant Shares is required to be issued to a Purchaser without a legend, in
      lieu
      of delivering physical certificates representing the Conversion Shares or
      Warrant Shares (provided that a registration statement under the Securities
      Act
      providing for the resale of the Warrant Shares and Conversion Shares is then
      in
      effect), the Company may cause its transfer agent to electronically transmit
      the
      Conversion Shares or Warrant Shares to a Purchaser by crediting the account
      of
      such Purchaser or such Purchaser’s Prime Broker with the Depository Trust
      Company (“DTC”)
      through its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      (to the extent not inconsistent with any provisions of this
      Agreement).

     

    
      
        
        

      

      
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    ARTICLE
      VI

     

    Indemnification

     

    Section
      6.1 General
      Indemnity.
      The
      Company agrees to indemnify and hold harmless the Purchasers (and their
      respective directors, officers, managers, partners, members, shareholders,
      affiliates, agents, successors and assigns) from and against any and all losses,
      liabilities, deficiencies, costs, damages and expenses (including, without
      limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
      the Purchasers as a result of any inaccuracy in or breach of the
      representations, warranties or covenants made by the Company herein. Each
      Purchaser severally but not jointly agrees to indemnify and hold harmless the
      Company and its directors, officers, affiliates, agents, successors and assigns
      from and against any and all losses, liabilities, deficiencies, costs, damages
      and expenses (including, without limitation, reasonable attorneys’ fees, charges
      and disbursements) incurred by the Company as a result of any inaccuracy in
      or
      breach of the representations, warranties or covenants made by such Purchaser
      herein. The maximum aggregate liability of each Purchaser pursuant to its
      indemnification obligations under this Article VII shall not exceed the portion
      of the Purchase Price paid by such Purchaser hereunder.

     

    Section
      6.2 Indemnification
      Procedure.
      Any
      party entitled to indemnification under this Article VI (an “indemnified party”)
      will give written notice to the indemnifying party of any matters giving rise
      to
      a claim for indemnification; provided,
      that
      the failure of any party entitled to indemnification hereunder to give notice
      as
      provided herein shall not relieve the indemnifying party of its obligations
      under this Article VI except to the extent that the indemnifying party is
      actually prejudiced by such failure to give notice. In case any action,
      proceeding or claim is brought against an indemnified party in respect of which
      indemnification is sought hereunder, the indemnifying party shall be entitled
      to
      participate in and, unless in the reasonable judgment of the indemnified party
      a
      conflict of interest between it and the indemnifying party may exist with
      respect of such action, proceeding or claim, to assume the defense thereof
      with
      counsel reasonably satisfactory to the indemnified party. In the event that
      the
      indemnifying party advises an indemnified party that it will contest such a
      claim for indemnification hereunder, or fails, within thirty (30) days of
      receipt of any indemnification notice to notify, in writing, such person of
      its
      election to defend, settle or compromise, at its sole cost and expense, any
      action, proceeding or claim (or discontinues its defense at any time after
      it
      commences such defense), then the indemnified party may, at its option, defend,
      settle or otherwise compromise or pay such action or claim. In any event, unless
      and until the indemnifying party elects in writing to assume and does so assume
      the defense of any such claim, proceeding or action, the indemnified party’s
      costs and expenses arising out of the defense, settlement or compromise of
      any
      such action, claim or proceeding shall be losses subject to indemnification
      hereunder. The indemnified party shall cooperate fully with the indemnifying
      party in connection with any negotiation or defense of any such action or claim
      by the indemnifying party and shall furnish to the indemnifying party all
      information reasonably available to the indemnified party which relates to
      such
      action or claim. The indemnifying party shall keep the indemnified party fully
      apprised at all times as to the status of the defense or any settlement
      negotiations with respect thereto. If the indemnifying party elects to defend
      any such action or claim, then the indemnified party shall be entitled to
      participate in such defense with counsel of its choice at its sole cost and
      expense. The indemnifying party shall not be liable for any settlement of any
      action, claim or proceeding effected without its prior written consent.
      Notwithstanding anything in this Article VI to the contrary, the indemnifying
      party shall not, without the indemnified party’s prior written consent, settle
      or compromise any claim or consent to entry of any judgment in respect thereof
      which imposes any future obligation on the indemnified party or which does
      not
      include, as an unconditional term thereof, the giving by the claimant or the
      plaintiff to the indemnified party of a release from all liability in respect
      of
      such claim. The indemnification required by this Article VI shall be made by
      periodic payments of the amount thereof during the course of investigation
      or
      defense, as and when bills are received or expense, loss, damage or liability
      is
      incurred, so long as the indemnified party irrevocably agrees to refund such
      moneys if it is ultimately determined by a court of competent jurisdiction
      that
      such party was not entitled to indemnification. The indemnity agreements
      contained herein shall be in addition to (a) any cause of action or similar
      rights of the indemnified party against the indemnifying party or others, and
      (b) any liabilities the indemnifying party may be subject to pursuant to the
      law.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII

     

    Miscellaneous

     

    Section
      7.1 Fees
      and Expenses.
      Except
      as otherwise set forth in this Agreement and the other Transaction Documents,
      each party shall pay the fees and expenses of its advisors, counsel, accountants
      and other experts, if any, and all other expenses, incurred by such party
      incident to the negotiation, preparation, execution, delivery and performance
      of
      this Agreement, provided that the Company shall pay all actual and reasonable
      attorneys’ fees and expenses (including disbursements and out-of-pocket
      expenses) up to a maximum of $40,000 incurred by the Purchasers in connection
      with the preparation, negotiation, execution and delivery of this Agreement
      and
      the other Transaction Documents and the consummation of the transactions and
      the
      review of the Restructuring Agreements. The Company shall also pay to Vision
      at
      the Closing in connection with due diligence expenses incurred by Vision at
      the
      Closing in connection with due diligence expenses incurred by Vision an amount
      of $100,000. The Company shall also pay all reasonable fees and expenses
      incurred by the Purchasers in connection with the enforcement of this Agreement
      or any of the other Transaction Documents, including, without limitation, all
      reasonable attorneys’ fees and expenses but only if the Purchasers are
      successful in any litigation or arbitration relating to such
      enforcement.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    Section
      7.2 Specific
      Enforcement, Consent to Jurisdiction.
      

     

    (a) The
      Company and the Purchasers acknowledge and agree that irreparable damage would
      occur in the event that any of the provisions of this Agreement or the other
      Transaction Documents were not performed in accordance with their specific
      terms
      or were otherwise breached. It is accordingly agreed that the parties shall
      be
      entitled to an injunction or injunctions to prevent or cure breaches of the
      provisions of this Agreement or the other Transaction Documents and to enforce
      specifically the terms and provisions hereof or thereof, this being in addition
      to any other remedy to which any of them may be entitled by law or
      equity.

     

    (b) Each
      of
      the Company and the Purchasers (i) hereby irrevocably submits to the
      jurisdiction of the United States District Court sitting in the Southern
      District of New York and the courts of the State of New York located in New
      York
      county for the purposes of any suit, action or proceeding arising out of or
      relating to this Agreement or any of the other Transaction Documents or the
      transactions contemplated hereby or thereby and (ii) hereby waives, and agrees
      not to assert in any such suit, action or proceeding, any claim that it is
      not
      personally subject to the jurisdiction of such court, that the suit, action
      or
      proceeding is brought in an inconvenient forum or that the venue of the suit,
      action or proceeding is improper. Each of the Company and the Purchasers
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address in effect for notices to
      it
      under this Agreement and agrees that such service shall constitute good and
      sufficient service of process and notice thereof. Nothing in this Section 7.2
      shall affect or limit any right to serve process in any other manner permitted
      by law.

     

    Section
      7.3 Entire
      Agreement; Amendment.
      This
      Agreement and the other Transaction Documents contains the entire understanding
      and agreement of the parties with respect to the matters covered hereby and,
      except as specifically set forth herein or in the Transaction Documents, neither
      the Company nor any of the Purchasers makes any representations, warranty,
      covenant or undertaking with respect to such matters and they supersede all
      prior understandings and agreements with respect to said subject matter, all
      of
      which are merged herein. No provision of this Agreement may be waived or amended
      other than by a written instrument signed by the Company and the holders of
      at
      least seventy-five percent (75%) of the Preferred Shares then outstanding,
      and
      no provision hereof may be waived other than by an a written instrument signed
      by the party against whom enforcement of any such amendment or waiver is sought.
      No such amendment shall be effective to the extent that it applies to less
      than
      all of the holders of the Preferred Shares then outstanding. No consideration
      shall be offered or paid to any person to amend or consent to a waiver or
      modification of any provision of any of the Transaction Documents unless the
      same consideration is also offered to all of the parties to the Transaction
      Documents or holders of Preferred Shares, as the case may be.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    Section
      7.4 Notices.
      Any
      notice, demand, request, waiver or other communication required or permitted
      to
      be given hereunder shall be in writing and shall be effective (a) upon hand
      delivery by telex (with correct answer back received), telecopy or facsimile
      at
      the address or number designated below (if delivered on a business day during
      normal business hours where such notice is to be received), or the first
      business day following such delivery (if delivered other than on a business
      day
      during normal business hours where such notice is to be received) or (b) on
      the
      second business day following the date of mailing by express courier service,
      fully prepaid, addressed to such address, or upon actual receipt of such
      mailing, whichever shall first occur. The addresses for such communications
      shall be:

    

      
        	 	
                If
                  to the Company: 

              	 	 
	 	 	 	
                Rise
                  Elite International (BVI), Ltd.

                c/o
                  Daqing Sunway Technology Co., Ltd.

                Daqing
                  Hi-Tech Industry Development Zone

                Daqing,
                  Helongjiang, Post Code 163316

                People’s
                  Republic of China

                Dr.
                  David Wang, CFO

                Tel:
                   86-459-6046043

                Fax:
                   86-459-6046004

                Email: abc1869@163.com

              
	 	 	 	 
	 	
                with
                  copies to:

              	 	 
	 	 	 	
                Guzov
                  Ofsink, LLC

                600
                  Madison Avenue, 14th Floor

                New
                  York, New York 10022

                Attention:
                  Darren Ofsink

                Tel.
                  No.: (212) 371-8008, ext. 127

                Fax
                  No.: (212) 688-7273

              
	 	 	 	 
	 	
                If
                  to any Purchaser:

              	 	
                At
                  the address of such Purchaser set forth on Exhibit A to this Agreement,
                  with copies to Purchaser’s counsel as set forth on Exhibit A or as
                  specified in writing by such Purchaser with copies to:

                 

                Loeb
                  & Loeb LLP

                345
                  Park Avenue

                New
                  York, New York 10154

                Attention:
                  Mitchell S. Nussbaum, Esq.

                Tel
                  No.: (212) 407-4000

                Fax
                  No.: (212) 407-4990

              

      

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    Any
      party
      hereto may from time to time change its address for notices by giving at least
      ten (10) days written notice of such changed address to the other party
      hereto.

     

    Section
      7.5 Waivers.
      No
      waiver by either party 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 other provisions, condition or requirement hereof,
      nor shall any delay or omission of any party to exercise any right hereunder
      in
      any manner impair the exercise of any such right accruing to it
      thereafter.

     

    Section
      7.6 Headings.
      The
      article, section and subsection headings in this Agreement are for convenience
      only and shall not constitute a part of this Agreement for any other purpose
      and
      shall not be deemed to limit or affect any of the provisions
      hereof.

     

    Section
      7.7 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns.

     

    Section
      7.8 No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    Section
      7.9 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York, without giving effect to any of the conflicts
      of
      law principles which would result in the application of the substantive law
      of
      another jurisdiction. This Agreement shall not be interpreted or construed
      with
      any presumption against the party causing this Agreement to be
      drafted.

     

    Section
      7.10 Survival.
      The
      representations and warranties of the Company and the Purchasers shall survive
      the execution and delivery hereof and the Closings hereunder for a period of
      two
      years following the Closing Date.

     

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

     

    Section
      7.12 Publicity.
      The
      Company agrees that it will not disclose, and will not include in any public
      announcement, the name of the Purchasers without the consent of the Purchasers
      unless and until such disclosure is required by law or applicable regulation,
      and then only to the extent of such requirement.

     

    Section
      7.13 Severability.
      The
      provisions of this Agreement and the Transaction Documents are severable and,
      in
      the event that any court of competent jurisdiction shall determine that any
      one
      or more of the provisions or part of the provisions contained in this Agreement
      or the Transaction Documents 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 provision or part of a provision
      of
      this Agreement or the Transaction Documents and such provision shall be reformed
      and construed as if such invalid or illegal or unenforceable provision, or
      part
      of such provision, had never been contained herein, so that such provisions
      would be valid, legal and enforceable to the maximum extent
      possible.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    Section
      7.14 Further
      Assurances.
      From
      and after the date of this Agreement, upon the request of any Purchaser or
      the
      Company, each of the Company and the Purchasers shall execute and deliver such
      instrument, documents and other writings as may be reasonably necessary or
      desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this Agreement, the Preferred Shares, the Conversion Shares, the
      Warrants, the Warrant Shares, the Series B Certificate of Designation, the
      Registration Rights Agreement and the other Transaction Documents.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    
       

      

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      

       

      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A TO THE

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

     

      
        

      

    

     

    
      	 	 	
              Investment

              Amount

            	 	
              Preferred
                B

            	 	
              A
                Warrant

            	 	
              B
                Warrant

            	 	
              J
                Warrant

            	 	
              C
                Warrant

            	 	
              D
                Warrant

            	 
	
              Vision
                Opportunity Master Fund, Ltd.

            	 	 	
              6,500,000

            	 	 	
              160,494

            	 	 	
              4,814,815

            	 	 	
              2,407,407

            	 	 	
              4,362,416

            	 	 	
              4,362,416

            	 	 	
              2,181,208

            	 
	
              Columbia
                China Capital Group, Inc.

            	 	 	
              200,000

            	 	 	
              4,938

            	 	 	
              148,148

            	 	 	
              74,074

            	 	 	
              134,228

            	 	 	
              134,228

            	 	 	
              67,114

            	 

    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B TO THE 

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

     

    
      
 

    FORM
      OF SERIES B CERTIFICATE OF DESIGNATION

     

    [OMITTED]

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C-1 TO THE

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

     

    
      
 

    FORM
      OF SERIES A WARRANT

     

    [OMITTED]

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C-2 TO THE 

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

     

    
      

    

     

    FORM
      OF SERIES B WARRANT

     

    [OMITTED]

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C-3 TO THE 

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

     

    
      
 

    FORM
      OF SERIES J WARRANT

     

    [OMITTED]

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      D TO THE 

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

     

    
      

    

     

    FORM
      OF REGISTRATION RIGHTS AGREEMENT

     

    [OMITTED]

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      E TO THE 

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

     

    
      

    

     

    FORM
      OF LOCK-UP AGREEMENT

     

    [OMITTED]

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      F-1 TO THE 

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

     

    
      

    

     

    FORM
      OF ESCROW GENERAL AGREEMENT

     

    [OMITTED]

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      F-2 TO THE 

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

     

    
      

    

     

    FORM
      OF SECURITIES ESCROW AGREEMENT

     

    [OMITTED]

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      G TO THE 

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

     

    
      

    

     

    FORM
      OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

     

    
      
 

    as
      of
      ____________, 2007

     

    [Name
      and address of Transfer Agent]

    Attn:
      _____________

     

    Ladies
      and Gentlemen:

     

    Reference
      is made to that certain Series B Convertible Preferred Stock Purchase Agreement
      (the “Purchase
      Agreement”),
      dated
      as of ______________, 2007, by and among _____________________________________,
      a ____________ corporation (the “Company”),
      and
      the purchasers named therein (collectively, the “Purchasers”)
      pursuant to which the Company is issuing to the Purchasers shares of its Series
      B Convertible Preferred Stock, par value $_______ per share, (the “Preferred
      Shares”)
      and
      warrants (the “Warrants”)
      to
      purchase shares of the Company’s common stock, par value $________ per share
      (the “Common
      Stock”).
      This
      letter shall serve as our irrevocable authorization and direction to you
      provided that you are the transfer agent of the Company at such time) to issue
      shares of Common Stock upon conversion of the Preferred Shares (the
“Conversion
      Shares”)
      and
      exercise of the Warrants (the “Warrant
      Shares”)
      to or
      upon the order of a Purchaser from time to time upon (i) surrender to you
      of a properly completed and duly executed Conversion Notice or Exercise Notice,
      as the case may be, in the form attached hereto as Exhibit I and Exhibit II,
      respectively, (ii) in the case of the conversion of Preferred Shares, a
      copy of the certificates (with the original certificates delivered to the
      Company) representing Preferred Shares being converted or, in the case of
      Warrants being exercised, a copy of the Warrants (with the original Warrants
      delivered to the Company) being exercised (or, in each case, an indemnification
      undertaking with respect to such share certificates or the warrants in the
      case
      of their loss, theft or destruction), and (iii) delivery of a treasury
      order or other appropriate order duly executed by a duly authorized officer
      of
      the Company. So long as you have previously received (x) written confirmation
      from counsel to the Company that a registration statement covering resales
      of
      the Conversion Shares or Warrant Shares, as applicable, has been declared
      effective by the Securities and Exchange Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”),
      and
      no subsequent notice by the Company or its counsel of the suspension or
      termination of its effectiveness and (y) a copy of such registration statement,
      and if the Purchaser represents in writing that the Conversion Shares or the
      Warrant Shares, as the case may be, were sold pursuant to the Registration
      Statement, then certificates representing the Conversion Shares and the Warrant
      Shares, as the case may be, shall not bear any legend restricting transfer
      of
      the Conversion Shares and the Warrant Shares, as the case may be, thereby and
      should not be subject to any stop-transfer restriction. Provided, however,
      that
      if you have not previously received those items and representations listed
      above, then the certificates for the Conversion Shares and the Warrant Shares
      shall bear the following legend:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT”), OR ANY STATE
      SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
      REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR
      THE
      COMPANY SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF
      SUCH
      SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
      STATE
      SECURITIES LAWS IS NOT REQUIRED.”

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    and,
      provided, further, that the Company may from time to time notify you to place
      stop-transfer restrictions on the certificates for the Conversion Shares and
      the
      Warrant Shares in the event a registration statement covering the Conversion
      Shares and the Warrant Shares is subject to amendment for events then
      current.

     

    A
      form of
      written confirmation from counsel to the Company that a registration statement
      covering resales of the Conversion Shares and the Warrant Shares has been
      declared effective by the SEC under the 1933 Act is attached hereto as Exhibit
      III.

     

    Please
      be
      advised that the Purchasers are relying upon this letter as an inducement to
      enter into the Purchase Agreement and, accordingly, each Purchaser is a third
      party beneficiary to these instructions.

     

    Please
      execute this letter in the space indicated to acknowledge your agreement to
      act
      in accordance with these instructions. Should you have any questions concerning
      this matter, please contact me at ___________.

     

    
      	 	 	 	Very
              truly yours,
	 	 	 	 
	 	 	 	
              [________________________________________]

               

            
	 	 	 	
            
	
            	 	 	
              By:
                ______________________________________

               

              Name:
                ____________________________________

               

              Title:
                _____________________________________

            

    

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

    
    

    ACKNOWLEDGED
      AND AGREED:

     

    [TRANSFER
      AGENT]

     

    
      	
              By:
                ______________________________________

               

              Name:
                ____________________________________

               

              Title:
                _____________________________________

               

              Date: 
                _____________________________________

            	 	 	
               

            

    

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      I

     

    
      

    

     

    CONVERSION
      NOTICE

     

    Reference
      is made to the Series B Certificate of Designation of the Relative Rights and
      Preferences of the Series B Preferred Stock of
      ______________________________________ (the “Series B Certificate of
      Designation”). In accordance with and pursuant to the Series B Certificate of
      Designation, the undersigned hereby elects to convert the number of shares
      of
      Series B Preferred Stock, par value $________ per share (the “Preferred
      Shares”), [ ], a ________ corporation (the “Company”), indicated below into
      shares of Common Stock, par value $_________ per share (the “Common Stock”), of
      the Company, by tendering the stock certificate(s) representing the share(s)
      of
      Preferred Shares specified below as of the date specified below.

     

    Date
      of
      Conversion:  ______________________________________

     

    Number
      of
      Preferred Shares to be converted:  _________

     

    Stock
      certificate no(s). of Preferred Shares to be converted:  _______

     

    The
      Common Stock have been sold pursuant to the Registration Statement (as defined
      in the Registration Rights Agreement): YES _______ NO______

     

    Please
      confirm the following information:

     

    Conversion
      Price:  _______________________________________

     

    Number
      of
      shares of Common Stock to
      be
      issued:  _______________________________________

     

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the Date of Conversion: _____________________

     

    Please
      issue the Common Stock into which the Preferred Shares are being converted
      and,
      if applicable, any check drawn on an account of the Company in the following
      name and to the following address:

     

    
      	Issue to:   	 	 	
            
	 	 	 	
              
 
	 	 	 	
              
 
	Facsimile
              Number:  	 	 	
            
	
            	 	 	
              
                

              

            

    

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

       

    
      	Authorization: 	 	 	
            
	 	 	 	
              
 
	 	 	 	By:  
	 	 	 	
              
                
 

            
	
            	 	 	Title:
	
            	 	 	
              
                

              

            

    

    Dated:

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      II

     

    FORM
      OF EXERCISE NOTICE

     

    EXERCISE
      FORM

     

    
      

    

     

    The
      undersigned____________, pursuant to the provisions of the within Warrant,
      hereby elects to purchase ______ shares of Common Stock of
      ___________________________ covered by the within Warrant.

     

    
      	Dated:
              _________________________	 	
              Signature
                ________________________________

            
	 	 	 
	 	 	Address
              ________________________________
	 	 	________________________________________
	 	 	
            

       

    

    Number
      of
      shares of Common Stock beneficially owned or deemed beneficially owned by the
      Holder on the date of Exercise: _______________________

     

    ASSIGNMENT

     

    FOR
      VALUE
      RECEIVED, ________________ hereby sells, assigns and transfers unto
      _______________ the within Warrant and all rights evidenced thereby and does
      irrevocably constitute and appoint ______________, attorney, to transfer the
      said Warrant on the books of the within named corporation.

     

    
      	Dated:
              _________________________	 	
              Signature
                ________________________________

            
	 	 	 
	 	 	Address
              ________________________________
	 	 	_______________________________________
	 	 

    

     

    PARTIAL
      ASSIGNMENT

     

    FOR
      VALUE
      RECEIVED, ________________ hereby sells, assigns and transfers unto
      _______________ the right to purchase ___________ shares of Warrant Stock
      evidenced by the within Warrant together with all rights therein, and does
      irrevocably constitute and appoint __________________, attorney, to transfer
      that part of the said Warrant on the books of the within named
      corporation.

     

    
      	Dated:
              _________________________	 	
              Signature
                ________________________________

            
	 	 	 
	 	 	Address
              ________________________________
	 	 	________________________________________
	 	 

    

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    FOR
      USE
      BY THE ISSUER ONLY:

     

    This
      Warrant No. W-_________ canceled (or transferred or exchanged) this _______
      day
      of __________, _______, shares of Common Stock issued therefor in the name
      of
      _______________, Warrant No. W-______ issued for _______ shares of Common Stock
      in the name of ________________.

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      III

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    [Name
      and address of Transfer Agent]

    Attn:
      _________

     

    Re:
      [_________________________________]

     

    Ladies
      and Gentlemen:

     

    We
      are
      counsel to ________________________________, a ___________ corporation (the
      “Company”),
      and
      have represented the Company in connection with that certain Series B
      Convertible Preferred Stock Purchase Agreement (the “Purchase
      Agreement”),
      dated
      as of ______________, 2007, by and among the Company and the purchasers named
      therein (collectively, the “Purchasers”)
      pursuant to which the Company issued to the Purchasers shares of its Series
      B
      Convertible Preferred Stock, par value $________ per share, (the “Preferred
      Shares”)
      and
      warrants (the “Warrants”)
      to
      purchase shares of the Company’s common stock, par value $_________ per share
      (the “Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company has also entered into a
      Registration Rights Agreement with the Purchasers (the “Registration
      Rights Agreement”),
      dated
      as of _____________, 2007, pursuant to which the Company agreed, among other
      things, to register the Registrable Securities (as defined in the Registration
      Rights Agreement), including the shares of Common Stock issuable upon conversion
      of the Preferred Shares and exercise of the Warrants, under the Securities
      Act
      of 1933, as amended (the “1933
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ________________, 2007, the Company filed a Registration Statement
      on Form SB-2 (File No. 333-________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the resale of the Registrable Securities which names each of the
      present Purchasers as a selling stockholder thereunder.

     

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the 1933 Act at [ENTER
      TIME OF EFFECTIVENESS]
      on
      [ENTER
      DATE OF EFFECTIVENESS]
      and we
      have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
      any stop order suspending its effectiveness has been issued or that any
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      accordingly, the Registrable Securities are available for resale under the
      1933
      Act pursuant to the Registration Statement.

    
      	 	 	 
	 	
              Very
                truly yours,

               

              [COMPANY
                COUNSEL]

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

            

    

     

    cc:
      [LIST
      NAMES OF PURCHASERS]

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
      H TO THE 

    SERIES
      B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

     

    
      
        
          

        

      

       

    

    FORM
      OF OPINION OF COUNSEL

     

    1. The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of __________ and has the requisite
      corporate power to own, lease and operate its properties and assets, and to
      carry on its business as presently conducted. The Company is duly qualified
      as a
      foreign corporation to do business and is in good standing in every jurisdiction
      in which the nature of the business conducted or property owned by it makes
      such
      qualification necessary.

     

    2. The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under the Transaction Documents and to issue the
      Preferred Stock, the Warrants and the Common Stock issuable upon conversion
      of
      the Preferred Stock and exercise of the Warrants. The execution, delivery and
      performance of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      and
      validly authorized by all necessary corporate action and no further consent
      or
      authorization of the Company or its Board of Directors or stockholders is
      required. Each of the Transaction Documents have been duly executed and
      delivered, and the Preferred Stock and the Warrants have been duly executed,
      issued and delivered by the Company and each of the Transaction Documents
      constitutes a legal, valid and binding obligation of the Company enforceable
      against the Company in accordance with its respective terms. The Common Stock
      issuable upon conversion of the Preferred Stock and exercise of the Warrants
      are
      not subject to any preemptive rights under the Articles or the
      Bylaws.

     

    3. The
      Preferred Stock and the Warrants have been duly authorized and, when delivered
      against payment in full as provided in the Purchase Agreement, will be validly
      issued, fully paid and nonassessable. The shares of Common Stock issuable upon
      conversion of the Preferred Stock, have been duly authorized and reserved for
      issuance, and, when delivered upon conversion or against payment in full as
      provided in the Series B Certificate of Designation will be validly issued,
      fully paid and nonassessable.

     

    4. The
      execution, delivery and performance of and compliance with the terms of the
      Transaction Documents and the issuance of the Preferred Stock, the Warrants
      and
      the Common Stock issuable upon conversion of the Preferred Stock and exercise
      of
      the Warrants do not (i) violate any provision of the Articles or Bylaws, (ii)
      conflict with, or constitute a default (or an event which with notice or lapse
      of time or both would become a default) under, or give to others any rights
      of
      termination, amendment, acceleration or cancellation of, any material agreement,
      mortgage, deed of trust, indenture, note, bond, license, lease agreement,
      instrument or obligation to which the Company is a party, (iii) create or impose
      a lien, charge or encumbrance on any property of the Company under any agreement
      or any commitment to which the Company is a party or by which the Company is
      bound or by which any of its respective properties or assets are bound, or
      (iv)
      result in a violation of any federal, state, local or foreign statute, rule,
      regulation, order, judgment, injunction or decree (including Federal and state
      securities laws and regulations) applicable to the Company or by which any
      property or asset of the Company is bound or affected, except, in all cases
      other than violations pursuant to clauses (i) and (iv) above, for such
      conflicts, default, terminations, amendments, acceleration, cancellations and
      violations as would not, individually or in the aggregate, have a Material
      Adverse Effect.

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    5. No
      consent, approval or authorization of or designation, declaration or filing
      with
      any governmental authority on the part of the Company is required under Federal,
      state or local law, rule or regulation in connection with the valid execution
      and delivery of the Transaction Documents, or the offer, sale or issuance of
      the
      Preferred Stock, the Warrants or the Common Stock issuable upon conversion
      of
      the Preferred Stock and exercise of the Warrants other than the Series B
      Certificate of Designation and the Registration Statement.

     

    6. To
      our
      knowledge, there is no action, suit, claim, investigation or proceeding pending
      or threatened against the Company which questions the validity of this Agreement
      or the transactions contemplated hereby or any action taken or to be taken
      pursuant hereto or thereto. To our knowledge, there is no action, suit, claim,
      investigation or proceeding pending, or to our knowledge, threatened, against
      or
      involving the Company or any of its properties or assets and which, if adversely
      determined, is reasonably likely to result in a Material Adverse Effect. There
      are no outstanding orders, judgments, injunctions, awards or decrees of any
      court, arbitrator or governmental or regulatory body against the Company or
      any
      officers or directors of the Company in their capacities as such.

     

    7. Based
      upon the representations of the Purchaser, the offer, issuance and sale of
      the
      Preferred Stock and the Warrants and the offer, issuance and sale of the shares
      of Common Stock issuable upon conversion of the Preferred Stock and exercise
      of
      the Warrants pursuant to the Purchase Agreement, the Series B Certificate of
      Designation and the Warrants, as applicable, are exempt from the registration
      requirements of the Securities Act.

     

    8. The
      Company is not, and as a result of and immediately upon Closing will not be,
      an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
      amended.

     

    Very
      truly yours,

     

    
      
        
        

      

      
        57REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of June 5, 2007, by and among National Realty and
      Mortgage, Inc, a Nevada corporation (the “Company”),
      and
      the purchasers listed on Schedule I hereto (the “Purchasers”).

     

    This
      Agreement is being entered into pursuant to the Series B Convertible Preferred
      Stock Purchase Agreement dated as of the date hereof among the Company and
      the
      Purchasers (the “Purchase
      Agreement”).

     

    The
      Company and the Purchasers hereby agree as follows:

     

    
      
        
          	
                	1.	
                  Definitions.

                

        

      

    

     

    Capitalized
      terms used and not otherwise defined herein shall have the meanings given such
      terms in the Purchase Agreement. As used in this Agreement, the following terms
      shall have the following meanings:

     

    “Additional
      Filing Date”
shall
      mean the thirtieth (30th)
      day
      following the date on which a Demand Notice is received by the Company;
provided
      that if
      any Additional Filing Date falls on a Saturday, Sunday or any other day which
      shall be a legal holiday or a day on which the Commission is authorized by
      law
      or other government actions to close, the Additional Filing Date shall be the
      following Business Day.

     

    “Advice”
shall
      have meaning set forth in Section 3(m).

     

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

     

    “Board”
shall
      have meaning set forth in Section 3(n).

     

    “Business
      Day”
means
      any day except Saturday, Sunday and any day which shall be a legal holiday
      or a
      day on which banking institutions in the state of New York generally are
      authorized or required by law or other government actions to close.

     

    “Closing
      Date”
means
      the date of the Closing of the purchase and sale of the Preferred Stock and
      the
      Warrants pursuant to the Purchase Agreement.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the Company’s Common Stock, par value $0.001 per share.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Demand
      Notice”
shall
      have the meaning set forth in Section 2A.

     

    “Effectiveness
      Date”
means,
      with respect to any Registration Statement the earlier of (A) the one hundred
      twentieth (120th)
      day
      following the Filing Date or any Additional Filing Dates, as applicable, or
      (B)
      in the event the Registration Statement receives a “full review” by the
      Commission, the one hundred fiftieth (150th)
      day
      following the Filing Date or any Additional Filing Dates, as applicable, which
      shall be extended for an additional thirty (30) days in the event the Commission
      provides comments solely on the issues related to Rule 415, or (C) the date
      which is within three (3) Business Days after the date on which the Commission
      informs the Company the (i) the Commission will not review a Registration
      Statement or (ii) the Company may request the acceleration of the effectiveness
      of a Registration Statement and the Company makes such request; provided,
      that,
      if the Effectiveness Date falls on a Saturday, Sunday or any other day which
      shall be a legal holiday or a day on which the Commission is authorized or
      required by law or other government actions to close, the Effectiveness Date
      shall be the following Business Day.

     

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section 2.

     

    “Event”
shall
      have the meaning set forth in Section 7(e).

     

    “Event
      Date”
shall
      have the meaning set forth in Section 7(e).

     

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

     

    “Filing
      Date”
means,
      the thirtieth (30th)
      day
      following the Closing Date; provided,
      that,
      if the Filing Date falls on a Saturday, Sunday or any other day which shall
      be a
      legal holiday or a day on which the Commission is authorized or required by
      law
      or other government actions to close, the Filing Date shall be the following
      Business Day.

     

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

     

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5(c).

     

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5(c).

     

    “Initiating
      Holders”
shall
      have the meaning set forth in Section 2A.

     

    “Losses”
shall
      have the meaning set forth in Section 5(a).

     

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

     

    “Preferred
      Stock”
means
      shares of the Company’s Series B Convertible Preferred Stock issued to the
      Purchasers pursuant to the Purchase Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference in such
      Prospectus.

     

    “Registrable
      Securities”
means
      (i) the shares of Common Stock issuable upon conversion of the Preferred Stock
      (“Conversion Shares”), (ii) the shares of Common Stock issuable upon exercise of
      the Warrants (“Warrant Shares”) and (iii) the shares of Common Stock that may be
      acquired by the Purchasers either (x) upon their release from escrow on the
      terms and subject to the conditions set forth in the Securities Escrow Agreement
      (the “Escrow Shares”) or (y) pursuant to Section 3.25 of the Purchase Agreement
      (the “Principal Stockholder Shares”).

     

    “Registration
      Statement”
means
      the registration statements and any additional registration statements
      contemplated by Section 2, including (in each case) the Prospectus, amendments
      and supplements to such registration statement or Prospectus, including pre-
      and
      post-effective amendments, all exhibits thereto, and all material incorporated
      by reference in such registration statement.

     

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

     

    “Rule
      158”
means
      Rule 158 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Rule
      424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

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

     

    “Securities
      Escrow Agreement”
means
      the Securities Escrow Agreement dated as of June 5, 2007 by and among the
      Company, Vision Opportunity Master Fund, Ltd, as purchaser representative and
      Rise Elite International Limited and Loeb and Loeb, LLP, as escrow agent.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Series
      J Warrant”
means
      the Series J Warrant of the Company dated June 6, 2007.

     

    “Special
      Counsel”
means
      ____________________, for which the Holders will be reimbursed by the Company
      pursuant to Section 4.

     

    “2008
      Escrow Shares”
shall
      have the meaning ascribed to such term in the Securities Escrow
      Agreement.

     

    “2007
      Escrow Shares”
shall
      have the meaning ascribed to such term in the Securities Escrow
      Agreement.

     

    “Warrants”
means
      the warrants to purchase shares of Common Stock issued to the Purchasers
      pursuant to the Purchase Agreement.

     

    
      	
            	2.	
              Resale
                Registrations. 

            

    

     

    (a) On
      or
      prior to the Filing Date, the Company shall prepare and file with the Commission
      a “resale” Registration Statement providing for the resale of all Conversion
      Shares for an offering to be made on a continuous basis pursuant to Rule 415.
      Such Registration Statement shall be on Form SB-2 (except if the Company is
      not
      then eligible to register for resale the Conversion Shares on Form SB-2, in
      which case such registration shall be on another appropriate form in accordance
      herewith and the Securities Act and the rules promulgated thereunder). Such
      Registration Statement shall cover to the extent allowable under the Securities
      Act and the rules promulgated thereunder (including Rules 415 and 416), such
      indeterminate number of additional shares of Common Stock resulting from stock
      splits, stock dividends or similar transactions with respect to the Conversion
      Shares. The Company shall (i) not permit any securities other than the
      Conversion Shares to be included in such Registration Statement and (ii) use
      its
      best efforts to cause such Registration Statement to be declared effective
      under
      the Securities Act as promptly as possible after the filing thereof, but in
      any
      event prior to the applicable Effectiveness Date, and to keep such Registration
      Statement continuously effective under the Securities Act until such date as
      is
      the earlier of (x) the date when all Conversion Shares covered by such
      Registration Statement have been sold or (y) the date on which the Conversion
      Shares may be sold without any restriction pursuant to Rule 144(k) as determined
      by the counsel to the Company pursuant to a written opinion letter, addressed
      to
      the Company’s transfer agent to such effect (the “Effectiveness Period”). The
      Company shall request that the effective time of any such Registration Statement
      is 5:00 p.m. Eastern Time on the effective date. 

     

    (b) In
      the
      event that the Company is unable to register for resale under Rule 415 of
      Regulation C under the Securities Act all of the Conversion Shares on the
      Registration Statement that it has agreed to file pursuant to the first sentence
      of this Section 2(a) due to limits imposed by the Commission’s interpretation of
      Rule 415 of Regulation C under the Securities Act, the Company will file a
      Registration Statement under the Securities Act with the Commission covering
      the
      resale by the Purchasers of such lesser amount of the as the Company is able
      to
      register pursuant to the Commission’s interpretation of Rule 415 of Regulation C
      under the Securities Act and use its reasonable best efforts to have such
      Registration Statement become effective as promptly as possible, and, when
      permitted to do so by the Commission, to file subsequent registration
      statement(s) under the Securities Act with the Commission covering the resale
      any Conversion Shares that were omitted from previous registration statement(s)
      and use its reasonable best efforts to have such registration declared effective
      as promptly as possible. In furtherance of the Company’s obligations set forth
      in the preceding sentence, the parties hereby agree that in the event that
      any
      Holder shall deliver to the Company a written notice at any time after the
      later
      of (x) the date which is six months after the Effectiveness Date of the latest
      Registration Statement that was filed pursuant to Section 2(a) or 2(b) hereof,
      as applicable, or (y) the date on which all Conversion Shares registered on
      the
      all of the prior Registration Statements filed pursuant to Section 2(a) and
      2(b)
      hereof are sold, that the Company shall file, within 30 days following the
      date
      of receipt of such written notice, an additional Registration Statement
      registering any Conversion Shares that were omitted from the initial
      Registration Statement. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
            	2A.	
              Demand
                Registrations.

            

    

     

    (a) At
      Any
      time following the date on which all Conversion Shares have been registered
      for
      resale pursuant to Section 2 hereof (the “Permitted Request Date”), (i) a Holder
      or Holders owning 25% or more in interest of the Registrable Securities (other
      than the Conversion Shares) (the “Initiating Holders”) may request that the
      Company file a Registration Statement providing for the resale of all
      Registrable Securities then held by the Initiating Holders by giving written
      notice (a “Demand Notice”) of such demand to the Company. The Demand Notice
      shall describe the number of Registrable Securities intended to be disposed
      of
      and the intended method of disposition. The Company shall then prepare and
      file
      with the Commission on or prior to the Additional Filing Date, a “resale”
Registration Statement providing for the resale of all Registrable Securities
      included in the Demand Notice for an offering to be made on a continuous basis
      pursuant to Rule 415. Any such Registration Statements shall be on Form SB-2
      (except if the Company is not then eligible to register for resale such
      Registrable Securities on Form SB-2, in which case such registrations shall
      be
      on another appropriate form in accordance herewith and the Securities Act and
      the rules promulgated thereunder). Each such Registration Statement shall cover
      to the extent allowable under the Securities Act and the rules promulgated
      thereunder (including Rules 415 and 416), such indeterminate number of
      additional shares of Common Stock resulting from stock splits, stock dividends
      or similar transactions with respect to the Registrable Securities. The Company
      shall (i) not permit any securities other than the Registrable Securities to
      be
      included in any such Registration Statement and (ii) use its reasonable best
      efforts to cause any such Registration Statement to be declared effective under
      the Securities Act as promptly as possible after the filing thereof, but in
      any
      event prior to the applicable Effectiveness Date, and to keep any such
      Registration Statement continuously effective under the Securities Act until
      such date as is the earlier of (x) the date when all Registrable Securities
      covered by such Registration Statement have been sold or (y) the date on which
      the Registrable Securities may be sold without any restriction pursuant to
      Rule
      144(k) as determined by the counsel to the Company pursuant to a written opinion
      letter, addressed to the Company’s transfer agent to such effect (the
“Effectiveness Period”). The Company shall request that the effective time of
      any such Registration Statement is 5:00 p.m. Eastern Time on the effective
      date.

     

    (b) In
      the
      event that the Company is unable to register for resale under Rule 415 of
      Regulation C under the Securities Act all of the Registrable Securities on
      any
      of the Registration Statements that it has agreed to file pursuant to the first
      sentence of this Section 2A(a) due to limits imposed by the Commission’s
      interpretation of Rule 415 of Regulation C under the Securities Act, the Company
      will file a Registration Statement under the Securities Act with the Commission
      covering the resale by the Purchasers of such lesser amount of the Registrable
      Securities (in the proportions set forth in the last sentence of this Section
      2A(b)) as the Company is able to register pursuant to the Commission’s
      interpretation of Rule 415 of Regulation C under the Securities Act and use
      its
      reasonable best efforts to have such Registration Statement become effective
      as
      promptly as possible, and, when permitted to do so by the Commission, to file
      subsequent registration statement(s) under the Securities Act with the
      Commission covering the resale any Registrable Securities that were omitted
      from
      its prior Registration Statements filed with the Commission pursuant to this
      Section 2A(b) and use its reasonable best efforts to have such registration
      declared effective as promptly as possible. In furtherance of the Company’s
      obligations set forth in the preceding sentence, the parties hereby agree that
      in the event that any Holder shall deliver to the Company a written notice
      at
      any time after the later of (x) the date which is six months after the
      Effectiveness Date of the latest Registration Statement filed pursuant to
      Section 2A(a) or 2A(b) hereof, as applicable, or (y) the date on which all
      Registrable Securities registered on all of the prior Registration Statements
      filed pursuant to Section 2A(a) and 2A(b) hereof are sold, that the Company
      shall file, within 30 days following the date of receipt of such written notice,
      an additional Registration Statement registering any Registrable Securities
      that
      were the subject of the applicable Demand Notice that were omitted from such
      Registration Statement. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      
        
          	
                	3.	
                  Registration
                    Procedures.

                

        

      

    

     

    In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

     

    (a) Prepare
      and file with the Commission, on or prior to each of the Filing Date and each
      Additional Filing Date, a Registration Statement on Form SB-2 (or if the Company
      is not then eligible to register for resale the Registrable Securities on Form
      SB-2 such registration shall be on another appropriate form in accordance
      herewith and the Securities Act and the rules promulgated thereunder) in
      accordance with the plan of distribution as set forth on Exhibit
      A
      hereto
      and in accordance with applicable law, and cause such Registration Statement
      to
      become effective and remain effective as provided herein; provided,
      however,
      that
      not less than five (5) Business Days prior to the filing of such Registration
      Statement or any related Prospectus or any amendment or supplement thereto,
      the
      Company shall (i) furnish to the Holders and any Special Counsel, copies of
      all
      such documents proposed to be filed, which documents will be subject to the
      review of such Holders and such Special Counsel, and (ii) cause its officers
      and
      directors, counsel and independent certified public accountants to respond
      to
      such inquiries as shall be necessary, in the reasonable opinion of Special
      Counsel, to conduct a reasonable review of such documents. The Company shall
      not
      file any Registration Statement or any such Prospectus or any amendments or
      supplements thereto to which the Holders of a majority of the Registrable
      Securities or any Special Counsel shall reasonably object in writing within
      three (3) Business Days of their receipt thereof.

     

    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to each Registration Statement as may be necessary to keep such
      Registration Statement continuously effective as to the applicable Registrable
      Securities for the applicable Effectiveness Period and prepare and file with
      the
      Commission such additional Registration Statements as necessary in order to
      register for resale under the Securities Act all of the Registrable Securities;
      (ii) cause any related Prospectus to be amended or supplemented by any required
      Prospectus supplement, and as so supplemented or amended to be filed pursuant
      to
      Rule 424 (or any similar provisions then in force) promulgated under the
      Securities Act; (iii) respond as promptly as possible, but in no event later
      than ten (10) Business Days, to any comments received from the Commission with
      respect to any such Registration Statement or any amendment thereto and as
      promptly as possible provide the Holders true and complete copies of all
      correspondence from and to the Commission relating to any such Registration
      Statement; (iv) file the final prospectus pursuant to Rule 424 of the Securities
      Act no later than 9:00 a.m. Eastern Time on the Business Day following the
      date
      any such Registration Statement is declared effective by the Commission; and
      (v)
      comply in all material respects with the provisions of the Securities Act and
      the Exchange Act with respect to the disposition of all Registrable Securities
      covered by any such Registration Statement during the Effectiveness Period
      in
      accordance with the intended methods of disposition by the Holders thereof
      set
      forth in such Registration Statement as so amended or in such Prospectus as
      so
      supplemented.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c) Notify
      the Holders of Registrable Securities and any Special Counsel as promptly as
      possible (and, in the case of (i)(A) below, not less than three (3) Business
      Days prior to such filing, and in the case of (iii) below, on the same day
      of
      receipt by the Company of such notice from the Commission) and (if requested
      by
      any such Person) confirm such notice in writing no later than one (1) Business
      Day following the day (i)(A) when a Prospectus or any Prospectus supplement
      or
      post-effective amendment to any Registration Statement is filed; (B) when the
      Commission notifies the Company whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement and (C) with respect to any Registration Statement or
      any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other Federal or state governmental authority
      for amendments or supplements to any Registration Statement or Prospectus or
      for
      additional information; (iii) of the issuance by the Commission of any stop
      order suspending the effectiveness of any Registration Statement covering any
      or
      all of the Registrable Securities or the initiation or threatening of any
      Proceedings for that purpose; (iv) if at any time any of the representations
      and
      warranties of the Company contained in any agreement contemplated hereby ceases
      to be true and correct in all material respects; (v) of the receipt by the
      Company of any notification with respect to the suspension of the qualification
      or exemption from qualification of any of the Registrable Securities for sale
      in
      any jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and (vi) of the occurrence of any event that makes any statement made
      in any Registration Statement or Prospectus or any document incorporated or
      deemed to be incorporated therein by reference untrue in any material respect
      or
      that requires any revisions to such Registration Statement, Prospectus or other
      documents so that, in the case of any Registration Statement or the Prospectus,
      as the case may be, it will not contain any untrue statement of a material
      fact
      or omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading.

     

    (d) Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of,
      as promptly as possible, (i) any order suspending the effectiveness of any
      such
      Registration Statement or (ii) any suspension of the qualification (or exemption
      from qualification) of any of the Registrable Securities for sale in any
      jurisdiction.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (e) If
      requested by the Holders of a majority in interest of the Registrable
      Securities, (i) promptly incorporate in a Prospectus supplement or
      post-effective amendment to any Registration Statement such information as
      the
      Company reasonably agrees should be included therein and (ii) make all required
      filings of such Prospectus supplement or such post-effective amendment as soon
      as practicable after the Company has received notification of the matters to
      be
      incorporated in such Prospectus supplement or post-effective
      amendment.

     

    (f) If
      requested by any Holder, furnish to such Holder and any Special Counsel, without
      charge, at least one conformed copy of each Registration Statement and each
      amendment thereto, including financial statements and schedules, all documents
      incorporated or deemed to be incorporated therein by reference, and all exhibits
      to the extent requested by such Person (including those previously furnished
      or
      incorporated by reference) promptly after the filing of such documents with
      the
      Commission.

     

    (g) Promptly
      deliver to each Holder and any Special Counsel, without charge, as many copies
      of the Prospectus or Prospectuses (including each form of prospectus) and each
      amendment or supplement thereto as such Persons may reasonably request; and
      subject to the provisions of Sections 3(m) and 3(n), the Company hereby consents
      to the use of such Prospectus and each amendment or supplement thereto by each
      of the selling Holders in connection with the offering and sale of the
      Registrable Securities covered by such Prospectus and any amendment or
      supplement thereto.

     

    (h) Prior
      to
      any public offering of Registrable Securities, use its best efforts to register
      or qualify or cooperate with the selling Holders and any Special Counsel in
      connection with the registration or qualification (or exemption from such
      registration or qualification) of such Registrable Securities for offer and
      sale
      under the securities or Blue Sky laws of such jurisdictions within the United
      States as any Holder requests in writing, to keep each such registration or
      qualification (or exemption therefrom) effective during the Effectiveness Period
      and to do any and all other acts or things necessary or advisable to enable
      the
      disposition in such jurisdictions of the Registrable Securities covered by
      a
      Registration Statement; provided,
      however,
      that
      the Company shall not be required to qualify generally to do business in any
      jurisdiction where it is not then so qualified or to take any action that would
      subject it to general service of process in any such jurisdiction where it
      is
      not then so subject or subject the Company to any material tax in any such
      jurisdiction where it is not then so subject.

     

    (i) Cooperate
      with the Holders to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be sold pursuant to a
      Registration Statement, which certificates, to the extent permitted by the
      Purchase Agreement and applicable federal and state securities laws, shall
      be
      free of all restrictive legends, and to enable such Registrable Securities
      to be
      in such denominations and registered in such names as any Holder may request
      in
      connection with any sale of Registrable Securities.

     

    (j) Upon
      the
      occurrence of any event contemplated by Section 3(c)(vi), as promptly as
      possible, prepare a supplement or amendment, including a post-effective
      amendment, to a Registration Statement or a supplement to the related Prospectus
      or any document incorporated or deemed to be incorporated therein by reference,
      and file any other required document so that, as thereafter delivered, neither
      such Registration Statement nor such Prospectus will contain an untrue statement
      of a material fact or omit to state a material fact required to be stated
      therein or necessary to make the statements therein, in the light of the
      circumstances under which they were made, not misleading.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (k) Use
      its
      best efforts to cause all Registrable Securities relating to any Registration
      Statement to be listed or quoted on the OTC Bulletin Board or any other
      securities exchange, quotation system or market, if any, on which similar
      securities issued by the Company are then listed or traded as and when required
      pursuant to the Purchase Agreement.

     

    (l) Comply
      in
      all material respects with all applicable rules and regulations of the
      Commission and make generally available to its security holders all documents
      filed or required to be filed with the Commission, including, but not limited,
      to, earning statements satisfying the provisions of Section 11(a) of the
      Securities Act and Rule 158 not later than 45 days after the end of any 12-month
      period (or 90 days after the end of any 12-month period if such period is a
      fiscal year) commencing on the first day of the first fiscal quarter of the
      Company after the effective date of each of the Registration Statements, which
      statement shall conform to the requirements of Rule 158.

     

    (m) The
      Company may require each selling Holder to furnish to the Company information
      regarding such Holder and the distribution of such Registrable Securities as
      is
      required by law to be disclosed in any Registration Statement, Prospectus,
      or
      any amendment or supplement thereto, and the Company may exclude from such
      registration the Registrable Securities of any such Holder who unreasonably
      fails to furnish such information within a reasonable time after receiving
      such
      request.

     

    If
      any
      Registration Statement refers to any Holder by name or otherwise as the holder
      of any securities of the Company, then such Holder shall have the right to
      require (if such reference to such Holder by name or otherwise is not required
      by the Securities Act or any similar federal statute then in force) the deletion
      of the reference to such Holder in any amendment or supplement to such
      Registration Statement filed or prepared subsequent to the time that such
      reference ceases to be required.

     

    Each
      Holder covenants and agrees that it will not sell any Registrable Securities
      under any Registration Statement until the Company has electronically filed
      the
      Prospectus as then amended or supplemented as contemplated in Section 3(g)
      and
      notice from the Company that such Registration Statement and any post-effective
      amendments thereto have become effective as contemplated by Section
      3(c).

     

    Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of any event of the
      kind
      described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n),
      such Holder will forthwith discontinue disposition of such Registrable
      Securities under a Registration Statement until such Holder’s receipt of the
      copies of the supplemented Prospectus and/or amended Registration Statement
      contemplated by Section 3(j), or until it is advised in writing (the
“Advice”)
      by the
      Company that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (n) If
      (i)
      there is material non-public information regarding the Company which the
      Company’s Board of Directors (the “Board”)
      determines not to be in the Company’s best interest to disclose and which the
      Company is not otherwise required to disclose, (ii) there is a significant
      business opportunity (including, but not limited to, the acquisition or
      disposition of assets (other than in the ordinary course of business) or any
      merger, consolidation, tender offer or other similar transaction) available
      to
      the Company which the Board determines not to be in the Company’s best interest
      to disclose, or (iii) the Company is required to file a post-effective amendment
      to a Registration Statement to incorporate the Company’s quarterly and annual
      reports and audited financial statements on Forms 10-QSB and 10-KSB, then the
      Company may (x) postpone or suspend filing of a registration statement for
      a
      period not to exceed thirty (30) consecutive days or (y) postpone or suspend
      effectiveness of a registration statement for a period not to exceed twenty
      (20)
      consecutive days; provided,
      that
      the Company may not postpone or suspend effectiveness of a registration
      statement under this Section 3(n) for more than forty-five (45) days in the
      aggregate during any three hundred sixty (360) day period; provided,
      however,
      that no
      such postponement or suspension shall be permitted for consecutive twenty (20)
      day periods arising out of the same set of facts, circumstances or
      transactions.

     

    
      
        
          	
                	4.	
                  Registration
                    Expenses.

                

        

      

    

     

    All
      fees
      and expenses incident to the performance of or compliance with this Agreement
      by
      the Company, except as and to the extent specified in this Section 4, shall
      be
      borne by the Company whether or not a Registration Statement is filed or becomes
      effective and whether or not any Registrable Securities are sold pursuant to
      such Registration Statement. The fees and expenses referred to in the foregoing
      sentence shall include, without limitation, (i) all registration and filing
      fees
      (including, without limitation, fees and expenses (A) with respect to filings
      required to be made with the OTC Bulletin Board and each other securities
      exchange or market on which Registrable Securities are required hereunder to
      be
      listed, if any, (B) with respect to filing fees required to be paid to the
      National Association of Securities Dealers, Inc. and the NASD Regulation, Inc.
      (including, without limitation, pursuant to NASD Rule 2710) and (C) in
      compliance with state securities or Blue Sky laws (including, without
      limitation, fees and disbursements of counsel for the Holders in connection
      with
      Blue Sky qualifications of the Registrable Securities and determination of
      the
      eligibility of the Registrable Securities for investment under the laws of
      such
      jurisdictions as the Holders of a majority of Registrable Securities may
      designate)), (ii) printing expenses (including, without limitation, expenses
      of
      printing certificates for Registrable Securities and of printing prospectuses
      if
      the printing of prospectuses is requested by the holders of a majority of the
      Registrable Securities included in a Registration Statement), (iii) messenger,
      telephone and delivery expenses, (iv) fees and disbursements of counsel for
      the
      Company and Special Counsel for the Holders, in the case of the Special Counsel,
      up to a maximum amount of $7,500, (v) Securities Act liability insurance, if
      the
      Company so desires such insurance, and (vi) fees and expenses of all other
      Persons retained by the Company in connection with the consummation of the
      transactions contemplated by this Agreement, including, without limitation,
      the
      Company’s independent public accountants (including the expenses of any comfort
      letters or costs associated with the delivery by independent public accountants
      of a comfort letter or comfort letters). In addition, the Company shall be
      responsible for all of its internal expenses incurred in connection with the
      consummation of the transactions contemplated by this Agreement (including,
      without limitation, all salaries and expenses of its officers and employees
      performing legal or accounting duties), the expense of any annual audit, the
      fees and expenses incurred in connection with the listing of the Registrable
      Securities on any securities exchange if required hereunder. The Company shall
      not be responsible for any discounts, commissions, transfer taxes or other
      similar fees incurred by the Holders in connection with the sale of the
      Registrable Securities.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              5.

            	
              Indemnification.

            

    

     

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, managers, partners, members,
      shareholders, agents, brokers, investment advisors and employees of each of
      them, each Person who controls any such Holder (within the meaning of Section
      15
      of the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the fullest
      extent permitted by applicable law, from and against any and all losses, claims,
      damages, liabilities, costs (including, without limitation, costs of preparation
      and attorneys’ fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to any violation of securities laws or
      untrue or alleged untrue statement of a material fact contained in any
      Registration Statement, any Prospectus or any form of prospectus or in any
      amendment or supplement thereto or in any preliminary prospectus, or arising
      out
      of or relating to any omission or alleged omission of a material fact required
      to be stated therein or necessary to make the statements therein (in the case
      of
      any Prospectus or form of prospectus or supplement thereto, in the light of
      the
      circumstances under which they were made) not misleading, except to the extent,
      but only to the extent, that such untrue statements or omissions are based
      solely upon information regarding such Holder or such other Indemnified Party
      furnished in writing to the Company by such Holder expressly for use therein.
      The Company shall notify the Holders promptly of the institution, threat or
      assertion of any Proceeding of which the Company is aware in connection with
      the
      transactions contemplated by this Agreement.

     

    (b) Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents and employees
      of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses (as determined by a court of competent jurisdiction
      in a final judgment not subject to appeal or review), as incurred, arising
      solely out of or based solely upon any untrue statement of a material fact
      contained in any Registration Statement, any Prospectus, or any form of
      prospectus, or in any amendment or supplement thereto, or arising solely out
      of
      or based solely upon any omission of a material fact required to be stated
      therein or necessary to make the statements therein (in the case of any
      Prospectus or form of prospectus or supplement thereto, in the light of the
      circumstances under which they were made) not misleading, to the extent, but
      only to the extent, that such untrue statement or omission is contained in
      any
      information so furnished in writing by such Holder or other Indemnifying Party
      to the Company specifically for inclusion in any Registration Statement or
      such
      Prospectus. Notwithstanding anything to the contrary contained herein, each
      Holder shall be liable under this Section 5(b) for only that amount as does
      not
      exceed the net proceeds to such Holder as a result of the sale of Registrable
      Securities pursuant to such Registration Statement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (c) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party promptly shall notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall be entitled to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided, that the failure of any Indemnified
      Party to give such notice shall not relieve the Indemnifying Party of its
      obligations or liabilities pursuant to this Agreement, except (and only) to
      the
      extent that it shall be finally determined by a court of competent jurisdiction
      (which determination is not subject to appeal or further review) that such
      failure shall have proximately and materially adversely prejudiced the
      Indemnifying Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; or (2) the Indemnifying Party shall have failed promptly to assume
      the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such parties shall have been advised by counsel
      that a conflict of interest is likely to exist if the same counsel were to
      represent such Indemnified Party and the Indemnifying Party (in which case,
      if
      such Indemnified Party notifies the Indemnifying Party in writing that it elects
      to employ separate counsel at the expense of the Indemnifying Party, the
      Indemnifying Party shall not have the right to assume the defense thereof and
      such counsel shall be at the expense of the Indemnifying Party). The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld or delayed. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending or
      threatened Proceeding in respect of which any Indemnified Party is a party
      and
      indemnity has been sought hereunder, unless such settlement includes an
      unconditional release of such Indemnified Party from all liability on claims
      that are the subject matter of such Proceeding.

     

    All
      fees
      and expenses of the Indemnified Party (including reasonable fees and expenses
      to
      the extent incurred in connection with investigating or preparing to defend
      such
      Proceeding in a manner not inconsistent with this Section) shall be paid to
      the
      Indemnified Party, as incurred, within ten (10) Business Days of written notice
      thereof to the Indemnifying Party (regardless of whether it is ultimately
      determined that an Indemnified Party is not entitled to indemnification
      hereunder; provided,
      that
      the Indemnified Party shall reimburse all such fees and expenses to the extent
      it is finally judicially determined that such Indemnified Party is not entitled
      to indemnification hereunder).

     

    (d) Contribution.
      If a
      claim for indemnification under Section 5(a) or 5(b) is due but unavailable
      to
      an Indemnified Party because of a failure or refusal of a governmental authority
      to enforce such indemnification in accordance with its terms (by reason of
      public policy or otherwise), then each Indemnifying Party, in lieu of
      indemnifying such Indemnified Party, shall contribute to the amount paid or
      payable by such Indemnified Party as a result of such Losses, in such proportion
      as is appropriate to reflect the relative benefits received by the Indemnifying
      Party on the one hand and the Indemnified Party on the other from the offering
      of the Preferred Stock and the Warrants. If, but only if, the allocation
      provided by the foregoing sentence is not permitted by applicable law, the
      allocation of contribution shall be made in such proportion as is appropriate
      to
      reflect not only the relative benefits referred to in the foregoing sentence
      but
      also the relative fault, as applicable, of the Indemnifying Party and
      Indemnified Party in connection with the actions, statements or omissions that
      resulted in such Losses as well as any other relevant equitable considerations.
      The relative fault of such Indemnifying Party and Indemnified Party shall be
      determined by reference to, among other things, whether any action in question,
      including any untrue or alleged untrue statement of a material fact or omission
      or alleged omission of a material fact, has been taken or made by, or relates
      to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the
      parties’ relative intent, knowledge, access to information and opportunity to
      correct or prevent such action, statement or omission. The amount paid or
      payable by a party as a result of any Losses shall be deemed to include, subject
      to the limitations set forth in Section 5(c), any reasonable attorneys’ or other
      reasonable fees or expenses incurred by such party in connection with any
      Proceeding to the extent such party would have been indemnified for such fees
      or
      expenses if the indemnification provided for in this Section was available
      to
      such party in accordance with its terms. In no event shall any selling Holder
      be
      required to contribute an amount under this Section 5(d) in excess of the net
      proceeds received by such Holder upon the sale of such Holder’s Registrable
      Securities pursuant to a Registration Statement giving rise to such contribution
      obligation.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph. No Person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of
      the Securities Act) shall be entitled to contribution from any Person who was
      not guilty of such fraudulent misrepresentation.

     

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties pursuant to the law.

     

    
      	 	
              6.

            	
              Rule
                144.

            

    

     

    As
      long
      as any Holder owns Preferred Stock, Warrants or Registrable Securities, the
      Company covenants to timely file (or obtain extensions in respect thereof and
      file within the applicable grace period) all reports required to be filed by
      the
      Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
      Act. As long as any Holder owns Preferred Stock, Warrants or Registrable
      Securities, if the Company is not required to file reports pursuant to Section
      13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders
      and make publicly available in accordance with Rule 144(c) promulgated under
      the
      Securities Act annual and quarterly financial statements, together with a
      discussion and analysis of such financial statements in form and substance
      substantially similar to those that would otherwise be required to be included
      in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
      as
      any other information required thereby, in the time period that such filings
      would have been required to have been made under the Exchange Act. The Company
      further covenants that it will take such further action as any Holder may
      reasonably request, all to the extent required from time to time to enable
      such
      Person to sell Conversion Shares and Warrant Shares without registration under
      the Securities Act within the limitation of the exemptions provided by Rule
      144
      promulgated under the Securities Act, including providing any legal opinions
      reasonably requested relating to such sale pursuant to Rule 144. Upon the
      request of any Holder, the Company shall deliver to such Holder a written
      certification of a duly authorized officer as to whether it has complied with
      such requirements.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	 	
              7.

            	
              Miscellaneous.

            

    

     

    (a) Remedies.
      In the
      event of a breach by the Company or by a Holder, of any of their obligations
      under this Agreement, such Holder or the Company, as the case may be, in
      addition to being entitled to exercise all rights granted by law and under
      this
      Agreement, including recovery of damages, will be entitled to specific
      performance of its rights under this Agreement. The Company and each Holder
      agree that monetary damages would not provide adequate compensation for any
      losses incurred by reason of a breach by it of any of the provisions of this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall waive the defense
      that
      a remedy at law would be adequate.

     

    (b) No
      Inconsistent Agreements.
      Neither
      the Company nor any of its subsidiaries has, as of the date hereof entered
      into
      and currently in effect, nor shall the Company or any of its subsidiaries,
      on or
      after the date of this Agreement, enter into any agreement with respect to
      its
      securities that is inconsistent with the rights granted to the Holders in this
      Agreement or otherwise conflicts with the provisions hereof. Except as disclosed
      on Schedule 2.1(c) of the Purchase Agreement or Schedule II hereto, neither
      the
      Company nor any of its subsidiaries has previously entered into any agreement
      currently in effect granting any registration rights with respect to any of
      its
      securities to any Person. Without limiting the generality of the foregoing,
      without the written consent of the Holders of a majority of the then outstanding
      Registrable Securities, the Company shall not grant to any Person the right
      to
      request the Company to register any securities of the Company under the
      Securities Act unless the rights so granted are subject in all respects to
      the
      prior rights in full of the Holders set forth herein, and are not otherwise
      in
      conflict with the provisions of this Agreement.

     

    (c) No
      Piggyback on Registrations.
      Neither
      the Company nor any of its security holders (other than the Holders in such
      capacity pursuant hereto) may include securities of the Company in any
      Registration Statement, and the Company shall not after the date hereof enter
      into any agreement providing such right to any of its securityholders, unless
      the right so granted is subject in all respects to the prior rights in full
      of
      the Holders set forth herein, and is not otherwise in conflict with the
      provisions of this Agreement.

     

    (d) Piggy-Back
      Registrations.
      If at
      any time when there is not an effective Registration Statement providing for
      the
      resale of the Registrable Securities, the Company shall determine to prepare
      and
      file with the Commission a registration statement relating to an offering for
      its own account or the account of others under the Securities Act of any of
      its
      equity securities, other than on Form S-4 or Form S-8 (each as promulgated
      under
      the Securities Act) or their then equivalents relating to equity securities
      to
      be issued solely in connection with any acquisition of any entity or business
      or
      equity securities issuable in connection with stock option or other employee
      benefit plans, the Company shall send to each holder of Registrable Securities
      written notice of such determination and, if within thirty (30) days after
      receipt of such notice, or within such shorter period of time as may be
      specified by the Company in such written notice as may be necessary for the
      Company to comply with its obligations with respect to the timing of the filing
      of such registration statement, any such holder shall so request in writing,
      (which request shall specify the Registrable Securities intended to be disposed
      of by the Purchasers), the Company will cause the registration under the
      Securities Act of all Registrable Securities which the Company has been so
      requested to register by the holder, to the extent requisite to permit the
      disposition of the Registrable Securities so to be registered, provided that
      if
      at any time after giving written notice of its intention to register any
      securities and prior to the effective date of the registration statement filed
      in connection with such registration, the Company shall determine for any reason
      not to register or to delay registration of such securities, the Company may,
      at
      its election, give written notice of such determination to such holder and,
      thereupon, (i) in the case of a determination not to register, shall be relieved
      of its obligation to register any Registrable Securities in connection with
      such
      registration (but not from its obligation to pay expenses in accordance with
      Section 4 hereof), and (ii) in the case of a determination to delay registering,
      shall be permitted to delay registering any Registrable Securities being
      registered pursuant to this Section 7(d) for the same period as the delay in
      registering such other securities. The Company shall include in such
      registration statement all or any part of such Registrable Securities such
      holder requests to be registered; provided,
      however,
      that
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144(k)
      of the Securities Act. In the case of an underwritten public offering, if the
      managing underwriter(s) or underwriter(s) should reasonably object to the
      inclusion of the Registrable Securities in such registration statement, then
      if
      the Company after consultation with the managing underwriter should reasonably
      determine that the inclusion of such Registrable Securities would materially
      adversely affect the offering contemplated in such registration statement,
      and
      based on such determination recommends inclusion in such registration statement
      of fewer or none of the Registrable Securities of the Holders, then (x) the
      number of Registrable Securities of the Holders included in such registration
      statement shall be reduced pro-rata among such Holders (based upon the number
      of
      Registrable Securities requested to be included in the registration), if the
      Company after consultation with the underwriter(s) recommends the inclusion
      of
      fewer Registrable Securities, or (y) none of the Registrable Securities of
      the
      Holders shall be included in such registration statement, if the Company after
      consultation with the underwriter(s) recommends the inclusion of none of such
      Registrable Securities; provided,
      however,
      that if
      securities are being offered for the account of other persons or entities as
      well as the Company, such reduction shall not represent a greater fraction
      of
      the number of Registrable securities intended to be offered by the Holders
      than
      the fraction of similar reductions imposed on such other persons or entities
      (other than the Company).

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (e) Failure
      to File Registration Statement and Other Events.
      The
      Company and the Purchasers agree that the Holders will suffer damages if a
      Registration Statement is not filed on or prior to the Filing Date or any
      Additional Filing Date, as applicable, or after notice from the Holders, as
      set
      forth in Section 2(b) hereto or Section 2A(b) hereto, and, in each case, not
      declared effective by the Commission on or prior to the applicable Effectiveness
      Date and maintained in the manner contemplated herein during the applicable
      Effectiveness Period or if certain other events occur. The Company and the
      Holders further agree that it would not be feasible to ascertain the extent
      of
      such damages with precision. Accordingly, if (A) a Registration Statement is
      not
      filed on or prior to the Filing Date, any Additional Filing Date or after notice
      from the Holders, as set forth in Section 2(b) hereof or Section 2A(b) hereof,
      or (B)  a Registration Statement is not declared effective by the
      Commission on or prior to the applicable Effectiveness Date, or (C) the Company
      fails to file with the Commission a request for acceleration in accordance
      with
      Rule 461 promulgated under the Securities Act within three (3) Business Days
      of
      the date that the Company is notified (orally or in writing, whichever is
      earlier) by the Commission that a Registration Statement will not be “reviewed,”
or not subject to further review, or (D) any Registration Statement is filed
      with and declared effective by the Commission but thereafter ceases to be
      effective as to all Registrable Securities at any time prior to the expiration
      of the Effectiveness Period, without being succeeded immediately by a subsequent
      Registration Statement filed with and declared effective by the Commission,
      or
      (E) the Company has breached Section 3(n), or (F) trading in the Common Stock
      shall be suspended or if the Common Stock is no longer quoted on or is delisted
      from the OTC Bulletin Board (or other principal exchange on which the Common
      Stock is listed or traded) for any reason for more than three (3) Business
      Days
      in the aggregate (any such failure or breach being referred to as an
“Event,”
and
      for purposes of clauses (A) and (B) the date on which such Event occurs, or
      for
      purposes of clause (C) the date on which such three (3) Business Day period
      is
      exceeded, or for purposes of clause (D) after more than fifteen (15) Business
      Days, or for purposes of clause (F) the date on which such three (3) Business
      Day period is exceeded, being referred to as “Event
      Date”),
      the
      Company shall pay an amount in cash as liquidated damages to each Holder equal
      to one percent (1%) of the amount of the Holder’s initial investment in the
      Preferred Stock for each calendar month or portion thereof thereafter from
      the
      Event Date until the applicable Event is cured; provided,
      however,
      that in
      no event shall the amount of liquidated damages payable at any time and from
      time to time to any Holder pursuant to this Section 7(e) exceed an aggregate
      of
      ten percent (10%) of the amount of the Holder’s initial investment in the
      Preferred Stock; and provided,
      further,
      that
      notwithstanding the foregoing, in the event the Commission does not permit
      all
      of the Registrable Securities to be included in a Registration Statement because
      of its application of Rule 415, no liquidated damages shall be payable pursuant
      to this Section by the Company with respect to any Registrable Securities that
      the Company was not permitted to include on such Registration Statement and
      provided
      further,
      that
      notwithstanding the foregoing, no liquidated damages shall be payable with
      respect to the occurrence of an Event set described in clauses (A) and (B)
      above
      for any Warrant Shares other than the Warrant Shares issuable upon exercise
      of
      the Series J Warrant. Notwithstanding anything to the contrary in this paragraph
      (e), if (a) any of the Events described in clauses (A), (B), (C), (D) or (F)
      shall have occurred, (b) on or prior to the applicable Event Date, the Company
      shall have exercised its rights under Section 3(n) hereof and (c) the
      postponement or suspension permitted pursuant to such Section 3(n) shall remain
      effective as of such applicable Event Date, then the applicable Event Date
      shall
      be deemed instead to occur on the second Business Day following the termination
      of such postponement or suspension. Liquidated damages payable by the Company
      pursuant to this Section 7(d) shall be payable on the first (1st) Business
      Day
      of each thirty (30) day period following the Event Date. The parties agree
      that
      the liquidated damages set forth in this Section 7(e) shall be the exclusive
      remedy of the parties hereto with respect to the breaches by the Company of
      this
      Section 7(e). 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (f) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of a majority of the Registrable
      Securities outstanding.

     

    (g) Notices.
      Any
      notice, demand, request, waiver or other communication required or permitted
      to
      be given hereunder shall be in writing and shall be effective (a) upon hand
      delivery, telecopy or facsimile at the address or number designated below (if
      delivered on a business day during normal business hours where such notice
      is to
      be received), or the first business day following such delivery (if delivered
      other than on a business day during normal business hours where such notice
      is
      to be received) or (b) on the second business day following the date of mailing
      by express courier service, fully prepaid, addressed to such address, or upon
      actual receipt of such mailing, whichever shall first occur. The addresses
      for
      such communications shall be:

    

    
      	
              If
                to the Company: 

            	 	
              National
                Realty and Mortgage, Inc

              c/o
                Daqing Sunway Technology Co., Ltd.

              Daqing
                Hi-Tech Industry Development Zone

              Daqing,
                Helongjiang, Post Code 163316

              People’s
                Republic of China

              Attention:
                Dr. David Wang, Chief Financial Officer

              Tel:
                 86-459-6046043

              Fax:
                 86-459-6046004

              Email: abc1869@163.com

            
	 	 	 
	
              with
                copies (which copies

              shall
                not constitute notice)

              to:

            	 	
              Guzov
                Ofsink, LLC

              600
                Madison Avenue, 14th Floor

              New
                York, New York 10022

              Attention:
                Darren Ofsink

              Tel.
                No.: (212) 371-8008, ext. 127

              Fax
                No.: (212) 688-7273

            
	 	 	 
	
              If
                to any Purchaser:

            	 	 
	 	 	 
	
              with
                copies (which copies

              shall
                not constitute notice)

              to:

            	 	
              Loeb
                & Loeb LLP

              345
                Park Avenue

              New
                York, NY 10154

              Attn:
                Mitchell Nussbaum

              Facsimile:
                212-407-4000

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Any
      party
      hereto may from time to time change its address for notices by giving at least
      ten (10) days written notice of such changed address to the other party
      hereto.

     

    (h) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns and shall inure to the benefit of each
      Holder and its successors and assigns. The Company may not assign this Agreement
      or any of its rights or obligations hereunder without the prior written consent
      of each Holder. Each Purchaser may assign its rights hereunder in the manner
      and
      to the Persons as permitted under the Purchase Agreement.

     

    (i) Assignment
      of Registration Rights.
      The
      rights of each Holder hereunder, including the right to have the Company
      register for resale Registrable Securities in accordance with the terms of
      this
      Agreement, shall be automatically assignable by each Holder to any Person to
      whom all or a portion of the Preferred Stock, the Warrants or the Registrable
      Securities are transferred if: (i) the Holder agrees in writing with the
      transferee or assignee to assign such rights, and a copy of such agreement
      is
      furnished to the Company within a reasonable time after such assignment, (ii)
      the Company is, within a reasonable time after such transfer or assignment,
      furnished with written notice of (a) the name and address of such transferee
      or
      assignee, and (b) the securities with respect to which such registration rights
      are being transferred or assigned, (iii) following such transfer or assignment
      the further disposition of such securities by the transferee or assignees is
      restricted under the Securities Act and applicable state securities laws unless
      such securities are registered in a Registration Statement under this Agreement
      (in which case the Company shall be obligated to amend such Registration
      Statement to reflect such transfer or assignment) or are otherwise exempt from
      registration, (iv) at or before the time the Company receives the written notice
      contemplated by clause (ii) of this Section, the transferee or assignee agrees
      in writing with the Company to be bound by all of the provisions of this
      Agreement, and (v) such transfer shall have been made in accordance with the
      applicable requirements of the Purchase Agreement. The rights to assignment
      shall apply to the Holders (and to subsequent) successors and
      assigns.

     

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

     

    (k) Governing
      Law; Jurisdiction.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York, without giving effect to any of the conflicts
      of
      law principles which would result in the application of the substantive law
      of
      another jurisdiction. This Agreement shall not be interpreted or construed
      with
      any presumption against the party causing this Agreement to be drafted. The
      Company and the Holders agree that venue for any dispute arising under this
      Agreement will lie exclusively in the state or federal courts located in New
      York County, New York, and the parties irrevocably waive any right to raise
      forum
      non conveniens
      or any
      other argument that New York is not the proper venue. The Company and the
      Holders irrevocably consent to personal jurisdiction in the state and federal
      courts of the state of New York. The Company and the Holders consent to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address in effect for notices to it under this Agreement
      and
      agrees that such service shall constitute good and sufficient service of process
      and notice thereof. Nothing in this Section 7(k) shall affect or limit any
      right
      to serve process in any other manner permitted by law. The Company and the
      Holders hereby agree that the prevailing party in any suit, action or proceeding
      arising out of or relating to this Agreement or the Purchase Agreement, shall
      be
      entitled to reimbursement for reasonable legal fees from the non-prevailing
      party. The parties hereby waive all rights to a trial by jury.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (l) Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

     

    (m) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held to be
      invalid, illegal, void or unenforceable in any respect, the remainder of the
      terms, provisions, covenants and restrictions set forth herein shall remain
      in
      full force and effect and shall in no way be affected, impaired or invalidated,
      and the parties hereto shall use their reasonable efforts to find and employ
      an
      alternative means to achieve the same or substantially the same result as that
      contemplated by such term, provision, covenant or restriction. It is hereby
      stipulated and declared to be the intention of the parties that they would
      have
      executed the remaining terms, provisions, covenants and restrictions without
      including any of such that may be hereafter declared invalid, illegal, void
      or
      unenforceable.

     

    (n) Headings.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    (o) Shares
      Held by the Company and its Affiliates.
      Whenever the consent or approval of Holders of a specified percentage of
      Registrable Securities is required hereunder, Registrable Securities held by
      the
      Company or its Affiliates (other than any Holder or transferees or successors
      or
      assigns thereof if such Holder is deemed to be an Affiliate solely by reason
      of
      its holdings of such Registrable Securities) shall not be counted in determining
      whether such consent or approval was given by the Holders of such required
      percentage.

     

    (p) Independent
      Nature of Purchasers.
      The
      Company acknowledges that the obligations of each Purchaser under the
      Transaction Documents are several and not joint with the obligations of any
      other Purchaser, and no Purchaser shall be responsible in any way for the
      performance of the obligations of any other Purchaser under the Transaction
      Documents. The Company acknowledges that the decision of each Purchaser to
      purchase Securities pursuant to the Purchase Agreement has been made by such
      Purchaser independently of any other Purchaser and independently of any
      information, materials, statements or opinions as to the business, affairs,
      operations, assets, properties, liabilities, results of operations, condition
      (financial or otherwise) or prospects of the Company or of its Subsidiaries
      which may have made or given by any other Purchaser or by any agent or employee
      of any other Purchaser, and no Purchaser or any of its agents or employees
      shall
      have any liability to any Purchaser (or any other person) relating to or arising
      from any such information, materials, statements or opinions. The Company
      acknowledges that nothing contained herein, or in any Transaction Document,
      and
      no action taken by any Purchaser pursuant hereto or thereto (including, but
      not
      limited to, the (i) inclusion of a Purchaser in a Registration Statement and
      (ii) review by, and consent to, such Registration Statement by a Purchaser)
      shall be deemed to constitute the Purchasers as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Purchasers are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      The
      Company acknowledges that each Purchaser shall be entitled to independently
      protect and enforce its rights, including without limitation, the rights arising
      out of this Agreement or out of the other Transaction Documents, and it shall
      not be necessary for any other Purchaser to be joined as an additional party
      in
      any proceeding for such purpose. The Company acknowledges that for reasons
      of
      administrative convenience only, the Transaction Documents have been prepared
      by
      counsel for one of the Purchasers and such counsel does not represent all of
      the
      Purchasers. The Company acknowledges that it has elected to provide all
      Purchasers with the same terms and Transaction Documents for the convenience
      of
      the Company and not because it was required or requested to do so by the
      Purchasers. The Company acknowledges that such procedure with respect to the
      Transaction Documents in no way creates a presumption that the Purchasers are
      in
      any way acting in concert or as a group with respect to the Transaction
      Documents or the transactions contemplated hereby or thereby.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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        20

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    Schedule
      I

    Purchasers

     

    
      	
              Investor

            	 	
              Investment

            	 	
              Shares
                Purchased

            	 	
              Series
                A Warrants

            	 	
              Series
                B Warrants

            	 	
              Series
                J Warrants

            	 	
              Series
                C Warrants

            	 	
              Series
                D Warrants

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    Schedule
      II

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    Exhibit
      A

    Plan
      of Distribution

     

    The
      selling security holders and any of their pledgees, donees, assignees and
      successors-in-interest may, from time to time, sell any or all of their shares
      of common stock being offered under this prospectus on any stock exchange,
      market or trading facility on which shares of our common stock are traded or
      in
      private transactions. These sales may be at fixed or negotiated prices. The
      selling security holders may use any one or more of the following methods when
      disposing of shares:

     

    
      	 	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	 	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	 	
              ·

            	
              purchases
                by a broker-dealer as principal and resales by the broker-dealer
                for its
                account;

            

    

     

    
      	 	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	 	
              ·

            	
              privately
                negotiated transactions;

            

    

     

    
      	 	
              ·

            	
              to
                cover short sales made after the date that the registration statement
                of
                which this prospectus is a part is declared effective by the
                Commission;

            

    

     

    
      	 	
              ·

            	
              broker-dealers
                may agree with the selling security holders to sell a specified number
                of
                such shares at a stipulated price per
                share;

            

    

     

    
      	 	
              ·

            	
              a
                combination of any of these methods of sale;
                and

            

    

     

    
      	 	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      shares may also be sold under Rule 144 under the Securities Act of 1933, as
      amended (“Securities Act”), if available, rather than under this prospectus. The
      selling security holders have the sole and absolute discretion not to accept
      any
      purchase offer or make any sale of shares if they deem the purchase price to
      be
      unsatisfactory at any particular time.

     

    The
      selling security holders may pledge their shares to their brokers under the
      margin provisions of customer agreements. If a selling security holder defaults
      on a margin loan, the broker may, from time to time, offer and sell the pledged
      shares.

     

    Broker-dealers
      engaged by the selling security holders may arrange for other broker-dealers
      to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the selling security holders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, which
      commissions as to a particular broker or dealer may be in excess of customary
      commissions to the extent permitted by applicable law.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    If
      sales
      of shares offered under this prospectus are made to broker-dealers as
      principals, we would be required to file a post-effective amendment to the
      registration statement of which this prospectus is a part. In the post-effective
      amendment, we would be required to disclose the names of any participating
      broker-dealers and the compensation arrangements relating to such
      sales.

     

    The
      selling security holders and any broker-dealers or agents that are involved
      in
      selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
      sales. Commissions received by these broker-dealers or agents and any profit
      on
      the resale of the shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act. Any broker-dealers or agents
      that are deemed to be underwriters may not sell shares offered under this
      prospectus unless and until we set forth the names of the underwriters and
      the
      material details of their underwriting arrangements in a supplement to this
      prospectus or, if required, in a replacement prospectus included in a
      post-effective amendment to the registration statement of which this prospectus
      is a part.

     

    The
      selling security holders and any other persons participating in the sale or
      distribution of the shares offered under this prospectus will be subject to
      applicable provisions of the Exchange Act, and the rules and regulations under
      that act, including Regulation M. These provisions may restrict activities
      of,
      and limit the timing of purchases and sales of any of the shares by, the selling
      security holders or any other person. Furthermore, under Regulation M, persons
      engaged in a distribution of securities are prohibited from simultaneously
      engaging in market making and other activities with respect to those securities
      for a specified period of time prior to the commencement of such distributions,
      subject to specified exceptions or exemptions. All of these limitations may
      affect the marketability of the shares.

     

    If
      any of
      the shares of common stock offered for sale pursuant to this prospectus are
      transferred other than pursuant to a sale under this prospectus, then subsequent
      holders could not use this prospectus until a post-effective amendment or
      prospectus supplement is filed, naming such holders. We offer no assurance
      as to
      whether any of the selling security holders will sell all or any portion of
      the
      shares offered under this prospectus.

     

    We
      have
      agreed to pay all fees and expenses we incur incident to the registration of
      the
      shares being offered under this prospectus. However, each selling security
      holder and purchaser is responsible for paying any discounts, commissions and
      similar selling expenses they incur.

     

    We
      and
      the selling security holders have agreed to indemnify one another against
      certain losses, damages and liabilities arising in connection with this
      prospectus, including liabilities under the Securities Act.

     

    
      
        
        

      

      
        26

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