Document:

Unassociated Document

     

    
      Exhibit
10.1

      Far
East Energy Corporation

      105,515,300 Shares
of Common Stock, par value $0.001 per share

      PLACEMENT
AGENCY AGREEMENT

      

      

      

      August
20, 2010

      

      

      Macquarie
Capital (USA) Inc.

      125 West
55th Street

      New York,
NY 10019

      

      Dear Sir
or Madam:

      

      Far East
Energy Corporation, a Nevada corporation (the “Company”), proposes to issue and
sell 105,515,300 shares (the “Offered Shares” or “Offered Securities”) of
the Company’s common stock, par value $0.001 per share (the “Common Stock”), to
certain investors (each, an “Investor” and collectively, the
“Investors”).  The Company desires to engage you as its placement
agent (the “Placement Agent”) in connection with such issuance and
sale.  The Offered Securities are more fully described in the
Registration Statement (as hereinafter defined).

      

      The
Company hereby confirms as follows its agreements with the Placement
Agent.

      

      1.  Agreement to Act as
Placement Agent.  On the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions of this Placement Agency Agreement (this “Agreement”), the
Company hereby appoints the Placement Agent and the Placement Agent agrees to
act as the Company’s placement agent, on a best efforts basis, in connection
with the issuance and sale by the Company of the Offered Securities to the
Investors.  The Placement Agent shall use commercially reasonable
efforts to assist the Company in obtaining performance by each Investor whose
offer to purchase Offered Securities has been solicited by the Placement Agent
and accepted by the Company, but the Placement Agent shall not, except as
otherwise provided in this Agreement, have any liability to the Company if any
such purchase is not consummated for any reason.  The Company shall
have the sole right to accept offers to purchase Offered Securities and may
reject any such offer, in whole or in part.  The Company shall pay to
the Placement Agent an aggregate amount equal to 5.6762% of the proceeds
received by the Company from the sale of the Offered Securities, if any,
actually sold as set forth on the cover page of the Prospectus (as hereinafter
defined) upon the closing of the transactions contemplated
hereby.  The Placement Agent, without the prior consent of the
Company, may appoint any co-agents or sub-agents in connection with the issuance
and sale of the Offered Securities and may allocate any portion of such fee to
such co-agents or sub-agents except as may otherwise be agreed by the Company
and the Placement Agent.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.  Delivery and
Payment.  At 10:00 a.m., New York City time, on August 24, 2010
or at such other time on such other date as may be agreed upon by the Company
and the Placement Agent (such date is hereinafter referred to as the “Closing
Date”), the Placement Agent shall cause the Investors to wire an amount equal to
the price per share as shown on the cover page of the Prospectus (as hereinafter
defined) for each and all of the Offered Securities offered pursuant to the
Prospectus to an account designated by the Company and the Company shall deliver
the Offered Securities to the Investors, which delivery may be made through the
facilities of The Depository Trust Company.  The closing (the
“Closing”) shall take place at the office of Morrison & Foerster LLP, 1290
Avenue of the Americas, New York, New York 10104.  All actions taken
at the Closing shall be deemed to have occurred simultaneously.

      

      3.  Representations and
Warranties of the Company.  The Company represents and warrants
and covenants to the Placement Agent on the date hereof, and shall be deemed to
represent and warrant and covenant to the Placement Agent on the Closing Date,
that:

      

      (a)  A
“shelf” registration statement on Form S-3 (File No. 333-162019) with respect to
the Common Stock and certain other securities of the Company has been prepared
by the Company in conformity with the requirements of the Securities Act of
1933, as amended (the “Act”), and the rules and regulations (the “Rules and
Regulations”) of the Securities and Exchange Commission (the “Commission”)
thereunder, and has been filed with the Commission.  The Company and
the transactions contemplated by this Agreement meet the requirements and comply
with the conditions for the use of Form S-3.  The Registration
Statement meets the requirements of Rule 415(a)(1)(x) under the Act and complies
in all materials respects with said rule.  As used in this
Agreement:

      

      (i)  “Applicable Time” means
9:00 a.m., New York City time, on the date of this Agreement;

      

      (ii)  “Effective Date” means
any date as of which any part of the Registration Statement became, or is deemed
to have become, effective under the Act in accordance with the Rules and
Regulations;

      

      (iii)  “Issuer Free Writing
Prospectus” means each “issuer free writing prospectus” (as defined in Rule 433
of the Rules and Regulations) prepared by or on behalf of the Company or used or
referred to by the Company in connection with the offering of the Offered
Securities, each as listed on Schedule 3 hereto;

      

      (iv)  “Preliminary
Prospectus”  means any preliminary prospectus relating to the Offered
Securities included in the Registration Statement or filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, including any preliminary
prospectus supplement thereto relating to the Offered Securities;

       

      
        
          
          

        

        
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      (v)  “Pricing Disclosure
Materials” means, as of the Applicable Time, the most recent Preliminary
Prospectus, together with each Issuer Free Writing Prospectus filed or used by
the Company on or before the Applicable Time, and the information set forth on
Schedule 4 hereto;

      

      (vi)  “Prospectus” means the
final prospectus relating to the Offered Securities including any prospectus
supplement thereto relating to the Offered Securities and the documents
incorporated by reference therein, as filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations; and

      

      (vii)  “Registration
Statement” means, collectively, the various parts of such registration
statement, each as amended as of the Effective Date for such part, including any
Preliminary Prospectus or the Prospectus and all exhibits to such registration
statement.

      

      Any
reference to any Preliminary Prospectus, the Prospectus or the Registration
Statement shall be deemed to refer to and include any documents incorporated or
deemed to be incorporated by reference therein  pursuant to Form S-3
under the Act as of the date of such Preliminary Prospectus or the Prospectus,
as the case may be.  Any reference herein to the terms “amend”,
“amendment” or “supplement” with respect to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
any document filed under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), after the effective date of the Registration Statement, the
date of such Preliminary Prospectus or the date of the Prospectus, as the case
may be, which is incorporated therein by reference.

      

      (b)  The
Registration Statement has heretofore become effective under the Act or, with
respect to any registration statement to be filed to register the offer and sale
of Offered Securities pursuant to Rule 462(b) under the Act, will be filed with
the Commission and become effective under the Act no later than 10:00 p.m., New
York City time, on the date of determination of the public offering price for
the Offered Securities; no stop order of the Commission preventing or suspending
the use of any Prospectus, or the effectiveness of the Registration Statement,
has been issued, and no proceedings for such purpose have been instituted or, to
the Company’s knowledge, are contemplated by the Commission.

      

      (c)  The
Company was not at the time of the initial filing of the Registration Statement,
has not been since the date of such filing, and will not be on the Closing Date,
an “ineligible issuer” (as defined in Rule 405 under the Act).  The
Company has been since the time of initial filing of the Registration Statement
and continues to be eligible to use Form S-3 for the offering of the Offered
Securities.

      

      (d)  The
Registration Statement, at the time it became effective, as of the date hereof,
and at the Closing Date conformed and will conform in all material respects to
the requirements of the Act and the rules and regulations of the Commission
promulgated thereunder (the “Rules and Regulations”).  The Preliminary
Prospectus conformed, and the Prospectus will conform, when filed with the
Commission pursuant to Rule 424(b) and on the Closing Date to the requirements
of the Act and the Rules and Regulations.  The documents incorporated
by reference in any Preliminary Prospectus or the Prospectus conformed, and any
further documents so incorporated will conform, when filed with the Commission,
to the requirements of the Exchange Act or the Act, as applicable, and the rules
and regulations promulgated under the Act and the Exchange Act.

       

      
        
          
          

        

        
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      (e)  The
Registration Statement did not, as of the Effective Date, 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 not
misleading.

      

      (f)  The
Prospectus will not, as of its date and on the Closing Date, 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; provided, however, that the
Company makes no representation or warranty with respect to any statement
contained in the Prospectus in reliance upon and in conformity with information
concerning the Placement Agent and furnished in writing by the Placement Agent
to the Company expressly for use in the Prospectus, as set forth in Section
8(b).

      

      (g)  The
documents incorporated by reference in any Preliminary Prospectus or the
Prospectus did not, and any further documents filed and incorporated by
reference therein will not, when filed with the Commission, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated in such document or necessary to make the statements in such document, in
light of the circumstances under which they were made, not
misleading.

      

      (h)  The
Pricing Disclosure Materials, including each Issuer Free Writing Prospectus, did
not, as of the Applicable Time, 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 light of the circumstances under which they were
made, not misleading; provided, however, that the
Company makes no representation or warranty with respect to any statement
contained in the Pricing Disclosure Materials in reliance upon and in conformity
with information concerning the Placement Agent and furnished in writing by the
Placement Agent to the Company expressly for use in the Pricing Disclosure
Materials, as set forth in Section 8(b).

      

      (i)  Each
Issuer Free Writing Prospectus conformed or will conform in all material
respects to the requirements of the Act and the Rules and Regulations on the
date of first use, and the Company has complied or will comply with any filing
requirements applicable to such Issuer Free Writing Prospectus pursuant to the
Rules and Regulations.  Each Issuer Free Writing Prospectus, as of its
issue date and at all subsequent times through the completion of the public
offer and sale of the Offered Securities, did not, does not and will not include
any information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, the Pricing Disclosure Materials or the
Prospectus, including any document incorporated by reference therein that has
not been superseded or modified.  The Company has not made any offer
relating to the Offered Securities that would constitute an Issuer Free Writing
Prospectus without the prior written consent of the Placement
Agent.  The Company has retained in accordance with the Rules and
Regulations all Issuer Free Writing Prospectuses that were not required to be
filed pursuant to the Rules and Regulations.

       

      
        
          
          

        

        
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      (j)  The
Company is, and at the Closing Date will be, duly organized, validly existing
and in good standing under the laws of the State of Nevada.  The
Company (i) has, and at the Closing Date will have, full corporate power and
authority to conduct all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus and (ii) is, and at the Closing Date
will be, duly licensed or qualified to do business and in good standing as a
foreign organization in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
licensing or qualification necessary; except, in each case, where the failure to
be so qualified or in good standing or have such power or authority would not,
individually or in the aggregate, have a material adverse effect or would not
reasonably be expected to have a material adverse effect on or affecting the
business, properties, management, consolidated financial position, stockholders’
equity, prospects or results of operations of the Company and its Subsidiaries
taken as a whole (a “Material Adverse Effect”).  Complete and correct
copies of the certificate of incorporation and of the bylaws of the Company and
all amendments thereto have been delivered or made available to the Placement
Agent, and no changes therein will be made subsequent to the date hereof and
prior to the Closing Date.

      

      (k)  Each
of the Company’s significant subsidiaries (as defined in Rule 1.02 (w) of
Regulation S-X under the Securities Act) (each a “Subsidiary” and collectively
the “Subsidiaries”) are listed on Schedule 1 to this Agreement.  Each
Subsidiary has been duly organized and is validly existing as a corporation in
good standing under the laws of its jurisdiction of formation.  Each
Subsidiary is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or in good
standing which will not, individually or in the aggregate, have a Material
Adverse Effect.  All of the shares of issued capital stock of each
subsidiary of the Company have been duly authorized and validly issued, are
fully paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of any lien, encumbrance, claim, security interest,
restriction on transfer, shareholders’ agreement, voting trust or other defect
of title whatsoever.

      

      (l)  The
issued and outstanding shares of capital stock of the Company have been validly
issued, are fully paid and nonassessable and, other than as set forth in the
Registration Statement, are not subject to any preemptive rights, rights of
first refusal or similar rights.  The Company has an authorized,
issued and outstanding capitalization as set forth in the Prospectus as of the
dates referred to therein. The descriptions of the securities of the Company in
the Registration Statement and the Prospectus are, and at the Closing Date will
be, complete and accurate in all respects.  Except as set forth in the
Registration Statement and the Prospectus, the Company does not have outstanding
any rights (other than stock options or other equity awards under the Company’s
equity incentive and stock purchase plans) or warrants to subscribe for, or any
securities or obligations convertible into, or exchangeable for, or any
contracts or commitments to issue or sell, any shares of capital stock or other
securities.

      

      (m)  The
Company has full legal right, power and authority to enter into this Agreement
and perform the transactions contemplated hereby.  This Agreement has
been authorized and validly executed and delivered by the Company and is the
legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as rights to indemnity hereunder
may be limited by federal or state securities laws and subject to the effect of
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally and equitable principles of general applicability
and public policy.

       

      
        
          
          

        

        
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      (n)  The
issuance and sale of each of the Offered Shares have been duly authorized by the
Company, and the Offered Shares, when issued and paid for in accordance with
this Agreement, will be duly and validly issued, fully paid and nonassessable
and will not be subject to preemptive or similar rights.  The holders
of the Offered Securities will not be subject to personal liability by reason of
being such holders.  The Offered Securities, when issued, will conform
in all material respects to the description thereof set forth in or incorporated
into the Prospectus.

      

      (o)  The
consolidated financial statements and the related notes included in the
Registration Statement, the Pricing Disclosure Materials and the Prospectus
present fairly, in all material respects, the financial condition of the Company
and its consolidated Subsidiaries as of the dates thereof and the results of
operations and cash flows at the dates and for the periods covered thereby in
conformity with generally accepted accounting principles
(“GAAP”).  Any pro forma financial statements or data included in the
Registration Statement, the Pricing Disclosure Materials and the Prospectus
comply in all material respects with the requirements of the Act and the
Exchange Act, and the assumptions used in the preparation of such pro forma
financial statements and data are reasonable, the pro forma adjustments used
therein are appropriate to give effect to the transactions or circumstances
described therein and the pro forma adjustments have been properly applied to
the historical amounts in the compilation of those statements and
data.  No other financial statements or schedules of the Company, any
Subsidiary or any other entity are required by the Act or the Rules and
Regulations to be included in the Registration Statement, the Pricing Disclosure
Materials or the Prospectus.  All disclosures contained in the
Registration Statement, the Pricing Disclosure Materials and the Prospectus
regarding “non-GAAP financial measures” (as such term is defined by the Rules
and Regulations) comply with Regulation G of the Exchange Act and Item 10 of
Regulation S-K under the Act, to the extent applicable.  The Company
and the Subsidiaries do not have any material liabilities or obligations, direct
or contingent (including any off-balance sheet obligations or any “variable
interest entities” within the meaning of Financial Accounting Standards Board
Interpretation No. 46), of a character required to be described in or to be
filed as an exhibit to the Registration Statement that are not disclosed in the
Registration Statement, the Pricing Disclosure Materials and the Prospectus or
so filed.

      

      (p)  JonesBaggett
LLP (formerly Payne Smith & Jones, P.C., the “Accountants”), who have
reported on such consolidated financial statements and schedules, are registered
independent public accountants with respect to the Company as required by the
Act and the Rules and Regulations and by the rules of the Public Company
Accounting Oversight Board.  The consolidated financial statements of
the Company and the related notes and schedules included in the Registration
Statement and the Prospectus have been prepared in conformity with the
requirements of the Act and the Rules and Regulations and present fairly the
information shown therein.

       

      
        
          
          

        

        
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      (q)  There
is and has been no failure on the part of the Company, or to the Company’s
knowledge after due inquiry, any of the Company’s directors or officers, in
their capacities as such, to comply with any applicable provisions of the
Sarbanes Oxley Act of 2002 and the rules and regulations promulgated therewith
(the “Sarbanes Oxley Act”).  Each of the principal executive officer
and the principal financial officer of the Company (or each former principal
executive officer of the Company and each former principal financial officer of
the Company as applicable) has made all certifications required by Sections 302
and 906 of the Sarbanes-Oxley Act with respect to all reports, schedules, forms,
statements and other documents required to be filed by it with the
Commission.  For purposes of the preceding sentence, “principal
executive officer” and “principal financial officer” shall have the meanings
given to such terms in the Sarbanes-Oxley Act.  The Company has taken
all reasonable actions necessary to ensure that it is in compliance in all
material respects with all provisions of the Sarbanes-Oxley Act that are in
effect and with which the Company is required to comply.

      

      (r)  The
Company and its Subsidiaries maintain systems of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.  The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company
and designed such disclosure controls and procedures to provide reasonable
assurance that material information relating to the Company and its Subsidiaries
is made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, is being
prepared.  The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Form 10-K for the year ended December 31, 2009
(such date, the “Evaluation Date”).  The Company presented in its Form
10-K for the year ended December 31, 2009 the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation
Date, there have been no significant changes in the Company’s internal controls
(as such term is defined in Item 307(b) of Regulation S-K under the Exchange
Act) or, to the Company’s knowledge, in other factors that could significantly
affect the Company’s internal controls.

      

      (s)  Except
as set forth in or otherwise contemplated or disclosed in the Registration
Statement, the Pricing Disclosure Materials and the Prospectus, since the date
of the most recent consolidated financial statements of the Company included or
incorporated by reference in the most recent Preliminary Prospectus, (i) there
has not been any change in the capital stock of the Company or long-term debt of
the Company or any Subsidiary or any dividend or distribution of any kind
declared, set aside for payment, paid or made by the Company on any class of
capital stock, or any material adverse change, in the business, properties,
management, consolidated financial position, stockholders’ equity, or results of
operations of the Company and its Subsidiaries taken as a whole (a “Material
Adverse Change”), (ii) there has not been any change or any development
involving a prospective Material Adverse Change whether or not occurring in the
ordinary course of business, and (iii) neither the Company nor any Subsidiary
has sustained any material loss or material interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor disturbance or dispute or any action, order or decree of any
court or arbitrator or governmental or regulatory authority.

       

      
        
          
          

        

        
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      (t)  Except
as set forth in or otherwise contemplated or disclosed in the Registration
Statement, the Pricing Disclosure Materials and the Prospectus, since the date
as of which information is given in the most recent Preliminary Prospectus or
the Pricing Disclosure Materials, neither the Company nor any Subsidiary has
entered into any transaction or agreement, not in the ordinary course of
business, that is material to the Company and its Subsidiaries taken as a whole
or incurred any liability or obligation, direct or contingent, not in the
ordinary course of business, that is material to the Company and its
Subsidiaries taken as a whole.

      

      (u)  The
Company and each Subsidiary has good and defensible title to all items of real
property and good and defensible title to all tangible personal property
described in the Registration Statement, the Pricing Disclosure Materials or the
Prospectus as being owned by them that are material to the businesses of the
Company and its Subsidiaries taken as a whole, in each case free and clear of
all liens, encumbrances and claims except those that (i) do not materially
interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries or (ii) would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.  Any real property described in the Registration Statement,
the Pricing Disclosure Materials or the Prospectus as being leased by the
Company or any Subsidiary that is material to the business of the Company and
its Subsidiaries taken as a whole is held by them under valid, existing and
enforceable leases, except where the failure of such leases to be valid or
enforceable (A) does not materially interfere with the use made or proposed to
be made of such property by the Company and its Subsidiaries or (B) would not be
reasonably expected, individually or in the aggregate, to have a Material
Adverse Effect.

      

      (v)  The
Company is not, nor upon completion of the transactions contemplated herein will
it be, an “investment company” or “promoter” or “principal underwriter” for an
“investment company,” as such terms are defined in the Investment Company Act of
1940, as amended (the “Investment Company Act”).

      

      (w)  There
are no legal, governmental or regulatory actions, suits or proceedings pending,
nor any legal, governmental or regulatory investigations, to which the Company
or any Subsidiary is a party or to which any property of the Company or any
Subsidiary is the subject that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect or materially and
adversely affect the ability of the Company to perform its obligations under
this Agreement (collectively, the “Actions”); to the Company’s knowledge, no
such Actions are threatened by any governmental or regulatory authority or
threatened by others; and there are no current or, to the Company’s knowledge,
pending legal, governmental or regulatory investigations, actions, suits or
proceedings that are required under the Act to be described in the Registration
Statement, the Pricing Disclosure Materials or the Prospectus that are not so
described.

       

      
        
          
          

        

        
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      (x)  The
Company and each Subsidiary has, and at the Closing Date will have: (i) all
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to carry on its respective business as presently
conducted except where the failure to have such governmental licenses, permits,
consents, orders, approvals and other authorizations would not have a Material
Adverse Effect; (ii) complied with all laws, regulations and orders applicable
to either it or its business, except where the failure to so comply would not
have a Material Adverse Effect; and (iii) performed all its obligations required
to be performed, and is not, and at the Closing Date will not be, in default,
under any indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement, lease, contract or other agreement
or instrument (collectively, a “contract or other agreement”) to which it is a
party or by which its property is bound or subject, except where such default
would not have a Material Adverse Effect, and, to the Company’s knowledge, no
other party under any material contract or other agreement to which it is a
party is in default in any respect thereunder where such default would have a
Material Adverse Effect.  The Company and its Subsidiaries are not in
violation of any provision of their respective organizational or governing
documents.

      

      (y)  All
consents, authorizations, approvals and orders required for the execution and
delivery of this Agreement have been obtained, except such as may be required
under state securities or Blue Sky Laws or the by-laws and rules of the
Financial Industry Regulatory Authority, Inc. (“FINRA”) or the OTC Bulletin
Board in connection with the distribution of the Offered Securities by the
Placement Agent.

      

      (z)  Neither
the execution of this Agreement, nor the issuance, offering or sale of the
Offered Securities, nor the consummation of any of the transactions contemplated
herein, nor the compliance by the Company with the terms and provisions hereof
will conflict with, or will result in a breach of, any of the terms and
provisions of, or has constituted or will constitute a default under, or has
resulted in or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to the terms of any contract or other agreement to which the Company or
its Subsidiaries may be bound or to which any of the property or assets of the
Company or its Subsidiaries is subject, except (i) such conflicts, breaches or
defaults as may have been waived and (ii) such conflicts, breaches and defaults
that would not have a Material Adverse Effect; nor will such action result (x)
in any violation of the provisions of the organizational or governing documents
of the Company or any Subsidiary, or (y) in any material violation of the
provisions of any statute or any order, rule or regulation applicable to the
Company or any Subsidiary or of any court or of any federal, state or other
regulatory authority or other government body having jurisdiction over the
Company or any Subsidiary.

      

      (aa)  There
is no document or contract of a character required to be described in the
Registration Statement, the Pricing Disclosure Materials or the Prospectus or to
be filed as an exhibit to the Registration Statement which is not described or
filed as required.  All such contracts to which the Company is a party
have been authorized, executed and delivered by the Company, constitute valid
and binding agreements of the Company, and are enforceable against the Company
in accordance with the terms thereof, subject to the effect of applicable
bankruptcy, insolvency or similar laws affecting creditors’ rights generally and
equitable principles of general applicability.

      

      (bb)  No
statement, representation or warranty made by the Company in this Agreement or
made in any certificate or document required by this Agreement to be delivered
to the Placement Agent or the Investors was or will be, when made, inaccurate,
untrue or incorrect in any material respect.

       

      
        
          
          

        

        
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      (cc)  The
Company and its directors, officers or controlling persons have not taken,
directly or indirectly, any action intended, or which might reasonably be
expected, to cause or result, under the Act or otherwise, in, or which has
constituted, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Common Stock.

      

      (dd)  No
holder of securities of the Company has rights to the registration of any
securities of the Company as a result of the filing of the Registration
Statement or the transactions contemplated by this Agreement, except for such
rights as have been waived or satisfied.

      

      (ee)  The
Common Stock is currently quoted on the OTC Bulletin Board.  Except as
disclosed in the Registration Statement, the Pricing Disclosure Materials or the
Prospectus, the Company has not, in the 12 months preceding the date hereof,
received notice from the OTC Bulletin Board to the effect that the Company is
not in compliance with the OTC Bulletin Board’s listing or maintenance
requirements.  The Company is, and has no reason of which it is
currently aware to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance
requirements.

      

      (ff)  Neither
the Company nor any Subsidiary is involved in any material labor dispute nor, to
the Company’s knowledge, is any such dispute known by the Company or any of its
Subsidiaries to be threatened.

      

      (gg)  The
business and operations of the Company and each of its Subsidiaries have been
and are being conducted in compliance with all applicable laws, ordinances,
rules, regulations, licenses, permits, approvals, plans, authorizations or
requirements relating to occupational safety and health, or pollution, or
protection of health or the environment (including, without limitation, those
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous or toxic substances, materials or wastes
into ambient air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto, except where the failure to be in such compliance will not,
individually or in the aggregate, have a Material Adverse Effect; and neither
the Company nor any of its Subsidiaries has received any notice from any
governmental instrumentality or any third party alleging any material violation
thereof or liability thereunder (including, without limitation, liability for
costs of investigating or remediating sites containing hazardous substances
and/or damages to natural resources).

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (hh)  Except
as disclosed in the Registration Statement, the Pricing Disclosure Materials and
the Prospectus: (i) the Company and each Subsidiary owns licenses, has options
for or has the right to use the inventions, patent applications, patents,
trademarks (both registered and unregistered), trade names, copyrights and trade
secrets necessary for the conduct of its respective business as currently
conducted (collectively, the “Intellectual Property”); and (ii) (A) there are no
third parties who have any ownership rights to any Intellectual Property that is
owned by, or has been licensed to, the Company or any Subsidiary for the
products described in the Registration Statement that would preclude the Company
or any Subsidiary from conducting its business as currently conducted and have a
Material Adverse Effect, except for the ownership rights of the owners of the
Intellectual Property licensed or optioned by the Company or a Subsidiary; (B)
there are currently no sales of any products that would constitute an
infringement by third parties of any Intellectual Property owned, licensed or
optioned by the Company or any Subsidiary, which infringement would have a
Material Adverse Effect; (C) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging the rights of
the Company or any Subsidiary in or to any Intellectual Property owned, licensed
or optioned by the Company or any Subsidiary, other than claims which would not
reasonably be expected to have a Material Adverse Effect; (D) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any Intellectual Property
owned, licensed or optioned by the Company or any Subsidiary, other than
actions, suits, proceedings and claims which would not reasonably be expected to
have a Material Adverse Effect; and (E) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others that the
Company or any of any Subsidiaries infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary right of others, other
than actions, suits, proceedings and claims which would not reasonably be
expected to have a Material Adverse Effect.

      

      (ii)  The
Company and each Subsidiary has filed all necessary federal, state and foreign
income and franchise tax returns and have paid or accrued all taxes shown as due
thereon, and, to the Company’s knowledge, there is no tax deficiency which has
been or could reasonably be expected to be asserted or threatened against it or
any Subsidiary which could have a Material Adverse Effect.

       

      (jj)  On
the Closing Date, all stock transfer or other taxes (other than income taxes)
which are required to be paid in connection with the sale and transfer of the
Offered Securities to be sold hereunder will be, or will have been, fully paid
or provided for by the Company and all laws imposing such taxes will be or will
have been fully complied with.

      

      (kk)  The
Company and each Subsidiary maintains insurance of the types and in the amounts
that the Company reasonably believes is adequate for their respective
businesses, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company or any Subsidiary against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against by similarly situated companies, all of which insurance is in
full force and effect.

      

      (ll)  Neither
the Company nor any Subsidiary, nor, to the Company’s knowledge, any director,
officer, agent or employee of the Company, has directly or indirectly: (i) made
any unlawful contribution to any candidate for public office, or failed to
disclose fully any contribution in violation of law; (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof; (iii)
violated or is in violation of any provisions of the U.S. Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (mm)  Each
officer and director of the Company listed on Schedule 2 hereto has delivered to
the Placement Agent an agreement substantially in the form of Exhibit
A.

      

      (nn)  The
Company has delivered to the Placement Agent an agreement substantially in the
form of Exhibit B.

      

      (oo)  The
Company has not distributed and, prior to the later to occur of the Closing Date
and completion of the distribution of the Offered Securities, will not
distribute any offering material in connection with the offering and sale of the
Offered Securities other than any Preliminary Prospectus, the Prospectus and any
Issuer Free Writing Prospectus to which the Placement Agent has
consented.

      

      (pp)  Except
as described in the Registration Statement, the Pricing Disclosure Materials and
the Prospectus, the Company does not directly or indirectly control or have a
material interest in any other business entity.

      

      (qq)  Each
material employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is
maintained, administered or contributed to by the Company or any of its
affiliates for employees or former employees of the Company and its Subsidiaries
has been maintained in material compliance with its terms and the requirements
of any applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”);
no prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code, has occurred which would result in a material liability to the
Company with respect to any such plan excluding transactions effected pursuant
to a statutory or administrative exemption; and for each such plan that is
subject to the funding rules of Section 412 of the Code or Section 302 of ERISA,
no “accumulated funding deficiency” as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the assets of
each such plan (excluding for these purposes accrued but unpaid contributions)
exceeds the present value of all benefits accrued under such plan determined
using reasonable actuarial assumptions.

      

      (rr)  No
relationship, direct or indirect, exists between or among the Company or any
Subsidiary, on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any Subsidiary, on the other, which is
required by the Act to be disclosed in the Registration Statement, the Pricing
Disclosure Materials and the Prospectus and is not so disclosed.

      

      (ss)  The
Company has not sold or issued any securities that would be integrated with the
offering of the Offered Securities contemplated by this Agreement pursuant to
the Act, the Rules and Regulations or the interpretations thereof by the
Commission.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      (tt)  Neither
the Company nor its Subsidiaries are a party to any contract, agreement or
understanding with any person (other than this Agreement) that would give rise
to a valid claim against the Company or its Subsidiaries or the Placement Agent
(or the Placement Agent’s co-agent or sub-agent, if any) for a brokerage
commission, finder’s fee or like payment in connection with the offering and
sale of the Offered Securities.

      

      (uu)  No
forward-looking statement (within the meaning of Section 27A of the Act and
Section 21E of the Exchange Act) (a “Forward Looking Statement”) contained in
the Registration Statement or the Prospectus has been made or reaffirmed without
a reasonable basis or has been disclosed other than in good
faith.  The Forward Looking Statements incorporated by reference in
the Registration Statement and the Prospectus from the Company’s Annual Report
on Form 10-K for the year ended December 31, 2009 and Quarterly Report on Form
10-Q for the period ended March 31, 2010 (in each case under the heading
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations) (i) are within the coverage of the safe harbor for forward looking
statements set forth in Section 27A of the Act, Rule 175(b) under the Act or
Rule 3b-6 under the Exchange Act, as applicable, (ii) were made by the Company
with a reasonable basis and in good faith and reflect the Company’s good faith
reasonable best estimate of the matters described therein and (iii) have been
prepared in accordance with Item 10 of Regulation S-K.

      

      (vv)  The
operations of the Company and its Subsidiaries are and have been conducted at
all times in material compliance with applicable financial record keeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions to which
the Company or its Subsidiaries are subject, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its Subsidiaries with respect to the Money Laundering Laws is pending
or, to the Company’s knowledge, threatened against the Company or any of its
Subsidiaries.

      

      (ww)  Except
as set forth in the Company’s filings with the Commission, none of the officers
or directors of the Company and, to the knowledge of the Company, none of its
employees are presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $120,000,
other than for (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement of expenses incurred on behalf of the Company, (iii) housing
allowances for employees on expatriate assignments in the ordinary course of
business and (iv) other employee benefits, including stock option agreements
under any stock option plan of the Company.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      (xx)  The
Company has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to
the Investors as a result of the Investors and the Company fulfilling their
obligations or exercising their rights under this Agreement, including without
limitation as a result of the Company’s issuance of the Offered Securities and
the Investors’ ownership of such Offered Securities.

      

      (yy)  All
consents, approvals, authorizations or licenses requisite under the legal
requirements of the People’s Republic of China, not including Taiwan, Hong Kong
and Macau (“PRC”) for the due and proper establishment and operation of the
Company and its Subsidiaries have been duly obtained from the relevant PRC
individual, entity or body exercising, or entitled to exercise, any executive,
legislative, judicial, administrative, regulatory, police, military or taxing
authority or power of any nature having authority over the Company, its
Subsidiaries or any of their products or other governmental body having
authority over the Company, its Subsidiaries or any of their products or
property, and are in full force and effect except where the failure to obtain
any such consent, approval, authorization or license or maintain the same in
full force and effect would not have, or be reasonably likely to result in, a
Material Adverse Effect.

      

      (zz)  All
filings and registrations with the PRC required in respect of the Company and
its Subsidiaries and their capital structure and operations including, without
limitation, the registration with the Ministry of Commerce, the China Securities
Regulatory Commission, the State Administration of Industry, or their respective
local divisions of Commerce, the State Administration of Foreign Exchange, tax
bureau and customs authorities have been duly completed in accordance with the
relevant PRC legal requirements. The Company and each of its Subsidiaries has
taken all reasonable steps (to the extent required of the Company and each such
subsidiary under PRC legal requirements) to comply with, and to ensure
compliance with any persons known to the Company that are required to comply (in
connection with their interests in the Company) with applicable legal
requirements of the relevant PRC governmental body (including, without
limitation, the Ministry of Commerce and the National Development and Reform
Commission).

       

      (aaa)  The
Company and its obligations under this Agreement are subject to suit, and none
of the Company, any of its subsidiaries or any of its or their properties or
assets has any right of immunity, on any grounds, from any action, suit or
proceeding, from the giving of any relief in any action, suit or proceeding,
from set-off or counter claim, from the jurisdiction of any PRC or U.S. federal
or New York state court, as the case may be from service of process, attachment
upon or prior to judgment, or attachment in aid of execution of judgment, or
from execution of a judgment, or from other legal process or proceeding for the
giving of any relief or for the enforcement of a judgment, in any such court,
with respect to its obligations, liabilities or any other matter arising out of
or relating to this Agreement.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      4. 
Agreements of the
Company.  The Company covenants and agrees with the Placement
Agent as follows:

      

      (a)  The
Registration Statement has become effective, and if Rule 430A is used or the
filing of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus (properly completed if Rule 430A has been used),
subject to the prior approval of the Placement Agent, pursuant to Rule 424(b)
within the prescribed time period and will provide a copy of such filing to the
Placement Agent promptly following such filing.

      

      (b)  The
Company will not, during such period as the Prospectus would be required by law
to be delivered in connection with sales of the Offered Securities by an
underwriter or dealer in connection with the offering contemplated by this
Agreement, file any amendment or supplement to the Registration Statement or the
Prospectus unless a copy thereof shall first have been submitted to the
Placement Agent within a reasonable period of time prior to the filing thereof
and the Placement Agent shall not have reasonably objected thereto in good
faith.

      

      (c)  The
Company will notify the Placement Agent promptly, and will, if requested,
confirm such notification in writing: (i) when any post-effective amendment to
the Registration Statement becomes effective, but only during the period
mentioned in Section 4(b); (ii) of any request by the Commission for any
amendments to the Registration Statement or any amendment or supplements to the
Prospectus or any Issuer Free Writing Prospectus or for additional information
related to the offering of the Offered Securities or for additional information
related to the Registration Statement, the Prospectus or any Issuer Free Writing
Prospectus, but only during the period mentioned in Section 4(b); (iii) of the
issuance by the Commission of any stop order preventing or suspending the
effectiveness of the Registration Statement, or the initiation of any
proceedings for that purpose or the threat thereof, but only during the period
mentioned in Section 4(b); (iv) of becoming aware of the occurrence of any event
during the period mentioned in Section 4(b) that in the reasonable judgment of
the Company makes any statement made in the Registration Statement, the Pricing
Disclosure Materials or the Prospectus untrue in any material respect or that
requires the making of any changes in the Registration Statement, the Pricing
Disclosure Materials or the Prospectus in order to make the statements therein,
in light of the circumstances in which they are made, not misleading; and (v) of
receipt by the Company during the period mentioned in Section 4(b) of any
notification with respect to any suspension of the qualification of the Offered
Securities for offer and sale in any jurisdiction.  If at any time the
Commission shall issue any order suspending the effectiveness of the
Registration Statement in connection with the offering contemplated hereby, the
Company will use commercially reasonable efforts to obtain the withdrawal of any
such order at the earliest possible moment.  If the Company has
omitted any information from the Registration Statement, pursuant to Rule 430A,
it will use best efforts to comply with the provisions of and make all requisite
filings with the Commission pursuant to said Rule 430A and to notify the
Placement Agent promptly of all such filings.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      

      (d)  If,
at any time when a Prospectus relating to the Offered Securities is required to
be delivered under the Act, the Company becomes aware of the occurrence of any
event as a result of which the Prospectus, as then amended or supplemented,
would, in the reasonable judgment of counsel to the Company or counsel to the
Placement Agent, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or the
Pricing Disclosure Materials, as then amended or supplemented, would, in the
reasonable judgment of counsel to the Company or counsel to the Placement Agent,
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or the Registration
Statement, as then amended or supplemented, would, in the reasonable judgment of
counsel to the Company or counsel to the Placement Agent, include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading, or if for any other reason it is
necessary, in the reasonable judgment of counsel to the Company or counsel to
the Placement Agent, at any time to amend or supplement the Prospectus, the
Pricing Disclosure Materials or the Registration Statement to comply with the
Act or the Rules and Regulations, the Company will promptly notify the Placement
Agent and, subject to Section 4(b) hereof, will promptly prepare and file with
the Commission, at the Company’s expense, an amendment to the Registration
Statement, an amendment or supplement to the Pricing Disclosure Materials or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance and will deliver to the Placement Agent,
without charge, such number of copies thereof as the Placement Agent may
reasonably request.  The Company consents to the use of the Prospectus
or any amendment or supplement thereto by the Placement Agent.

      

      (e)  The
Company will furnish, upon request, to the Placement Agent and its counsel,
without charge: (i) one conformed copy of the Registration Statement as
originally filed with the Commission and each amendment thereto, including
financial statements and schedules, and all exhibits thereto; and (ii) so long
as a prospectus relating to the Offered Securities is required to be delivered
under the Act, as many copies of each Issuer Free Writing Prospectus,
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
as the Placement Agent may reasonably request.

      

      (f)  The
Company will comply with all the undertakings contained in the Registration
Statement.

      

      (g)  Prior
to the sale of the Offered Securities to the Investors, the Company will
cooperate with the Placement Agent and its counsel in connection with the
registration or qualification of the Offered Securities for offer and sale under
the state securities or Blue Sky laws of such jurisdictions as the Placement
Agent may reasonably request; provided, that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to general service of process in any jurisdiction where it is not now
so subject.

      

      (h)  The
Company will not make any offer relating to the Offered Securities that would
constitute an Issuer Free Writing Prospectus without consulting with the
Placement Agent.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      (i)  The
Company will retain in accordance with the Rules and Regulations all Issuer Free
Writing Prospectuses not required to be filed pursuant to the Rules and
Regulations.

      

      (j)  The
Company will apply the net proceeds from the offering and sale of the Offered
Securities in the manner set forth in the Pricing Disclosure Materials and the
Prospectus under the caption “Use of Proceeds.”

      

      (k)  The
Company will use its best efforts to ensure that the Offered Securities are
listed or quoted on the OTC Bulletin Board at the time of the
Closing.

      

      (l)  The
Company will not at any time, directly or indirectly, take any action intended,
or which might reasonably be expected, to cause or result in, or which will
constitute, stabilization of the price of the Offered Securities to facilitate
the sale or resale of any of the Offered Shares.

      

      5.  Agreements of the Placement
Agent.  The Placement Agent agrees that it shall not include
any “issuer information” (as defined in Rule 433 under the Act) in any “free
writing prospectus” (as defined in Rule 405) used or referred to by the
Placement Agent without the prior consent of the Company (any such issuer
information with respect to whose use the Company has given its consent,
“Permitted Issuer Information”).  The Placement Agent also agrees to
provide to each Investor, prior to the Closing, a copy of the Prospectus and any
amendments or supplements thereto.

      

      6.  Expenses.  Whether
or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay all of its costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, including but not limited to costs and expenses of or relating to:
(i) the preparation, printing and filing of the Registration Statement
(including each pre- and post-effective amendment thereto) and exhibits thereto,
any Issuer Free Writing Prospectus, each Preliminary Prospectus, the Prospectus
and any amendments or supplements thereto, including all fees, disbursements and
other charges of counsel and accountants to the Company; (ii) the preparation
and delivery of certificates representing the Offered Securities; (iii)
furnishing (including costs of shipping and mailing) such copies of the
Registration Statement (including all pre- and post-effective amendments
thereto), the Prospectus and any Preliminary Prospectus or Issuer Free Writing
Prospectus, and all amendments and supplements thereto, as may be reasonably
requested for use in connection with the direct placement of the Offered
Securities; (iv) the listing of the Common Stock on the OTC Bulletin Board; (v)
any filings required to be made by the Placement Agent with FINRA, and the fees,
disbursements and other charges of counsel for the Placement Agent in connection
therewith; (vi) the registration or qualification of the Offered Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 4(g), including the reasonable fees,
disbursements and other charges of counsel to the Placement Agent in connection
therewith and the preparation and printing of preliminary, supplemental and
final Blue Sky memoranda; (vii) fees, disbursements and other charges of counsel
to the Company; and (viii) fees and disbursements of the Accountants incurred in
delivering the letter(s) described in Section 7(g) of this
Agreement.  The Company shall reimburse the Placement Agent for all
reasonable out-of-pocket travel, legal and other out-of-pocket expenses in an
aggregate amount not to exceed $200,000.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      7.  Conditions of the
Obligations of the Placement Agent.  The obligations of the
Placement Agent to place the Offered Securities and consummate the transactions
contemplated hereby on the Closing are subject to the following
conditions:

      

      (a)  (i)  No
stop order suspending the effectiveness of the Registration Statement shall have
been issued, and no proceedings for that purpose shall be pending or threatened
by any securities or other governmental authority (including, without
limitation, the Commission); (ii) no order suspending the effectiveness of the
Registration Statement or the qualification or registration of the Offered
Securities under the securities or Blue Sky laws of any jurisdiction shall be in
effect and no proceeding for such purpose shall be pending before, or
threatened, to the Company’s knowledge, in writing by, any securities or other
governmental authority (including, without limitation, the Commission); (iii)
any request for additional information on the part of the staff of any
securities or other governmental authority (including, without limitation, the
Commission) shall have been complied with to the satisfaction of the staff of
the Commission or such authorities; and (iv) after the date hereof and prior to
the Closing no amendment or supplement to the Registration Statement, any Issuer
Free Writing Prospectus or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Placement Agent and the Placement Agent did
not object thereto in good faith.

      

      (b)  Since
the respective dates as of which information is given in the Registration
Statement, the Pricing Disclosure Materials and the Prospectus, (i) there shall
not have been a Material Adverse Change, whether or not arising from
transactions in the ordinary course of business, in each case other than as set
forth in or contemplated by the Registration Statement, the Pricing Disclosure
Materials and the Prospectus and (ii) the Company shall not have sustained any
material loss or material interference with its business or properties from
fire, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration Statement,
the Pricing Disclosure Materials and the Prospectus, if in the reasonable
judgment of the Placement Agent any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Offered Securities to
Investors as contemplated hereby.

      

      (c)  Since
the respective dates as of which information is given in the Registration
Statement, the Pricing Disclosure Materials and the Prospectus, there shall have
been no litigation or other proceeding instituted against the Company or any of
its officers or directors in their capacities as such, before or by any Federal,
state or local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, which litigation or proceeding, in
the reasonable judgment of the Placement Agent, would have a Material Adverse
Effect.

      

      (d)  Each
of the representations and warranties of the Company contained herein shall be
true and correct in all material respects at the Closing Date, as if made on
such date, and all covenants and agreements herein contained to be performed on
the part of the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to the Closing Date shall have been
duly performed, fulfilled or complied with in all material
respects.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      (e)  The
Placement Agent shall have received an opinion, dated the Closing Date of
Weycer, Kaplan, Pulaski & Zuber, P.C., Coppedge Emmel & Klegerman PC,
and Conyers Dill & Pearman Limited, as counsel to the Company, in form and
substance reasonably satisfactory to the Placement Agent, with respect to the
matters set forth in Exhibit C-1, Exhibit C-2 and Exhibit C-3,
respectively.

      

      (f)  The
Placement Agent shall have received an opinion, dated the Closing Date, of
Morrison & Foerster LLP, as counsel to the Placement Agent, in form and
substance reasonably satisfactory to the Placement Agent.

      

      (g)  On
the date hereof, the Accountants shall have furnished to the Placement Agent a
letter, dated the date of its delivery (the “Comfort Letter”), addressed to the
Placement Agent and in form and substance reasonably satisfactory to the
Placement Agent and addressing such matters as are customary for the type of
transactions contemplated by this Agreement and the Prospectus: (i) confirming
that they are independent public accountants with respect to the Company within
the meaning of the Act and the Rules and Regulations; and (ii) stating, as of
the date hereof (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the Pricing Disclosure Materials and the Prospectus, as of a date not more
than five days prior to the date hereof), the conclusions and findings of such
firm with respect to the financial information and other matters ordinarily
covered by accountants’ “comfort letters” in connection with registered public
offerings.  At the Closing Date, the Accountants shall have furnished
to the Placement Agent a letter, dated the date of its delivery (the “Bring-Down
Letter”), addressed to the Placement Agent and in form and substance reasonably
satisfactory to the Placement Agent: (i) confirming that they are independent
public accountants with respect to the Company within the meaning of the Act and
the Rules and Regulations; (ii) stating, as of the date of the Bring-Down Letter
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Pricing Disclosure Materials and the Prospectus, as of a date not more than five
days prior to the date of the Bring-Down Letter), the conclusions and findings
of such firm with respect to the financial information and other matters covered
by the Comfort Letter; and (iii) confirming in all material respects the
conclusions and findings set forth in the Comfort Letter.

      

      (h)  At
the Closing Date, there shall be furnished to the Placement Agent a certificate,
dated the date of its delivery, signed by each of the Chief Executive Officer
and the Chief Financial Officer of the Company, in form and substance
satisfactory to the Placement Agent to the effect that each signer has carefully
examined the Registration Statement, the Prospectus and the Pricing Disclosure
Materials, and that to each of such person’s knowledge:

      

      1.  (A)  As
of the date of such certificate, (x) the Registration Statement does not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading and (y) neither the Prospectus nor the Pricing Disclosure
Materials contains any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (B) no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading in any material respect.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

         

      

      2.  Each
of the representations and warranties of the Company contained in this Agreement
were, when originally made, and are, at the time such certificate is delivered,
true and correct in all material respects.

      

      3.  Each
of the covenants required herein to be performed by the Company on or prior to
the date of such certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or prior to the
delivery of such certificate has been duly, timely and fully complied
with.

      

      4.  Subsequent
to the date of the most recent financial statements in the Prospectus, there has
been no Material Adverse Change.

      

      5.  No
stop order suspending the effectiveness of the Registration Statement or of any
part thereof has been issued, and no proceedings for that purpose have been
instituted or are pending or, to the Company’s knowledge, threatened by any
securities or other governmental authority (including, without limitation, the
Commission).

      

      6.  No
order suspending the effectiveness of the Registration Statement or the
qualification or registration of the Offered Securities under the securities or
Blue Sky laws of any jurisdiction are in effect and no proceeding for such
purpose is pending before, or threatened, to the Company’s knowledge, in writing
by, any securities or other governmental authority (including, without
limitation, the Commission).

      

      7.  The
Company has complied with any request for additional information from the staff
of any securities or other governmental authority (including, without
limitation, the Commission) to the satisfaction of the staff of the Commission
or such authorities.

      

      (i)  At
the Closing, there shall be furnished to the Placement Agent a certificate,
dated the date of its delivery, signed by the Secretary of the Company, in form
and substance satisfactory to the Placement Agent as to matters customary to the
closing of the transactions of the type contemplated hereby.

      

      (j)  The
Offered Securities shall be qualified for sale in such states as the Placement
Agent may reasonably request, subject to the limitations set forth in the
proviso in Section 4(g).

      

      (k)  The
Company shall have furnished or caused to be furnished to the Placement Agent
such customary closing certificates, in addition to those specifically mentioned
herein, as the Placement Agent may have reasonably requested as to the accuracy
and completeness at the Closing Date of any statement in the Registration
Statement, the Pricing Disclosure Materials or the Prospectus, as to the
accuracy at the Closing Date of the representations and warranties of the
Company as to the performance by the Company of its obligations hereunder, or as
to the fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Placement Agent.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      (l)  The
Placement Agent shall have received the letters referred to in Section 3(mm) and
(nn) hereof substantially in the form of Exhibits A and B.

      

      8.  Indemnification.

      

      (a)  The
Company shall indemnify and hold harmless the Placement Agent, its respective
directors, officers, employees and agents and each person, if any, who controls
the Placement Agent within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, liabilities,
expenses and damages, joint or several, (including any and all investigative,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which it, or any of them, may become subject under the Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any untrue statement or alleged untrue statement made by the Company in
Section 3 of this Agreement, (ii) any untrue statement or alleged untrue
statement of any material fact contained in (A) any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto,
(B) any Issuer Free Writing Prospectus or any amendment or supplement thereto or
(C) any Permitted Issuer Information used or referred to in any “free writing
prospectus” (as defined in Rule 405) used or referred to by the Placement Agent
and (D) any application or other document, or any amendment or supplement
thereto, executed by the Company based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to qualify the
Offered Securities under the securities or Blue Sky laws thereof or filed with
the Commission or any securities association or securities exchange (each, an
“Application”), or (iii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement, the Prospectus or any Issuer
Free Writing Prospectus, or any amendment or supplement thereto, or in any
Permitted Issuer Information or any Application a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that the
Company will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Offered Securities in the public
offering to any person and is  based solely on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to the Placement Agent furnished in writing
to the Company by the Placement Agent expressly for inclusion in the
Registration Statement, any Preliminary Prospectus, the Prospectus, any Issuer
Free Writing Prospectus or in any amendment or supplement thereto or in any
Permitted Issuer Information or any Application (as set forth in Section 8(b)
below); and provided further, that such
indemnity with respect to any Preliminary Prospectus, Issuer Free Writing
Prospectus or any Permitted Issuer Information shall not inure to the benefit of
the Placement Agent (or any person controlling the Placement Agent) from whom
the person asserting any such loss, claim, damage, liability or action purchased
Offered Securities which are the subject thereof to the extent that any such
loss, claim, damage or liability: (i) results from the fact that the Placement
Agent failed to send or give a copy of the Prospectus (as amended or
supplemented) to such person at or prior to the confirmation of the sale of such
Offered Securities to such person in any case where such delivery is required by
the Act; (ii) arises out of or is based upon an untrue statement or omission of
a material fact contained in such Preliminary Prospectus, Issuer Free Writing
Prospectus or any Permitted Issuer Information that was corrected in the
Prospectus (or any amendment or supplement thereto), unless such failure to
deliver the Prospectus (as amended or supplemented) was the result of
noncompliance by the Company with Section 4(d); or (iii) arises from the gross
negligence or willful misconduct of any indemnified party .  This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      (b)  The
Placement Agent will indemnify and hold harmless the Company, each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, each director of the Company and each officer of
the Company who signs the Registration Statement to the same extent as the
foregoing indemnity from the Company to the Placement Agent, but only insofar as
losses, claims, liabilities, expenses or damages arise out of or are based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the Placement Agent
furnished in writing to the Company by the Placement Agent expressly for use in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
Issuer Free Writing Prospectus.  This indemnity agreement will be in
addition to any liability that the Placement Agent might otherwise
have.  The Company acknowledges that, for all purposes under this
Agreement, the name of the Placement Agent and the paragraph relating to
placement agents’ fees and reimbursement of expenses appearing under the caption
“Plan of Distribution” in the Prospectus constitute the only information
relating to the Placement Agent furnished in writing to the Company by the
Placement Agent expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus.

      

      (c)  Any
party that proposes to assert the right to be indemnified under this Section 8
will, promptly after receipt of notice of commencement of any action against
such party in respect of which a claim is to be made against an indemnifying
party or parties under this Section 8, notify each such indemnifying party of
the commencement of such action, enclosing a copy of all papers served, but the
omission so to notify such indemnifying party will not relieve it from any
liability that it may have to any indemnified party under the foregoing
provisions of this Section 8 unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party.  If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense.  The indemnified
party will have the right to employ its own counsel in any such action, but the
fees, expenses and other charges of such counsel will be at the expense of such
indemnified party unless: (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party; (2) the indemnified
party has reasonably concluded (based on advice of counsel) that a conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party that would prevent the counsel
selected by the indemnifying party from representing the indemnified party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party); or (3) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or
parties.  It is understood that the indemnifying party or parties
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm admitted to practice in such jurisdiction at any
one time for all such indemnified party or parties.  All such fees,
disbursements and other charges will be reimbursed by the indemnifying party
promptly as they are incurred following submission of invoices (including time
and expense descriptions) to the indemnifying party.  The indemnifying
party will not, without the prior written consent of the indemnified party
(which consent will not be unreasonably withheld or delayed), settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification has been
sought hereunder, unless such settlement, compromise or consent includes an
unconditional release of the indemnified party from all liability arising out of
such claim, action, suit or proceeding.  An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent will not be unreasonably withheld).

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      (d)  In
order to provide for just and equitable contribution in circumstances in which
the indemnification provided for in the foregoing paragraphs of this Section 8
is applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or the Placement Agent, the Company and the
Placement Agent will contribute to the total losses, claims, liabilities,
expenses and damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted, but after deducting any
contribution received by the Company from persons other than the Placement Agent
such as persons who control the Company within the meaning of the Act or the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company, who also may be liable for contribution) to which the
Company and the Placement Agent may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one
hand and the Placement Agent on the other.  The relative benefits
received by the Company on the one hand and the Placement Agent on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting Company expenses) received by the Company as set
forth in the table on the cover page of the Prospectus bear to the fee received
by the Placement Agent hereunder.  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 of the Company, on the one hand, and the Placement Agent
on the other, with respect to the statements or omissions which resulted in such
loss, claim, liability, expense or damage, or action in respect thereof, as well
as any other relevant equitable considerations with respect to such
offering.  Such relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Placement Agent, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission.  The Company and the Placement Agent agree that
it would not be just and equitable if contributions pursuant to this Section
8(d) were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to herein.  The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 8(d) shall be deemed to
include, for purpose of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim.  Notwithstanding the provisions
of this Section 8(d), the Placement Agent shall not be required to contribute
any amount in excess of the fee received by it, except to the extent that it is
finally judicially determined that the relevant liability resulted from the
gross negligence or willful misconduct of any indemnified party, and no person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.  For purposes of this
Section 8(d), any person who controls a party to this Agreement within the
meaning of the Act or the Exchange Act will have the same rights to contribution
as that party, and each officer of the Company who signed the Registration
Statement will have the same rights to contribution as the Company, subject in
each case to the provisions hereof.  Any party entitled to
contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 8(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 8(d).  No party will be liable
for contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      9.  Termination.

      

      (a)  The
obligations of the Placement Agent under this Agreement may be terminated at any
time prior to the Closing Date, by notice to the Company from the Placement
Agent, without liability on the part of the Placement Agent to the Company if,
prior to delivery and payment for the Offered Securities, in the sole judgment
of the Placement Agent: (i) trading in the Common Stock shall have been
suspended by the Commission or by the OTC Bulletin Board; (ii) trading in
securities generally on the OTC Bulletin Board shall have been suspended or
limited or minimum or maximum prices shall have been generally established on
any of such exchange or additional material governmental restrictions, not in
force on the date of this Agreement, shall have been imposed upon trading in
securities generally by any of such exchange or by order of the Commission or
any court or other governmental authority; (iii) a general banking moratorium
shall have been declared by Federal or New York State authorities; or (iv) any
material adverse change in the financial or securities markets in the United
States or any outbreak or material escalation of hostilities or declaration by
the United States of a national emergency or war or other calamity or crisis
shall have occurred, the effect of any of which is such as to make it, in the
sole judgment of the Placement Agent, impracticable or inadvisable to market the
Offered Securities on the terms and in the manner contemplated by the
Prospectus.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      (b)  If
this Agreement shall expire or be terminated pursuant to any of the provisions
hereof, or if the sale of the Offered Securities provided for herein is not
consummated because any condition to the obligations of the Placement Agent set
forth herein is not satisfied or because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or comply with any
provision hereof, the Company will, subject to demand by the Placement Agent,
reimburse the Placement Agent for all out-of-pocket expenses incurred in
connection herewith in an aggregate amount not to exceed $200,000.

      

      10.  No Fiduciary
Duty.  The Company acknowledges and agrees that in connection
with this offering, sale of the Offered Securities or any other services the
Placement Agent may be deemed to be providing hereunder, notwithstanding any
preexisting relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the Placement
Agent: (i) no fiduciary or agency relationship between the Company and any other
person, on the one hand, and the Placement Agent, on the other, exists; (ii) the
Placement Agent is not acting as an advisor, expert or otherwise, to the
Company, including, without limitation, with respect to the determination of the
offering price of the Offered Securities, and such relationship between the
Company, on the one hand, and the Placement Agent, on the other, is entirely and
solely commercial, based on arms-length negotiations; (iii) any duties and
obligations that the Placement Agent may have to the Company shall be limited to
those duties and obligations specifically stated herein; and (iv) the Placement
Agent and its respective affiliates may have interests that differ from those of
the Company.  The Company hereby waives any claims that the Company
may have against the Placement Agent with respect to any breach of fiduciary
duty in connection with this offering.

      

      11.  Notices.  Notice
given pursuant to any of the provisions of this Agreement shall be in writing
and, unless otherwise specified, shall be mailed or delivered (a) if to the
Company, at the office of the Company, 363 N. Sam Houston Parkway E., Suite 380,
Houston, TX 77060 Attention: Bruce N. Huff, Chief Financial Officer, with copies
to Weycer, Kaplan, Pulaski & Zuber, P.C., Eleven Greenway Plaza, Houston,
Texas 77046, facsimile: (713) 961-5341, Attention: Robert C. Beasley, Esq., or
(b) if to the Placement Agent, 125 West 55th Street New York, NY 10019,
facsimile: (212) 231-1718, Attention: Macquarie Capital Advisors Legal
Department, with copies to Morrison & Foerster, LLP, 1290 Avenue of the
Americas, New York, NY 10104-0050, Attention: James R. Tanenbaum, Esq.,
facsimile: (212) 468-7900.  Any such notice shall be effective only
upon receipt.  Any notice under Section 8 may be made by facsimile or
telephone, but if so made shall be subsequently confirmed in
writing.

      

      12.  Survival.  The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Company and the Placement Agent set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of: (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, the Placement Agent or any controlling person referred to in Section
8 hereof and (ii) delivery of and payment for the Offered
Securities.  The respective agreements, covenants, indemnities and
other statements set forth in Sections 6 and 8 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this
Agreement.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      13.  Successors.  This
Agreement shall inure to the benefit of and shall be binding upon the Placement
Agent, the Company and their respective successors and legal representatives,
and nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnification and contribution contained
in Sections 8(a) and (d) of this Agreement shall also be for the benefit of the
directors, officers, employees and agents of the Placement Agent and any person
or persons who control the Placement Agent within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act and (ii) the indemnification and
contribution contained in Sections 8(b) and (d) of this Agreement shall also be
for the benefit of the directors of the Company, the officers of the Company who
have signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act.  No Investor shall be deemed a successor because of such
purchase.

      

      14.  Applicable
Law.  The validity and interpretations of this Agreement, and
the terms and conditions set forth herein, shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
provisions relating to conflicts of laws.

      

      15.  Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

      

      16.  Entire
Agreement.  This Agreement constitutes the entire understanding
between the parties hereto as to the matters covered hereby and supersedes all
prior understandings, written or oral, relating to such subject
matter.

      

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      Please
confirm that the foregoing correctly sets forth the agreement between the
Company and the Placement Agent.

       

      
        	 
      	
                Very
      truly yours,

              
	 	 
	 
      	
                FAR
      EAST ENERGY CORPORATION

              
	 	 
	 	 
	 
      	
                By:
      /s/ Bruce N. Huff

                Name:
      Bruce N. Huff

                Title:
      Chief Financial Officer

              

      

      

       

      Confirmed
as of the date first

      above
mentioned:

       

      
        	
                MACQUARIE
      CAPITAL (USA) INC.

              	 
      
	 	 
	
                By:
      /s/ Sean Fitzgerald

                Name:
      Sean Fitzgerald

                Title: Managing
      Director

              	 
	 	 
	
                By:
      /s/ Michael G. Meyers

                Name:
      Michael G. Meyers

                Title:
      Managing Director

              	 
      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      SCHEDULE
1

      

      SUBSIDIARIES

       

      
        	
                Name

              	
                Jurisdiction
      or State of Incorporation

              
	 	 
	
                Far
      East Energy (Bermuda), Ltd.

              	
                Bermuda

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
2

      

      LOCK UP
AGREEMENTS

      

      Donald A.
Juckett

      Michael
R. McElwrath

      William
A. Anderson

      C. P.
Chiang

      John C.
Mihm

      Lucian L.
Morrison

      Thomas E.
Williams

      Bruce N.
Huff

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
3

      

      ISSUER
FREE WRITING PROSPECTUSES

      

      

      

      Issuer
Free Writing Prospectus dated August 20, 2010

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      SCHEDULE
4

      

      TERM
SHEET INFORMATION

       

      
        	
                Issuer:

                 

              	
                Far
      East Energy Corporation

              
	
                Security:

                 

              	
                105,515,300 shares
      of common stock, par value $0.001 per share ("Common
    Stock")

              
	
                Public
      Offering Price:

                 

              	
                $0.33
      per share

              
	
                Estimated
      Net Proceeds to the Issuer:

                 

              	
                Approximately
      $32,843,598 million, after deducting placement agent fees and
      commissions but before deducting estimated offering expenses
      payable by us

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      EXHIBIT
A

      

      FORM OF
LOCK-UP AGREEMENT (OFFICERS AND DIRECTORS)

      

      [l], 2010

      

      

      Macquarie
Capital (USA) Inc.

      125 West
55th Street

      New York,
NY 10019

      

      Ladies
and Gentlemen:

      

      The
undersigned understands that you, as Placement Agent, propose to enter into a
Placement Agency Agreement (the “Placement Agency Agreement”) with Far East
Energy Corporation, a Nevada corporation (the
“Company”), providing for an offering (the “Offering”) of shares of the
Company’s Common Stock.  Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Placement Agency
Agreement.

      

      In
consideration of the foregoing, and in order to induce you to act as Placement
Agent in the Offering, and for other good and valuable consideration receipt of
which is hereby acknowledged, the undersigned hereby agrees that, without the
prior written consent of the Placement Agent, the undersigned will not, during
the period beginning on the date hereof and ending on the date that is 90 days after the date of
the final prospectus supplement relating to the Offering, (1) offer for sale,
pledge, announce the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of the Company’s capital stock (the “Company
Securities”) or any securities convertible into or exercisable or exchangeable
for Company Securities (including without limitation, Company Securities which
may be deemed to be beneficially owned by the undersigned in accordance with the
rules and regulations of the Securities and Exchange Commission and securities
which may be issued upon exercise of a stock option or warrant), or (2) enter
into any swap or other agreement that transfers to another, in whole or in part,
any of the economic consequences of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Company Securities or other securities, in cash or
otherwise.

      

      Notwithstanding
the foregoing, the restrictions set forth in clause (1) and (2) above shall not
apply to (a) transfers (i) as a bona fide gift or gifts to
any charitable organization, (ii) as a bona fide gift or gifts to
any other entity or person, provided that the donee or donees thereof agree to
be bound in writing by the restrictions set forth herein, (iii) to any trust for
the direct or indirect benefit of the undersigned or the immediate family of the
undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value, or (iv) with the prior
written consent of the Placement Agent, or (b) the acquisition or exercise of
any stock option or any restricted stock award issued pursuant to the Company’s
existing stock option plans or equity incentive plans, including any exercise
effected by the delivery or sale of shares of Company Securities held by the
undersigned.  Notwithstanding the foregoing, nothing contained in this
letter agreement shall prohibit the undersigned from establishing a trading plan
pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended;
provided, that
the undersigned shall not engage in any transaction under such trading plan
until the termination of the restrictions imposed by this letter
agreement.  For purposes of this letter agreement, “immediate family”
shall mean any relationship by blood, marriage or adoption, not more remote than
first cousin.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Notwithstanding
the above, to the extent you are at such time providing research coverage to the
Company and subject to the restrictions set forth in FINRA Rule 2711(f)(4),
then, if (1) during the last 17 days of the lock-up period, (A) the Company
issues an earnings release or (B) material news or a material event relating to
the Company occurs; or (2) prior to the expiration of the lock-up period, the
Company announces that it will release earnings results during the 16-day period
following the last day of the lock-up period, then the restrictions imposed by
this letter agreement shall continue to apply until the expiration of the 18-day
period beginning on the date of the release of the earnings results or the
occurrence of material news or a material event relating to the Company, as the
case may be, unless the Placement Agent waives, in writing, such
extension.

      

      In
furtherance of the foregoing, the Company, and any duly appointed transfer agent
for the registration or transfer of the securities described herein, are hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this letter agreement.

      

      The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this letter agreement.  All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.

      

      The
undersigned understands that, if the Offering does not occur or is terminated
prior to payment for and delivery of the shares of Common Stock to be sold
thereunder, the undersigned shall be released from all obligations under this
letter agreement.  In addition, this letter agreement shall terminate
if the offering has not closed on or before September 15, 2010.

      

      This
lock-up agreement shall be governed by and construed in accordance with the laws
of the State of New York, without regard to the conflict of laws principles that
would apply any other law.

      

       (Signature
page follows.)

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

      

       

      
        	 	Very
      truly yours,
	 	 	 
	 
      	
                [NAME
      OF OFFICER OR DIRECTOR]

                 

              
	 
      	
                By:  
      

              	 
      
	 
      	 
      	
                Name:  
      

              	 
      
	 
      	 
      	
                Title:

              	 
      

      

          

      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
B

      

      FORM OF
COMPANY LOCK-UP AGREEMENT

      

      [l], 2010

      

      Macquarie
Capital (USA) Inc.

      125 West
55th Street

      New York,
NY 10019

      

      Ladies
and Gentlemen:

      

      Reference
is made to the Placement Agency Agreement (the “Placement Agency Agreement”),
which will be executed by and between Far East Energy Corporation, a Nevada
corporation (the “Company”), and Macquarie Capital Advisors (the “Placement
Agent”).  Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Placement Agency
Agreement.

      

      In
consideration of the Placement Agency Agreement, the undersigned hereby agrees
not to, without the prior written consent of the Placement Agent, offer, sell or
otherwise dispose of any shares, directly or indirectly, of the Company’s Common
Stock, par value $0.001 per share (the “Common Stock”) or any other security of
the Company, during the period beginning on the date hereof and ending on the
date which is 90 days after the date of the final prospectus supplement relating
to the Offering, except with respect to the issuance of shares of Common Stock
upon the exercise of currently outstanding warrants, stock options or other
equity incentive awards currently outstanding under any employee benefit or
purchase plans described or incorporated by reference in the Registration
Statement or Prospectus. Notwithstanding the foregoing, the restrictions set
forth in this letter agreement shall not apply to: (i) securities required to be
issued pursuant to contractual obligations of the Company in effect as of the
date of this letter agreement and disclosed to the Placement Agent or its
counsel prior to the Closing; (ii) securities issued on a pro rata basis to all
holders of a class of outstanding equity securities of the Company; and
(iii) equity securities issued pursuant to employee benefit or purchase plans
described or incorporated by reference in the Registration Statement, the
Preliminary Prospectus or the Prospectus.

      

      Notwithstanding
the above, to the extent you are at such time providing research coverage to the
Company and subject to the restrictions set forth in FINRA Rule 2711(f)(4), if
(1) during the last 17 days of the lock-up period, (A) the Company issues an
earnings release or (B) material news or a material event relating to the
Company occurs; or (2) prior to the expiration of the lock-up period, the
Company announces that it will release earnings results during the 16-day period
following the last day of the lock-up period, then the restrictions imposed by
this letter agreement shall continue to apply until the expiration of the 18-day
period beginning on the date of the release of the earnings results or the
occurrence of material news or a material event relating to the Company, as the
case may be, unless the Placement Agent waives in writing, such
extension.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      It is
understood that, if the Company at any time does not intend to proceed with the
issuance and sale of shares of Common Stock to be sold in the Offering (the
“Securities”)  pursuant to the Placement Agency Agreement, if the
Placement Agency Agreement does not become effective, or if the Placement Agency
Agreement (other than the provisions thereof which survive termination) shall
expire, terminate or be terminated prior to payment for and delivery of the
Securities, the undersigned will be released from its obligations under this
letter agreement.

       

      

      
        	 
      	
                Very
      truly yours,

              
	 	 	 
	 
      	
                Far
      East Energy Corporation

              
	 	 	 
	 	 	 
	 
      	
                By:

              	 
      
	 
      	
                Name: 
      

              	 
      
	 
      	
                Title:

              	 
      

      

      

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
C-1

      

      MATTERS
TO BE COVERED IN THE COMPANY COUNSEL LEGAL OPINION FROM WEYCER, KAPLAN, PULASKI
& ZUBER, P.C.

      

      1.  The
Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of the State of Texas.

      

      2.  To
our knowledge, the statements in the Prospectus under the
heading  “Description of Securities We are Offering” in the
Registration Statement, insofar as such statements purport to summarize legal
matters, agreements or documents discussed therein, fairly present, to the
extent required by the Act and the rules thereunder, in all material respects,
such legal matters, agreements or documents.

      

      3.  There
is (i) no action, suit or proceeding by or before any court or other
governmental agency, authority or body or any arbitrator in United States
federal court or the courts of the State of Texas, and to our knowledge, in any
foreign jurisdiction, pending or to our knowledge threatened against the Company
or its properties by a third party of a character required to be disclosed in
the Prospectus that is not disclosed in the Prospectus, and (ii) no indenture,
contract, lease, mortgage, deed of trust, note agreement, loan, franchises or
other agreement or instrument of a character required to be filed as an exhibit
to the Registration Statement, which is not filed as required by the Act and the
rules and regulations thereunder.

      

      4.  The
Registration Statement has become effective under the Act; no stop order
suspending the effectiveness of the Registration Statement has been issued under
the Act and to our knowledge no proceedings for such purpose have been
instituted or are pending or threatened by the Commission.  Any
required filing of the Prospectus and any supplement thereto, pursuant to Rule
424(b) under the Act, has been made in the manner and within the time period
required by such Rule 424(b).

      

      5.  Except
as set forth in or otherwise contemplated by the Registration Statement, the
Pricing Disclosure Materials or the Prospectus, to our knowledge, no person has
the right to require the Company or any of its Subsidiaries to register any
securities for sale under the Act by reason of the filing of the Registration
Statement with the Commission or by reason of the issuance and sale of the
Offered Securities, except for rights which have been waived.

      

      6.  The
Registration Statement, the Pricing Disclosure Materials and the Prospectus,
including each of the documents incorporated by reference therein, and each
amendment or supplement to the Registration Statement, the Pricing Disclosure
Materials and the Prospectus, as the case may be, including the documents
incorporated by reference therein, as of their respective effective or issue
dates, or as of the dates they were filed with the Commission, as the case may
be (other than the financial statements and supporting schedules included
therein or omitted therefrom, as to which such counsel expresses no opinion),
complied as to form in all material respects with the requirements of the Act
and the Rules and Regulations and the Exchange Act.  We express no
opinion regarding documents of the Company that were furnished to the
Commission.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      7.  To
our knowledge, there is not pending or threatened in writing any action, suit,
proceeding, inquiry or investigation, to which the Company or any of its
Subsidiaries are parties, or to which the property of the Company or its
Subsidiaries are subject, before or brought by any court or governmental agency
or body, domestic or foreign, that is required to be disclosed in the Prospectus
and is not adequately disclosed therein.

      

      8.  No
consent, approval, authorization or filing with or order of any U.S. Federal or
state court or governmental agency or body in the United States having
jurisdiction over the Company is required for the execution and delivery of the
Placement Agency Agreement by the Company or the issuance and sale of the
Securities pursuant thereto, except such as have been obtained under the Act and
except such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Offered Securities by the
Placement Agent in the manner contemplated in the Placement Agency Agreement and
in the Prospectus, or under the bylaws, rules and regulations of
FINRA.

      

      9.  The
Company is not, nor will be upon completion of the offering, an “investment
company” or an entity “controlled” by an “investment company,” as such terms are
defined in the Investment Company Act of 1940, as amended.

      

      In
addition, we have participated in conferences with representatives of the
Placement Agent and with representatives of the Company and its accountants
concerning the Registration Statement, the Prospectus and the Pricing Disclosure
Materials and have considered the matters required to be stated therein and the
statements contained therein, although we have not independently verified the
accuracy, completeness or fairness of such statements.  Based upon and
subject to the foregoing, and relying as to materiality in part upon the factual
statements of officers and other representatives of the Company, we advise you
that no facts have come to our attention that lead us to believe that (i) the
Registration Statement, at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
the Prospectus, at the time it was filed with the Commission pursuant to Rule
424(b) under the Act or as of the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; or (iii)
the documents and information comprising the Pricing Disclosure Materials, taken
as a whole as of the Applicable Time, contained an untrue statement of material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that we have not been requested to and
do not make any comment in this paragraph with respect to the financial
statements, supporting schedules, footnotes, oil and gas reserve data, and other
financial or accounting data and information contained in the Registration
Statement, the Prospectus or the Pricing Disclosure Materials).

      

      
        
          
          

        

        
          C-2

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
C-2

      

      MATTERS
TO BE COVERED IN THE COMPANY COUNSEL LEGAL OPINION FROM COPPEDGE EMMEL &
KLEGERMAN PC

      

      1.  The
Company is validly existing as a corporation in good standing under the laws of
the State of Nevada.

      

      2.  The
Company has the corporate power and authority to enter into and perform its
obligations under the Placement Agency Agreement.

      

      3.  The
execution, delivery, and performance of the Placement Agency Agreement have been
duly authorized by all necessary corporate action on the part of the
Company.

      

      4.  The
Offered Shares have been duly authorized and when issued and delivered against
payment of the consideration therefor in accordance with the Placement Agency
Agreement and the Prospectus will be validly issued, fully paid and
nonassessable.

      

      5.  No
stockholder of the Company is entitled to preemptive rights, arising under
chapter 78 of the Nevada Revised Statutes (“Private Corporations”) or the
Company’s articles of incorporation or bylaws, to subscribe for the Offered
Shares.

      

      6.  No
consent, approval, authorization or filing with or order of any State of Nevada
governmental agency or body having jurisdiction over the Company is required for
the execution and delivery of the Placement Agency Agreement by the Company or
the issuance and sale of the Offered Shares pursuant thereto.

      

      7.  The
execution, delivery and performance of the Placement Agency Agreement and the
consummation of the transactions contemplated therein (including the issuance
and sale of the Offered Shares to the Investors) and compliance by the Company
with its obligations under the Agreement will not result in a breach or
violation of the Company’s articles of incorporation or bylaws or in any
material violation of any applicable law, statute, rule, or regulation of the
State of Nevada.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
C-3

      

      MATTERS
TO BE COVERED IN THE COMPANY COUNSEL LEGAL OPINION FROM BERMUDA
COUNSEL

      

      1.  The
Company is duly incorporated and existing under the laws of Bermuda in good
standing (meaning solely that it has not failed to make any filing with any
Bermuda governmental authority or to pay any Bermuda government fee or tax which
would make it liable to be struck off the Register of Companies and thereby
cease to exist under the laws of Bermuda).

      

      2.  The
Company has the necessary corporate power to own or lease, as the case may be,
and operate its properties and conduct its business as described under the
heading "Overview" in the Registration Statement, and as described under the
heading “Our Business” in the Final Prospectus.Unassociated Document

    
      Exhibit
10.1

       

       

    

    

    DATED:    June
23, 2010

    

    山东中文实业集团有限公司

    (SHANDONG
ZHONGWEN INDUSTRIAL GROUP COMPANY LIMITED)

    

    and

    

    香港中文博国际集团有限公司

    (HONGKONG
ZHONGWENBO INTERNATIONAL GROUP COMPANY LIMITED)

    

    
      
        

      

       

    

    SALES
AGENCY AGREEMENT

     

    
      

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

       

    
      THIS AGREEMENT is made on the
23rd day of June,  2010.

    

    

    BETWEEN

    

    
      	
              (1)

            	
              山东中文实业集团有限公司 (SHANDONG ZHONGWEN INDUSTRIAL
      GROUP COMPANY LIMITED), a limited liability company established and
      existing under the laws of the People’s Republic of China (the “PRC”) and whose address
      is at Damu Village, Miaozi Town, Qingzhou City, Shandong Province, PRC
      (中華人民共和國山东省青州市庙子镇大牟村);
      and

            

    

    

    
      	
              (2)

            	
              香港中文博国际集团有限公司(HONGKONG ZHONGWENBO
      INTERNATIONAL GROUP COMPANY LIMITED), a company incorporated and
      existing under the laws of Hong Kong and whose registered office is at 4/F
      & 5/F, Central Tower, No.28 Queen’s Road Central, Hong Kong (the
      “Agent”).

            

    

    

    WHEREAS
:

    

    
      	
              (A)

            	
              The
      Principal manufactures and sells the Products (as defined
      below).

            

    

    

    
      	
              (B)

            	
              The
      Agent wishes to be appointed as the Principal’s agent in the Territory for
      the sale of the Products (as defined
below).

            

    

    

    NOW IT IS HEREBY AGREED as
follows :

    

    
      
        	
                1.

              	
                INTERPRETATION

              

      

    

    

    
      	
              1.1

            	
              In
      this Agreement, unless the context otherwise
  requires:

            

    

     

    
      
        	
              	
                “Force
      Majeure”

              	
                means
      in relation to either party, any circumstances beyond the reasonable
      control of that party (including, without limitation, any strike, lock-out
      or other form of industrial
action).

              

      

      

      
        	
              	
                “Intellectual
      Property”

              	
                means
      any patent, copyright, registered design, trade mark or other industrial
      or intellectual property right subsisting in the Territory in respect of
      the Product, and applications for any of the
  foregoing.

              

      

      

      
        	
              	
                “Net Sales
      Value”

              	
                means
      in relation to any Products, the price actually charged to the customer
      therefor (less any value added or other sales tax thereon included in the
      price).

              

      

      

      
        	
              	
                “Products”

              	
                means
      products as are manufactured by or for the Principal and are from time to
      time notified in writing by the Principal to the Agent, as more
      particularly set out in the List of Products in the Schedule.

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
              	
                “Restricted
      Information”

              	
                means
      any information which is disclosed to the Agent by the Principal pursuant
      to or in connection with this Agreement (whether orally or in writing, and
      whether or not such information is expressly stated to be confidential or
      marked as such).

              

      

      

      
        	
              	
                “Territory”

              	
                means
      any productions other than Brazil and the PRC (excluding the Special
      Administration Regions of Hong Kong and Macau and the territory of
      Taiwan).

              

      

    

     

    
      	
              1.2

            	
              The
      headings of this Agreement are inserted for convenience only and shall be
      ignored in construing this Agreement.  Unless the context
      otherwise requires, references in this Agreement to the singular shall be
      deemed to include references to the plural and vice versa; references to
      one gender shall include all genders and references to any person shall
      include an individual, firm, body corporate or
    unincorporate.

            

    

    

    
      	
              1.3

            	
              References
      to any statute or statutory provision shall include any statute or
      statutory provision which amends or replaces or has amended or replaced it
      and shall include any subordinate legislation made under the relevant
      statute.

            

    

    

    
      	
              1.4

            	
              References
      in this Agreement to clauses, schedules and exhibit are references to,
      clauses of and schedules and exhibit to, this Agreement and references to
      sub-clauses and paragraphs are unless otherwise stated, references to
      sub-clauses and paragraphs of the clause, sub-clause or, as appropriate,
      the schedule in which the reference
appears.

            

    

    

    
      
        	
                2.

              	
                APPOINTMENT OF
      AGENT

              

      

    

    

    
      	
              2.1

            	
              The
      Principal hereby appoints the Agent as its agent for the sale of the
      Products in the Territory, and the Agent hereby agrees to act in that
      capacity, subject to the terms and conditions of this
      Agreement.

            

    

    

    
      	
              2.2

            	
              The
      Principal shall not, during the continuance of this Agreement, appoint any
      other person, firm or company as the Principal’s agent or distributor for
      the sale of the Products in the
Territory.

            

    

    

    
      	
              2.3

            	
              The
      Agent shall not solicit or accept any orders for the
      Products:-

            

    

    

    
      	
               
      

            	
              (i)

            	
              from
      any person in the Territory if the Agent knows or has reason to believe
      that the Products concerned will be resold outside the Territory;
      or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              from
      any person outside the
Territory.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
      	
              2.4

            	
              Subject
      to the prior consent of the Agent either generally or in relation to any
      specific transaction, the Agent shall guarantee to the Principal the due
      performance by any customer or customers of contracts that they have
      entered into with the Principal as a result of the Agent’s activities
      under this Agreement. Such guarantee shall be by way of separate agreement
      in writing between the Principal and the Agent in a form to be agreed but
      which shall in any event provide that the Agent is not to be liable
      thereunder in the event of a refusal to perform by the customer or
      customers which is caused by any default of the
  Principal.

            

    

    

    
      
        	
                3.

              	
                THE AGENT’S
      DUTIES

              

      

    

    

    
      	
              3.1

            	
              The
      Agent shall, at all times during the continuance of this Agreement
      :

            

    

    

    
      	
               
      

            	
              (i)

            	
              act
      in the interests of the Principal and not allow its interests to conflict
      with the duties that it owes to the Principal;
  and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              act
      towards the Principal dutifully and in good
  faith.

            

    

    

    
      	
              3.2

            	
              The
      Agent shall use its best endeavours to promote and market the Products to
      customers and prospective customers in the Territory and, subject to the
      provisions of clause 4.1,
      shall be entitled without prior reference to the Principal to enter into
      contracts for the sale of the Products in the name and on behalf of the
      Principal.

            

    

    

    
      	
              3.3

            	
              The
      Agent shall conduct the promotion and marketing of the Products in the
      Territory with all due care and diligence and shall cultivate and maintain
      good relations with customers and potential customers in the Territory in
      accordance with sound commercial
principles.

            

    

    

    
      	
              3.4

            	
              Subject
      as provided in this Agreement and to any directions which the Principal
      may from time to time properly give, the Agent shall be entitled to
      perform its duties hereunder in such manner as it may think
      fit.

            

    

    

    
      	
              3.5

            	
              The
      Agent shall in all dealings concerning the Products describe itself as
      “Sales Agent” for the Principal.

            

    

    

    
      	
              3.6

            	
              The
      Agent shall be responsible for obtaining all licences, permits and
      approvals which are necessary or advisable for the sale of the Products in
      the Territory and for the performance of its duties
    hereunder.

            

    

    

    
      	
              3.7

            	
              The
      Agent shall comply with all applicable laws and regulations relating to
      the sale of the Products in the Territory (other than those relating to
      the nature, method of manufacture, packaging or labeling of the Products)
      and shall notify the Principal of any changes in the laws and regulations
      in the Territory relating to the nature, method of manufacture, packaging
      or labeling of the Products.

            

    

    

    
      	
              3.8

            	
              The
      Agent shall maintain a list of customers and potential customers for the
      Products in the Territory and shall at the request of the Principal supply
      it with a copy of that list.

            

    

    

    
      	
              3.9

            	
              The
      Agent shall from time to time keep the Principal fully informed of the
      Agent’s promotional and marketing activities in respect of the
      Products.

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
      	
              3.10

            	
              The
      Agent shall keep the Principal informed of conditions in the market for
      the Products in the Territory.

            

    

    

    
      	
              3.11

            	
              The
      Agent shall promptly inform the Principal of
:

            

    

    

    
      	
               
      

            	
              (i)

            	
              any
      complaint or after-sales enquiry concerning the Products which is received
      by the Agent; and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              any
      matters likely to be relevant in relation to the manufacture, sale, use or
      development of the Products within or outside the
    Territory.

            

    

    

    
      	
              3.12

            	
              The
      Agent shall not :

            

    

    

    
      	
               
      

            	
              (i)

            	
              pledge
      the credit of the Principal in any
way;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              make
      any modifications to the Products or their packaging or (without prejudice
      to the generality of the foregoing) alter, remove or tamper with the trade
      names, trade marks, or other means of identification on the
      Products;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              use
      any advertising, promotional or selling materials in relation to the
      Products except those supplied or approved by the
    principal;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              engage
      in any conduct which in the opinion of the Principal is prejudicial to the
      Principal’s business or the marketing of the Products generally;
      or

            

    

    

    
      	
               
      

            	
              (v)

            	
              be
      concerned or interested either directly or indirectly in the manufacture,
      sale, promotion, marketing or importation into the Territory of any goods
      which compete with the Products.

            

    

    

    
      
        	
                4.

              	
                SALES AND STOCKS OF
      THE PRODUCTS

              

      

    

    

    
      	
              4.1

            	
              All
      sales of the Products by the Agent on behalf of the Principal shall be
      made on such terms and conditions as the Principal may from time to time
      specify in writing to the Agent, and accordingly
  :

            

    

    

    
      	
               
      

            	
              (i)

            	
              the
      Agent shall, in the course of dealing with all customers and prospective
      customers for the Products in the Territory, bring to their notice such
      terms and conditions; and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      Agent shall not make or give any promises, warranties, guarantees or
      representations concerning the Products other than those contained in
      those terms and conditions of sale.

            

    

    

    
      	
              4.2

            	
              All
      sales of the Products by the Agent on behalf of the Principal shall be at
      the price specified in the price lists which shall from time to time be
      supplied to the Agent for the purpose by the Principal, subject to such
      discounts and other deductions as the Principal may
  allow.

            

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
      	
              4.3

            	
              Title
      to the Products shall at no time pass to the Agent, and the Agent shall
      ensure that all Products are separately stored on its premises and marked
      as being the property of the
Principal.

            

    

    

    
      
        	
                5.

              	
                INTELLECTUAL
      PROPERTY

              

      

    

    

    
      	
              5.1

            	
              The
      Agent shall promptly and fully notify the Principal of any actual,
      threatened or suspected infringement in the Territory of any Intellectual
      Property of the Principal which comes to the Agent’s notice, and of any
      claim by any third party so coming to its notice that the importation of
      the Products into the Territory, or their sale therein, infringes any
      rights of any other person, and the Agent shall at the request and expense
      of the Principal do all such things as may be reasonably required to
      assist the Principal in taking or resisting any proceedings in relation to
      any such infringement or claim.

            

    

    

    
      	
              5.2

            	
              Nothing
      in this Agreement shall give the Agent any rights in respect of any trade
      names or trade marks used by the Principal in relation to the Products or
      of the goodwill associated therewith, and the Agent hereby acknowledges
      that, except as expressly provided in this Agreement, it shall not acquire
      any rights in respect thereof and that all such rights and goodwill are,
      and shall remain, vested in the
Principal.

            

    

    

    
      	
              5.3

            	
              The
      Agent shall not use in the Territory any trade marks or trade names so
      resembling the trade marks or trade names of the Principal as to be likely
      to cause confusion or deception.

            

    

    

    
      	
              5.4

            	
              The
      Agent shall, at the expense of the Principal, take all such steps as the
      Principal may reasonably require to assist the Principal in maintaining
      the validity and enforceability of the Intellectual Property of the
      Principal during the continuance of this
  Agreement.

            

    

    

    
      	
              5.5

            	
              Without
      prejudice to the right of the Agent or any third party to challenge the
      validity of any Intellectual Property of the Principal, the Agent shall
      not do or authorize any third party to do any act which would or might
      invalidate or be inconsistent with the Intellectual Property of the
      Principal and shall not omit or authorize any third party to omit to do
      any act which, by its omission, would have that effect or
      character.

            

    

    

    
      
        	
                6.

              	
                RIGHTS AND DUTIES OF
      THE PRINCIPAL

              

      

    

    

    
      	
              6.1

            	
              The
      Principal shall at all times during the continuance of this Agreement act
      towards the Agent dutifully and in good
faith.

            

    

    

    
      	
              6.2

            	
              The
      Principal shall be entitled from time to time to extend the range of the
      Products, or discontinue any of the
same.

            

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      	
              6.3

            	
              The
      Principal shall :

            

    

    

    
      	
               
      

            	
              (i)

            	
              supply
      to the Agent any information which may come into its possession which may
      assist the Agent to effect sales pursuant to this
    Agreement;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              honour
      any contracts for the sale of the Products entered into by the Agent on
      behalf of the Principal pursuant to this
  Agreement;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              promptly
      and efficiently deal with any after sales enquiry relating to the Products
      raised by a customer in the Territory;
and

            

    

    

    
      	
               
      

            	
              (iv)

            	
              comply
      with all the applicable laws and regulations relating to the nature,
      method of manufacture, packaging and labeling of the
    Products.

            

    

    

    
      	
              6.4

            	
              Subject
      to compliance by the Agent with its obligations under this Agreement, the
      Principal shall indemnify the Agent against any liability (including,
      without prejudice to the generality of the foregoing, all costs and
      expenses which the Agent may reasonably incur in defending any
      proceedings) which it may incur by reason only of its being held out as
      the Principal’s agent.

            

    

    

    
      
        	
                7.

              	
                FINANCIAL
      PROVISIONS

              

      

    

    

    In
consideration of the obligations undertaken by the Agent hereunder, the
Principal shall pay the Agent commission equal to 5 per cent of the Net Sales
Value of all Products for which a contract of sale is made by the Agent on
behalf of the Principal pursuant to this Agreement. All sums payable by the
Principal under this Agreement shall be paid in full without set-off or
counterclaim or any restriction or condition and free and clear of any tax or
other deductions or withholdings of any nature.

    

    
      
        	
                8.

              	
                CONFIDENTIALITY

              

      

    

    

    
      	
              8.1

            	
              Except
      as provided by clauses 8.2 and
      8.3, the
      Agent shall at all times during the continuance of this Agreement and
      after its termination:

            

    

    

    
      	
               
      

            	
              (i)

            	
              use
      its best endeavours to keep all Restricted Information confidential and
      accordingly not to disclose any Restricted Information to any other
      person; and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              not
      use any Restricted Information for any purpose other than the performance
      of its obligation under this
Agreement.

            

    

    

    
      	
              8.2

            	
              Any
      Restricted Information may be disclosed by the Agent to
  :

            

    

    

    
      	
               
      

            	
              (i)

            	
              any
      customers or prospective customers;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              any
      governmental or other authority or regulatory body;
  or

            

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (iii)

            	
              any
      employees of the Agent or of any of the aforementioned
      persons,

            

    

    

    to such
extent only as is necessary for the purposes contemplated by this Agreement,
subject in each case to the Agent using its best endeavours to ensure that the
person in question keeps the same confidential and does not use the same except
for the purposes for which the disclosure is made, or to any person as is
required by law.

    

    
      	
              8.3

            	
              Any
      Restricted Information may be used by the Agent for any purpose, or
      disclosed by the Agent to any other person, to the extent only that
      :

            

    

    

    
      	
               
      

            	
              (i)

            	
              it
      is at the date hereof, or hereafter becomes, public knowledge through no
      fault of the Agent (provided that in doing so the Agent shall not disclose
      any Restricted Information which is not public knowledge);
    or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              if
      can be shown by the Agent, to the reasonable satisfaction of the
      Principal, to have been known to the Agent prior to its being disclosed by
      the Principal to the Agent.

            

    

    

    
      
        	
                9.

              	
                FORCE
      MAJEURE

              

      

    

    

    
      	
              9.1

            	
              If
      either party is affected by Force Majeure it shall forthwith notify the
      other party of the nature and extent
thereof.

            

    

    

    
      	
              9.2

            	
              Neither
      party shall be deemed to be in breach of this Agreement, or otherwise be
      liable to the other, by reason of any delay in performance, or
      non-performance, of any of its obligations hereunder to the extent that
      such delay or non-performance is due to any Force Majeure of which it has
      notified the other party; and the time for performance of that obligation
      shall be extended accordingly.

            

    

    

    
      	
              9.3

            	
              If
      the Force Majeure in question prevails for a continuous period in excess
      of six months, the parties shall enter into bona fide discussions with a
      view to alleviating its effects, or to agreeing upon such alternative
      arrangements as may be fair and
reasonable.

            

    

    

    
      
        	
                10.

              	
                DURATION AND
      TERMINATION

              

      

    

    

    
      	
              10.1

            	
              This
      agreement shall come into force on the date hereof and, subject as
      provided in clauses 10.2
      and 10.3,
      shall continue in force for a period of 2 years and thereafter unless or
      until terminated by either party giving to the other written notice
      expiring at or at any time after the end of that
  period.

            

    

    

    
      	
              10.2

            	
              Either
      party shall be entitled forthwith to terminate this Agreement by giving
      written notice to the other if that other party commits any repudiatory
      breach of any of the provisions of this Agreement and, in the case of a
      breach capable of remedy, fails to remedy the same within 30 days after
      receipt of a written notice giving full particulars of the breach and
      requiring it to be remedied.

            

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
      	
              10.3

            	
              Either
      party shall be entitled to terminate this Agreement by giving written
      notice to the other party if :

            

    

    

    
      	
               
      

            	
              (i)

            	
              the
      other party commits a breach of this Agreement (not being a repudiatory
      breach of this Agreement) and, if the breach is capable of remedy, fails
      to remedy it within 30 days after receipt of a written notice giving full
      particulars of the breach and requiring it to be
  remedied;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      other party makes any voluntary arrangement with its
      creditors;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              the
      other party goes into liquidation (except for the purposes of amalgamation
      or reconstruction and in such manner that the company resulting therefrom
      effectively agrees to be bound by or assume the obligations imposed on
      that other party under this
Agreement);

            

    

    

    
      	
               
      

            	
              (iv)

            	
              anything
      analogous to any of the foregoing under the law of any jurisdiction occurs
      in relation to that other party; or

            

    

    

    
      	
               
      

            	
              (v)

            	
              the
      other party ceases, or threatens to cease, to carry on
      business.

            

    

    

    
      	
              10.4

            	
              For
      the purposes of clause 10.3, a
      breach shall be considered capable of remedy if the party in breach can
      comply with the provision in question in all respects other than as to the
      time of performance (provided that time of performance is not of the
      essence).

            

    

    

    
      	
              10.5

            	
              Any
      waiver by either party of a breach of any provision of this Agreement
      shall not be considered as a waiver of any subsequent breach of the same
      or any other provision thereof.

            

    

    

    
      	
              10.6

            	
              The
      rights to terminate this Agreement given by this clause shall be without
      prejudice to any other right or remedy of either party in respect of the
      breach concerned (if any) or any other
breach.

            

    

    

    
      
        	
                11.

              	
                CONSEQUENCES OF
      TERMINATION

              

      

    

    

    
      	
              11.1

            	
              Upon
      the termination of this Agreement for any reason
  :

            

    

    

    
      	
               
      

            	
              (i)

            	
              the
      Agent shall within 30 days send to the Principal or otherwise dispose of
      in accordance with the directions of the Principal all stocks of the
      Products (other than any for which it has accepted orders from customers
      before the date of termination), samples and any advertising, promotional
      or sales material relating to the Products then in the possession of the
      Agent;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      Agent shall cease to promote, market, advertise or sell the
      Products;

            

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (iii)

            	
              the
      provisions of clause 7 shall
      continue in force in relation to :

            

    

    

    
      	
               
      

            	
              (a)

            	
              all
      sales of the Products before the date of termination;
  and

            

    

    

    
      	
               
      

            	
              (b)

            	
              all
      sales of the Products after the date of termination pursuant to orders
      received on or before that date;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              clause
      8 shall continue in force in accordance with its terms;
  and

            

    

    

    
      	
               
      

            	
              (v)

            	
              subject
      as otherwise provided herein and to any rights or obligations which have
      accrued prior to termination, neither party shall have any further
      obligation to the other under the
Agreement.

            

    

    

    
      	
              11.2

            	
              The
      costs incurred by the Agent in complying with clause 11.1(i)
      shall, where the termination is by the Agent pursuant to clause 10.2, be
      for the account of the Principal and, in any other case, be for the
      account of the Agent.

            

    

    

    
      
        	
                12.

              	
                MISCELLANEOUS

              

      

    

    

    
      	
              12.1

            	
              Subject
      as provided in clause 12.2,
      this Agreement is personal to the Principal and  the Agent,
      which may not without the written consent of the other party, assign,
      mortgage, charge (otherwise than by floating charge) or dispose of any of
      its rights hereunder, or sub-contract or otherwise delegate any of its
      obligations hereunder.

            

    

    

    
      	
              12.2

            	
              The
      Agent shall not without the prior written consent of the Principal employ
      sub-agents, if with such consent it does so, every act or omission of the
      sub-agent shall for the purposes of this Agreement be deemed to be the act
      or omission of the Agent.

            

    

    

    
      	
              12.3

            	
              Nothing
      in this Agreement shall create, or be deemed to create, a partnership or
      the relationship of employer and employee between the
    parties.

            

    

    

    
      	
              12.4

            	
              This
      Agreement contains the entire agreement between the parties with respect
      to the subject matter hereof, supersedes all previous agreements and
      understandings between the parties with respect thereto, and may not be
      modified except by an instrument in writing signed by the duly authorized
      representatives of the parties.

            

    

    

    
      	
              12.5

            	
              Each
      party acknowledges that, in entering into this Agreement, it does not do
      so on the basis of, and does not rely on, any representation, warranty or
      other provision except as expressly provided herein, and all conditions,
      warranties or other terms implied by statute or common law are hereby
      excluded to the fullest extent permitted by
law.

            

    

    

    
      	
              12.6

            	
              If
      any provision of this Agreement is held by any court or other competent
      authority to be void or unenforceable in whole or part, this Agreement
      shall continue to be valid as to the other provisions thereof and the
      remainder of the affected
provision.

            

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    
      
        	
                13.

              	
                NOTICES

              

      

    

    

    
      Any
notice or other communication given or to be given pursuant to this Agreement
shall be in writing sent or delivered to the recipient at the address set out
below or such other address as the addressee may by three (3) business days’
prior written notice specify to the other party:

    

    

    山东中文实业集团有限公司 (Shandong
Zhongwen Industrial Group Company Limited)

    
      
        
          
            
              	
                    	
                      Address:

                    	
                      中華人民共和國山东省青州市庙子镇大牟村

                    

            

          

          (Damu
Village, Miaozi Town, Qingzhou City, Shandong Province, PRC)

          
            
              	
                    	
                      Attention:

                    	
                      Mr.
      Duan Wenbo (段文博)

                    

            

          

          

          香港中文博国际集团有限公司 (Hongkong
Zhongwenbo International Group Company Limited)

          
            
              	
                    	
                      Address:

                    	
                      4/F
      & 5/F, Central Tower, No.28 Queen’s Road Central, Hong
      Kong

                    

            

          

          
            
              	
                    	
                      Attention:

                    	
                      Mr.
      Sun Hongyi (孙洪义)

                    

            

          

            

        

      

    

    
      
        	
                14.

              	
                ARBITRATION

              

      

    

    

    Any
dispute, controversy or claim arising out of or relating to this Agreement shall
be settled by arbitration administered by the Hong Kong International
Arbitration Centre in accordance with the UNCITRAL Arbitration Rules as at
present in force and as may be amended by the provisions of this Section. The
arbitration shall be the sole and exclusive forum for resolution of such
dispute, controversy or claim, and the award rendered shall be final and
binding. Judgment on the award rendered may be entered in any court having
jurisdiction thereof.

    

    
      
        	
                15.

              	
                GOVERNING
      LAW

              

      

    

    

    
      This
Agreement shall be construed and governed in accordance with the laws of the
HKSAR.

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF this
Agreement has been duly executed by the parties hereto on the date first written
above.

    

    
      
        
          
            	
                    SIGNED
      by

                  	
                    )

                  
	 
      	
                    )

                  
	
                    for
      and on behalf of山东中文实业集团

                  	
                    )

                  
	 
      	
                    )

                  
	 
      	
                    )

                  
	
                    有限公司  (Shandong
      Zhongwen

                  	
                    )

                  
	 
      	
                    )

                  
	
                    Industrial
      Group Company Limited)

                  	
                    )

                  
	 
      	
                    )

                  
	
                    in
      the presence of: -

                  	 
      

          

        

      

    

    

    
      
        
          
            	
                    SIGNED
      by

                  	
                    )

                  
	 
      	
                    )

                  
	
                    for
      and on behalf of香港中文博国际集

                  	
                    )

                  
	 
      	
                    )

                  
	 
      	
                    )

                  
	
                    团有限公司
      (Hongkong Zhongwenbo

                  	
                    )

                  
	 
      	
                    )

                  
	
                    International
      Group Company Limited)

                  	
                    )

                  
	 
      	
                    )

                  
	
                    in
      the presence of: -

                  	 
      

          

        

      

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    THE
SCHEDULE

    

    LIST
OF PRODUCTS

    

    
      
        
          	
                  No.

                	 	
                  Name of Products

                	 
      
	
                  1

                	 	
                  QTC63C
      Tower Crane

                	
                  塔式起重机

                
	
                  2

                	 	
                  HZS
      HLS Series Concrete Mixing Station

                	
                  搅拌站

                
	
                  3

                	 	
                  HBT
      80 Concrete Pump

                	
                  混凝土输送泵

                

        

      

    

    

    * The
product description is attached to the Annex 1.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    ANNEX
1

    

    PRODUCT
DESCRIPTION

    
      
         

      

      
        2

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