Document:

Unassociated Document

    EXECUTION
VERSION

    

    
      
        	
                Monarch
      Alternative Capital L.P.

                535
      Madison Ave.

                New
      York, NY 10022

              	
                Whitebox
      Advisors, LLC

                3033
      Excelsior Blvd., Suite 300

                Minneapolis,
      MN 55416

              

      

    

     

    York
Capital Management

    Global
Advisors LLC

    767 Fifth
Ave., 17th
Floor

    New York,
NY 10153

     

    July 20,
2010

     

    $50,000,000 Convertible
Secured Notes

    Purchase
Letter

     

    U.S.
Concrete, Inc.

    2925
Briarpark, Suite 1050

    Houston,
TX 77042

     

    Attention:  Board
of Directors

     

    Ladies
and Gentlemen:

     

    You have
advised Monarch Alternative Capital, L.P. (acting individually or through one or
more of its affiliates) (“Monarch”), Whitebox
Advisors, LLC (acting individually or through one or more of its affiliates)
(“Whitebox”)
and York Capital Management Global Advisors, LLC (“York” and, together
with Monarch and Whitebox, the “Put Option Parties”)
that you expect that U.S. Concrete, Inc. (“US Concrete”) and its
affiliated debtors and debtors-in-possession (collectively, the “Debtors”), each the
subject of a voluntary case under chapter 11 of title 11 of the United States
Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”), in
the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”),
Case No. 10-11407 (the “Cases”), will be
reorganized pursuant to the Joint Plan of Reorganization of U.S.
Concrete., Et Al., Pursuant to Chapter 11 of the Bankruptcy Code dated as
of June 2, 2010 (the “Plan”).  You
have advised the Put Option Parties that the Debtors, as reorganized pursuant to
the Plan (the “Companies” or the
“Reorganized
Company”), are seeking up to $50,000,000 of financing in connection with
the consummation of the Plan.  The offering and issuance of the
Convertible Secured Notes (as defined below) is referred to herein as the “Transaction.”

     

    In
connection with the foregoing, the Put Option Parties are pleased to advise you
of their commitment to purchase $50,000,000 in new Convertible Secured Notes
(the “Convertible
Secured Notes”) (with each Put Option Party committed to purchase
one-third of such amount) on the effective date of the Plan (the “Effective Date”) upon
the exercise of the Companies’ option to sell such Convertible Secured Notes to
the Put Option Parties (the “Put Option”), and
upon the terms and conditions set forth in this purchase letter (this purchase
letter, together with the exhibits and annexes attached hereto and as amended,
restated, modified or otherwise supplemented from time to time in accordance
with the terms hereof, this “Purchase Letter”) and
in the Outline of Proposed Terms and Conditions attached hereto as Exhibit A
(the “Term
Sheet”), with the proceeds thereof to be used to repay in full the
Debtors’ debtor-in-possession
financing (the “DIP Facility”) and
for working capital and general corporate purposes of the Companies and their
subsidiaries.  The Put Option Parties have agreed that other holders
of US Concrete’s 8.375% Senior Subordinated Notes due 2014 (the “Existing Notes”) to
the extent they are Qualified Institutional Buyers (“QIBS”) (as defined in
Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)) or
institutional accredited investors (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) may purchase Convertible Secured Notes according
to their pro rata holdings of the Existing Notes thereby reducing the aggregate
placement of Convertible Secured Notes to the Put Option Parties pursuant to the
Put Option.  Each of the Put Option Parties hereby represents and
warrants that it is a QIB or an institutional accredited
investor.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    In
connection with the Transaction, you agree to use commercially reasonable
efforts to prepare materials, reasonably acceptable to the Put Option Parties,
to the extent reasonably available, regarding the Companies, their subsidiaries
and the Convertible Secured Notes, to be used in connection with the offering of
the Convertible Secured Notes, including an Offering Memorandum Supplement, for
distribution to other holders of the Existing Notes (collectively, with the Term
Sheet, the “Information
Materials”).

     

    US
Concrete hereby represents and covenants that (a) all information, other than
financial information and projections (the “Projections”) and
general economic or specific industry information developed by, and obtained
from, third party sources that has been or will be made available to the Put
Option Parties by US Concrete or any of its representatives, when taken together
as a whole, is and will be, when furnished, correct in all material respects and
does not or will not, when furnished, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which such
statements are made and (b) the Projections that have been prepared in
connection with the Debtors’ Disclosure Statement Relating to the
Joint Plan of Reorganization of U.S. Concrete, Inc., Et Al., Pursuant to Chapter
11 of the Bankruptcy Code dated June 2, 2010 have been prepared in good
faith based upon assumptions that are believed to be reasonable at the time made
and remain accurate in all material respects.

     

    Each Put
Option Party’s commitment and agreements hereunder are subject to the
satisfaction or waiver of the following conditions:

     

    1.    not later
than August 18, 2010, entry of an order by the Bankruptcy Court in the Cases, in
form and substance reasonably satisfactory to the Put Option Parties, (a)
approving this Purchase Letter and (b) otherwise authorizing the Debtors to
execute, perform and incur their obligations under this Purchase Letter,
including the payment of fees and expenses and the provision of indemnities as
set forth herein;

     

    2.    there not
having occurred a dismissal or conversion of any Case to a case under Chapter 7
of the Bankruptcy Code or the appointment of a Chapter 11 trustee in any
Case;

     

    3.    (a) no
provision of the Plan (as filed with the Bankruptcy Court) having been amended,
supplemented or otherwise modified in any respect in a manner materially adverse
to the Put Option Parties without the consent of the Put Option Parties (such
consent not to be unreasonably withheld or delayed) and (b) not later than
August 18, 2010, entry of an order confirming the Plan (the “Confirmation Order”)
by the Bankruptcy Court in the Cases, in form and substance reasonably
satisfactory to the Put Option Parties (it being agreed that the Plan Supplement
to be filed with the Bankruptcy Court shall be reasonably satisfactory to the
Put Option Parties);

     

    4.    the
Confirmation Order having become a final order, in full force and effect without
reversal, modification or stay;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.    evidence, in
form and substance reasonably satisfactory to the Put Option Parties, that
substantially concurrently with the issuance of the Convertible Secured Notes
all obligations under the DIP Facility (other than contingent obligations not
then due and payable) have been repaid in full, all commitments under the DIP
Facility have been terminated and all liens and security interests related to
the DIP Facility have been terminated or released;

     

    6.    except to the
extent disclosed by US Concrete in any filing made by US Concrete with the
Securities and Exchange Commission prior to the date hereof, in the Plan or in
writing to the Put Option Parties on the date hereof, (a) there not occurring or
becoming known to the Put Option Parties any events, developments, conditions or
circumstances (each, an “Event”) that,
individually or in the aggregate, have had or could reasonably be expected to
have a material adverse effect on the business, operations, property, condition
(financial or otherwise) or prospects of US Concrete and its direct and indirect
subsidiaries, taken as a whole (or the Reorganized Debtors and its direct and
indirect subsidiaries, taken as a whole), and (b) no material assets of the
Debtors having been sold or agreed to be sold outside of the ordinary course of
business from and after the date hereof; 

     

    7.    (a) the
Companies and the Put Option Parties having entered into definitive
documentation with respect to the purchase of the Convertible Secured Notes and
related documentation reflecting the terms and conditions set forth herein, in
the Term Sheet and otherwise customary for this type of transaction, including
conditions relating to the collateral and perfection of security interests
thereunder (the “Note
Documentation”) and (b) on the Effective Date (A) there not
being any event or condition which constitutes an event of default, or which
upon notice, lapse of time, or both would constitute an event of default, under
the Note Documentation and (B) the Note Documentation being in full force
and effect;

     

    8.    the payment of the fees
and reimbursement of out-of-pocket costs and expenses as set forth herein, in
the Plan and pursuant to that certain letter, dated as of February 22,
2010, between US Concrete and Paul, Weiss, Rifkind, Wharton & Garrison LLP
(“Paul Weiss”)
regarding payment by US Concrete of fees and expenses to Paul Weiss as counsel
to a group formed by certain holders of the Existing Notes, in accordance with the
terms hereof and thereof;

     

    9.    the Effective
Date and closing of the Transaction having occurred not later than September 27,
2010;

     

    10.          as
of the date of the Offering Memorandum Supplement and the closing of the
Transaction, the Information Materials are, when furnished and taken as a whole,
complete and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained therein, in light of the circumstances under which such
statements are made, not misleading;

     

    11.         
the following shall be true and correct: as of the date hereof, each of the
Company’s filings with the Securities and Exchange Commission since January 1,
2010 (the “SEC
Filings”) is, as of its respective filing date, complete and correct in
all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which such statements are made, not
misleading;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    12.         
substantially concurrently with the issuance of the Secured Notes (a) the
Debtors and the First Lien Revolving Facility lenders having entered into the
definitive documentation for the First Lien Revolving Facility referred to in
the Term Sheet and any related documentation (the “First Lien Revolving
Facility”) and reasonably satisfactory to the Put Option Parties and
(b) all conditions to borrowing under the First Lien Revolving Facility
having been satisfied or waived (provided that if such waiver could reasonably
be expected to be adverse in any material respect to the interests of the Put
Option Parties, the Put Option Parties shall have consented to such waiver) on
or prior to the Effective Date, and (d) on the Effective Date
(A) there not being any event or condition which constitutes an event of
default, or which upon notice, lapse of time, or both would become an event of
default, under the First Lien Revolving Facility and (B) the First Lien
Revolving Facility being in full force and effect;

     

    13.         
the Put Option Parties shall have received such legal opinions, documents and
other instruments as are customary for transactions of this type;
and

     

    14.         
all governmental, shareholder or third party consents, if any, necessary for the
consummation of the Transaction having been obtained.

     

    Those
matters that are not covered by the provisions hereof and of the Term Sheet
shall be consistent with the Term Sheet and shall be subject to the approval and
agreement of the Put Option Parties and the Companies; provided that the Note
Documentation shall not contain (i) any conditions precedent other than the
accuracy of the Specified Representations (as defined below), the conditions
precedent set forth herein and delivery of an officer’s certificate customary
for transactions of this type or (ii) any representation or warranty (other than
the Specified Representations), any affirmative or negative covenant or event of
default, the accuracy, compliance or absence, respectively, of or with which
would be a condition to the availability of the purchase of Convertible Secured
Notes pursuant to the Put Option on the Effective Date.  For purposes
hereof, “Specified Representations” means the representations and warranties of
the Company relating to corporate power and authority, the enforceability of the
definitive documentation, the validity of the securities issued, due
organization, no conflicts, Investment Company Act and, in each case as
they relate to the entering into and performance of the definitive credit
documentation, Federal Reserve margin regulations.

     

    You agree
to reimburse the Put Option Parties (promptly following written demand,
including documentation reasonably supporting such request) for all reasonable
out-of-pocket costs, fees and expenses incurred by or on behalf of the Put
Option Parties in connection with the negotiations, preparation, execution and
delivery of this Purchase Letter, the Term Sheet, the transactions contemplated
in connection therewith, and any and all definitive documentation relating
thereto, including, but not limited to, the reasonable out-of-pocket fees and
expenses of one primary counsel for the Put Option Parties and necessary local
counsel.

     

    You agree
to indemnify and hold harmless the Put Option Parties, each of their affiliates
and each of their and their affiliates’ respective officers, directors,
partners, shareholders, trustees, controlling persons, employees, agents,
advisors, attorneys and representatives (each, an “Indemnified Party”)
from and against any and all claims, damages, losses, liabilities and related
reasonable out-of-pocket costs and expenses (including, without limitation,
reasonable fees and disbursements of one counsel for the Indemnified Parties,
except to the extent an actual conflict exists among them) that may be incurred
by or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or relating to the Transactions, this Purchase
Letter or the transactions contemplated hereby, any use made or proposed to be
made with the proceeds of the Convertible Secured Notes, or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any Indemnified Party is a party thereto, and you shall
reimburse (promptly following written demand, including documentation reasonably
supporting such request) each Indemnified Party on demand for all reasonable
legal and other out-of-pocket expenses incurred by it in connection with
investigating, preparing to defend or defending, or providing evidence in or
preparing to serve or serving as witness with respect to, any lawsuit,
investigation, claim or other proceeding relating to any of the foregoing
(including, without limitation, in connection with the enforcement of the
indemnification obligations set forth herein), irrespective of whether the
transactions contemplated hereby are consummated, except to the extent such
claim, damage, loss, liability, or expense is (i) found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnified Party or any
of its affiliates or its or its affiliates’ respective officers, directors,
partners, shareholders, trustees, controlling persons, employees, agents,
advisors, attorneys or representatives or (ii) solely the result of a dispute
between or among the Indemnified Parties.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    If any
Indemnified Party shall receive an indemnification payment in respect of any
claim, damage, loss, liability or expense pursuant to the preceding paragraph
and such claim, damage, loss, liability or expense is found by a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnified Party or any
of its affiliates or its or its affiliates’ respective officers, directors,
partners, shareholders, trustees, controlling persons, employees, agents,
advisors, attorneys or representatives, then such Indemnified Party shall refund
the amount received by it in respect of such indemnification in excess of that
amount to which it is entitled under the terms of the preceding paragraph. 
In no event, however, shall any Indemnified Party be liable to you or any of
your affiliates on any theory of liability for any special, indirect,
consequential or punitive damages.

     

    You
further agree that, without the prior written consent of the Put Option Parties,
you will not enter into any settlement of any lawsuit, claim or other proceeding
arising out of the Transaction, this Purchase Letter or the transactions
contemplated hereby unless such settlement (i) includes an explicit and
unconditional release from the party bringing such lawsuit, claim or other
proceeding of all Indemnified Parties and (ii) does not include a statement as
to or an admission of fault, culpability, or a failure to act by or on behalf of
any Indemnified Party. No Indemnified Party shall be liable to you or any
of your affiliates for any damages arising from the use by unauthorized persons
of any information made available to the Put Option Parties by you or any of
your representatives through electronic, telecommunications or other information
transmission systems that is intercepted by such persons.

     

    Additionally,
you acknowledge and agree that the Put Option Parties are not advising you as to
any legal, tax, investment, accounting or regulatory matters in any
jurisdiction.  You shall consult with your own advisors concerning such
matters and shall be responsible for making your own independent investigation
and appraisal of the transactions contemplated hereby, and the Put Option
Parties shall have no responsibility or liability to you with respect
thereto.

     

    You
acknowledge that each Put Option Party and its affiliates (the term “Put Option Party” as
used below in this paragraph being understood to include such affiliates) may be
providing debt financing, equity capital or other services (including financial
advisory services) to other companies in respect of which you may have
conflicting interests regarding the transactions described herein (including
without limitation, the Plan) and otherwise.  No Put Option Party will use
confidential information obtained from you, any of your affiliates or any of
your representatives, by virtue of the transactions contemplated hereby or its
other relationships with you in connection with the performance by such Put
Option Party of services for other companies, and no Put Option Party will
furnish any such information to other companies any third party (other than its
affiliates or representatives as necessary in connection with the evaluation of
its investment in connection with the Transaction) or otherwise use such
information other than in connection with the evaluation of its investment in
connection with the Transaction.  You also acknowledge that no Put Option
Party has any obligation to use in connection with the transactions contemplated
hereby, or to furnish to you, confidential information obtained from other
companies. You further acknowledge that each of the Put Option Parties may from
time to time effect transactions, for its own or its affiliates’ account or the
account of customers, and hold positions in loans, securities or options on
loans or securities of the Companies and their affiliates and of other companies
that may be the subject of the transactions contemplated by this Purchase Letter
and the Put Option Parties acknowledge their obligations under the applicable
securities laws with respect to any such activities.  This paragraph shall
survive termination of this Purchase Letter.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Each Put
Option Party may employ the services of its affiliates in providing certain
services hereunder and, in connection with the provision of such services, may
exchange with such affiliates information concerning you and the other companies
that may be the subject of the transactions contemplated by this Purchase
Letter, and, to the extent so employed, such affiliates shall be entitled to the
benefits afforded and the obligations imposed upon such Put Option Party
hereunder.

     

    In
connection with the Put Option Parties’ commitment hereunder pursuant to the Put
Option, the rights and obligations of the Commitment Parties may be assigned, in
whole or in part, by the Commitment Parties to any proposed investor reasonably
acceptable to you; provided, however, no such
assignment shall release the Commitment Parties from their obligations to
purchase their respective portions of the Convertible Secured Notes on the
Effective Date pursuant to the Put Option.

     

    This
Purchase Letter shall not be assignable by you without the prior written consent
of each Put Option Party (and any purported assignment without such consent
shall be null and void).  This Purchase Letter is intended to be solely for
the benefit of the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any person other than the parties hereto
and the Indemnified Parties.  This Purchase Letter may not be amended or
waived except by an instrument in writing signed by you and each Put Option
Party.  This Purchase Letter may be executed in any number of counterparts,
each of which shall be an original, and all of which, when taken together, shall
constitute one agreement.  Delivery of an executed signature page of this
Purchase Letter by facsimile or electronic transmission shall be effective as
delivery of a manually executed counterpart hereof.  This Purchase Letter
is the only agreement that has been entered into among us with respect to the
Convertible Secured Notes and sets forth the entire understanding of the parties
with respect thereto as of the date hereof.

     

    This
Purchase Letter shall be governed by, and construed in accordance with, the laws
of the State of New York.  The parties hereto consent to the nonexclusive
jurisdiction and venue of the Bankruptcy Court, and in the event that the
Bankruptcy Court does not have or declines to exercise jurisdiction or there is
reason to believe that it would not have or would decline to exercise
jurisdiction, to the nonexclusive jurisdiction and venue of the state or federal
courts located in the City of New York in the Borough of Manhattan. 
Subject to the foregoing, each party hereto irrevocably waives, to the fullest
extent permitted by applicable law, (a) any right it may have to a trial by jury
in any legal proceeding related to or arising out of this Purchase Letter or the
transactions contemplated hereby or thereby (whether based on contract, tort or
any other theory) and (b) any objection that it may now or hereafter have to the
laying of venue of any such legal proceeding in the Bankruptcy Court or the
state or federal courts located in the City of New York in the Borough of
Manhattan.

     

    This
Purchase Letter and the Put Option Parties’ obligations hereunder shall
terminate at any time upon written notice from the Put Option Parties to US
Concrete in the event that any of the conditions set forth in this Purchase
Letter becomes incapable of being satisfied (unless such condition has been
waived by the Put Option Parties in their sole discretion); provided, that in
the case of any failure to satisfy paragraph 1 and 3, the Debtors shall
automatically receive a five (5) day extension of the applicable deadline if the
Debtors failed to satisfy the applicable condition by the deadline stated
therein notwithstanding the Debtors’ reasonable good faith efforts to satisfy
the applicable condition.  This Purchase Letter shall be subject to the
approval of the Bankruptcy Court.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
reimbursement and indemnification provisions contained herein and any other
provision herein or therein which by its terms expressly survives the
termination of this Purchase Letter shall remain in full force and effect
regardless of whether definitive financing documentation shall be executed and
delivered and notwithstanding the termination of this Purchase Letter or the
commitment of the Put Option Parties hereunder; provided that such reimbursement
and indemnification provisions shall be superseded in their entirety by the
reimbursement and indemnification provisions set forth in any such definitive
documentation for the Transaction.

     

    If the
foregoing correctly sets forth our agreement, please indicate your acceptance of
the terms hereof by returning to us executed counterparts hereof not later than
5:00 p.m., New York City time, on July 20, 2010.  This offer will
automatically expire at such time if we have not received such executed
counterparts in accordance with the preceding sentence.  Unless
extended in writing by the Put Option Parties, the commitments contained herein
to purchase the Convertible Secured Notes upon exercise by the Company of the
Put Option shall automatically expire at 5:00 p.m., New York City time, on
September 27, 2010.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    We are
pleased to have been given the opportunity to assist you in connection with this
important financing.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 
      	
                                        Very
      truly yours,

                                      
	 
      	 
      	 
	 
      	
                                        MONARCH
      ALTERNATIVE CAPITAL L.P.

                                      
	 
      	 
      	 
	 
      	
                                        By:

                                      	/s/
      T.J. Viglietta	 
	 
      	 
      	
                                        Name:
      T.J. Viglietta

                                      	 
	 
      	 
      	
                                        Title:
      Managing Pincipal

                                      	 
	 
      	 
      	 
	 
      	
                                        WHITEBOX
      ADVISORS, LLC

                                      
	 
      	 
      	 
	 
      	
                                        By:

                                      	/s/
      Mark Strefling	 
	 
      	 
      	
                                        Name:
      Mark Strefling

                                      	 
	 
      	 
      	
                                        Title:
      Chief Legal Officer

                                      	 
	 
      	 
      	 
	 
      	
                                        YORK
      CREDIT OPPORTUNITIES MASTER FUND, L.P.

                                      
	 
      	 
      	 
	 	By:	
                                        York
      Credit Opportunities Domestic Holdings, LLC, 

                                        its General Partner

                                      
	 	 	 	 
	 
      	
                                        By:

                                      	/s/
      Daniel A. Schwartz	 
	 
      	 
      	
                                        Name:
      Daniel A. Schwartz

                                      	 
	 
      	 
      	
                                        Title:
      Chief Investment Officer

                                      	 

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        	
              	
                YORK
      CREDIT OPPORTUNITIES FUND, L.P.

              
	 
      	 
      	 
	 	By:	
                York
      Credit Opportunities Domestic Holdings, LLC, 

                its General Partner

              
	 	 	 	 
	 
      	
                By:

              	/s/
      Daniel A. Schwartz	 
	 
      	 
      	
                Name:
      Daniel A. Schwartz

              	 
	 
      	 
      	
                Title:
      Chief Investment Officer

              	 

      

    

     

    [Convertible
Secured Notes Commitment Letter]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              
                	
                        Accepted
      and agreed to as of

                      
	
                        the
      date first written above by:

                      
	 
      	 
	
                        U.S.
      Concrete, Inc.

                      
	 
      	 
	
                        By:

                      	/s/
      Michael W. Harlan	 
	 
      	
                        Name:
      Michael W. Harlan

                      	 
	 
      	
                        Title:
      President and CEO

                      	 

              

            

          

        

      

    

     

    
      [Convertible
Secured Notes Commitment Letter]

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A

    Term
Sheet

    
       

      EXECUTION
VERSION

    

     

    Outline
of Proposed Terms and Conditions

    for U.S. Concrete,
Inc.

     

    July 20,
2010

     

    The terms
and conditions of this “Term
Sheet” are part of a comprehensive transaction, which is an integral
aspect of the proposed restructuring of U.S. Concrete (the “Company”)
(collectively, the “Financing”).  This
Term Sheet is subject in all respects to the commitment letter to which this
Term Sheet is attached and which it forms a part.

    

    
      
        
          
            
              
                
                  
                    	
                            The
      Transaction:

                          	
                            A
      private exit placement of Convertible Secured Notes (as defined below)
      with funds being provided by the exercise of a put option by the Company
      to place such Convertible Secured Notes with the Purchaser Group, with
      proceeds received by the Company used to repay in full the current DIP
      revolving and term facility and for working capital and other general
      corporate purposes.

                          
	 
      	 
      
	
                            Purchaser
      Group:

                          	
                            The
      purchaser group consists of three existing holders of the Company’s 8.375%
      senior subordinated notes including Monarch Alternative Capital, Whitebox
      Advisors and York Capital Management (the “Purchaser
      Group”).  Each member of the Purchaser Group is
      committing to purchase up to $16.67 million of the offering upon the
      exercise of the Company’s option (the “Put
      Option”).

                          
	 	 
	
                            Consideration:

                          	
                            Pursuant
      to the Put Option, the Purchaser Group will commit to purchase $50 million
      in new Convertible Secured Notes (the “Convertible
      Secured Notes”).  The opportunity to purchase the
      Convertible Secured Notes will be offered to certain other holders of U.S.
      Concrete’s 8.375% Notes on a pro rata basis.  Holders must meet
      the definition of a QIB or institutional accredited investor in order to
      participate.  Holders participating in the purchase of the
      Convertible Secured Notes, including the members of the Purchaser Group
      upon exercise of the Put Option, are hereinafter referred to collectively
      as the “Purchasing
      Parties,” and each a “Purchasing
      Party.”

                          
	 	 
	 
      	
                            If
      such other holders do not purchase their pro rata share of the Convertible
      Secured Notes, the Company may exercise its option to require each member
      of the Purchaser Group to purchase up to $16.67 million of the Convertible
      Secured Notes.

                          
	 	 
	
                            Description
      of Notes:

                          	
                            Description:

                          	
                            $50
      million of new Convertible Secured Notes.

                          
	 	 	 
	 
      	
                            Maturity:

                          	
                            Fifth
      anniversary of the issuance of the Convertible Secured
    Notes.

                          
	 	 	 
	 
      	
                            Amortization:

                          	
                            None

                          
	 	 	 
	 
      	
                            Interest:

                          	
                            9.5%
      per annum, payable quarterly in
arrears.

                          

                  

                

              

            

          

        

      

    

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  Description
      of Notes (Cont.):

                	
                  Option
      Premium:

                	
                  The
      Purchaser Group shall receive a 2.00% option premium, which shall be
      earned, due and payable upon the issuance of the Convertible Secured
      Notes.  The obligation of the Company to pay the option premium
      shall be set forth in the definitive documentation governing the Purchaser
      Group’s obligation to purchase, upon the Company’s exercise of the Put
      Option, the Convertible Secured Notes.

                
	 	 	 
	 
      	
                  Conversion
      Price:

                	
                  5%
      above the equity value based on the mid-point enterprise valuation of $194
      million less estimated net debt at issuance.

                
	 
      	 
      	 
      
	 
      	
                  Optional
      Conversion:

                	
                  Except
      as set forth under “Conversion Event” below, holders shall have the right
      to convert all or any portion of the Convertible Secured Notes at such
      holder’s option at any time and from time to time prior to maturity
      thereof into a number of shares equal to the aggregate principal amount of
      the Convertible Secured Notes divided by the conversion price then in
      effect.  In connection with any such optional conversion,
      holders shall also have the right to receive accrued and unpaid interest
      on the Convertible Secured Notes to the date of conversion (the “Accrued
      Interest”).  The Company may elect to pay the Accrued
      Interest in cash or in shares of its common stock.  If the
      Company elects to satisfy its obligation to pay the Accrued Interest in
      shares, the number of shares issuable shall be determined by dividing the
      Accrued Interest by 95% of the trailing 10-day VWAP of the common stock of
      the Company.

                

        

      

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                Conversion
      Event:

              	
                If
      the closing price of the Company’s common stock exceeds 150% of the
      conversion price for at least 20 trading days during any consecutive
      30-day trading period (a “Conversion
      Event”), the Company shall provide written notice to each holder of
      Convertible Secured Notes in accordance with the indenture (the “Conversion
      Notice”).  In addition, the Company shall publicly
      announce such Conversion Event by filing a press release on Form 8-K with
      the Securities and Exchange Commission.  Except as set forth in
      an Election Notice (as defined below), the right to convert Convertible
      Secured Notes shall terminate on the date that is 46 days following the
      date of the Conversion Notice (the “Conversion
      Termination Date”), such that a holder of Convertible Secured Notes
      shall have a 45-day period to convert its Convertible Secured Notes up to
      the amount of the Conversion Cap (as defined below).  Any
      Convertible Secured Notes not converted prior to the Conversion
      Termination Date as a result of the Conversion Cap shall be, at such
      holder’s election, upon written notice to the Company (the “Election
      Notice”) converted into shares of common stock of the Company on a
      date or dates prior to the date that is 180 days following the Conversion
      Termination Date (such date or dates to be specified in the Election
      Notice).  A holder shall deliver an Election Notice so
      specifying its election on or prior to the Conversion Termination
      Date.

              
	 
      	 
      	 
      
	 
      	 
      	
                Any
      Convertible Secured Notes not otherwise converted prior to the Conversion
      Termination Date or specified for conversion in an Election Notice shall
      be redeemable, in whole or in part, at the Company’s option at any time
      prior to maturity at par plus accrued and unpaid interest to the
      Conversion Termination Date.

              
	 
      	 
      	 
      
	 
      	 
      	
                Interest
      shall cease to accrue on all Convertible Secured Notes on the Conversion
      Termination Date and the covenants and related events of default contained
      in the indenture shall cease to be of any force and effect on the
      Conversion Termination Date (other than the Company’s obligation to
      convert, redeem or pay at maturity the Convertible Secured
      Notes).

              
	 
      	 
      	 
      
	 
      	 
      	
                If
      a Conversion Event occurs on or prior to the second anniversary of the
      issue date of the Convertible Secured Notes, in addition to the shares
      issuable upon conversion or amounts received upon redemption or maturity,
      as applicable, the holders shall have a right to receive upon conversion,
      redemption or maturity, as applicable, the lesser of: (i) the aggregate
      amount of interest that would be payable from the Conversion Termination
      Date through the second anniversary of the closing date (including any
      accrued and unpaid interest on the Convertible Secured Notes to the
      Conversion Termination Date (or conversion date, if earlier)) and (ii) an
      aggregate amount equal to 15 months of interest (including any accrued and
      unpaid interest on the Convertible Secured Notes to the Conversion
      Termination Date (or conversion date, if earlier)) (amounts in clauses (i)
      and (ii) above referred to as the “Cash
      Conversion Amount”).  The Company may elect to pay the
      Cash Conversion Amount in cash or in shares of its common
      stock.  If the Company elects to satisfy its obligation to pay
      the Cash Conversion Amount in shares, the number of shares issuable shall
      be determined by dividing the Cash Conversion Amount by 95% of the
      trailing 10-day VWAP of the common stock of the Company from the
      Conversion Termination
Date.

              

      

    

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    

    
      
        	 
      	 
      	
                The
      Company shall pay the Cash Conversion Amount as follows: (i) on the
      Conversion Termination Date for all Convertible Secured Notes converted
      prior to such date, (ii) on the date or dates specified for conversion in
      an Election Notice, if any, and (iii) on the date of redemption or at
      maturity, as applicable, for all other Convertible Secured
      Notes.

              
	 
      	 
      	 
      
	 
      	
                Make-Whole
      on

                Fundamental

                Change
      of

                Control:

              	
                Upon
      a fundamental change of control, in addition to any conversion rights such
      holder may have, each holder of the Convertible Secured Notes will have
      (a) a make-whole provision calculated in a manner consistent with the
      methodology used on Annex 1 attached hereto, which sets forth for
      illustrative purposes make-whole amounts based upon a conversion price of
      $10 per share and (b) an amount equal to interest that would be payable
      from the date of the fundamental change of control through the third
      anniversary of the closing date, plus any accrued and unpaid interest from
      the closing date to the date of such fundamental change of control (clause
      (b) above, the “Cash Make
      Whole Amount” and clauses (a) and (b) above, the “Make Whole
      Amount”). The Company may elect to pay the Cash Make Whole Amount
      in cash or in shares of its common stock.  If the Company elects
      to satisfy its obligation to pay the Cash Make Whole Amount in shares, the
      number of shares issuable shall be determined as follows: (i) if the
      fundamental change of control is a merger or consolidation described in
      clause (i) of the definition of “fundamental change of control” and all of
      the Company’s common stock is exchanged for stock of the acquiror, the
      number of shares of Company common stock issuable shall be determined by
      dividing the Cash Make Whole Amount by the implied price paid per share
      for the common stock of the Company in connection with such fundamental
      change of control, with such shares being treated the same as all other
      shares of Company common stock in such fundamental change of control
      transaction, and (ii) in all other cases, the number of shares of Company
      common stock issuable shall be determined by dividing the Cash Make Whole
      Amount by 95% of the trailing 10-day VWAP of the common stock of the
      Company immediately prior to such fundamental change of
      control.

              

      

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    

    
      
        	 
      	 
      	
                In
      lieu of the foregoing, upon a fundamental change of control, the holders
      shall have the right to require the Company to repurchase outstanding
      Convertible Secured Notes at par plus accrued and unpaid interest
      thereon.

              
	 
      	 
      	 
      
	 
      	 
      	
                A
      “fundamental change of control” will be deemed to occur at such time as:
      (i) the Company consolidates with or merges with or into another person
      (other than any subsidiary of the Company or a merger for the purpose of
      changing the Company’s jurisdiction of incorporation) and its outstanding
      voting securities are reclassified into, converted for or converted into
      the right to receive any other property or security, or the Company sells,
      conveys, transfers or leases all or substantially all of its properties
      and assets to any person (other than its subsidiary); provided, that the
      foregoing shall not constitute a fundamental change of control if persons
      that beneficially own the Company’s voting securities immediately prior to
      the transaction own, directly or indirectly, a majority of the voting
      securities of the surviving or transferee person immediately after the
      transaction in substantially the same proportion as their ownership of the
      Company’s voting securities immediately prior to the transaction; (ii) any
      “person” or “group” (as such terms are used for purposes of Sections 13(d)
      and 14(d) of the Securities Exchange Act of 1934, as amended, whether or
      not applicable), other than the Company or any of its subsidiaries or any
      employee benefit plan of it or such subsidiary, is or becomes the
      “beneficial owner,” directly or indirectly, of more than 50% of the total
      voting power in the aggregate of all classes of the Company’s capital
      stock then outstanding and entitled to vote generally in elections of
      directors; or (iii) during any period of 12 consecutive months after the
      date of original issuance of the Convertible Secured Notes, persons who at
      the beginning of such 12 month period constituted the Company’s Board of
      Directors, together with any new persons whose election was approved by a
      vote of a majority of the persons then still comprising its Board of
      Directors who were either members of the Board of Directors at the
      beginning of such period or whose election, designation or nomination for
      election was previously so approved, cease for any reason to constitute a
      majority of the Company’s Board of
Directors.

              

      

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    

    
      
        	 
      	 
      	
                Notwithstanding
      the foregoing, a  “fundamental change of control” shall not be
      deemed to have occurred in the case of a merger or consolidation described
      in clause (i) of the definition of fundamental change of control if (x) at
      least 90% of the consideration paid for the Company’s common stock (and
      cash payments pursuant to dissenter’s appraisal rights) in the merger or
      consolidation consists of common stock of a U.S. or non-U.S. company
      traded on a national securities exchange (or which will be so traded or
      quoted when issued or exchanged in connection with such transaction) and
      (y) the market capitalization of the acquiror is at least equal to or
      greater than the market capitalization of the Company on the trading day
      immediately preceding the day on which such merger or consolidation is
      publicly announced.

              
	 
      	 
      	 
      
	 
      	 
      	
                A
      Purchasing Party shall not be entitled to receive the Make Whole Amount
      upon a fundamental change of control if such fundamental change of control
      (i) is a merger, consolidation or sale with or into such Purchasing Party,
      its affiliates or any “group” of which such Purchasing Party is a member;
      (ii) is a transaction specified in clause (ii) of the definition of
      fundamental change of control if such Purchasing Party or any of its
      affiliates is a “person” or a member of a “group” for purposes of such
      clause (ii); or (iii) if the nominees of any such Purchasing Party, its
      affiliates, or any “group” of which such Purchasing Party is a member
      constitutes one or more of new board members effecting such fundamental
      change of control.

              

      

    

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    

    
      
        
          	 
      	
                  Covenants:

                	
                  Standard
      high yield covenants including limitation on liens and a debt incurrence
      test (including exceptions for (i) $75 million at any time incurred
      pursuant to the First Lien Revolving Facility; provided, that after March
      31, 2012, the Company may only incur such debt to the extent the Company
      is in compliance, on a pro forma basis, with a
      maximum Secured Leverage Ratio (to be mutually defined but only including
      debt incurred pursuant to the Convertible Secured Notes and First Lien
      Revolving Facility (other than letters of credit)) of 6.50:1.00, (ii) $50
      million at any time in other secured debt (including, without limitation
      the obligations under the Notes), (iii) other unsecured debt so long as
      immediately after the incurrence of such unsecured debt, the Company shall
      be in compliance, on a pro forma basis, with a
      maximum Total Leverage Ratio (to be mutually defined but excluding all
      capital lease and other PMSI debt and non-recourse debt) of 5.00:1.00 and
      (iv) other customary exceptions to be mutually agreed).  No
      interest coverage, liquidity, capital expenditure or other financial
      maintenance covenant requirements.

                
	 
      	 
      	 
      
	 
      	
                  Collateral:

                	
                  The
      holders of the Convertible Secured Notes shall have a first priority lien
      on substantially all assets of the Company and the applicable guarantors,
      including material owned real property and material owned quarries (and
      related assets), subject to permitted liens (including a second priority
      lien in favor of the agent under the First Lien Revolving Facility) and
      exceptions to be mutually agreed; provided, that notwithstanding the
      foregoing, the holders of the Convertible Secured Notes shall have a
      second priority lien on the assets of the Company and other guarantors
      (subject to permitted liens and exceptions to be mutually agreed),
      securing the Company’s revolving exit facility (including any refinancing,
      replacement, extension, renewal, amendment, supplement, or modification
      thereof, the “First Lien
      Revolving Facility”).

                
	 
      	 
      	 
      
	 
      	
                  Intercreditor:

                	
                  The
      Convertible Secured Notes will be pari passu in right of
      payment to existing senior indebtedness of the Company and subject to an
      intercreditor agreement with the agent under the First Lien Revolving
      Facility which will govern the priority of the security interests in the
      collateral and related creditors’
rights.

                

        

      

    

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    

    
      
        
          
            	 
      	
                    Registration
      Rights:

                  	
                    Filing
      of a registration statement with respect to the resale of the Convertible
      Secured Notes that are Registrable Securities (as defined below), such
      filing to be made no later than the first business day following the date
      that is 365 days following the issuance date of the Convertible Secured
      Notes (the “Registration
      Date”); filing of a registration statement with respect to the
      resale of the common stock underlying the Convertible Secured Notes, such
      filing to be made and declared effective within 180 days following the
      issuance date of the Convertible Secured Notes, in each case subject to
      such other terms as may be mutually agreed.  The Convertible
      Secured Notes shall not be considered “Registrable Securities” for
      purposes of the applicable registration rights agreement if such
      securities may be transferred freely (without complying with volume,
      manner of sale or information requirements (i.e., whether or not the
      Company has timely filed any required reports under the Securities
      Exchange Act of 1934 (the “Exchange
      Act”)) by the holder thereof under Rule 144 under the Securities
      Act of 1933 without any restrictive legends.  For the avoidance
      of doubt, the Company shall not be required to file a registration
      statement in connection with the resale of any Convertible Secured Notes
      that are not Registrable Securities as of the Registration
      Date.

                  
	 
      	 
      	 
      
	 
      	
                    Adjustments
      to

                    Conversion
      Price:

                  	
                    Adjustments
      for dividends, stock splits, combinations and the like, subject to certain
      customary exceptions.  The equity issued upon conversion of the
      Convertible Secured Notes shall not dilute either the equity issued
      pursuant to the Management Incentive Plan or the warrants issued pursuant
      to the Plan of Reorganization as set forth on Annex 1 attached
      hereto.

                  
	 
      	 
      	 
      
	 
      	
                    Redemption:

                  	
                    Other
      than as provided under “Conversion Event”, the Convertible Secured Notes
      shall not be redeemable by the Company.

                  
	 	 	 
	
                    Other:

                  	
                    Agent:

                  	
                    Wells
      Fargo

                  
	 	 	 
	 
      	
                    Conversion
      Cap:

                  	
                    In
      no event will a Convertible Secured Note be convertible into a number of
      shares of common stock of the Company that would cause a holder to
      “beneficially own” (as such term is used in the Exchange Act) more than
      9.9% of the common stock of the Company at any time
      outstanding.

                  

          

        

      

    

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                Additional
      Covenants:

              	
                The
      indenture shall contain affirmative covenants customary for transactions
      of this type including customary reporting
  covenants.

              

      

    

    
      
         

      

      
        -9-SUBSCRIPTION
BOOKLET

     

    BUYONATE,
INC.

    

    Minimum
of $3,000,000 up to a

    Maximum
of $5,000,000 of Investment Units

    

    Each
Unit Consisting of Four (4) Shares of Common Stock

    and
a Series C Warrant to purchase one (1) Share of Common Stock

    at
an Exercise Price of $3.70 per share and a Series D Warrant to purchase one (1)
Share of Common Stock  at an Exercise Price of $4.75 per
share.

    

    Purchase
Price Per Unit: $10.56

    

    CONTENTS

    

    Instructions
for Subscription

    

    Subscription
Agreement

    

    Investor
Questionnaire

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    BUYONATE,
INC.

     

    INSTRUCTIONS
FOR SUBSCRIPTION

     

    The
subscriber must do the following:

     

    1.           Complete,
sign and deliver the Subscription Agreement included in this Subscription
Booklet (fill out and sign on
signature page).

     

    2.           Complete,
sign and deliver the Investor Questionnaire included in this Subscription
Booklet (fill out and
sign).

     

    3.           Deliver
payment in the aggregate amount of your subscription.

     

    Delivery
of the completed subscription documents described above and checks for
subscription amounts made out to “Signature Bank, as Escrow Agent for
Buyonate, Inc.”
should be delivered directly to:

     

    Signature
Bank

    261
Madison Ave.

    New
York, NY 10016

    Attention: Cliff
Broder, Group Director and Senior Vice President

    

    Subscription
amounts may also be sent by wire transfer of immediately available funds
to:

     

    Receiving
Bank Name: Signature Bank

    Receiving
Bank ABA#: 026013576

    Receiving
Bank Address: 261 Madison Ave., New York, NY 10016

    Beneficiary’s
Name: Buyonate, Inc. Signature Bank as Escrow Agent

    Reference: Buyonate,
Inc.

    Beneficiary’s
Address: Buyonate, Inc.

    Attn:
Ryan Cravey, CEO

    #803-5348
Vegas Drive

    Las
Vegas, NV 89108

    

    Beneficiary’s
Account #: 1501400153

    SWIFT
Code:       SIGNUS33

    

    THE
COMPANY MAY ACCEPT OR REJECT SUBSCRIPTIONS IN ITS SOLE
DISCRETION.  THE OFFERING IS AVAILABLE ONLY TO “ACCREDITED INVESTORS”
AS DEFINED UNDER REGULATION D AND/OR TO NON-UNITED STATES PERSONS UNDER
REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  In the
event that a subscription offer is not accepted by the Company, the subscription
funds shall be returned to the subscriber, without interest or deduction
thereon.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    SUBSCRIPTION
AGREEMENT

     

    THIS SUBSCRIPTION AGREEMENT
(this “Agreement”), is
dated as of July 9, 2010, by and between Buyonate, Inc., a
Nevada corporation (“Buyonate” or the “Company”), and the subscribers
identified on the signature pages hereto (each a “Subscriber” and collectively,
the “Subscribers”).

    

    RECITALS:

    

    WHEREAS, the Company and the
Subscribers are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6), Regulation D (“Regulation D”) and/or
Regulation S (“Regulation
S”) as promulgated by the United States Securities and Exchange
Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “1933 Act”).

    

    WHEREAS, Hunter Wise
Securities, LLC is acting as lead placement agent and American Capital Partners,
LLC is acting as the co-placement agent (“Placement Agent”), on a “best
efforts” basis, in a private offering (the “Offering”) in which the
Subscribers agree to purchase and the Company agrees to offer and sell
investment units (each a “Unit” and collectively the
“Units”), each
consisting of four (4) shares of the Company’s common stock, $0.0001 par value
per share (the “Common
Stock”); a Series C warrant (the “Series C
Warrants”)  to purchase one share of  common stock at
an exercise price of $3.70 per share (the “C Warrant Shares”); and a Series
D warrant (the “Series D
Warrants”)  to purchase one share of common stock at an
exercise price of $4.75 per share (the “D Warrant Shares”)
(collectively, the C Warrant Shares and the D Warrant Shares are the “Warrant Shares”) at a
price  of $10.56 (the “Issue Price”) for aggregate
gross proceeds of $3,000,000 (the “Minimum Offering”) to
$5,000,000 (the “Maximum
Offering”) in gross aggregate proceeds. The Common Stock, Warrants and
Warrant Shares are hereinafter referred to as the “Purchased
Securities”.

     

    WHEREAS, such Offering is in
connection with the combination (the “Combination”) of Buyonate and
China Electronic Holding, Inc., a company incorporated under the laws of
Delaware (“China
Electronic”). The closing of the Combination is conditioned upon all of
the conditions of the Offering being met, and the Offering is conditioned upon
the closing of the Combination. The current shareholders, Chinese founders and
management of China Electronic shall own at least 80% of the Company or its
successor upon completion of the Combination and Minimum Offering. Pursuant to
the Combination, China Electronic will become a wholly-owned subsidiary of
Buyonate.  Therefore, Buyonate, and China Electronic are collectively
referred to herein as “Buyonate” or the “Company”, unless otherwise
indicated.

     

    WHEREAS, the Company desires
to enter into this Agreement to issue and sell the Purchased Securities and the
Subscriber desires to purchase that number of Purchased Securities set forth on
the signature page hereto on the terms and conditions set forth
herein.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    WHEREAS, the aggregate
proceeds of the Offering shall be held in escrow pursuant to the terms of a
Funds Escrow Agreement to be executed by the parties substantially in the form
attached hereto as Exhibit
D (the “Escrow
Agreement”).

     

    AGREEMENT:

     

    NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement, the Company and the Subscriber hereby agree as follows:

     

    1.           Purchase and Sale of
Securities.

     

    (a)           The
Units.   Subject to the satisfaction or waiver of the
terms and conditions of this Agreement, on the Closing Date (as defined below),
each Subscriber shall purchase and the Company shall sell to each Subscriber the
Purchased Securities for the portion of the Issue Price designated on the
signature pages hereto.

    

    (b)           Warrants. Upon the
following terms and conditions and for no additional consideration, each of the
Subscribers shall be issued Series C Warrants in the form attached hereto as
Exhibit E and Series D
Warrants in the form attached hereto as Exhibit F (collectively, the
Series C Warrants and Series D Warrants are referred to herein as the “Warrants”) with the Series C
Warrants entitling the Subscribers to purchase one (1) share of the Company’s
Common Stock  at an exercise price of $3.70, and the Series D Warrants
entitling the Subscribers to purchase an one (1) share of the Company’s Common
Stock  at an exercise price of $4.75.

     

    2.           Closing.  The
issuance and sale of the Purchased Securities shall occur on the closing date
(the “Closing Date”),
which shall be the date that Subscriber funds representing the net amount due to
the Company from the Issue Price of the Offering is transmitted by wire transfer
or otherwise to or for the benefit of the Company. The initial Closing Date
shall occur on or before July 16, 2010 (the “Initial Closing”) and shall
transmit to the Company gross proceeds of at least $3,000,000. The consummation
of the transactions contemplated herein (the “Closing”) shall take place at
the offices of Anslow & Jaclin, LLP, 195 Route 9 South, 2nd Floor,
Manalapan, New Jersey 07726 on such date and time as the Subscribers and the
Company may agree upon; provided, that all of
the conditions set forth in Section 11 hereof and applicable to the Closing
shall have been fulfilled or waived in accordance herewith. The Subscriber and
the Company acknowledge and agree that the Company may consummate the sale of
additional Purchased Securities to the Subscriber, on the terms set forth in
this Agreement and the other Transaction Documents as defined herein, at more
than one closing which shall be no later than August 31, 2010 (each referred to
herein as a “Closing”).

     

    3.           Subscriber Representations,
Warranties and Covenants.  The Subscriber hereby represents and
warrants to and agrees with the Company that:

    

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

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (b)           Authorization and
Power.   Such Subscriber has the requisite power and
authority to enter into and perform this Agreement and the other Transaction
Documents (as defined in Section 4(c)) and to purchase the Purchased Securities
being sold to it hereunder.  The execution, delivery and performance
of this Agreement and the other Transaction Documents by such Subscriber and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate or partnership action, and no further
consent or authorization of such Subscriber or its Board of Directors,
stockholders, partners, members, as the case may be, is
required.  This Agreement and the other Transaction Documents have
been duly authorized, executed and delivered by such Subscriber and constitutes,
or shall constitute when executed and delivered, a valid and binding obligation
of such Subscriber enforceable against such Subscriber in accordance with the
terms thereof.

    

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

    

    (d)           Acquisition for
Investment. The Subscriber is acquiring the Purchased Securities solely
for its own account for the purpose of investment and not with a view to or for
resale in connection with a distribution.  The Subscriber does not
have a present intention to sell the Purchased Securities, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of the Purchased Securities to or through any person or entity;
provided, however, that by
making the representations herein and subject to Section 3.2(h) below, the
Subscriber does not agree to hold the Purchased Securities for any minimum or
other specific term and reserves the right to dispose of the Purchased
Securities at any time in accordance with Federal and state securities laws
applicable to such disposition.  The Subscriber acknowledges that it
is able to bear the financial risks associated with an investment in the
Purchased Securities and that it has been given full access to such records of
the Company and the subsidiaries and to the officers of the Company and the
subsidiaries and received such information as it has deemed necessary or
appropriate to conduct its due diligence investigation and has sufficient
knowledge and experience in investing in companies similar to the Company in
terms of the Company’s stage of development so as to be able to evaluate the
risks and merits of its investment in the Company.  The Subscriber
further acknowledges that the Subscriber understands the risks of investing in
companies domiciled and/or which operate primarily in the People’s Republic of
China and that the purchase of the Purchased Securities involves substantial
risks.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (e)       
    Information on
Company.    Such Subscriber has been furnished with
or has had access to the EDGAR Website of the Commission and to the Company’s
Form 10-K filed on EDGAR on March 24, 2010 for the fiscal year ended December
31, 2009, together with all other filings made with the Commission available at
the EDGAR website (hereinafter referred to collectively as the “Reports”) and all
correspondence from the Commission to the Company including but not limited to
the Commission’s comment letters relating to the Company’s periodic filings with
the Commission whether available at the EDGAR website or not.  In
addition, such Subscriber has received in writing from the Company such other
information concerning its operations, financial condition and other matters as
such Subscriber has requested in writing, identified thereon as OTHER WRITTEN
INFORMATION (such other information is collectively, the “Other Written Information”),
and considered all factors such Subscriber deems material in deciding on the
advisability of investing in the Purchased Securities.  Such
Subscriber has relied on the Reports and Other Written Information in making its
investment decision.

    

    (f)           
Opportunities for
Additional Information.  The Subscriber acknowledges that the
Subscriber has had the opportunity to ask questions of and receive answers from,
or obtain additional information from, the executive officers of the Company
concerning the financial and other affairs of the Company.

    

    (g)           Information on
Subscriber.   Subscriber is, and will be on the Closing
Date, an “accredited
investor”, as such term is defined in Regulation D promulgated by the
Commission under the 1933 Act, is experienced in investments and business
matters, has made investments of a speculative nature and has purchased
securities of United States publicly-owned companies in private placements in
the past and, with its representatives, has such knowledge and experience in
financial, tax and other business matters as to enable such Subscriber to
utilize the information made available by the Company to evaluate the merits and
risks of and to make an informed investment decision with respect to the
proposed purchase, which represents a speculative investment.  Such
Subscriber has the authority and is duly and legally qualified to purchase and
own the Purchased Securities.  Such Subscriber is able to bear the
risk of such investment for an indefinite period and to afford a complete loss
thereof.  The information set forth on the signature page hereto
regarding such Subscriber is accurate.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (h)         
  Compliance
with 1933 Act.   Such Subscriber understands and agrees
that the Purchased Securities have not been registered under the 1933 Act or any
applicable state securities laws, by reason of their issuance in a transaction
that does not require registration under the 1933 Act (based in part on the
accuracy of the representations and warranties of the Subscriber contained
herein), and that such Purchased Securities must be held indefinitely unless a
subsequent disposition is registered under the 1933 Act or any applicable state
securities laws or is exempt from such registration.  The Subscriber
acknowledges that the Subscriber is familiar with Rule 144 of the rules and
regulations of the Commission, as amended, promulgated pursuant to the
Securities Act (“Rule
144”), and that such person has been advised that Rule 144 permits
resales only under certain circumstances. The Subscriber understands that to the
extent that Rule 144 is not available, the Subscriber will be unable to sell any
Purchased Securities without either registration under the 1933 Act or the
existence of another exemption from such registration requirement. In any event,
and subject to compliance with applicable securities laws, the Subscriber may
enter into lawful hedging transactions in the course of hedging the position
they assume and the Subscriber may also enter into lawful short positions or
other derivative transactions relating to the Purchased Securities, and deliver
the Purchased Securities, to close out their short or other positions or
otherwise settle other transactions, or loan or pledge the Purchased Securities,
to third parties who in turn may dispose of these Purchased
Securities.

    

    (i)           
 Purchased
Securities Legend.  The Purchased Securities shall bear the
following or similar legend:

    

    “THE ISSUANCE AND SALE OF THE PURCHASED SECURITIES REPRESENTED BY THIS CERTIFICATE HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE
STATE SECURITIES LAWS.  THE PURCHASED SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE PURCHASED SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT, OR OTHERWISE.  NOTWITHSTANDING THE
FOREGOING, THE PURCHASED
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
PURCHASED SECURITIES.”

     

     (j)            Communication of
Offer.  The offer to sell the Purchased Securities was directly
communicated to such Subscriber by the Company.  At no time was such
Subscriber presented with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other form of general
advertising or solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated offer.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (k)           Restricted
Securities.   Such Subscriber understands that the
Purchased Securities have not been registered under the 1933 Act and such
Subscriber will not sell, offer to sell, assign, pledge, hypothecate or
otherwise transfer any of the Purchased Securities unless pursuant to an
effective registration statement under the 1933 Act, or unless an exemption from
registration is available.  Notwithstanding anything to the contrary
contained in this Agreement, such Subscriber may transfer (without restriction
and without the need for an opinion of counsel) the Purchased Securities to its
Affiliates (as defined below) provided that each such Affiliate is an
“accredited investor” under Regulation D and such Affiliate agrees to be bound
by the terms and conditions of this Agreement. For the purposes of this
Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity.  Affiliate includes each Subsidiary of the Company.  For
purposes of this definition, “control” means the power to
direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

    

    (l)          
 No Governmental
Review.   Such Subscriber understands that no United
States federal or state agency or any other governmental or state agency has
passed on or made recommendations or endorsement of the Purchased Securities or
the suitability of the investment in the Purchased Securities nor have such
authorities passed upon or endorsed the merits of the offering of the Purchased
Securities.

    

    (m)           Correctness of
Representations.  Such Subscriber represents that the foregoing
representations and warranties are true and correct as of the date hereof and,
unless such Subscriber otherwise notifies the Company prior to the Closing Date,
shall be true and correct as of the Closing Date.  The Subscriber
understands that the Purchased Securities are being offered and sold in reliance
on a transactional exemption from the registration requirement of Federal and
state securities laws and the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of the Subscriber set forth herein in order to determine the applicability of
such exemptions and the suitability of the Subscriber to acquire the Purchased
Securities.

    

    (n)           Short Sales and
Confidentiality. Other than the transaction contemplated hereunder, the
Subscriber has not directly or indirectly, nor has any person acting on behalf
of or pursuant to any understanding with the Subscriber, executed any
disposition, including short sales (but not including the location and/or
reservation of borrowable shares of Common Stock), in the securities of the
Company during the period commencing from the time that the Subscriber first
received a term sheet from the Company or any other person setting forth the
material terms of the transactions contemplated hereunder until the date that
the transactions contemplated by this Agreement are first publicly announced as
described in Section 7(m).  The Subscriber covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed
by the Company as described in Section 7(m), the Subscriber will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction). The
Subscriber understands and acknowledges that the Commission currently takes the
position that coverage of short sales of shares of the Common Stock “against the
box” prior to the effective date of the Registration Statement with the
Purchased Securities is a violation of Section 5 of the 1933 Act, as set forth
in Item 65, Section 5 under Section A, of the Manual of Publicly Available
Telephone Interpretations, dated July 1997, compiled by the Office of Chief
Counsel, Division of Corporation Finance. Notwithstanding the foregoing, the
Subscriber does not make any representation, warranty or covenant hereby that it
will not engage in short sales in the securities of the Company after the date
that the transactions contemplated by this Agreement are first publicly
announced as described in Section 7(m). Notwithstanding the foregoing, in
the case of a Subscriber that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Subscriber's assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Subscriber's
assets, the covenant set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Purchased Securities covered by this
Agreement.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (o)           Additional
Representations, Warranties and Covenants of Non-United States
Persons.

    

    (i)           The
Subscriber understands that the investment offered hereunder has not been
registered under the 1933 Act and the Subscriber understands that such
Subscriber is purchasing the Purchased Securities without being furnished any
offering literature or prospectus. The Subscriber is acquiring the Purchased
Securities for the Subscriber’s own account, for investment purposes only, and
not with a view towards resale or distribution.

    

    (ii)          At
the time the Subscriber was offered the Purchased Securities, it was not, and at
the date hereof, such Subscriber is not a “U.S. Person”
which is defined below:

    

    
      	
            	
              (A)

            	
              Any
      natural person resident in the United
States;

            

    

    

    
      	
               
      

            	
              (B)

            	
              Any
      partnership or corporation organized or incorporated under the laws of the
      United States;

            

    

    

    
      	
               
      

            	
              (C)

            	
              Any
      estate of which any executor or administrator is a U.S.
      person;

            

    

    

    
      	
            	
              (D)

            	
              Any
      trust of which any trustee is a U.S.
person;

            

    

    

    
      	
               
      

            	
              (E)

            	
              Any
      agency or branch of a foreign entity located in the United
      States;

            

    

    

    
      	
               
      

            	
              (F)

            	
              Any
      non-discretionary account or similar account (other than an estate or
      trust) held by a dealer or other fiduciary for the benefit or account of a
      U.S. person;

            

    

    

    
      	
               
      

            	
              (G)

            	
              Any
      discretionary account or similar account (other than an estate or trust)
      held by a dealer or other fiduciary organized, incorporated, or (if an
      individual) resident of the United States;
and

            

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
       

      
        	
              	
                (H)

              	
                Any
      partnership or corporation if (i) organized or incorporated under the laws
      of any foreign jurisdiction and (ii) formed by a U.S. person principally
      for the purpose of investing in securities not registered under the 1933
      Act, unless it is organized or incorporated, and owned, by accredited
      investors (as defined in Rule 501(a) of Regulation D promulgated under the
      1933 Act) who are not natural persons, estates or
  trusts.

              

      

    

    

    “United States” or “U.S.” means the United
States of America, its territories and possessions, any State of the United
States, and the District of Columbia.

    

    (iii)        The
Subscriber understands that no action has been or will be taken in any
jurisdiction by the Company that would permit a public offering of the Purchased
Securities in any country or jurisdiction where action for that purpose is
required.

    

    (iv)        The
Subscriber (i) as of the execution date of this Agreement is not located within
the United States, and (ii) is not purchasing the Purchased Securities for the
account or benefit of any U.S. person except in accordance with one or more
available exemptions from the registration requirements of the 1933 Act or in a
transaction not subject thereto.

    

    (v)         The
Subscriber will not resell the Purchased Securities except in accordance with
the provisions of Regulation S (Rule 901 through 905 and Preliminary Notes
thereto), pursuant to a registration under the 1933 Act, or pursuant to an
available exemption from registration; and agrees not to engage in hedging
transactions with regard to such securities unless in compliance with the 1933
Act.

    

    (vi)        The
Subscriber will not engage in hedging transactions with regard to shares of the
Company prior to the expiration of the distribution compliance period specified
in Category 2 or 3 (paragraph (b)(2) or (b)(3)) in Rule 903 of Regulation S, as
applicable, unless in compliance with the 1933 Act; and as applicable, shall
include statements to the effect that the securities have not been registered
under the 1933 Act and may not be offered or sold in the United States or to
U.S. persons (other than distributors) unless the securities are registered
under the 1933 Act, or an exemption from the registration requirements of the
1933 Act is available.

    

    (vii)       No
form of “directed selling efforts” (as defined in Rule 902 of Regulation S under
the 1933 Act), general solicitation or general advertising in violation of the
1933 Act has been or will be used nor will any offers by means of any directed
selling efforts in the United States be made by the Subscriber or any of their
representatives in connection with the offer and sale of the Purchased
Securities.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    4.           Company Representations and
Warranties.  The Company represents and warrants to and agrees
with each Subscriber that:

     

    (a)           Due
Incorporation.  The Company is a corporation or other entity
duly incorporated or organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has the
requisite corporate power to own its properties and to carry on its business as
presently conducted.  The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect.  For purposes of
this Agreement, a “Material
Adverse Effect” means any material adverse effect on the business,
operations, properties, or financial condition of the Company and its
Subsidiaries individually, or in the aggregate and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to perform any of its obligations under this
Agreement in any material respect. For purposes of this Agreement, “Subsidiary” means, with
respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity of which more than 30% of (i) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (iii) in the case of a trust, estate, association,
joint venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such
entity.  As of the Closing Date, all of the Company’s Subsidiaries and
the Company’s ownership interest therein are set forth on Schedule 4(a).

     

    (b)           Outstanding
Stock.  All issued and outstanding shares of capital stock and
equity interests in the Company have been duly authorized and validly issued and
are fully paid and non-assessable.

     

    (c)           Authority;
Enforceability.  This Agreement, the Purchased
Securities, the Escrow Agreement, the Lock-Up Agreements and any other
agreements delivered together with this Agreement or in connection herewith
(collectively, the “Transaction
Documents”) have been duly authorized, executed and delivered by the
Company and are valid and binding agreements of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights generally and to general
principles of equity.  The Company has full corporate power and
authority necessary to enter into and deliver the Transaction Documents and to
perform its obligations thereunder.

     

    (d)           Capitalization
and
Additional
Issuances.   The authorized and outstanding capital stock
of the Company and Subsidiaries on a fully diluted basis as of the date of this
Agreement and the Closing Date (not including the Purchased Securities) are set
forth on Schedule 4(d).  Except as set
forth on Schedule 4(d), there are no options,
warrants, or rights to subscribe to, securities, rights, understandings or
obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock or other equity interest of the
Company or any of the Subsidiaries.  The only officer, director,
employee and consultant stock option or stock incentive plan or similar plan
currently in effect or contemplated by the Company is described on Schedule
4(d).  There are no outstanding agreements or preemptive or
similar rights affecting the Company’s common stock.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (e)           Consents.  No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, or any of its
Affiliates, the Over The Counter Bulletin Board (the “Bulletin Board”) or the
Company’s shareholders is required for the execution by the Company of the
Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the
issuance and sale of the Purchased Securities.  The Transaction
Documents and the Company’s performance of its obligations thereunder have been
unanimously approved by the Company’s Board of Directors.  No consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority in the
world, including without limitation, the United States, or elsewhere is required
by the Company or any Affiliate of the Company in connection with the
consummation of the transactions contemplated by this Agreement, except as would
not otherwise have a Material Adverse Effect or the consummation of any of the
other agreements, covenants or commitments of the Company or any Subsidiary
contemplated by the other Transaction Documents. Any such qualifications and
filings will, in the case of qualifications, be effective on the Closing and
will, in the case of filings, be made within the time prescribed by
law.

     

    (f)           No Violation or
Conflict.  Assuming the representations and warranties of the
Subscriber in Section 3 are true and correct, neither the issuance nor sale of
the Purchased Securities nor the performance of the Company’s obligations under
this Agreement and all other Transaction Documents entered into by the Company
relating thereto will:

     

    (i)           violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company’s knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or over the properties or assets
of the Company or any of its Affiliates, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the
properties of the Company or any of its Affiliates is subject, or (D) the terms
of any “lock-up” or similar provision of any underwriting or similar agreement
to which the Company, or any of its Affiliates is a party except the violation,
conflict, breach, or default of which would not have a Material Adverse Effect;
or

     

    (ii)          result
in the creation or imposition of any lien, charge or encumbrance upon the
Purchased Securities or any of the assets of the Company or any of its
Affiliates, except in favor of Subscriber as described herein;
or

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (iii)         result
in the activation of any anti-dilution rights or a reset or repricing of any
debt, equity or security instrument of any creditor or equity holder of the
Company, or the holder of the right to receive any debt, equity or security
instrument of the Company nor result in the acceleration of the due date of any
obligation of the Company; or

     

    (iv)        result
in the triggering of any piggy-back or other registration rights of any person
or entity holding securities of the Company or having the right to receive
securities of the Company.

     

    (g)         The Purchased Securities.  The
Purchased Securities upon issuance:

     

    (i)          are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject only to restrictions upon transfer under the 1933 Act and
any applicable state securities laws;

    

    (ii)         have
been, or will be, duly and validly authorized and on the date of issuance of the
Purchased Securities, the Purchased Securities will be duly and validly issued,
fully paid and nonassessable or if resold in a transaction registered pursuant
to the 1933 Act and pursuant to an effective registration statement or exempt
from registration will be free trading, unrestricted and
unlegended;

     

    (iii)        will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company or rights to acquire
securities of the Company; and

     

    (iv)        will
not subject the holders thereof to personal liability by reason of being such
holders.

     

    (h)         Litigation.  There
is no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates that
would affect the execution by the Company or the complete and timely performance
by the Company of its obligations under the Transaction
Documents.  Except as disclosed in the Reports, there is no pending
or, to the best knowledge of the Company, basis for or threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates which
litigation if adversely determined would have a Material Adverse
Effect.

     

    (i)           No Market
Manipulation.  The Company and its Affiliates have not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the common stock to facilitate the sale or resale of the
Purchased Securities or affect the price at which the Purchased Securities may
be issued or resold.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (j)           Information Concerning
Company.  The Reports contain all material information relating
to the Company and its operations and financial condition as of their respective
dates which information is required to be disclosed
therein.   Since March 31, 2010 and except as modified in the
Reports or in the Schedules hereto, there has been no Material Adverse Effect
relating to the Company’s business, financial condition or affairs. The Reports,
including the financial statements included therein do not contain any 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, taken as a whole,
not misleading in light of the circumstances and when made.

     

    (k)          Defaults.  The
Company is not in material violation of its articles of incorporation or
bylaws.   The Company is (i) not in default under or in violation
of any other material agreement or instrument to which it is a party or by which
it or any of its properties are bound or affected, which default or violation
would have a Material Adverse Effect, (ii) not in default with respect to any
order of any court, arbitrator or governmental body or subject to or party to
any order of any court or governmental authority arising out of any action, suit
or proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters which default would
have a Material Adverse Effect, or (iii) not in violation of any statute, rule
or regulation of any governmental authority which violation would have a
Material Adverse Effect.

     

    (l)           No Integrated
Offering.   Neither the Company, nor any of its
Affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security of the Company nor solicited
any offers to buy any security of the Company under circumstances that would
cause the offer of the Purchased Securities pursuant to this Agreement to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of the Bulletin Board.  No prior
offering will impair the exemptions relied upon in this Offering or the
Company’s ability to timely comply with its obligations
hereunder.  Neither the Company nor any of its Affiliates will take
any action or steps that would cause the offer or issuance of the Purchased
Securities to be integrated with other offerings which would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.  The Company will not conduct
any offering other than the transactions contemplated hereby that may be
integrated with the offer or issuance of the Purchased Securities that would
impair the exemptions relied upon in this Offering or the Company’s ability to
timely comply with its obligations hereunder.

     

    (m)         No General
Solicitation.  Neither the Company, nor any of its Affiliates,
nor to its knowledge, any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D/Regulation S under the 1933 Act) in connection with the offer or
sale of the Purchased Securities.

     

    (n)          No Undisclosed
Liabilities.  Since March 31, 2010, except as disclosed in the
Reports, the Company has no liabilities or obligations which are material,
individually or in the aggregate, other than those incurred in the ordinary
course of the Company businesses since March 31, 2010 and which, individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect, except as disclosed in the Reports or on Schedule 4(n).

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (o)           No Undisclosed Events or
Circumstances.  Since March 31, 2010, except as disclosed in
the Reports, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the Reports.

     

    (p)           Dilution.   The
Company’s executive officers and directors understand the nature of the
Purchased Securities being sold hereby and recognize that the issuance of the
Purchased Securities will have a potential dilutive effect on the equity
holdings of other holders of the Company’s equity or rights to receive equity of
the Company.  The board of directors of the Company has concluded, in
its good faith business judgment that the issuance of the Purchased Securities
is in the best interests of the Company.  The Company specifically
acknowledges that its obligation to issue the Purchased Securities is binding
upon the Company and enforceable regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the Company or parties
entitled to receive equity of the Company.

     

    (q)           No Disagreements with
Accountants and Lawyers. There are no disagreements of any kind
presently existing, or reasonably anticipated by the Company to arise between
the Company and the accountants and lawyers previously and presently employed by
the Company, including but not limited to disputes or conflicts over payment
owed to such accountants and lawyers, nor have there been any such disagreements
during the two years prior to the Closing Date, in each case, that could cause a
Material Adverse Effect.

    

    (r)        
   Foreign Corrupt
Practices.  Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is  in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.

    

    (s)           Reporting
Company.  The Company is a publicly-held company subject to
reporting obligations pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the “1934
Act”).  Pursuant to the provisions of the 1934 Act, the Company
has timely filed all reports and other materials required to be filed thereunder
with the Commission during the preceding twelve months.

    

    (t)      
     Listing.  Upon
completion of the Combination, the Company’s common stock is quoted on the
Bulletin Board currently under the symbol “BUYO”.  The Company
has not received any oral or written notice that its common stock is not
eligible nor will become ineligible for quotation on the Bulletin Board nor that
its common stock does not meet all requirements for the continuation of such
quotation.  The Company satisfies all the requirements for the
continued quotation of its common stock on the Bulletin Board.

     

    
      
         

      

      
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    (u)           Transfer
Agent.   The name, address, telephone number, fax number,
contact person and email address of the Company transfer agent is set forth on
Schedule 4(u)
hereto.

    

    (v)           Environmental
Compliance. Since their inception, neither the Company, nor any of its
Subsidiaries have been, in violation of any applicable law relating to the
environment or occupational health and safety, where such violation would have a
Material Adverse Effect. The Company and its Subsidiaries (i) are in compliance
with any and all Environmental Laws (as hereinafter defined), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. “Environmental Laws” shall mean
all applicable laws relating to the protection of the environment including,
without limitation, all requirements pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions, discharges,
releases or threatened releases of hazardous substances, chemical substances,
pollutants, contaminants or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature, into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, material or wastes,
whether solid, liquid or gaseous in nature. Other than as disclosed on Schedule 4(v), the Company and each of its
Subsidiaries are also in compliance with all other limitations, restrictions,
conditions, standards, requirements, schedules and timetables required or
imposed under all Environmental Laws. There are no past or present events,
conditions, circumstances, incidents, actions or omissions relating to or in any
way affecting the Company or its Subsidiaries that violate or may violate any
Environmental Law after the Closing Date or that may give rise to any
environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance where, in each of the
foregoing clauses (i) and (ii), the failure to so comply could
be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.

    

    (w)           Employees. Neither
the Company nor any Subsidiary has any collective bargaining arrangements or
agreements covering any of its employees. Except as disclosed in the Reports or
Other Written Information, neither the Company nor any Subsidiary  has any
employment contract, agreement regarding proprietary information,
non-competition agreement, non-solicitation agreement, confidentiality
agreement, or any other similar contract or restrictive covenant, relating to
the right of any officer, employee or consultant to be employed or engaged by
the Company or such Subsidiary required to be disclosed with the Commission or
on the Form 8-K that is not so disclosed. Since March 31, 2010, no officer,
consultant or key employee of the Company or any Subsidiary whose termination,
either individually or in the aggregate, would have a Material Adverse Effect,
has terminated or, to the knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company or any
Subsidiary.

     

    
      
         

      

      
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    (x)      
     Public Utility Holding
Company Act; Investment Company Act and U.S. Real Property Holding Corporation
Status. The Company is not a “holding company” or a “public utility
company” as such terms are defined in the Public Utility Holding Company Act of
1935, as amended. The Company is not, and as a result of and immediately upon
the Closing will not be, an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.  The Company is not and has never been a U.S. real
property holding corporation within the meaning of Section 897 of the Internal
Revenue Code of 1986, as amended.

    

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

    

    (z)           Independent Nature of
Subscribers. The Company acknowledges that the obligations of each
Subscriber under the Transaction Documents are several and not joint with the
obligations of any other Subscriber, and no Subscriber shall be responsible in
any way for the performance of the obligations of any other Subscriber under the
Transaction Documents. The Company acknowledges that the decision of each
Subscriber to purchase securities pursuant to this Agreement has been made by
such Subscriber independently of any other Subscriber and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of its Subsidiaries
which may have been made or given by any other Subscriber or by any agent or
employee of any other Subscriber, and no Subscriber or any of its agents or
employees shall have any liability to any Subscriber (or any other person)
relating to or arising from any such information, materials, statements or
opinions. The Company acknowledges that nothing contained herein, or in any
Transaction Documents, and no action taken by any Subscriber pursuant hereto or
thereto, shall be deemed to constitute the Subscribers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Subscribers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. The Company acknowledges that each Subscriber shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Subscriber to
be joined as an additional party in any proceeding for such
purpose.

     

    
      
         

      

      
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    (aa)          Sarbanes-Oxley Act.
The Company is in material compliance with the applicable provisions of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the
rules and regulations promulgated thereunder, that are effective and for which
material compliance by the Company is required as of the date
hereof.

    

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

    

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

    

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

    

    (ee)          Reserved.

    

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

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    (gg)         Correctness of
Representations.  The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies the Subscribers
prior to the Closing Date, shall be true and correct in all material respects as
of the Closing Date; provided, that, if such representation or warranty is made
as of a different date, in which case such representation or warranty shall be
true as of such date.

     

    (hh)         Survival.  The
foregoing representations and warranties shall survive for a period of two years
after the Closing Date.

     

    (ii)           
No
Brokers.  Neither the Company nor any Subsidiary has taken any
action which would give rise to any claim by any person for brokerage
commissions, finder’s fees or similar payments relating to this Agreement or the
transactions contemplated hereby, except for dealings with the Placement Agent,
whose commissions and fees will be paid by the Company and except as set forth
on Schedule
4(ii).

     

    4.1        
China
Electronic
Representations and Warranties.  China Electronic represents
and warrants to and agrees with each Subscriber that:

     

    (a)           Due
Incorporation.  China Electronic is a corporation or other
entity duly incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and has
the requisite corporate power to own its properties and to carry on its business
as presently conducted. China Electronic is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect. As of the Closing Date, all
of China Electronic’s Subsidiaries and China Electronic’s ownership interest
therein are set forth on Schedule 4.1(a).

     

    (b)           Outstanding
Stock.  All issued and outstanding shares of capital stock and
equity interests in China Electronic have been duly authorized and validly
issued and are fully paid and non-assessable.

     

    (c)           Authority;
Enforceability.  The Transaction Documents have been duly
authorized, executed and delivered by China Electronic and are valid and binding
agreements of China Electronic enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights generally and to general principles of
equity.  China Electronic has full corporate power and authority
necessary to enter into and deliver the Transaction Documents and to perform its
obligations thereunder.

    
      
         

      

      
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     (d)           Consents.  No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over China Electronic, or any of its
Affiliates, the Bulletin Board or China Electronic’s shareholders is required
for the execution by China Electronic of the Transaction Documents and
compliance and performance by China Electronic of its obligations under the
Transaction Documents, including, without limitation, the issuance and sale of
the Purchased Securities.  The Transaction Documents and China
Electronic’s performance of its obligations thereunder have been unanimously
approved by China Electronic’s Board of Directors.  No consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority in the
world, including without limitation, the United States, or elsewhere is required
by China Electronic or any Affiliate of China Electronic in connection with the
consummation of the transactions contemplated by this Agreement, except as would
not otherwise have a Material Adverse Effect or the consummation of any of the
other agreements, covenants or commitments of China Electronic or any Subsidiary
contemplated by the other Transaction Documents. Any such qualifications and
filings will, in the case of qualifications, be effective on the Closing and
will, in the case of filings, be made within the time prescribed by
law.

     

    (e)           No Violation or
Conflict.  Assuming the representations and warranties of the
Subscriber in Section 3 are true and correct, neither the issuance nor sale of
the Purchased Securities nor the performance of China Electronic’s obligations
under this Agreement and all other Transaction Documents entered into by China
Electronic relating thereto will:

     

    (i)           violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of China Electronic, (B) to China Electronic’s
knowledge, any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to China Electronic of any court, governmental agency
or body, or arbitrator having jurisdiction over China Electronic or over the
properties or assets of China Electronic or any of its Affiliates, (C) the terms
of any bond, debenture, note or any other evidence of indebtedness, or any
agreement, stock option or other similar plan, indenture, lease, mortgage, deed
of trust or other instrument to which China Electronic or any of its Affiliates
is a party, by which China Electronic or any of its Affiliates is bound, or to
which any of the properties of China Electronic or any of its Affiliates is
subject, or (D) the terms of any “lock-up” or similar provision of any
underwriting or similar agreement to which China Electronic, or any of its
Affiliates is a party except the violation, conflict, breach, or default of
which would not have a Material Adverse Effect; or

     

    (ii)          result
in the creation or imposition of any lien, charge or encumbrance upon the
Purchased Securities or any of the assets of China Electronic or any of its
Affiliates except in favor of Subscriber as described herein; or

     

    (iii)         result
in the activation of any anti-dilution rights or a reset or repricing of any
debt, equity or security instrument of any creditor or equity holder of China
Electronic, or the holder of the right to receive any debt, equity or security
instrument of China Electronic nor result in the acceleration of the due date of
any obligation of China Electronic; or

    
      
         

      

      
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    (iv)        result
in the triggering of any piggy-back or other registration rights of any person
or entity holding securities of China Electronic or having the right to receive
securities of China Electronic.

     

    (f)           Litigation.  There
is no pending or, to the best knowledge of China Electronic, threatened action,
suit, proceeding or investigation before any court, governmental agency or body,
or arbitrator having jurisdiction over China Electronic, or any of its
Affiliates that would affect the execution by China Electronic or the complete
and timely performance by China Electronic of its obligations under the
Transaction Documents.  Except as disclosed in the Reports, there is
no pending or, to the best knowledge of China Electronic, basis for or
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over China
Electronic, or any of its Affiliates which litigation if adversely determined
would have a Material Adverse Effect.

     

    (g)           No Market
Manipulation.  China Electronic and its Affiliates have not
taken, and will not take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the common stock to facilitate the sale or resale
of the Purchased Securities or affect the price at which the Purchased
Securities may be issued or resold.

     

    (h)           Information Concerning
China
Electronic.  China Electronic's audited financial statements
consisting of the balance sheet of the Company as of December 31, 2009 and
December 31, 2008 and the related statements of income and retained earnings,
stockholders' equity and cash flow for the years then ended (the “Audited Financial
Statements”), and unaudited financial statements consisting of the
balance sheet of the China Electronic for the most recent quarter prior to the
Closing Date and the related statements of income and retained earnings,
stockholders' equity and cash flow for the three month period then ended (the
“Interim Financial
Statements” and together with the Audited Financial Statements, the
“ China
Electronic Financial
Statements”). The Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis throughout the period involved, subject,
in the case of the Interim Financial Statements, to normal and recurring
year-end adjustments (the effect of which will not be materially adverse) and
the absence of notes (that, if presented, would not differ materially from those
presented in the Audited Financial Statements). The Financial Statements are
based on the books and records of the Company, and fairly present the financial
condition of the Company as of the respective dates they were prepared and the
results of the operations of the Company for the periods indicated.

     

    (i)           Defaults.  China
Electronic is not in material violation of its articles of incorporation or
bylaws.   China Electronic is (i) not in default under or in
violation of any other material agreement or instrument to which it is a party
or by which it or any of its properties are bound or affected, which default or
violation would have a Material Adverse Effect, (ii) not in default with respect
to any order of any court, arbitrator or governmental body or subject to or
party to any order of any court or governmental authority arising out of any
action, suit or proceeding under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters which
default would have a Material Adverse Effect, or (iii) not in violation of any
statute, rule or regulation of any governmental authority which violation would
have a Material Adverse Effect.

    
      
         

      

      
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    (j)           No Integrated
Offering.   Neither China Electronic, nor any of its
Affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security of China Electronic nor
solicited any offers to buy any security of China Electronic under circumstances
that would cause the offer of the Purchased Securities pursuant to this
Agreement to be integrated with prior offerings by China Electronic for purposes
of the 1933 Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of the Bulletin
Board.  No prior offering will impair the exemptions relied upon in
this Offering or China Electronic’s ability to timely comply with its
obligations hereunder.  Neither China Electronic nor any of its
Affiliates will take any action or steps that would cause the offer or issuance
of the Purchased Securities to be integrated with other offerings which would
impair the exemptions relied upon in this Offering or China Electronic’s ability
to timely comply with its obligations hereunder.  China Electronic
will not conduct any offering other than the transactions contemplated hereby
that may be integrated with the offer or issuance of the Purchased Securities
that would impair the exemptions relied upon in this Offering or China
Electronic’s ability to timely comply with its obligations
hereunder.

     

    (k)          No General
Solicitation.  Neither China Electronic, nor any of its
Affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D/Regulation S under the 1933 Act) in connection with the
offer or sale of the Purchased Securities.

     

    (l)           No Undisclosed
Liabilities.  Except as disclosed in the China Electronic
Financial Statements, China Electronic has no liabilities or obligations which
are material, individually or in the aggregate, other than those incurred in the
ordinary course of China Electronic businesses and which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect,
except as disclosed in the China Electronic Financial Statements or on
Schedule 4.1(l).

     

    (m)         No Undisclosed Events or
Circumstances.  Except
as disclosed in the China Electronic Financial Statements, no event or
circumstance has occurred or exists with respect to China Electronic or its
businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by China Electronic, but which has not been so publicly
announced or disclosed in the China Electronic Financial
Statements.

     

     (n)         No Disagreements with
Accountants and Lawyers.  There
are no disagreements of any kind presently existing, or reasonably anticipated
by China Electronic to arise between China Electronic and the accountants and
lawyers previously and presently employed by China Electronic, including, but
not limited to, disputes or conflicts over payment owed to such accountants and
lawyers, nor have there been any such disagreements during the two years prior
to the Closing Date, in each case, that could cause a Material Adverse
Effect.

     

    
      
         

      

      
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    (o)          Foreign Corrupt
Practices.  Neither China Electronic, nor to the knowledge of
China Electronic, any agent or other person acting on behalf of China
Electronic, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by China Electronic (or made by any person
acting on its behalf of which China Electronic is aware) which is  in
violation of law, or (iv) violated in any material respect any provision of the
Foreign Corrupt Practices Act of 1977, as amended.

    

    (p)          Environmental
Compliance. Since their inception, neither China Electronic, nor any of
its Subsidiaries have been, in violation of any applicable law relating to the
environment or occupational health and safety, where such violation would have a
Material Adverse Effect. China Electronic and its Subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. Other than as disclosed on Schedule 4.1(p), China Electronic and each
of its Subsidiaries are also in compliance with all other limitations,
restrictions, conditions, standards, requirements, schedules and timetables
required or imposed under all Environmental Laws. There are no past or present
events, conditions, circumstances, incidents, actions or omissions relating to
or in any way affecting China Electronic or its Subsidiaries that violate or may
violate any Environmental Law after the Closing Date or that may give rise to
any environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance where, in each of the
foregoing clauses (i) and (ii), the failure to so comply could be reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect.

    

    (q)          Employees. Neither
China Electronic nor any Subsidiary has any collective bargaining arrangements
or agreements covering any of its employees. Except as disclosed in the Reports
or Other Written Information, neither China Electronic nor any Subsidiary has
any employment contract, agreement regarding proprietary information,
non-competition agreement, non-solicitation agreement, confidentiality
agreement, or any other similar contract or restrictive covenant, relating to
the right of any officer, employee or consultant to be employed or engaged by
China Electronic or such Subsidiary required to be disclosed with the Commission
or on the Form 8-K that is not so disclosed.

    

    (r)           Public Utility Holding
Company Act; Investment Company Act and U.S. Real Property Holding Corporation
Status. China Electronic is not a “holding company” or a “public utility
company” as such terms are defined in the Public Utility Holding Company Act of
1935, as amended. China Electronic is not, and as a result of and immediately
upon the Closing will not be, an “investment company” or a company “controlled”
by an “investment company,” within the meaning of the Investment Company Act of
1940, as amended.  China Electronic is not and has never been a U.S.
real property holding corporation within the meaning of Section 897 of the
Internal Revenue Code of 1986, as amended.

     

    
      
         

      

      
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    (s)          ERISA. No liability
to the Pension Benefit Guaranty Corporation has been incurred with respect to
any Plan (as defined below) by China Electronic or any of its Subsidiaries which
is or would be materially adverse to China Electronic and its subsidiaries. The
execution and delivery of this Agreement and the other Transaction Documents and
the issuance and sale of the Purchased Securities will not involve any
transaction which is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended, provided, that, if any of the
Subscribers, or any person or entity that owns a beneficial interest in any
of the Subscribers, is an “employee pension benefit plan” (within the
meaning of Section 3(2) of ERISA) with respect to which China Electronic is a
“party in interest” (within the meaning of Section 3(14) of ERISA), the
requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are
met.

    

    (t)           Independent Nature of
Subscribers. China Electronic acknowledges that the obligations of each
Subscriber under the Transaction Documents are several and not joint with the
obligations of any other Subscriber, and no Subscriber shall be responsible in
any way for the performance of the obligations of any other Subscriber under the
Transaction Documents. China Electronic acknowledges that the decision of each
Subscriber to purchase securities pursuant to this Agreement has been made by
such Subscriber independently of any other Subscriber and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of China Electronic or of its Subsidiaries
which may have been made or given by any other Subscriber or by any agent or
employee of any other Subscriber, and no Subscriber or any of its agents or
employees shall have any liability to any Subscriber (or any other person)
relating to or arising from any such information, materials, statements or
opinions. China Electronic acknowledges that nothing contained herein, or in any
Transaction Documents, and no action taken by any Subscriber pursuant hereto or
thereto, shall be deemed to constitute the Subscribers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Subscribers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. China Electronic acknowledges that each Subscriber shall
be entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Subscriber to
be joined as an additional party in any proceeding for such
purpose.

    

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

     

    
      
         

      

      
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    (v)           OFAC. Neither China
Electronic nor any of its Subsidiaries nor, to the knowledge of China
Electronic, any director, officer, agent, employee, Affiliate or person acting
on behalf of any of China Electronic or any of its Subsidiaries, is currently
subject to any U.S. sanctions administered by OFAC; and China Electronic will
not directly or indirectly use the proceeds of the sale of the Purchased
Securities, or lend, contribute or otherwise make available such proceeds to any
subsidiary of China Electronic, joint venture partner or other person or entity,
towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any
other country sanctioned by OFAC or for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered by
OFAC.

    

    (w)           Money Laundering
Laws. The operations of each of China Electronic and its Subsidiaries are
and have been conducted at all times in compliance with the money laundering
requirements of all applicable Money Laundering Laws and no action, suit or
proceeding by or before any court or governmental authority or any arbitrator
involving any of China Electronic or any of its Subsidiaries with respect to the
Money Laundering Laws is pending or, to the best knowledge of China Electronic,
threatened.

    

    (x)           Company Predecessor and
Subsidiaries.  China Electronic makes each of the
representations contained in Sections 4.1 of this Agreement, as same relate or
could be applicable to each Subsidiary.  All representations made by
or relating to China Electronic of a historical or prospective nature shall
relate, apply and refer to China Electronic and its predecessors and
successors.  China Electronic represents that it owns all of the
equity of the Subsidiaries and rights to receive equity of the Subsidiaries
identified on Schedule
4.1(a), free and clear of all
liens, encumbrances and claims, except as set forth on Schedule 4.1(a).  China
Electronic further represents that except as described in the China Electronic
Financial Statements the Subsidiaries have not been known by any other name
for the prior five years.

    

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

    

    (z)           Correctness of
Representations.  China Electronic represents that the
foregoing representations and warranties are true and correct as of the date
hereof in all material respects, and, unless China Electronic otherwise notifies
the Subscribers prior to the Closing Date, shall be true and correct in all
material respects as of the Closing Date; provided, that, if such representation
or warranty is made as of a different date, in which case such representation or
warranty shall be true as of such date.

    
      
         

      

      
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    (aa)          Survival.  The
foregoing representations and warranties shall survive for a period of two years
after the Closing Date.

     

    (bb)         No
Brokers.  Neither China Electronic nor any Subsidiary has taken
any action which would give rise to any claim by any person for brokerage
commissions, finder’s fees or similar payments relating to this Agreement or the
transactions contemplated hereby, except for dealings with the Placement Agent,
whose commissions and fees will be paid by China Electronic and except as set
forth on Schedule
4.1(bb).

     

    5.           Regulation D/Regulation S Offering/Legal
Opinion.  The offer and issuance of the Purchased Securities to
the Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act or Rule 506 of Regulation D and/or Regulation S promulgated
thereunder.  On the Closing Date, the Company will provide an opinion
reasonably acceptable to the Subscribers from the Company’s legal counsel
opining on the availability of an exemption from registration under the 1933 Act
as it relates to the offer and issuance of the Purchased
Securities.  A form of the Closing Legal Opinion is annexed hereto as
Exhibit C.  The Company will
provide, at the Company’s expense, such other legal opinions, if any, as are
reasonably necessary in each Subscriber’s opinion for the issuance and resale of
the Purchased Securities pursuant to an effective registration
statement. The Company shall approve, or have its designated counsel
approve, Rule 144 legal opinion requests from Subscriber’s counsel for removal
of restrictive legends to the Purchased Securities, within three (3) business
days of such request being provided to the Company’s transfer
agent.

     

    6.           Legal
Fees.   The Company shall pay a fee of $30,000 to
Anslow & Jaclin, LLP, as reimbursement for legal services rendered to the
Subscriber in connection with this Agreement and the purchase and sale of
the Offering, and $2,000 to Spectrum-OSO Asia Limited for due diligence
related services.   The $32,000 fee for Subscriber’s legal fees
and expenses (to the extent known as of the Closing) will be payable out of
funds held pursuant to the Escrow Agreement and paid at Closing.

     

    7.           Covenants of the
Company.  The Company covenants and agrees with the Subscribers
as follows:

     

    (a)           Stop
Orders.  Subject to the prior notice requirement described in
Section 7(n), the Company will advise the Subscribers, within twenty-four hours
after it receives notice of issuance by the Commission, any state securities
commission or any other regulatory authority of any stop order or of any order
preventing or suspending any offering of any securities of the Company, or of
the suspension of the qualification of the common stock of the Company for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose.  The Company will not issue any stop transfer order
or other order impeding the sale, resale or delivery of any of the Purchased
Securities, except as may be required by any applicable federal or state
securities laws and unless contemporaneous notice of such instruction is given
to the Subscribers.

    
      
         

      

      
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    (b)           Listing/Quotation.  The
Company will maintain the quotation or listing of its common stock on the
American Stock Exchange, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq
Global Select Market, Bulletin Board, or New York Stock Exchange (whichever of
the foregoing is at the time the principal trading exchange or market for the
common stock (the “Principal
Market”), and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Principal Market,
as applicable, as long as any Purchased Securities are outstanding. The Company
will provide Subscribers with copies of all notices it receives notifying the
Company of the threatened and actual delisting of the common stock from any
Principal Market.  As of the date of this Agreement and the Closing
Date, the Bulletin Board is and will be the Principal
Market.  (c)Market
Regulations.  If required, the Company shall notify the
Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Purchased Securities to the Subscribers and promptly provide
copies thereof to the Subscribers.

     

    (d)           Filing
Requirements.  From the date of this Agreement and until the
last to occur of (i) two (2) years after the Final Closing Date, or (ii) the
Purchased Securities can be resold or transferred by the Subscribers pursuant to
Rule 144(b)(1)(i) (the date of such latest occurrence being the “End Date”), the Company will
(A) comply in all respects with its reporting and filing obligations under the
1934 Act, and (B) comply with all requirements related to any registration
statement filed pursuant to this Agreement.  The Company will use its
best efforts not to take any action or file any document (whether or not
permitted by the 1933 Act or the 1934 Act or the rules thereunder) to terminate
or suspend such registration or to terminate or suspend its reporting and filing
obligations under said acts until the End Date.  Until all of the
Purchased Securities are sold by the Subscriber, the Company will continue the
listing or quotation of the Common Stock on a Principal Market and will comply
in all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Principal Market.  The Company agrees to
timely file a Form D with respect to the Purchased Securities if required under
Regulation D and to provide a copy thereof to each Subscriber promptly after
such filing.

     

    (e)           Use of
Proceeds.   The proceeds of the Offering will be employed
by the Company for expenses of the Offering, and general working
capital.  Except as described on Schedule 7(e), the Issue Price
may not and will not be used for accrued and unpaid officer and director
salaries, payment of financing related debt, redemption of outstanding notes or
equity instruments of the Company nor non-trade obligations outstanding on the
Closing Date.

     

    (f)           DTC
Program.  If the Company is eligible for DTC's "FAST"
program, it will, for a period of at least two (2) years from the Final Closing
Date, use its best efforts to employ as the transfer agent for the Purchased
Securities a participant in the Depository Trust Company Automated Securities
Transfer Program that is eligible to deliver shares via the Deposit Withdrawal
Agent Commission System.

    
      
         

      

      
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    (g)           Taxes.  The
Company will promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and governmental charges or
levies imposed upon the income, profits, property or business of the Company;
provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that the Company
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached
as security therefore.

     

    (h)           Insurance.  As
reasonably necessary as determined by the Company, the Company will keep its
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company’s line of business and
location, in amounts and to the extent and in the manner customary for companies
in similar businesses similarly situated and located and to the extent available
on commercially reasonable terms.

     

    (i)           Books and
Records. The Company will keep true records and books of account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent
basis.

     

    (j)           Governmental
Authorities. The Company shall duly observe and conform in all
material respects to all valid requirements of governmental authorities relating
to the conduct of its business or to its properties or assets.

     

    (k)           Intellectual
Property.  The Company shall maintain in full force and effect
its corporate existence, rights and franchises and all licenses and other rights
to use intellectual property owned or possessed by it and reasonably deemed to
be necessary to the conduct of its business, unless it is sold for
value.  Schedule
7(k) hereto identifies all of
the intellectual property owned by the Company and Subsidiaries.

     

    (l)           Properties. The
Company will keep its properties in good repair, working order and condition,
reasonable wear and tear excepted, and from time to time make all necessary and
proper repairs, renewals, replacements, additions and improvements thereto; and
the Company will at all times comply with each provision of all leases and
claims to which it is a party or under which it occupies or has rights to
property if the breach of such provision could reasonably be expected to have a
Material Adverse Effect.  The Company will not abandon any of its
assets except for those assets which have negligible or marginal value or for
which it is prudent to do so under the circumstances.

    
      
         

      

      
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    (m)           Confidentiality/Public
Announcement.   The Company agrees that except in
connection with a Form 8-K and the registration statement or statements
regarding the Subscriber’s Purchased Securities or in correspondence with the
SEC regarding same, it will not disclose publicly or privately the identity of
the Subscriber unless expressly agreed to in writing by a Subscriber or only to
the extent required by law and then only upon not less than three days prior
notice to Subscriber.  In any event and subject to the foregoing, the
Company undertakes to file a Form 8-K and issue a press release describing the
Offering on the fourth business day after the Closing Date.  Prior to
the Closing Date, such Form 8-K will be provided to the Placement Agents for
their review and approval.  In the Form 8-K, the Company will
specifically disclose the nature of the Offering and amount of common stock
outstanding immediately after the Closing.  Upon 
delivery by the Company to the Subscribers after the Closing Date of any
notice or information, in writing, electronically or otherwise, and while the
Purchased Securities are held by Subscribers, unless the  Company has
in good faith determined that the matters relating to such notice do not
constitute material, nonpublic information relating to
the Company or Subsidiaries, the Company  shall within four
business days after any such delivery publicly disclose such 
material,  nonpublic  information on a
Report on Form 8-K, provided, however,
that the Company will have no obligation to file any Report on Form 8-K with
respect to (i) any information contained in the registration statement relating
to the registration of the Registrable Securities, submitted for investors’
review pursuant to Section 9 herein, and (ii) the information as to currently
contemplated and/or negotiated financing transactions.  In
the event that the Company believes that a
notice or communication to Subscribers contains material, nonpublic
information relating to the Company or Subsidiaries, the Company shall so
indicate to Subscribers prior to delivery of such notice or
information.  Subscribers will be granted sufficient time to notify
the Company that such Subscriber elects not to receive such
information.   In such case, the Company will not deliver such
information to Subscribers.  In the absence of any such
indication, Subscribers shall be allowed to presume that all matters
relating to such notice and information do not constitute material,
nonpublic information relating to the Company or Subsidiaries.

     

    (n)           Non-Public
Information.  The Company covenants and agrees that except for
the Reports, Other Written Information and schedules and exhibits to this
Agreement and the Transaction Documents, which information the Company
undertakes to publicly disclose on the Form 8-K described in Section 7(m) above
and except for the information as to currently contemplated and/or negotiated
financing transactions, neither it nor any other person acting on its behalf
will at any time provide any Subscriber or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto such Subscriber shall have agreed in writing
to accept such information.  The Company understands and confirms that
each Subscriber shall be relying on the foregoing representations in effecting
transactions in securities of the Company.

     

    (o)           Further Registration
Statements.   Except for a registration statement filed
exclusively on behalf of the Subscribers, the Company will not, without the
consent of the Majority Holders, file with the Commission or with state
regulatory authorities any registration statements or amend any already filed
registration statement to increase the amount of common stock registered
therein, or reduce the price of which such company securities are registered
therein, (except for Forms S-8), until the End Date.  

     

    (p)           Lockup
Agreement.   The Company will deliver to the Subscribers
on or before the Closing Date, and enforce the provisions of, irrevocable lockup
agreements (“Lockup
Agreement”) in the form annexed hereto as Exhibit B, with the persons identified
on Schedule 7(p).

    
      
         

      

      
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    (q)           Board of Directors.
 As soon as possible, but no later than twelve (12) months after the
Closing Date (the “Uplisting Board Date”), the
Company shall comply with all Nasdaq Corporate Governance standards, including,
but not limited to, appointment of a number of independent directors to exceed
the number of non-independent directors on the board (the “Uplisting
Board”).

     

    (r)           Uplisting.  The
Company shall complete an uplisting of the common shares currently quoted on the
Bulletin Board to the Nasdaq Capital Market, Nasdaq Global Market, Nasdaq
Global Select Market, NYSE Amex Equities or any other exchange acceptable to the
Subscriber within twelve (12) months of the Closing (“Uplisting”). If the
Uplisting is not completed within twelve (12) months after the Closing
Date (the “Uplisting Date”), the Company shall pay liquidated damages to the
Subscribers. Such damages shall be paid in cash in an aggregate amount per month
(or part thereof) equal to 0.5% of the amount of the aggregate Issue Price of
the Purchased Securities subscribed to in the Offering after the Uplisting Date,
to be paid on the first business day of each monthly anniversary after the
Uplisting Date until the Uplisting is achieved (the “Uplisting Penalty”). The
Uplisting Penalty shall be apportioned on a pro-rata basis (determined by
dividing each Subscriber’s Issue Price by the aggregate Issue Price delivered to
the Company by the Subscribers hereunder). The Uplisting Penalty shall not in
the aggregate exceed 5% of the aggregate Issue price of the Purchased Securities
subscribed to by the Subscribers.

    

    (s)           Additional Negative
Covenants.  From the date of this Agreement until the End Date,
the Company will not and will not permit any of its Subsidiaries, without the
written consent of the Majority Holders, to directly or indirectly:

    

    (i)          engage
in any business other than businesses engaged in or proposed to be engaged in by
the Company on the Closing Date or businesses similar thereto;

    

    (ii)         merge
or consolidate with any person or entity (other than mergers of wholly owned
subsidiaries into the Company), or sell, lease or otherwise dispose of its
assets other than in the ordinary course of business involving an aggregate
consideration of more than twenty percent (20%) of the book value of its assets
on a consolidated basis in any 12-month period, or liquidate, dissolve,
recapitalize or reorganize;

    

    (iii)        incur
any indebtedness for borrowed money or become a guarantor or otherwise
contingently liable for any such indebtedness in excess of three million dollars
($3,000,000), except for obligations incurred in the ordinary course of
business;

    

    (iv)        enter
into any new agreement or make any amendment to any existing agreement, which by
its terms would restrict the Company’s performance of its obligations to holders
of the Purchased Securities pursuant to this Agreement or any Transaction
Documents; or

    

    (v)         enter
into any agreement with any holder or prospective holder of any securities of
the Company providing for the granting to such holder of registration rights,
preemptive rights, special voting rights or protection against
dilution.

     

    
      
         

      

      
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    8.           Indemnification.

     

    (a)           The
Company agrees to indemnify, hold harmless, reimburse and defend the
Subscribers, the Subscribers’ officers, directors, agents, Affiliates, members,
managers, control persons, and principal shareholders, against any claim, cost,
expense, liability, obligation, loss or damage (including reasonable legal fees)
of any nature, incurred by or imposed upon the Subscribers or any such person
which results, arises out of or is based upon (i) any material misrepresentation
by the Company or breach of any representation or warranty by the Company in
this Agreement or in any Exhibits or Schedules attached hereto in any
Transaction Documents, or (ii) after any applicable notice and/or cure periods,
any breach or default in performance by the Company of any material covenant or
undertaking to be performed by the Company hereunder, or any other
material agreement entered into by the Company and Subscribers relating
hereto.

     

    (b)           The
Subscribers agree to indemnify, hold harmless, reimburse and defend
the Company, the Company’s officers, directors, agents, Affiliates,
members, managers, control persons, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon them or any
such person which results, arises out of or is based upon any material
misrepresentation by the Subscribers in this Agreement or in any Exhibits or
Schedules attached hereto or in any Transaction
Documents.  Notwithstanding the forgoing, in no event shall the
liability of the Subscriber or permitted successor hereunder, or under any
Transaction Documents or other agreement delivered in connection
herewith, exceed the Purchase Price paid by such Subscriber.

     

    (c)           The
procedures set forth in Section 9(f) shall apply to the indemnification set
forth in Section 8.

     

    
      
         

      

      
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    9.           Registration
Rights.

     

    (a)          Registration Statement
Requirements.  The Company shall file with the Commission a
Form S-1 registration statement (the “Registration Statement”) (or
such other form that it is eligible to use) in order to register all or such
portion of the Registrable Shares (as hereinafter defined) as permitted by the
Commission (provided that the Company shall use diligent efforts to advocate
with the Commission for the registration of all of the Registrable Shares)
pursuant to Rule 415 for resale and distribution under the 1933 Act on or before
the date (the “Required Filing
Date”) which is sixty (60) calendar days after the Final Closing Date,
and use its best efforts to cause the Registration Statement to be declared
effective by the date (the “Required Effective Date”)
which is not later than the earlier of (x) one hundred eighty (180) calendar
days after the Final Closing Date, or (y) ten (10) business days after oral or
written notice to the Company or its counsel from the Commission that it may be
declared effective. The Company will register not less than 100% of the
Purchased Shares and the Warrant Shares in the aforedescribed Registration
Statement (the “Registrable
Shares”).  In the event that the Company is required by the
Commission to cutback the number of shares being registered in the Registration
Statement pursuant to Rule 415, then the Company shall reduce the Registrable
Shares pro rata, and unless otherwise directed in writing by the Subscriber as
to its Registrable Shares, the number of Registrable Shares to be registered on
such Registration Statement will first be reduced by Registrable Shares
represented by Warrant Shares and second by Registrable Shares represented by
Purchased Shares.  The Registration Statement shall also state that,
in accordance with Rules 416 and 457 under the 1933 Act, it also covers such
indeterminate number of additional shares of common stock as may become issuable
with respect to the Registrable Shares to prevent dilution resulting from stock
splits, stock dividends or similar transactions. Notwithstanding anything to the
contrary contained in this Section 9, if the Company receives comments on the
Registration statement from the Commission, and following discussions with and
responses to the Commission in which the Company uses its reasonable best
efforts and time to cause as many Registrable Shares for as many Subscribers as
possible to be included in the Registration Statement filed pursuant to Section
9(a) without characterizing any Subscriber as an underwriter, the Company is
unable to cause the inclusion of all Registrable Shares in such Registration
Statement, then the Company may, following not less than three (3) Trading Days
prior written notice to the Subscribers, (x) remove from the Registration
Statement such Registrable Shares (the “Cut Back Shares”) and/or (y)
agree to such restrictions and limitations on the registration and resale of the
Registrable Shares, in each case as the Commission may require in order for the
Commission to allow such Registration Statement to become effective; provided, that in no
event may the Company name any Subscriber as an underwriter without such
Subscriber’s prior written consent (collectively, the “Commission Restrictions”).
Unless the Commission Restrictions otherwise require, any cut-back imposed
pursuant to this Section 9(a) shall be allocated among the Registrable Shares of
the Subscribers on a pro rata basis. No liquidated damages under Section 9(d)
shall accrue on or as to any Cut Back Shares, and the Required Effective Date
for such additional Registration Statement including the Cutback Shares will be
tolled, until such time as the Company is able to effect the registration of the
Cut Back Shares in accordance with any Commission Restrictions (such date, the
“Restriction Termination
Date”). From and after the Restriction Termination Date, all provisions
of this Section 9 (including, without limitation, the liquidated damages
provisions, subject to tolling as provided above) shall again be applicable to
the Cut Back Shares (which, for avoidance of doubt, retain their character as
“Registrable Shares”) so that the Company will be required to file with and
cause to be declared effective by the Commission such additional Registration
Statements in the time frames set forth herein as necessary to ultimately cause
to be covered by effective Registration Statements all Registrable Shares (if
such Registrable Shares cannot at such time be resold by the Subscribers thereof
pursuant to Rule 144).

     

    (b)         Registration
Procedures. If and whenever the Company is required by the provisions of
Section 9(a) to effect the registration of any Registrable Shares under the 1933
Act, the Company will, as expeditiously as possible:

     

    (i)          subject
to the timelines provided in this Agreement, prepare and file with the
Commission a registration statement required by Section 9, with respect to such
securities and use its best commercially reasonable efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby (determined as herein provided), and promptly
provide to Subscriber’s Counsel copies of all filings and Commission letters of
comment and notify the Subscribers (by telecopier and by e-mail addresses
provided by the Subscribers) and Subscriber’s Counsel (by telecopier and by
email to ktrauger@anslowlaw.com) on or
before the second  business day thereafter that the Company receives
notice that (i) the Commission has no comments or no further comments on the
registration statement, and (ii) the registration statement has been declared
effective;

    
      
         

      

      
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    (ii)         prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective until such registration
statement has been effective until all of the Registrable Shares
covered by the Registration Statement can been sold by the Subscribers
pursuant to Rule 144 without volume restrictions;

     

    (iii)        furnish
to the Subscribers such number of copies of the registration statement and
the prospectus included therein (including each preliminary prospectus) as such
Subscribers reasonably may request in order to facilitate the public sale or
their disposition of the securities covered by such registration statement or
make them electronically available;

     

    (iv)        use
its reasonable best efforts to register or qualify the Registrable Shares
covered by such registration statement under the securities or “blue sky” laws
of such jurisdictions as the Subscribers shall request in writing, provided,
however, that the Company shall not for any such purpose be required to qualify
to transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to service of process in any such jurisdiction
and the Company shall not be required to register or qualify the Registrable
Shares in more than ten (10) states;

     

    (v)         list
the Registrable Shares covered by such registration statement with any
securities exchange on which the common stock of the Company is then
listed;

     

    (vi)        notify
the Subscribers within twenty-four hours of the Company’s becoming aware that a
prospectus relating thereto is required to be delivered under the 1933 Act, of
the happening of any event of which the Company has knowledge as a result of
which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing or which
becomes subject to a Commission, state or other governmental order suspending
the effectiveness of the registration statement covering any of the Registrable
Shares. Each Subscriber hereby covenants that it will not sell any Registrable
Shares pursuant to such prospectus during the period commencing at the time at
which the Company gives such Subscriber notice of the suspension of the use of
such prospectus in accordance with this Section 9(b)(vi) and ending at the time
the Company gives such Subscriber notice that such Subscriber may thereafter
effect sales pursuant to the prospectus, or until the Company delivers to such
Subscriber or files with the Commission an amended or supplemented
prospectus.

     

    (c)           Provision of
Documents.  It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Shares of a
particular Subscriber that such Subscriber shall furnish to the
Company in writing such information and representation letters, including a
completed form of the Selling Securityholder Questionnaire attached as Exhibit A hereto, with respect to
itself and the proposed distribution by it as the Company may reasonably request
to assure compliance with federal and applicable state securities
laws.

    
      
         

      

      
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    (d)           Non-Registration
Events.  The Company and the Subscribers agree that the
Subscribers will suffer damages if the Registration Statement is not filed by
the Required Filing Date and not declared effective by the Commission by the
Required Effective Date or if, after it is declared effective, its effectiveness
is not maintained in the manner and within the time periods contemplated by
Section 9 hereof, and it would not be feasible to ascertain the extent of
such damages with precision.  Accordingly, if (A) the Registration
Statement is not filed on or before the Required Filing Date, (B) the
Registration Statement is not declared effective on or before the Required
Effective Date, or (C) any registration statement described in Section 9
declared effective but shall thereafter cease to be effective for a period of
time which shall exceed forty (40) days in the aggregate per year (defined as a
period of 365 days commencing on the date the Registration Statement is declared
effective), or (D) the Company fails to file with the Commission a request for
acceleration of a Registration Statement in accordance with Rule 461 promulgated
by the Commission pursuant to the Securities Act, within five Trading Days of
the date that the Company is notified, or (E) ) prior to the effective date of a
Registration Statement, the Company fails to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in respect of
such Registration Statement within thirty (30) calendar days (the “Comment Response
Period”) after the receipt of comments by or notice from the Commission
that such amendment is required in order for such Registration Statement to be
declared effective (orally or in writing, whichever is earlier) by the
Commission that such Registration Statement will not be “reviewed” or will not
be subject to further review, or (F) the Company shall fail for any reason to
satisfy the current public information requirement under Rule 144 as to the
applicable Registrable Shares (each such event referred to in clauses A through
F of this Section 9(d), a “Non-Registration Event”), then
the Company shall deliver to the Subscribers, as liquidated damages (“Liquidated Damages”), on a
pro-rata basis (determined by dividing each Subscriber’s Issue Price by the
aggregate Issue Price delivered to the Company by the Subscribers hereunder)an
amount equal to one-half percent (0.5%) of the aggregate Issue Price of the
Purchased Securities owned of record by such Subscribers on the first
business day after the Non-Registration Event and for each subsequent thirty
(30) day period (pro rata for any period less than thirty days) which are
subject to such Non-Registration Event. The maximum aggregate Liquidated Damages
payable to the Subscriber under this Agreement shall be five percent (5%) of the
aggregate Issue Price paid by the Subscribers pursuant to this
Agreement. The Company shall pay the Liquidated Damages in cash. In the
event a Registration Statement is filed by the Required Filing Date, but is
withdrawn prior to being declared effective by the Commission, then such
Registration Statement will be deemed to have not been filed until it is
refiled.

     

    (e)           Expenses.  All
expenses incurred by the Company in complying with Section 9, including, without
limitation, all registration and filing fees, printing expenses (if required),
fees and disbursements of counsel and independent public accountants for the
Company, fees and expenses (including reasonable counsel fees) incurred in
connection with complying with state securities or “blue sky” laws, fees of the
FINRA, transfer taxes, and fees of transfer agents and registrars, are called
“Registration Expenses.”
The Company will pay all Registration Expenses in connection with any
registration statement described in Section 9.

    
      
         

      

      
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    (f)           Indemnification and
Contribution.

     

    (i)           In
the event of a registration of any Registrable Shares under the 1933 Act
pursuant to Section 9, the Company will, to the extent permitted by law,
indemnify and hold harmless the Subscriber, each of the officers, directors,
agents, Affiliates, members, managers, control persons, and principal
shareholders of the Subscriber, each underwriter of such Registrable Shares
thereunder and each other person, if any, who controls such Subscriber or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Subscriber, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Shares was registered under the 1933 Act pursuant
to Section 9, any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances when made, and will subject to the provisions of
Section 9(f)(iii) reimburse the Subscriber, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however,
that the Company shall not be liable to the Subscriber to the extent that any
such damages arise out of or are based upon an untrue statement or omission made
in any preliminary prospectus if (i) the Subscriber failed to send or deliver a
copy of the final prospectus delivered by the Company to the Subscriber with or
prior to the delivery of written confirmation of the sale by the Subscriber to
the person asserting the claim from which such damages arise, (ii) the final
prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, or (iii) to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any such Subscriber in writing
specifically for use in such registration statement or prospectus.

     

    (ii)           In
the event of a registration of any of the Registrable Shares under the 1933 Act
pursuant to Section 9, each Subscriber severally, but not jointly, will, to the
extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement, each director
of the Company, each underwriter and each person who controls any underwriter
within the meaning of the 1933 Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Shares were registered under the 1933 Act pursuant
to Section 9, any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however,
that the Subscriber will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Subscriber, as such, furnished in writing to the Company by such Subscriber
specifically for use in such registration statement or prospectus, and provided, further,
however, that the liability of the Subscriber hereunder shall be limited to the
net proceeds actually received by the Subscriber from the sale of Registrable
Shares pursuant to such registration statement.

    
      
         

      

      
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    (iii)        Promptly
after receipt by an indemnified party hereunder of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to such indemnified party
other than under this Section 9(f)(iii) and shall only relieve it from any
liability which it may have to such indemnified party under this Section
9(f)(iii), except and only if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 9(f)(iii) for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnifying party shall have reasonably concluded that there may be reasonable
defenses available to indemnified party which are different from or additional
to those available to the indemnifying party or if the interests of the
indemnified party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified parties, as a group, shall have the right to
select one separate counsel, reasonably satisfactory to the indemnified and
indemnifying party, and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.

     

    (iv)        In
order to provide for just and equitable contribution in the event of joint
liability under the 1933 Act in any case in which either (i) a Subscriber, or
any controlling person of a Subscriber, makes a claim for indemnification
pursuant to this Section 9(f) but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 9(f) provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of the Subscriber or
controlling person of the Subscriber in circumstances for which indemnification
is not provided under this Section 9(f); then, and in each such case, the
Company and the Subscriber will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that the Subscriber is responsible only for the
portion represented by the percentage that the public offering price of its
securities offered by the registration statement bears to the public offering
price of all securities offered by such registration statement, provided,
however, that, in any such case, (y) the Subscriber will not be required to
contribute any amount in excess of the public offering price of all such
securities sold by it pursuant to such registration statement; and (z) no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section
10(f) of the 1933 Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation and provided,
further, however, that the liability of the Subscriber hereunder shall be
limited to the net proceeds actually received by the Subscriber from the sale of
Registrable Shares pursuant to such registration statement.

     

    
      
         

      

      
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    10.         Anti-dilution and Purchase
Rights.

    

    (a)           Right of Participation.   The
Subscribers shall have the right to purchase up to 25% of any subsequent
underwritten offering of the Company’s securities at the time of Uplisting (the
“Follow-on Financing”). The Subscribers shall be given not less than ten
business days prior written notice (the “Notice of Sale”) of any proposed
Follow-on Financing and shall have the right during the ten business days
following receipt of the Notice of Sale to purchase the securities offered in
the Follow-on Financing.

     

    (b)           Most Favored Nations
Provision.   Other than in connection with Excepted
Issuances (as such term is defined in the last sentence of this Section 10(b)),
if at any time within twenty four (24) months following the Closing, the Company
shall issue any common stock or securities convertible into or exercisable for
shares of common stock (or modify the conversion or exercise price of any of the
foregoing which may be outstanding) to any person or entity at a price per share
which shall be less than 130% of the Common Stock price in the Offering or $3.43
for the price of the Follow-on Financing, subject to adjustment for stock
dividends, subdivisions and combinations (the “Lower Price Issuance”),
without the consent of the Subscriber, then the Company shall issue, for each
such occasion, additional shares of common stock to the Subscriber respecting
those Purchased Securities that are then still owned by the Subscriber at the
time of the Lower Price Issuance so that the average per share purchase price of
the Purchased Securities owned by the Subscriber on the date of the Lower Price
Issuance plus such additional shares issued to Subscriber pursuant to this
Section 10(b) is equal to such other lower price per share.  The
delivery to Subscriber of the additional shares of common stock shall be not
later than the closing date of the transaction giving rise to the requirement to
issue additional shares of common stock.  Subscriber is granted
piggyback registration rights in connection with such additional shares of
common stock.  For purposes of the issuance and adjustment described
in this paragraph, in the case of the issuance of securities convertible into or
exercisable for shares of common stock, the price per share shall be deemed to
be the quotient obtained by dividing (i) the sum of (A) the price paid for such
derivative security plus (B) the aggregate amount of consideration to be paid
upon conversion or exercise price of such security for the maximum number of
shares for which the derivative security may be converted or exercised, by (ii)
the total number of shares of common stock issuable upon conversion or exercise
price of such security for the maximum number of shares for which the derivative
security may be converted or exercised. The adjustment described in this
paragraph shall be made immediately upon the earlier of (x) the issuance of the
derivative security or (y) the Company entering into an agreement to issue the
derivative security, in each case at a price lower than $3.43 or the price of
the Follow-on Financing, (which $3.43 or price of the Follow-on Financing is
subject to adjustment for stock dividends, subdivisions and combinations), but
such adjustment shall not be made again upon any issuance of shares of common
stock upon conversion of such derivative security. Any common stock or
derivative security issued or issuable by the Company for no consideration or
for consideration that cannot be determined at the time of issuance will be
deemed issuable or to have been issued for $0.01 per share of common
stock.  The rights of Subscriber set forth in this Section 10 are in
addition to any other rights the Subscriber has pursuant to this Agreement, any
Transaction Documents, and any other agreement referred to or entered into in
connection herewith or to which Subscriber and Company are
parties.  For purposes hereof, “Excepted Issuances” means the
(i) Company’s issuances of securities  comprising the full or partial
consideration in connection with a strategic merger, acquisition, consolidation
or purchase of substantially all of the securities or assets of a corporation or
other entity that has been approved by a majority of disinterested directors of
the Company and in which holders of such securities or debt are not at any time
granted registration rights, (ii) the Company’s issuance of securities in
connection with strategic license agreements and other partnering arrangements
so long as such issuances are not for the purpose of raising capital and which
holders of such securities or debt are not at any time granted registration
rights, (iii) the Company’s issuance of common stock or its issuances or grants
of options to purchase common stock to employees, directors, and officers of the
Company pursuant to any stock or option plan duly adopted for such purpose, by a
majority of the non-employee members of the Board of Directors or a majority of
the members of a committee of non-employee directors established for such
purpose, and (iv) the Company’s issuances of securities upon the exercise or
exchange of or conversion of any securities exercisable or exchangeable for or
convertible into shares of common stock issued and outstanding on the date of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise price, exchange price or conversion price of such
securities.

    
      
         

      

      
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    (c)           Other
Adjustments.

     

    (i)           If
the Company’s actual after tax net income under U.S. GAAP for the fiscal year
ending December 31, 2010 (“Actual 2010 Net Income”) is
less than $12,000,000 (“2010
Guaranteed NI”), then the Company shall issue, for each such occasion, to
each Subscriber on a pro-rata basis (determined by dividing each Subscriber’s
Issue Price by the aggregate Issue Price delivered to the Company by the
Subscribers hereunder), additional amount of shares of Common Stock (the “Make Good Shares”) equal to,
as applicable, a number of shares equal to the difference between A and the
product of A x B, where A is the number of common shares originally purchased
and B equals (2010 Guaranteed NI  minus Actual 2010 Net Income)/2010
Guaranteed NI.

     

    (ii)          The
delivery to Subscriber of the Make Good Shares shall be made not later than the
third business day after the filing of a Form 10-K with the Commission which
includes the annual audited financial statements for the fiscal year ending
December 31, 2010.

    
      
         

      

      
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    (iii)        Notwithstanding
anything to the contrary contained herein, in determining whether the Company
has achieved the 2010 Guaranteed NI, the Company may disregard any non-cash
charge or expense required to be recognized by the Company under United States
generally accepted accounting principles (the “GAAP”), including, but not
limited to, the non-cash charges listed below. In addition, in determining
whether the Company has achieved the 2010 Guaranteed NI, (1) any liquidated
damages payable pursuant to the Transaction Documents and (2) any non-cash
charges expensed by the Company related to any Warrants or common stock issued
pursuant to this Transaction, in each case, shall not be included as expenses of
the Company in determining the Actual 2010 Net Income. Actual 2010 Net Income
shall also not include any charges or additions to net income of the Company as
a result of any fluctuation in the value of the Company’s Common Stock. “Net Income” shall mean the
Company’s income after taxes for the fiscal year ending  December 31,
2010 determined in accordance with GAAP as reported in the 2010 Annual Report on
Form 10-K of the Company less the allowable exclusions listed
above.

     

    11.         Closing
Conditions.

     

    (a)           The
obligation hereunder of the Subscriber to acquire and pay for the Purchased
Securities is subject to the satisfaction or waiver, at or before the Closing,
of each of the conditions set forth below. These conditions are for the
Subscriber’s sole benefit and may be waived by the Subscriber at any time in its
sole discretion.

     

    (i)          The
representations and warranties of the Company contained in this Agreement shall
have been true and correct on the date of this Agreement and shall be true and
correct on the Closing Date as if given on and as of the Closing Date (except
for representations given as of a specific date, which representations shall be
true and correct as of such date), and on or before the Closing Date the Company
shall have performed all covenants and agreements of the Company contained
herein or in any of the other Transaction Documents required to be performed by
the Company on or before the Closing Date;

    

    (ii)         The
Company shall have completed the Combination simultaneously with the Closing of
the Offering described herein

    

    (iii)        The
Transaction Documents have been duly executed and delivered by the Company to
the Escrow Agent; and

    

    (iv)        On
the Closing Date, the Subscriber shall have received an opinion of the Guzov
Ofsink, LLC, counsel for the Company and Global Law Office PRC counsel for the
Company, dated the Closing Date, addressed to the Subscribers, in the forms
attached as Exhibit C-1 and
C-2.

    

    (b)           The
obligation hereunder of the Company to issue and sell the Purchased Securities
to the Subscriber is subject to the satisfaction or waiver, at or before the
Closing, of each of the conditions set forth below. These conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion.

    

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

     

    
      
         

      

      
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    (ii)         The
Issue Price for the Purchased Securities has been delivered to the escrow
account maintained by Signature Bank (the “Escrow Agent”);

    

    (iii)     
  The initial Closing Date shall have occurred on or before July 16,
2010 and shall have transmitted to the Company gross proceeds of at least
$3,000,000; and

    

    (iv)        The
Transaction Documents to which the Subscriber is a party have been duly executed
and delivered by the Subscriber to the Escrow Agent.

    
       

    

    12.         Appointment of Subscriber
Representative.

    

    (a)           Except
for Oso Capital, LLC, Lee Bear I, LLC, Chestnut Ridge Partners, LP, John
Baldwin, DNST Properties, LLC, Burke Family Trust, SEL Private Trust Co. FAO Jim
Smucker Co. Master Trust, Coronado Capital Partners LP, Lazy Bear I, LLC, Joseph
R. Lee, Chris Clayton and Bear Marsh, LLC,, any additional subscribers in
Subsequent Closings hereby appoint American Capital Partners, LLC as such
subscriber’s representative (the “Subscriber Representative”) to
act on their collective behalf with respect to the Transaction Documents and all
amendments thereto, and the Subscriber Representative hereby accepts such
appointment.

    

    (b)           Such
subscribers hereby authorize the Subscriber Representative to negotiate and
accept on the subscriber’s behalf such additional terms of the Offering as the
Subscriber Representative shall deem at its sole discretion to be in the best
interest of such subscriber. All decisions of the Subscriber Representative with
respect to the foregoing shall be binding on such subscriber absent fraud or
willful misconduct.

    

    (c)           The
Company hereby agrees to expand to each additional subscriber the benefit of the
additional terms of the Offering accepted by the Subscriber Representative
pursuant to Section 12(b).

    

    13.         Miscellaneous.

     

    (a)           Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

    
      
         

      

      
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    If to the
Company, to:

    

    Buyonate,
Inc.

    Attn:
Ryan Cravey, CEO

    #803-5348
Vegas Drive

    Las
Vegas, NV 89108

    

    With a
copy by fax only to (which copy shall not constitute notice):

    

    Darren L.
Ofsink

    GUZOV
OFSINK, LLC

    600
Madison Avenue

    New York,
New York  10022

    Facsimile:  (212)
688-7273

    

    If to the
Subscribers:

    To each
of the addresses and facsimile numbers listed on the signature pages of this
Agreement

    

    With a
copy by fax only to (which copy shall not constitute notice):

    

    Anslow
& Jaclin LLP

    Attn:
Kristina L. Trauger, Esq.

        Gary S. Eaton,
Esq

    195 Route
9 South, 2nd
Floor

    Manalapan,
NJ 07726

    Facsimile:
(732) 577-1188

     

     (b)           Entire Agreement;
Amendment. This Agreement and the other Transaction Documents contain the
entire understanding and agreement of the parties with respect to the matters
covered hereby and, except as specifically set forth herein or in the
Transaction Documents, neither the Company nor any of the Subscribers makes any
representations, warranty, covenant or undertaking with respect to such matters
and they supersede all prior understandings and agreements with respect to
said subject matter, all of which are merged herein. No provision of this
Agreement nor any of the Transaction Documents may be waived or amended other
than by a written instrument signed by the Company and the holders of at least
fifty percent (50%) of the total shares of common stock purchased in the
Offering and then outstanding (the “Majority Holders”), and no
provision hereof may be waived other than by a written instrument signed by the
Majority Holders. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Purchased Shares then
outstanding. No consideration shall be offered or paid to any person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to
the Transaction Documents or holders of Purchased Shares, as the case may
be.

    
      
         

      

      
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     (c)           Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
transmission, PDF, electronic signature or other similar electronic means with
the same force and effect as if such signature page were an original
thereof.

     

    (d)           Law Governing this
Agreement.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state and county of New York.  The parties to this Agreement
hereby irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens.  The parties executing this Agreement
and other agreements referred to herein or delivered in connection herewith on
behalf of the Company agree to submit to the in personam jurisdiction of such
courts and hereby irrevocably waive trial by jury.  The
prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs.  In the event that any provision
of this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision of any agreement.  Each party hereby irrevocably waives
personal service of process and consents to process being served in any suit,
action or proceeding in connection with this Agreement or any other Transaction
Documents by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by law.

     

    (e)           Specific Enforcement,
Consent to Jurisdiction.  The Company and Subscribers
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.  It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or
equity.  Subject to Section 13(d) hereof, the Company and the
Subscribers hereby irrevocably waive, and agree not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction in New York of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper.  Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by
law.

    
      
         

      

      
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    (f)           Damages.   In
the event the Subscriber is entitled to receive any liquidated damages pursuant
to the Transactions Documents, the Subscriber may elect to receive the greater
of actual damages or such liquidated damages.

     

    (g)           Maximum
Payments.   Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that
the rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum
shall be credited against amounts owed by the Company to the Subscriber and thus
refunded to the Company.

     

    (h)           Calendar
Days.   All references to “days” in the Transaction
Documents shall mean calendar days unless otherwise stated.  The terms
“business days” and “trading days” shall mean days that the New York Stock
Exchange is open for trading for three or more hours.  Time periods
shall be determined as if the relevant action, calculation or time period were
occurring in New York City.  Any deadline that falls on a non-business
day in any of the Transaction Documents shall be automatically extended to the
next business day and interest, if any, shall be calculated and payable through
such extended period.

     

    (i)           Captions: Certain
Definitions.  The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.  As used in this Agreement the term
“person” shall mean and
include an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, an unincorporated organization and a government or
any department or agency thereof.

     

    (j)           Severability.  In
the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability: (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.

     

    [Signature Pages
Follow]

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT

    

    Please
acknowledge your acceptance of the foregoing Subscription Agreement with China
Electronic Holdings, Inc. by signing and returning a copy to the Company
whereupon it shall become a binding agreement.

    

    NUMBER
OF UNITS   _____________   x  10.56
=   _____________  (the “Issue
Price”)

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        Signature

                                                      	 
      	
                                                        Signature
      (if purchasing jointly)

                                                      
	 
      	 
      	 
      
	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        Name
      Typed or Printed

                                                      	 
      	
                                                        Name
      Typed or Printed

                                                      
	 
      	 
      	 
      
	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        Entity
      Name

                                                      	 
      	
                                                        Entity
      Name

                                                      
	 
      	 
      	 
      
	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        Address

                                                      	 
      	
                                                        Address

                                                      
	 
      	 
      	 
      
	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        City,
      State and Zip Code

                                                      	 
      	
                                                        City,
      State and Zip Code

                                                      
	 
      	 
      	 
      
	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        Telephone
      - Business

                                                      	 
      	
                                                        Telephone
      - Business

                                                      
	 
      	 
      	 
      
	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        Telephone
      – Residence

                                                      	 
      	
                                                        Telephone
      – Residence

                                                      
	 
      	 
      	 
      
	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        Facsimile
      – Business

                                                      	 
      	
                                                        Facsimile
      - Business

                                                      
	 
      	 
      	 
      
	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        Facsimile
      – Residence

                                                      	 
      	
                                                        Facsimile
      – Residence

                                                      
	 
      	 
      	 
      
	
                                                         

                                                      	 
      	
                                                         

                                                      
	
                                                        Tax
      ID # or Social Security #

                                                      	 
      	
                                                        Tax
      ID # or Social Security
#

                                                      

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    Name in
which securities should be issued:
_________________________________

     

    Dated:  July
9, 2010

     

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    This
Subscription Agreement is agreed to and accepted as of July 9,
2010.

     

    
      
        
          
            	 
      	
                    BUYONATE,
      INC.

                  
	 
      	 
      
	 
      	
                    By:

                  	 
      
	 
      	 
      	
                    Name:

                  
	 
      	 
      	
                    Title:

                  

          

        

      

    

     

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    This
Subscription Agreement is agreed to and accepted as of July 9,
2010.

     

    
      
        
          	 
      	
                  Solely
      with respect to Section 4.1,

                  (Representations
      by China Electronic Holdings, Inc.),

                
	 
      	 
      	
                  CHINA
      ELECTRONIC HOLDINGS, INC.

                
	 
      	 
      	 
      
	 
      	 
      	
                  By:

                	 
      
	 
      	 
      	 
      	
                  Name:

                
	 
      	 
      	 
      	
                  Title:

                

        

      

    

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

    LIST OF EXHIBITS AND
SCHEDULES

    

    
      	
              Exhibit
      A

            	
              Selling
      Securityholder Questionnaire

            
	 
      	 
      
	
              Exhibit
      B

            	
              Form
      of Lockup Agreement

            
	 
      	 
      
	
              Exhibit
      C

            	
              Form
      of Legal Opinion

            
	 
      	 
      
	
              Exhibit
      D

            	
              Escrow
      Agreement

            
	 
      	 
      
	
              Exhibit
      E

            	
              Series
      C Warrant

            
	 
      	 
      
	
              Exhibit
      F

            	
              Series
      D Warrant

            

    

     

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

    Investor
Questionnaire

     

    This
Questionnaire must be answered fully and returned along with your completed
subscription agreement in connection with your prospective purchase of
securities from Buyonate, Inc. (the “Company”).

     

    The
Subscriber represents and warrants that he, she or it comes within category as
marked below, and that for any category marked, he, she or it has truthfully set
forth, where applicable, the factual basis or reason the Subscriber comes within
that category.  ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE
KEPT STRICTLY CONFIDENTIAL.  The undersigned agrees to furnish any
additional information which the Company deems necessary in order to verify the
answers set forth below.

     

    Capitalized
terms used herein without definition shall have the respective meanings given
such terms as set forth in the subscription agreement between the Company and
the subscriber signatory thereto (the “Agreement”). 

    

    (1)           The
undersigned represents and warrants that he, she or it comes within at least one
category marked below, and that for any category marked, he, she or it has
truthfully set forth, where applicable, the factual basis or reason the
undersigned comes within that category.  The undersigned agrees to
furnish any additional information which the Company deems necessary in order to
verify the answers set forth below

     

    
      	
               ̈

            	
              The undersigned is an
      individual (not a partnership, corporation, etc.) whose individual net
      worth, or joint net worth with his or her spouse, presently exceeds
      $1,000,000.

            

    

     

    Explanation:  In
calculating net worth you may include equity in personal property and real
estate, including your principal residence, cash, short-term investments, stock
and securities.  Equity in personal property and real estate should be
based on the fair market value of such property less debt secured by such
property.

     

    
      	
               ̈

            	
              The undersigned is an
      individual (not a partnership, corporation, etc.) who had an income in
      excess of $200,000 in each of the two most recent years, or joint income
      with his or her spouse in excess of $300,000 in each of those years (in
      each case including foreign income, tax exempt income and full amount of
      capital gains and losses but excluding any income of other family members
      and any unrealized capital appreciation) and has a reasonable expectation
      of reaching the same income level in the current
    year.

            

    

     

    
      	
               ̈

            	
              The undersigned is a director
      or executive officer of the Company which is issuing and selling the
      Units.

            

    

     

    
      	
               ̈

            	
              The undersigned is a bank; a
      savings and loan association; insurance company; registered investment
      company; registered business development company; licensed small business
      investment company (“SBIC”); or employee benefit plan within the meaning
      of Title 1 of ERISA and (a) the investment decision is made by a plan
      fiduciary which is either a bank, savings and loan association, insurance
      company or registered investment advisor, or (b) the plan has total assets
      in excess of $5,000,000 or (c) is a self directed plan with investment
      decisions made solely by Persons that are accredited Subscribers.
      (describe entity)

            

    

     

    
            ______________________________________________________

            ______________________________________________________

       

    

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

     

    
      	
              1.

            	
              The
      undersigned is a private business development company as defined in
      section 202(a)(22) of the Investment Advisors Act of 1940. (Describe
      entity)

            

    

     

          ______________________________________________________

          ______________________________________________________

     

    
      	
              2.

            	
              The
      undersigned is either a corporation, partnership, Massachusetts business
      trust, or non-profit organization within the meaning of Section 501(c)(3)
      of the Internal Revenue Code, in each case not formed for the specific
      purpose of acquiring the Units and with total assets in excess of
      $5,000,000. (Describe entity)

            

    

     

          ______________________________________________________

          ______________________________________________________

     

    
      	
              3.

            	
              The
      undersigned is a trust with total assets in excess of $5,000,000, not
      formed for the specific purpose of acquiring the Units, where the purchase
      is directed by a “sophisticated person” as defined in Regulation
      506(b)(2)(ii) under the Securities
Act.

            

    

     

    
      	
              4.

            	
              The
      undersigned is an entity (other than a trust) all of the equity owners of
      which are “accredited investors” within one or more of the above
      categories.  If relying upon this Category H alone, each equity
      owner must complete a separate copy of this
      Agreement.  (Describe
entity)

            

    

     

                               ______________________________________________________

     

    
      	
              1.

            	
              The
      undersigned is not within any of the categories above and is therefore not
      an accredited investor.

            

    

     

    The
undersigned agrees that the undersigned will notify the Company at any time on
or prior to the Closing Date in the event that the representations and
warranties made by the undersigned in this Agreement shall cease to be true,
accurate and complete.

     

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

     

    GENERAL
INFORMATION

     

    Name:  ________________________________

    

    Date of
Birth:  ______________________________

    

    Residence
Address:  _______________________________________________________________

    

    Business
Address:  ________________________________________________________________

    

    Home
Telephone No.:
______________________________________________________________

    

    Business
Telephone
No:  ____________________________________________________________

    

    E-mail
Address:  ___________________________________________________________________

    

    Preferred
Mailing Address: ________ Business   or _________  Home
(check one)

    

    Social
Security
Number:  ____________________________________________________________

    

    Marital
Status:  ____________________________________________________________________

     

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

     

    (2)
           SUITABILITY (please answer each
question)

     

    (a)  For
an individual Subscriber, please describe your current employment, including the
company by which you are employed and its principal business:

     

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                  

                              
	 
      
	 
      
	 
      

                      

                    

                  

                

              

            

          

        

      

    

     

    (b)  For
an individual Subscriber, please describe any college or graduate degrees held
by you:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                    

                                
	 
      
	 
      

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    (c) For
all Subscribers, please list types of prior investments:

     

    
      
        
          
            
              
                
                  
                    
                      	
                                

                            
	 
      
	 
      
	 
      

                    

                  

                

              

            

          

        

      

    

     

    (d)  For
all Subscribers, please state whether you have you participated in other private
placements before:

    

    YES   ̈                               NO   ̈

    

    (e) If
your answer to question (d) above was “YES”, please indicate frequency of such
prior participation in private placements of:

    

    
      	 
      	
              Public

            	
              Private

            	
              Public
      or Private

            
	 
      	
              Companies

            	
              Companies

            	
              [                          ]

            
	 
      	 
      	 
      	 
      
	
              Frequently

            	 
      	 
      	 
      
	
              Occasionally

            	 
      	 
      	 
      
	
              Never

            	 
      	 
      	 
      

    

     

    (f) For
individual Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future?

    

    YES   ̈                               NO   ̈

    

    (g)  For
trust, corporate, partnership and other institutional Subscribers, do you expect
your total assets to significantly decrease in the foreseeable
future?

    

    YES   ̈                               NO   ̈

    

    (h)  For
all Subscribers, do you have any other investments or contingent liabilities
which you reasonably anticipate could cause you to need sudden cash requirements
in excess of cash readily available to you:

    

    YES   ̈                               NO   ̈

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    (i)  For
all Subscribers, are you familiar with the risk aspects and the non-liquidity of
investments such as the securities for which you seek to subscribe?

    

    YES   ̈                               NO   ̈

    

    (j)  For
all Subscribers, do you understand that there is no guarantee of financial
return on this investment and that you run the risk of losing your entire
investment?

    

    YES   ̈                               NO   ̈

    

    (3)           MANNER
IN WHICH TITLE IS TO BE HELD. (circle one)

    

    
      	 
      	
              (a)

            	
              Individual
      Ownership

            
	 
      	
              (b)

            	
              Community
      Property

            
	 
      	
              (c)

            	
              Joint
      Tenant with Right of

            
	 
      	 
      	
              Survivorship
      (both parties must sign)

            
	 
      	
              (d)

            	
              Partnership*

            
	 
      	
              (e)

            	
              Tenants
      in Common

            
	 
      	
              (f)

            	
              Company*

            
	 
      	
              (g)

            	
              Trust*

            
	 
      	
              (h)

            	
              Other

            

    

    

    *If Units
are being subscribed for by an entity, the Certificate of Signatory attached as
Exhibit II to the Subscription Agreement must also be completed.

    

    (4)           FINRA
AFFILIATION.

    

    Are you
affiliated or associated with a FINRA member firm (please check
one):

    

    YES   ̈                               NO   ̈

    

    If yes,
please describe:

     

    
      
        
          
            
              
                
                  
                    	
                              

                          
	 
      
	 
      

                  

                

              

            

          

        

      

    

     

    If
Subscriber is a Registered Representative with a FINRA member firm, have the
following acknowledgment signed by the appropriate party:

    

    The
undersigned FINRA member firm acknowledges receipt of the notice required by the
Rules of Fair Practice.

     

    
      
        
          
            
              	 
      
	
                      Name
      of FINRA Member Firm

                    
	
                      By:

                    	 
      
	
                      Authorized
      Officer

                    
	
                      Date:

                    	 
      

            

          

        

      

    

     

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    (5)          FOR TRUST
SUBSCRIBERS.

    

    A.
Certain trusts generally may not qualify as accredited investors except under
special circumstances. Therefore, if you intend to purchase the shares of the
Company’s stock in whole or in part through a trust, please answer each of the
following questions.

    

    Is the
trustee of the trust a national or state bank that is acting in its fiduciary
capacity in making the investment on behalf of the trust?

    

    YES   ̈                               NO   ̈

    

    Does this
investment in the Company exceed 10% of the trust assets?

    

    YES   ̈                               NO   ̈

    

    B. If the
trust is a revocable
trust, please complete Question 1 below.  If the trust is an irrevocable trust, please
complete Question 2 below.

    

    1.           REVOCABLE TRUSTS

    

    Can the
trust be amended or revoked at any time by its grantors:

    

    YES   ̈                               NO   ̈

    

    If yes,
please answer the following questions relating to each grantor (please add
sheets if necessary):

    

    Grantor
Name:                                                                                                                     

    

    Net worth
of grantor (including spouse, if applicable), including home, home furnishings
and automobiles exceeds $1,000,000?

    

    YES   ̈                               NO   ̈

    

    OR

    

    Income
(exclusive of any income attributable to spouse) was in excess of $200,000 for
2008 and 2009 and is reasonably expected to be in excess of $200,000 for
2010?

    

    YES   ̈                               NO   ̈

    

    OR

    

    Income
(including income attributable to spouse) was in excess of $300,000 for 2008 and
2009 and is reasonably expected to be in excess of $300,000 for
2010?

    

    YES   ̈                               NO   ̈

    
      
         

      

      
        52

        
          

        

      

      
         

      

    

    2.           IRREVOCABLE
TRUSTS

    

    If the
trust is an irrevocable trust, please answer the following
questions:

    

    Please
provide the name of each trustee:

    

    Trustee
Name:                                                                                                                   

    

    Trustee
Name:                                                                                                                   

    

    Does the
trust have assets greater than $5 million?

    

    Yes  ̈                     No
 ̈

    Do you
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the
Company?

    

    Yes  ̈                     No
 ̈

    

    Indicate
how often you invest in:

    

    
      	
               
      

            	
              (i)

            	
              Marketable
      Securities

            

    

    

    Often
 ̈
Occasionally  ̈ Seldom
o Never  ̈

    

    
      	
               
      

            	
              (ii)

            	
              Restricted
      Securities

            

    

    

    Often
 ̈
Occasionally  ̈ Seldom
 ̈
Never  ̈

    

    
      	
               
      

            	
              (iii)

            	
              Venture
      Capital Companies

            

    

    

    Often
 ̈
Occasionally  ̈ Seldom
 ̈
Never  ̈

    

    [Signature
Page follows]

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    

    By
signing this Questionnaire, I hereby confirm the following
statements:

    

               (a)
I am aware that the offering of Units will involve securities that are not
transferable and for which no market exists, thereby requiring my investment to
be maintained for an indefinite period of time.

    

               (b)
I acknowledge that any delivery to me of the Transaction Documents relating to
the Units prior to the determination by the Company of my suitability as an
investor, shall not constitute an offer of such Units until such determination
of suitability shall be made, and I agree that I shall promptly return the
Transaction Documents to the Company upon request.

    

               (c)           My
answers to the foregoing questions are, and were on any date (if any) that I
previously subscribed for Units in the Company, true and complete to the best of
my information and belief and were true on any date that I previously as of, and
I will promptly notify the Company of any changes in the information I have
provided.

    

    Executed:

    

    
      
        
          
            
              	
                      Date:
      _____________

                    	 
      
	 
      	 
      
	 
      	 
      
	
                      (Printed
      Name)

                    	 
      
	 
      	 
      
	 
      	 
      
	
                      (Signature)

                    	 
      
	 
      	 
      
	 
      	 
      
	
                      (Printed
      Name of Joint Subscriber)

                    	 
      
	 
      	 
      
	 
      	 
      
	
                      (Signature
      of Joint Subscriber)

                    	 
      

            

          

        

      

    

     

    
      
         

      

      
        54

        
          

        

      

      
         

      

    

     

    CERTIFICATE
OF SIGNATORY

     

    I,
____________________________, am the ____________________________ of
__________________________________________ (the “Entity”).

     

    I certify
that I am empowered and duly authorized by the Entity to execute and carry out
the terms of that certain Subscription Agreement dated as of ___________, 2010,
by and between the Entity and Buyonate, Inc. (the “Subscription Agreement”), and
to purchase and hold the Units (as defined in the Subscription Agreement), and
certify further that the Subscription Agreement has been duly and validly
executed on behalf of the Entity and constitutes a legal and binding obligation
of the Entity.

     

    IN
WITNESS WHEREOF, I have set my hand this _____ day of _____________,
2010.

     

    
      
        	 
      	 
      
	 
      	
                (Signature)

              

      

    

     

    
      
         

      

      
        55

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