Document:

LOCK-UP
      AGREEMENT

     

    THIS
      AGREEMENT (this “Agreement”) is dated as of June 10, 2008 by and between
      Southern Sauce Company, Inc., a Florida corporation (the “Company”), and
      ____________ (“Shareholder”).

     

    WHEREAS,
      the Company intends to enter into (i) a merger transaction in which the holders
      of all of the equity interests in Shen Kun International Limited, a British
      Virgin Islands company (“Shen Kun”), will deliver all of such equity interests
      to the Company and receive from the Company, as merger consideration, certain
      shares of the common stock of the Company, par value $0.001 per share (such
      stock, the “Common Stock”; such transaction, the “Merger Transaction”) and (ii)
      a private placement financing transaction with certain accredited investors
      (the
“Investors”) whereby the Company will issue Units composed of shares of a
      newly-designated Series A Convertible Preferred Stock, par value $0.001 per
      share (the “Series A Stock”) and related warrants (the “Warrants”) to purchase
      shares of Common Stock of the Company (the “Financing Transaction” and, together
      with the Merger Transaction, the “Two Transactions”).

     

    WHEREAS,
      Shareholder wishes to induce the Company and the Investors to enter into the
      Financing Transaction.

     

    WHEREAS,
      in order to induce the Company and the Investors to enter into the Financing
      Transaction pursuant to the Securities Purchase Agreement dated June 10, 2008
      by
      and among the Company and the Investors (the “Purchase Agreement”), Shareholder
      has agreed not to sell any shares of the Company’s Common Stock or any ordinary
      shares of Long Sunny Limited, a British Virgin Islands company (the “Long Sunny
      Shares”) that Shareholder presently owns or may acquire after the date hereof,
      except in accordance with the terms and conditions set forth herein
      (collectively, the “Lock-Up Shares”). Capitalized terms used herein without
      definition shall have the meanings assigned to such terms in the Purchase
      Agreement.

     

    NOW,
      THEREFORE, in consideration of the covenants and conditions hereinafter
      contained, the parties hereto agree as follows:

     

    1.  Restriction
      on Transfer; Term.
      The
      Shareholder hereby agrees with the Company that such Shareholder will not offer,
      sell, contract to sell, assign, transfer, hypothecate, pledge or grant a
      security interest in, or otherwise dispose of, or enter into any transaction
      which is designed to, or might reasonably be expected to, result in the
      disposition of (whether by actual disposition or effective economic disposition
      due to cash settlement or otherwise, directly or indirectly) (each, a
“transfer”), any of the Lock-Up Shares and shall not transfer such shares until
      a date that is twelve (12) months following the effective date of the Initial
      Registration Statement (as that term is defined in the Registration Rights
      Agreement, dated June 10, 2008 by and among the Company and the Investors)
      or,
      in the case of the Long Sunny Shares, until June 10, 2009 (the “Effective Date”)
      filed by the Company with the Securities and Exchange Commission providing
      for
      the resale of the shares of Common Stock issuable upon conversion of the
      Preferred Shares issued pursuant to the Purchase Agreement (the “Period”). The
      Shareholder agrees that, during the twenty-four (24) months immediately
      following the Period, such Shareholder shall not transfer more than one-twelfth
      (1/12) of such Shareholder’s total holdings of Common Stock during any one (1)
      month. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    2.  Ownership.
      During
      the Period, Shareholder shall retain all rights of ownership in the Lock-Up
      Shares, including, without limitation, voting rights and the right to receive
      any dividends that may be declared in respect thereof.

     

    3.  Company
      and Transfer Agent.
      The
      Company is hereby authorized to disclose the existence of this Agreement to
      its
      transfer agent. The Company and its transfer agent are hereby authorized to
      decline to make any transfer of the Common Stock if such transfer would
      constitute a violation or breach of this Agreement and/or the Purchase
      Agreement.

     

    4.  Notices.
      All
      notices, demands, consents, requests, instructions and other communications
      to
      be given or delivered or permitted under or by reason of the provisions of
      this
      Agreement or in connection with the transactions contemplated hereby shall
      be in
      writing and shall be deemed to be delivered and received by the intended
      recipient as follows: (i) if personally delivered, on the business day of such
      delivery (as evidenced by the receipt of the personal delivery service), (ii)
      if
      mailed certified or registered mail return receipt requested, two (2) business
      days after being mailed, (iii) if delivered by overnight courier (with all
      charges having been prepaid), on the business day of such delivery (as evidenced
      by the receipt of the overnight courier service of recognized standing), or
      (iv)
      if delivered by facsimile transmission, on the business day of such delivery
      if
      sent by 6:00 p.m. in the time zone of the recipient, or if sent after that
      time,
      on the next succeeding business day (as evidenced by the printed confirmation
      of
      delivery generated by the sending party’s telecopier machine). If any notice,
      demand, consent, request, instruction or other communication cannot be delivered
      because of a changed address of which no notice was given (in accordance with
      this Section 4), or the refusal to accept same, the notice, demand, consent,
      request, instruction or other communication shall be deemed received on the
      second business day the notice is sent (as evidenced by a sworn affidavit of
      the
      sender). All such notices, demands, consents, requests, instructions and other
      communications will be sent to the following addresses or facsimile numbers
      as
      applicable.

     

    If
      to the
      Company: 

    Southern
      Sauce Company, Inc.

    No.
      27,
      Wang Gang Road, Jin Nan (Shuang Gang) Development Area

    Tianjin,
      People’s Republic of China 300350

    Attention:
      Chen Wang 

    Tel.
      No.:
      (86-22) 2858-8899

    Fax
      No.:
      (86-22) 2859-0003

     

    with
      copies (which copies shall not constitute notice to the Issuer) to: 

    

    Sichenzia
      Ross Friedman Ference LLP

    61
      Broadway, 32nd Floor

    New
      York,
      NY 10006

    Attention:
      Marc J. Ross, Esq.

    Tel.
      No.:
      (212) 930-9700

    Fax
      No.:
      (212) 930-9725 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    and
      to:

     

    Loeb
      & Loeb LLP

    345
      Park
      Avenue

    New
      York,
      NY 10154

    Attn:
      Mitchell S. Nussbaum, Esq.

    Tel.
      No.:
      212-407-4159

    Fax
      No.:
      212-407-4990

     

    If
      to
      Shareholder, 

     

    c/o
      Southern Sauce Company, Inc.

    No.
      27,
      Wang Gang Road, Jin Nan (Shuang Gang) Development Area

    Tianjin,
      People’s Republic of China 300350

    Attention:
      Chen Wang 

    Tel.
      No.:
      (86-22) 2858-8899

    Fax
      No.:
      (86-22) 2859-0003

     

    or
      to
      such other address as any party may specify by notice given to the other party
      in accordance with this Section 4.

     

    5.  Amendment.
      This
      Agreement may not be modified, amended, altered or supplemented, except by
      a
      written agreement executed by each of the parties hereto.

     

    6.  Entire
      Agreement.
      This
      Agreement contains the entire understanding and agreement of the parties
      relating to the subject matter hereof and supersedes all prior and/or
      contemporaneous understandings and agreements of any kind and nature (whether
      written or oral) among the parties with respect to such subject matter, all
      of
      which are merged herein.

     

    7.  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York applicable to agreements made and to be performed in that
      state, without regard to any of its principles of conflicts of laws or other
      laws which would result in the application of the laws of another jurisdiction.
      This Agreement shall be construed and interpreted without regard to any
      presumption against the party causing this Agreement to be drafted.

     

    8.  Waiver
      of Jury Trial.
      EACH OF
      THE PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL
      BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
      AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES
      UNCONDITIONALLY AND IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE
      COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY AND THE FEDERAL
      DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK WITH RESPECT TO ANY SUIT,
      ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
      TRANSACTIONS CONTEMPLATED HEREBY, AND EACH OF THE PARTIES HEREBY UNCONDITIONALLY
      AND IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN NEW YORK COUNTY OR SUCH
      DISTRICT, AND AGREES THAT SERVICE OF ANY SUMMONS, COMPLAINT, NOTICE OR OTHER
      PROCESS RELATING TO SUCH SUIT, ACTION OR OTHER PROCEEDING MAY BE EFFECTED IN
      THE
      MANNER PROVIDED IN SECTION 4.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

    9.  Severability.
      The
      parties agree that if any provision of this Agreement be held to be invalid,
      illegal or unenforceable in any jurisdiction, that holding shall be effective
      only to the extent of such invalidity, illegally or unenforceability without
      invalidating or rendering illegal or unenforceable the remaining provisions
      hereof, and any such invalidity, illegally or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction. It is the intent of the parties that this Agreement be
      fully
      enforced to the fullest extent permitted by applicable law.

     

    10.  Binding
      Effect; Assignment.
      This
      Agreement and the rights and obligations hereunder may not be assigned by any
      party hereto without the prior written consent of the other parties hereby.
      This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective successors and permitted assigns.

     

    11.  Headings.
      The
      section headings contained in this Agreement (including, without limitation,
      section headings and headings in the exhibits and schedules) are inserted for
      reference purposes only and shall not affect in any way the meaning,
      construction or interpretation of this Agreement. Any reference to the
      masculine, feminine, or neuter gender shall be a reference to such other gender
      as is appropriate. References to the singular shall include the plural and
      vice
      versa.

     

    12.  Counterparts.
      This
      Agreement may be executed in two or more counterparts, and by the different
      parties hereto in separate counterparts, each of which when executed shall
      be
      deemed to be an original, and all of which, when taken together, shall
      constitute one and the same document. This Agreement shall become effective
      when
      one or more counterparts, taken together, shall have been executed and delivered
      by all of the parties.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
       

      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      written above herein.

     

     

    
      	 	
              SOUTHERN
                SAUCE COMPANY, INC.

               

              By:
                __________________________________

              Name:
                

              Title:
                

               

               

              _____________________________________

              Name:

            

    

     

     

    
      
         

      

      
        5MERGER
        AGREEMENT AND 

      PLAN
        OF REORGANIZATION

      

      THIS MERGER
        AGREEMENT AND PLAN OF REORGANIZATION,
        dated
        as of June 9, 2008 (this “Agreement”)
        by and
        among Southern Sauce Company, Inc., a Florida corporation (“Parent”),
        Shen
        Kun Acquisition Sub Limited, a British Virgin Islands company which is a
        wholly
        owned subsidiary of Parent (“Acquisition
        Subsidiary”)
        and
        Shen Kun International Limited, a British Virgin Islands company (“Shen
        Kun”);
        

       

      Castle
        Bison, Inc., a California corporation (“Castle”),
        Martin Sumichrast (“Sumichrast”),
        Ralph
        Olson (“Olson”)
        and
        Vision Opportunity China LP, a Guernsey limited partnership (“Vision”
        and
        together with Castle, Sumichrast and Olson, the “Parent
        Controlling Shareholders”)
        are
        parties to this Agreement for purposes of Articles III, V, VI, VII, IX
        and
X
        only;

       

      Long
        Sunny Limited, a British Virgin Islands company (“Long
        Sunny”),
        Groom
        Profit Holdings Limited, a British Virgin Islands company (“Groom
        Profit”),
        Right
        Idea Holdings Limited, a British Virgin Islands company (“Right
        Idea”),
        the
        individuals, Mr. Miao Yang, Ms. Zhang Ying, Ms. Chen Fang, Mr. Wu Yanping,
        Mr.
        Liu Naifan, (Long Sunny, Groom Profit, Right Idea, Mr. Miao, Ms. Zhang, Ms.
        Chen, Mr. Wu, and Mr. Liu together constituting the “Shen
        Kun Shareholders”),
        Shengkai (Tianjin) Ceramic Valves Co., Ltd., a PRC wholly
        foreign-owned enterprise (“WFOE”),
        and
        Tianjin Shengkai Industrial Technology Development Co., Ltd., a
        PRC
        company (“Shengkai”
        and
        together with
        Shen Kun and WFOE,
        “the
        Shen Kun Companies”),
        are
        parties to this Agreement for purposes of Articles IV, V, VI, VII,
        VIII,
        IX
        and
X
        only.

      

      RECITALS

       

      WHEREAS,
        the
        Shen Kun Shareholders own 100% of the issued and outstanding capital stock
        of
        Shen Kun (the “Shen
        Kun Shares”);
        and

       

      WHEREAS,
        the
        Shen Kun Companies have entered into arrangements which effectively give
        Shen
        Kun control over Shengkai’s business and management;

       

      WHEREAS,
        the
        Boards of Directors of each of Parent, Acquisition Subsidiary and Shen Kun
        have,
        pursuant to the laws of their respective jurisdiction, approved this Agreement
        and the consummation of the transactions contemplated hereby, including the
        merger of Acquisition Subsidiary with and into Shen Kun (the “Merger”);
        and
        the Boards of Directors of each of Shen Kun and Acquisition Subsidiary have
        declared that this Agreement is advisable, fair and in the best interests
        of
        their respective shareholders and approved the Merger upon the terms and
        conditions set forth in this Agreement.

       

      WHEREAS,
        immediately following the consummation of the Merger, and pursuant to a
        Securities Purchase Agreement to be dated as of the date of the First
        Closing by
        and
        among Parent, Vision, and certain other investors (collectively, the
“Investors”)
        substantially in the form set forth as Exhibit
        A
        hereto
        (the “Securities
        Purchase Agreement”),
        Parent
        intends to conduct the Private Placement upon the terms and conditions set
        forth
        in the relevant Private Placement transaction documents; and 

       

      WHEREAS,
        immediately prior to the Merger, no more than 1,562,500 shares of Common
        Stock
        shall be issued and outstanding; and

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      WHEREAS,
        the
        parties hereto agree that the capitalization table (the “Cap
        Table”)
        upon
        which the transactions contemplated by this Agreement and the Private Placement
        are based is set forth as Exhibit
        B
        hereto;

       

      NOW,
        THEREFORE,
        in
        consideration of the mutual terms, conditions and other agreements set forth
        herein, the parties hereto agree as follows:

       

      ARTICLE
        I

       

      DEFINITIONS 

      

      Unless
        the context otherwise requires, the terms defined in this Article I shall
        have
        the meanings herein specified for all purposes of this Agreement, applicable
        to
        both the singular and plural forms of any of the terms herein defined.

      

      “Action”
shall
        have the meaning assigned to it in Section 3.8.

      

      “Accredited
        Investor”
shall
        have the meaning assigned to it in Rule 501 promulgated under the Securities
        Act. 

      

      “Acquisition
        Subsidiary”
means
        Shen Kun Acquisition Sub Limited, a British Virgin Islands company.

      

      “Affiliate”
means
        any Person that directly or indirectly controls, is controlled by, or is
        under
        common control with, the indicated Person. For the purpose hereof the term
        “control” shall mean the holding of shares in excess of fifty percent (50%) of
        the voting securities of a corporate entity. 

      

      “Agreement”
shall
        have the meaning assigned to it in Preamble.

      

      “Approvals”
shall
        have the meaning assigned to it in Section 4.2(b)

      

      “Articles of
        Merger”
shall
        have the meaning assigned to it in Section 2.2. 

      

      “BCA”
means
        the BVI Business Companies Act, 2004.

       

      “BVI”
means
        the British Virgin Islands.

      

      “Cap
        Table”
shall
        have the meaning assigned to it in the Recitals.

      

      “Certificate”
shall
        have the meaning assigned to it in Section 2.6(a). 

      

      “Closing”
shall
        have the meaning assigned to such term in Section 2.2. 

      

      “Closing
        Date”
shall
        have the meaning assigned to such term in Section 2.2. 

      

      “Code”
means
        the Internal Revenue Code of 1986, as amended. 

      

      “Common
        Stock”
means
        the common stock, par value $0.001 per share, of Parent. 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “Contingent
        Obligation”
means,
        as to any Person, any direct or indirect liability, contingent or otherwise,
        of
        that Person with respect to any indebtedness, lease, dividend or other
        obligation of another Person if the primary purpose or intent of the Person
        incurring such liability, or the primary effect thereof, is to provide assurance
        to the obligee of such liability that such liability will be paid or discharged,
        or that any agreements relating thereto will be complied with, or that the
        holders of such liability will be protected (in whole or in part) against
        loss
        with respect thereto. 

      

      “Corporate
        Records”
shall
        have the meaning assigned to it in Section 4.2(b).

      

      “Damages”
shall
        mean any and all losses, claims, actions, damages, liabilities, penalties,
        fines, settlement costs and expenses, including, without limitation, costs
        of
        preparation and reasonable attorneys’ fees.

      

      “Employee
        Benefit Plan”
shall
        have the meaning assigned to it in Section 3.12.

      

      “Environmental
        Laws”
shall
        have the meaning assigned to it in Section 4.24(c).

      

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

      

      “Financial
        Statements”
shall
        have the meaning assigned to it in Section 3.10(a).

      

      “First
        Closing”
shall
        have the meaning assigned to it in the Securities Purchase
        Agreement.

      

      “GAAP”
means
        United States generally accepted accounting principles consistently applied,
        as
        in effect from time to time. 

      

      “Governmental
        Authority”
means
        any foreign, federal, national, state or local judicial, legislative, executive
        or regulatory body, authority, agency, court, administrative panel, tribunal
        or
        instrumentality, including, without limitation, any such United States, British
        Virgin Islands or PRC authorities. 

      

      “Indebtedness”
of
        any
        Person means, without duplication (A) all indebtedness for borrowed money,
        (B)
        all obligations issued, undertaken or assumed as the deferred purchase price
        of
        property or services (other than trade payables entered into in the ordinary
        course of business), (C) all reimbursement or payment obligations with respect
        to letters of credit, surety bonds and other similar instruments, (D) all
        obligations evidenced by notes, bonds, debentures or similar instruments,
        including obligations so evidenced incurred in connection with the acquisition
        of property, assets or businesses, (E) all indebtedness created or arising
        under
        any conditional sale or other title retention agreement, or incurred as
        financing, in either case with respect to any property or assets acquired
        with
        the proceeds of such indebtedness (even though the rights and remedies of
        the
        seller or bank under such agreement in the event of default are limited to
        repossession or sale of such property), (F) all monetary obligations under
        any
        leasing or similar arrangement which, in connection with GAAP, consistently
        applied for the periods covered thereby, is classified as a capital lease,
        (G)
        all indebtedness referred to in clauses (A) through (F) above secured by
        (or for
        which the holder of such Indebtedness has an existing right, contingent or
        otherwise, to be secured by) any mortgage, lien, pledge, charge, security
        interest or other encumbrance upon or in any property or assets (including
        accounts and contract rights) owned by any Person, even though the Person
        which
        owns such assets or property has not assumed or become liable for the payment
        of
        such indebtedness and (H) all Contingent Obligations in respect of indebtedness
        or obligations of others of the kinds referred to in clauses (A) through
        (G)
        above. 

      

      “Initial
        WFOE Capitalization”
shall
        have the meaning assigned to it in Section 5.10.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      “Intellectual
        Property”
shall
        have the meaning assigned to it in Section 4.22.

      

      “Investor”
shall
        have the meaning assigned to it in the Recitals.

       

      “Laws”
means
        any federal, national, state, local or foreign statute, law, ordinance,
        regulation, rule, code, order or other requirement or rule of law.

      

      “Lien”
means
        any mortgage, pledge, security interest, encumbrance, lien or charge of any
        kind, including, without limitation, any conditional sale or other title
        retention agreement, any lease in the nature thereof and including any lien
        or
        charge arising by Law. 

      

      “Long
        Sunny”
means
        Long Sunny Limited, a British Virgin Islands company.

      

      “Material
        Adverse Effect”
shall
        have the meanings assigned to it in Sections 3.10(b)(ii) and 4.7.

      

      “Material
        Shen Kun Contract”
shall
        have the meaning assigned to it in Section 4.15(g).

      

      “Merger”
shall
        have the meaning assigned to it in the Preamble. 

      

      “Merger
        Effective Date”
shall
        have the meaning assigned to it in Section 2.2. 

      

      “Merger
        Shares”
shall
        have the meaning assigned to it in Section 2.5(b). 

      

      “Parent”
shall
        have the meaning assigned to it in the Preamble. 

      

      “Parent
        Breach”
shall
        have the meaning assigned to it in Section 9.1(c).

      

      “Parent
        Charter Documents”
shall
        have the meaning assigned to it in Section 3.2(c).

      

      “Parent
        Controlling Shareholders”
shall
        have the meaning assigned to it in Preamble.

      

      “Parent
        Disclosure Schedules”
shall
        have the meaning assigned to it in Section 3.1.

      

      “Parent
        Indemnified Party”
shall
        have the meaning assigned to it in Section 10.2(a).

       

      “Permitted
        Liens”
shall
        have the meaning assigned to it in Section 4.15(d).

       

      “Person”
means
        all natural persons, corporations, business trusts, associations, unincorporated
        organizations, limited liability companies, partnerships, joint ventures
        and
        other entities and Governmental Authorities or any department or agency
        thereof.

       

      “.PDF”
shall
        have the meaning assigned to it in Section 10.14(b).

       

      “PRC”
means
        the People’s
        Republic
        of China. 

       

      “Private
        Placement”
means
        the private offering by Parent to Accredited Investors whereby, in consideration
        of up to $20,000,000 in gross private placement proceeds, Parent will issue
        to
        the Investors up to 7,887,500 Units, each Unit consisting of one share of
        the
        Series A Preferred Stock, and one Series A Warrant to purchase the number
        of
        shares of Common Stock equal to 120% of the number of shares of Common Stock
        issuable upon conversion of the Series A Preferred Stock purchased by each
        Investor.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      “Public
        Reports”
shall
        have the meaning assigned to it in Section 3.10(b)(i).

       

      “Registrar
        of Corporate Affairs”
means
        the Registrar of Corporate Affairs in the BVI.

       

      “Originally
        signed”
or
        “original
        signature”
shall
        have the meaning assigned to it in Section 10.14(b).

       

      “Sarbanes-Oxley
        Act”
shall
        have the meaning assigned to it in Section 3.10(b)(i).

       

      “SEC”
means
        the U.S. Securities and Exchange Commission.

       

      “Second
        Closing” shall have the meaning assigned to it in the Securities Purchase
        Agreement.

       

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

       

      “Securities
        Purchase Agreement”
means
        that certain Securities Purchase Agreement entered into to consummate the
        Private Placement, by and among Parent and the purchasers signatory
        thereto.

       

      “Series
        A Preferred Stock”
means
        the Series A Convertible Preferred Stock of Parent, par value $0.001 per
        share.

       

      “Shengkai”
        means Tianjin
        Shengkai Industrial Technology Development Co., Ltd., a
        PRC
        company.

       

      “Shen
        Kun”
shall
        have the meaning assigned to it in Preamble.

       

      “Shen
        Kun Articles”
shall
        have the meaning assigned to it in Section 2.3(a).

       

      “Shen
        Kun Breach”
shall
        have the meaning assigned to it in Section 9.1(b).

       

      “Shen
        Kun Charter Documents”
shall
        have the meaning assigned to it in Section 4.2(b)

       

      “Shen
        Kun Companies”
shall
        have the meaning assigned to it in Preamble.

       

      “Shen
        Kun Companies Permits”
shall
        have the meaning assigned to it in Section 4.19.

       

      “Shen
        Kun Designee”
        shall
        have the meaning assigned to it in Section 5.6(a).

       

      “Shen
        Kun Disclosure Schedules”
shall
        have the meaning assigned to it in Section 4.1.

       

      “Shen
        Kun Financial Statements”
shall
        have the meaning assigned to it in Section 4.14.

       

      “Shen
        Kun Indemnified Party”
shall
        have the meaning assigned to it in Section 10.2(b).

       

      “Shen
        Kun Shareholders”
shall
        have the meaning assigned to it in Preamble.

       

      “Shen
        Kun Shares”
shall
        have the meaning assigned to it in Recitals.

       

      “Shen
        Kun Shareholder Approval”
shall
        have the meaning assigned to it in Section 7.3.

       

      “Shen
        Kun Share Records”
shall
        have the meaning assigned to it in Section 4.2(b).

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      “Subsidiary”
shall
        have the meaning assigned to it in Section 3.4. 

       

      “Survival
        Period”
shall
        have the meaning assigned to it in Section 10.1.

       

      “Surviving
        Corporation”
shall
        have the meaning assigned to it in Section 2.1.

       

      “Tax”
or
        “Taxes”
means
        (a) any and all taxes, assessments, customs, duties, levies, fees, tariffs,
        imposts, deficiencies and other governmental charges of any kind whatsoever
        (including, but not limited to, taxes on or with respect to net or gross
        income,
        franchise, profits, gross receipts, capital, sales, use, ad valorem, value
        added, transfer, real property transfer, transfer gains, transfer taxes,
        inventory, capital stock, license, payroll, employment, social security,
        unemployment, severance, occupation, real or personal property, estimated
        taxes,
        rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative
        minimum, doing business, withholding and stamp), together with any interest
        thereon, penalties, fines, damages costs, fees, additions to tax or additional
        amounts with respect thereto, imposed by BVI, the United States (federal,
        state
        or local) or other applicable jurisdiction; (b) any liability for the payment
        of
        any amounts described in clause (a) as a result of being a member of an
        affiliated, consolidated, combined, unitary or similar group or as a result
        of
        transferor or successor liability, including, without limitation, by reason
        of
        Section 1.1502-6 of the Treasury Regulations promulgated under the Code;
        and (c)
        any liability for the payments of any amounts as a result of being a party
        to
        any tax sharing agreement or as a result of any express or implied obligation
        to
        indemnify any other Person with respect to the payment of any amounts of
        the
        type described in clause (a) or (b). 

       

      “Tax
        Authority”
shall
        have the meaning assigned to it in Section 3.13.

       

      “Tax
        Return”
shall
        have the meaning assigned to it in Section 3.13. 

       

      “Transaction
        Form 8-K”
shall
        have the meaning assigned to it in Section 5.5.

       

      “Transaction
        Documents”
means
        this Agreement and all agreements, contracts, documents, certificates and
        instruments contemplated by or referenced in this Agreement, including all
        schedules and exhibits hereto and thereto.

       

      ARTICLE
        II

       

      THE
        MERGER

       

      Section
        2.1 Merger.
        Upon
        the terms and subject to the conditions of this Agreement, at the Merger
        Effective Date,
        Acquisition Subsidiary shall have been merged with and into Shen Kun in
        accordance with the BCA, the separate legal existence of Acquisition Subsidiary
        will have ceased, and Shen Kun shall (i) be the surviving corporation of
        the
        Merger (sometimes hereinafter referred to as the “Surviving
        Corporation”);
        (ii)
        be governed and continue its corporate existence under the laws of the BVI;
        and
        (iii) have succeeded to and assumed all of the rights and the properties
        and
        obligations of Acquisition Subsidiary and Shen Kun in accordance with the
        BCA.
        With respect to references in this Agreement relating to any obligations
        or
        duties of Shen Kun accruing after the Merger Effective Date, the usage of
        the
        defined term “Shen Kun” as opposed to “Surviving Corporation” shall not operate
        to negate any such obligation or duties. 

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      Section
        2.2 Merger
        Effective Date; Closing.
        The
        parties hereto shall cause the terms and conditions of the Merger (including
        but
        not limited to the exchange and cancellation of share certificates and updating
        of share registers) to be consummated as soon as practicable after the filing
        of
        the articles of merger (the “Articles of
        Merger”)
        with
        the Registrar of Corporate Affairs (in such form as required by and executed
        in
        accordance with the relevant provisions of the BCA) (the “Merger
        Effective Date”),
        the
        receipt of a Certificate of Merger from the Registrar of Corporate Affairs,
        and
        the satisfaction or due waiver of the conditions set forth in Articles VI
        and
        VII. The closing of the Merger (the “Closing”)
        shall
        take place at 5:00 p.m. E.S.T. on the day the conditions to closing set forth
        in
        Articles VI and VII herein have been satisfied or waived, or at such other
        time
        and date as the parties hereto shall agree in writing (the “Closing
        Date”),
        at
        the offices of Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor,
        New
        York, New York 10006.

       

      Section
        2.3 Articles
        of Association; Directors and Officers. 

       

      (a) Articles
        of Association and Memorandum of Association.
        The
        Memorandum of Association of Shen Kun (the “Shen
        Kun Articles”),
        as in
        effect immediately prior to the Merger, shall be the Memorandum of Association
        of the Surviving Corporation from and after the Merger until further amended
        in
        accordance with applicable Law. 

       

      (b) Directors
        and Officers.
        The
        directors and officers of Shen Kun immediately prior to the Merger, shall
        be the
        directors and officers of the Surviving Corporation, and each shall hold
        his
        respective office or offices from and after the Merger until his successor
        shall
        have been elected and shall have qualified in accordance with applicable
        Law, or
        as otherwise provided in the Articles of Association of the Surviving
        Corporation. 

       

      Section
        2.4 Effects
        of the Merger.
        The
        Merger shall have the effects provided for herein and in the applicable
        provisions of the BCA. Without limiting the generality of the foregoing and
        subject thereto, at the Merger Effective Date, all of the properties, rights,
        privileges, powers and franchises of Shen Kun and Acquisition Subsidiary
        will
        have vested in the Surviving Corporation and all debts, liabilities and duties
        of Shen Kun and Acquisition Subsidiary will have become the debts, liabilities
        and duties of the Surviving Corporation. 

       

      Section
        2.5 Manner
        and Basis of Converting Shares. 

       

      (a) Acquisition
        Subsidiary Share Conversion.
        At the
        Merger Effective Date, each share of Acquisition Subsidiary that was outstanding
        immediately prior to the Merger shall have, by virtue of the Merger and without
        any action on the part of the holder thereof, been converted into one share
        of
        the Surviving Corporation, with no cash or other consideration having been
        delivered or deliverable in exchange therefor, so that at the Merger Effective
        Date, Parent shall have become the holder of all of the issued and outstanding
        shares of the Surviving Corporation. 

       

      (b) Conversion
        of Shen Kun Shares.
        At the
        Merger Effective Date, subject to the provisions of Section 2.5(c), the Shen
        Kun
        Shares that were outstanding immediately prior to the Merger shall have,
        by
        virtue of the Merger and without any action on the part of the holder thereof,
        been converted into the right to receive an aggregate of 20,550,000 shares
        of
        Common Stock in the amounts and in the names of Persons as set forth on
Schedule
        2.5(b)
        hereto
        (collectively, the “Merger
        Shares”).
        

       

      (c) Other
        Securities.
        Each of
        the Shen Kun Shares held in the treasury of Shen Kun, if any, each share
        of any
        other class of shares of Shen Kun (other than the Shen Kun Shares), if any,
        any
        debt or other securities convertible into or exercisable for the purchase
        of the
        Shen Kun Shares, if any, and securities of Shen Kun held by Parent and/or
        Acquisition Subsidiary, if any, issued and outstanding immediately prior
        to the
        Merger Effective Date shall be canceled without payment of any consideration
        therefor and without any conversion thereof. 

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (d) Dissenting
        Shares.
        Notwithstanding any provision contained herein to the contrary, any holder
        of
        Shen Kun Shares immediately prior to the Merger shall be entitled to receive
        payment of the fair value for his shares upon properly dissenting from the
        Merger in accordance with the provisions of the BCA and upon the Merger,
        the
        dissenting member shall cease to have any rights with respect to the Surviving
        Corporation except for the right to receive payment of fair value for his
        shares
        and the right to initiate proceedings against the Surviving
        Corporation.

       

      Section
        2.6 Surrender
        and Exchange of Securities.
        

      

      (a) As
        soon
        as practicable after the Merger Effective Date and upon (i) surrender of
        a
        certificate or certificates representing the Shen Kun Shares that were
        outstanding immediately prior to the Merger to Parent (or, in case such
        certificates shall be lost, stolen or destroyed, an affidavit of that fact
        by
        the holder thereof) (each a “Certificate”),
        Parent shall deliver to the shareholder of the Shen Kun Shares surrendering
        such
        certificate or certificates, a certificate or certificates (or evidence of
        shares in book-entry form) registered in the name of such shareholder
        representing the number of shares of Common Stock to which such holder is
        entitled under Section 2.5(b). At the Merger Effective Date, each Shen Kun
        Share
        issued and outstanding immediately prior to the Merger shall no longer be
        outstanding but shall have automatically upon registration of the Articles
        o f
        Merger with the Registrar of Corporate Affairs, been canceled but available
        for
        reissue and until the certificate or certificates evidencing such shares
        are
        surrendered, each certificate that immediately prior to the Merger represented
        any outstanding Shen Kun Share shall be deemed at and after the Merger Effective
        Date to represent only the right to receive upon surrender as aforesaid the
        consideration specified in Section 2.5(b) for the holder thereof. 

      

      (b) All
        shares of Common Stock issued upon the surrender for exchange of Certificates
        in
        accordance with the terms of this Article II
        shall be
        deemed to have been issued (and paid) in full satisfaction of all rights
        pertaining to the Shen Kun Shares previously represented by such Certificates,
        and at the Merger Effective Date, the share transfer books of Shen Kun shall
        be
        closed and thereafter there shall be no further registration of transfers
        on the
        share transfer books of the Surviving Corporation of the Shen Kun Shares
        that
        were outstanding immediately prior to the Merger Effective Date. At the Merger
        Effective Date, the holders of Certificates that evidenced ownership of the
        Shen
        Kun Shares outstanding immediately prior to the Merger shall have ceased
        to have
        any rights with respect to such shares, except as otherwise provided for
        herein
        or by applicable law. 

       

      (c) If
        any
        Certificate shall have been lost, stolen or destroyed, upon the making of
        an
        affidavit of that fact by the Person claiming such Certificate to be lost,
        stolen or destroyed and, if required by Parent, upon the written agreement
        by
        such Person to indemnify Parent and the Surviving Corporation against any
        claim
        that may be made against it with respect to such Certificate, Parent will
        issue,
        in exchange for such lost, stolen or destroyed Certificate, the Merger Shares
        pursuant to this Agreement. 

       

      (d) Notwithstanding
        any provision of this Agreement to the contrary, none of the parties hereto
        or
        the Surviving Corporation shall be liable to any Person in respect of any
        shares
        of Common Stock (or dividends or other distributions with respect thereto)
        or
        cash in lieu of any fractional shares of Common Stock, in each case required
        to
        be delivered and delivered to a public official pursuant to any applicable
        abandoned property, escheat or similar Law. 

       

      Section
        2.7 Further
        Assurances.
        From
        time to time, from and after the Merger Effective Date, as and when requested
        by
        Parent or its respective successors or assigns, the proper officers and
        directors of Shen Kun or Acquisition Subsidiary (as applicable) in office
        immediately prior to the Merger shall, for and on behalf and in the name
        of Shen
        Kun or Acquisition Subsidiary (as applicable), execute and deliver all such
        deeds, bills of sale, assignments and other instruments and take or cause
        to be
        taken such further actions as Parent or its respective successors or assigns
        may
        deem necessary or desirable in order to confirm or record or otherwise transfer
        to the Surviving Corporation title to and possession of all of the properties,
        rights, privileges, powers, franchises and immunities of Shen Kun and the
        Acquisition Subsidiary or otherwise to carry out fully the provisions and
        purposes of this Agreement and the Articles of Merger.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        III

       

      REPRESENTATIONS
        AND WARRANTIES OF PARENT, ACQUISITION SUBSIDIARY 

      AND
        PARENT CONTROLLING SHAREHOLDERS

      

      Each
        of
        Parent, Acquisition Subsidiary and the Parent Controlling Shareholders (where
        specifically included) hereby, severally and not jointly, represents, warrants
        and agrees that all of the statements in the following subsections of this
        Article III are true and complete in all material respects as of the date
        hereof, and will, except as contemplated by this Agreement, be true and complete
        as of the Closing Date as if first made on such date: 

      

      Section
        3.1 Disclosure
        Schedules.
        The
        disclosure schedules
        attached
        hereto as Schedules
        3.1
        through
3.18
        (the
“Parent
        Disclosure Schedules”)
        are
        divided into sections that correspond to the sections of this Article III.
        The
        Parent Disclosure Schedules comprise lists of all exceptions to the truth
        and
        accuracy in all material respects of, and of all disclosures or descriptions
        required by, the representations and warranties set forth in the remaining
        sections of this Article III. For purposes of this Article III, any statement,
        facts, representations, or admissions contained in the Public Reports are
        deemed
        to be included in the Parent Disclosure Schedules and all such information
        is
        deemed to be fully disclosed to the Shen Kun Companies and the Shen
        Kun Shareholders.
        Notwithstanding anything contained herein to the contrary in this Agreement,
        any
        representation, warranty or covenant made by Parent, Acquisition Subsidiary,
        or
        the Parent Controlling Shareholders shall be deemed to have been made to
        the
        best of their knowledge for any period prior to February 14, 2008. For purposes
        of this Agreement, "to the best of our knowledge" or similar phrase shall
        mean
        that such Person shall have current actual knowledge of a condition or event,
        or
        have received notice that would give rise to current actual knowledge of
        such
        condition or event.

       

      Section
        3.2 Corporate
        Organization

       

      (a) Parent
        is
        a corporation duly organized, validly existing and in good standing under
        the
        laws of Florida, and has all requisite corporate power and authority to own
        its
        properties and assets and to conduct its business as now conducted and is
        duly
        qualified to do business and is in good standing in each jurisdiction in
        which
        the nature of the business conducted by Parent or the ownership or leasing
        of
        its properties makes such qualification and being in good standing necessary,
        except where the failure to be so qualified and in good standing will not
        have a
        Material Adverse Effect on the business, operations, properties, assets,
        condition or results of operation of Parent. 

       

      (b) Acquisition
        Subsidiary is a corporation duly organized and validly existing under the
        laws
        of the BVI, and has all requisite corporate power and authority to carry
        on its
        business as now conducted.

       

      (c) Copies
        of
        the Articles of Incorporation and By-laws of Parent, as amended to date,
        and the
Memorandum
        of Association and Articles
        of Association of Acquisition Subsidiary (as may be amended or supplemented
        from
        time to time) (collectively, the
        “Parent
        Charter Documents”)
        have
        been furnished to the Shen Kun Shareholders
        and to the Shen Kun Companies, and such copies are accurate and complete
        as of
        the date hereof. Neither Parent nor Acquisition Subsidiary is in violation
        or
        default of any of the respective provisions of the Parent Charter Documents.
        

       

      
        
          
          

        

        
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      Section
        3.3 Capitalization
        of Parent. 

       

      (a) On
        the
        Closing Date,
        immediately before the consummation of the Merger, Parent shall be authorized
        to
        issue: (i) 50,000,000 shares of Common Stock, of which not more than 1,562,500
        shares of Common Stock shall be issued and outstanding; and (ii) 15,000,000
        shares of “blank check” preferred stock, of which no shares shall be issued and
        outstanding, and of which 10,000,000 shares shall be designated as the Series
        A
        Convertible Preferred Stock pursuant to Articles of Amendment to the Articles
        of
        Incorporation of Parent substantially in the form of Exhibit
        C
        attached
        hereto are to be submitted for filing with the Florida Department of State
        immediately prior to the Closing. Immediately following the Merger but prior
        to
        the closing of the Private Placement, the Shen Kun Shareholders will own
        92.9%
        of the total combined voting power of all classes of capital stock of Parent
        entitled to vote on a fully diluted basis.

       

      (b) The
        1 for
        2 reverse stock split of the Common Stock described in the Current Report
        Form
        8-K filed with the SEC on April 14, 2008 was validly authorized by Parent’s
        Board of Directors and/or shareholders as required under the laws of the
        State
        of Florida and complied with all applicable Law. To the best of Parent’s
        knowledge, there are presently no claims from any current or former shareholders
        of the Parent in relation to the said reverse stock split.

       

      (c) The
        issuance of the Merger Shares will be in accordance with the provisions of
        this
        Agreement. On the Closing Date all of the issued and outstanding shares of
        Common Stock and all of the Merger Shares to be issued pursuant to this
        Agreement will have been duly authorized and validly issued, fully paid and
        non-assessable, will have been issued in compliance with all applicable Laws,
        and will have been issued free of preemptive rights of any security holder.
        Except with respect to securities to be issued pursuant to the Securities
        Purchase Agreement and as set forth on Schedule
        3.3(c)
        attached
        hereto, as of the date of this Agreement there are, and as of the Closing
        Date
        there will be, no outstanding or authorized options, warrants, agreements,
        commitments, conversion rights, preemptive rights or other rights to subscribe
        for, purchase or otherwise acquire or receive any shares of Parent’s capital
        stock, nor are there or will there be any outstanding or authorized stock
        appreciation, phantom stock, profit participation or similar rights with
        respect
        to Parent or any Common Stock, or any voting trusts, proxies or other agreements
        or understandings with respect to the voting of Parent’s capital stock as of the
        Closing Date. Except with respect to securities to be issued pursuant to
        the
        Securities Purchase Agreement and the Merger Shares, there are no registration
        rights, and there is no voting trust, proxy, rights plan, anti-takeover plan
        or
        other agreement or understanding to which Parent is a party or by which it
        is
        bound with respect to any equity security of any class of Parent.

       

      Section
        3.4 Subsidiaries
        and Equity Investments.
        Except
        for Parent’s 100% interest in Acquisition Subsidiary, neither Parent nor
        Acquisition Subsidiary, directly or indirectly, owns any capital stock or
        other
        securities of, or any beneficial ownership interest in, or holds any equity
        or
        similar interest, or has any investment in any corporation, limited liability
        company, partnership, limited partnership, joint venture or other company,
        person or other entity, including without limitation any Subsidiary of Parent.
        For purposes of this Agreement, a “Subsidiary”
        of a
        company means any entity in which, at the date of this Agreement, such company
        or any of its subsidiaries directly or indirectly owns any of the capital
        stock,
        equity or similar interests or voting power. 

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      Section
        3.5 Authorization
        and Validity of Agreements.
        All
        corporate action on the part of each of Parent and Acquisition Subsidiary,
        its
        officers and directors necessary for the (i) due authorization, execution
        and
        delivery of this Agreement and (ii) performance of all obligations of Parent
        and/or Acquisition Subsidiary hereunder has been taken as of the date hereof.
        All corporate action of Parent and Acquisition Subsidiary necessary for the
        (i)
        due authorization, execution and delivery of this Agreement and (ii) performance
        of all obligations of Parent and/or Acquisition Subsidiary hereunder has
        been
        taken or will be taken prior to the Closing. This Agreement has been duly
        executed by each of Parent and Acquisition Subsidiary and, assuming the due
        authorization, execution and delivery by the other parties thereto, constitutes
        and will constitute a valid and legally binding obligation of both Parent
        and
        Acquisition Subsidiary, (i) subject to applicable bankruptcy, insolvency,
        reorganization, fraudulent conveyance, moratorium or similar laws of general
        application affecting the enforcement of creditors’ rights generally, (ii)
        subject to a court’s discretionary authority with respect to the granting of
        specific performance, injunctive relief or other equitable remedies and (iii)
        except to the extent the indemnification and contribution provisions, if
        any,
        contained in any such agreement may be limited by BVI or United States
        securities laws or unenforceable as against public policy. Parent does not
        need
        to give any notice to, make any filings with, or obtain any authorization,
        consent or approval of any government or governmental agency or other person
        in
        order for it to consummate the transactions contemplated by this Agreement,
        other than filings that may be required or permitted under the laws of the
        BVI
        or states securities laws, the Securities Act and/or the Exchange Act resulting
        from the issuance of the Merger Shares. 

      

      Section
        3.6 No
        Conflict or Violation.
        Neither
        the execution and delivery of this Agreement by Parent or Acquisition
        Subsidiary, nor the consummation by Parent or Acquisition Subsidiary of the
        transactions contemplated hereby will: (i) violate any provision of the Parent
        Charter Documents; (ii) violate any constitution, statute, regulation, rule,
        injunction, judgment, order, decree, ruling, charge or other restriction
        of any
        Government Authority to which Parent or Acquisition Subsidiary is subject,
        (iii)
        conflict with, result in a breach of, constitute a default under, result
        in the
        acceleration of, create in any party the right to accelerate, terminate,
        modify
        or cancel, or require any notice under any agreement, contract, lease, license,
        instrument or other arrangement to which Parent or Acquisition Subsidiary
        is a
        party or by which it is bound, or to which any of its assets is subject;
        or (iv)
        result in or require the creation or imposition of any encumbrance of any
        nature
        upon or with respect to any of Parent’s or Acquisition Subsidiary’s assets,
        including without limitation the Merger Shares. 

      

      Section
        3.7 Material
        Agreements.
        Neither
        Parent nor Acquisition Subsidiary is a party to or bound by any contracts,
        including, but not limited to, any:

      

      (a) employment,
        advisory or consulting contract;

       

      (b) plan
        providing for employee benefits of any nature;

       

      (c) lease
        with respect to any property or equipment;

       

      (d) contract,
        agreement, understanding or commitment for any future expenditure in excess
        of
        $5,000 in the aggregate;

       

      (e) contract
        or commitment pursuant to which it has assumed, guaranteed, endorsed, or
        otherwise become liable for any obligation of any other person, entity or
        organization;

       

      (f) agreement
        with any person relating to the dividend, purchase or sale of securities,
        that
        has not been settled by the delivery or payment of securities when due, and
        which remains unsettled upon the date of this Agreement.

       

      None
        of
        the Parent Controlling Shareholders or any of their Affiliates is a party
        to any
        side agreements relating to the Merger. 

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      Section
        3.8 Litigation.
        There
        is no action, suit, claim,
        or
        legal,
        administrative, arbitration, governmental or other proceeding or
        investigation either
        within or the
        U.S.
        or outside the U.S. (“Action”)
        pending or, to the best knowledge of Parent or the Parent Controlling
        Shareholders, currently threatened against Parent or any of its Subsidiaries
        or
        any of their respective Affiliates, that may affect the validity of this
        Agreement or the right of Parent to enter into this Agreement or to consummate
        the transactions contemplated hereby or thereby. There is no Action pending
        or,
        to the best knowledge of Parent or the Parent Controlling Shareholders,
        currently threatened against Parent or any of its Subsidiaries or any of
        their
        respective Affiliates, before any court or by or before any governmental
        body or
        any arbitration board or tribunal, nor is there any judgment, decree, injunction
        or order of any Governmental Authority or arbitrator against Parent or any
        of
        its Subsidiaries or any of their respective Affiliates. Neither Parent nor
        any
        of its Subsidiaries or any of their respective Affiliates is a party or subject
        to the provisions of any order, writ, injunction, judgment or decree of any
        Governmental Authority. There is no Action by Parent or any of its Subsidiaries
        or any of their respective Affiliates relating to Parent currently pending
        or
        which Parent or any of its Subsidiaries or any of their respective Affiliates
        intends to initiate. 

       

      Section
        3.9 Compliance
        with Laws. Parent,
        each of its Subsidiaries and each of their respective Affiliates has been
        and is
        in compliance with, and has not received any notice of any violation of any,
        applicable law, ordinance, regulation or rule of any kind whatsoever, including
        without limitation the Securities Act, the Exchange Act, the applicable rules
        and regulations of the SEC, or the applicable securities laws and rules and
        regulations of any state. 

       

      Section
        3.10 Financial
        Statements; SEC Filings. 

       

      (a) Parent’s
        financial statements contained in its periodic reports filed with the SEC
        (the
“Financial
        Statements”)
        have
        been prepared in accordance with GAAP applied on a consistent basis throughout
        the periods indicated and with each other, except that those of the Financial
        Statements that are not audited do not contain all footnotes required by
        GAAP.
        The Financial Statements fairly present the financial condition and operating
        results of Parent as of the dates, and for the periods, indicated therein,
        subject to normal year-end audit adjustments. Except as set forth in the
        Financial Statements, Parent has no material liabilities (contingent or
        otherwise). Parent is not a guarantor or indemnitor of any indebtedness of
        any
        other person, firm or corporation. Parent maintains and will continue to
        maintain until the Closing a standard system of accounting established and
        administered in accordance with GAAP.

       

      (b) (i)
        Parent has timely made all filings with the SEC that it has been required
        to
        make under the Securities Act and the Exchange Act (the “Public
        Reports”).
        Each
        of the Public Reports has complied in all material respects with the applicable
        provisions of the Securities Act, the Exchange Act, and the Sarbanes-Oxley
        Act
        of 2002 (the “Sarbanes-Oxley
        Act”)
        and/or
        regulations promulgated thereunder. None of the Public Reports, as of their
        respective dates, contained any untrue statement of a material fact or omitted
        to state a material fact necessary to make the statements made therein not
        misleading. To the knowledge of Parent or the Parent Controlling Shareholders,
        there is no event, fact or circumstance that would cause any certification
        signed by any officer of Parent in connection with any Public Report pursuant
        to
        the Sarbanes/Oxley Act to be untrue, inaccurate or incorrect in any respect.
        There is no revocation order, suspension order, injunction or other proceeding
        or law affecting the trading of its Common Stock. The consummation of the
        transactions contemplated by this Agreement do not conflict with and will
        not
        result in any violation of any FINRA or OTC Bulletin Board trading requirement
        or standard applicable to Parent or its Common Stock. All of the issued and
        outstanding shares of Common Stock have been issued in compliance with the
        Securities Act and applicable state securities laws and no shareholder of
        Parent
        has any right to rescind or other claim against Parent for failure to comply
        with the Securities Act or state securities laws.

       

      
        
          
          

        

        
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      (ii) Since
        the
        date of the filing of its Quarterly Report on Form 10-Q for the quarter ended
        March 31, 2008: (A) there has been no event, occurrence or development that
        has
        resulted in or could result in a Material Adverse Effect. A “Material
        Adverse Effect”
means,
        when used with respect to the Parent, any event, occurrence, fact, condition,
        change or effect that is materially adverse to the business, assets, condition
        (financial or otherwise), operating results or prospects of Parent);
        (B)
        Parent has not incurred any liabilities other than in the ordinary course
        of
        business, contingent or otherwise, other than professional fees, which are
        accurately disclosed in the Public Reports; (C) Parent has not declared or
        made
        any dividend or distribution of cash or property to its shareholders, purchased,
        redeemed or made any agreements to purchase or redeem any shares of its capital
        stock, or issued any equity securities; and (D) Parent has not made any loan,
        advance or capital contribution to or investment in any person or entity.
        

       

      (c) There
        are
        no outstanding SEC comment letters or other SEC correspondence with regard
        to
        any of Parent’s SEC filings that have not been resolved by subsequent
        filing.

       

      Section
        3.11 Books
        and Financial Records.
        All the
        accounts, books, registers, ledgers, Board minutes and financial and other
        material records of whatsoever kind of each of Parent and any Subsidiary
        of
        Parent have been fully, properly and accurately kept and completed; there
        are no
        material inaccuracies or discrepancies of any kind contained or reflected
        therein; and they give and reflect a true and fair view of the financial,
        contractual and legal position of Parent and each such Subsidiary. 

       

      Section
        3.12 Employee
        Benefit Plans.
        Parent
        does not have any “Employee Benefit Plan” as defined in the U.S. Employee
        Retirement Income Security Act of 1974 or similar plans under any applicable
        laws. 

       

      Section
        3.13 Tax
        Returns, Payments and Elections.
        Each of
        Parent and its Subsidiaries has timely filed all Tax returns, statements,
        reports, declarations and other forms and documents (including, without
        limitation, estimated tax returns and reports and material information returns
        and reports) (“Tax
        Returns”)
        required pursuant to applicable law to be filed with any Tax Authority. All
        such
        Tax Returns are accurate, complete and correct in all material respects,
        and
        each of Parent and its Subsidiaries has timely paid all Taxes due. Each of
        Parent and its Subsidiaries has withheld or collected from each payment made
        to
        each of its employees the amount of all Taxes (including, but not limited
        to,
        United States income taxes and other foreign taxes) required to be withheld
        or
        collected therefrom, and has paid the same to the proper Tax Authority. For
        purposes of this Agreement, the following terms have the following meanings:
        “Tax”
(and,
        with correlative meaning, “Taxes”
and
        “Taxable”)
        means
        any and all taxes including, without limitation, (x) any net income, alternative
        or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem,
        transfer, franchise, profits, value added, net worth, license, withholding,
        payroll, employment, excise, severance, stamp, occupation, premium, property,
        environmental or windfall profit tax, custom, duty or other tax, governmental
        fee or other like assessment or charge of any kind whatsoever, together with
        any
        interest or any penalty, addition to tax or additional amount imposed by
        any
        United States, local or foreign governmental authority or regulatory body
        responsible for the imposition of any such tax (domestic or foreign) (a
“Tax
        Authority”),
        (y)
        any liability for the payment of any amounts of the type described in (x)
        as a
        result of being a member of an affiliated, consolidated, combined or unitary
        group for any taxable period or as the result of being a transferee or successor
        thereof, and (z) any liability for the payment of any amounts of the type
        described in (x) or (y) as a result of any express or implied obligation
        to
        indemnify any other person. 

       

      Section
        3.14 Absence
        of Undisclosed Liabilities.
        As of
        the Closing Date, neither Parent nor Acquisition Subsidiary will have any
        liabilities of any kind whatsoever. Parent is not a guarantor of any
        indebtedness of any other person, entity or corporation. 

       

      Section
        3.15 No
        Broker Fees.
        No
        brokers, finders or financial advisory fees or commissions will be payable
        by or
        to Parent, or Acquisition Subsidiary or the Parent Controlling Shareholders
        or
        any of their Affiliates with respect to the transactions contemplated by
        this
        Agreement. 

       

      
        
          
          

        

        
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      Section
        3.16 No
        Disagreements with Accountants and Lawyers.
        There
        are no disagreements of any kind presently existing, or anticipated by Parent
        to
        arise, between Parent and any accountants and/or lawyers formerly or presently
        employed by Parent. Parent is current with respect to fees owed to its
        accountants and lawyers.

       

      Section
        3.17 Disclosure.
        This
        Agreement and any certificate attached hereto or delivered in accordance
        with
        the terms hereby by or on behalf of Parent or Acquisition Subsidiary in
        connection with the transactions contemplated by this Agreement, when taken
        together, do not contain any untrue statement of a material fact or omit
        any
        material fact necessary in order to make the statements contained herein
        and/or
        therein not misleading. 

       

      Section
        3.18 Survival.
        Each of
        the representations and warranties set forth in this Article III shall be
        deemed
        represented and made by Parent, Acquisition Subsidiary or the Parent Controlling
        Shareholders, as the case may be, at the Closing as if made at such time
        and
        shall survive the Closing for a period terminating twelve (12)
        months
        after the Closing Date.

       

      ARTICLE
        IV

       

      REPRESENTATIONS
        AND WARRANTIES OF THE SHEN KUN COMPANIES 

      AND
        THE SHEN KUN SHAREHOLDERS 

      

      Each
        of the
        Shen
        Kun Companies and the Shen Kun Shareholders hereby, jointly and severally,
        represents, warrants to Parent, Acquisition Subsidiary and the Parent
        Controlling Shareholders and agrees that all of the statements in the following
        subsections of this Article IV are true and complete as of the date hereof,
        and
        will, except as contemplated by this Agreement, be true and complete as of
        the
        Closing Date as if first made on such date.  

      

      Section
        4.1 Disclosure
        Schedules.
        The
        disclosure schedules
        attached
        hereto as Schedules
        4.1
        through
4.31
        (the
“Shen
        Kun Disclosure Schedules”)
        are
        divided into sections that correspond to the sections of this Article IV.
        The
        Shen Kun Disclosure Schedules comprise lists of all exceptions to the truth
        and
        accuracy in all material respects of, and of all disclosures or descriptions
        required by, the representations and warranties set forth in the remaining
        sections of this Article IV. For purposes of this Agreement, "to the best
        of our
        knowledge" or similar phrase shall mean that such Person shall have current
        actual knowledge of a condition or event, or have received notice that would
        give rise to current actual knowledge of such condition or event.

       

      Section
        4.2 Corporate
        Organization. 

       

      (a) Each
        of
        the Shen Kun Companies and if applicable, each of the Shen Kun Shareholders,
        is
        validly existing and in good standing under the laws of their respective
        jurisdictions of organization, and have the requisite corporate power and
        authority to own, lease and operate its assets and properties and to carry
        on
        their respective businesses as they are now being or currently planned to
        be
        conducted.

       

      
        
          
          

        

        
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      (b) Each
        of
        the Shen Kun Companies is
        in
        possession of all franchises, grants, authorizations, licenses, permits,
        easements, consents, certificates, approvals and orders (“Approvals”)
        necessary to own, lease and operate the properties it purports to own, operate
        or lease and to carry on its business as it is now being conducted and to
        consummate the transactions contemplated under this Agreement, except where
        the
        failure to have such Approvals could not, individually or in the aggregate,
        reasonably be expected to have a material adverse effect on the business,
        operations, properties, assets, condition or results of operation of the
        Shen
        Kun Companies. Each of the Shen Kun Companies have delivered to Parent and
        the
        Parent Controlling Shareholders complete and correct copies of the following
        documents for each respective entity (collectively referred to herein as
        the
“Shen
        Kun Charter Documents”):
        (i)
        Articles of Association and the Memorandum of Association; (ii) the articles
        or
        certificate of incorporation and the by-laws or code of regulations of a
        corporation; (iii) any other document performing a similar function to the
        documents specified in clauses (i) or (ii) adopted or filed in connection
        with
        the creation, formation or organization of a Person (as defined elsewhere
        in
        this Agreement); and (iv) any and all amendments to any of the foregoing.
        The
        Shen Kun Companies are not in violation of any of the provisions of the Shen
        Kun
        Charter Documents. The minute books or the equivalent of the Shen Kun Companies
        contain true and accurate records of all meetings and consents in lieu of
        meetings of its Board of Directors and shareholders (“Corporate
        Records”),
        from
        the time of its organization until the date hereof. The stock ledgers and
        other
        ownership records of the shares of all of Shen Kun Companies’ capital stock (the
“Shen
        Kun Share Records”)
        are
        true, complete and accurate records of the ownership of the shares of such
        capital stock as of the date thereof and contain all issuances and transfers
        of
        such shares since the time of organization of the Shen Kun Companies.

       

      
        
          
          

        

        
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      Section
        4.3 Capitalization
        of Shen Kun Companies; Title to the Shen Kun Shares.
        On the
        Closing Date, immediately before the transactions to be consummated pursuant
        to
        this Agreement, the Shen Kun Companies shall have authorized capital stock
        and
        issued and outstanding shares as set forth on Schedule
        4.3.
        All of
        the capital shares of the Shen Kun Companies as well as the owners of record
        are
        as contained on Schedule
        4.3.
        The
        capital shares as contained on Schedule
        4.3
        are the
        only outstanding securities of the Shen Kun Companies and there are no
        outstanding options, warrants, agreements, commitments, conversion rights,
        preemptive rights or other rights to subscribe for, purchase or otherwise
        acquire any shares of capital stock or any unissued or treasury shares of
        capital stock of Shen Kun.

       

      Section
        4.4 Subsidiaries
        and Equity Investments. 

       

      (a) Each
        Subsidiary and affiliated company of the Shen Kun Companies is set forth
        on
Schedule
        4.4(a).
        

       

      (b) The
        Shen
        Kun Companies do
        not,
        directly or indirectly, own any capital stock or other securities of, or
        have
        any beneficial ownership interest in, or hold any equity or similar interest,
        or
        have any investment in any corporation, limited liability company, partnership,
        limited partnership, joint venture or other company, person or other entity.
        For
        each entity listed thereon, Schedule
        4.4(a)
        sets
        forth its jurisdiction of organization and the percentage of the outstanding
        capital stock or other equity interests of such entity that is held by the
        Shen
        Kun Companies. Each entity listed on Schedule
        4.4(a)
        is duly
        organized and
        validly existing and is in good standing under the laws of the jurisdiction
        of
        its formation; has the requisite corporate power and authority to own its
        properties and to carry on its business as now being conducted; and, if
        applicable, is duly qualified as a foreign entity to do business and, to
        the
        extent legally applicable, is in good standing in every jurisdiction in which
        its ownership of property or the nature of the business conducted by it makes
        such qualification necessary, except to the extent that the failure to be
        so
        qualified or be in good standing would not have a material adverse
        effect.

       

      (c) The
        agreements entered into between WFOE and Shengkai (as described in Schedule
        4.4(c)
        hereto),
        which effectively give WFOE control over Shengkai’s business and management as
        if Shengkai were a wholly-owned subsidiary of WFOE, were validly entered
        into by
        the parties and in compliance with relevant PRC laws and regulations, and
        all
        necessary approvals in connection with such contractual agreements have been
        obtained, except for those that do not or will not have a material adverse
        effect on the business of Shengkai. 

       

      Section
        4.5 Authorization
        and Validity of Agreements.
        The
        Shen Kun Companies have all corporate power and authority to execute and
        deliver
        this Agreement, to perform their
        obligations hereunder and to consummate the transactions contemplated hereby.
        Each of the Shen Kun Shareholders has full power and authority to execute
        and
        deliver this Agreement, to perform its obligations hereunder and to consummate
        the transactions contemplated hereby. This Agreement constitutes the valid
        and
        legally binding obligation of the Shen Kun Companies and the Shen Kun
        Shareholders and is enforceable in accordance with its terms against each
        of
        them. Neither the Shen Kun Companies nor the Shen Kun Shareholders need give
        any
        notice to, make any filings with, or obtain any authorization, consent or
        approval of any government or governmental agency or other person in order
        for
        it to consummate the transactions contemplated by this Agreement, other than
        filings that may be required or permitted under BVI law, states securities
        laws,
        the Securities Act and/or the Exchange Act resulting from the transfer and
        exchange of the Shen Kun Shares. The execution and delivery of this Agreement
        by
        the Shen Kun Companies and
        the
        Shen Kun Shareholders, and the consummation by the Shen Kun Companies and
        by the
        Shen Kun Shareholders of the transactions contemplated hereby, have been
        duly
        authorized by all necessary corporate action of the Shen Kun
        Companies and
        the
        Shen Kun Shareholders, and no other corporate proceedings on the part of
        the
        Shen Kun Companies or other actions on the part of the Shen Kun Shareholders
        are
        necessary to authorize this Agreement or to consummate the transactions
        contemplated hereby. 

       

      
        
          
          

        

        
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      Section
        4.6 No
        Conflict or Violation.
        Neither
        the execution and delivery of this Agreement by the Shen Kun Companies or
        the
        Shen Kun Shareholders, nor the consummation by the Shen Kun Companies and/or
        the
        Shen Kun Shareholders of the transactions contemplated hereby will: (i) violate
        any provision of the Shen Kun Charter Documents, (ii) violate any Law,
        constitution, statute, regulation, rule, injunction, judgment, order, decree,
        ruling, charge or other restriction of any Governmental Authority to which
        the
        Shen Kun Companies and/or the Shen Kun Shareholders are subject, (iii) conflict
        with, result in a breach of, constitute a default under, result in the
        acceleration of, create in any party the right to accelerate, terminate,
        modify
        or cancel, or require any notice under any agreement, contract, lease, license,
        instrument or other arrangement to which the Shen Kun Companies and/or the
        Shen
        Kun Shareholders is/are a party or by which it/they is/are bound, or to which
        any of its/their/his assets is subject; or (iv) result in or require the
        creation or imposition of any encumbrance of any nature upon or with respect
        to
        any of Shen Kun Companies or any of the Shen Kun Shareholders’ assets, including
        without limitation the Shen Kun Shares. 

       

      Section
        4.7 Material
        Changes/Compliance with Laws and Other Instruments. Except
        as
        would not have a Material Adverse Effect on the Shen Kun Companies, the business
        and operations of any of the Shen Kun Companies have been and are being
        conducted in accordance with all applicable Laws, rules and regulations and
        all
        applicable orders, injunctions, decrees, writs, judgments, determinations
        and
        awards of all Governmental Authorities.
        Except
        as would not have a Material Adverse Effect on the Shen Kun Companies, the
        Shen
        Kun Companies are not, and are not alleged to be, in violation of, or (with
        or
        without notice or lapse of time or both) in default under, or in breach of,
        any
        term or provision of the Shen Kun Charter Documents or of any indenture,
        loan or
        credit agreement, note, deed of trust, mortgage, security agreement or other
        material agreement, lease, license or other instrument, commitment, obligation
        or arrangement to which any of the Shen Kun Companies are a party or by which
        any of the Shen Kun Companies’ properties, assets or rights are bound or
        affected. To the knowledge of the Shen Kun Companies, no other party to any
        material contract, agreement, lease, license, commitment, instrument or other
        obligation to which any of the Shen Kun Companies are
        a
        party are (with or without notice or lapse of time or both) in default
        thereunder or in breach of any term thereof. The Shen Kun Companies are not
        subject to any obligation or restriction of any kind or character, nor are
        there, to the knowledge of the Shen Kun Companies, any event or circumstance
        relating to the Shen Kun Companies that materially and adversely affects
        in any
        way their business, properties, assets or prospects or that would prevent
        or
        make burdensome their performance of or compliance with all or any part of
        this
        Agreement or the consummation of the transactions contemplated hereby or
        thereby. “Material
        Adverse Effect” means,
        when used with respect to the Shen Kun Companies, any change, effect or
        circumstance which, individually or in the aggregate, would reasonably be
        expected to (a) have a material adverse effect on the business, assets,
        financial condition or results of operations of the Shen Kun Companies, in
        each
        case taken as a whole or (b) materially impair the ability of the Shen Kun
        Companies to
        perform their obligations under this Agreement, excluding any change, effect
        or
        circumstance resulting from (i) the announcement, pendency or consummation
        of
        the transactions contemplated by this Agreement, (ii) changes in the United
        States securities markets generally, or (iii) changes in general economic,
        currency exchange rate, political or regulatory conditions in industries
        in
        which the Shen Kun Companies operate. 

       

      Section
        4.8 Brokers’
        Fees. None
        of
        the Shen Kun Shareholders nor the Shen Kun Companies has any liability to
        pay
        any fees or commissions or other consideration to any broker, finder, or
        agent
        with respect to the transactions contemplated by this Agreement.

       

      
        
          
          

        

        
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      Section
        4.9 Investment
        Representations.
        

      

      (a) Each
        of
        the Shen Kun Shareholders understands and agrees that the issuance of the
        Merger
        Shares to the Shen Kun Shareholders as contemplated hereby, has not been
        registered under the Securities Act or the securities laws of any state of
        the
        U.S. and that the issuance of the Merger Shares is being effected in reliance
        upon an exemption from registration afforded under the Securities Act.

       

      (b) The
        Merger Shares will be acquired hereunder solely for the account of the Shen
        Kun
        Shareholders for investment, and not with a view to the resale or distribution
        thereof. Each of the Shen Kun Shareholders understands and is able to bear
        any
        economic risks associated with acquiring the Merger Shares. Each of the Shen
        Kun
        Shareholders have had full access to all the information it considers necessary
        or appropriate to make an informed investment decision with respect to the
        Merger. 

       

      (c) No
        offer
        to enter into this Agreement has been made by Parent to any of the Shen Kun
        Shareholders in the United States. None of the Shen Kun Shareholders or any
        of
        their respective Affiliates or any person acting on their behalf or on behalf
        of
        any such Affiliate, has engaged or will engage in any activity undertaken
        for
        the purpose of, or that reasonably could be expected to have the effect of,
        conditioning the markets in the United States for the Merger Shares, including,
        but not limited to, effecting any sale or short sale of securities. To the
        best
        knowledge of each of the Shen Kun Shareholders, this Agreement and the
        transactions contemplated herein are not part of a plan or scheme to evade
        the
        registration provisions of the Securities Act, and the Merger Shares are
        being
        acquired for investment purposes by each of the Shen Kun Shareholders.

       

      (d) By
        its
        execution of this Agreement, each Shen Kun Shareholder, severally and not
        jointly, represents and warrants to Parent, Acquisition Subsidiary and the
        Parent Controlling Shareholders either that: (i) such Shen Kun Shareholder
        is an
        Accredited Investor; or (ii) such Shen Kun Shareholder is not a U.S. Person.
        Each Shen Kun Shareholder severally understands that the Merger Shares being
        offered and sold to such Shen Kun Shareholder in reliance upon the truth
        and
        accuracy of the representations, warranties, agreements, acknowledgments
        and
        understandings of such Shen Kun Shareholder set forth in this Agreement,
        in
        order that Parent may determine the applicability and availability of the
        exemptions from registration of the Common Stock on which Parent is relying.
        Each
        of
        the Shen Kun Shareholders acknowledges that, in connection with the transactions
        contemplated by this Agreement, Parent shall file such notices, applications,
        reports, or other instruments as may be deemed necessary or appropriate in
        an
        effort to document reliance on such exemptions, and the appropriate regulatory
        authority in the countries where the Shen Kun Shareholders resides unless
        an
        exemption requiring no filing is available in such jurisdictions, all to
        the
        extent and in the manner as may be deemed by such Parties to be
        appropriate.

       

      (e) No
        Shen
        Kun Shareholder will transfer any or all of the Merger Shares absent an
        effective registration statement under the Securities Act and applicable
        state
        securities law covering the disposition of such shareholder’s Merger Shares,
        without first providing Parent with an opinion of counsel (which counsel
        and
        opinion are reasonably satisfactory to Parent) to the effect that such transfer
        will be made pursuant to an exemption from the registration and the prospectus
        delivery requirements of the Securities Act and the registration or
        qualification requirements of any applicable U.S. state securities
        laws.

       

      (f) Each
        of
        the Shen Kun Shareholders agrees
        that it will not
        (i)
        offer,
        sell or otherwise transfer any of the Merger Shares, unless in compliance
        with
        the Securities Act or (ii)
        engage
        in
        hedging transactions involving such securities. Each Shen Kun Shareholder
        acknowledges that the Merger Shares are “restricted securities” as defined in
        Rule 144 under the Securities Act.

       

      (g) Each
        of
        the Shen Kun Shareholders hereby agrees as follows: 

       

      
        
          
          

        

        
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      (i) Securities
        Act Legend.
        The
        certificates evidencing the Merger Shares issued to the Shen Kun Shareholders,
        and each certificate issued in transfer thereof, will bear the following
        legend:

       

      THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND
        NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
        ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE
        REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
        LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
        REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS,
        IN
        WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY
        AN
        OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
        TO THE
        COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
        OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE
        EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
        APPLICABLE STATE SECURITIES LAWS.

      

      (ii) Other
        Legends.
        The
        certificates representing such Merger Shares, and each certificate issued
        in
        transfer thereof, will also bear any other legend required by contract or
        under
        any applicable Law, including, without limitation, any U.S. state corporate
        and
        state securities law. 

       

      (h) Each
        Shen
        Kun Shareholder understands and acknowledges that Parent may refuse to transfer
        the Merger Shares, unless such Shareholder complies with this Section 4.9.
        Each
        Shareholder consents to Parent making a notation on its records or giving
        instructions to any transfer agent of the Common Stock in order to implement
        the
        restrictions on transfer of the Merger Shares.

       

      (i) Each
        of
        the Shen Kun Shareholders has been furnished with and has carefully read
        the
        Public Reports filed by Parent with the SEC during the preceding two years.
        With
        respect to individual or partnership tax and other economic considerations
        involved in this investment, each of the Shen Kun Shareholders confirms that
        they are not relying on Parent (or any agent or representative of Parent).
        Each
        of the Shen Kun Shareholders have carefully considered and have, to the extent
        such persons believe such discussion necessary, discussed with their own
        legal,
        tax, accounting and financial advisers the suitability of an investment in
        the
        stock for such particular tax and financial situation. 

       

      (j) Each
        of
        the Shen Kun Shareholders acknowledges
        that
        Parent is a “shell company”,”
as
        defined by Rule 12b-2 of the Exchange Act,
        with no
        operations and no significant assets and that, as a result, the value
        of
        the Shen
        Kun Shares far exceeds the value of the Merger Shares under any recognized
        criteria of value. Each of the Shen Kun Shareholders further acknowledges
        that
        they are aware of the quoted prices for the Common Stock on the OTC Bulletin
        Board but understands
        there is
        no active trading market for such shares, quotations on the OTC Bulletin
        Board
        represent inter-dealer prices without retail mark-up, mark-down, or commission,
        and may not represent actual transactions, and there is no liquid trading
        market
        for the Common Stock, and that, as a result, Parent and the Parent Controlling
        Shareholders are not providing any assurance that the Shen Kun Shareholders
        will
        be able to sell the Common Stock. 

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      (k) Each
        of
        the Shen Kun Shareholders has had an opportunity to inspect relevant documents
        relating to the organization and business of Parent. Each of the Shen Kun
        Shareholders acknowledges
        that all
        documents, records and books pertaining to this investment which such Shen
        Kun
        Shareholders have requested has been made available for inspection by such
        Shen
        Kun Shareholders and their respective attorney, accountant or other
        adviser(s).

       

      (l) Each
        of
        the Shen Kun Shareholders and/or their respective advisor(s) has/have had
        a
        reasonable opportunity to ask questions of, and receive answers and request
        additional relevant information from, the officers of Parent concerning the
        transactions contemplated by this Agreement.

       

      (m) Each
        of
        the Shen Kun Shareholders confirms
        that
        they are not acquiring the Common Stock as a result of or subsequent to any
        advertisement, article, notice or other communication published in any
        newspaper, magazine or similar media or broadcast over television or radio
        or
        presented at any seminar.

       

      (n) Each
        of
        the Shen Kun Shareholders, by reason of such person’s business or financial
        experience, has
        the
        capacity to protect its
        own
        interests in connection with the transactions contemplated by this
        Agreement.

       

      (o) Except
        as
        set forth in this Agreement, each of the Shen Kun Shareholders represents
        that no
        representations or warranties have been made to them by Parent, any officer
        director, agent, employee, or Affiliate of Parent, and such Shen Kun Shareholder
        has not relied on any oral representations by Parent or by any of its officers,
        directors or agents in connection with their decision to acquire the Merger
        Shares.

       

      (p) Each
        of
        the Shen Kun Shareholders has
        adequate
        means for providing for their current financial needs and contingencies,
        is
        able to
        bear the substantial economic risks of an investment in the Merger Shares
        for an
        indefinite period of time, has
        no need
        for liquidity in such investment and, at the present time, could afford a
        complete loss of such investment. 

       

      (q) Each
        of
        the Shen Kun Shareholders has
        such
        knowledge and experience in financial, tax and business matters so as to
        enable
such
        shareholder
        to use
        the information made available to them in connection with the transaction
        to
        evaluate the merits and risks of an investment in the Merger Shares and to
        make
        an informed investment decision with respect thereto 

       

      (r) Each
        of
        the Shen Kun Shareholders understands
        that the
        Merger Shares constitute “restricted securities” that have not been registered
        under the Securities Act or any applicable state securities law and they
        are
        acquiring the same as principal for their own account for investment purposes
        and not for distribution. The Shen Kun Shareholders acknowledge that the
        Merger
        Shares have not been registered under the Securities Act or under any securities
        act of any state or country. The Shen Kun Shareholders understand further
        that
        in absence of an effective registration statement, the Merger Shares can
        only be
        sold pursuant to some exemption from registration under the Securities Act.
        

       

      (s) Each
        of
        the Shen Kun Shareholders recognizes that an investment in the Merger Shares
        involves substantial risks. Each of the Shen Kun Shareholders acknowledges
        that
        they have reviewed the risk factors identified in the periodic reports filed
        by
        Parent with the SEC. Each of the Shen Kun Shareholders further confirms
        that
        they are aware that no federal or state agencies have passed upon this
        transaction or made any finding or determination as to the fairness of this
        investment.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      Section
        4.10 Ownership
        of Shares.
        Each
        Shen Kun Shareholder is both the record and beneficial owner of the Shen
        Kun
        Shares set forth opposite such Shen Kun Shareholder's name on Schedule
        4.10
        hereto.
        Each Shen Kun Shareholder is not the record or beneficial owner of any other
        Shen Kun Shares. The information set forth on Schedule
        4.10
        with
        respect to each Shen Kun Shareholder is accurate and complete. Each Shen
        Kun
        Shareholder has and shall transfer at the Closing, good and marketable title
        to
        the Shen Kun Shares shown as owned of record by such Shen Kun Shareholder
        on
Schedule
        4.10
        to this
        Agreement, free and clear of all Liens.

       

      Section
        4.11 Pre-emptive
        Rights.
        At
        Closing, no Shen Kun Shareholder has any pre-emptive rights or any other
        rights
        to acquire any Shen Kun Shares that have not been waived or
        exercised.  

      

      Section
        4.12 Disclosure.
        This
        Agreement, the schedules hereto and any certificate attached hereto or delivered
        in accordance with the terms hereof by or on behalf of the Shen Kun Companies
        or
        any of
        the Shen Kun Shareholders in connection with the transactions contemplated
        by
        this Agreement, when taken together, do not contain any untrue statement
        of a
        material fact or omit any material fact necessary in order to make the
        statements contained herein and/or therein not misleading. 

      

      Section
        4.13 Title
        to and Condition of Properties.
        The Shen
        Kun Companies own or hold under valid leases or other rights to use all real
        property, plants, machinery and equipment necessary for the conduct of the
        business of any of the Shen Kun Companies as presently conducted, except
        where
        the failure to own or hold such property, plants, machinery and equipment
        would
        not have a Material Adverse Effect on any of the Shen Kun Companies. The
        material buildings, plants, machinery and equipment necessary for the conduct
        of
        the business of any of the Shen Kun Companies as presently conducted are
        structurally sound, are in good operating condition and repair and are adequate
        for the uses to which they are being put, in each case, taken as a whole,
        and
        none of such buildings, plants, machinery or equipment are in need of
        maintenance or repairs, except for ordinary, routine maintenance and repairs
        that are not material in nature or cost. 

      

      Section
        4.14 Financial
        Statements/Absence of Undisclosed Liabilities. The
        audited financial statements for fiscal years ended June 30, 2006 and 2007
        and
        the unaudited financial statements for the fiscal quarters ended September
        30,
        2007, December 31, 2007 and March 31, 2008 of the Shen Kun Companies (the
        “Shen
        Kun Financial Statements”)
        have
        been prepared in accordance with GAAP applied on a consistent basis during
        the
        periods involved, except as may be otherwise specified in such financial
        statements or the notes thereto and except that unaudited financial statements
        may not contain all footnotes required by GAAP, and fairly present in all
        material respects the financial position of the Company and its consolidated
        subsidiaries as of and for the dates thereof and the results of operations
        and
        cash flows for the periods then ended, subject, in the case of unaudited
        statements, to normal, immaterial, year-end audit adjustments. The Shen Kun
        Companies have no debt, obligation or liability (whether accrued, absolute,
        contingent, liquidated or otherwise, whether due or to become due, whether
        or
        not known to the Shen Kun Companies) arising out of any transaction entered
        into
        at or prior to the Closing Date or any act or omission at or prior to the
        Closing Date, except to the extent set forth on or reserved against on the
        Shen
        Kun Companies’ audited financial statements for the fiscal years ended June 30,
        2006 and 2007 and the unaudited financial statements for the fiscal quarters
        ended September 30, 2007, December 31, 2007 and March 31, 2008. All debts,
        obligations or liabilities with respect to directors and officers of the
        Shen
        Kun Companies will be cancelled prior to the Closing. The Shen Kun Companies
        have not incurred any liabilities or obligations under agreements entered
        into,
        except in the usual and ordinary course of business and
        except as otherwise provided in the Shen Kun Financial Statements since
        July
        31,
        2007. 

       

      Section
        4.15 Changes.
        The
        Shen
        Kun Companies have not, since March 31, 2008:

      

      (a) Ordinary
        Course of Business.
        Conducted their business or entered into any transaction other than in the
        usual
        and ordinary course of business, except for this Agreement.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      (b) Adverse
        Changes.
        Suffered or experienced any change in, or affecting, their condition (financial
        or otherwise), properties, assets, liabilities, business, operations, results
        of
        operations or prospects other than changes, events or conditions in the usual
        and ordinary course of their business, none of which would have a Material
        Adverse Effect;

       

      (c) Loans.
        Made
        any loans or advances to any Person, other than travel advances and
        reimbursement of expenses made to employees, officers and directors in the
        ordinary course of business;

       

      (d) Liens.
        Created
        or permitted to exist any Lien on any material property or asset of any of
        the
        Shen Kun Companies, other than (a) Liens for taxes not yet payable or in
        respect
        of which the validity thereof is being contested in good faith by appropriate
        proceedings and for the payment of which the relevant party has made adequate
        reserves; (b) Liens in respect of pledges or deposits under workmen’s
        compensation laws or similar legislation, carriers, warehousemen, mechanics,
        laborers and material men and similar Liens, if the obligations secured by
        such
        Liens are not then delinquent or are being contested in good faith by
        appropriate proceedings conducted and for the payment of which the relevant
        party has made adequate reserves; (c) statutory Liens incidental to the conduct
        of the business of the relevant party which were not incurred in connection
        with
        the borrowing of money or the obtaining of advances or credits and that do
        not
        in the aggregate materially detract from the value of its property or materially
        impair the use thereof in the operation of its business; and (d) Liens that
        would not have a Material Adverse Effect (“Permitted Liens”);

       

      (e) Capital
        Stock.
        Issued,
        sold, disposed of or encumbered, or authorized the issuance, sale, disposition
        or encumbrance of, or granted or issued any option to acquire any shares
        of
        their capital stock or any other of their securities or any equity security
        of
        any class of any of the Shen Kun Companies, or altered the term of any of
        their
        outstanding securities or made any change in their outstanding shares of
        capital
        stock or their capitalization, whether by reason of reclassification,
        recapitalization, stock split, combination, exchange or readjustment of shares,
        stock dividend or otherwise;

       

      (f) Dividends.
        Declared, set aside, made or paid any dividend or other distribution to any
        of
        their shareholders;

       

      (g) Material
        Shen Kun Contracts.
        Terminated or modified any and all agreements, contracts, arrangements, leases,
        commitments or otherwise, of any of the Shen Kun Companies, of the type and
        nature that is required to be filed with the SEC (each a “Material
        Shen Kun Contract”),
        except for termination upon expiration in accordance with the terms
        thereof;

       

      (h) Claims.
        Released, waived or cancelled any claims or rights relating to or affecting
        any
        of the Shen Kun Companies in excess of US $10,000 in the aggregate or instituted
        or settled any Action involving in excess of US $10,000 in the
        aggregate;

       

      (i) Discharged
        Liabilities.
        Paid,
        discharged or satisfied any claim, obligation or liability in excess of US
        $10,000 in the aggregate, except for liabilities incurred prior to the date
        of
        this Agreement in the ordinary course of business;

       

      (j) Indebtedness.
        Created, incurred, assumed or otherwise become liable for any indebtedness
        in
        excess of US $10,000 in the aggregate, other than professional
        fees;

       

      (k) Guarantees.
        Guaranteed or endorsed in a material amount any obligation or net worth of
        any
        Person;

       

      
        
          
          

        

        
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      (l) Acquisitions.
        Acquired the capital stock or other securities or any ownership interest
        in, or
        substantially all of the assets of, any other Person;

       

      (m) Accounting.
        Changed
        their method of accounting or the accounting principles or practices utilized
        in
        the preparation of the Shen Kun Financial Statements other than as required
        by
        GAAP;

       

      (n) Agreements.
        Entered
        into any agreement, or otherwise obligated themselves, to do any of the
        foregoing.

       

      Section
        4.16 Material
        Shen Kun Contracts. The
        Shen
        Kun Companies have made available to Parent and the Parent Controlling
        Shareholders, prior to the date of this Agreement, true, correct and complete
        copies of each written Material Shen Kun Contract, including each amendment,
        supplement and modification thereto. Each Material Shen Kun Contract is a
        valid
        and binding agreement of the Shen Kun Companies and is in full force and
        effect.
        Except as would not have a Material Adverse Effect, the Shen Kun Companies
        are
        not in breach or default of any Material Shen Kun Contract to which they
        are a
        party and, to the knowledge of the Shen Kun Companies, no other party to
        any
        Material Shen Kun Contract are in breach or default thereof. Except as would
        not
        have a Material Adverse Effect, no event has occurred or circumstance exists
        that (with or without notice or lapse of time) would (a) contravene, conflict
        with or result in a violation or breach of, or become a default or event
        of
        default under, any provision of any Material Shen Kun Contract or (b) permit
        the
        Shen Kun Companies or any other Person the right to declare a default or
        exercise any remedy under, or to accelerate the maturity or performance of,
        or
        to cancel, terminate or modify any Material Shen Kun Contract. The Shen Kun
        Companies have not received notice of the pending or threatened cancellation,
        revocation or termination of any Material Shen Kun Contract to which they
        are a
        party. There are no renegotiations of, or attempts to renegotiate, or
        outstanding rights to renegotiate any material terms of any Material Shen
        Kun
        Contract.

       

      Section
        4.17 Material
        Assets.
        The
        financial statements of the Shen Kun Companies reflect the material properties
        and assets (real and personal) owned or leased by the Shen Kun
        Companies.

       

      Section
        4.18 Litigation.
        There is
        no Action pending or, to the best knowledge of the Shen Companies and the
        Shen
        Kun Shareholders, currently threatened against any of the Shen Kun Companies
        or
        any of their respective Subsidiaries or Affiliates, that may affect the validity
        of this Agreement, the right of such parties to enter into this Agreement,
        to
        consummate the transactions contemplated hereby or thereby, or threatened
        against or affecting any of the Shen Kun Companies’ respective properties,
        assets, business or employees. There is no Action pending or, to the best
        knowledge of the Shen Companies and the Shen Kun Shareholders, currently
        threatened against any of the Shen Kun Companies or any of their respective
        Subsidiaries or Affiliates, before any court or by or before any Governmental
        Authority or any arbitration board or tribunal, nor is there any judgment,
        decree, injunction or order of any Governmental Authority or arbitrator against
        any of the Shen Kun Companies or any of their respective Subsidiaries or
        Affiliates. None of the Shen Kun Companies or their respective Subsidiaries
        or
        Affiliates is a party or subject to the provisions of any order, writ,
        injunction, judgment or decree of any Governmental Authority. There is no
        Action
        by any of the Shen Kun Companies or any of their respective Subsidiaries
        or
        Affiliates relating to any of the Shen Kun Companies currently pending or
        which
        any of the Shen Kun Companies or any of their respective Subsidiaries
intends
        to initiate. 

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      Section
        4.19 Licenses. Except
        as
        would not have a Material Adverse Effect, the Shen Kun Companies possess
        from
        the appropriate Governmental Authority all licenses, permits, authorizations,
        approvals, franchises and rights that are necessary for any of the Shen Kun
        Companies to engage in their business as currently conducted and to permit
        any
        of the Shen Kun Companies to own and use their properties and assets in the
        manner in which they currently own and use such properties and assets
        (collectively, the “Shen
        Kun Companies Permits”).
        The
        Shen Kun Companies have not received notice from any Governmental Authority
        or
        other Person that there are lacking any license, permit, authorization,
        approval, franchise or right necessary for the Shen Kun Companies to engage
        in
        their business as currently conducted and to permit the Shen Kun Companies
        to
        own and use their properties and assets in the manner in which they currently
        own and use such properties and assets. Except as would not have a Material
        Adverse Effect, the Shen Kun Companies Permits are valid and in full force
        and
        effect. Except as would not have a Material Adverse Effect, no event has
        occurred or circumstance exists that may (with or without notice or lapse
        of
        time): (a) constitute or result, directly or indirectly, in a violation of
        or a
        failure to comply with any Shen Kun Companies Permit; or (b) result, directly
        or
        indirectly, in the revocation, withdrawal, suspension, cancellation or
        termination of, or any modification to, any Shen Kun Companies Permit. The
        Shen
        Kun Companies have not received notice from any Governmental Authority or
        any
        other Person regarding: (a) any actual, alleged, possible or potential
        contravention of any Shen Kun Companies Permit; or (b) any actual, proposed,
        possible or potential revocation, withdrawal, suspension, cancellation,
        termination of, or modification to, any Shen Kun Companies Permit. All
        applications required to have been filed for the renewal of such Shen Kun
        Companies Permits have been duly filed on a timely basis with the appropriate
        Persons, and all other filings required to have been made with respect to
        such
        Shen Kun Companies Permits have been duly made on a timely basis with the
        appropriate Persons. All Shen Kun Companies Permits are renewable by their
        terms
        or in the ordinary course of business without the need to comply with any
        special qualification procedures or to pay any amounts other than routine
        fees
        or similar charges, all of which have, to the extent due, been duly
        paid.

       

      Section
        4.20 Interested
        Party Transactions.
        No
        officer, director or shareholder of any of the Shen Kun Companies or any
        Affiliate or “associate” (as such term are defined in Rule 405 of the Securities
        Act) of any such Person, have or have had, either directly or indirectly,
        (1) an
        interest in any Person which (a) furnishes or sells services or products
        which
        are furnished or sold or are proposed to be furnished or sold by the Shen
        Kun
        Companies, or (b) purchases from or sells or furnishes to, or proposes to
        purchase from, sell to or furnish any of the Shen Kun Companies any goods
        or
        services; or (2) a beneficial interest in any contract or agreement to which
        the
        Shen Kun Companies are a party or by which they may be bound or
        affected.

       

      Section
        4.21 Governmental
        Inquiries.
        The
        Shen Kun Companies have provided to Parent a copy of each material written
        inspection report, questionnaire, inquiry, demand or request for information
        received by the Shen Kun Companies from any Governmental Authority, and the
        Shen
        Kun Companies’ response thereto, and each material written statement, report or
        other document filed by the Shen Kun Companies with any Governmental
        Authority.

       

      Section
        4.22 Intellectual
        Property.
        The
        Shen Kun Companies do not own, use or license any Intellectual Property in
        their
        business as presently conducted. For purposes of this Agreement, “Intellectual
        Property” means all industrial and intellectual property, including, without
        limitation, all U.S. and non-U.S. patents, patent applications, patent rights,
        trademarks, trademark applications, common law trademarks, Internet domain
        names, trade names, service marks, service mark applications, common law
        service
        marks, and the goodwill associated therewith, copyrights, in both published
        and
        unpublished works, whether registered or unregistered, copyright applications,
        franchises, licenses, know-how, trade secrets, technical data, designs, customer
        lists, confidential and proprietary information, processes and formulae,
        all
        computer software programs or applications, layouts, inventions, development
        tools and all documentation and media constituting, describing or relating
        to
        the above, including manuals, memoranda, and records, whether such intellectual
        property has been created, applied for or obtained anywhere throughout the
        world.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      Section
        4.23 Stock
        Option Plans; Employee Benefits.

       

      (a) The
        Shen
        Kun Companies have no stock option plans providing for the grant by the Shen
        Kun
        Companies of stock options to directors, officers or employees.

       

      (b) The
        Shen
        Kun Companies have no employee benefit plans or arrangements covering their
        present and former employees or providing benefits to such persons in respect
        of
        services provided the Shen Kun Companies.

       

      (c) Neither
        the consummation of the transactions contemplated hereby alone, nor in
        combination with another event, with respect to each director, officer, employee
        and consultant of the Shen Kun Companies, will result in (a) any payment
        (including, without limitation, severance, unemployment compensation or bonus
        payments) becoming due from the Shen Kun Companies, (b) any increase in the
        amount of compensation or benefits payable to any such individual or (c)
        any
        acceleration of the vesting or timing of payment of compensation payable
        to any
        such individual. No agreement, arrangement or other contract of the Shen
        Kun
        Companies provides benefits or payments contingent upon, triggered by, or
        increased as a result of a change in the ownership or effective control of
        the
        Shen Kun Companies.

       

      Section
        4.24 Environmental
        and Safety Matters.
        Except
        as would not have a Material Adverse Effect:

       

      (a) The
        Shen
        Kun Companies have at all time been and are in compliance with all Environmental
        Laws applicable to the Shen Kun Companies.

       

      (b) There
        are
        no Actions pending or threatened against the Shen Kun Companies alleging
        the
        violation of any Environmental Law or environmental permit applicable to
        the
        Shen Kun Companies or alleging that the Shen Kun Companies are potentially
        responsible parties for any environmental site contamination.

       

      (c) Neither
        this Agreement nor the consummation of the transactions contemplated by this
        Agreement shall impose any obligations to notify or obtain the consent of
        any
        Governmental Authority or third Persons under any Law or other requirement
        relating to the environment, natural resources, or public or employee health
        and
        safety (“Environmental
        Laws”)
        applicable to the Shen Kun Companies.

      

      Section
        4.25 Board
        Recommendation.
        Each
        respective Board of Directors of the Shen Kun Companies, at meetings duly
        called
        and held, has determined that this Agreement and the transactions contemplated
        by this Agreement are advisable and in the best interests of the Shen Kun
        Companies’ shareholders and has duly authorized this Agreement and the
        transactions contemplated by this Agreement.

      

      Section
        4.26 Compliance
        of Transaction with PRC Laws.
        The
        execution and the consummation of the transactions contemplated by this
        Agreement do not conflict with or result in a violation of the Company Act,
        the
        Securities Act of China or any other Law of the PRC.

      

      Section
        4.27 Foreign
        Corrupt Practices.
        Neither
        the Shen Kun Companies nor the Shen Kun Shareholders nor any director, officer,
        agent, employee or other Person acting on behalf of either or both of them,
        has,
        in the course of its actions for, or on behalf of, either of the Shen Kun
        Companies or the Shen Kun Shareholders, as the case may be, (i) used any
        corporate funds for any unlawful contribution, gift, entertainment or other
        unlawful expenses relating to political activity, (ii) made any direct or
        indirect unlawful payment to any foreign or domestic government official
        or
        employee from corporate funds, (iii) violated or is in violation of any
        provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended,
        or (iv)
        made any unlawful bribe, rebate, payoff, influence payment, kickback or other
        unlawful payment to any foreign or domestic government official or employee.
        

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      Section
        4.28 OFAC.
        Neither
        the Shen Kun Companies nor the Shen Kun Shareholders (i) is a Person whose
        property or interest in property is blocked or subject to blocking pursuant
        to
        Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property
        and
        Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
        Support
        Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or
        transactions prohibited by Section 2 of such executive order, or is otherwise
        associated with any such Person in any manner violative of Section 2 of such
        executive order or (iii) is a Person on the list of Specially Designated
        Nationals and Blocked Persons or subject to the limitations or prohibitions
        under any other U.S. Department of Treasury’s Office of Foreign Assets Control
        regulation or executive order. 

      

      Section
        4.29 Patriot
        Act.
        Assuming
        it were applicable to the Shen Kun Companies and the Shen Kun Shareholders,
        the
        Shen Kun Companies and the Shen Kun Shareholders would be in compliance,
        in all
        material respects, with the (i) Trading with the Enemy Act, as amended, and
        each
        of the foreign assets control regulations of the United States Treasury
        Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
        legislation or executive order relating thereto; and (ii) Uniting and
        Strengthening America by Providing Appropriate Tools Required to Intercept
        and
        Obstruct Terrorism (USA Patriot Act of 2001).

      

      Section
        4.30 Representations
        and Warranties True.
        Each of
        the Shen Kun Companies and the Shen Kun Shareholders covenant and represent
        and
        warrant that all of the representations and warranties set forth herein shall
        be
        true and correct at the time of Closing as if made on that date.

      

      Section
        4.31 Survival.
        Each of
        the representations and warranties set forth in this Article III shall be
        deemed
        represented and made by the Shen Kun Companies and
        the
        Shen Kun Shareholders at the Closing as if made at such time and shall survive
        the Closing for a period terminating twenty-four months after the Closing
        Date. 

      

      ARTICLE
        V

       

      ADDITIONAL
        AGREEMENTS 

      

      Section
        5.1 Certain
        Changes and Conduct of Business.

      

      (a) From
        and
        after the date of this Agreement and until the Closing Date, each of Parent
        and
        the Shen Kun Companies shall conduct its business solely in the ordinary
        course
        consistent with past practices and, in a manner consistent with all their
        respective representations, warranties or covenants contained herein, and
        without the prior written consent of the other party (which may be withheld
        for
        any reason or no reason), will not, except as required or permitted pursuant
        to
        the terms hereof or the Private Placement:

       

      (i) make
        any
        material change in the conduct of its businesses and/or operations or enter
        into
        any transaction other than in the ordinary course of business consistent
        with
        past practices;

       

      (ii) make
        any
        change to the Parent Charter Documents or the Shen Kun Charter Documents;
        issue
        any additional shares of capital stock or equity securities or grant any
        option,
        warrant or right to acquire any capital stock or equity securities or issue
        any
        security convertible into or exchangeable for its capital stock or alter
        in any
        material term of any of its outstanding securities or make any change in
        its
        outstanding shares of capital stock or its capitalization, whether by reason
        of
        a reclassification, recapitalization, stock split or combination, exchange
        or
        readjustment of shares, stock dividend or otherwise;

       

      
        
          
          

        

        
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      (iii) other
        than in the ordinary course of business, incur, assume or guarantee any
        indebtedness for borrowed money, issue any notes, bonds, debentures or other
        corporate securities or grant any option, warrant or right to purchase any
        thereof; 

       

      (iv) issue
        any
        securities convertible or exchangeable for debt or equity
        securities;

       

      (v) make
        any
        sale, assignment, transfer, abandonment or other conveyance of any of its
        assets
        or any part thereof; 

       

      (vi) subject
        any of its assets, or any part thereof, to any Lien or suffer such to be
        imposed;

       

      (vii) acquire
        any assets, raw materials or properties, or enter into any other
        transaction;

       

      (viii) enter
        into any new (or amend any existing) employee benefit plan, program or
        arrangement or any new (or amend any existing) employment, severance or
        consulting agreement, grant any general increase in the compensation of officers
        or employees (including any such increase pursuant to any bonus, pension,
        profit-sharing or other plan or commitment) or grant any increase in the
        compensation payable or to become payable to any employee; 

       

      (ix) make
        or
        commit to make any material capital expenditures;

       

      (x) pay,
        loan
        or advance any amount to, or sell, transfer or lease any properties or assets
        to, or enter into any agreement or arrangement with, any of its
        affiliates;

       

      (xi) guarantee
        any indebtedness for borrowed money or any other obligation of any other
        person;

       

      (xii) fail
        to
        keep in full force and effect insurance comparable in amount and scope to
        coverage maintained by it (or on behalf of it) on the date hereof;

       

      (xiii) take
        any
        other action that would cause any of the representations and warranties made
        by
        it in this Agreement not to remain true and correct in any material
        respect;

       

      (xiv) make
        any
        loan, advance or capital contribution to or investment in any
        person;

       

      (xv) make
        any
        change in any method of accounting or accounting principle, method, estimate
        or
        practice;

       

      (xvi) settle,
        release or forgive any claim or litigation or waive any right;

       

      (xvii) commit
        itself to do any of the foregoing.

       

      (b) From
        and
        after the date of this Agreement, each of Parent and the Shen Kun Companies
        and
        each of its Subsidiaries will:

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      (i) continue
        to maintain, in all material respects, its properties in accordance with
        present
        practices in a condition suitable for its current use; 

       

      (ii) file,
        when due or required, federal, state, foreign and other tax returns and other
        reports required to be filed and pay when due all taxes, assessments, fees
        and
        other charges lawfully levied or assessed against it, unless the validity
        thereof is contested in good faith and by appropriate proceedings diligently
        conducted;

       

      (iii) continue
        to conduct its business in the ordinary course consistent with past
        practices;

       

      (iv) keep
        its
        books of account, records and files in the ordinary course and in accordance
        with existing practices; and 

       

      (v) continue
        to maintain existing business relationships with suppliers.

       

      (c) From
        and
        after the date of this Agreement, none of the Shen Kun Shareholders will
        sell,
        transfer, convey, assign or otherwise dispose of, or contract or otherwise
        agree
        to sell, transfer, convey, assign or otherwise dispose of any of the Shen
        Kun
        Shares except as provided by this Agreement.

       

      (d) From
        the
        date of this Agreement and until the Closing date, each of Parent and the
        Shen
        Kun Companies shall confer on a reasonable basis with each other regarding
        operational matters and other matters related to the Merger and the transactions
        contemplated hereby.

       

      Section
        5.2 Publicity.
        No
        party shall issue any press release or public announcement pertaining to
        the
        Merger that has not been agreed upon in advance by Parent and Shen Kun, except
        as Parent reasonably determines to be necessary in order to comply with the
        rules of the SEC; provided,
        however,
        that to
        the maximum extent practicable, Parent and Shen Kun shall give prior notice
        thereof to the other, as applicable, and consult with each other regarding
        the
        same. 

      

      Section
        5.3 Tax
        Returns; Cooperation.
        From
        and after the Closing, the Shen Kun Companies, on the one hand, and Parent,
        on
        the other, will cooperate with each other and provide such information as
        the
        other party may require in order to file any return to determine Tax liability.
        Such cooperation shall include making employees available on a mutually
        convenient basis to explain any documents or information provided hereunder
        or
        otherwise as required in the conduct of any audit or other proceeding. In
        addition, each of the parties shall use all commercially reasonable efforts
        to
        take, or cause to be taken, all actions, and to do, or cause to be done,
        and to
        assist and cooperate with the other parties in doing, all things necessary,
        proper or advisable to consummate and make effective, as soon as reasonably
        practicable, the Merger and the other transactions contemplated by this
        Agreement. 

       

      Section
        5.4 Tax-Free
        Exchange.
        Each of
        Parent, the Shen Kun Companies and the Shen Kun Shareholders shall use its
        respective reasonable efforts to cause the Merger to qualify as a tax-free
        exchange of the Merger Shares under the Code. For purposes of the foregoing,
        this Agreement shall constitute a plan of reorganization. 

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      Section
        5.5 Transaction
        Form 8-K; Other Filings.
        Within
        four (4) days after Closing,
        and at
        its own cost and expense, Parent will prepare and file a Current Report on
        Form
        8-K (the “Transaction
        Form 8-K”)
        and
        any filings required to be filed by it under the Exchange Act, the Securities
        Act or any other Federal, foreign or blue sky or related Laws relating to
        the
        execution of this Agreement and the consummation of the Merger and the
        transactions contemplated hereby, as well as under the stock exchange or
        trading
        system on which shares of Common Stock are listed or quoted and such other
        governmental agencies as may require the filing of such other filings. The
        Shen
        Kun Companies will work together with Parent to
        prepare the Transaction Form 8-K within
        4
        days after Closing, to prepare
        other
        filings referred to above and
        to
        provide
        Parent whatever information is necessary to accurately complete such filings
        in
        a timely manner. 

      

      Section
        5.6 Parent
        Directors and Officers. 

      

      (a) Directors.
        On the
        Closing Date, Parent shall take all necessary actions to ensure that Mr.
        Wang
        Chen or such other Person designated by the Shen Kun Companies (the
“Shen
        Kun Designee”)
        shall
        be appointed to the Board of Directors of Parent, and that on the Merger
        Effective Date, the Board of Directors of Parent shall consist of two
        members,
        one of
        whom shall be the Shen Kun Designee. 

       

      (b) Schedule
        14F-1.
        On
or
        before the
        Closing
        Date,
        Parent shall take all actions required pursuant to Section 14(f) of the Exchange
        Act and Rule 14f-1 promulgated thereunder, including filing with the SEC
        an
        Information Statement on Schedule 14F-1 substantially in the form attached
        as
Exhibit
        D
        hereto
        with respect to the change of a majority of members of the Board of Directors
        of
        Parent.
        Upon the
        effectiveness of the Schedule 14F-1, Ms. Guo Wei shall be appointed to the
        Board
        of Directors of Parent and Mr. John Vogel shall resign as a member of the
        Board
        of Directors of Parent.

       

      (c) Independent
        Directors. Within
        ninety (90) days of the Closing Date, Parent shall cause the number of members
        of its Board of Directors to be increased by three
        (3)
        for a total of five (5) members,
        and Mr.
        Wang Chen shall be entitled to nominate and the Parent shall cause to be
        appointed, three
        (3)
        independent directors for the Board of Directors of Parent, two
        (2)
        of which will be subject
        to Vision’s approval
        for
        ninety (90) days after Closing.
        

       

      (d) Officers.
        Immediately following the Closing Date, the officers of Parent shall consist
        of
        those individuals listed on Schedule
        5.6
        hereto.

       

      Section
        5.7 Continued
        Listing.
        Parent
        will take all action necessary to continue the quotation or listing of its
        Common Stock on the OTC Bulletin Board or other exchange or market on which
        the
        Common Stock is trading or may be traded in the future. 

       

      Section
        5.8 Sales
        of Securities under Rule 144, If Applicable.
        Parent
        will use its best efforts to at all times satisfy the current public information
        requirements of Rule 144 promulgated under the Securities Act. If any
        certificate representing any such restricted stock is presented to Parent’s
        transfer agent for registration or transfer in connection with any sales
        theretofore made under Rule 144, provided such certificate is duly endorsed
        for
        transfer by the appropriate person(s) or accompanied by a separate stock
        power
        duly executed by the appropriate person(s) in each case with reasonable
        assurances that such endorsements are genuine and effective, and is accompanied
        by an opinion of counsel satisfactory to Parent and its counsel that such
        transfer has complied with the requirements of Rule 144, as the case may
        be,
        Parent will promptly instruct its transfer agent to allow such transfer and
        to
        issue one or more new certificates representing such shares to the transferee
        and, if appropriate under the provisions of Rule 144, as the case may be,
        free
        of any stop transfer order or restrictive legend. 

       

      Section
        5.9 Consistency
        in Reporting.
        Each
        party hereto agrees that if the characterization of any transaction contemplated
        in this Agreement or any ancillary or collateral transaction is challenged,
        each
        party hereto will testify, affirm and ratify that the characterization
        contemplated in such agreement was the characterization intended by the party;
        provided, however, that nothing herein shall be construed as giving rise
        to any
        obligation if the reporting position is determined to be incorrect by final
        decision of a court of competent jurisdiction. 

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      Section
        5.10 Capital
        Contribution.
        Within
        thirty (30) days of the First Closing (as that term is defined in the Securities
        Purchase Agreement) of the Private Placement, the Parent shall cause Shen
        Kun to
        contribute one hundred percent (100%) of the net proceeds from sale of Units
        to
        WFOE (the “Initial
        WFOE Contribution”).
        Parent will cause Shen Kun to contribute one hundred percent (100%) of the
        registered capital of WFOE within two years from the date of issuance of
        the
        business license of WFOE. Notwithstanding the prior sentence, in the event
        of a
        Second Closing of the Private Placement (as that term is defined in the
        Securities Purchase Agreement), within fifteen (15) days of the Second Closing,
        Parent will cause Shen Kun to contribute one hundred percent (100%) of the
        net
        proceeds from the sale of Units in the Second Closing to WFOE, such transfer,
        along with the Initial WFOE Capitalization, shall represent a capital
        contribution of one hundred percent (100%) of the registered capital of
        WFOE.

      

      Section
        5.11 Further
        Assurances.
        Subject
        to the terms and conditions herein provided, each of the parties hereto agrees
        to use reasonable efforts to take, or cause to be taken, all action and to
        do,
        or cause to be done, all things necessary, proper or advisable under applicable
        laws and regulations to satisfy the conditions to Closing and to consummate
        and
        make effective the transactions contemplated by this Agreement, including,
        without limitation, using reasonable efforts to lift or rescind any injunction
        or restraining order or other order adversely affecting the ability of the
        parties to consummate the transactions contemplated by this Agreement and
        using
        reasonable efforts to prevent the breach of any representation, warranty,
        covenant or agreement of such party contained or referred to in this Agreement
        and to promptly remedy the same. In case at any time after the Merger Effective
        Date any further action is necessary or desirable to carry out the purposes
        of
        this Agreement, the proper officers and directors of each party to this
        Agreement shall take all such necessary action. Nothing in this Section 5.11
        shall be construed to require any party to participate in any threatened
        or
        actual legal, administrative or other proceedings (other than proceedings,
        actions or investigations to which it is a party or subject or threatened
        to be
        made a party or subject) in connection with consummation of the transactions
        contemplated by this Agreement unless such party shall consent in advance
        and in
        writing to such participation and the other party agrees to reimburse and
        indemnify such party for and against any and all costs and damages related
        thereto. 

      

      Section
        5.12 Financial
        Statements.
        Prior
        to the Closing Date, the Shen Kun Companies shall have initiated a system
        of
        internal accounting controls sufficient to provide reasonable assurance that
        (i)
        transactions are executed in accordance with management’s general or specific
        authorizations, (ii) transactions are recorded as necessary to permit
        preparation of financial statements in conformity with GAAP and to maintain
        asset accountability, (iii) access to assets is permitted only in accordance
        with management’s general or specific authorization and (iv) the recorded
        accountability for assets is compared with the existing assets at reasonable
        intervals and appropriate action is taken with respect to any differences.
        The
        Shen Kun Companies shall disclose to Shen Kun’s outside auditors (A) all
        significant deficiencies and material weaknesses in the design or operation
        of
        internal control over financial reporting which are reasonably likely to
        adversely affect the Shen Kun Companies’ ability to record, process, summarize
        and report financial data and (B) any fraud, whether or not material, that
        involves management or other employees who have a significant role in the
        Shen
        Kun Companies’ internal controls over financial reporting. 

      

      Section
        5.13 Access
        to Parent and Acquisition Subsidiary.
        Parent
        shall afford to the Shen Kun Companies and its officers, directors, agents
        and
        counsel access at times and upon conditions reasonably convenient to Parent
        and
        make available all properties, books, records, contracts and documents of
        Parent
        and Acquisition Subsidiary, and an opportunity to make such investigations
        as
        they shall reasonably desire to make of Parent and Acquisition Subsidiary;
        and
        Parent shall furnish or cause to be furnished to the Shen Kun Companies and
        its
        authorized representatives all such information with respect to the business
        and
        affairs of Parent and Acquisition Subsidiary as the Company and its authorized
        representatives may request and make the officers, directors, employees,
        auditors and counsel of Parent and Acquisition available for consultation
        and
        permit access to other third parties reasonably requested for verification
        of
        any information so obtained. 

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      Section
        5.14 Access
        to the Shen Kun Companies.
        The
        Shen Kun Companies shall afford to Parent and its officers, directors, agents
        and counsel access at times and upon conditions reasonably convenient to
        the
        Shen Kun Companies and make available all properties, books, records, contracts
        and documents of the Shen Kun Companies, and an opportunity to make such
        investigations as it shall reasonably desire to make of the Shen Kun Companies;
        and the Shen Kun Companies shall furnish or cause to be furnished to Parent
        and
        its authorized representatives all such information with respect to the business
        and affairs of the Shen Kun Companies as Parent and its authorized
        representatives may request and make the officers, directors, employees,
        auditors and counsel of the Shen Kun Companies available for consultation
        and
        permit access to other third parties reasonably requested for verification
        of
        any information so obtained. 

      

      Section
        5.15 Negotiations.
        From and
        after the date hereof until the earlier of the Closing or the termination
        of
        this Agreement, no party to this Agreement, nor any of its officers or directors
        (subject to such director's fiduciary duties), nor anyone acting on behalf
        of
        any party or other persons shall, directly or indirectly, encourage, solicit,
        engage in discussions or negotiations with, or provide any information to,
        any
        person, firm, or other entity or group concerning any merger, sale of
        substantial assets, purchase or sale of shares of capital stock or similar
        transaction involving any party except for the Private Placement. A party
        shall
        promptly communicate to any other party any inquiries or communications
        concerning any such transaction which they may receive or of which they may
        become aware.

      

      Section
        5.16 Consents
        and Approvals.
        The
        parties shall: (i) use their reasonable commercial efforts to obtain all
        necessary consents, waivers, authorizations and approvals of all governmental
        and regulatory authorities, domestic and foreign, and of all other persons,
        firms or corporations required in connection with the execution, delivery
        and
        performance by them of this Agreement; and (ii) diligently assist and cooperate
        with each party in preparing and filing all documents required to be submitted
        by a party to any governmental or regulatory authority, domestic or foreign,
        in
        connection with such transactions and in obtaining any governmental consents,
        waivers, authorizations or approvals which may be required to be obtained
        in
        connection with
        such
        transactions.

      

      Section
        5.17 Registration
        Rights.
        All
        shares listed on Schedule
        5.17
        shall be
        registered pursuant to the terms of the Registration Rights Agreement
        substantially in the form attached as Exhibit
        E
        hereto.

      

      ARTICLE
        VI

      

      CONDITIONS
        TO OBLIGATIONS OF SHEN KUN AND THE SHEN KUN SHAREHOLDERS

      

      The
        obligations of Shen Kun and the Shen Kun Shareholders to consummate the
        transactions contemplated by this Agreement are subject to the fulfillment,
        at
        or before the Closing Date, of the following conditions, any one or more
        of
        which may be waived by the Shen Kun Companies and the Shen Kun Shareholders
        at
        their sole discretion:

      

      Section
        6.1 Representations
        and Warranties of Parent, Acquisition Subsidiary and the Parent Controlling
        Shareholders.
        All
        representations and warranties made by Parent, Acquisition Subsidiary and
        the
        Parent Controlling Shareholders in this Agreement shall be true and correct
        in
        all material respects on and as of the Closing Date as if again made by Parent,
        Acquisition Subsidiary and the Parent Controlling Shareholders,
        as
        applicable,
        on and
        as of such date and insofar as any inconsistency or inaccuracy does not or
        will
        not have a Material Adverse Effect, except insofar as the representations
        and
        warranties relate expressly and solely to a particular date or period, in
        which
        case, subject to the limitations applicable to the particular date or period,
        they will be true and correct in all material respects on and as of the Closing
        Date with respect to such date or period. 

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

      Section
        6.2 Agreements
        and Covenants.
        Each of
        Parent, Acquisition Subsidiary and the Parent Controlling Shareholders shall
        have performed and complied in all material respects with all agreements
        and
        covenants required by this Agreement to be performed or complied with by
        on or
        prior to the Closing Date. 

      

      Section
        6.3 Consents
        and Approvals.
        All
        consents, waivers, authorizations and approvals of any governmental or
        regulatory authority, domestic or foreign, and of any other person, firm
        or
        corporation, required in connection with the execution, delivery and performance
        of this Agreement shall be in full force and effect on the Closing Date.
        The
        Merger shall have been duly approved by the Parent’s Board of Directors and, if
        necessary under applicable laws, the requisite vote of the outstanding shares
        of
        capital stock of Acquisition Subsidiary entitled to vote thereon.

      

      Section
        6.4 No
        Violation of Orders.
        No
        preliminary or permanent injunction or other order issued by any court or
        governmental or regulatory authority, domestic or foreign, nor any statute,
        rule, regulation, decree or executive order promulgated or enacted by any
        government or governmental or regulatory authority, which declares this
        Agreement invalid in any respect or prevents the consummation of the
        transactions contemplated hereby, or which materially and adversely affects
        the
        assets, properties, operations, prospects, net income or financial condition
        of
        Parent shall be in effect; and no action or proceeding before any court or
        governmental or regulatory authority, domestic or foreign, shall have been
        instituted or threatened by any government or governmental or regulatory
        authority, domestic or foreign, or by any other person, or entity which seeks
        to
        prevent or delay the consummation of the transactions contemplated by this
        Agreement or which challenges the validity or enforceability of this
        Agreement.

      

      Section
        6.5 Other
        Closing Documents.
        Each of
        the Shen Kun Shareholders shall have received such certificates, instruments
        and
        documents in confirmation of the representations and warranties of Parent
        and
        the Parent Controlling Shareholders, Parent’s and Parent Controlling
        Shareholders’ performance of its obligations hereunder, and/or in furtherance of
        the transactions contemplated by this Agreement as the Shen Kun Shareholders
        and/or their respective counsel may reasonably request. 

      

      Section
        6.6 Opinions
        of Counsel, Etc.
        At the
        Closing, counsel to Parent shall deliver to the Shen Kun Shareholders an
        opinion
        of counsel substantially in the form of Exhibit
        F.
        

      

      Section
        6.7 Appointment
        of New Directors.
        At the
        Closing, (i)
        Wang
        Chen
        shall be duly appointed to the Board of Directors of Parent,
        and
        (ii) subject to the effectiveness of a Schedule 14F-1 filed with the SEC
        on the
        Closing Date, Mr. John Vogel shall resign as a member of the Board of Directors
        of Parent, and Ms. Guo Wei shall be duly appointed to the Board of Directors
        of
        Parent.

      

      ARTICLE
        VII

       

      CONDITIONS
        TO OBLIGATIONS OF PARENT,
        ACQUISITION SUBSIDIARY, 

      AND
        PARENT CONTROLLING SHAREHOLDERS

      

      The
        obligations of Parent and Acquisition Subsidiary to consummate the transactions
        contemplated by this Agreement are subject to the fulfillment, at or before
        the
        Closing Date, of the following conditions, any one or more of which may be
        waived by Parent in its sole discretion:

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      Section
        7.1 Representations
        and Warranties of the Shen Kun Companies and the Shen Kun
        Shareholders.
        All
        representations and warranties made by the Shen Kun Companies and the Shen
        Kun
        Shareholders in this Agreement shall be true and correct on and as of the
        Closing Date as if again made by the Shen Kun Companies and the Shen Kun
        Shareholders, as applicable, on and as of such date. 

      

      Section
        7.2 Agreements
        and Covenants.
        Each of
        the Shen Kun Companies and the Shen Kun Shareholders shall have performed
        and
        complied in all material respects with all agreements and covenants required
        by
        this Agreement to be performed or complied with by each of them on or prior
        to
        the Closing Date. 

      

      Section
        7.3 Consents
        and Approvals.
        All
        consents, waivers, authorizations and approvals of any governmental or
        regulatory authority, domestic or foreign, and of any other person, firm
        or
        corporation, required in connection with the execution, delivery and performance
        of this Agreement, shall have been duly obtained and shall be in full force
        and
        effect on the Closing Date. The Merger shall have been duly approved by the
        unanimous consent of the holders of the Shen Kun Shares in accordance with
        the
        BCA (the “Shen
        Kun Shareholder Approval”).
        

      

      Section
        7.4 No
        Violation of Orders.
        No
        preliminary or permanent injunction or other order issued by any court or
        other
        governmental or regulatory authority, domestic or foreign, nor any statute,
        rule, regulation, decree or executive order promulgated or enacted by any
        government or governmental or regulatory authority, domestic or foreign,
        that
        declares this Agreement invalid or unenforceable in any respect or which
        prevents the consummation of the transactions contemplated hereby, or which
        materially and adversely affects the assets, properties, operations, prospects,
        net income or financial condition of Shen Kun, taken as a whole, shall be
        in
        effect; and no action or proceeding before any court or government or regulatory
        authority, domestic or foreign, shall have been instituted or threatened
        by any
        government or governmental or regulatory authority, domestic or foreign,
        or by
        any other person, or entity which seeks to prevent or delay the consummation
        of
        the transactions contemplated by this Agreement or which challenges the validity
        or enforceability of this Agreement. 

      

      Section
        7.5 Financial
        Statements of Shen Kun Companies.
        The
        Shen Kun Companies shall have delivered the Shen Kun Financial Statements
        to
        Parent at least two (2) days prior to the Closing Date.

      

      Section
        7.6 Other
        Closing Documents.
        Parent
        shall have received such certificates, instruments and documents in confirmation
        of the representations and warranties of the Shen Kun Companies and the Shen
        Kun
        Shareholders, the performance of the Shen Kun Companies and
        the
        Shen Kun Shareholders’ respective obligations hereunder and/or in furtherance of
        the transactions contemplated by this Agreement as Parent or its counsel
        may
        reasonably request. Additionally, Parent shall have received a copy of the
        employment agreement of Mr. Wang Chen, dated as of June 7, 2001, entered
        into
        with Shengkai.

      

      Section
        7.7 Opinions
        of Counsel, Etc. At
        the
        Closing, the Shen Kun Companies shall deliver,
        or cause to be delivered, to Parent the following: 

      

      (a) the
        opinion of Harney
        Westwood & Riegels,
        BVI
        counsel to Shen Kun, addressed to Shen Kun and the Parent Controlling
        Shareholders, in substantially the form of Exhibit
        G
        attached
        hereto; and 

       

      (b) the
        opinion of DeHeng Law Offices, PRC counsel to the Shen Kun Companies, addressed
        to the Parent
        and the
        Parent Controlling Shareholders, in substantially the form of Exhibit
        H
        attached
        hereto. 

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      Section
        7.8 No
        Material Change.
        There
        shall have been no Material Adverse Effect with respect to the Shen Kun
        Companies since the date hereof.

       

      Section
        7.9 Transfer
        of Intellectual Property.
        The
        Shen Kun Companies and Shen Kun Shareholders shall have approved and executed
        that certain Technology Transfer Agreement of even date herewith attached
        hereto
        as Exhibit
        I
        transferring certain intellectual property, including the Southern Sauce
        trademark and recipe, to Robert Jordan.

       

      Section
        7.10 Schedule
        14F-1.
        On the
        Closing Date, Parent shall have filed with the SEC an Information Statement
        on
        Schedule 14F-1 with respect to the change of a majority of members of the
        Board
        of Directors of Parent.

      ARTICLE
        VIII

      

      POST-CLOSING
        COVENANTS

      

      Section
        8.1 Appointment
        of Directors.
        Within
        ninety (90) days of the Closing Date, Parent shall have increased the number
        of
        members of its Board of Directors to five (5) members, of which three (3)
        directors shall be independent and two (2) of such independent directors
        have
        been approved by Vision.

       

      Section
        8.2 Transaction
        Form 8-K.
        Within
        four (4)
        business days of the Closing Date,
        the Shen
        Kun Companies shall
        have ensured
        that the
        Transaction Form 8-K has
        been
        filed with the SEC.
        

       

      Section
        8.3 Capital
        Contribution.
        Within
        thirty (30) days of the First Closing of the Private Placement, the Parent
        shall
        cause Shen Kun to contribute the Initial WFOE Contribution. Parent will cause
        Shen Kun to contribute one hundred percent (100%) of the registered capital
        of
        WFOE within two years from the date of issuance of the business license of
        WFOE.
        Notwithstanding the prior sentence, in the event of a Second Closing of the
        Private Placement within fifteen (15) days of the Second Closing, Parent
        will
        cause Shen Kun to contribute one hundred percent (100%) of the net proceeds
        from
        the Second Closing to WFOE, such transfer, along with the Initial WFOE
        Capitalization, shall represent a capital contribution of one hundred percent
        (100%) of the registered capital of WFOE.

       

      Section
        8.4 Private
        Placement.
        Within
        three (3) business days of the Closing Date, Parent shall consummate
        the
        First Closing of the Private Placement and the financing contemplated
        thereby.
        

       

      ARTICLE
        IX

      

      TERMINATION
        AND ABANDONMENT

      

      Section
        9.1 Methods
        of Termination.
        This
        Agreement may be terminated and the transactions contemplated hereby may
        be
        abandoned at any time before the Closing:

      

      (a) By
        the
        mutual written consent of Shen
        Kun
and
        Parent; 

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      (b) By
        Parent, upon a material breach on the part of the Shen Kun Companies or the
        Shen
        Kun Shareholders of any representation, warranty, covenant or agreement set
        forth in this Agreement, or if any representation or warranty of the Shen
        Kun
        Companies or any of the Shen Kun Shareholders shall become untrue, in either
        case such that any of the conditions set forth in Article VII hereof would
        not
        be satisfied (a “Shen
        Kun Breach”),
        and
        such breach, if capable of cure, has not been cured within ten (10) days
        after
        receipt by the Shen Kun Companies and the Shen Kun Shareholders of a written
        notice from Parent setting forth in detail the nature of such Shen Kun
        Breach;

       

      (c) By
        Shen
        Kun, upon a material breach on the part of Parent or Acquisition Subsidiary
        of
        any representation, warranty, covenant or agreement set forth in this Agreement,
        or, if any representation or warranty of Parent or Acquisition Subsidiary
        shall
        become untrue, in either case such that any of the conditions set forth in
        Article VI hereof would not be satisfied (a “Parent
        Breach”),
        and
        such breach, if capable of cure, has not been cured within ten (10) days
        after
        receipt by Parent of a written notice from Shen Kun setting forth in detail
        the
        nature of such Parent Breach;

       

      (d) By
        either
        Parent or Shen Kun, if the Closing shall not have consummated before ninety
        (90)
        days after the date hereof; provided,
        however,
        that
        this Agreement may be extended by written notice of either Shen Kun or Parent
        if
        the Closing shall not have been consummated as a result of the Shen Kun
        Companies or Parent having failed to receive all required regulatory approvals
        or consents with respect to this transaction or as the result of the entering
        of
        an order as described in this Agreement; and further
        provided, however,
        that
        the right to terminate this Agreement under this Section 9.1(d)
        shall
        not be available to any party whose failure to fulfill any obligations under
        this Agreement has been the cause of, or resulted in, the failure of the
        Closing
        to occur on or before this date; or

       

      (e) By
        either
        Shen Kun or Parent if a court of competent jurisdiction or governmental,
        regulatory or administrative agency or commission shall have issued an order,
        decree or ruling or taken any other action (which order, decree or ruling
        the
        parties hereto shall use its best efforts to lift), which permanently restrains,
        enjoins or otherwise prohibits the transactions contemplated by this
        Agreement.

       

      Section
        9.2 Procedure
        Upon Termination.
        In the
        event of termination and abandonment of this Agreement pursuant to Section
        9.1,
        written
        notice thereof shall forthwith be given by the terminating parties to the
        other
        parties and this Agreement shall terminate and the transactions contemplated
        hereby shall be abandoned, without further action. If this Agreement is
        terminated as provided herein, no party to this Agreement shall have any
        liability or further obligation to any other party to this Agreement;
provided,
        however,
        that no
        termination of this Agreement pursuant to this Article VIII shall relieve
        any
        party of liability for a breach of any provision of this Agreement occurring
        before such termination.

      

      ARTICLE
        X

      

      MISCELLANEOUS
        PROVISIONS

      

      Section
        10.1 Survival
        of Provisions.
        The
        respective representations, warranties, covenants and agreements of each
        of the
        parties to this Agreement (except covenants and agreements which are expressly
        required to be performed and are performed in full on or before the Closing
        Date) shall expire on the first day of the twenty-four-month anniversary
        of the
        Closing Date (the “Survival
        Period”),
        subject to Sections 3.18 and 4.31. In the event of a breach of any of such
        representations, warranties or covenants, the party to whom such
        representations, warranties or covenants have been made shall have all rights
        and remedies for such breach available to it under the provisions of this
        Agreement or otherwise, whether at law or in equity, regardless of any
        disclosure to, or investigation made by or on behalf of such party on or
        before
        the Closing Date.

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

      Section
        10.2 Indemnification.
        

      

      (a) Indemnification
        Obligations in favor of the Officers, Directors, Employees and Parent
        Controlling Shareholders.
        Notwithstanding the limitation set forth in Section 10.1, from and after
        the
        Closing Date until the expiration of statute of limitations for shareholder
        action under the laws of New York, the Shen Kun Companies and the Shen Kun
        Shareholders shall indemnify and hold harmless the Parent’s officers, directors,
        employees in office immediately prior to the Closing and the Parent Controlling
        Shareholders (each such person and his heirs, executors, administrators,
        agents,
        successors and assigns is referred to herein as a “Parent
        Indemnified Party”)
        against
        and in respect of any and all Damages suffered, sustained, incurred or required
        to be paid by any Parent Indemnified Party arising out of:

       

      (i) any
        breach of any representation, warranty, covenant, obligation or other agreement
        made by the Shen Kun Companies or the Shen Kun Shareholders in any Transaction
        Document; 

       

      (ii) any
        acts
        or omissions by any of the Shen Kun Companies or the Shen Kun Shareholders
        taken
        or made after the Closing Date; or 

       

      (iii) any
        actions or omissions of any of the Shen Kun Companies or the Shen Kun
        Shareholders taken in furtherance of the transactions contemplated by this
        Agreement, the Private Placement or the financing contemplated
        thereby.

       

      (b) Indemnification
        in favor of Shen Kun and the Shen Kun Shareholders.
        Notwithstanding the limitation set forth in Section 10.1 and subject to the
        limitation set forth in this Section 10.2, from and after the Closing Date
        until
        the expiration of the twelve-month anniversary of the Closing Date, the Parent
        Controlling Shareholders will, severally and not jointly, up to the amounts
        indicated on Schedule
        10.2(b) for
        each
        of the Parent Controlling Shareholders, indemnify and hold harmless Shen
        Kun,
        the Shen Kun Shareholders, and their respective officers, directors, agents,
        attorneys and employees, and each person, if any, who controls or may “control”
(within the meaning of the Securities Act) any of the forgoing persons or
        entities (hereinafter referred to individually as a “Shen
        Kun Indemnified Party”)
        from
        and against any and all Damages suffered, sustained, incurred or required
        to be
        paid by a Shen Kun Indemnified Party arising out of:

       

      (i) any
        breach of any representation, warranty, covenant, obligation or other agreement
        made by Parent or the Parent Controlling Shareholders in any Transaction
        Document; 

       

      (ii) any
        acts
        or omissions by Parent or the Parent Controlling Shareholders since February
        14,
        2008 through and including the Closing Date; or

       

      (iii) any
        actions or omissions by Parent or the Parent Controlling Shareholders
        taken in
        furtherance of the transactions contemplated by this Agreement, the Private
        Placement or the financing contemplated thereby.

       

      (c) Indemnification
        and Director and Officer Insurance.
        From
        and after the Closing, Parent will honor in all respects its obligations
        pursuant to any indemnification agreements between Parent and its directors
        and
        officers in effect immediately prior to the Merger Effective Date and any
        indemnification benefits accruing to such persons under Law, to the maximum
        extent permitted by Law. 

       

      Section
        10.3 Successors
        and Assigns.
        This
        Agreement shall inure to the benefit of, and be binding upon, the parties
        hereto
        and their respective successors and assigns; provided, however, that no party
        shall assign or delegate any of the obligations created under this Agreement
        without the prior written consent of the other parties. 

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      Section
        10.4 Fees
        and Expenses.
        Except
        as otherwise expressly provided in this Agreement, all legal and other fees,
        costs and expenses incurred in connection with this Agreement and the
        transactions contemplated hereby shall be paid by the party incurring such
        fees,
        costs or expenses. 

      

      Section
        10.5 Notices.
        All
        notices and other communications given or made pursuant hereto shall be in
        writing and shall be deemed to have been given or made if in writing and
        delivered personally or sent by registered or certified mail (postage prepaid,
        return receipt requested) to the parties at the following addresses:

      

      If
        to the
        Shen Kun Companies or the Shen Kun Shareholders, to:

      

      Shen
        Kun
        International Limited

      Wang
        Gang
        Road, Jin Nan (Shuang Gang) Development Area

      Tian
        Jin,
        People’s Republic of China 300350

      Attention:
        Wang Chen 

      Tel.
        No.:
        86-22-2858-8899

      Fax
        No.:
        86-22-2859-0003

       

      with
        copies to: 

      

      Sichenzia
        Ross Friedman Ference LLP

      61
        Broadway, 32nd
        Floor

      New
        York,
        New York 10006

      Attention:
        Marc Ross, Esq.

      Tel.
        No.:
        (212) 930-9700

      Fax
        No.:
        (212) 930-9725

      

      If
        to
        Parent, or Acquisition Subsidiary or the Parent Controlling Shareholders,
        to:

       

      Southern
        Sauce Company, Inc.

      Shengkai
        Industrial Park

      Wang
        Gang
        Road, Jin Nan (Shuang Gang) Development Area

      Tian
        Jin,
        People’s Republic of China 300350

      Attention:
        Wang Chen 

      Tel.
        No.:
        86-22-2858-8899

      Fax
        No.:
        86-22-2859-0003

      

      with
        copies, which shall not constitute notice, to: 

      

      Berman
        Rennert Vogel & Mandler, P.A.

      100
        SE
        2nd Street, 29th Floor | Miami, Fl. 33131

      Attention:
        Chuck Rennert, Esq.

      Tel.
        No.:
        (305)577-4171 Fax No.: (305)347-6463

      

      or
        to
        such other persons or at such other addresses as shall be furnished by any
        party
        by like notice to the others, and such notice or communication shall be deemed
        to have been given or made as of the date so delivered or mailed. No change
        in
        any of such addresses shall be effective insofar as notices under this Section
        9.5 are concerned unless such changed address is located in the United States
        of
        America (or, in the case of Long Sunny, Gross Profit, Right Idea, or Shen
        Kun,
        in the British Virgin Islands or the United States of America) and notice
        of
        such change shall have been given to such other party hereto as provided
        in this
        Section 9.5.

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      Section
        10.6 Entire
        Agreement.
        This
        Agreement, together with the exhibits hereto, represents the entire agreement
        and understanding of the parties with reference to the transactions set forth
        herein and no representations or warranties have been made in connection
        with
        this Agreement other than those expressly set forth herein or in the exhibits,
        certificates and other documents delivered in accordance herewith. This
        Agreement supersedes all prior negotiations, discussions, correspondence,
        communications, understandings and agreements between the parties relating
        to
        the subject matter of this Agreement and all prior drafts of this Agreement,
        all
        of which are merged into this Agreement. No prior drafts of this Agreement
        and
        no words or phrases from any such prior drafts shall be admissible into evidence
        in any action or suit involving this Agreement.

      

      Section
        10.7 Severability.
        This
        Agreement shall be deemed severable, and the invalidity or unenforceability
        of
        any term or provision hereof shall not affect the validity or enforceability
        of
        this Agreement or of any other term or provision hereof. Furthermore, in
        lieu of
        any such invalid or unenforceable term or provision, the parties hereto intend
        that there shall be added as a part of this Agreement a provision as similar
        in
        terms to such invalid or unenforceable provision as may be possible so as
        to be
        valid and enforceable.

      

      Section
        10.8 Titles
        and Headings.
        The
        Article and Section headings contained in this Agreement are solely for
        convenience of reference and shall not affect the meaning or interpretation
        of
        this Agreement or of any term or provision hereof.

      

      Section
        10.9 Counterparts. This
        Agreement may be executed in two or more counterparts, each of which shall
        be
        deemed an original and all of which together shall be considered one and
        the
        same agreement.

      

      Section
        10.10 Convenience
        of Forum; Consent to Jurisdiction.
        The
        parties to this Agreement, acting for themselves and for their respective
        successors and assigns, without regard to domicile, citizenship or residence,
        hereby expressly and irrevocably elect as the sole judicial forum for the
        adjudication of any matters arising under or in connection with this Agreement,
        and consent and subject themselves to the jurisdiction of, the courts of
        the
        State of New York located in County of New York, and/or the United States
        District Court for the Southern District of New York, in respect of any matter
        arising under this Agreement. Service of process, notices and demands of
        such
        courts may be made upon any party to this Agreement by personal service at
        any
        place where it may be found or giving notice to such party as provided in
        Section 9.5.

      

      Section
        10.11 Enforcement
        of the Agreement.
        The
        parties hereto agree that irreparable damage would occur if 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 an injunction or injunctions to prevent breaches
        of
        this Agreement and to enforce specifically the terms and provisions hereto,
        this
        being in addition to any other remedy to which they are entitled at law or
        in
        equity.

      

      Section
        10.12 Governing
        Law.
        Except
        to
        the extent required by Florida or BVI law, this
        Agreement shall be governed by and interpreted and enforced in accordance
        with
        the laws of the State of New York without giving effect to the choice of
        law
        provisions thereof.

      

      Section
        10.13 Amendments
        and Waivers.
        Except
        or otherwise provided herein, no amendment of any provision of this Agreement
        shall be valid unless the same shall be in writing and signed by all of the
        parties hereto. No waiver by any party of any default, misrepresentation,
        or
        breach of warranty or covenant hereunder, whether intentional or not, shall
        be
        deemed to extend to any prior or subsequent default, misrepresentation, or
        breach of warranty or covenant hereunder or affect in any way any rights
        arising
        by virtue of any prior or subsequent such occurrence.

       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      Section
        10.14 Electronic
        Signatures. 

      

      (a) Execution
        on Paper.
        Notwithstanding the Electronic Signatures in Global and National Commerce
        Act
        (15 U.S.C. Section 7001 et seq.),
        the
        Uniform Electronic Transactions Act or any other Law relating to or enabling
        the
        creation, execution, delivery or recordation of any contract or signature
        by
        electronic means, and notwithstanding any course of conduct engaged in by
        the
        Shen Kun Companies, Acquisition Subsidiary and Parent, neither the Shen Kun
        Companies, Parent or Acquisition Subsidiary will be deemed to have executed
        a
        transaction document or other document contemplated thereby (including any
        amendment or other change thereto) unless and until such party shall have
        executed such transaction document or other document on paper by a handwritten
        original signature or any other symbol executed or adopted by that party
        with
        the current intention to authenticate such transaction document or such other
        document contemplated. 

       

      (b) Electronic
        Delivery.
        Delivery of a copy of a transaction document or such other document bearing
        an
        original signature by facsimile transmission (whether directly from one
        facsimile device to another by means of a dial-up connection or whether mediated
        by the worldwide web), by electronic mail in “portable document format” (“.PDF”)
        form, or by any other electronic means intended to preserve the original
        graphic
        and pictorial appearance of a document, will have the same effect as physical
        delivery of the paper document bearing the original signature. “Originally
        signed” or “original signature” means or refers to a signature that has not been
        mechanically or electronically reproduced. 

       

      [SIGNATURES
        ON NEXT PAGE]

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the
        parties hereto have executed this Agreement as of the date first above
        written.

      

        
          	
                  SOUTHERN
                    SAUCE COMPANY, INC. 

                	 	
                  SHEN
                    KUN INTERNATIONAL LIMITED 

                
	 	 	 
	 	 	 
	
                  By:

                	
                  /s/
                    John Vogel

                	 	
                  By:

                	
                  /s/
                    Wang Chen

                
	 	
                  John
                    Vogel, Chief Executive Officer

                	 	 	
                  Wang
                    Chen, Chief Executive Officer

                
	 	 	 	 	 
	 	 	 	 	 
	
                  SHEN
                    KUN ACQUISITION SUB LIMITED 

                	 	
                  SHENGKAI
                    (TIANJIN) CERAMIC VALVES CO., LTD.

                
	 	 	 	 	 
	 	 	 	 	 
	
                  By:
                    

                	
                  /s/
                    John Vogel

                	 	
                  By:

                	
                  /s/
                    Wang Chen

                
	 	
                  John
                    Vogel, Chief Executive Officer

                	 	 	
                  Wang
                    Chen, Chief Executive Officer

                
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	
                  TIANJIN
                    SHENGKAI INDUSTRIAL

                
	 	 	 	
                  TECHNOLOGY
                    DEVELOPMENT CO., LTD.

                
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	
                  By:

                	
                  /s/
                    Wang Chen

                
	 	 	 	 	
                  Wang
                    Chen, Chairman and Chief Executive
                    Officer

                

        

      

       

      [SIGNATURES
        CONTINUED ON NEXT PAGE]

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

      
        	
                PARENT
                  CONTROLLING SHAREHOLDERS:

              	 	
                SHEN
                  KUN SHAREHOLDERS:

              
	 	 	 
	
                VISION
                  OPPORTUNITY CHINA LP

              	 	
                LONG
                  SUNNY LIMITED

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	
                By:

              	
                /s/
                  Adam Benowitz

              	 	 	
                By:

              	
                  /s/
                  Wang Chen

              	 
	 	
                Adam
                  Benowitz, Authorized Signatory

              	 	 	 	
                  Wang
                  Chen, Chief Executive Officer

              
	 	 	 	 	 	 
	CASTLE
                BISON, INC.,	 	 	
                GROSS
                  PROFIT HOLDINGS LIMITED

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	
                By:

              	
                /s/
                  Raul Silvestre

              	 	 	
                By:

              	
                  /s/
                  Zhao Yanqiu

              	 
	 	
                Raul
                  Silvestre, President

              	 	 	 	
                Zhao
                  Yanqiu, Director

              	 
	 	 	 	 	 	 	 
	
                MARTIN
                  SUMICHRAST

              	 	 	
                RIGHT
                  IDEA HOLDINGS LIMITED

              	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
                /s/
                  Martin Sumichrast

              	 	 	
                By:

              	
                  /s/
                  Ji Haihong

              	 
	 	 	 	 	 	
                Ji
                  Haihong, Director

              	 
	 	 	 	 	 	 
	
                RALPH
                  OLSON

              	 	 	
                MIAO
                  YANG

              	 
	 	 	 	 	 	 
	
                /s/
                  Ralph Olson

              	 	 	
                /s/
                  Miao Yang

              	 
	 	 	 	 	 	 
	 	 	 	 	
                ZHANG
                  YING

              	 
	 	 	 	 	 	 
	 	 	 	 	
                /s/
                  Zhang Ying

              	 
	 	 	 	 	 	 
	 	 	 	 	
                CHEN
                  FANG

              	 
	 	 	 	 	 	 
	 	 	 	 	
                /s/
                  Chen Fang

              	 
	 	 	 	 	 	 
	 	 	 	 	
                WU
                  YANPING

              	 
	 	 	 	 	 	 
	 	 	 	 	
                /s/
                  Wu Yanping

              	 
	 	 	 	 	 	 
	 	 	 	 	
                LIU
                  NAIFAN

              	 
	 	 	 	 	 	 
	 	 	 	 	
                /s/
                  Liu Naifan

              	 

      

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

      

      SECURITIES
        PURCHASE AGREEMENT

       

      Please
        refer to Exhibit 4.2 of the Form 8-K

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        B

      

      CAPITALIZATION
        TABLE

      

      

      
        	
                PIPE

              	 	 	 	 	 	 	 
	
                Conversion
                  Price

              	
                $2.5357

              	
                per
                  share of common

              	 	 	 	 
	
                Warrant
                  A

              	
                $3.5200

              	
                120%

              	 	 	 	 	 
	 	 	 	 	 	 	 	 

      

       

      
        	
                Current
                  Cap Structure

              

      

      

        
          	 	 	 	 	
                  Preferred

                	 	
                  Warrant

                  A @

                	 	
                  Post-financing

                	 	
                  With Financing from

                  All Warrants

                	 
	 	 	
                  Common

                	 	
                  A

                	 	
                  $3.52

                	 	
                  #
                    of shares

                	 	
                  %

                	 	
                  #
                    of shares

                	 	
                  %

                	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Long
                    Sunny BVI

                	 	 	
                  17,400,000

                	 	 	 	 	 	 	 	 	
                  17,400,000

                	 	 	
                  62.08

                	
                  %

                	 	
                  17,400,000

                	 	 	
                  49.24

                	
                  %

                
	
                  Wang
                    Chen

                	 	 	
                  6,960,000

                	 	 	 	 	 	 	 	 	
                  6,960,000

                	 	 	
                  24.83

                	
                  %

                	 	
                  6,960,000

                	 	 	
                  19.69

                	
                  %

                
	
                  Foreigner

                	 	 	
                  10,440,000

                	 	 	 	 	 	 	 	 	
                  10,440,000

                	 	 	
                  37.25

                	
                  %

                	 	
                  10,440,000

                	 	 	
                  29.54

                	
                  %

                
	
                  Right
                    Idea BVI

                	 	 	
                  1,350,000

                	 	 	 	 	 	 	 	 	
                  1,350,000

                	 	 	
                  4.82

                	
                  %

                	 	
                  1,350,000

                	 	 	
                  3.82

                	
                  %

                
	
                  Groom
                    Profit BVI

                	 	 	
                  1,350,000

                	 	 	 	 	 	 	 	 	
                  1,350,000

                	 	 	
                  4.82

                	
                  %

                	 	
                  1,350,000

                	 	 	
                  3.82

                	
                  %

                
	
                  Zhang
                    Ying

                	 	 	
                  135,000

                	 	 	 	 	 	
                  106,534

                	 	 	
                  135,000

                	 	 	
                  0.48

                	
                  %

                	 	
                  241,534

                	 	 	
                  0.68

                	
                  %

                
	
                  Miao
                    Yang

                	 	 	
                  135,000

                	 	 	 	 	 	
                  106,534

                	 	 	
                  135,000

                	 	 	
                  0.48

                	
                  %

                	 	
                  241,534

                	 	 	
                  0.68

                	
                  %

                
	
                  Chen
                    Fang

                	 	 	
                  30,000

                	 	 	 	 	 	 	 	 	
                  30,000

                	 	 	
                  0.11

                	
                  %

                	 	
                  30,000

                	 	 	
                  0.08

                	
                  %

                
	
                  Wu
                    Yanping

                	 	 	
                  75,000

                	 	 	 	 	 	 	 	 	
                  75,000

                	 	 	
                  0.27

                	
                  %

                	 	
                  75,000

                	 	 	
                  0.21

                	
                  %

                
	
                  Liu
                    NaiFan

                	 	 	
                  75,000

                	 	 	 	 	 	 	 	 	
                  75,000

                	 	 	
                  0.27

                	
                  %

                	 	
                  75,000

                	 	 	
                  0.21

                	
                  %

                
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Vision

                	 	 	 	 	 	
                  5,915,526

                	 	 	
                  7,098,632

                	 	 	
                  5,915,526

                	 	 	
                  21.11

                	
                  %

                	 	
                  13,014,158

                	 	 	
                  36.83

                	
                  %

                
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Shell

                	 	 	
                  1,562,500

                	 	 	 	 	 	 	 	 	
                  1,562,500

                	 	 	
                  5.57

                	
                  %

                	 	
                  1,562,500

                	 	 	
                  4.42

                	
                  %

                
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Total

                	 	 	
                  22,112,500

                	 	 	
                  5,915,526

                	 	 	
                  7,311,700

                	 	 	
                  28,028,026

                	 	 	
                  100.00

                	
                  % 
                    

                	 	
                  35,339,726

                	 	 	
                  100.00

                	
                  % 
                    

                

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        C

      

      FORM
        OF ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION

       

      Please
        refer to Exhibit 3.4 of the Form 8-K

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        D 

      

      SCHEDULE
        14F-1

       

      Please
        refer to the Schedule 14f-1 filed with SEC on June 10, 2008.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        E 

      

      REGISTRATION
        RIGHTS AGREEMENT

       

      Please
        refer to Exhibit 4.4 of the Form 8-K

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        F 

      

      FORM
        OF OPINION OF COUNSEL TO PARENT 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        G

      

      FORM
        OF OPINION OF BVI COUNSEL TO THE SHEN KUN COMPANIES 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        H

      

      FORM
        OF OPINION OF PRC COUNSEL TO THE SHEN KUN COMPANIES 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        I

      

      INTELLECTUAL
        PROPERTY TRANSFER AGREEMENT 

       

      Please
        refer to Exhibit 10.13 of the Form 8-K

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