Document:

SECURITIES PURCHASE
AGREEMENT

    

    This
Securities Purchase Agreement (this “Agreement”) is made
and entered into as of August 6, 2009 (the “Execution Date”), by
and between China Architectural Engineering, Inc., a Delaware corporation (the
“Company”), KGE
Group Limited, a Hong Kong
limited company, and each of the purchasers listed on Schedule I attached
hereto (each, a “Purchaser” and collectively, the “Purchasers”).

    

    RECITALS

    

    WHEREAS, the Company desires to sell to
the Purchasers, and the Purchasers desire to purchase from the Company, an
aggregate of 17,000,000 shares (the “Shares”) of the
Company’s common stock, $0.001 par value per share (“Common Stock”), on
the terms and conditions set forth in this Agreement; and

    

    WHEREAS, the Purchasers desire to
receive and rely upon KGE Group Limited, and KGE Group Limited is willing to
provide for such reliance to encourage investment by the Purchasers, certain
promises for the benefit of the Purchasers and the Company and its stockholders
overall.

    

    NOW, THEREFORE, in consideration of the
foregoing, the mutual promises hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

    

    
      	
              1.

            	
              DEFINITIONS

            

    

     

    (a)          
“Affiliate”
means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person.  “Control” for this purpose
means possession, directly or indirectly, of more than fifty percent (50%) of
the voting power of a Person.

     

    (b)           “Business Day” means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to
close.

     

    (c)           “Entity” means any
sole proprietorship, corporation, partnership of any kind having a separate
legal status, limited liability company, business trust, unincorporated
organization or association, mutual company, joint stock company or joint
venture.

     

    (d)          
“Governmental
Authority” means (i) any federal, state, county, municipal or other
government, domestic or foreign, or any agency, board, bureau, commission,
court, department or other instrumentality of any such government, or (ii) any
Person having the authority under any applicable Governmental Requirement to
administer, assess, collect or impose Taxes.

     

    (e)           “Governmental
Requirement” means at any time (i) any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, writ, edict, award,
authorization or other requirement of any Governmental Authority in effect at
that time or (ii) any obligation included in any certificate, certification,
franchise, permit or license issued by any Governmental Authority or resulting
from binding arbitration, including any requirement under common law, at that
time.

     

    (f)           “Knowledge” means, as
it pertains to the Company and any Purchaser, the actual knowledge of the
Company or the Purchaser, as applicable.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (g)           “Person” means any
natural person, Entity, estate, trust, union or employee organization or
Governmental Authority.

     

    
      	
              2.

            	
              AGREEMENT
      TO PURCHASE AND SELL STOCK

            

    

     

    (a)           Subject
to the terms and conditions of this Agreement, the Company agrees to sell and
issue to the Purchasers, and the Purchasers agrees to purchase, acquire and
accept from the Company at the Closing (as defined below), the number of
authorized but unissued shares of Common Stock set forth opposite their names
set forth on Schedule
I attached hereto at a per share purchase price of $1.65 (the “Per Share
Price”).

     

    (b)           None
of the Shares shall be sold and issued to the Purchasers prior to the Company
obtaining stockholder approval to sell and issue the Shares in accordance with
the requirements of NASDAQ Marketplace Rule 5635 and Section 6 hereto (the
“Stockholder
Approval”). If and when the Company obtains the Stockholder Approval, the
parties shall hold a Closing for the purchase and sale of the
Shares.

     

    3.           CLOSING

     

    On September 30, 2009, provided that
the Stockholder Approval is obtained, the parties shall conduct a closing for
the purchase and sale of the Shares (the “Closing,” the date of
the Closing being referred to herein as the “Closing Date”), at
the offices of the Company at 105 Baishi Road, Jiuzhou West Avenue, Zhuhai
519070, People’s Republic of China at 5:00 p.m. Local Time or at such other time
and place as the Company and Purchasers mutually agree upon after the
Stockholder Approval is obtained.  At the Closing, against delivery of
full payment for the Shares sold hereunder by wire transfer of immediately
available funds in accordance with the Company’s instructions; the Company shall
provide to Purchasers (i) irrevocable instructions to the Company’s
transfer agent and registrar to issued one or more stock certificates registered
in the name of Purchasers (or in such nominee name(s) as designated by each
Purchaser, representing the number of Shares set forth opposite such Purchaser’s
name on Schedule
I hereto and bearing the legend set forth in Section 5(j)
herein.  The Company shall submit such irrevocable instruction letter
to the Company’s transfer agent on the Closing Date and the stock certificate
representing the Shares purchased by each Purchaser shall be delivered by the
transfer agent to the Purchasers no later than Five (5) Business Days from the
Closing Date.  Closing documents may be delivered by facsimile on the
Closing Date, with original signature pages subsequently sent by overnight
courier.

     

    
      	
              4.

            	
              REPRESENTATIONS,
      WARRANTIES AND CERTAIN AGREEMENTS OF THE
COMPANY

            

    

     

    The
Company hereby represents and warrants to the Purchasers as of the Closing Date
that:

     

    (a)           Organization. The
Company has all corporate power and authority required to enter into this
Agreement and the other agreements, instruments and documents contemplated
hereby, and to consummate the transactions contemplated hereby and
thereby.

    
      
         

      

      
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    (b)           Due Authorization.
All corporate actions on the part of the Company necessary for the
authorization, execution, delivery and performance of all obligations of the
Company under this Agreement, including the authorization, issuance, reservation
for issuance and delivery of all the Shares being sold under this Agreement,
have been taken and no further consent or authorization of the Company, the
Company’s board of directors (the “Board of Directors”)
or the Company’s stockholders is required (other than the Stockholder Approval),
and this Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
(i) as may be limited by (1) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors’ rights generally and (2) the effect of rules of
law governing the availability of equitable remedies and (ii) as rights to
indemnity or contribution may be limited under federal or state securities laws
or by principles of public policy thereunder.

     

    (c)           Non-Contravention.
The execution, delivery and performance of this Agreement by the Company, and
the consummation by Company of the transactions contemplated hereby, do not:
(i) contravene or conflict with the organizational documents of Company; or
(ii) constitute a violation of any provision of any federal, state, local or
foreign law, rule, regulation, order or decree applicable to Company, except in
the case of clause (ii), for such violations, breaches or defaults as would not
be reasonably likely to have a material adverse effect on the
Company.

     

    (d)           Litigation. There is
no Action pending to which Company is a party that is reasonably likely to
prevent, enjoin, alter or delay the transactions contemplated by this
Agreement.

     

    (e)           Valid Issuance of the
Shares. The Shares have been duly authorized and, when issued and
delivered to Purchasers against payment therefor in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable and will
be free and clear from all liens, claims and encumbrances with respect to the
issuance of such Shares and will not be subject to any pre-emptive rights or
similar rights.

     

    (f)           Brokers, Finders and
Others.  There are no fees or commissions of any sort
whatsoever claimed by, or payable by the Company to, any broker, finder,
intermediary or any other similar Person in connection with effecting this
Agreement or the transactions contemplated hereby, except for ordinary and
customary legal and accounting fees.

     

    (g)           Governmental and Third-Party
Proceedings.  No consent, approval, authorization of, or
registration, declaration or filing with, any court, Governmental Authorities or
any other third party, other than the Nasdaq Stock Market or as required under
U.S. state and federal securities laws, is required to be made or obtained by
the Company in connection with the execution, delivery or performance by the
Company of this Agreement and the Transaction Documents or the consummation by
the Company of the transactions contemplated hereby.

     

    
      	
              5.

            	
              REPRESENTATIONS,
      WARRANTIES AND CERTAIN AGREEMENTS OF THE
  PURCHASERS

            

    

     

    Each of
the Purchasers, severally but not jointly, hereby represents and warrants to the
Company as of the Closing Date that:

     

    (a)           Organization.
Purchaser has all corporate, limited liability company, partnership, trust or
individual, as the case may be, power and authority required to enter into this
Agreement and the other agreements, instruments and documents contemplated
hereby, and to consummate the transactions contemplated hereby and
thereby.

    
      
         

      

      
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    (b)           Due Authorization.
All corporate, limited liability company, partnership, trust or individual, as
the case may be, action on the part of Purchaser necessary for the
authorization, execution, delivery of and the performance of all obligations of
Purchaser under this Agreement have been taken and no further consent or
authorization of Purchaser is necessary, and this Agreement constitutes
Purchaser’s legal, valid and binding obligation, enforceable in accordance with
its terms, except (i) as may be limited by (1) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally and (2) the effect
of rules of law governing the availability of equitable remedies and
(ii) as rights to indemnity or contribution may be limited under federal or
state securities laws or by principles of public policy thereunder.

     

    (c)           Non-Contravention.
The execution, delivery and performance of this Agreement by Purchaser, and the
consummation by Purchaser of the transactions contemplated hereby, do not:
(i) contravene or conflict with the organizational documents of Purchaser;
or (ii) constitute a violation of any provision of any federal, state, local or
foreign law, rule, regulation, order or decree applicable to Purchaser, except
in the case of clause (ii), for such violations, breaches or defaults as would
not be reasonably likely to have a Material Adverse Effect on
Purchaser.

     

    (d)           Litigation. There is
no Action pending to which Purchaser is a party that is reasonably likely to
prevent, enjoin, alter or delay the transactions contemplated by this
Agreement.

     

    (e)           Investment
Representations. The Purchaser has received this Agreement and carefully
read such Agreement; the decision to acquire Shares has been taken solely in
reliance upon the information contained in this Agreement, and such other
written information supplied by an authorized representative of the Company as
the Purchaser may have requested.  The Purchaser acknowledges that all
documents, records and books pertaining to this investment have been made
available for inspection by the Purchaser, its attorneys, accountants and
purchaser representatives upon request prior to tendering this Agreement, and
that it has been informed by the Company that its books and records will be
available for inspection by the Purchaser or its agents and representatives at
any time, and from time to time, during reasonable business hours and upon
reasonable notice.  The Purchaser further acknowledges that it (or its
advisors, agents and/or representatives) has had a reasonable and adequate
opportunity to ask questions of and receive answers from the Company concerning
the terms and conditions of the acquisition of Shares, the nature of Shares and
the business and operations of the Company, and to obtain from the Company such
additional information, to the extent possessed or obtainable without
unreasonable effort or expense, as is necessary to verify the accuracy of the
information contained in this Agreement or otherwise provided by the Company;
all such questions have been answered by the Company to the full satisfaction of
the Purchaser.  Purchaser is not relying upon any oral information
furnished by the Company or any other Person in connection with its investment
decision, and in any event, no such oral information has been furnished to
Purchaser which is in any way inconsistent with or contradictory to any
information contained in this Agreement, or otherwise provided to Purchaser by
the Company in writing as described above.

     

    (i)           Purchaser
meets the criteria established in each of subsections (1) or (2)
below:

     

    (1)           Purchaser
is an “accredited investor” as such term is defined in Rule 501 of Regulation D,
promulgated under the 1933 Act.

     

    (2)           Purchaser
is not a U.S. Person, as defined in Rule 901 of Regulation S, promulgated under
the 1933 Act and Purchaser warrants that:

     

    (a)           Purchaser
is not acquiring Shares as a result of, and Purchaser covenants that he, she or
it will not engage in any “directed selling efforts” (as defined in
Regulation S under the 1933 Act) in the United States in respect of the
Shares which would include any activities undertaken for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the market in
the United States for the resale of any of the Shares;

    
      
         

      

      
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    (b)           Purchaser
is not acquiring the Shares for the account or benefit of, directly or
indirectly, any U.S. Person;

     

    (c)           Purchaser
is a resident of the jurisdiction in which Purchaser resides;

     

    (d)           the
offer and the sale of Shares to Purchaser as contemplated in this Agreement
complies with or is exempt from the applicable securities legislation of the
jurisdiction in which the Purchaser resides;

     

    (e)           Purchaser
is outside the United States when receiving and executing this Agreement and
that the Purchaser will be outside the United States when acquiring
Shares,

     

    (f)           and
Purchaser covenants with the Company that:

     

    (i)           offers
and sales of any of Shares prior to the expiration of a period of six months
after the date of original issuance of the Shares (the six month period
hereinafter referred to as the “Distribution Compliance
Period”) shall only be made in compliance with the safe harbor provisions
set forth in Regulation S, pursuant to the registration provisions of the 1933
Act or an exemption therefrom, and that all offers and sales after the
Distribution Compliance Period shall be made only in compliance with the
registration provisions of the 1933 Act or an exemption therefrom and in each
case only in accordance with applicable state securities laws; and

     

    (ii)           Purchaser
will not engage in hedging transactions with respect to Shares until after the
expiration of the Distribution Compliance Period.

     

    (ii)           Purchaser
(1) has adequate net worth and means of providing for current financial needs
and possible personal contingencies, (2) has no need for liquidity in this
investment; and (3) is able to bear the economic risks of an investment in the
Shares for an indefinite period of time, and of losing the entire amount of such
investment.

     

    (iii)           Purchaser
understands and acknowledges that an acquirer of the Shares it must be prepared
to bear the economic risk of such investment for an indefinite period because
of: (A) illiquidity of the Shares due to the fact such stock has not been
registered under the 1933 Act or any state securities act (nor passed upon by
the SEC or any state securities commission), and the Shares have not been
registered or qualified by the Company under federal or state securities laws
solely in reliance upon an available exemption from such registration or
qualification, and hence such Shares cannot be sold unless they is subsequently
so registered or qualified (which is not likely), or are otherwise subject to
any applicable exemption from such registration requirements; and (B)
substantial restrictions on the transfer of Shares, as set forth in this
Agreement and by legend on the face or reverse side of any certificate
evidencing an ownership interest in the Company.

     

    (iv)           Purchaser
either (i) has a pre-existing personal or business relationship with the
Company, its officers, directors or affiliates; or (ii) alone or with its
representatives, such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in the
Shares.

    
      
         

      

      
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    (v)           Purchaser
understands and acknowledges that an investment in the Shares is speculative in
nature, and involves certain risks.

     

    (vi)           Purchaser
is a not member of the Financial Industry Regulatory Authority, or of any other
self-regulatory agency which would require approval prior to any acquisition of
the Shares.

     

    (vii)           Purchaser
is acquiring the Shares for its own investment, and not with a view toward the
subdivision, resale, distribution, or fractionalization
thereof.  Purchaser has no contract, undertaking, arrangement or
obligation with or to any person to sell, transfer, or otherwise dispose of the
Shares (or any portion thereof hereby acquired), nor has a present intention to
enter into any such contract, undertaking, agreement or
arrangement.

     

    (viii)           The
offering of the Shares was made only through direct, personal communication
between Purchaser (or a representative thereof) and the Company; the acquisition
of the Shares by Purchaser is not the result of any form of general solicitation
or general advertising including, but not limited to, the following: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine, or other written communication, or broadcast over
television, radio or any other medium; or (ii)  any seminar or meeting
to which the attendees had been invited by any general solicitation or general
advertising.

     

    (ix)           Purchaser
has been advised to consult with an attorney regarding legal matters concerning
the acquisition and ownership of the Shares, and with a tax advisor regarding
the tax consequences of acquiring such stock.

     

    (x)           Purchaser
has not distributed this Agreement, or any other information pertaining to the
acquisition of the Shares hereunder, to anyone other than its representative
and/or its investment, legal or accounting advisors in connection with its
consideration of an acquisition of the Shares.

     

    (xi)           Purchaser
was not organized for the specific purpose of acquiring the Shares subscribed
for herein, and has other investments or business activities besides investing
in the Company, unless Purchaser has indicated the contrary to the Company in
writing.  Purchaser has specified in writing the number and character
(i.e., individual, corporate, company, etc.) of the beneficial owners
thereof.

     

    (f)           Reliance Upon Purchaser’s
Representations. Purchaser understands that the sale of the Shares to it
will not be registered under the 1933 Act on the ground that such issuance and
sale will be exempt from registration under the 1933 Act, and that the Company’s
reliance on such exemption is based on Purchaser’s representations set forth
herein.

     

    (g)           Legends. Purchaser
agrees that the certificates for the Shares shall bear the following
legend:

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS (I) A
REGISTRATION STATEMENT COVERING SUCH SECURITIES IS EFFECTIVE UNDER THE
SECURITIES ACT OR (II) THE TRANSACTION IS EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT AND, IF THE COMPANY REQUESTS, AN OPINION SATISFACTORY TO THE
COMPANY TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”

    
      
         

      

      
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    Purchaser
agrees that the Company may place stop transfer orders with its transfer agent
with respect to such certificates in order to implement the restrictions on
transfer set forth in this Agreement.

     

    
      	
              6.

            	
              STOCKHOLDER
      APPROVAL; CASH RESERVE

            

    

     

    (a)           Obtaining Stockholder
Approval.   The Company agrees to commence procedures to
seek, and use its best efforts to obtain, the Stockholder Approval as soon as
practicable following the Execution Date in accordance with NASDAQ Marketplace
Rule 5635 and Section 14 of the Securities Exchange Act of 1934, as
amended.  The Board of Directors shall recommend approval thereof by
the Company’s stockholders.

     

    (b)           Project Cash
Reserves.  After the Closing, the Company shall maintain a cash
reserve of at least US $23.0 million to fund the Shanghai Nine Dragons Project
further referenced in that certain agreement entered into by and between the
Company and Nine Dragon (Shanghai) Co. Ltd. dated _________, 2009 until such
time as said project has reached at least 80% of completion as determined by the
parties hereto.

     

    
      	
              7.

            	
              INDEMNIFICATION

            

    

     

    (a)           Each Purchaser’s
Indemnification

     

    (i)           Each
Purchaser shall indemnify the Company and its officers, directors, employees,
Affiliates and agents (collectively, “Company Indemnified
Parties”) and hold each harmless from and against any and all losses,
damages, actions, proceedings, causes of action, liabilities, claims,
encumbrances, penalties, demands, assessments, settlements, judgments, costs and
expenses including court costs and reasonable attorneys’ fees and disbursements
(collectively, “Losses”) incurred by
Company Indemnified Parties in connection with, arising out of, or resulting
from any of the following:

     

    (1)           any
breach or inaccuracy of any representation, warranty or statement made by such
Purchaser in this Agreement;

     

    (2)           any
failure by such Purchaser to perform any agreement, covenant or obligation of
such Purchaser pursuant to this Agreement;

     

    (b)           Company’s
Indemnification

     

    (i)           Subject
to the terms and conditions of this Agreement, the Company shall indemnify a
Purchaser, and its agents (“Purchaser Indemnified
Parties”) and hold each harmless from and against any and all Losses,
incurred by Purchaser Indemnified Parties in connection with, arising out of, or
resulting from any of the following:

     

    (1)           any
breach or inaccuracy of any representation or warranty made by the Company in
this Agreement; or

     

    (2)           any
failure by the Company to perform any agreement, covenant or obligation of the
Company pursuant to this Agreement.

    
      
         

      

      
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    (c)           Indemnification
Process.  The party seeking indemnification shall give notice
as promptly as is reasonably practicable, but in any event no later than fifteen
(15) business days after receiving notice thereof, to the Purchaser or the
Company, as the case may be, of the assertion of any claim, or the commencement
of any suit, action or proceeding, by any Person not a party hereto in respect
of which indemnity may be sought under this Agreement (which notice shall, to
the extent such information is reasonably available, specify in reasonable
detail the nature and amount of such claim).  After such notice, the
indemnifying party shall have the right to assume the defense; provided, however, that such
indemnified party shall have the right to participate at its own expense in the
defense of such action; and provided, further, that the
indemnifying party shall not consent to the entry of any judgment or enter into
any settlement, except with the written consent of such indemnified party (which
consent shall not be unreasonably withheld), that (a) fails to include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of any such action
or (b) grants the claimant or plaintiff any injunctive relief against the
indemnified party.  Any failure to give prompt notice under this Section 7(c) shall
not bar an indemnified party’s right to claim indemnification under this Section 7, except to
the extent that an indemnifying party shall have been harmed by such
failure.

     

    8.           CONDITIONS TO THE PURCHASERS’
OBLIGATIONS AT CLOSING. The obligations of the Purchasers to consummate
the transactions contemplated herein are subject to the fulfillment or waiver,
on or before the Closing, of each of the following conditions:

     

    (a)           Representations and
Warranties True. Each of the representations and warranties of the
Company contained in Section 4 shall
be true and correct in all material respects on and as of the date hereof (provided, however, that such
qualification shall only apply to representation or warranties not otherwise
qualified by materiality) and on and as of the Closing Date with the same effect
as though such representations and warranties had been made as of the Closing
(except for representations and warranties that speak as of a specific
date).

     

    (b)           Performance. The
Company shall have performed and complied in all material respects with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein; provided, however, as
provided in Section 3
hereof, the Company may furnish to each Purchaser a facsimile copy of the stock
certificate(s) representing the Shares purchased by such Purchaser no later than
the next Business Day following the Closing Date, with the original stock
certificate(s) to be delivered to such Purchaser by overnight courier no later
than the third (3rd) Business Day following the Closing Date.

     

    (c)           Securities
Exemptions. The offer and sale of the Shares to the Purchasers pursuant
to this Agreement shall be exempt from the registration requirements of the 1933
Act and the registration and/or qualification requirements of all applicable
state securities laws.

     

    (d)           No Statute or
Rule Challenging Transaction. No statute, rule, regulation,
executive order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or any
self-regulatory organization or the staff of any of the foregoing, having
authority over the matters contemplated hereby which questions the validity of,
or challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement.

     

    (e)           Other Actions. The
Company shall have executed such certificates, agreements, instruments and other
documents, and taken such other actions as shall be customary or reasonably
requested by the Purchasers in writing in connection with the transactions
contemplated hereby.

     

    
      
         

      

      
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    9.           CONDITIONS TO THE COMPANY’S
OBLIGATIONS AT CLOSING. The obligations of the Company to consummate the
transactions contemplated herein are subject to the fulfillment or waiver, on or
before the Closing, of each of the following conditions:

     

    (a)           Representations and
Warranties True. Each of the representations and warranties of the
Purchasers contained in Section 5 shall
be true and correct in all material respects on and as of the date hereof and on
and as of the Closing Date with the same effect as though such representations
and warranties had been made as of the Closing (except for representations and
warranties that speak as of a specific date).

     

    (b)           Performance. The
Purchasers shall have performed and complied in all material respects with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.

     

    (c)           Securities
Exemptions. The offer and sale of the Shares to the Purchasers pursuant
to this Agreement shall be exempt from the registration requirements of the 1933
Act and the registration and/or qualification requirements of all applicable
state securities laws.

     

    (d)           Payment of Purchase
Price. The Purchasers shall have delivered to the Company by wire
transfer of immediately available funds, full payment of the purchase price for
the Shares as specified in Section 2(a).

     

    (e)           No Statute or
Rule Challenging Transaction. No statute, rule, regulation,
executive order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or any
self-regulatory organization or the staff of any of the foregoing, having
authority over the matters contemplated hereby which questions the validity of,
or challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement.

     

    (f)            Stockholder
Approval. The Stockholder Approval shall have been obtained as a
condition to the Closing.

     

    (g)           Other Actions. The
Purchasers shall have executed such certificates, agreements, instruments and
other documents, and taken such other actions as shall be customary or
reasonably requested by the Company in connection with the transactions
contemplated hereby.

     

    10.          CONTRIBUTION.  In
order to further induce the Purchasers to purchase the Shares and for good and
valuable consideration acknowledged by KGE Group Limited, until the earlier of
(a) three (3) years from the Execution Date of this Agreement or (b) the
Purchasers no longer holder at least 50% of the Shares issued and sold to them
pursuant to this Agreement at the end of any fiscal quarter of the Company, if
as reported in the Company's financial statements at the end of any fiscal
quarter, the Company’s net assets (excluding normal depreciation) do not at
least equal the value of the Company’s net assets (excluding normal
depreciation) on June 30, 2009, less $2,500,000 (the "Net Assets Threshold"),
KGE Group Limited agrees to pay to the Company an amount equal to the difference
between the Net Assets Threshold and the net assets (excluding normal
depreciation) as reported for the period in question (the "Net Assets Loss") in
cash within six (6) months after the end of the period in which the Net Assets
Loss occurred.

    
      
         

      

      
        - 9 -

        
          

        

      

      
         

      

    

     

    
      	
              11.

            	
              MISCELLANEOUS.

            

    

     

    (a)           Notices.  All
notices, requests, demands and other communications required or permitted to be
given under this Agreement shall be given in writing and shall be deemed to have
been duly given (a) on the date of delivery if delivered by hand or by telecopy,
in the case of telecopy upon confirmation of receipt, (b) on the date of
delivery, if delivered by electronic mail, upon confirmation of receipt, or (c)
on the first business day following the date of dispatch if delivered by a
recognized next-day courier service.  All notices thereunder shall be
delivered to the following addresses:

     

    If to a
Purchaser, to the addresses set forth opposite such Purchaser’s name on Schedule
I

    

    If to the
Company or to KGE Group Limited, to:

    

    China
Architectural Engineering, Inc.

    105
Baishi Road

    Jiuzhou
West Avenue

    Zhuhai
519070

    People’s
Republic of China

    0086-756-8538908

    Attn: Luo
Ken Yi

    Email:
luo@caebuilding.com

    

    with a
copy to:

    

    K&L
Gates LLP

    10100
Santa Monica Blvd., 7th
Floor

    Los
Angeles, CA 90067

    Attention:  Thomas
J. Poletti, Esq.

    Facsimile:  (310)
552-5001

    Email:
thomas.poletti@klgates.com

    

    Any party
to this Agreement may, by notice given in accordance with this Section 10(a),
designate a new address for notices, requests, demands and other communications
to such party.

    

    (b)           Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be a duplicate original, but all of which taken together shall be
deemed to constitute a single instrument.

     

    (c)           Entire Agreement/No
Third-Party Rights.  This Agreement and the Disclosure Schedule
attached hereto constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter of this Agreement.  This Agreement is
not intended to confer upon any Person other than the parties hereto (and their
respective successors and assigns) any rights or remedies.

     

    (d)           Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns (including successive, as well
as immediate, successors and assigns) of the parties hereto.  This
Agreement may not be assigned by any party hereto without the prior written
consent of the other parties.

    
      
         

      

      
        - 10 -

        
          

        

      

      
         

      

    

     

    (e)           Captions.  The
captions contained in this Agreement are included only for convenience of
reference and do not define, limit, explain or modify this Agreement or its
interpretation, construction or meaning and are in no way to be construed as
part of this Agreement.

     

    (f)           Governing Law. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware without giving effect to principles of conflicts or choice
of laws (except to the extent that mandatory provisions of Federal law are
applicable).

     

    (g)           Payment of Fees and
Expenses.  Except as otherwise agreed in writing, each party
hereto shall pay its own costs and expenses, including legal and accounting
fees, incurred in connection with the preparation, negotiation and execution of
this Agreement and the consummation of the transactions contemplated hereby and
all expenses relating to its performance of, and compliance with, its
undertakings herein.

     

    (h)           Amendment.  From
time to time and at any time prior to the Closing, this Agreement may be amended
only by an agreement in writing executed by the Company and the
Purchasers.

     

    (i)           Arbitration.  Any
controversy arising out of or relating to this Agreement, its enforcement or
interpretation, or because of an alleged breach, default, or misrepresentation
in connection with any of its provisions, shall be submitted to arbitration
before a sole arbitrator (the “Arbitrator”) selected from Judicial Arbitration
and Mediation Services, Inc., or its successor (“JAMS”), or if JAMS is no longer
able to supply the arbitrator, such arbitrator shall be selected from the
American Arbitration Association, and shall be conducted as the exclusive forum
for the resolution of such dispute.  The arbitration shall be held in
the JAMS’ New York City office or at a mutually agreeable
location.  Any award or relief granted by the Arbitrator hereunder
shall be final and binding on the parties hereto and may be enforced by any
court of competent jurisdiction.  The parties acknowledge and agree
that they are hereby waiving any rights to trial by jury in any action,
proceeding or counterclaim brought by either of the parties against the other in
connection with any matter whatsoever arising out of or in any way connected
with this Agreement.  The parties agree that in any such arbitration,
the prevailing party shall be entitled to his or its reasonable attorney’s fees
and expenses, including costs of expert witnesses (if any).

     

    (j)           Waiver of Jury
Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH PARTY HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT
ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING IN WHOLE OR IN PART UNDER, RELATED TO, BASED ON OR IN CONNECTION
WITH THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR
OTHERWISE.  ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION 10(j) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

     

    (k)           Waiver.  The
rights and remedies of the parties to this Agreement are cumulative and not
alternative.  Neither the failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or
privilege.

    
      
         

      

      
        - 11 -

        
          

        

      

      
         

      

    

     

    (l)           Severability.  If
any provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

     

    (m)           Survival. The
representations and warranties of the Company contained in Section 3 of
this Agreement and of the Purchasers contained in Section 4 of
this Agreement shall survive until the second (2nd) anniversary of the Closing
Date.

     

    (n)           Further Assurances.
From and after the date of this Agreement, upon the request of the Company or
the Purchasers, the Company and the Purchasers will execute and deliver such
instruments, documents or other writings, and take such other actions, as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

     

    (o)           Stock Splits, Dividends and
other Similar Events. The provisions of this Agreement shall be
appropriately adjusted to reflect any stock split, stock dividend,
reorganization or other similar event that may occur with respect to the Company
after the date hereof.

     

     [Remainder of page intentionally left
blank.]

    
      
         

      

      
        - 12 -

        
          

        

      

      
         

      

    

     

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

     

    
      
        
          
            	 
      	
                    CHINA
      ARCHITECTURAL ENGINEERING, INC.

                  
	 
      	 
      
	 
      	
                    By:

                  	
                    /s/  Luo Ken
Yi

                  
	 
      	 
      	
                    Name:  Luo
      Ken Yi

                  
	 
      	 
      	
                    Title:  Chief
      Executive Officer

                  
	 
      	 
      
	 
      	
                    KGE
      GROUP LIMITED

                  
	 
      	 
      
	 
      	
                    By:

                  	
                    /s/  Luo Ken Yi [COMPANY STAMP]

                  
	 
      	 
      	
                    Name:  Luo
      Ken Yi

                  
	 
      	 
      	
                    Title:  Director

                  

          

        

      

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGES FOR PURCHASERS FOLLOW]

    
      
         

      

      
        - 13
-

        
          

        

      

      
         

      

    

    [PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

     

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    
      
        	 
      	
                Always
      Bright Group Investment Limited

              
	 
      	 
      
	 
      	
                /s/  LUI Tin
  Nang

              
	 
      	
                Name:

              	
                LUI Tin Nang

              
	 
      	
                Title:

              	 
      

      

    

    

    Number of Shares
Purchased:  1,500,000

    

    [SIGNATURE
PAGES CONTINUE]

    
      
         

      

      
        - 14
-

        
          

        

      

      
         

      

    

    [PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

     

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    
      
        	 
      	
                /s/  Zhu
Guohai

              
	 
      	
                Zhu
      Guohai, an individual

              

      

    

    

    Number of Shares
Purchased:  1,000,000

    

    [SIGNATURE
PAGES CONTINUES]

    
      
         

      

      
        - 15
-

        
          

        

      

      
         

      

    

    [PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

     

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    
      
        	 
      	
                /s/  Gu Binjie

              
	 
      	
                Gu
      Binjie, an individual

              

      

    

    

    Number of Shares
Purchased:  3,500,000

    

    [SIGNATURE
PAGES CONTINUES]

    
      
         

      

      
        - 16
-

        
          

        

      

      
         

      

    

    [PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

     

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        	 
      	
                                Hongkong
      Resource Holdings Co. Limited

                              
	 
      	 
      
	 
      	
                                  /s/  [ILLEGIBLE]

                              
	 
      	By:	
                                 

                              
	 
      	      
                                Title

                              	
                                 

                              

                      

                    

                  

                

              

            

          

        

      

    

    

    Number of Shares Purchased:
3,000,000

    

    [SIGNATURE
PAGES CONTINUES]

    
      
         

      

      
        - 17
-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    
      
        
          
            
              
                
                  
                    
                      	 
      	
                              Hongkong
      Resort Property Limited

                            
	 
      	 
      
	 
      	
                                /s/  [ILLEGIBLE]

                            
	 
      	      
                              By:

                            	
                               

                            
	 
      	      
                              Title

                            	
                               

                            

                    

                  

                

              

            

          

        

      

    

    

    Number of Shares
Purchased:  3,000,000

    

    [SIGNATURE
PAGES CONTINUES]

    
      
         

      

      
        - 18
-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    
      
        
          
            
              
                
                  
                    	 
      	
                            Natural
      Force Limited

                          
	 
      	 
      
	 
      	
                              /s/  [ILLEGIBLE]

                          
	 
      	      
                            By:

                          	
                             

                          
	 
      	      
                            Title

                          	
                             

                          

                  

                

              

            

          

        

      

    

    

    Number of Shares
Purchased:  3,000,000

    

    [SIGNATURE
PAGES CONTINUES]

    
      
         

      

      
        - 19
-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    
      
        
          
            
              
                
                  
                    
                      	 
      	
                              Hongkong
      Peninsula Investment Co Limited

                            
	 
      	 
      
	 
      	
                                /s/  [ILLEGIBLE]

                            
	 
      	      
                              By:

                            	
                               

                            
	 
      	      
                              Title

                            	
                               

                            

                    

                  

                

              

            

          

        

      

    

    

    Number of Shares
Purchased:  2,000,000

    

    [SIGNATURE
PAGES CONTINUES]

    
      
         

      

      
        - 20
-

        
          

        

      

      
         

      

    

    SCHEDULE
I

     

    
      
        
          
            
              	
                      Purchaser

                    	 
      	
                      Number of 

                      Shares

                    	 
      	
                      Address

                    
	
                      Always
      Bright Group Investment Limited

                    	 
      	
                            1,500,000

                    	 
      	
                      43F
      Huanhai Plaza,1045 Huaihai Road, Shanghai, P.R.China
      200031  Conact Person: Shen Kun
    Tel:86-13916133533

                    
	
                      Zhu
      Guohai

                    	 
      	
                            1,000,000

                    	 
      	
                      43F
      Huanhai Plaza,1045 Huaihai Road, Shanghai, P.R.China
      200031  Conact Person: Shen Kun
    Tel:86-13916133533

                    
	
                      Gu
      Binjie

                    	 
      	
                            3,500,000

                    	 
      	
                      43F
      Huanhai Plaza,1045 Huaihai Road, Shanghai, P.R.China
      200031  Conact Person: Shen Kun
    Tel:86-13916133533

                    
	
                      Hongkong
      Resource Holdings Co. Limited

                    	 
      	
                            3,000,000

                    	 
      	
                      43F
      Huanhai Plaza,1045 Huaihai Road, Shanghai, P.R.China
      200031  Conact Person: Shen Kun
    Tel:86-13916133533

                    
	
                      Hongkong
      Resort Property Limited

                    	 
      	
                            3,000,000

                    	 
      	
                      43F
      Huanhai Plaza,1045 Huaihai Road, Shanghai, P.R.China
      200031  Conact Person: Shen Kun
    Tel:86-13916133533

                    
	
                      Natural
      Force Limited

                    	 
      	
                            3,000,000

                    	 
      	
                      43F
      Huanhai Plaza,1045 Huaihai Road, Shanghai, P.R.China
      200031  Conact Person: Shen Kun
    Tel:86-13916133533

                    
	
                      Hongkong
      Peninsula Investment Co Limited

                    	 
      	
                            2,000,000

                    	 
      	
                      43F
      Huanhai Plaza,1045 Huaihai Road, Shanghai, P.R.China
      200031  Conact Person: Shen Kun
    Tel:86-13916133533

                    
	
                      Total

                    	
                        

                    	
                          17,000,000

                    	
                        

                    	
                      43F
      Huanhai Plaza,1045 Huaihai Road, Shanghai, P.R.China
      200031  Conact Person: Shen Kun
    Tel:86-13916133533

                    

            

          

        

      

    

     

    
      
         

      

      
        - 21
-AMENDMENT AND WAIVER
AGREEMENT

       

      This Amendment and Waiver
Agreement (the “Agreement”)
is made and entered into as of August 6, 2009, by and among China Architectural
Engineering, Inc., a Delaware corporation (the “Company”),
KGE Group Limited (“KGE
Group”), ABN AMRO Bank N.V., London Branch (“ABN
AMRO”), and CITIC Capital China Mezzanine Fund Limited (formerly known as
“CITIC Allco Investments Limited.”) (“CITIC,”
and together with ABN AMRO, the “Bondholders”)
and ABN AMRO Bank (China) Co., Ltd., Shenzhen Branch (the “Overdraft
Lender” and together with ABN AMRO and CITIC, the “Creditors”).

       

      Recitals

       

      WHEREAS,
on April 12, 2007, the Company sold and issued to ABN AMRO US $10,000,000
Variable Rate Convertible Bonds due 2012 (the “2007
Bonds”) and warrants to purchase 800,000 shares of common stock of the
Company expiring 2010 (the “2007
Warrants”);

       

      WHEREAS,
the 2007 Bonds were issued pursuant to a trust deed dated April 12, 2007, as
amended and restated on August 29, 2007 (the “2007 Trust
Deed”), entered into by and between the Company and The Bank of New York,
London Branch (the “Trustee”);

       

      WHEREAS,
the 2007 Warrants have been fully exercised pursuant to the terms of the 2007
Warrants and are no longer outstanding;

       

      WHEREAS,
on April 15, 2008, the Company issued to the Bondholders an aggregate amount of
US$20,000,000 12% Convertible Bonds due 2011 (the “2008
Bonds,” and together with the 2007 Bonds, the “Bonds”)
and 300,000 warrants to purchase 300,000 shares of common stock of the Company
expiring 2013 (the “2008
Warrants”);

       

      WHEREAS,
the 2008 Bonds were issued pursuant to a trust deed dated April 15, 2008, as
amended and restated on September 29, 2008 (the “2008 Trust
Deed,” and together with the 2007 Trust Deed, the “Trust
Deeds”), entered into by and between the Company and the
Trustee;

       

      WHEREAS,
the 2008 Warrants, none of which have been exercised as of the date of this
Agreement, were issued pursuant to a Warrant Instrument dated April 15, 2008
(the “2008
Warrant Instrument”) entered into by and between the Bondholders and the
Company;

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      WHEREAS,
the 2007 Trust Deed and 2008 Trust Deed each provide that the then-current
conversion price of the respective Bonds shall be adjusted downward upon certain
triggering events, including upon the sale and issuance by the Company of shares
of the Company’s common stock, $0.001 par value per share (“Shares”)
for consideration per Share that is less than the then-current conversion price
of the respective Bonds;

       

      WHEREAS,
paragraph 8.1(e) of the 2008 Warrant Instrument provides that an the occurrence
of an adjustment to the conversion price of the 2008 Bonds shall result in an
identical adjustment to the exercise price of the 2008 Warrants;

       

      WHEREAS,
the Company has agreed to provide a guarantee over an Overdraft Facility letter
(reference number CZ2008003C) provided by ABN AMRO Bank (China), Shenzhen
Branch, dated 13 May 2009 (the “Bank Overdraft
Facilities”);

       

      WHEREAS,
Condition 12(A)(xiv) of the Terms and Conditions of the 2008 Trust Deed provide
that it is an event of default if KGE Group ceases to own at least 45% of the
outstanding Shares;

       

      WHEREAS,
ABN AMRO holds 100% of the issued and outstanding 2007 Bonds, and the
Bondholders in aggregate hold 100% of the issued and outstanding 2008 Bonds and
100% of the 2008 Warrants;

       

      WHEREAS,
the Company and KGE Group are currently contemplating the issue and sale by the
Company and the sale by KGE Group of Shares to certain investors on the terms
and conditions described in Appendix A attached
to this Agreement (the “Proposed
Sale”) ;

       

      WHEREAS,
if consummated, the Proposed Sale (a) would trigger a reduction in the
conversion price of each of the Bonds and a reduction in the exercise price of
the 2008 Warrants pursuant to the terms of the Bonds and the 2008 Warrants (the
“Adjustment
Rights”) and (b) would result in an event of default under Condition
12(A)(xiv) of the 2008 Bonds;

       

      WHEREAS,
the proceeds of the Proposed Sale will be applied in accordance with the terms
hereof and as specifically set forth in Appendix B, and the
Proposed Sale will provide the Company with additional resources to assist the
Company in strengthening its financial position and operations;

      
        
           

        

        
          - 2
-

          
            

          

        

        
           

        

      

      WHEREAS,
the Proposed Sale is subject to the NASDAQ Stock Exchange and United States
federal securities law requirements described in Appendix
A;

       

      WHEREAS,
the Proposed Sale is expected to occur in two separate steps and consummation of
the second step is subject to certain approvals that may not be
received;

       

      WHEREAS,
the use of the net proceeds of the Proposed Sale shall be applied in the order
described in Appendix
B;

       

      WHEREAS,
each of the Bondholders desires to waive their Adjustment Rights only as it
relates to the Proposed Offering and Condition 12(A)(xiv) of the 2008 Bonds, and
only for the sole purpose of allowing the Proposed Sale to take place and be
completed no later than Three (3) months from the effective date of this
Agreement; and

       

      WHEREAS,
if any portion of the Proposed Sale is consummated but the Agreed Bondholder
Payments, as defined in Appendix B, are not
paid to the Creditors in accordance with the time periods, amounts and order set
forth in Appendix
B; then no rights of the Bondholders, including those rights under
Condition 12(A)(xiv) of the 2008 Bonds and Adjustment Rights, shall be waived
and appropriate adjustments shall be made to the conversion prices of the Bonds
and the exercise price of the 2008 Warrant to reflect the Shares sold by the
Company in the Proposed Sale, subject to the terms and conditions of this
Agreement.

       

      NOW,
THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth, the parties hereto, intending to be legally bound, agree
as follows:

       

      1.           Waivers.  Subject
to compliance by the Company and KGE Group with the terms and conditions set
forth herein, and for the sole purpose of allowing the Proposed Sale to take
place, each of the parties hereby agrees that, with respect to Shares sold
pursuant to and in accordance with the terms for the Proposed Sale set forth
herein (including in Appendix A and Appendix
B):

       

      (A)           notwithstanding
any provisions of the Trust Deeds or the 2008 Warrant Instrument, or any other
related documents or agreements, the Adjustment Rights that would otherwise be
triggered by the Proposed Sale shall not be applicable and shall be waived, and
there shall be no adjustment to the conversion price of the Bonds or the
exercise price of the 2008 Warrants; and

      
        
           

        

        
          - 3
-

          
            

          

        

        
           

        

      

      (B)           no
default shall occur under Condition 12(A)(xiv) of the 2008 Trust Deed relating
to the minimum percentage ownership requirements by KGE Group due to the sale of
such Shares,

       

      in each
case provided, that the
Company and KGE Group shall comply with Section 2 of this
Agreement.

       

      2.           Agreed
Use
of Net Proceeds. The Company and KGE Group hereby agree to use the net
proceeds of the Proposed Sale strictly in accordance with the terms set forth in
Appendix
B.

       

      3.           Failure to Pay
Agreed Bondholder Payments.  If any portion of the Proposed
Sale occurs and the Agreed Bondholders Payments are not paid to the Creditors in
the amounts, within the stipulated time periods and order provided in Appendix B then no
rights of the Bondholders, including those rights under Condition 12(A)(xiv) of
the 2008 Bonds and the Adjustment Rights, shall be waived and appropriate
adjustments shall be made to the conversion prices of the Bonds and the exercise
price of the 2008 Warrants to reflect the impact of the Shares sold in the
Proposed Sale.

       

      4.           No Prepayment of
Other Debt.  Until those certain Agreed Bondholders Payments
specified in Step No. 2 of Appendix B are made
by the Company after the sale of the Company Shares, as defined in Appendix B, the
Company agrees that the Company will not use its proceeds from the Proposed Sale
to repay or prepay any debt prior to its currently scheduled due
date.

       

      5.           Reinstatement of
Waived Rights.  If any part of the Proposed Sale is cancelled
or not consummated within three months from the
effective date of this Agreement and otherwise in accordance with the
terms of this Agreement and Appendix A, then all
rights previously waived or to be waived hereunder (including under Section 1),
shall not be waived and shall be reinstated, and any previous waivers shall be
null and void.

       

      6.           Failure to Use
Proceeds as Agreed.  The parties hereby agree that the terms of
each of the Bonds and of the Bank Overdraft Facility are hereby amended so that
it shall be an immediate event of default under each if any applicable Agreed
Bondholder Payments are not paid to the relevant Creditor in the amount, within
the stipulated time periods  and order provided in Appendix
B.

      
        
           

        

        
          - 4
-

          
            

          

        

        
           

        

      

      7.           Continued Effect
of Trust Deeds and 2008 Warrant Instrument.  All terms and
conditions of the Trust Deeds and 2008 Warrant Instrument, and related
documents, not expressly amended or waived by this Agreement remain unchanged
and in full force and effect, and the parties reserve all existing rights
thereunder.  To the extent there is any conflict between the terms of
the Bonds and the 2008 Warrants and the express terms hereof, the terms of this
Agreement shall take precedence.

       

      8.           Ownership of
the
Bonds and 2008 Warrants.  ABN AMRO hereby represents and
warrants that it owns 100% of the 2007 Bonds, 37.5% of the 2008 Bonds and 37.5%
of the 2008 Warrants.  CITIC represents and warrants that it owns
62.5% of the 2008 Bonds and 62.5% of the 2008 Warrants.  Each of ABN
AMRO and CITIC represents and warrants that it is the sole and lawful owner of
all rights, title and interest in and to all ownership interests indicated in
the immediately preceding sentence, and there has been no assignment or other
transfer of any such interests.

       

      9.           Accuracy of the
Appendices.  The Company and KGE Group (x) represent and
warrant to each Creditor that, as of the date of this Agreement, Appendix A and
Appendix B are accurate and complete descriptions of the Proposed Sale, the use
of proceeds therefrom and the required approvals therefor and (y) covenant and
agree to use their best efforts to consummate the Proposed Sale and use the
proceeds therefrom in accordance with such terms.  The Company and KGE
Group acknowledge that the Creditors are executing this Agreement in reliance on
these representations and warranties, covenants and agreements.

       

      10.           Compliance with
Laws and Regulations.  The Company and KGE Group shall comply
with all relevant Laws and Regulations applicable to them, including satisfying
all filings, notification and other requirements of Nasdaq, the United States
Securities and Exchange Commission and U.S. Securities Laws.

       

      11.           Duly
Authorized.  The execution, delivery and performance of this
Agreement have been duly authorized by all required corporate action by each of
the parties hereto.

       

      12.           Notice to
Trustee.  The execution of this Agreement, and instructions
related to the actions contemplated hereunder, shall be provided to the Trustee
in accordance with the terms of the Bonds and 2008 Warrants.

       

      13.           Counterparts.  This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same Agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other party, it being understood that all parties need not sign the same
counterpart.

      
        
           

        

        
          - 5
-

          
            

          

        

        
           

        

      

      14.           Successors and
Assigns.  It is expressly understood and agreed by the parties
that this Agreement and all of its terms shall be binding upon the parties’
respective representatives, executors, administrators, successors and
assigns.

       

      [SIGNATURE
PAGES TO FOLLOW]

      
        
           

        

        
          - 6
-

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by
their duly authorized respective officers, as of the date first written
above.

       

      
        
          
            
              
                	 
      	
                        CHINA
      ARCHITECTURAL ENGINEERING,

                        INC.

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/  Luo Ken
Yi

                      
	 
      	
                        Name:  Luo
      Ken Yi

                      
	 
      	
                        Title:   
      Chief Executive Officer

                      
	 
      	 
      	 
      
	 
      	
                        KGE
      GROUP LIMITED

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/  Luo Ken
Yi

                      
	 
      	
                        Name:

                      
	 
      	
                        Title:

                      
	 
      	 
      	 
      
	 
      	
                        ABN
      AMRO BANK N.V., LONDON BRANCH

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/  Peter
      [ILLIGIBLE]

                      
	 
      	
                        Name:  Peter
      [ILLEGIBLE]

                      
	 
      	
                        Title:   
      Head of Equities

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/  James
      [ILLEGIBLE]

                      
	 
      	
                        Name:  James
      [ILLEGIBLE]

                      
	 
      	
                        Title:   
      Regional
Counsel

                      

              

            

          

        

      

       

      [Amendment and Waiver Agreement
– Page 1 of 2]

       

      
        
          
          

        

        
          - 7
-

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 
      	
                                            CITIC
      CAPITAL CHINA MEZZANINE FUND

                                            LIMITED
      (formerly known as CITIC
      Allco

                                            Investments Limited.)

                                          
	 
      	 
      	 
      
	 
      	
                                            By:

                                          	
                                            [ILLEGIBLE SIGNATURE]

                                          
	 
      	
                                            Name:

                                          
	 
      	
                                            Title:

                                          
	 
      	 
      	 
      
	 
      	
                                            By:

                                          	 
      
	 
      	
                                            Name:

                                          
	 
      	
                                            Title:

                                          
	 
      	 
      	 
      
	 
      	
                                            ABN
      AMRO BANK (CHINA) CO., LTD.,

                                            SHENZHEN
      BRANCH

                                          
	 
      	 
      	 
      
	 
      	
                                            By:

                                          	       /s/  Chen
      Han Rui
	 
      	
                                            Name:  Chen
      Han Rui

                                          
	 
      	
                                            Title:   
      Vice President

                                          
	 
      	 
      	 
      
	 
      	
                                            By:

                                          	
                                            /s/  Moy
      Chin Khan

                                          
	 
      	
                                            Name:  Moy
      Chin Khan

                                          
	 
      	
                                            Title:    Vice
      President

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      [Amendment
and Waiver Agreement – Page 2 of 2]

      
        
           

        

        
          - 8
-

          
            

          

        

        
           

        

      

       

      APPENDIX
A

      PROPOSED
SALE

       

      KGE Group
intends to sell 5,000,000 previously-issued shares of common stock of the
Company to an investor at a per share price of US$0.90.  In addition,
the Company intends to sell approximately 17,000,000 shares of newly issued
shares of common stock to certain investors at a per share price of
$1.65.  Accordingly, a total of approximately 22,000,000 shares of
common stock of the Company is intended be sold to the investors.

       

      Nasdaq
Marketplace Rules require that the Company complete and submit an additional
listing application to the Nasdaq Stock Market and receive approval from NASDAQ
before the Company may issues any new shares in the Proposed Sale.  In
addition, Nasdaq Marketplace Rule 5635 requires that, among other things, the
Company obtain shareholder approval of the issuances of securities in private
placements where (i) the issuance (together with sales by officers, directors,
or substantial shareholders), equals 20% or more of the pre-transaction
outstanding shares; and (ii) the sales price is less than the greater of book or
market value.  Because the 22,000,000 shares of common stock of the
Company intended to be sold exceeds the 20% threshold as set forth in the Nasdaq
Marketplace Rules, the Company must obtain shareholder approval, which is
subject to compliance with Section 14 of the Securities Exchange Act of 1934, as
amended.

       

      The sale
of shares is intended to occur as follows:

       

      
        
          
            
              	
                      Step
      1.

                    	 	
                      Private
      Sale of Shares by KGE Group to Investor

                    	 	
                      5.0
      million shares

                    
	 
      	 	 
      	 	 
      
	 
      	 	
                      This
      sale is intended to occur as soon as practicable after the execution of
      this Amendment and Waiver Agreement and the completion of sale transaction
      documents and required processing in connection therewith.  Upon
      completion of this step, the percentage ownerships of the Company share
      capital by KGE Group and the new investor are expected to be approximately
      49.1% and 9.4%, respectively, based on 53,256,874 shares of common stock
      outstanding.

                    	 	 
      

            

          

        

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      APPENDIX
A (cont.)

      

      
        
          
            
              	
                      Step
      2.

                    	 	
                      Private
      Placement of Company  Shares by the Company to certain
      Investors

                    	 	
                      17
      million shares

                    
	 
      	 	 
      	 	 
      
	 
      	 	
                      This
      private placement of shares is intended to occur after the Nasdaq Stock
      Market reviews and approves an additional listing application for the
      shares to be sold by the Company, and after execution of a Securities
      Purchase Agreement between the Company and the investors and after
      shareholder approval of the transaction is obtained in accordance with
      Nasdaq Marketplace Rules.  Approval from Nasdaq of the
      additional listing application for the shares is expected to take
      approximately two weeks from date of application, depending on Nasdaq
      requests for information. Shareholder approval is subject to US Federal
      Securities laws and is expected to take approximately seven weeks, which
      is subject to review and comments from the Securities and Exchange
      Commission.  Upon completion of this step, the percentage
      ownership of the Company by KGE Group is expected to be approximately
      37.2%, based on 70,256,874 shares of common stock
    outstanding.

                    	 	 
      

            

          

        

      

      
        
           

        

        
          - 10
-

          
            

          

        

        
           

        

      

      APPENDIX
B

       

      USE
OF PROCEEDS

       

      The net
proceeds from the Proposed Sale shall be used as follows:

       

      
        
          
            
              	
                      1.

                    	 	
                      Private
      Sale of Shares by KGE Group to Investor

                    	 	
                      5.0
      million shares

                    
	 
      	 	
                      Net
      proceeds from this sale of these shares shall be used to fund the
      operations of KGE Group itself, including salary and rent, or in the
      discretion of the Board of Directors and Management, in the best interests
      of KGE Group and its shareholders.

                    	 	 
      
	 
      	 	 
      	 	 
      
	
                      2.

                    	 	
                      Private
      Placement of Company Shares by the Company to the
Investosr

                    	 	
                      17  million
      shares

                    
	 
      	 	
                      Net
      proceeds from this sale of these shares (the “Company Shares”) shall be
      used solely for the following purposes and in the following
      order:

                       

                      (i)   to
      pay the interest payments of the Bonds that are outstanding and due for
      payment in accordance with the terms of the Trust Deeds; and
      (ii)  to pay all amounts owed to ABN AMRO Bank (China) Co. Ltd.,
      Shenzhen Branch or any other ABN AMRO affiliate in connection with the
      Bank Overdraft Facility in the amount of CNY33,628,983.88 and any
      outstanding interest on the facility as at the date of payment
      (collectively, the “Agreed Bondholder Payments”). Such payments shall be
      made no later than the earlier of (i) Seven (7) Business Days after the
      sale of the Company Shares and (ii) three (3) months from the date of this
      Amendment and Waiver Agreement.  Remaining net proceeds shall be
      used to fund the operations of the Company, or in the discretion of the
      Board of Directors and Management, in the best interests of the Company
      and its shareholders. Until
      the Agreed Bondholders Payments of are made by the Company after the sale
      of the Company Shares, the Company agrees that the Company will not use
      its proceeds from the sale of the Company Shares to repay or prepay any
      debt prior to its currently scheduled due date.

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