Document:

Unassociated Document

     

    
      Equity
Transfer Agreement on

      70%
Equity of Tianjin Dadi
Friendship Co. Ltd.

      

      This
Agreement is entered by and between the Transferor, the Transferee and the Related
Party of Transferor in  Beijing on the day of
_________, 2010.

    

     

    Transferor:

     

      Beijing
Fengyin Xianghe Scientific Technology Co., Ltd.

    

    Transferee:

     

    China New
Energy Investment Co.,Ltd

    Authorized
Representative: Y.K. Chong

    

    Related
Party of Transferor:

     

      Tang
Zhixiang (ID No._ 110227195610211817)

    

     (The
Transferor, the Transferee and the Related
Party of Transferor shall hereinafter be referred to individually as the
"Party" and collectively as the "Parties".)

    

    Target
Company:

     

    Tianjin
Dadi Friendship Co. Ltd., (hereinafter referred to as “Friendship Co.” or the
“Target Company”), a limited company established and existing under the laws of
China, with its registered address at E1-602, XEDA Industrial Park, Xiqing
Economic Development Area, Tianjin, with its legal representative of Tang
Zhixiang.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Whereas:

     

    
      	
              1)  

            	
              The
      Related Party of Transferor is the actual controller of (i) the
      Transferor; (ii) Target Company, Subsidiary Companies and its Related
      Companies listed in Annex I (List of Target Company, Subsidiary Companies
      and its Related Companies) and (iii) majority shareholders of Target
      Company;

            

    

     

    
      	
              2)  

            	
              The
      Transferor undertakes that on the date of the execution of this Agreement
      the structure and the proportion of shareholding of the Transferor, the
      Target Company, Subsidiary Companies and its Related Companies are as it
      shown in Annex I;

            

    

     

    
      	
              3)  

            	
              The
      Transferee agrees that after the Transferor holding 100% equity of the
      Target Company, the Transferee will purchase 70% equity of the Target
      Company from the Transferor;

            

    

     

    
      	
              4)  

            	
              Target
      Company, Subsidiary Companies and its Related Companies listed in Annex I
      intend to invest projects listed in Annex VII;
  and

            

    

     

    
      	
              5)  

            	
              The
      Transferor provides the separate and consolidated financial statements
      (including balance sheet and income statement) of Target Company,
      Subsidiary Companies and its Related Companies listed in Annex I as
      indicated in Annex VIII. Transferor and the Related Party of
      Transferor represent and agree that all financial statements contained in
      Annex VIII are accurate and
complete.

            

    

    

    Pursuant
to the Company Law of the
People's Republic of China and Contract Law of the People's
Republic of China and other applicable laws and regulations the
Transferor, the Transferee and the Related Party of Transferor, after friendly
consultations, conclude this Agreement regarding the equity transfer as
follows:

     

    1.
Transferred Equity

     

    
      	
              1.1  

            	
              The
      Transferor agrees that after and within 15 days after the execution of
      this Agreement it will sell 70% equity interest of the Target Company held
      by it to the Transferee.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              1.1  

            	
              The
      Transferee agrees to purchase the 70% equity interest of the Target
      Company from the Transferor.

            

    

     

    
      	
              1.2  

            	
              After
      the completion of registration in AIC for this equity transfer the
      Transferee will enjoy the shareholder's rights, and undertake obligations
      and responsibilities of shareholder in accordance with applicable China
      laws and the provisions of the Articles of Association of the Target
      Company.

            

    

    

    
      	
              2.  

            	
              Principles
      of Transfer of Equity

            

    

     

    
      	
              2.1  

            	
              The
      Parties agree that the respective obligations of the Transferor and the
      Transferee to effect the sale and purchase of the Transferred Equity and
      the Completion shall comply with the following
  principles:

            

    

     

    
      	
              (1)  

            	
              that
      all necessary permissions, instructions, consents, licenses, approval or
      authorization of any governmental authority, bureau, agency or other
      body required in connection with the legality, validity or enforceability
      of the sale and purchase of the Transferred Equity have been obtained or
      made;

            

    

     

    
      	
              (2)  

            	
              that
      all necessary procedures, formalities and steps and regulatory
      requirements relating to the sale and purchase of the Transferred Equity
      have been completed or complied
with;

            

    

     

    
      	
              (3)  

            	
              that
      this transfer of equity shall not result in the deprivation of operating
      right of urban gas pipeline project of the Subsidiary Companies of the
      Target Company and its Related Companies listed in Annex
  I.

            

    

     

    
      	
              2.2  

            	
              The
      Transferee may at any time in writing exempt the performance of any of the
      above principles by the Transferor, and such exempt may be made subject to
      such terms and conditions as determined by the
  Transferee.

            

    

    The
Parties agree that unless otherwise provided in this Agreement, the Transferee
shall be entitled to terminate this Agreement unilaterally without any liability
of breach of this Agreement if some or all of the principles have not been
complied with before the completion of the transfer due to the Transferor. In
the event of such termination by the Transferee, any installments of the
purchase price previously paid shall be returned to the Transferee and the
Transferee is entitled to a penalty of RMB 10,000,000.00. If the penalty can not
cover the damages or losses suffered by the Transferee hereby, the Transferor
shall compensate the shortfall of such losses of the Transferee. If the
Transferee suffers from damages or losses hereby, the Transferor shall
compensation such losses to the Transferee.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              3.  

            	
              Arrangement
      of Mutual Management Bank Account

            

    

     

    
      	
              3.1  

            	
              Both
      the Transferee and the Transferor mutually agree that the Parties will
      open a mutual managed bank account with the Beneficiary of the Transferee
      within 3 working days after the execution of this Agreement. Any interest
      arise from the money deposited in the Mutual Management Bank Account shall
      belong to the Transferee.

            

    

     

    In the
event that pursuant to the laws and regulations or the terms and conditions of
this Agreement, this Agreement shall be terminated and the Transferor was
obliged to refund partial or entire payment paid by the Transferor; then release
the mutual managed bank account

     

    
      	
              3.2  

            	
              Both
      the Transferee and the Transferor mutually agree that relevant documents
      in connection with the terms and conditions of escrow may be made,
      including Supplementary Agreement for the Escrow Terms and Conditions for
      the First Installment.

            

    

     

    
      	
              4.  

            	
              Consideration
      and Payment Schedule

            

    

     

    Both the
Transferor and the Transferee agree that the consideration of 70% equity of the
Target Company (hereinafter referred to as the "Consideration") shall be
RMB270,000,000.00 (including tax). In any cases, the amount of the Consideration
will not be adjusted. But if any party breaches this Agreement, the breaching
party shall take the corresponding liabilities of breach.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              4.1.1  

            	
              The
      Consideration shall be paid in Renminbi or equivalent US Dollars (the
      exchange rate between RMB and USD shall be the rate upon each installment
      of payment) by installments.

            

    

     

    
      	
              4.1.2  

            	
              Both
      the Transferor and the Transferee agree the value of the corresponding
      equity of the Target Company, Subsidiary Companies and its Related
      Companies listed in Annex I is included in the Consideration. After this
      acquisition, the Target Company shall achieve the shareholding structure
      listed in Annex III.

            

    

     

    
      	
              4.2  

            	
              Payment
      Schedule

            

    

     

    The
Parties agree that the Consideration shall be paid according to the following
Payment Schedule:

     

    
      	
              4.2.1  

            	
              The
      amount of the first installment is
  RMB120,000,000.00.

            

    

     

    
      	
              4.2.1.1  

            	
              Transferee
      shall make the first installment payment to the Mutual Management Bank
      Account within 5 working days after
      the execution of this Agreement.

            

    

     

    Notwithstanding
aforesaid, if the Transferee failed to pay the agreed amount to the Transferor
to the Mutual Management Bank Account before the expiration day of the first
installment payment, the Transferee will be in a 5 days grace period. After such
grace period expired, if the transferee still failed to pay the agreed amount in
accordance with this Agreement, the Transferee shall pay overdue penalties at
the amount of 0.1% of the amount payable of the first installment to the
Transferors per day. However, that in no event shall the penalty of the late
payment of first installment payment be greater than RMB10,000,000.00
Yuan.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              4.2.1.2 

            	
              The
      Parties agree that after the satisfaction of first installment payment
      release preconditions, the Transferor is entitled to transfer partial or
      entire first installment payment from the Mutual Management Bank Account
      to any bank account at its sole discretion within 15 days (including the
      15th
      day) after the execution of this Agreement. The first installment payment
      release preconditions are as
follows:.

            

    

     

    
      	
              (1)  

            	
              The
      Target Company has accomplish the equity purchase of the entire equity on
      the purpose of achieving the shareholding structure listed in Annex II and
      completed the corresponding alteration registration of AIC. In order to
      avoid ambiguity, the Parties agree that the consideration of the equity
      transfer which the Target Company purchase on the purpose of achieving the
      shareholding structure listed in Annex II shall be included in the
      Consideration of this Agreement and the Transferor shall be in charge of
      making relevant payment of such consideration of the equity transfer to
      the seller of such equity and ensure that there will not be any liability
      incurred by the Target Company and the Subsidiary Companies of the Target
      Company hereby.

            

    

     

    
      	
              (2)  

            	
              Transferor
      has transferred 70% equity of the Target Company to the Transferee and
      completed the alteration of AIC registration for the equity transfer of
      the Target Company (during which the Transferee shall provide necessary
      assistance), namely after such alteration the Transferee shall hold 70%
      equity of the Target Company. For the Board of the Target Company after
      such alteration of AIC registration 5 directors of shall be appointed by
      the Transferee and 2 shall be appointed by the Transferor. The Target
      Company has obtained the new Business License. The business scope of all
      Subsidiary Companies of Target Company shall at least include the
      operation, management and services of urban gas pipeline and the Related
      Companies of Target Company listed in Annex II shall remain the
      same.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              (3)  

            	
              The
      Target Company has achieved the shareholding structure listed in Annex
      II;

            

    

     

    
      	
              (4)  

            	
              Before
      the completion of the Transfer, Articles of Associations of the Target
      Company, subsidiaries of Target Company and subsidiaries wholly-owned,
      controlled of its subsidiaries listed in Annex II shall satisfy that: (i)
      resolutions of the shareholders’ meeting with respect to decision of
      amending the articles of the association of the company, increasing or
      decreasing the registered capital, and merge, split, dissolution or
      alteration of the company form, shall be passed by the shareholders which
      represent two-thirds of the approving votes; and (ii) the Transferor, the
      Target Company or Subsidiary Companies of the Target Company has the right
      to appoint all the directors or executive director of the Target Company,
      Subsidiary Companies of the Target Company and subsidiaries wholly-owned,
      controlled of its subsidiaries listed in Annex II. In the case when the
      Transferor transfer its equity of the Target Company partially or
      entirely, such right of director appointment shall be still be valid to
      the transferee of such equity, unless otherwise provided under this
      Agreement;

            

    

     

    
      	
              (5)  

            	
              Both
      Transferor and the Related Party of Transferor has entered into an
      agreement involving all the following contents by and between all the
      shareholders (other than the subsidiaries of Target Company, Transferee
      and Transferor) of subsidiaries controlled of Subsidiary Companies of
      Target Company listed in Annex II):

            

    

        

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              (i)

            	
              Both
      the Transferor and the Related Party of Transferor  undertakes
      that after the completion of the Transfer (A) except provided otherwise in
      the agreement, they will not take part in any day-to-day operation and
      management (including but not limited to, taking the position of director,
      supervisor, senior officer, etc.) of the Target Company,Subsidiary
      Companies of Target Company and its Related Companies listed in Annex II;
      (B) the Transferor shall have the right appoint 2 directors of the Target
      Company and the Transferee shall have the right to appoint 5 directors and
      (C) waive the first right of refusal (if any) to purchase any equity sold
      by other shareholders of any the Target Company any more. Transferor shall
      only have the rights to enjoy the dividends and vote for the resolution of
      shareholder’s meeting according to his equity
  proportion;

            

    

     

    
      	
              (6)  

            	
              Beijing
      Dadi Gas Engineering Co., Ltd (hereinafter referred to as “DADI GAS”)
      undertakes in writing that in the period that the Transferor and the
      Related Party of Transferor still holds any equity of the Target Company,
      Subsidiary Companies and its Related Companies listed in Annex I and
      within 3 years after the Transferor and the Related Party of Transferor
      does not hold such equity any more, it will not operate any business of
      city gas and gas construction without the prior written consent of the
      Transferee;

            

    

     

    
      	
              (7)  

            	
              The
      Transferor and the Target Company shall assist the Transferee to inspect
      and check the fixed assets of the Target Company, the Subsidiary Companies
      and its Related Companies listed in Annex II)(If due to
      the reasons caused by the Transferee and which results the completion of
      fixed inspection and physical check could not be completed, then it deems
      as the Transferor has fulfilled their obligation).

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              (8)  

            	
              The
      Transferor shall procure the Target Company, Subsidiary Companies of
      Target Company and subsidiaries wholly-owned, controlled of its
      subsidiaries listed in Annex II to complete to transfer following
      materials to the Transferee, including but not limited to, company stamps,
      certificates, licenses, government permits and documents and materials of
      engineering, finance, human resources and business contracts of operation,
      no matter in writing or in electronic;
and

            

    

     

    
      	
              (9)  

            	
              Completion
      of the Transfer;

            

    

     

    
      	
              (10)  

            	
              The
      Transferor and the Related Party of Transferor has caused all the
      corresponding signatory parties of the legal documents regarding to the
      projects planned of the Target Company,the
      Subsidiary Companies and its Related Companies listed in Annex VII agree
      that (i) the Transferor, the Related Party of Transferor and their
      affiliates (where applicable) is entitled to transfer all of its rights
      and liabilities set forth in the corresponding legal documents to the
      Transferee or any third party nominated by the Transferee with no
      additional consideration; and (ii) the transfer of rights and liabilities
      aforesaid shall not cause any adverse affect to its transferee on the
      performance of such legal documents. Simultaneously, any legal documents
      regarding to such rights and liabilities transfer is duly executed. In
      addition, the Transferor obtain the written undertaking from DADI GAS of
      which DADI GAS will not take part in such projects planned in any manners
      without the prior written consent from the Transferee;
  and

            

    

     

    
      	
              (11)  

            	
              All
      Obligations of all parties set forth in Supplementary Agreement for the
      Escrow Terms and Conditions for the First Installment have fully
      performance, there is no any breach for all
  parties.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    The
Transferor shall submit original certificate or documents on satisfaction of
above conditions after obtainment. After the Transferee has received all the
certificates and documents, the Transferee shall issue a written confirmation
immediately. The day on which such written confirmation is issued is the
satisfaction day of the first installment payment release preconditions.
Notwithstanding aforesaid, the Transferee shall not refuse to issue the written
confirmation unreasonably when such certificates and documents submitted by the
Transferor are true, necessary and sufficient. Above-mentioned first installment
payment release preconditions shall be satisfied or fulfilled within 15 days
after the execution of this Agreement. In the event that the Transferor failed
to satisfy all the first installment payment release preconditions prior to the
expiry of such time limit, the Transferee agrees to provide a remedy period for
the Transferor provided that the Transferor submit a written application of
which the Transferor shall state a list in writing on the completion situation
of the preconditions (including all the completed items and uncompleted items)
and the reasons of its failure to satisfy all the first installment payment
release preconditions. During such remedy
period, the Transferor need to pay 0.1% of the first payment per day as the
penalty to the Transferee until the Transferor satisfy all the first installment
payment release preconditions,but in case that
the Transferor fails to satisfy all the first installment payment release
preconditions due to the liability of the Transferee, such penalty shall not
apply. In the event the Transferor is not able to satisfy all the first
installment payment release preconditions prior the expiry of remedy period, the
Transferee is entitled to take any of the following action (except due to the
liability of the Transferee ):

     

    
      	
              i.  

            	
              to
      terminate this Agreement, have the first installment payment which has
      been paid to the Mutual Management Bank Account returned and require the
      Transferor to pay the Transferee RMB10,000,000.00Yuan as
      penalty.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
              ii.  

            	
              to
      delay the issuance of the written confirmation of the first installment
      payment release preconditions until all the items are satisfied and
      require the Transferor to pay the Transferee no less than RMB
      10,000,000.00Yuan as penalty.

            

    

     

    
      	
              iii.  

            	
              to
      be entitled to deduct the corresponding amount of the first installment
      payment according to how the first installment payment release
      preconditions are satisfied at its sole discretion. In the event that
      there are 2 or more than 2 deduction situation occurs, all the deduction
      situations will be applied.

            

    

     

    
      	
              iv.  

            	
              Notwithstanding
      aforesaid, when the Transferee exercise its right set forth in item (i) to
      (iii) above-mentioned, the Transferee is entitled to decide at its sole
      discretion to waive any of its rights partially or
    entirely.

            

    

     

    Notwithstanding
the foregoing provided, if the Transferor intends to borrow some of the first
installment in the Mutual Management Bank Account, subject to the satisfaction
Supplementary Agreement for the Escrow Terms and Conditions for the First
Installment it is entitled to use 50% of frist installment and the Transferee
shall coordinate with it. if asons)tive director he

     

    
      	
               4.2.2  

            	
              The
      amount of the second installment is RMB 130,000,000.00. After the
      satisfaction of the following payment preconditions, the Transferee shall
      make the second installment payment to the Transferor within 90 days (including the 90th
      day) after the Transferee released the first installment
      payment, provided, however, that the extension and grace period set
      forth later in this section shall
apply:

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              (1)  

            	
              In
      the case that the Subsidiary Companies of Target Company holds less than
      70% equity of any sub-afiliale companies controlled of Target Company
      listed in Annex II, the balance portion of the equity between the current
      shareholding percentage and 70% has been transferred to the Subsidiary
      Companies of Target Company from one or more than one non Subsidiary
      Companies of Target Company shareholder. Such equity transfer of the
      balance portion shall be caused successfully by the Transferor and/or the
      Related Party of Transferor. The corresponding alteration of AIC
      registration (the Transferee and the Subsidiary Companies of Target
      Company shall provide the necessary assistance during the procedure) shall
      be completed as well, namely, after the alteration of AIC registration,
      the Subsidiary Companies of Target Company holds 70% equity of such
      company. For example, the Subsidiary Companies of Target Company Zhuolu
      Dadi Gas Ltd., Co.(hereinafter
      referred to as “Zhuolu Dadi”)holds 60%
      equity of Chengde Dadi Gas Ltd., Co. (hereinafter call “Chengde Company”)
      currently. The balance portion of equity is 10% equity of Chengde Company.
      10% equity of Chengde Company has been transferred to Zhuolu Dadi from one
      or more than one non Subsidiary Companies of Target Company shareholder.
      Such equity transfer of 10% equity of Chengde Company shall be caused
      successfully by the Transferor and/or the Related Party of Transferor. The
      corresponding alteration of AIC registration  shall be completed
      as well, namely, after the alteration of AIC registration, Zhuolu Dadi
      holds 70% equity of Chengde Company. In order to avoid ambiguity, the
      Parties agree that the consideration of the equity transfer which the
      Subsidiary Companies of Target Company purchase on the purpose of
      achieving the shareholding structure listed in Annex III shall be included
      in the Consideration of this Agreement and the Transferor shall be in
      charge of making relevant payment of such consideration of the equity
      transfer to the seller of such equity and ensure that there will not be
      any liability incurred by the Target Company and the Subsidiary Companies
      of the Target Company hereby.

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              (2)  

            	
              The
      Target Company has achieved the shareholding structure listed in Annex
      III. The business scope of all the sub-afiliale companies wholly-owned,
      controlled of Target Company listed in Annex III shall remain the same.;
      and

            

    

     

    
      	
              (3)  

            	
              All
      the materials submitted from the Transferor to the Transferee on the
      Delivery of the transfer are true, accurate and sufficient and necessary
      and complete.

            

    

     

    The
Transferor shall submit original certificates or documents on satisfaction of
above conditions after obtained. After the Transferee has received all the
certificates and documents, the Transferee shall issue a written confirmation
immediately. The day on which such written confirmation is issued is the
satisfaction day of such payment precondition. Notwithstanding aforesaid, the
Transferee shall issue the written confirmation when such certificates and
documents submitted by the Transferor are true, necessary and
sufficient.  Above-mentioned payment preconditions shall be satisfied
or fulfilled within 180 days after the Transferee release the first installment
payment. In the event that the Transferor failed to satisfy all the second
installment payment preconditions prior to the expiry of such time limit and the
Transferor submit a list in writing on the completion situation of the
preconditions (including all the completed items and uncompleted items) on the
expiration day of such time limit,, the Transferee agreed to provide a remedy
period for the Transferor, the preliminary remedy period are 15 days. During
such preliminary remedy period, the Transferor does not need to pay any penalty
for its failure on satisfaction of all the second installment payment
preconditions. In the event that the Transferor failed to satisfy all the second
installment payment preconditions prior to the expiry of such preliminary remedy
period, the Transferor is entitled to submit a written application on the
extension of the remedy period of which the Transferor shall state the reasons
of its failure to satisfy all the second installment payment preconditions. The
Transferee is entitled to decide whether such reasons are reasonable or not. If
not reasonable or the Transferor does not submit such extension application, the
remedy period will be expired on the expiration day of the preliminary remedy
period; if reasonable, the Transferee may provide a 15 days extension of the
remedy period (extension remedy period) for the Transferor, The remedy period
will be expired on the expiration day of the extension remedy period. During
such extension
remedy period, the Transferor need to pay 0.1% of the second payment per day as
the penalty to the Transferee until the Transferor satisfy all the second
installment payment preconditions,but in case that
the Transferor fails to satisfy all the second installment payment release
preconditions due to the liability of the Transferee, such penalty shall not
apply. In the event the Transferor is not able to satisfy all the second
installment payment preconditions prior the expiry of remedy period, the
Transferee is entitled to take any of the following action (except due to the
liability of the Transferee ):

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	
              i.

            	
              to
      terminate this Agreement, have the first installment payment which has
      been paid to the Mutual Management Bank Account returned and require the
      Transferor to pay the Transferee RMB10,000,000.00 Yuan as
      penalty.

            

    

     

    
      	
              ii.

            	
              to
      delay the issuance of the written confirmation of the second installment
      payment release preconditions until all the items are satisfied and
      require the Transferor to pay the Transferee no less than
      RMB10,000,000.00Yuan as penalty.

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	
              iii.

            	
              to
      be entitled to deduct the corresponding amount of the second installment
      payment according to how the second installment payment release
      preconditions are satisfied at its sole discretion. In the event that
      there are 2 or more than 2 deduction situation occurs, all the deduction
      situations will be applied.

            

    

     

    
      	
              iv.

            	
              Notwithstanding
      aforesaid, when the Transferee exercise its right set forth in item (i) to
      (iii) above-mentioned, the Transferee is entitled to decide at its sole
      discretion to waive any of its rights partially or
    entirely.

            

    

     

    Notwithstanding
aforesaid, after the expiration day of the second installment payment, the
Transferor confirm that the Transferee is entitle to have a extension of 90 days
without any penalty. After such extension if the Transferee failed to pay the
agreed amount to the Transferor after such extention, the Transferee will be in
a 45 days grace period. After such grace period expired, if the transferee still
failed to pay the agreed amount in accordance with this Agreement, the
Transferee shall pay overdue penalties at the amount of 0.1% of the amount
payable of the second installment to the Transferors per day. However, that in
no event shall the penalty of the late payment of second installment payment be
greater than RMB 10,000,000.00Yuan.

     

    
      	
              4.2.3  

            	
              The
      amount of the third installment is RMB20,000,000.00. For the purpose of
      smoothly transition and stable operating of the Target Company, the third
      installment shall be considered as the reserved payment of this
      transaction and will be paid to the Transferor within 180 days (including
      the 180th
      day) after the Transferee paid the second installment payment under the
      condition that the Transferor are free of any liabilities of breach or
      compensation.

            

    

     

    
      	
              4.2.4  

            	
              Notwithstanding
      aforesaid, both the Transferor and the Transferee agreed
    that:

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	
                   (i)

            	
              Notwithstanding
      aforesaid, if the Transferee failed to pay the agreed amount to the
      Transferor in the mutual management bank account before the expiration day
      of the third installment payment, the Transferee will be in a 45 days
      grace period. After such grace period expired, if the transferee still
      failed to pay the agreed amount in accordance with this Agreement, the
      Transferee shall pay overdue penalties at the amount of 0.1% of the amount
      payable of the third installment to the Transferors per day. However, that
      in no event shall the penalty of the late payment of third installment
      payment be greater than RMB 1,000,000.00
Yuan.

            

    

     

    
      	
                    (ii)

            	
              The
      third installment payment shall be paid by the Transferee to a mutual
      management bank account opened under the name of the Transferor. Within 3
      years after the completion of the Transfer, in the event that the
      Transferor breaches any provisions of this Agreement, the Transferee is
      entitled to require to transfer the penalty in such mutual management bank
      account to the bank account appointed by the Transferee. If it is not
      sufficient, the Transferor shall pay the outstanding penalty to the
      Transferee immediately. In the event that the Transferor does not breach
      this Agreement or has already completed the remedy (including but not
      limited to payment of the penalty of breaching) of its breach of this
      Agreement, the Transferee shall withdraw its management of such mutual
      management bank account after the expiration of such period of 3 years. If
      this provision is conflict with PRC rules and regulations,PRC rules
      and regulations shall prevail.

            

    

     

    
      	
              4.3  

            	
              Notwithstanding
      the provisions on the payment period of Article 4.2.1 and Article 4.2.2,
      in the event there is less than 10 working days between a satisfaction day
      of payment preconditions and the corresponding expiration day of payment,
      the 10the working day after such satisfaction day of payment shall be
      deemed as the expiration day of such
payment.

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	
              4.4  

            	
              The
      Transferor agree that when the Transferee makes payment to the Transferor,
      the Transferee is entitled to deduct any of the remaining payables
      confirmed by the parties (if any) owed by the Transferor on its own
      discretion without any prior consent of the
  Transferor.

            

    

     

    
      	
              4.5  

            	
              The
      Transferee agrees that, except as otherwise provided in this Agreement,
      when making the payment of the consideration to the Transferor, the
      Transferee will make the payment to the bank account instructed by the
      Transferor. The Transferor agrees that, such payment following the
      Transferor’s payment instruction shall be considered as the payment to the
      Transferor.

            

    

    

    
      	
              5.  

            	
              Business
      Operation before the Completion

            

    

     

    
      	
              5.1  

            	
              Both
      the Transferor and the Related Party of Transferor undertakes jointly and
      severally that theTarget Company, Subsidiary Companies and its Related
      Companies listed in Annex I and the shareholder’s meeting and the board of
      directors meeting of each company will procure that the business of each
      company respectively will be operated in a normal and prudent basis and in
      the ordinary course of day-to-day operations and, will not do or omit to
      do (or allow to be done) or to be omitted to be done any act or thing (in
      either case whether or not in the ordinary course of day-to-day
      operations) which is material and in particular (but without limiting the
      generality of the foregoing) the Transferor will procure that the Target
      Company, Subsidiary Companies and its Related Companies listed in Annex I
      shall NOT prior to Completion, without the prior written consent of the
      Transferee:

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	
              (1)  

            	
              issue
      or agree to issue any shares or loan capitals, or; offer or agree to offer
      or withdraw any option of purchase, or; amend any existing terms
      concerning the acquisition or subscription of the option or right of any
      shares or loan capital;

            

    

     

    
      	
              (2)  

            	
              make
      a loan or raise money;

            

    

     

    
      	
              (3)  

            	
              terminate
      any Agreements, arrangements or Agreements of great value, or; waive any
      rights of material value;

            

    

     

    
      	
              (4)  

            	
              create
      or permit to arise any mortgage, charge, lien, pledge, other form of
      security or encumbrance of equity of whatsoever nature, whether similar to
      the foregoing or not, on or in respect of any part of its undertaking,
      property or assets other than liens arising by operation of law in amounts
      which are not material;

            

    

     

    
      	
              (5)  

            	
              give
      any guarantee, indemnity, surety or security to any third
      party;

            

    

     

    
      	
              (6)  

            	
              dispose
      or agree to dispose of or acquire or agree to acquire any material
      asset;

            

    

     

    
      	
              (7)  

            	
              dispose
      of the ownership, possession, custody or control of any corporate or other
      books or records;

            

    

     

    
      	
              (8)  

            	
              other
      than in the ordinary and usual course of its business, compromise, settle,
      release, discharge or compound any material civil, criminal, arbitration
      or other proceedings or any material liability, claim, action, demand or
      dispute or waive any right in relation to any of the
      foregoing;

            

    

     

    
      	
              (9)  

            	
              other
      than in the ordinary course of its business, release compromise or write
      off any material amount recorded in the books of account of the company as
      owing by any debtors of the
company;

            

    

     

    
      	
              (10)  

            	
              let
      or agree to let the company to transfer the possession or ownership of the
      whole or any part of the Property, or take on lease or assume possession
      of any real property;

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	
              (11)  

            	
              terminate
      any or allow to lapse any material insurance policy now in effect or
      defaulting under any provision
thereof;

            

    

     

    
      	
              (12)  

            	
              Cause
      any employees to terminate their
employment;

            

    

     

    
      	
              (13)  

            	
              Materially
      change the terms of any existing employment
  arrangements;

            

    

     

    
      	
              (14)  

            	
              Make
      any payments to the shareholders;
or

            

    

     

    
      	
              (15)  

            	
              Conduct
      any behaviors which will cause any change or effect which, individually or
      in the aggregate with all other such changes and effects, is materially
      adverse to the business or to the condition (financial or otherwise),
      assets, operations, financial condition, results of operations or
      prospects of the company, taken as a whole, or that would materially and
      adversely effect the ability of the company to conduct its business as
      regularly conducted.

            

    

    

    
      	
              6.

            	
              Matters
      prior to Completion

            

    

     

    
      	
              6.1

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      confirms that, in order to enhance the work efficiency of the transaction,
      within 7 days after the execution of this Agreement, the Parties will
      designate personnel to form a transfer preparing working team
      respectively. The Parties shall coordinate to cause the working team
      perform its duty. The main duty of the working team includes: (1)
      coordinating and assisting the Transferee to complete the Delivery of the
      transfer; (2) ensuring the normal day-to-day operation of Target Company,
      Subsidiary Companies and its Related Companies listed in Annex II before
      the delivery of transfer; (3) any other responsibilities agreed by the
      Parties.

            

    

     

    
      	
              6.2

            	
              To
      ensure the steady handover, the Parties mutually agree to make the
      corresponding arrangement for the work during the period from the
      execution of this Agreement to
Completion.

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	
              6.3

            	
              The
      transfer preparing working team shall provide a list for the documents for
      the Transfer to the Target Company, Subsidiary Companies and its Related
      Companies listed in Annex II and prepare all documents for the Transfer
      mentioned in Section 7.4.

            

    

    

    
      	
              7.

            	
              Completion
      of the Transfer

            

    

     

    
      	
              7.1

            	
              The
      Parties agree that after all preparation work for the Transfer has been
      set forth in Section 6.3 of this Agreement has been completed they will
      establish a “transfer team” ("Transfer Team") jointly to deliver the
      Target Company (including Target Company, Subsidiary Companies and its
      Related Companies listed in Annex II) within 3 working days. The day when
      Transfer Team is established is the Commencement Day of
      Handover.

            

    

     

    
      	
              7.2

            	
              The
      Transferor shall prepare a list of transfer for the Transfer Team. The
      list shall show all the assets, corporate books required by the law,
      account books, documents, agreements, and contracts and so on of Target
      Company, Subsidiary Companies and its Related Companies listed in Annex
      II.

            

    

     

    
      	
              7.3

            	
              If
      the Transferor provide reports or data of the Target Company, Subsidiary
      Companies and its Related Companies listed in Annex II which are
      materially different from actual facts, the Transferor shall be considered
      as in breach of this Agreement, the Transferee is entitled to terminate
      this Agreement (whereupon Transferor will be entitled to a refund of the
      purchase price paid by the Transferor) and require the Transferor to
      compensate relevant damages and losses. The Transferee is entitled to
      decide to waive such rights partially or entirely at its sole
      discretion.

            

    

     

    
      	
              7.4

            	
              To
      facilitate the Completion of the Transfer, the Transferor shall submit the
      following documents to the
Transferee:

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	
              (1)  

            	
              Permits
      and approvals in writing for the alteration registration of equity
      transfer of the Target Company, Subsidiary Companies and its Related
      Companies listed in Annex II (if any) from Committees of Foreign Trade and
      Economic Cooperation and AIC;

            

    

     

    
      	
              (2)  

            	
              Certificates
      of ownership of the Transferred Equity (including register of shareholders
      of the Target Company, Subsidiary Companies and its Related Companies
      listed in Annex II);

            

    

     

    
      	
              (3)  

            	
              Certificates
      or documents which proves that Subsidiary Companies of Target Company and
      its Related Companies of Target Company listed in Annex II have legally
      and validly owned the operation right of gas pipeline, the qualification
      of gas operation and the charging right of gas. The certificates or
      documents include but not limited to the agreement of operation right of
      gas pipeline entered into by and between the local government or authority
      of the local government, administrative permit of the qualification of gas
      enterprise, certificate of gas
charging.

            

    

     

    
      	
              (4)  

            	
              The
      true, necessary and sufficient certificates or documents which proves that
      the Transferor has transferred all trademark, patent, know-how and other
      intangible asset right (if any) which is owned by third party but
      currently using by the Target Company, Subsidiary Companies and its
      Related Companies listed in Annex II from the owner to the Target
      Company.

            

    

     

    
      	
              (5)  

            	
              Letters
      of resignation from all the current directors, supervisors of the Target
      Company,Subsidiary
      Companies of Target Company and sub-afiliale companies wholly-owned,
      controlled of Target Company listed in Annex II, in which confirm that
      none of them have involved corresponding Target Company or Subsidiary
      Companies of Target Company and sub-afiliale companies wholly-owned,
      controlled of Target Company listed in Annex II respectively in any claims
      (no matter on the basis of the compensation for resignation or any other
      reasons). The resignation shall be effective upon the delivery
      day;

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	
              (6)  

            	
              Confirmation
      letters of senior management of the Target Company, Subsidiary
      Companies of Target Company and sub-afiliale companies wholly-owned,
      controlled of Target Company listed in Annex II to confirm that none of
      the them have claims against the corresponding Target Company and
      subsidiary companies wholly-owned, controlled of Target Company listed
      in  Annex II respectively (no matter on the basis of the
      compensation for resignation or any other
  reasons);

            

    

     

    
      	
              (7)  

            	
              Certificates
      that prove property right alteration registration procedures concerning
      the selling and purchasing of Transferred Equity have been duly
      completed;

            

    

     

    
      	
              (8)  

            	
              Certificates
      that prove the authorization orders of existing bank accounts of all the
      Target Company, Subsidiary Companies of Target Company and sub-afiliale
      companies wholly-owned, controlled of Target Company listed in Annex II
      have been rendered void and new authorization orders have been issued to
      personnel appointed by the
Transferee;

            

    

     

    
      	
              (9)  

            	
              Certificates
      of ownership of the assets of all the Target Company, Subsidiary Companies
      of Target Company and sub-afiliale companies wholly-owned, controlled of
      Target Company listed in Annex II;
and

            

    

     

    
      	
              (10)  

            	
              Certificates
      issued by the banks of the Target Company, Subsidiary Companies of Target
      Company and sub-afiliale companies wholly-owned, controlled of Target
      Company listed in Annex II stating the amount of the debit or credit of
      such accounts at close of business on the day of Completion of the
      Transfer.

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	
              (11)  

            	
              In
      the circumstance that the Target Company, Subsidiary Companies and its
      Related Companies listed in Annex II do not have any instance where the
      situations set forth in item (1) - (10) are not applicable, the Transferor
      shall make statements as to the non-applicability of the item and shall
      guarantee in writing, and furthermore the Transferor shall undertake if
      there is any untrue and inaccurate in statement which cause the Transferee
      suffer damages hereof that the Transferor shall assume the responsibility
      of compensation.

            

    

     

    
      	
              (12)  

            	
              Any
      other document or approval necessary to the completion fo the transfer of
      equity to the Transferee.

            

    

     

    
      	
              7.5

            	
              The
      Parties agree that the transfer shall be deemed to be completed on the day
      when the alteration registration of this Transfer in AIC and also the
      Transferee confirms that all works of delivery has completed and the
      Transferor have fulfilled its obligations under Section 7.4 and issues a
      written confirmation. Such day is the satisfaction day of Completion of
      the Transfer. Notwithstanding aforesaid, the Transferee shall not refuse
      to issue the written confirmation unreasonably when such certificates and
      documents submitted by the Transferor are true, necessary and
      sufficient.

            

    

     

    
      	
              7.6

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      undertake and warrant that the net assets value of each Target Company,
      Subsidiary Companies and its Related Companies of the satisfaction day of
      Completion of the Transfer shall not be lower than its net assets value of
      December 31, 2009 which was confirmed by the Transferee. Otherwise, the
      Transferor shall submit a explanation on why the net assets value drops in
      writing. The Transferee is entitled to decide whether such explanation
      from the Transferor is reasonable or not at its sole discretion. If the
      Transferee decides that such explanation is not reasonable, the Transferee
      is entitled to deduct the Consideration
  accordingly.

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	
              7.7

            	
              Beijing
      Century Dadi Transportation Ltd., Co., one of the sub-afiliale company of
      the Target Company will invest with the proportion of 51% and Beijing
      Fuhua Gas company. Company will invest with the proportion of 49% to
      establish Beijing Fuhua Energy Logistics (hereinafter referred to as “new
      company”). The Parties reach the following agreement on the net profit
      allocation of such new company which will be obtained by Beijing Century
      Dadi Transportation Ltd., Co. (based on the figures provided in the annual
      statement submitted to the tax bureau by such new
  company):

            

    

     

    
      	 
      	
              7.7.1

            	
              After
      the execution of this Agreement, the Transferee shall cause Beijing
      Century Dadi Transportation Ltd., Co. to enter into the consultation
      service agreement with the Related Party of Transferor regarding to such
      matters, before which neither the Transferor nor the Related Party of the
      Transferor is allowed to cause Beijing Century Dadi Transportation Ltd.,
      Co. reach any agreement orally or written regarding the aforesaid
      matters.

            

    

     

    
      	 
      	
              7.7.2

            	
              50%
      net profit obtained by Beijing Century Dadi Transportation Ltd., Co. which
      arises from the new business of such new company and which satisfies all
      the following conditions of such new company shall be paid to the Related
      Party of Transferor by Beijing Century Dadi Transportation Ltd., Co. as
      the consultation service fee:

            

    

     

    
      	
              (1)  

            	
              the
      net profit arise from the new business contract by and between such new
      company and the new clients of Beijing Century Dadi Transportation Ltd.,
      Co. other than its old clients before the Completion
  Day;

            

    

     

    
      	
              (2)  

            	
              the
      net profit arises within 3 years commence from the earlier date of the
      establishment day of such new company and the day when the Transferee owns
      70% equity of the Target Company and completes the alteration of AIC
      registration;

            

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	
              (3)  

            	
              the
      Articles of Association of such new company provided that Beijing Century
      Dadi Transportation Ltd., Co. has the right to appoint the general manager
      and the financial controller; and

            

    

     

    
      	
              (4)  

            	
              every
      general manager and financial controller of such new company shall be the
      person accepted by the Transferee.

            

    

     

    
      	
              7.8

            	
              Subject
      to Section 8.2.10, after Completion of the Transfer, the Target Company
      will succeed its claims and debts before Completion of the Transfer and it
      shall bear the liabilities for its debts with all its property. The
      shareholder shall be liable for the company to the extent of the capital
      contributions it has paid.

            

    

    

    
      	
              8.

            	
              Undertakings
      and Warranties

            

    

     

    
      	
              8.1

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      undertake and warrant that on the execution day of this
      Agreement:

            

    

     

    
      	
              8.1.1

            	
              The
      Transferor shall legally own 100% of the equity of the Target Company.
      Should any third Party claim any ownership or other interest in the
      aforesaid equity, the Transferor shall assume full responsibility and
      shall be liable to compensate the Transferee for any loss incurred
      hereof.

            

    

     

    
      	
              8.1.2

            	
              Upon
      execution by the Parties, this Agreement will be binding upon the
      Transferor and the Related Party of the
  Transferor.

            

    

     

    
      	
              8.1.3

            	
              The
      Transferor and the Related Party of the Transferor will negotiate with the
      Transferee on matters concerning equity transfer not mentioned herein in
      accordance with PRC laws and regulations and relevant
      policies.

            

    

     

    
      	
              8.1.4

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      acknowledges that the Transferee is entering into this Agreement in
      reliance upon the accuracy of each of the
  Warranties.

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	
              8.1.5

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      undertakes that upon the execution of the Agreement, it will terminate any
      negotiation in connection with the equity transfer of the Target Company
      with any third Party except the Transferee and it will not carry out new
      negotiations in connection with the equity transfer of the Target Company
      with any third Party except the
Transferee.

            

    

     

    
      	
              8.1.6

            	
              The
      above-mentioned undertakings and warranties are made as of the execution
      day of the Agreement and shall survive after the Completion Day of the
      Agreement.

            

    

     

    
      	
              8.2

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      undertake and warrant that:

            

    

     

    8.2.1

          Zhuolu
Dadi has set up a wholly-owned enterprise subsidiary – Zhuolu Dadi Municipal
Engineering Construction Technology Service Ltd. Co.. Simultaneously, Zhuolu
Dadi Municipal Engineering Construction Technology Service Ltd. Co. satisfies
all the following conditions:

     

    
      	 
      	
              8.2.1.1

            	
                 Before
      October 15,2010 , owns all the receivable and payables, operation
      contracts and assets (including but not limited fixed assets) which are
      (A) booked in the financial statement upon December 31, 2009 confirmed by
      the Transferee of Shijiazhuang Branch of Beijing Dadi Gas Engineering Co.,
      Ltd., Yanqing Branch of Beijing Dadi Gas Engineering Co., Ltd., Baigou
      Branch of Beijing Dadi Gas Engineering Co., Ltd., Xian County Branch of
      Beijing Dadi Gas Engineering Co., Ltd., Huahua Port Branch of Beijing Dadi
      Gas Engineering Co., Ltd., Zhuolu Branch of Beijing Dadi Gas Engineering
      Co., Ltd. and Chengde Branch of Beijing Dadi Gas Engineering Co., Ltd..;
      and (B) occurred during the period from January 1, 2010 to the
      satisfaction day of Completion of the Transfer, instead of such branches
      respectively; and

            

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              8.2.1.2

            	
              Apart
      from the credits and debts, operation contracts and assets (including but
      not limited fixed assets) set forth in item 8.1.2.2 aforesaid, does not
      own any other debts or potential
debts;

            

    

     

    
      	
              8.2.2

            	
              The
      Transferred Equity shall not subject to any restriction under any laws and
      agreements beyond the ones stipulated expressly in this Agreement. Should
      any third Party produce effective evidence that the transfer by the
      Transferor is subject to any restriction under any laws and agreements,
      the Transferor shall assume full responsibility and shall be liable to
      compensate the Transferee for any loss incurred
  hereof.

            

    

     

    
      	
              8.2.3

            	
              Upon
      the performance of this Agreement, the Transferred Equity purchased by the
      Transferee and its subsidiary rights and interests or those to be
      generated from the equity are free of any rights and interests of any
      third Party.

            

    

     

    
      	
              8.2.4

            	
              Target
      Company, Subsidiary Companies and its Related Companies listed in Annex I
      are established and legally existing under the laws of
    China.

            

    

     

    
      	
              8.2.5

            	
              Target
      Company, Subsidiary Companies and its Related Companies listed in Annex I
      own and have acquired all the effective authorization letters, licenses,
      approvals and permits to manage existing assets and carry out all the
      business operations (specified in Annex IV "The production and operation
      information of Target Company, Subsidiary Companies and its Related
      Companies"). The above-mentioned authorization letters, licenses,
      approvals and permits have been registered and recorded in relevant
      authorities in accordance with applicable laws and regulations. The
      Transferor shall explain for any exceptional case (if has) in advance and
      ensure to settle such case.

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    
      	
              8.2.6

            	
              Subsidiary
      Companies of Target Company and its Related Companies listed in Annex I
      have legally and validly owned the operation right of gas pipeline, the
      qualification of gas operation and the charging right of gas. The
      certificates or documents include but not limited to the agreement of
      operation right of gas pipeline entered into by and between the local
      government or authority of the local government, administrative permit of
      the qualification of gas enterprise, certificate of gas charging. The
      Transferor shall explain for any exceptional case (if has) in advance and
      ensure to settle such case.

            

    

     

    
      	
              8.2.7

            	
              Subsidiary
      Companies of Target Company and its Related Companies listed in Annex I
      have completed the corresponding comprehensive acceptance inspection for
      the vaporizing station and completed pipeline (including but not limited
      to examination and filing procedures of Construction Bureau, Quality
      Supervision Bureau, Environmental Protection Bureau and Security
      Supervision Bureau) and obtain the acceptance inspection report for
      relevant authorities. The Transferor shall explain for any exceptional
      case (if has) in advance and ensure to settle such
  case;

            

    

     

    
      	
              8.2.8

            	
              Except
      disclosure to the Transferee in writing, the assets of the Target Company,
      Subsidiary Companies and its Related Companies listed in Annex I are free
      of any guarantees or any right of third Party or any other limitations
      that might have adverse affect to the execution of rights concerning the
      above-mentioned assets or interests values. As of the execution day of the
      Agreement, nobody has executed or claimed to execute any rights that might
      have significantly adverse affect the conditions of the transferred
      assets, or raised any disputes directly or indirectly involving the
      transferred assets.

            

    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	
              8.2.9

            	
              Except
      disclosure to the Transferee in writing, there exists no litigation,
      arbitration or administrative procedures involving any relevant
      enterprises or its Target Company, Subsidiary Companies and its Related
      Companies listed in Annex I.

            

    

     

    
      	
              8.2.10

            	
              Except
      explicit disclosure in Annex VI   Obligations Transfer
      List, the assets of the Target Company, Subsidiary Companies and its
      Related Companies listed in Annex I are free of any other loans to be paid
      or debts of any forms. Contingent liabilities or other liabilities of the
      Target Company, Subsidiary Companies and its Related Companies listed in
      Annex II before the completion which the Transferor HAS not disclosed in
      Annex VI (Obligations transfer list) of this Agreement shall be assumed by
      the Transferor and the Related Party of Transferor jointly and severally.
      If the corresponding Target Company, Subsidiary Companies and its Related
      Companies assumes or pays such liabilities in advance, the Transferor
      shall reinburse all the payments to the corresponding Target Company,
      Subsidiary Companies and its Related Companies within 5 working days after
      the occurrence of the payment.Further more, all intercompany accounts
      payable among or between the Target Company, Subsidiary Companies and its
      sub-afiliale wholly-owned, controlled listed in Annex II and the
      affiliates of the Transferor and Related Party of Transferor were incurred
      in the ordinary course of each respective subsidiary’s business with the
      exception of those listed in Annex VI   Obligations
      Transfer List which shall be paid by the
  Transferor.

            

    

     

    
      	
              8.2.11

            	
              There
      is no written notice, nor is the Transferor or the Related Party fo
      Transferor aware of the treat of any notice from creditors that will cause
      a mandatory disposal of assets of the Target Company, Subsidiary Companies
      and its Related Companies listed in Annex
I.

            

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
      	
              8.2.12

            	
              as
      far as the Transferor’s knowledge (refer to the Transferor knows, or
      should know from making a diligent examination), no material adverse
      affect occurs or might occur on the basis of reasonable judgment to the
      existing business, finance or operation on the Target Company, Subsidiary
      Companies and its Related Companies listed in Annex
  I.

            

    

     

    
      	
              8.2.13

            	
              The
      Assets Confirmation List (specified in Annex V) of the Target Company,
      Subsidiary Companies and its Related Companies listed in Annex I provided
      by Transferor to Transferee is true, accurate and
  complete.

            

    

     

    
      	
              8.2.14

            	
              On
      the day of December 31, 2009,the Target Company, Subsidiary Companies and
      its Related Companies listed in Annex I have effective and tradable
      ownership for all the fixed assets stipulated in Assets Confirmation List,
      including but not limited to all the machines, constructions, on-going
      projects, gas pipeline, land and other fixed and current assets. Moreover,
      the Target Company will still have effective and tradable ownership in the
      above-mentioned assets and all the acquired assets upon the date of the
      Completion of the Transfer.

            

    

     

    
      	
              8.2.15

            	
              Major
      assets in operation of the Target Company, Subsidiary Companies and its
      Related Companies listed in Annex I shall be in good condition and comply
      with normal standards of gas industry after periodical and proper
      maintenance.

            

    

     

    
      	
              8.2.16

            	
              The
      operations (including but not limited to the operation of business
      involved in the business scope, financial, taxation, environment
      protection, labor and human resources, security manufaction, etc )of the
      Target Company, Subsidiary Companies and its Related Companies listed in
      Annex I have never gone against rules and regulations of China , never
      received any written notice from relevant management or public service
      department that indicates authorizations, licenses, approvals and permits
      awarded to the Target Company before have been revoked due to its
      delinquent behaviors and the revocation of the above-mentioned documents,
      compliance with relevant regulations or remedial measures adopted have
      made material adverse affects to the business operation of the Target
      Company, Subsidiary Companies and its Related Companies. Before the
      satisfaction day of Completion of the Transfer, none of the Target
      Company, Subsidiary Companies and its Related Companies listed in Annex II
      has any disputes or infringement of the legal interest of their employees
      respectively.

            

    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
      	
              8.2.17

            	
              All
      the employees who has the employment relationship with the Target Company,
      Subsidiary Companies and its Related Companies listed in Annex II have no
      dispute or claim against the corresponding Target Company, Subsidiary
      Companies and its Related Companies listed in  Annex II
      respectively (no matter on the basis of whatever reasons),otherwise
      the Transferor shall assume full responsibility and shall be liable to
      compensate the Transferee for any loss incurred
  hereof;

            

    

     

    
      	
              8.2.18

            	
              The
      Obligations Transfer List (please refer to Annex VI) of the Target
      Company, Subsidiary Companies and its Related Companies listed in Annex I
      provided by Transferor to Transferee is true, accurate and
      complete.

            

    

     

    
      	
              8.2.19

            	
              Before
      the delivery day, all the debts owed by the Target Company, Subsidiary
      Companies and its Related Companies listed in Annex I have been shown in
      the Debt Transfer List (specified in Annex
VI).

            

    

     

    
      	
              8.2.20

            	
              Except
      for debts shown in the Debt Transfer List (please refer to Annex VI),
      there is no other debt owed by the Target Company, Subsidiary Companies
      and its Related Companies listed in Annex I before the Date of
      Completion.

            

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      	
              8.2.21

            	
              If
      the Transferee has reasonable grounds to believe that a breach of any of
      the Warranties has occurred then the Transferor and the Related Party of
      the Transferor shall ensure that for a period of three (3) years after the
      date of Completion the Transferee and its advisers and representatives
      shall be given all facilities which they may reasonably request and in
      particular shall allow them full access to all accounting and other
      records of the Transferor in order that they might ascertain whether a
      breach of the Warranties has
occurred.

            

    

     

    
      	
              8.2.22

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      undertakes that all the shareholders of Target Company, Subsidiary
      Companies and its Related Companies listed in Annex I other than
      Transferor or the Target Company or Subsidiary Companies of Target Company
      (hereinafter referred to as "Non-Transferor Shareholders") shall
      completely cooperate with Transferor and obey the instructions of
      Transferor on the matters of this transaction (including but not limited
      to, waiver of right of first refusal, etc.), do not hold any substantive
      rights to control any Target Company and Subsidiary Companies and
      sub-afiliale companies controlled of Target Company; to control or dispose
      of any assets or take action on behalf of any Target Company and
      Subsidiary Companies of Target Company and its sub-afiliale companies
      controlled; or to acquire a greater interest in any Target Company ,
      Subsidiary Companies of Target Company and its sub-afiliale companies
      controlled with more preferred condition than Transferee. Further more;
      Non-Transferor Shareholders shall not cause any obstacles to the
      transaction and the transfer of equity will not trigger any additional
      rights for Non-Transferor shareholders that they do not currently
      possess.;

            

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    
      	
              8.2.23

            	
              The
      above-mentioned undertakings and warranties are made as of the Completion
      Day of the Transfer and shall survive after the Completion Day of the
      Transfer.

            

    

     

    
      	
              8.3

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      undertake and warrant that after the completion of the
      Transfer:

            

    

     

    
      	
              8.3.1

            	
              The
      books and records and personal with the knowledge necessary to complete
      the audit of theTarget Company, Subsidiary Companies and its Related
      Companies listed in Annex II which audit is under US GAAP, are currently
      available to the Transferee and such materials and information shall
      remain available until the completion of the
  audit;

            

    

     

    
      	
              8.3.2

            	
              The
      Transferor and the Related Party of Transferor shall endeavor to give
      their reasonable efforts to assist the Transferee and Subsidiary Companies
      of the Target Company to cause the shareholders other than the Subsidiary
      Companies of the Target Company of the sub-afiliale companies controlled
      of Target Company listed in Annex II to execute the template of joint
      venture agreement provided by the
Transferee.

            

    

     

    
      	
              8.3.3

            	
              The
      Transferor and Related Party of the Transferor shall cause DADI GAS to
      cancel the registration of all the branches of DADI GAS mentioned in
      Section 8.2.1.1 immediately upon receiving the writing notice of request
      for such cancellation.

            

    

     

    
      	
              8.3.4

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      undertakes that during the operation term of the Target Company and
      subsidiary companies wholly-owned, controlled, equity affiliates of Target
      Company, all the brand name which is currently using by the Target
      Company, Subsidiary Companies and its Related Companies listed in Annex I
      shall be continuously used for free until the company cancels its
      registration in AIC.

            

    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    
      	
              8.3.5

            	
              Both
      the Transferor and the Related Party of Transferor jointly and severally
      undertakes, after the completion of the Transfer of equity, in the period
      that the Transferor still holds any equity of the Target Company,
      Subsidiary Companies and its Related Companies listed in Annex I and
      within 3 years after the Transferor does not hold such equity any more,
      the Transferor, the Related Party of the Transferor and the companies
      controlled by them shall NOT conduct the business of urban gas and gas
      construction, or hold any post in any company conducting the business of
      urban gas and gas construction, or take any measures to affect any
      potential projects of Target Company, Subsidiary Companies and its Related
      Companies (including but not limited to any projects planned listed in
      Annex VII) unless otherwise provided under this
  Agreement.

            

    

     

    
      	8.3.6	
              Without
      the prior written consent of the Transferee, neither the Transferor nor
      the Related Party of Transferor or their affiliates shall not hire any
      employee who has the employment relationship with any of the Target
      Company, Subsidiary Companies and its Related Companies listed in Annex I
      on the execution day of this
Agreement.

            

    

     

    
      	
              8.4

            	
              With
      regard to companies related the exceptional case which the Transferor
      point out subject to Section 8.2.7, the Transferor and Related Party of
      the Transferor undertakes that prior to the second installment they will
      make their best effort to assist such companies to obtain all necessary
      qualifications and certifications for the Subsidiary Companies of Target
      Company and its Related Companies conducting business in their
      locality. However, for Chengde Dadi Gas Ltd., Co. and Baigou Dadi Gas Ltd.
      Co. the Transferor may remedy the entire certificates within a certain
      period with the prior consent of the Transferee. If the Transferor and
      Related Party of the Transferor refuse to perform such assistant
      obligation, they will assume the liability set forth in Section
      9.7.

            

    

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    
      	
              8.5

            	
              The
      Transferee undertakes and warrants
that:

            

    

     

    
      	
              8.5.1

            	
              The
      Transferee is a legal entity established and legally existing under the
      laws of P.R.C..

            

    

     

    
      	
              8.5.2

            	
              The
      Transferee will negotiate with the Transferor on matters concerning equity
      transfer not mentioned herein in accordance with PRC laws and regulations
      and relevant policies.

            

    

     

    
      	
              8.5.3

            	
              The
      Transferee shall be responsible for the above mentioned undertakings and
      warranties. If the Transferor have fulfilled its obligations under the
      Agreement, the Transferee shall also bear relevant obligations and pay
      Consideration to the Transferor as stipulated in this
      Agreement.

            

    

     

    
      	
              8.5.4

            	
              The
      Transferee undertakes that the Transferee may consider offering, but shall
      have no obligation to offer the Related Party of the Transferor a proper
      position in Transferee upon the request of Related Party of Transferor.
      And for purpose successful delivery and smoothly transition the Transferee
      may consider offering the Senior Management of the Target Company , but
      shall have no obligation to offer, a proper position in
      Transferee.

            

    

     

    
      	
              9.

            	
              Liability
      for breach of the Agreement

            

    

     

    
      	
              9.1

            	
              In
      the event that there is any substantial omission, inaccuracy or
      misrepresentation in the documents or data submitted by the Transferor,
      the Agreement may be terminated by the Transferee. The Transferor shall
      take the liabilities of breaching and indemnify the Transferee for the
      damages for the breach thereof.

            

    

     

    
      	
              9.2

            	
              The
      Parties mutually agree that, unless otherwise provided under this
      Agreement, if a Party is in material breach of this Agreement ("breaching
      Party"), then the other Party (“observant Party”) has the right to
      terminate this Agreement according to the Contract Law of People's
      Republic of China and applicable judicatory interpretations and claims
      damages arising from the breach.

            

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    
      	
              9.3

            	
              If
      the Transferor makes explanations for any exceptional case for
      undertakings and warranties in Section 8.2.5, Section 8.2.7, the
      Transferor shall settle such cases within the time limit approved by the
      Transferee. If failed to do so, the Transferee is entitle to choose any of
      following measures:

            

    

     

    
      	 
      	
              9.3.1

            	
              terminate
      this Agreement and require the Transferor to pay the Transferee
      RMB10,000,000.00 Yuan as penalty.

            

    

     

    
      	 
      	
              9.3.2

            	
              deduct
      no less than RMB10,000,000.00 Yuan from payables of the
      Transferee.

            

    

     

    
      	
              9.4

            	
              The
      Parties confirm simultaneously that, if a Party is in breach of
      obligations with regard to the escrow terms and conditions (including but
      not limited to the escrow terms and conditions in this Agreement and any
      other agreement the parties agreed in connection with the escrow terms and
      conditions), the beaching party shall assume responsibility of breach in
      accordance with Supplementary Agreement for the Escrow Terms and
      Conditions for the First
Installment.

            

    

     

    
      	
              9.5

            	
              The
      Parties confirm simultaneously that, unless otherwise provided in this
      Agreement, if a Party is in breach of their undertakings, warranties and
      facts stated in the Section 8 under the Agreement,the
      observant Party has the right to terminate this Agreement and claim
      damages arising from the breach.

            

    

     

    
      	
              9.6

            	
              After
      Completion of the Transfer, the Transferor shall take positive measures to
      solve all disputes or debts caused by the operation of the Target Company
      before the Date of Completion, or unforeseeable disputes before the Date
      of Delivery. The Transferor shall compensate for the direct or indirect
      damages rising thereof.

            

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    
      	
              9.7

            	
              If
      the Transferor and Related Party of the Transferor refuses to fulfill
      their obligation under Section 8.4 of this Agreement, the Transferor are
      in breach of the Agreement and the Transferee has the right to exercise
      any of the following options:

            

    

     

    
      	
              9.7.1

            	
              to
      delay the subsequent payments to the Transferor
  or.

            

    

     

    
      	
               
    A. 

            	
              Lack
      of exclusive operating agreement and not be able to remedy before the
      second installment, the Transferor shall compensate RMB2,000,000.00 per
      agreement to the Transferee;

            

    

     

    
      	
               
    B. 

            	
              Lack
      of certificate of qualification on gas operating and not be able to remedy
      before the second installment, the Transferor shall compensate
      RMB2,000,000.00 per certificate to the
  Transferee;

            

    

     

    
      	
               
    C. 

            	
              Lack
      of certificate of fee collection permit and not be able to remedy before
      the second installment, the Transferor shall compensate RMB2,000,000.00
      per certificate to the Transferee;

            

    

     

    
      	
               
    D. 

            	
              Lack
      of other certificate which is necessary for the regular operating of gas
      company before the second installment, the Transferor shall compensate
      RMB500,000.00 per certificate to the
Transferee.

            

    

     

    
      	
              9.7.2

            	
              to
      terminate this Agreement and claim damages rising
  thereof

            

    

     

    
      	
              9.7.3

            	
              For
      Chengde Dadi Gas Ltd., Co. and Baigou Dadi Gas Ltd., Co. Section 9.7 above
      shall not apply.

            

    

     

    
      	
              9.8

            	
              Unless
      this Agreement is otherwise provided, if the Transferor have performed all
      the provisions of this Agreement strictly; however the Transferee
      unilaterally terminates by violating this Agreement, the Transferee shall
      compensate the Transferor for their direct damages rising
      hereby.

            

    

     

    
      	
              9.9

            	
              Unless
      otherwise provided under this Agreement, each Party shall not terminate
      this Agreement without the consent of the other Party; otherwise the
      termination party shall pay the other Party RMB 5,000,000.00Yuan as
      penalty.

            

    

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    
      	
              9.10

            	
              The
      Parties agree that, under any of a situation or situations under Section
      10.2.3 to Section 10.2.9 of the Agreement, Transferee has the right to
      terminate this Agreement at its own discretion without taking any
      liability and has the right to request Transferor to pay it RMB
      5,000,000.00Yuan as penalty.

            

    

     

    
      	
              9.11

            	
              If,
      according to this Agreement, the Transferee does not make the second
      installment payment to the Transferor after the expiration of the grace
      period of second installment payment, the Transferee shall assist the
      Transferor to transfer 42% equity of the Target Company which is held by
      the Transferee to the Transferor ( after this transfer, the Transferee
      will possess 28% of the Target Company’s
  shares.)

            

    

    

    
      	
              10.

            	
              Termination
      of this Agreement

            

    

     

      The
Parties mutually agree that unless otherwise provided in this Agreement, this
Agreement shall be terminated only under following situations:

     

    
      	
              10.1

            	
              This
      Agreement shall be terminated upon the consent of the
    Parties;

            

    

     

    
      	
              10.2

            	
              Transferee
      is entitle to terminate this Agreement at its own discretion under any of
      the following situations:

            

    

     

    
      	
                
        10.2.1

            	
              Transferee
      is unable to complete the transaction due to relevant policies and rules
      of the State;

            

    

     

    
      	
                  
      10.2.2

            	
              Necessary
      governmental approvals are unable to obtain for this transaction (if
      necessary);

            

    

     

    
      	
                 
      10.2.3

            	
              Transferee
      discovers that there are material defects of the Transferred Equity or
      Transferor and/or Non-Transferor Shareholders are unable to transfer the
      Targets of this transaction;

            

    

     

    
      	
                 
      10.2.4

            	
              Transferee
      discovers that there is any conceal, omission or fraud in the documents or
      data submitted by Transferor in connection with the Target Company,
      Subsidiary Companies and its Related Companies listed in Annex
      II;

            

    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    
      	
                  
      10.2.5

            	
              Transferee
      discovers that before the completion of the Transfer there are martial
      barriers for the Target Company, Subsidiary Companies and its Related
      Companies listed in Annex II which will result in disability for
      conducting their business in further 3
years;

            

    

     

    
      	
                  
      10.2.6

            	
              Transferee
      discovers that Transferor fails to ensure the Work Group and the staff of
      Transferee to smoothly work together with relevant staff from the Target
      Company, Subsidiary Companies and its Related Companies listed in Annex
      II, which result in Transferee is unable to complete its prospective work
      requirements for continuous 5
      days;

            

    

     

    
      	
                  
      10.2.7

            	
              Transferee
      discovers that Transferor consults or negotiates relevant issues in
      connection with the transfer of part and/or all Transferred Equity or
      signs relevant written documents with any third party other than
      Transferee;

            

    

     

    
      	
                  
      10.2.8

            	
              Non-Transferor
      Shareholders fail to comply with the instructions of Transferor in
      connection with the transaction of the Target Company, Subsidiary
      Companies and its Related Companies listed in Annex II (including but not
      limited to the percentage of the transfer, the price of the transfer
      etc.), which results in any obstacle for such proposed transaction of
      Transferee by Non-Transferor Shareholders;or

            

    

     

    
      	
                  
      10.2.9

            	
              The
      Transferor fails to complete or satisfy one or more Transferee’s payment
      and/or payment release preconditions within the time limit provided in
      this Agreement.

            

    

     

    
      	
              10.3

            	
              Unless
      otherwise provided under this Agreement, in the case when the Transferee
      terminate this Agreement pursuant to the provisions of this Agreement, the
      Transferee is entitled not only to claim the liabilities of breach against
      the breaching party, but also to require the Transferor to fully return
      any payment paid to the Transferor from the
  Transferee.

            

    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    
      	
              10.4

            	
              Transferor
      is entitle to terminate this Agreement at its own discretion under any of
      the following situations:

            

    

     

    
      	
                  
      10.4.1

            	
              On
      conditions that there is no freeze, distrain, pledge, mortgage, or
      other right limitations against the Transferred Equity, Transferor is
      unable to complete the transaction due to relevant policies and rules of
      the State;

            

    

     

    
      	
                  
      10.4.2

            	
              Necessary
      governmental approvals are unable to obtain for this transaction (if
      necessary).

            

    

    

    
      	
              11.

            	
              Assignment
      of this Agreement

            

    

     

    Both the
Transferor and the Related Party of Transferor jointly and severally agrees
that, before the second installment if Transferee may transfer its entire or
partial rights and/or obligations to any third party designated by Transferee
who is affiliated with Transferee with the consent of the Transferor and the
Related Party of the Transferor for such transfer; after the second installment
the Transferee may make such transfer without the consent of the Transferor and
the Related Party of the Transferor, but the Transferee will notify. Both the
Transferor and the Related Party of Transferor jointly and severally further
agrees that, such third Transferee aforesaid may be person, legal entity or
other economic organizations. Transferee has the right to designate one natural
person, legal entity or other economic organization or two or more natural
persons, legal entities or other economic organizations as such third Transferee
its own discretion.

    

    
      	
              12.

            	
              Tax
      Issues

            

    

     

    
      	
              12.1

            	
              Unless
      otherwise provided under this Agreement, Transferee and Transferor shall
      bear relevant payable taxes and expenses in connection with the
      performance of this Agreement and this transaction respectively. If
      required by law, Transferee will withhold and remit tax when making
      payment (if any).

            

    

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    
      	
              12.2

            	
              Before
      the completion of delivery, Transferor shall be in charge of the tax
      issues of the Target Company, Subsidiary Companies and its Related
      Companies listed in Annex I. After completion, in case of economic damages
      and losses arising hereof, Transferee has the right to claim for such
      damages and losses against
Transferor.

            

    

    

    
      	
              13.

            	
              The
      Related Party of the Transferor undertakes that all the liabilities which
      shall be performed by the Transferor set forth in this Agreement shall be
      applicable to the Related Party of the Transferor as well. Further more,
      the Related Party of the Transferor will take joint guarantee liability
      for the liabilities which shall be performed by the Transferor set forth
      in this Agreement.

            

    

    

    
      	
              14.

            	
              Force
      Majeure

            

    

     

    Neither
Party shall be prevented from failure of performance of any of its obligations
under this Agreement due to an event of Force Majeure outside the reasonable
control of that Party. The Party affected by such event of force majeure shall
notify the other Party immediately in convenient way, and shall no later than 15
days after the commencement of such event submit the documentary evidence
notarized by local notary organ to the other Party. The Parties shall negotiate
the way of dealing with the aftermath such event in time. Any delay in the
performance of any of the duties or obligations of either party shall not be
considered a breach of this Agreement, and the time required for performance
shall be extended for a period equal to the period of such delay, if such delay
has been caused by or is the result of acts of God; acts of public enemy;
insurrections; riots; injunctions; embargoes; labor disputes, including strikes,
lockouts, job actions, or boycotts; fires; explosions; earthquakes; floods;
shortages of energy; governmental prohibition or restriction; or other
unforeseeable causes beyond the reasonable control and without the fault or
negligence of the party so affected.  The party so affected shall
immediately notify the other party of such inability and of the period for which
such inability is expected to continue.  The party giving such notice
of a force majeure event, shall be excused from the performance, or the punctual
performance, of such obligations, as the case may be, from the date of such
notice, up to a maximum of nine (9) calendar months, after which time the party
who is not able to perform, may terminate this Agreement.  To the
extent possible, each party shall use reasonable efforts to minimize the
duration of any force majeure.

    

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    
      	
              15.

            	
              Confidentiality

            

    

     

    Either
Party of this Agreement shall not disclose any information related to this
Agreement to any person、entity or company
during the term of the Agreement or five years after the expiration of the
Agreement, no matter the person、entity or company
has a competitive relationship with the other Party or not, except following
circumstances:

     

    (1) Such
disclosure is made in accordance with the governing laws or requested by the
competent government, justice authority;

     

    (2)The information
has been publicized and such publicizing is not a result of any breach or
violation of a contract, agreement or other binding documents;

     

    (3)The Party of such
disclosure has already obtained such Information without any confidentiality
limitation from other parties when it receives the Information from the other
Party;

     

    (4)Disclose to the
employees, directors, management, consult, CPA, agent and representative of any
party, or its affiliates and the employees, directors, management, consultant,
accounts, agent and representative of such affiliates.

     

    In case
any Party is in breach of the provision of the confidentiality and causes the
other Party suffering from economic damages and losses, the breaching Party
shall assume relevant liabilities of such breach to the other Party. But the
information disclosed pursuant to the applicable law or compulsory requirements
of the court or any other authorities will not be applied.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    
      	
              16.

            	
              Notices

            

    

     

    
      	
              16.1

            	
              Any
      and all notices shall be delivered in writing, including by facsimile、letter、courier
      service delivered letter, and notices shall be deemed to have been
      delivered at the 7th
      days after the written notice delivered. The notifying date of unwritten
      notice (telephone or email, etc) shall be the date of written confirmation
      of the receiver.

            

    

     

    
      	
              16.2

            	
              Either
      Party may change its particulars for receipt of notices by notice given to
      the other Party within 3 days after such change. If the Party fails to
      notice the other party its changes on its particulars for receipt of
      notices, it shall take all legal liability for all results rising
      hereof.

            

    

     

    If to the
Transferor, notices shall be delivered as follows:

     

    Addressee:   Position:

    Address: Post Code:

    Facsimile: Email:

     

    If to the
Transferee, notices shall be delivered as follows:

    收件人姓名Addressee:张仰幹  职务Position:CEO

    收件人地址Address: 天津市和平区南京路85号君隆广场B1座18层

    邮编Post Code:300040

    传真号码Facsimile:23210500

    电子信箱地址Email:ykchong@cnegc.com

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    If to the
Related Party of the Transferor, notices shall be delivered as
follows:

    Addressee:   Position:

    Address: Post Code:

    Facsimile: Email:

    

    
      	
              16.3

            	
              All
      notices and relevant expenses under this Agreement shall be processed by
      either Party respectively in accordance with laws and regulations at their
      own cost.

            

    

    

    
      	
              17.

            	
              Governing
      Law

            

    

     

    The
formation、validity、interpretation
and/or performance of this Agreement shall be governed by PRC LAWS.

    

    
      	
              18.

            	
              Settlement
      of Dispute

            

    

     

    Any
disputes arising from or in connection with this Agreement shall be settled
through friendly negotiation among the Parties. If the dispute cannot be
resolved by negotiation, then any Party may submit the dispute to China
International Economic and Trade Arbitration Committee located in Beijing for
arbitration according to and regulations in effect at the time of applying for
arbitration. The arbitration award shall be final and binding on all
parties.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    
      	
              19.

            	
              Severability

            

    

     

    Any
provision of the Agreement shall be deemed as severable. If any provision of the
Agreement is invalid, it shall not affect the validity of the rest of the
provisions of this Agreement.

    

    
      	
              20.

            	
              Non-waiver

            

    

     

    Either
Party's failure to insist the other Party on the performance of any provision of
the Agreement at any time shall not be deemed to waive such provision or waive
the right to request the other Party on execution of such provision in
future.

    

    
      	
              21.

            	
              Transcript

            

    

     

    The
formal text of the Agreement shall be written in CHINESE. Any provision of such
Agreement shall be interpreted under the usual meaning of the words in the
Chinese version.

    

    
      	
              22.

            	
              Title
      and Subtitles

            

    

     

    All tile
and subtitles of the Agreement are in the convenience of the reference only and
shall not limit or affect any provision provided in the Agreement.

    

    
      	
              23.

            	
              Entire
      agreement

            

    

     

    
      	
              23.1

            	
              Entire
      Agreement of this transaction include this Agreement, General Framework
      Agreement for Corporation, Exclusive Option Agreement and Supplementary
      Agreement for the Escrow Terms and Conditions for the First Installment,
      as well as all ancillary agreements to each related to the subject of this
      Agreement and supersedes any and all previous written or oral agreements
      and/or memorandums concluded by any consultation relating to the subject
      of this agreement. Unless this agreement is otherwise provided expressly,
      any other condition, definition, guarantee or statement related to the
      subject of this agreement shall not be binding on the
    Parties.

            

    

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    
      	
              23.2

            	
              Any
      correction、amendment、replacing or
      modification of this Agreement shall be made in writing and shall be
      ascertained that it is relevant to the Agreement and shall be signed by
      the representatives or designated person(s) of the Parties of the
      Agreement.

            

    

     

    
      	
              23.3

            	
              Both
      the Transferor and the Transferee mutually agree that in the convenience
      of processing the procedure of the alteration registration related to the
      equity transfer hereof with the local industry and commercial bureau, both
      parties may enter into a simpler equity transfer agreement. The content of
      such simple equity transfer agreement shall not be controversial with this
      Agreement hereof. In case of any controversy, this Agreement shall
      prevail.

            

    

     

    
      	
              24.

            	
              This
      Agreement shall become into effective upon the execution of the Parties
      and the approval from the
government.

            

    

    

    

    
      	
              25.

            	
              This
      Agreement is executed in [6] counterparts. Each Transferor holds
      [2],  the Transferee holds [2] and the Related Party of the
      Transferor  holds [2].

            

    

     

    Annexes:

     

    Annex
I List of Target
Company, Subsidiary Companies and its Related Companies

     

    Annex
I List of Target
Company, Subsidiary Companies and its Related Companies

     

    Annex II
The Shareholding Structure to be Achieved Prior the First Installment Payment
Release

    

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    Annex
IV  The production and operation information of Target Company,
Subsidiary Companies and its Related Companies

     

    Annex
V  Assets Confirmation List

     

    Annex
VI   Obligations Transfer List

     

    Annex VII
List of Projects Planned of Target Company, Subsidiary Companies and its Related
Companies

     

    Annex
VIII Financial Statements of Target Company, Subsidiary Companies and its
Related Companies

     

    Notwithstanding
anything to the contrary contained above, the Annexes hereto shall be required
to be delivered as set forth in the chart below:

     

    
      	
              Annexes

            	
               

              Delivery
      Date

               

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      

    

     

     (This
page is blank below)

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    Signature
Page

    

    Transferor:

      Beijing
Fengyin Xianghe Scientific Technology Co., Ltd.

    

    

    Authorized
Representative:

    

    

    Transferee:

    China New
Energy Investment Co.,Ltd

    

    

    Authorized
Representative:

    

    Related
Party of theTransferor:

    Tang
Zhixiang (Singature):

    

    Date:

    

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    Annex
I List of Target Company, Subsidiary Companies and its Related
Companies

     

    
      	
              1、

            	
              Target
      Company: Tianjin Dadi Friendship Co.
Ltd.

            

    

     

    
      	
              2、

            	
              Subsidiary
      Companies of Target Company:

            

    

     

    
      	
              (1)

            	
              Zhuolu
      Dadi Gas Ltd., Co.;

            

    

     

    
      	
              (2)

            	
              Beijing
      Century Dadi Gas Co., Ltd.

            

    

    

    
      	
              3、

            	
              Subsidiaries
      wholly-owned, controlled and equity affiliates of respectively Subsidiary
      Companies of Target Company (collectively referred to “Related Companies”)
      include:

            

    

     

    
      	
              (1)

            	
              Xian
      County Dadi Gas Ltd., Co..

            

    

     

    
      	
              (2)

            	
              Tianjin
      Dadi Gas Technology Development Ltd.,
Co.

            

    

     

    
      	
              (3)

            	
              Dadi
      Xingying Gas Ltd., Co.

            

    

     

    
      	
              (4)

            	
              Shijiazhuang
      Dadi Gas Ltd., Co. ;

            

    

     

    
      	
              (5)

            	
              Chengde
      Dadi Gas Ltd., Co. ; and

            

    

     

    
      	
              (6)

            	
              Baigou
      Dadi Gas Ltd., Co. .

            

    

     

    
      	
              (7)

            	
              Beijing
      Xiadu Dadi Gas Ltd., Co..

            

    

     

    
      	
              (8)

            	
              Zhuolu
      Dadi Municipal Engineering Construction Technology Service Ltd.
      Co.

            

    

     

    
      	
              (9)

            	
              Beijing
      Century Dadi Transportation Ltd.,
Co.

            

    

     

    
      	
              (10)

            	
              Huanghua
      Port Dadi Lihua Gas Ltd., Co.

            

    

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    
      	
              (11)

            	
              Suizhong
      Dadi Gas Ltd., Co.;

            

    

     

    
      	
              (12)

            	
              Jiaozuo
      Hualong Petrochemical Ltd., Co.
(70%)

            

    

     

    
      	
              (13)

            	
              Huojia
      Hualong Petrochemical Ltd., Co. (70%);
and

            

    

     

    
      	
              (14)

            	
              Dadi
      Huayou Gas Ltd., Co.;

            

    

     

    
      	
              (15)

            	
              Fuhua
      Dadi Gas Ltd., Co

            

    

    

    4、On the execution
date of this Agreement, the shareholding structure and proportion of the Target
Company, Subsidiary Companies and its Related Companies are as
follows:

     

    

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    Annex
II The Shareholding Structure to be Achieved Prior the First Installment Payment
Release

     

    

    

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    Annex
III The Shareholding Structure to be Achieved Prior to the Second Installment
Payment

     

    

    

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    Annex IV
The production and operation information of Target Company, Subsidiary Companies
and its Related Companies

     

    

    Part one
Basic Information of Target Company

    

    

    Business
License

    

    Business
License No.:

    Registration
No.:

    Issuing
Date:

    

    Address:

    

    Type
of Enterprise

    

    Registered
Capital

    

    

    Business
Scope:

    

    Business
Term:

    

    Board
of Directors:

    

    

    Name                                              Designated
by                                                   Position

    

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    

    

    

    Board of
Supervisors

    

    Name                                              Designated
by

    

    

    

    

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    

     Part
2 Certificates and Licenses of Operations

    

    

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

    Annex V
Assets Confirmation List

     

     

     

    

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    Annex VI
Obligations transfer list

     

    

     

    

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

     Annex
VII List of Projects Planned of Target Company, Subsidiary Companies and its
Related Companies

    

    Qing
County, located at Hebei Province

    

    Yangyuan
County, located at Zhangjiakou City, Hebei Province

    

    Wuqiang
County, located at the hinterland of Hebei Province

    

    Fucheng
County, located at Northeast Hengshui City, Hebei Province

    

    Wuyi
County, located at Northeast Hengshui City, Hebei Province

    

    Lingshou
County, located at Central and Western Hebei Province

    

    Guyuan
County, located at Northwest Hebei Province

    

    Huailai
County, located at Hebei Province

    

    Dongguang
County, located at southern Cangzhou City, Hebei Province

    

    Xianxian
is the franchise territories for gas operation controlled by our
company.

    

    Yushan
County, located at Jiangxi Province

    

    Wannian
County, located at Jiangxi Province

    

    Taiyuan
Hi-Tech Industry Park Project, located at Shanxi
Province

    

    Yan
Project is a LPG wholesale company.

    

    Zhongtian
gas is a city natural gas distribution company with two
subsidiaries.

    

    Jinzhou
City, located at southeastern Liaoning Province

    

    Fushun
City, located at eastern Liaoning Province,

    

    Huanghuagang,
located at the east of Cangzhou City, Hebei Province

    

    Bazhou
Lihua,

    

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

     

    Annex
VIII Financial Statements of Target Company, Subsidiary Companies and its
Related Companies

     

    
 

    
      
        
        

      

      
        59INVESTOR
RIGHTS AGREEMENT

     

    This
Investor Rights Agreement (this “Agreement”) is made and
entered into as of January 13, 2011, by and among ECOtality, Inc., a Nevada
corporation (the “Company”), and ABB Technology
Ventures Ltd. (the “Investor”).

     

    This
Agreement is made in connection with the Securities Purchase Agreement, dated as
of the date hereof among the Company and the Investors (the “Purchase
Agreement”).

     

    The
Company and the Investor hereby agree as follows:

     

    1.           Definitions.  Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement will have the respective meanings given such terms in the Purchase
Agreement.  As used in this Agreement, the following terms have the
respective meanings set forth in this Section
1:

     

    “Advice” has the meaning set
forth in Section
10(d).

     

    “Availability Date” has the
meaning set forth in Section
3(f).

     

    “Board” means the board of
directors of the Company.

     

    “Commission Positions” means written
comments pertaining solely to Rule
415 (or which challenge the right of an Investor to have its Registrable
Securities included in a Registration Statement filed hereunder without being
deemed an underwriter) which are received by the Company from the
Commission to a filed Registration Statement, a copy of which shall have been
provided by the Company to the Holders, which either (i) requires the Company to
limit the number of Registrable Securities which may be included therein to a
number which is less than the number of Registrable Securities not already
covered by an existing and effective Registration Statement or (ii) requires the
Company to either exclude Registrable Securities held by specified Holders or
deem such Holders to be underwriters with respect to Registrable Securities they
seek to include in such Registration Statement.

     

    “Cut Back Shares” has the
meaning set forth in Section
2(b).

     

    “Effective Date” means, as to a
Registration Statement, the date on which such Registration Statement is first
declared effective by the Commission.

     

    “Effectiveness Date” means (a)
with respect to the initial Registration Statement required to be filed pursuant
to Section
2(a), the earlier of: (i) the 90th day
following the Closing Date (or, in the event of a “full review” by the
Commission, the 120th
calendar day following the Closing Date) and (ii) the fifth Trading Day
following the date on which the Company is notified by the Commission that the
initial Registration Statement will not be reviewed or is no longer subject to
further review and comments; (b) with respect to any additional Registration
Statements required to be filed pursuant to Section 2(a), the
earlier of: (i) the 90th day
following the applicable Filing Date for such additional Registration
Statement(s) and (ii) the fifth Trading Day following the date on which the
Company is notified by the Commission that such additional Registration
Statement(s) will not be reviewed or is no longer subject to further review; and
(c) with respect to any additional Registration Statements required to be filed
solely due to SEC Restrictions, the earlier of: (i) the 90th day
following the applicable Restriction Termination Date and (ii) the fifth Trading
Day following the date on which the Company is notified by the Commission that
such Registration Statement will not be reviewed or is no longer subject to
further review and comments.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    “Effectiveness Period” means,
as to any Registration Statement required to be filed pursuant to this
Agreement, the period commencing on the Effective Date of such Registration
Statement and ending on the earliest to occur of (a) such time as all of
the Registrable Securities covered by such Registration Statement have been
publicly sold by the Holders of the Registrable Securities included therein, or
(b) such time as all of the Registrable Securities covered by such Registration
Statement may be sold by the Holders without volume or manner-of-sale
restrictions pursuant to Rule 144, in each case as determined by the counsel to
the Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected
Holders.

     

    “Event of Default” has the
meaning set forth in Section
8(a).

     

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

     

    “Filing Date” means (a) with
respect to the initial Registration Statement required to be filed pursuant to
Section 2(a),
the 45th day
following the Closing Date; (b) with respect to any additional Registration
Statements required to be filed pursuant to Section 2(a), the
later of the 15th day
following the Effective Date for the last Registration Statement filed pursuant
to this Agreement under Section 2(a) and the
earliest practical date on which the Company is permitted by SEC Guidance to
file such additional Registration Statement related to the Registrable
Securities; and (c) with respect to any additional Registration Statements
required to be filed due to SEC Restrictions, the 15th day
following the applicable Restriction Termination Date.

     

    “First Director Expiration
Date” means the date on which the Investor ceases to hold, or cease to
“beneficially own” (within the meaning of Rule 13d-3 under the Exchange Act) at
least 15% of the issued and outstanding shares of Common Stock of the
Company.

     

    “Governance Committee” has the
meaning set forth in Section
5(a).

     

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

     

    “Indemnified Party” has the
meaning set forth in Section
9(c).

     

    “Indemnifying Party” has the
meaning set forth in Section
9(c).

     

    “Investor” has the meaning set
forth in the Recitals hereto.

     

    “Investor Director” has the
meaning set forth in Section
5(a).

     

    “Investor Director Seats” has
the meaning set forth in Section
5(a).

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    “Losses” has the meaning set
forth in Section
9(a).

     

    “New York Courts” means the
courts of the state of New York and the United States District Court for the
Southern District of New York.

     

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

     

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

     

    “Registrable Securities” means:
(i) the Shares, (ii) the Warrants, (ii) the Warrant Shares, and (iv) any
securities issued or issuable in connection with any adjustment provisions in
the Warrants or upon any stock split, dividend or other distribution,
recapitalization or similar event, or any price adjustment as a result of such
stock splits, reverse stock splits or similar events with respect to any of the
securities referenced in (i), (ii) or (iii) above.

     

    “Registration Statement” means
the initial registration statement required to be filed in accordance with Section 2(a) and any
additional registration statements required to be filed under this Agreement,
including in each case the Prospectus, amendments and supplements to such
registration statements or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference therein.

     

    “Restriction Termination Date”
has the meaning set forth in Section
2(b).

     

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

     

    “Rule 172” means Rule 172
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

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

     

    “Rule 416” means Rule 416
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

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

     

    “Qualified Strategic Issuance”
means an issuance by the Company of shares of Common Stock or Common Stock
Equivalents in connection with a strategic transaction between the Company (or
one of its Subsidiaries) and a third party that: (a) has been approved by a
majority of the disinterested directors of the Company; (b) is made at a price
per share that is not less than the greater of the book value and the market
value of the Common Stock; and (c) on the date of such strategic transaction,
consists of shares of Common Stock and Common Stock Equivalents representing, in
the aggregate and on an as converted to Common Stock basis, less than two
percent (2%) of the Company’s shares of Common Stock outstanding on a fully
diluted basis.

    “SEC Guidance” means (i) any
publicly-available written or oral guidance of the Commission staff, or any
comments, requirements or requests of the Commission staff and (ii) the
Securities Act.

     

    “SEC Restrictions” has the
meaning set forth in Section
2(b).

     

    “Second Director Expiration
Date” means the date on which the Investor ceases to hold, or cease to
“beneficially own” (within the meaning of Rule 13d-3 under the Exchange Act) at
least 8%  of the
issued and outstanding shares of Common Stock of the Company.

     

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

     

    “Shares” means the shares of
Common Stock issued or issuable to the Investor pursuant to the Purchase
Agreement.

     

    “Sub Board” has the meaning set
forth in Section
5(f).

     

    “Subsequent Issuance” means any
private issuance of Common Stock or Common Stock Equivalents that is consummated
by the Company (or any of its Subsidiaries, as applicable) following the Closing
Date, other than any such issuance (a) as compensation to employees or directors
of the Company or its Subsidiaries pursuant to and in accordance with the
Company’s equity incentive plans, (b) as compensation to vendors or consultants
or other non-employees of the Company, in each case for services rendered to the
Company, that has been approved by a majority of the disinterested directors of
the Company and which issuance is made at a price per share that is not less
then the greater of the book value and the market value of the Common Stock, (c)
upon the exercise or exchange of or conversion of any Securities issued pursuant
to the Purchase Agreement and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the
date of this Agreement, (d) pursuant to a Qualified Strategic Issuance; and (e)
pursuant to acquisitions of assets (whether directly or through the acquisition
of capital stock of an entity) that are useful in the Company’s business, which
acquisition is approved by a majority of the disinterested directors of the
Company and which issuance is made at a price per share that is not less then
the greater of the book value and the market value of the Common
Stock.

     

    “Transfer Agent” has the
meaning set forth in Section
3(n).

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    “Warrants” means the Common Stock
purchase warrants issuable to the Investor at the Closing pursuant to the
Purchase Agreement.

     

    “Warrant Shares” means the shares of
Common Stock issuable upon exercise of the Warrants.

     

    2.           Registration.

     

    (a)           On
or prior to its applicable Filing Date, the Company shall prepare and file with
the Commission a Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration
Statement.  The Registration Statement also shall cover, to the extent
allowable under the Securities Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends, recapitalizations or other
adjustments provided for in the Warrants with respect to the Registrable
Securities.  Each Registration Statement required to be filed under
this Agreement shall be filed on Form S-3 (or if the Company is not then
eligible to utilize Form S-3 to register for resale the Registrable Securities,
it shall utilize  such other available form appropriate for such
purpose and shall contain (except if otherwise required pursuant to written
comments received from the Commission upon a review of such Registration
Statement, other than as to the characterization of any Holder as an
underwriter, which shall not occur without such Holder’s written consent) the
“Plan of Distribution” substantially in the form attached hereto as Annex
A.  The Company shall promptly notify the Holders via facsimile
or by e-mail of the effectiveness of a Registration Statement on the same
Trading Day that the Company telephonically confirms effectiveness with the
Commission.  The Company shall cause each Registration Statement
required to be filed under this Agreement to be declared effective under the
Securities Act as soon as practicable but, in any event, no later than its
Effectiveness Date, and shall use its reasonable best efforts to keep each such
Registration Statement continuously effective during its entire Effectiveness
Period.  By 5:00 p.m. (New York City time) on the Business Day
immediately following the Effective Date of each Registration Statement, the
Company shall file with the Commission in accordance with Rule 424 under the
Securities Act the final prospectus to be used in connection with sales pursuant
to such Registration Statement (whether or not such filing is technically
required under such Rule).  Failure to file a final Prospectus as
foresaid shall be deemed an Event under Section
6.  If for any reason other than due solely to SEC
Restrictions, a Registration Statement is effective but not all outstanding
Registrable Securities are registered for resale pursuant thereto, then the
Company shall prepare and file by the applicable Filing Date an additional
Registration Statement to register the resale of all such unregistered
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415.  The Registration Statement shall not include any shares
of Common Stock or other securities for the account of any other holder of
Common Stock without the prior written consent of the Investor, which such
consent shall not be unreasonably withheld, conditioned or
delayed.

    
      
         

      

      
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    (b)           The
Company shall use its reasonable best efforts to advocate with the Commission
for the registration of all of the Registrable Securities in accordance with the
SEC Guidance (including without limitation, the Manual of Publicly Available
Telephone Interpretations D.29) for an offering to be made on a continuous basis
pursuant to Rule 415.  At such time as additional shares of Common
Stock become issuable upon the exercise of the Warrants (whether due to an
adjustment under the Warrants or otherwise), the Company shall prepare and file
with the Commission one or more Registration Statements or amend any
Registration Statement filed pursuant to Section 2(a), if such
Registration Statement has not previously been declared effective covering the
resale of the additional shares of Common Stock, but only to the extent the
additional shares of Common Stock are not at the time covered by an effective
Registration Statement.  Such Registration Statement also shall cover,
to the extent allowable under the Securities Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of additional shares
of Common Stock resulting from stock splits, stock dividends or similar
transactions.  Such Registration Statement shall not include any
shares of Common Stock or other securities for the account of any other holder
without the prior written consent of the Investor.

     

    (c)           Notwithstanding
anything to the contrary contained in this Section 2 and subject
to the payment of liquidated damages pursuant to Section 6, if, after
advocating with the Commission in accordance with Section 2(b), due to
Commission Positions, the Company is nonetheless unable to include all
Registrable Securities in the Registration Statement filed pursuant to Section 2(a) without
characterizing any Holder as an underwriter then the Company may, following not
less than three (3) Trading Days prior written notice to the Holders along with
the calculations as to such Holder’s allotment, (i) use its reasonable best
efforts to cause as many Registrable Securities for as many Holders as
possible to be included in the Registration Statement filed pursuant to Section 2(a) or 2(b) and remove from
the Registration Statement all other Registrable Securities (the “Cut Back Shares”), (ii) use
its reasonable best efforts to promptly file amendments to the Registration
Statement and promptly file a new Registration Statement, in either case, to
cover the maximum number of Registrable Securities permitted to be registered by
the Commission, or (iii) withdraw the Registration Statement and promptly file a
new Registration Statement covering the maximum number of Registrable Securities
permitted to be registered by the Commission, on Form S-3 or such other form
available to register for resale the Registrable Securities as a secondary
offering, and (iv) agree to such restrictions and limitations on the
registration and resale of the Registrable Securities, in each case as the
Commission may require in order for the Commission to allow each such
Registration Statement to become effective; provided, that in no
event may the Company name any Holder as an underwriter without such Holder’s
prior written consent (such restrictions and limitations on the registration and
resale, the “SEC
Restrictions”).  Unless the SEC Restrictions otherwise require,
any cut-back imposed pursuant to this Section 2(c) shall be
allocated among the Registrable Securities of the Holders on a pro rata
basis.  In addition, if the Company is, after compliance with the
requirements of Sections 2(a), (b) and
(c) unable to include all Registrable Securities in one or more
Registration Statements, unless the holders of a majority of the Registrable
Securities included in the Registration Statement agree otherwise, the Company
shall use its reasonable best efforts to first register the Shares, prior to the
registration of any Warrant Shares or Warrants.  No liquidated damages
under Section 6
shall accrue on or as to any Cut Back Shares, and the required Effectiveness
Date for such Registration Statement will be tolled, until such time as the
Company is able to effect the registration of the Cut Back Shares in accordance
with any SEC Restrictions (such date, the “Restriction Termination
Date”).  From and after the Restriction Termination Date, all
provisions of this Section 2 (including,
without limitation, the liquidated damages provisions, subject to tolling as
provided above) shall again be applicable to the Cut Back Shares (which, for
avoidance of doubt, retain their character as “Registrable Securities”) so that
the Company will be required to file with and cause to be declared effective by
the Commission such additional Registration Statements in the time frames set
forth herein as necessary to ultimately cause to be covered by effective
Registration Statements all Registrable Securities (if such Registrable
Securities cannot at such time be resold by the Holders thereof without volume
limitations pursuant to Rule 144).

    
      
         

      

      
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    (d)           Each
Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex B (a “Selling Holder
Questionnaire”).  The Company shall not be required to include
the Registrable Securities of a Holder in a Registration Statement and shall not
be required to pay any liquidated or other damages under Section 8 to any
Holder who fails to furnish to the Company a fully completed Selling Holder
Questionnaire at least two Trading Days prior to the Filing Date (subject to the
requirements set forth in Section 3(a)).

     

    3.           Registration
Procedures.

     

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

     

    (a)           Not
less than five (5) Trading Days prior to the filing of a Registration Statement
or any related Prospectus or any amendment or supplement thereto, the Company
shall (i) furnish to each Holder copies  such Registration Statement,
prospectus, amendment or supplement proposed to be filed, which documents will
be subject to the review of such Holders, and (ii) cause its officers and
directors, counsel and independent registered public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective
counsel to each Holder, to conduct a reasonable investigation within the meaning
of the Securities Act.  The Company shall not file a Registration
Statement or any such Prospectus or any amendments or supplements thereto to
which the Holders of a majority of the Registrable Securities shall reasonably
object, provided that, the Company is notified of such objection in writing no
later than five (5) Trading Days after the Holders have been so furnished copies
of a Registration Statement or amendments or supplements thereto or one (1)
Trading Day after the Holders have been so furnished copies of any related
Prospectus.  The Company shall not file a Registration Statement, any
Prospectus or any amendments or supplements thereto in which the “Selling
Stockholder” section thereof differs from the disclosure received from a Holder
in its Selling Holder Questionnaire (as amended or supplemented).  The
Company shall not file a Registration Statement, any Prospectus or any
amendments or supplements thereto in which it (i) characterizes any Holder
as an underwriter, (ii) excludes a particular Holder due to such Holder
refusing to be named as an underwriter, or (iii) reduces the number of
Registrable Securities being registered on behalf of a Holder except pursuant
to, in the case of subsection (iii), the Commission Positions, without, in each
case, such Holder’s express written authorization.

    
      
         

      

      
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    (b)           (i)  Prepare
and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its Effectiveness
Period, prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities and advise the Holders in writing when the Effectiveness
Period has expired; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably practicable to any comments received from the Commission with respect
to each Registration Statement or any amendment thereto and, as promptly as
reasonably practicable, but no fewer than five (5) Trading Days after their
receipt from or prior to filing with the Commission, provide true and complete
copies of and permit counsel designated by the Holders to review each
Registration Statement, all amendments and supplements there to and all
correspondence from and to the Commission relating to such Registration
Statement that would not result in the disclosure to the Holders of material and
non-public information concerning the Company; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the Registration Statement(s) and the disposition of all Registrable
Securities covered by each Registration Statement.

     

    (c)           If
during the Effectiveness Period, the number of Registrable Securities at any
time exceeds 100% of the number of shares of Common Stock then registered in a
Registration Statement, then the Company shall file as soon as reasonably
practicable, but in any case prior to the applicable Filing Date, an additional
Registration Statement covering the resale by the Holders of not less than the
number of such Registrable Securities.

     

    (d)           Use
all reasonable best efforts to cause all Registrable Securities covered by each
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed.

     

    (e)           Notify
the Holders as promptly as practicable (and, in the case of (i)(A) below, not
less than three Trading Days prior to such filing and, in the case of (v) below,
not less than three Trading Days prior to the financial statements in any
Registration Statement becoming ineligible for inclusion therein) and (if
requested by any such Person) confirm such notice in writing no later than one
Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a “review” of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the
Holders, but not information which the Company believes would constitute
material and non-public information); and (C) with respect to each Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to a Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission or any other Governmental Authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in such Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and (vi) of the occurrence or existence of any
pending corporate development with respect to the Company that the Company
believes may be material and that, in the determination of the Company, makes it
not in the best interest of the Company to allow continued availability of a
Registration Statement or Prospectus, provided that, any
and all of such information shall remain confidential to each Holder until such
information otherwise becomes public, unless disclosure by a Holder is required
by law; provided, further, that
notwithstanding each Holder’s agreement to keep such information confidential,
each such Holder makes no acknowledgement that any such information is material,
non-public information.

    
      
         

      

      
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    (f)           Otherwise
use all reasonable best efforts to comply with all applicable rules and
regulations of the SEC under the Securities Act and the Exchange Act, including
Rule 172, notify the Investor promptly if the Company no longer satisfies the
conditions of Rule 172 and take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable Securities
hereunder; and make available to its security holders, as soon as reasonably
practicable, but not later than the Availability Date (as defined below), an
earnings statement covering a period of at least twelve months, beginning after
the effective date of each Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act, including
Rule 158 promulgated thereunder (for the purpose of this Section 3(f), “Availability Date” means the
45th day following the end of the fourth fiscal quarter that includes the
effective date of such Registration Statement, except that, if such fourth
fiscal quarter is the last quarter of the Company’s fiscal year, “Availability Date” means the
90th day after the end of such fourth fiscal quarter).

     

    (g)           Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order stopping or suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.

     

    (h)           Furnish
to each Holder and their legal counsel promptly after the same is prepared and
publicly distributed, filed with the Commission, or received by the Company (but
not later than three (3) Business Days after the filing date, receipt date or
sending date, as the case may be), without charge, at least one conformed copy
of each Registration Statement and any amendment thereto, including financial
statements and schedules, each preliminary prospectus, free-writing prospectus
and Prospectus and each amendment or supplement thereto, and each letter written
by or on behalf of the Company to the Commission or the staff of the Commission,
and each item of correspondence from the Commission or the staff of the
Commission, in each case, relating to such Registration Statement (other than
any portion thereof which contains information for which the Company has sought
confidential treatment), such number of copies of a Prospectus, including a
preliminary prospectus, any free-writing prospectus and all amendments and
supplements thereto and such other documents as each Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder that are covered by each Registration Statement, all
documents incorporated or deemed to be incorporated therein by reference to the
extent requested by such Person, and all exhibits to the extent requested by
such Person (including those previously furnished) promptly after the filing of
such documents with the Commission; provided, that any such item that is
available on the EDGAR system (or successor thereto) need not be furnished in
physical form.

    
      
         

      

      
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    (i)           The
Company shall use its reasonable best efforts to cooperate with any
broker-dealer through which a Holder proposes to resell its Registrable
Securities in effecting a filing with the FINRA Corporate Financing Department
pursuant to FINRA Rule 5110, as requested by any such Holder, and the Company
shall pay the filing fee required by such filing within two (2) Business Days of
request therefor.

     

    (j)           Promptly
deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request.  The
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.

     

    (k)           Prior
to any public offering of Registrable Securities, register or qualify such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of all jurisdictions within the United States as any Holder may request, to keep
each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statement(s); provided that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.

     

    (l)           Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statement(s), which certificates shall be free, to
the extent permitted by the Purchase Agreement, of all restrictive legends, and
to enable such Registrable Securities to be in such denominations and registered
in such names as any such Holders may request.

     

    (m)           Upon
the occurrence of any event contemplated by Section 3(e)(v), as
promptly as reasonably practicable, prepare a supplement or amendment, including
a post-effective amendment, to the affected Registration Statement(s) or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.

    
      
         

      

      
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    (n)           Upon
the earlier of (i) Rule 144(b)(i) becoming available to the Company, (ii) any
sale pursuant to Rule 144 (assuming the transferor is not an Affiliate of the
Company) or (iii) such time as a legend is no longer required under applicable
requirements of the Securities Act or other applicable Law (including
controlling judicial interpretations and pronouncements issued by the
Commission), the Company shall (A) deliver to the transfer agent for the Common
Stock (the “Transfer
Agent”) irrevocable instructions that the Transfer Agent shall reissue a
certificate representing shares of Common Stock without legends upon receipt by
such Transfer Agent of the legended certificates for such shares, together with
either (1) a customary representation by each Investor that Rule 144(b)(i) or
Rule 144 applies to the shares of Common Stock represented thereby or (2) in
connection with any sale of Common Stock by the Investor pursuant to the
registration contemplated by this Agreement, and (B) cause its counsel to
deliver to the Transfer Agent one or more blanket opinions to the effect that
the removal of such legends in such circumstances may be effected under the
Securities Act.  From and after the earlier of such dates, upon the
Investor’s written request, the Company shall promptly cause certificates
evidencing the Investor’s Securities to be replaced with certificates which do
not bear such restrictive legends, and Warrant Shares subsequently issued upon
due exercise of the Warrants shall not bear such restrictive legends provided
the provisions of clause (i) above are satisfied with respect to such Warrant
Shares.

     

    (o)           With
a view to making available to the Investor the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the Commission that may at
any time permit the Investor to sell shares of Common Stock to the public
without registration, the Company covenants and agrees to:  (i) make
and keep public information available, as those terms are understood and defined
in Rule 144, until the earlier of (A) six months after such date as all of
the Registrable Securities may be resold pursuant to Rule 144(b)(i)(1) or any
other rule of similar effect or (B) such date as all of the Registrable
Securities shall have been resold; (ii) file with the Commission in a timely
manner all reports and other documents required of the Company under the
Exchange Act; and (iii) furnish to the Investor upon request, as long as the
Investor owns any Registrable Securities, (A) a written statement by the Company
that it has complied with the reporting requirements of the Exchange Act, (B) a
copy of the Company’s most recent Annual Report on Form 10-K or Quarterly Report
on Form 10-Q, and (C) such other information as may be reasonably requested in
order to avail the Investor of any rule or regulation of the Commission that
permits the selling of any such Registrable Securities without
registration.

     

    (p)           Use
commercially reasonable efforts to take all other steps necessary or reasonably
required to effect the registration of the Registrable Securities covered by
each Registration Statement contemplated hereby.

     

    4.           Registration
Expenses.  All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Commission, (B) with respect to filings required to
be made with any Trading Market on which the Common Stock is then listed for
trading, (C) in compliance with applicable state securities or Blue Sky laws),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority of
the Registrable Securities included in the Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement.  In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

    
      
         

      

      
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    5.           Nomination of Investor
Directors.

     

    (a)           Interim Appointment of
Investor Directors.  From and after the Closing Date until the
First Director Expiration Date, the Investor may nominate two directors
(collectively, the “Investor
Directors”) to be elected to the Board.  From and after the
First Director Expiration Date until the Second Director Expiration Date, the
Investor may nominate one Investor Director.  Any such nominee for
Investor Director shall be subject to (a) the reasonable approval of the Board’s
Nominating and Corporate Governance Committee (the “Governance Committee”) (such
approval not to be unreasonably withheld, conditioned or delayed), and (b)
satisfaction of all legal and governance requirements regarding service as a
director of the Company; provided, that the
Company shall at the reasonable request of the Investor, so long as such request
is not inconsistent with applicable law or exchange requirements, amend or
modify any such requirements so as not to any way impede the right of the
Investor to nominate directors.  On the Closing Date, the Company
shall cause the following two initial Investor Directors to be elected and
appointed to the Board: Enrique Santacana and Andrew Tang.  The
Company from time to time shall take all actions necessary such that the number
of members on the Board shall (a) except as otherwise provided herein, consist
of no more than 5 non-Investor Directors until the First Director Expiration
Date, (b) except as otherwise provided herein, consist of no more than 6
non-Investor Directors from and after the First Director Expiration Date until
the Second Director Expiration Date, and (c) if necessary, be increased such
that there are sufficient seats on the Board for the Investor Directors to serve
on the Board and such vacancies (the “Investor Director Seats”)
shall be filled by the Investor Directors, effective as of the Closing Date (or,
if later, then the date that the Investor determines to appoint such Investor
Directors).  Each Investor Director appointed pursuant to this Section 5(a) shall
continue to hold office until such Investor Director’s term expires, subject,
however, to prior death, resignation, retirement, disqualification or
termination of term of office as provided in Section
5(c).

     

    (b)           Continuing Designation of
Investor Directors.  Until the Second Director Expiration Date,
at each meeting of the Company’s stockholders at which the election of directors
to the Investor Director Seats is to be considered, the Company shall, subject
to the provisions of Section 5(a) and
Section 5(c),
nominate the Investor Director(s) designated by the Investor for election to the
Board by the holders of voting capital stock and solicit proxies from the
Company’s stockholders in favor of the election of Investor
Directors.  Subject to the provisions of Section 5(a) and
Section 5(c),
the Company shall use all reasonable best efforts to cause each Investor
Director to be elected to the Board (including voting all unrestricted proxies
in favor of the election of such Investor Director and including recommending
approval of such Investor Director’s appointment to the Board) and shall not
take any action which would reasonably be expected to diminish the prospects of
such Investor Director(s) of being elected to the Board.

    
      
         

      

      
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    (c)           Termination of Investor
Director Designation Rights.  The right of the Investor to
designate two Investor Directors pursuant to Section 5(a) and
Section 5(b)
shall (i) automatically and without any action by the parties hereto, become a
right to designate one Investor Director from and after the First Director
Expiration Date, and (ii) terminate on the Second Director Expiration
Date.  If the right of the Investor to nominate one or more Investor
Directors terminates pursuant to the immediately preceding sentence, then (x) at
the First Director Expiration Date, the Investor Director selected by the
Investor, and (y) at the Second Director Expiration Date, each remaining
Investor Director, shall promptly submit his or her resignation as a member of
the Board and each applicable Sub Board with immediate effect.

     

    (d)           Resignation; Removal;
Vacancies.  Any elected Investor Director may resign from the
Board at any time by giving written notice to the Board.  The
resignation is effective without acceptance when the notice is given to the
Board, unless a later effective time is specified in the notice. So long as
the Investor retains the right to designate Investor Directors, the Company
shall use all reasonable best efforts to remove any Investor Director only if so
directed in writing by the Investor.  In the event of a vacancy on the
Board resulting from the death, disqualification, resignation, retirement or
termination of term of office of an Investor Director nominated by the Investor,
the Company shall use all reasonable best efforts to fill such vacancy with a
representative designated by the Investor as provided hereunder, in either case,
to serve until the next annual or special meeting of the stockholders (and at
such meeting, such representative, or another representative designated by the
Investor, will be elected to the Board in the manner set forth in Section
5(b).

     

    (e)           Fees and
Expenses.  The Investor Directors shall be entitled to
reimbursement of reasonable expenses incurred in such capacities, but shall not
otherwise be entitled to any compensation from the Company in such capacities as
Investor Directors.

     

    (f)           Subsidiary Boards;
Committees.  Subject to (a) the reasonable approval of the
Governance Committee (such approval not to be unreasonably withheld, conditioned
or delayed), and (b) satisfaction of all legal and governance requirements
regarding service as a director or member of any committee of the Company or any
of its Subsidiaries, at the request of the Investor, the Company shall cause the
Investor Directors to have proportional representation (relative to their
percentage on the whole Board, but in no event less than one representative) on
the boards (or equivalent governing body) of each Subsidiary (each, a “Sub Board”), and each
committee of the Board and each Sub Board.  The Company shall at the
reasonable request of the Investor, so long as such request is not inconsistent
with applicable law or exchange requirements, amend or modify any requirements
regarding service as a director or member of any committee of the Company or any
of its Subsidiaries.

     

    (g)           Reporting
Information.  With respect to each Investor Director designated
pursuant to the provisions of this Section 5, the
Investor shall use its reasonable best efforts to cause each Investor Director
to provide to the Company all necessary assistance and information related to
such Investor Director that is required under Regulation 14A under the Exchange
Act to be disclosed in solicitations of proxies or otherwise, including such
Person’s written consent to being named in the proxy statement (if applicable)
and to serving as a director if elected.

    
      
         

      

      
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    (h)           Directors and Officers
Insurance; Indemnification Agreements.  The Company shall
purchase and maintain directors’ and officers’ liability insurance policy
covering each Investor Director effective from the Closing Date (or such later
date as such Investor Director is appointed pursuant to Section 5(a) or Section 5(b) and
shall purchase and maintain for a period of not less than six years from the
date of any Investor Director’s death, resignation, retirement, disqualification
or termination of term of office as provided in 5(c), a directors’
and officers’ liability insurance tail policy for such Investor
Director.  The Company shall enter into a separate indemnification
agreement with each of the Investor Directors.

     

    6.           Participation
Right.

     

    (a)           From
and after the Closing Date until the date that is the first to occur of (i) the
expiration of the Warrant or (ii) the date upon which the Investor first owns
less than 2% of the issued and outstanding Common Stock as of such date, the
Investor shall have the right, at its election in accordance with this Section 6, to
participate in any Subsequent Issuance.  The Investor may elect to
provide all or any portion of its Pro Rata Portion of such Subsequent
Issuance.  For purposes hereof, “Pro Rata Portion” means a
fraction, the numerator of which is the number of shares of Common Stock
(including for these purposes, any Warrant Shares issued upon exercise of the
Warrant) the Investor beneficially owns as of such date, and the denominator of
which is the total number of shares of Common Stock issued and outstanding as of
such date.

     

    (b)           At
least thirty days prior to the anticipated consummation of any Subsequent
Issuance, the Company shall deliver a written notice (each, a “Subsequent Issuance Notice”)
to the Investor.  The Subsequent Issuance Notice shall disclose in
reasonable detail the proposed terms and conditions of the Subsequent Issuance,
the amount of proceeds intended to be raised thereunder and the identity, and
ownership of capital stock of the Company (if applicable), of any other
prospective participants in such Subsequent Issuance, and shall include a term
sheet or similar document relating thereto as an attachment.  The
Subsequent Issuance Notice shall constitute a binding offer to enter into the
Subsequent Issuance with the Investor, up to its Pro Rata Portion, on the terms
and conditions set forth in such Subsequent Issuance Notice.

     

    (c)           The
Investor may elect to participate in such Subsequent Issuance and shall have the
right, subject to Section 6(d) below,
to purchase its Pro Rata Portion of the Subsequent Issuance on the terms and
subject to the conditions specified in the Subsequent Issuance Notice by
delivering written notice of such election to the Company within twenty five
days after the delivery of the Subsequent Issuance Notice to the Investor (the
“Election
Period”).  If the Investor elects to participate in the
Subsequent Issuance, then the closing of the Subsequent Issuance shall occur on
the date specified in the Subsequent Issuance Notice or on such other date as
otherwise may be agreed by the Company and the Investor.  If the
Investor fails to deliver such election notice prior to the end of the Election
Period, then the Investor shall be deemed to have notified the Company that it
does not elect to participate in such Subsequent Issuance.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    (d)           If
any portion of a Subsequent Issuance is not purchased by the Investor or the
Persons identified in the Subsequent Issuance Notice within sixty days after the
delivery of the relevant Subsequent Issuance Notice to the Investor on terms no
less favorable to the Company than those described in such Subsequent Issuance
Notice, then prior to consummating any subsequent Subsequent Issuance, the
Company must deliver a new Subsequent Issuance Notice to the Investor and
otherwise follow the procedures set forth in this Section 6 (and, for
the avoidance of doubt, the Investor will again have the right of participation
set forth above in this Section
6).

     

    (e)           Notwithstanding
any other provision in this Agreement to the contrary, the Investor’s right to
participate in any Subsequent Issuance shall be subject to such participation
not causing a violation of the Beneficial Ownership Limitation; provided,
however, that the Company shall use all commercially reasonable efforts to
discuss and explore ways to enable the Investor to participate in any Subsequent
Issuance in compliance with the Beneficial Ownership Limitation.

     

    7.           Delivery of Financial
Statements.

     

    (a)           For
so long as the Investor holds, or “beneficially owns” (within the meaning of
Rule 13d 3 under the Exchange Act) at least 2% of the shares of Common Stock of
the Company issued and outstanding at any time that the Company is not required
to file periodic reports with the Commission, the Company shall deliver to the
Investor:

     

    1.      as
soon as practicable, but in any event within ninety days after the end of each
fiscal year of the Company, for each of the Company and each of its
Subsidiaries, an income statement for such fiscal year, a balance sheet, and
statement of stockholder’s equity as of the end of such fiscal year, and a
statement of cash flows for such fiscal year, such year end financial reports to
be in reasonable detail, prepared in accordance with GAAP, and audited and
certified by a nationally recognized accounting firm selected by the Company and
reasonably acceptable to the Investor;

     

    2.      as
soon as practicable, but in any event within forty five days after the end of
each of the first three quarters of each fiscal year of the Company, for the
Company and each of its Subsidiaries, an unaudited income statement for such
quarter, statement of cash flows for such quarter and an unaudited balance sheet
as of the end of such quarter;

     

    3.      with
respect to the financial statements called for in subsection (2) of this Section 7(a)(3), an
instrument executed by the Chief Financial Officer or Chief Executive Officer of
the Company and certifying that such financial statements were prepared in
accordance with GAAP consistently applied with prior practice for earlier
periods (with the exception of footnotes that may be required by GAAP) and
fairly present in all material respects the financial condition of the Company
and its Subsidiaries and its results of operation for the period specified,
subject to year end audit adjustment;

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    4.      notices
of events that have had or would reasonably be expected to have a material and
adverse effect on the Company and its Subsidiaries, taken as a whole, as soon as
practicable following the occurrence of any such event; and

     

    5.      such
other information relating to the financial condition, business, prospects or
corporate affairs of the Company and its Subsidiaries as the  Investor
may from time to time reasonably request.

     

    Notwithstanding
the foregoing, at all times, the Company shall use reasonable best efforts to
deliver the financial statements listed in Sections 7(a)(1) and
7(a)(2)
promptly after such statements are internally available.

     

    (b)           Inspection.  For
so long as the Investor holds at least 5% of the shares of Common Stock of the
Company issued and outstanding at any time the Company is not required to file
periodic reports with the Commission, (A) the Company shall permit the Investor,
together with the Investor’s consultants and advisors, to visit and inspect the
Company’s and its Subsidiaries’ properties, to examine their respective books of
account and records and to discuss the Company’s and its Subsidiaries’ affairs,
finances and accounts with their respective officers and employees, all at such
reasonable times as may be requested by the Investor.

     

    8.           Events of Default and
Remedies.

     

    (a)           It
shall be considered an “Event
of Default” if:

     

    1.      a
Registration Statement is not declared effective by the Commission on or prior
to its required Effectiveness Date;

     

    2.      by
the Business Day immediately following the Effective Date, the Company shall not
have filed a “final” prospectus for the
Registration Statement with the Commission under Rule 424(b) in accordance with
the terms hereof (whether or not such a prospectus is technically required by
such Rule);

     

    3.      after
its Effective Date, without regard for the reason thereunder or efforts
therefor, such Registration Statement ceases for any reason to be effective and
available to the Holders as to all Registrable Securities to which it is
required to cover at any time prior to the expiration of its Effectiveness
Period for more than an aggregate of 60 Trading Days during any 12-month period
(which need not be consecutive);

     

    4.      after
a Registration Statement has been declared effective by the SEC, sales cannot be
made pursuant to such Registration Statement for any reason (including by reason
of a stop order or the Company’s failure to update the Registration Statement),
except as excused pursuant to Section 2(b);
or

     

    5.      the
Company defaults in any way with its obligations under Section 5 or Section 6, and such
default (other than with respect to Section 5 for which
there shall be no cure period) continues for longer than 30
days.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    (b)           For
purposes of this Section 8, the date
on which such Event of Default occurs, or for purposes of clause (a)(3) the date
which such 60 Trading Day-period is exceeded, being referred to as “Event Date”), then in
addition to any other rights the Holders may have hereunder or under applicable
law, on each such Event Date and on each monthly anniversary of each such Event
Date (if the applicable Event shall not have been cured by such date) until the
applicable Event is cured, the Company shall pay to each Holder an amount in
cash, as partial liquidated damages and not as a penalty, equal to one percent
(1.0%) of the aggregate Per Share Purchase Price paid by such Holder for Shares
pursuant to the Purchase Agreement for the first 30 days of continuation of such
Event of Default, which amount shall increase by one percent (1.0%) each
thirtieth day thereafter that the applicable Event of Default has not been
cured, subject to a maximum amount of three percent (3.0%) per 30-day
period.  The parties agree that (1) the Company will not be liable for
liquidated damages under this Agreement with respect to any Cut Back Shares and
(2) in no event will the Company be liable for liquidated damages under this
Agreement in excess of one percent (1.0%) of the aggregate Investment Amount of
the Holders in any 30-day period and the maximum aggregate liquidated damages
payable to a Holder under this Agreement shall be three percent (3.0%) of the
aggregate Per Share Purchase Price paid by such Holder pursuant to the Purchase
Agreement per 30-day period.  The partial liquidated damages pursuant
to the terms hereof shall apply on a daily pro-rata basis for any portion of a
month prior to the cure of an Event, and shall cease to accrue (unless earlier
cured) upon the expiration of the Effectiveness Period.  The period
during which an Event of Default is continuing is referred to herein as a “Blackout
Period”.  If the Company fails to pay any partial liquidated
damages pursuant to this Section 8 in full
within seven days after the date payable, the Company will pay interest thereon
at a rate of 18% per annum (or such lesser maximum amount that is permitted to
be paid by applicable law) to the Holder, accruing daily from the date such
partial liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full.  The payments described above shall not
affect the right of the Investors to seek any other relief including injunctive
relief or request registration pursuant to Section
2.  The amounts payable pursuant to this paragraph shall be
paid monthly within five Business Days of the last day of each month following
the commencement of the Blackout Period until the termination of the Blackout
Period.  Such payments shall be made to the Investor in
cash.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    9.           Indemnification.

    (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents, brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors, partners, members and
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles, notwithstanding a lack of such title or any other title) of
each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, members, stockholders, partners, agents and employees (and
any other Persons with a functionally equivalent role of a Person holding such
titles, notwithstanding a lack of such title or any other title) of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, contingencies, costs
(including, without limitation, reasonable costs of preparation and reasonable
attorneys’ fees and disbursements and other expenses incurred in connection with
investigating, preparing or defending any action, claim or proceeding, pending
or threatened and the costs of enforcement thereof) and expenses (collectively,
“Losses”), as incurred,
arising out of or relating to (1) any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, (2) any blue sky application or other document executed by the
Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Registrable Securities under the securities laws
thereof, (3) any failure to register or qualify the Registrable Securities
included in any such Registration Statement in any state where the Company or
its agents has affirmatively undertaken or agreed in writing that the Company
will undertake such registration or qualification on any Investor’s behalf, and
will reimburse for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, contingency or expense or (4) any violation or alleged violation by
the Company or its agents of the Securities Act, the Exchange Act or any state
securities law, or any rule or regulation thereunder, in connection with the
performance of its obligations under this Agreement, except to the extent, but
only to the extent, that (i) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder and was reviewed and expressly approved in
writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
or (ii) in the case of an occurrence of an event of the type specified in Section 3(e)(ii)-(v),
the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of any Advice or an amended or
supplemented Prospectus, but only if and to the extent that following the
receipt of the Advice or the amended or supplemented Prospectus the misstatement
or omission giving rise to such Loss would have been corrected.  The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.

     

    (b)           Indemnification by
Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, arising solely out of
or based solely upon: (x) such Holder’s failure to comply with the prospectus
delivery requirements of the Securities Act or (y) any untrue statement of a
material fact contained in any Registration Statement, any Prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon
any omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading to the extent, but only to the extent
that, (1) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use in such Registration Statement or such Prospectus, such
Prospectus or in any amendment or supplement thereto or (2) in the case of an
occurrence of an event of the type specified in Section 3(e)(ii)-(v),
the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated
or  defective and prior to the receipt by such Holder of an Advice or
an amended or supplemented Prospectus, but only if and to the extent that
following the receipt of the Advice or the amended or supplemented Prospectus
the misstatement or omission giving rise to such Loss would have been
corrected.  In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    (d)           Contribution.  If
a claim for indemnification under Section 9(a) or 9(b) is unavailable
to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses (by reason of public policy or otherwise), then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations.  The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in Section
9(c), any reasonable attorneys’ or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

     

    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 9(d) were
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the
immediately preceding paragraph.  Notwithstanding the provisions of
this Section
9(d), no Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the proceeds actually received by such
Holder from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission.

     

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

     

    10.         Miscellaneous.

     

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

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    (b)           No Piggyback on
Registrations.  Except as set forth on Schedule 10(b)
attached hereto or as otherwise agreed in writing by the
Investor,  neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include securities of the
Company in a Registration Statement other than the Registrable Securities, and
the Company shall not during the Effectiveness Period file any other
registration statements until all Registrable Securities are registered pursuant
to a Registration Statement that is declared effective by the Commission,
provided that this Section 10(b) shall
not prohibit the Company from filing amendments to registration statements filed
prior to the date of this Agreement.

     

    (c)           Compliance.  Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

     

    (d)           Discontinued
Disposition.  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(e), such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder’s receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the “Advice”) by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement.  The Company will use its best efforts to ensure that the
use of the Prospectus may be resumed as promptly as is
practicable.  The Company agrees and acknowledges that any periods
during which the Holder is required to discontinue the disposition of the
Registrable Securities hereunder shall be subject to the provisions of Section
2(b).

     

    (e)           Piggy-Back
Registrations.  If at any time during the Effectiveness
Period  there is not an effective Registration Statement covering all
of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall deliver to each Holder written notice of
such determination and, if within fifteen calendar days after delivery of such
notice, any such Holder shall so request in writing, the Company shall include
in such registration statement all or any part of such Registrable Securities
such Holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.

     

    (f)           Amendments and
Waivers.  The provisions of this Agreement, including the
provisions of this Section 10(f), may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and the Holders of no less than a majority in interest
of the then outstanding Registrable Securities.  Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of certain Holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates; provided, further
that no amendment or waiver to any provision of this Agreement relating to
naming any Holder or requiring the naming of any Holder as an underwriter may be
effected in any manner without such Holder’s prior written
consent.  Section 2(a) may
not be amended or waived except by written consent of each Holder affected by
such amendment or waiver.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    (g)           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 6:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 6:30
p.m. (New York City time) on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is required
to be given.  The address for such notices and communications shall be
as follows:

     

    
      	
              If
      to the Company:

            	
              ECOtality,
      Inc.

            
	 
      	
              Four
      Embarcadero Center, Suite 3720

            
	 
      	
              San
      Francisco, CA 94111

            
	 
      	
              Facsimile:  (415)
      992-3001

            
	 
      	
              Attn:  Chief
      Executive Officer

            
	 
      	 
      
	
              With
      a copy to:

            	
              Farella
      Braun + Martel LLP

            
	 
      	
              Russ
      Building

            
	 
      	
              235
      Montgomery Street, 17th floor

            
	 
      	
              San
      Francisco, CA  94104

            
	 
      	
              Facsimile:  (415)
      954-4480

            
	 
      	
              Attn.:  Samuel
      Dibble / Bruce Maximov

            
	 
      	 
      
	
              If
      to an Investor:

            	
              ABB
      Technology Ventures Ltd.

            
	 
      	
              Affolternstrasse
      44

            
	 
      	
              P.O.
      Box

            
	 
      	
              CH-8050

            
	 
      	
              Zurich/Switzerland

            
	 
      	
              Attn.:
      Girish Nadkarni

            
	 
      	 
      
	
              With
      a copy to:

            	
              ABB
      Ltd.

            
	 
      	
              EC-LC

            
	 
      	
              Affolternstrasse
      44

            
	 
      	
              8050
      Zurich

            
	 
      	
              SWITZERLAND

            
	 
      	
              Attn:  Diane
      Desaintvictor, Executive Vice President,

            
	 
      	
              General
      Counsel & Secretary

            

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    
      	 
      	
              And

            
	 
      	 
      
	 
      	
              Kirkland
      & Ellis LLP

            
	 
      	
              601
      Lexington Avenue

            
	 
      	
              New
      York, New York  10022

            
	 
      	
              Facsimile:  (212)
      446-4900

            
	 
      	
              Attn.:  Thomas
      Christopher

            
	 
      	
              Christopher
      Kitchen

            

    

     

    or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.

     

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

     

    (i)           No Inconsistent
Agreements. Neither the Company nor any of its Subsidiaries has entered,
as of the date hereof, nor shall the Company or any of its Subsidiaries, on or
after the date of this Agreement, enter into any agreement with respect to its
securities, that would have the effect of impairing the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions
hereof.  Except as set forth on Schedule 10(i),
neither the Company nor any of its Subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.

     

    (j)           Execution and
Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same
Agreement.  In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile or “.pdf” signature page were the
original thereof.

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    (k)           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to contracts executed in and to be performed in that State, without
regard to the principles of conflicts of law thereof or any other
jurisdiction.  Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
Affiliates, employees or agents) will be commenced in the New York
Courts.  Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND
REPRESENTS AND WARRANTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.  If either party shall commence a Proceeding to enforce any
provisions of this Agreement, then the prevailing party in such Proceeding shall
be reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.

     

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

     

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

     

    (n)           Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the provisions hereof.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK;

    SIGNATURE
PAGES TO FOLLOW]

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

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

     

    
      
        
          	
                  ECOTALITY,
      INC.

                
	 
      	 
      
	
                  By:

                	
                  /s/ Jonathan Read

                
	 
      	
                  Name:  Jonathan
      Read

                
	
                   
      

                	
                  Title:  President
      and CEO

                

        

      

    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK;

    SIGNATURE
PAGES OF INVESTORS TO FOLLOW]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

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

    

    
      
        	
                ABB TECHNOLOGY VENTURES LTD.

              
	 
      	 
      
	
                By:

              	
                /s/ Girish Nadkarni

              
	 
      	
                Name:  Girish Nadkarni

              
	 
      	
                Title:  Managing Director

              
	 
      	 
      
	
                By:

              	
                /s/ Natascia Rubinic

              
	 
      	
                Name:  Natascia Rubinic

              
	 
      	
                Title:  Authorized Signatory

              

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Annex A

     

    FORM
OF PLAN OF DISTRIBUTION

     

    We and
the selling stockholder may sell the securities offered under this prospectus
through agents, underwriters or dealers, or directly to one or more purchasers.
As used in this prospectus, the term selling stockholder includes donees,
pledgees, transferees or other successors-in-interest selling shares of common
stock or interests in shares of common stock received after the date of this
prospectus from the selling stockholder as a gift, pledge, partnership
distribution or other transfer.

     

    We or the
selling stockholder may designate agents who agree to use their reasonable
efforts to solicit purchases for the period of their appointment or to sell
securities on a continuing basis. We may include shares of the selling
stockholder in conjunction with underwritten sales by us of shares of our common
stock.

     

    If we or
the selling stockholder use underwriters for a sale of securities, the
underwriters will acquire the securities for their own account. The underwriters
may resell the securities in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The obligations of the underwriters to purchase the
securities will be subject to the conditions stated in the applicable
underwriting agreement. The underwriters will be obligated to purchase all the
securities of the series offered if any of the securities of that series are
purchased. Any initial public offering price and any discounts or concessions
allowed or re-allowed or paid to dealers may be changed from time to
time.

     

    We and
the selling stockholder may sell securities directly to one or more purchasers
without using underwriters or agents.

     

    Sales of
common stock hereunder also may be effected by the selling stockholder from time
to time in one or more types of transactions on the Nasdaq Stock Market or any
other national securities exchange or automated quotation system on which our
common stock may be listed at the time of sale, in the over-the-counter market,
in transactions otherwise than on such exchanges or the over-the-counter market,
including negotiated transactions, ordinary brokers’ transactions, through
options transactions relating to the shares, or a combination of such methods of
sale, at market prices prevailing at the time of sale, at negotiated prices or
at fixed prices. The selling stockholder may also sell shares of common stock in
block trades in which the broker-dealer will attempt to sell the shares as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction, in an exchange distribution in accordance with the
rules of the applicable exchange, in short sales effected after the date the
registration statement of which this prospectus is a part is declared effective
by the SEC.

     

    The
selling stockholder and underwriters, dealers and agents that participate in the
distribution of the securities may be underwriters as defined in the Securities
Act, and any discounts or commissions they receive from us and any profit on
their resale of the securities may be treated as underwriting discounts and
commissions under the Securities Act. The applicable prospectus supplement will
identify any underwriters, dealers or agents and will describe their
compensation. We or the selling stockholder may have agreements with the
underwriters, dealers and agents to indemnify them against certain civil
liabilities, including liabilities under the Securities Act. Underwriters,
dealers and agents may engage in transactions with or perform services for us or
our subsidiaries in the ordinary course of their business.

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

     

    Unless
otherwise specified in the applicable prospectus supplement, each class or
series of securities will be a new issue with no established trading market,
other than the common stock, shares of which are listed on the Nasdaq Stock
Market. We may elect to list any other class or series of securities on any
exchange, but we are not obligated to do so. It is possible that one or more
underwriters may make a market in a class or series of securities, but the
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. We cannot give any assurance as to the
liquidity of the trading market for any of the securities.

     

    We or the
selling stockholder may enter into derivative transactions with third parties,
or sell securities not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement indicates, in
connection with those derivatives, the third parties may sell securities covered
by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third party may use securities pledged by us or
the selling stockholder or borrowed from us, the selling stockholder or others
to settle those sales or to close out any related open borrowings of stock, and
may use securities received from us in settlement of those derivatives to close
out any related open borrowings of stock. We or the selling stockholder may also
loan or pledge securities covered by this prospectus and any applicable
prospectus supplement to third parties, who may sell the loaned securities or,
in an event of default in the case of a pledge, sell the pledged securities
pursuant to this prospectus and any applicable prospectus supplement (or a
post-effective amendment).

     

    Any
underwriter may engage in over-allotment, stabilizing transactions,
short-covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves sales in excess of the offering
size, which create a short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Short-covering transactions involve purchases of the
securities in the open market after the distribution is completed to cover short
positions. Penalty bids permit the underwriters to reclaim a selling concession
from a dealer when the securities originally sold by the dealer are purchased in
a covering transaction to cover short positions. Those activities may cause the
price of the securities to be higher than it would otherwise be. If commenced,
the underwriters may discontinue any of the activities at any time.

     

    The
selling stockholder is subject to the applicable provisions of the Exchange Act
and the rules and regulations under the Exchange Act, including Regulation M.
This regulation may limit the timing of purchases and sales of any of the shares
of common stock offered in this prospectus by the selling stockholder. The
anti-manipulation rules under the Exchange Act may apply to sales of shares in
the market and to the activities of the selling stockholder and its affiliates.
Furthermore, Regulation M may restrict the ability of any person engaged in the
distribution of the shares to engage in market-making activities for the
particular securities being distributed for a period of up to five business days
before the distribution. The restrictions may affect the marketability of the
shares and the ability of any person or entity to engage in market-making
activities for the shares.

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

     

    To the
extent required, this prospectus may be amended and/or supplemented from time to
time to describe a specific plan of distribution. Instead of selling the shares
of common stock under this prospectus, the selling stockholder may sell the
shares of common stock in compliance with the provisions of Rule 144 under the
Securities Act, if available, or pursuant to other available exemptions from the
registration requirements of the Securities Act.

     

    We have
advised the selling stockholder that the anti-manipulation rules of Regulation M
under the Exchange Act may apply to sales of shares in the market and to the
activities of the selling stockholder and its affiliates. In addition, we will
make copies of this prospectus (as it may be supplemented or amended from time
to time) available to the selling stockholder for the purpose of satisfying the
prospectus delivery requirements of the Securities Act. The selling stockholder
may indemnify any broker-dealer that participates in transactions involving the
sale of the shares against certain liabilities, including liabilities arising
under the Securities Act.

     

    We have
agreed to indemnify the selling stockholder against liabilities, including
liabilities under the Securities Act and state securities laws, relating to the
registration of the shares offered by this prospectus.

    
      
         

      

      
        A-3

        
          

        

      

      
         

      

    

    Annex B

     

    ECOTALITY,
INC.

     

    Selling
Securityholder Notice and Questionnaire

     

    The
undersigned beneficial owner of common stock (the “Common Stock”), of ECOtality,
Inc., a Nevada corporation (the “Company”), understands that
the Company has filed or intends to file with the Securities and Exchange
Commission (the “Commission”) a Registration
Statement for the registration and resale of the Registrable Securities, in
accordance with the terms of the Investor Rights Agreement, dated as of January
13, 2011 (the “Investor Rights
Agreement”), among the Company and the Investors named
therein.  A copy of the Investor Rights Agreement is available from
the Company upon request at the address set forth below.  All
capitalized terms used and not otherwise defined herein shall have the meanings
ascribed thereto in the Investor Rights Agreement.

     

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

     

    
      
        	
                1.

              	
                Name.

              

      

    

     

    
      	
               
      

            	
              (a)

            	
              Full
      Legal Name of Selling
Securityholder

            

    

     

    
      
        	
                 

              	
                 

              

      

    

    

    
      
        	
                 
      

              	
                (b)

              	
                Full
      Legal Name of Registered Holder (if not the same as (a) above) through
      which Registrable Securities Listed in Item 3 below are
    held:

              
	 	 	 
	 	 	 

      

    

    

    
      
        	
                 
      

              	
                (c)

              	
                Full
      Legal Name of Natural Control Person (which means a natural person who
      directly or indirectly alone or with others has power to vote or dispose
      of the securities covered by the questionnaire):

              
	 	 	 
	 	 	 

      

    

     

    2.  Address
for Notices to Selling Securityholder:

     

    
      
        
          
            	 
      
	 
      
	 
      

          

        

        
          
            
              	
                      Telephone: 

                    	
                        

                    

            

          

          
            	
                    Fax: 

                  	
                      

                  

          

          
            	
                    Contact Person: 

                  	
                      

                  

          

        

      

    

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

     

    
      3.  Beneficial
Ownership of Registrable Securities:

    

     

    
      
        	
                 
      

              	
                Type
      and Amount of Registrable Securities beneficially
owned:

              
	 	 
	 	 
	 	 
	 	 

      

    

     

    
      4.  Broker-Dealer
Status:

    

     

    
      	
               
      

            	
              (a)

            	
              Are
      you a broker-dealer?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
            	
              Note:

            	
              If
      yes, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Are
      you an affiliate of a
broker-dealer?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
               
      

            	
              (c)

            	
              If
      you are an affiliate of a broker-dealer, do you certify that you bought
      the Registrable Securities in the ordinary course of business, and at the
      time of the purchase of the Registrable Securities to be resold, you had
      no agreements or understandings, directly or indirectly, with any person
      to distribute the Registrable
Securities?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
            	
              Note:

            	
              If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

            

    

     

    
      5.  Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Securityholder.

    

     

    Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.

     

    
      
        	
                 
      

              	
                Type
      and Amount of Other Securities beneficially owned by the Selling
      Securityholder:

              
	 	 
	 	 
	 	 

      

    

    
      
         

      

      
        B-2

        
          

        

      

      
         

      

    

    

    
      6.  Relationships
with the Company:

    

     

    Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

     

    
      
        	
                 
      

              	
                State
      any exceptions here:

              
	 	 
	 	 
	 	 

      

    

     

    The
Company has advised each Selling Stockholder that it is the view of the
Commission that it may not use shares registered on the Registration Statement
to cover short sales of Common Stock made prior to the date on which the
Registration Statement is declared effective by the Commission, in accordance
with 1997 Securities and Exchange Commission Manual of Publicly Available
Telephone Interpretations Section A.65.  If a Selling Stockholder uses
the prospectus for any sale of the Common Stock, it will be subject to the
prospectus delivery requirements of the Securities Act.  The Selling
Stockholders will be responsible to comply with the applicable provisions of the
Securities Act and Exchange Act, and the rules and regulations thereunder
promulgated, including, without limitation, Regulation M, as applicable to such
Selling Stockholders in connection with resales of their respective shares under
the Registration Statement.

     

    The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the Effective Date for the Registration Statement.

     

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related
prospectus.  The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of
the Registration Statement and the related prospectus.

     

    IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Selling Securityholder Notice and Questionnaire to be executed and delivered
either in person or by its duly authorized agent.

     

    
      
        	
                Dated: 

              	 
      	 
      	
                Beneficial Owner: 

              	
                  

              

      

    

    

    
      
        	 
      	 
      	
                By: 

              	
                  

              
	 
      	 
      	
                 

              	

                Name: 
      

              
	 
      	
                  

              	
                 

              	

                Title: 
      

              

      

    

    
      
         

      

      
        B-3

        
          

        

      

      
         

      

    

    

    PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

    

    ECOtality,
Inc.

    Four
Embarcadero Center, Suite 3720

    San
Francisco, CA 94111

    Facsimile:  (415)
992-3001

    Attn:  Chief
Executive Officer

    
      
         

      

      
        B-4

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