Document:

SECURITIES
PURCHASE AGREEMENT

     

    Dated
as of February 26, 2010

     

    among

     

    REMEDIATION
SERVICES, INC.

     

    and

     

    THE
PURCHASERS LISTED ON EXHIBIT A

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Table of
Contents

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            	
                                                                    ARTICLE
      I Purchase and Sale of the Units

                                                                  	
                                                                    1

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      1.1

                                                                  	
                                                                    Purchase
      and Sale of Stock

                                                                  	
                                                                    1

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      1.2

                                                                  	
                                                                    Warrants

                                                                  	
                                                                    2

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      1.3

                                                                  	
                                                                    Conversion
      and Warrant Shares

                                                                  	
                                                                    2

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      1.4

                                                                  	
                                                                    Purchase
      Price and Closing

                                                                  	
                                                                    2

                                                                  
	 	 	 	 
	ARTICLE
      II Representations and Warranties	
                                                                    2

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      2.1

                                                                  	
                                                                    Representations
      and Warranties of the Company, its non-PRC Subsidiaries and the PRC
      Subsidiary

                                                                  	
                                                                    2
      

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      2.2

                                                                  	
                                                                    Representations
      and Warranties of the Purchasers

                                                                  	
                                                                    14

                                                                  
	 	 	 	 
	
                                                                    ARTICLE
      III Covenants

                                                                  	
                                                                    16

                                                                  
	 	 
	 
      	
                                                                    Section
      3.1

                                                                  	
                                                                    Securities
      Compliance

                                                                  	
                                                                    17

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.2

                                                                  	
                                                                    Registration
      and Listing

                                                                  	
                                                                    17

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.3

                                                                  	
                                                                    Confidential
      Information

                                                                  	
                                                                    17

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.4

                                                                  	
                                                                    Compliance
      with Laws

                                                                  	
                                                                    17

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.5

                                                                  	
                                                                    Keeping
      of Records and Books of Account

                                                                  	
                                                                    17

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.6

                                                                  	
                                                                    Reporting
      Requirements

                                                                  	
                                                                    17

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.7

                                                                  	
                                                                    Amendments

                                                                  	
                                                                    18

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.8

                                                                  	
                                                                    Other
      Agreements

                                                                  	
                                                                    18

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.9

                                                                  	
                                                                    Distributions

                                                                  	
                                                                    18

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.10

                                                                  	
                                                                    Reservation
      of Shares

                                                                  	
                                                                    18

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.11

                                                                  	
                                                                    Transfer
      Agent

                                                                  	
                                                                    19

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.12

                                                                  	
                                                                    Disposition
      of Assets

                                                                  	
                                                                    19

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.13

                                                                  	
                                                                    Reporting
      Status

                                                                  	
                                                                    19

                                                                  
	 	 	 	 
	 
      	
                                                                    Section
      3.14

                                                                  	
                                                                    Disclosure
      of Transaction

                                                                  	
                                                                    19

                                                                  

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        	 
      	
                                                                Section
      3.15

                                                              	
                                                                Disclosure
      of Material Information

                                                              	
                                                                20

                                                              
	 	 	 	 
	 
      	
                                                                Section
      3.16

                                                              	
                                                                Pledge
      of Securities

                                                              	
                                                                20

                                                              
	 	 	 	 
	 
      	
                                                                Section
      3.17

                                                              	
                                                                Lock-Up
      Agreements

                                                              	
                                                                20

                                                              
	 	 	 	 
	 
      	
                                                                Section
      3.18

                                                              	
                                                                DTC

                                                              	
                                                                20

                                                              
	 	 	 	 
	 
      	
                                                                Section
      3.19

                                                              	
                                                                Sarbanes-Oxley
      Act

                                                              	
                                                                20

                                                              
	 	 	 	 
	 
      	
                                                                Section
      3.20

                                                              	
                                                                No
      Integrated Offerings

                                                              	
                                                                20

                                                              
	 	 	 	 
	 
      	
                                                                Section
      3.21

                                                              	
                                                                No
      Commissions in Connection with Conversion of Preferred
    Shares

                                                              	
                                                                21

                                                              
	 	 	 	 
	 
      	
                                                                Section
      3.22

                                                              	
                                                                No
      Manipulation of Price

                                                              	
                                                                21

                                                              
	 	 	 	 
	 
      	
                                                                Section
      3.23

                                                              	
                                                                Subsequent
      Financings

                                                              	
                                                                21

                                                              
	 	 	 	 
	
                                                                ARTICLE
      IV CONDITIONS

                                                              	
                                                                23

                                                              
	 	 
	 
      	
                                                                Section
      4.1

                                                              	
                                                                Conditions
      Precedent to the Obligation of the Company to Sell the
    Units

                                                              	
                                                                23

                                                              
	 	 	 	 
	 
      	
                                                                Section
      4.2

                                                              	
                                                                Conditions
      Precedent to the Obligation of the Purchasers to Purchase the
      Units

                                                              	
                                                                23

                                                              
	 	 	 	 
	
                                                                ARTICLE
      V Stock Certificate Legend

                                                              	
                                                                26

                                                              
	 	 
	 
      	
                                                                Section
      5.1

                                                              	
                                                                Legend

                                                              	
                                                                26

                                                              
	 	 	 	 
	
                                                                ARTICLE
      VI Indemnification

                                                              	
                                                                27

                                                              
	 	 
	 
      	
                                                                Section
      6.1

                                                              	
                                                                General
      Indemnity

                                                              	
                                                                27

                                                              
	 	 	 	 
	 
      	
                                                                Section
      6.2

                                                              	
                                                                Indemnification
      Procedure

                                                              	
                                                                28

                                                              
	 	 	 	 
	
                                                                ARTICLE
      VII Miscellaneous

                                                              	
                                                                29

                                                              
	 	 
	 
      	
                                                                Section
      7.1

                                                              	
                                                                Fees
      and Expenses

                                                              	
                                                                29

                                                              
	 	 	 	 
	 
      	
                                                                Section
      7.2

                                                              	
                                                                Specific
      Enforcement, Consent to Jurisdiction

                                                              	
                                                                29

                                                              
	 	 	 	 
	 
      	
                                                                Section
      7.3

                                                              	
                                                                Entire
      Agreement; Amendment

                                                              	
                                                                30

                                                              
	 	 	 	 
	 
      	
                                                                Section
      7.4

                                                              	
                                                                Notices

                                                              	
                                                                30

                                                              
	 	 	 	 
	 
      	
                                                                Section
      7.5

                                                              	
                                                                Waivers

                                                              	
                                                                31

                                                              

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 	
                                      Section 7.6

                                    	
                                      Headings

                                    	
                                      31

                                    
	 	 	 	 
	 	
                                      Section
      7.7

                                    	
                                      Successors
      and Assigns

                                    	
                                      31

                                    
	 	 	 	 
	 	
                                      Section
      7.8

                                    	
                                      No
      Third Party Beneficiaries

                                    	
                                      32

                                    
	 	 	 	 
	 	
                                      Section
      7.9

                                    	
                                      Governing
      Law

                                    	
                                      32

                                    
	 	 	 	 
	 	
                                      Section
      7.10

                                    	
                                      Survival

                                    	
                                      32

                                    
	 	 	 	 
	 	
                                      Section
      7.11

                                    	
                                      Counterparts

                                    	
                                      32

                                    
	 	 	 	 
	 	
                                      Section
      7.12

                                    	
                                      Publicity

                                    	
                                      32

                                    
	 	 	 	 
	 	
                                      Section
      7.13

                                    	
                                      Severability

                                    	
                                      32

                                    
	 	 	 	 
	 	
                                      Section
      7.14

                                    	
                                      Further
      Assurances

                                    	
                                      32

                                    
	 	 	 	 
	 	
                                      Section 7.15

                                    	
                                      Currency

                                    	
                                      33

                                    
	 	 	 	 
	 	
                                      Section
      7.16

                                    	
                                      Termination

                                    	
                                      33

                                    

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    EXHIBIT
LIST

     

    
      
        
          	
                  Exhibit
      A

                	
                  List
      of Purchasers

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      B

                	
                  Definition
      of Accredited Investor

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      B-1

                	
                  Accredited
      Investor Representations

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      B-2

                	
                  Non-US
      Persons Representations

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      C

                	
                  Form
      of Series A Preferred Stock Certificate of Designation

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      D-1

                	
                  Form
      of Series A Warrant

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      D-2

                	
                  Form
      of Series B Warrant

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      E

                	
                  Form
      of Registration Rights Agreement

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      F

                	
                  Form
      of Lock-up Agreement

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      G

                	
                  Form
      of Closing Escrow Agreement

                	 
      
	 
      	 
      	 
      
	
                  Exhibit
      H

                	
                  Form
      of Securities Escrow Agreement

                	 
      

        

      

    

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

     

    
      
        	
                Exhibit
      I

              	
                Irrevocable
      Transfer Agent Instructions

              	 
      
	 
      	 
      	 
      
	
                Exhibit
      J

              	
                Form
      of Opinion of Lionel Sawyer & Collins, Nevada Counsel

              	 
      
	 
      	 
      	 
      
	
                Exhibit
      K

              	
                Form
      of Opinion of Loeb & Loeb LLP, Securities Counsel

              	 
      

      

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated
as of February 26, 2010 by and among Remediation Services, Inc., a Nevada
corporation (the “Company”), and each
of the Purchasers whose names are set forth on Exhibit A hereto
(individually, a “Purchaser” and
collectively, the “Purchasers”).

     

    RECITALS

     

    WHEREAS,
the Company and the Purchasers are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Section 4(2) of the Securities Act and/or Rule 506 of Regulation D
(“Regulation
D”) as promulgated by the United States Securities and Exchange
Commission (the “Commission”) under
the Securities Act of 1933, as amended (the “Securities Act”), or
Regulation S (“Regulation S”) as
promulgated under the Securities Act; and

     

    WHEREAS,
the Company is offering units (the “Units”), each
consisting of (i) nine (9) shares of the Company’s 8% Series A Convertible
Preferred Stock, par value $0.001 per share (the “Preferred Shares”),
initially convertible into nine (9) shares of the Company’s common stock, par
value $0.001 per share (the “Common Stock”)
(subject to adjustment), (ii) one (1) share of Common Stock (the “Common Shares”) and
(iii) a Series A Warrant (the “Series A Warrant”)
and Series B Warrant (the “Series B Warrant”
and, together with the Series A Warrant, the “Warrants”), with each
Warrant exercisable to purchase the number of shares of Common Stock equal to
twenty-five percent (25%) of the aggregate number of shares of Common Stock
underlying the Units and underlying the Preferred Shares purchased by each
Purchaser.

     

    AGREEMENT

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchasers hereby agree as
follows:

     

    ARTICLE
I

     

    Purchase
and Sale of the Units

     

    Section
1.1           Purchase and Sale of
Units. Upon the following terms and conditions, the Company is offering
to each Purchaser the number of Units set forth opposite such Purchaser’s name
as Exhibit A
hereto consisting of (i) nine (9) Preferred Shares, initially convertible into
nine (9) shares of Common Stock (subject to adjustment), (ii) one (1) Common
Share and (iii) a Series A Warrant and a Series B Warrant. The designation,
rights, preferences and other terms and provisions of the Preferred Shares are
set forth in the Series A Certificate of Designation, substantially in the form
attached hereto as Exhibit C (the “Series A Certificate of
Designation”).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
1.2           Warrants. Each of the
Purchasers shall be issued, as part of the Units, a Series A Warrant and a
Series B Warrant, each Warrant to purchase the number of shares of Common Stock
equal to twenty-five percent (25%) of the aggregate number of shares of Common
Stock underlying the Units and underlying the Preferred Shares purchased by each
Purchaser, as set forth opposite such Purchaser’s name on Exhibit A hereto. The
Series A Warrant, in substantially the form attached hereto as Exhibit D-1, shall
expire three (3) years following the Closing Date, and have an initial exercise
price of $4.50.  The Series B Warrant, in substantially the form
attached hereto as Exhibit D-2, shall
expire three (3) years following the Closing Date, and have an initial exercise
price of $5.75.

     

    Section
1.3           Conversion and Warrant
Shares. The Company has authorized and has reserved and covenants to
continue to reserve, free of preemptive rights and other similar contractual
rights of stockholders, a number of shares of Common Stock equal to one hundred
ten percent (110%) of the number of shares of Common Stock as shall from time to
time be sufficient to effect conversion of all of the Preferred Shares and
exercise of the Warrants then outstanding. Any shares of Common Stock issuable
upon conversion of the Preferred Shares and exercise of the Warrants (and such
shares when issued) are herein referred to as the “Conversion Shares”
and the “Warrant
Shares”, respectively.  The Preferred Shares, the Common
Shares, the Conversion Shares and the Warrant Shares are sometimes collectively
referred to as the “Shares”.

     

    Section
1.4           Purchase Price and
Closing. Subject to the terms and conditions hereof, the Company agrees
to issue and sell to the Purchasers and, in consideration of and in express
reliance upon the representations, warranties, covenants, terms and conditions
of this Agreement, the Purchasers, severally but not jointly, agree to purchase
the Units for $35.00 per Unit (the “Purchase Price”) for
an aggregate purchase price of $20,000,000, provided, however, that the
Company, in its sole discretion, shall have the right to increase the aggregate
purchase price hereunder to up to $40,000,000.  Subject to all
conditions to closing have been satisfied or waived, the closing of the purchase
and sale of the Units shall take place at the offices of Loeb & Loeb, LLP,
345 Park Avenue, New York, NY 10154 (the “Closing”) no later
than February 26, 2010, which date may be extended for an additional 30 days at
the sole discretion of the Company (the “Closing
Date”).  Subject to the terms and conditions of this Agreement,
at the Closing the Company shall deliver or cause to be delivered to each
Purchaser (x) certificates for the number of Common Shares and Preferred Shares
set forth opposite the name of such Purchaser on Exhibit A hereto, (y)
the Warrants to purchase such number of shares of Common Stock as is set forth
opposite the name of such Purchaser on Exhibit A attached
hereto, and (z) any other documents required to be delivered pursuant to Article
IV hereof.  At the time of the Closing, each Purchaser shall have
delivered its Purchase Price by wire transfer to the escrow account pursuant to
the Closing Escrow Agreement (as hereafter defined).  The Company may
also, in its sole discretion, terminate the offering and return the funds
deposited in escrow, in accordance with the Closing Escrow
Agreement.

     

    ARTICLE
II

     

    Representations
and Warranties

     

    Section
2.1           Representations and
Warranties of the Company, non-PRC Subsidiaries and the PRC
Subsidiary.  The Company hereby represents and warrants to the
Purchasers on behalf of itself, its non-PRC Subsidiaries (as hereinafter
defined) and the PRC Subsidiary (as hereinafter defined), as of the date hereof
(except as set forth on the Schedule of Exceptions attached hereto with each
numbered Schedule corresponding to the section number herein), as
follows:

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (a)           Organization, Good Standing
and Power. Each of the Company, its non-PRC Subsidiaries and the PRC
Subsidiary is a corporation or other entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization (as applicable) and has the
requisite corporate power to own, lease and operate its properties and assets
and to conduct its business as it is now being conducted.  Except as
set forth on Schedule
2.1(a), each of the Company, its non-PRC Subsidiaries and the PRC
Subsidiary is duly qualified to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary except for any jurisdiction(s) (alone or
in the aggregate) in which the failure to be so qualified will not have a
Material Adverse Effect (as defined in Section 2.1(g) hereof) on the Company’s
consolidated financial condition.

     

    (b)           Corporate Power; Authority
and Enforcement. The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Registration Rights
Agreement in the form attached hereto as Exhibit E (the “Registration Rights
Agreement”), the Lock-Up Agreement (as defined in Section 3.17 hereof) in
the form attached hereto as Exhibit F, the
Closing Escrow Agreement by and among the Company, the Purchasers and the escrow
agent named therein, dated as of the date hereof, substantially in the form of
Exhibit G
attached hereto (the “Closing Escrow
Agreement”), the Securities Escrow Agreement by and among the Company,
the Purchasers, the Principal Stockholder (as defined therein) and the escrow
agent named therein, dated as of the date hereof, substantially in the form of
Exhibit H
attached hereto (the “Securities Escrow
Agreement,” and together with the Closing Escrow Agreement and the
Securities Escrow Agreement, the “Escrow Agreements”),
the Irrevocable Transfer Agent Instructions (as defined in Section 3.11), the
Series A Certificate of Designation, and the Warrants (collectively, the “Transaction
Documents”), and to issue and sell the Units in accordance with the terms
hereof. The execution, delivery and performance of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action, and no further consent or authorization of the Company or its Board of
Directors or stockholders is required.  Each of the Transaction
Documents constitutes, or shall constitute when executed and delivered, a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.

     

    (c)           Capitalization. The
authorized capital stock of the Company and the shares thereof currently issued
and outstanding as of the date hereof is set forth on Schedule 2.1(c)
hereto.  All of the issued and outstanding shares of the Common Stock
have been duly and validly authorized. Except as contemplated by the Transaction
Documents or as set forth on Schedule 2.1(c)
hereto:

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (i)           no
shares of Common Stock are entitled to preemptive, conversion or other rights
and there are no outstanding options, warrants, scrip, rights to subscribe to,
call or commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the
Company;

     

    (ii)          there
are no contracts, commitments, understandings, or arrangements by which the
Company is or may become bound to issue additional shares of  capital
stock of the Company or options, securities or rights convertible into shares of
capital stock of the Company;

     

    (iii)         the
Company is not a party to any agreement granting registration or anti-dilution
rights to any person with respect to any of its equity or debt securities;
and

     

    (iv)        
the Company is not a party to, and it has no knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of the
Company.

     

    The offer
and sale of all capital stock, convertible securities, rights, warrants, or
options of the Company issued prior to the Closing complied with all applicable
Federal and state securities laws.  The Company has furnished or made
available to the Purchasers true and correct copies of the Company’s Articles of
Incorporation, as amended and in effect on the date hereof (the “Articles”), and the
Company’s Bylaws, as amended and in effect on the date hereof (the “Bylaws”).  Except
as restricted under applicable federal, state, local or foreign laws and
regulations, the Articles, the Series A Certificate of Designation or the
Transaction Documents, or as set forth on Schedule 2.1 (c), no
written or oral contract, instrument, agreement, commitment, obligation, plan or
arrangement of the Company shall limit the payment of dividends on the Company’s
Preferred Shares, or its Common Stock.

     

    (d)           Issuance of Shares.
The Units, the Preferred Shares, the Common Shares and the Warrants to be issued
at the Closing have been duly authorized by all necessary corporate action and
the Preferred Shares, when paid for or issued in accordance with the terms
hereof, will be validly issued and outstanding, fully paid and nonassessable and
entitled to the rights and preferences set forth in the Series A Certificate of
Designation and, immediately after the Closing, the Purchasers will be the
record and beneficial owners of all of such securities and have good and valid
title to all of such securities, free and clear of all encumbrances. When the
Conversion Shares and the Warrant Shares are issued in accordance with the terms
of the Series A Certificate of Designation and the Warrants, respectively, such
Shares will be duly authorized by all necessary corporate action and validly
issued and outstanding, fully paid and nonassessable, and the holders will be
entitled to all rights accorded to a holder of Common Stock and will be the
record and beneficial owners of all of such securities and have good and valid
title to all of such securities, free and clear of all
encumbrances.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (e)           Subsidiaries. Schedule 2.1(e)
hereto sets forth each Subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of ownership of
each Subsidiary. There are no outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by or binding upon any
Subsidiary for the purchase or acquisition of any shares of capital stock of any
Subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital stock. Neither
the Company nor any Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any Subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Except as filed as
exhibits to the Commission Documents (as defined below), neither the Company nor
any Subsidiary is party to, nor has any knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock of any
Subsidiary.  For the purposes of this Agreement, “Subsidiary” shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interests having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries. All of the outstanding shares of capital
stock of each Subsidiary has been duly authorized and validly issued, and are
fully paid and nonassessable.  For the purposes of this Agreement, the
“PRC
Subsidiary” shall mean Beijing Jianxin Petrochemical Engineering Co.,
Ltd., a Subsidiary incorporated under the laws of the People’s Republic of
China.

     

    (f)           Commission Documents,
Financial Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”),
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
(all of the foregoing including filings incorporated by reference therein being
referred to herein as the “Commission
Documents”).  The Company has not provided to the Purchasers
any material non-public information or other information which, according to
applicable law, rule or regulation, was required to have been disclosed publicly
by the Company but which has not been so disclosed, other than (i) with respect
to the transactions contemplated by this Agreement, or (ii) pursuant to a
non-disclosure or confidentiality agreement signed by the
Purchasers.  At the time of the respective filings, the Form 10-K’s
and the Form 10-Q’s complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such documents.  As of their respective filing dates,
none of the Form 10-K’s or Form 10-Q’s contained any untrue statement of a
material fact; and none omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents (the “Financial
Statements”) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect thereto. The
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles (“GAAP”) applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in the Financial Statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the consolidated financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

    
      
         

      

      
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    (g)           No Material Adverse
Effect. Since September 30, 2009, neither the Company, the non-PRC
Subsidiaries, nor the PRC Subsidiary has experienced or suffered any Material
Adverse Effect. For the purposes of this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, operations,
properties, or financial condition of the Company, its non-PRC Subsidiaries, the
PRC Subsidiary, individually, or in the aggregate and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to perform any of its obligations under this
Agreement in any material respect.

     

    (h)           No Undisclosed
Liabilities.  Other than as disclosed on Schedule 2.1(h) or
set forth in the Commission Documents, to the knowledge of the Company, neither
the Company, the non-PRC Subsidiaries, nor the PRC Subsidiary has any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) other than
those incurred in the ordinary course of the Company’s, the non-PRC
Subsidiaries’ and the PRC Subsidiary’ respective businesses since September 30,
2009 and those which, individually or in the aggregate, do not have a Material
Adverse Effect on the Company, the non-PRC Subsidiaries or the PRC
Subsidiary.

     

    (i)           No Undisclosed Events or
Circumstances. To the Company’s knowledge, no event or circumstance has
occurred or exists with respect to the Company, the non-PRC Subsidiaries or the
PRC Subsidiary or their respective businesses, properties, operations or
financial condition, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.

     

    (j)           Indebtedness. The
Financial Statements set forth all outstanding secured and unsecured
Indebtedness of the Company on a consolidated basis, or for which the Company,
the non-PRC Subsidiaries or the PRC Subsidiary have commitments as of the date
of Financial Statements or any subsequent period that would require disclosure.
For the purposes of this Agreement, “Indebtedness” shall
mean (a) any liabilities for borrowed money or amounts owed (other than trade
accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same should be reflected in the
Company’s consolidated balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments due under leases required to be capitalized in accordance
with GAAP.  Neither the Company, the non-PRC Subsidiaries nor the PRC
Subsidiary is in default with respect to any Indebtedness which, individually or
in the aggregate, would have a Material Adverse Effect.

     

    (k)           Title to Assets. Each
of the Company, the non-PRC Subsidiaries and the PRC Subsidiary has good and
marketable title to (i) all properties and assets purportedly owned or used by
them as reflected in the Financial Statements, (ii) all properties and assets
necessary for the conduct of their business as currently conducted, and (iii)
all of the real and personal property reflected in the Financial Statements free
and clear of any Lien. All leases are valid and subsisting and in full force and
effect.

     

    (l)           Actions Pending.
There is no action, suit, claim, investigation, arbitration, alternate dispute
resolution proceeding or any other proceeding pending or, to the knowledge of
the Company, threatened against or involving the Company, any Subsidiary or the
PRC Subsidiary (i) which questions the validity of this Agreement or any of the
other Transaction Documents or the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto or (ii) involving
any of their respective properties or assets.  To the knowledge of the
Company, there are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against the
Company, the non-PRC Subsidiaries or the PRC Subsidiary or any of their
respective executive officers or directors in their capacities as
such.

    
      
         

      

      
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    (m)           Compliance with
Law.  The Company, the non-PRC Subsidiaries and the PRC
Subsidiary have all material franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of their respective business as now being conducted by it unless the
failure to possess such franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.

     

    (n)           No
Violation.  The business of the Company, the non-PRC
Subsidiaries and the PRC Subsidiary is not being conducted in violation of any
Federal, state, local or foreign governmental laws, or rules, regulations and
ordinances of any of any governmental entity, except for possible violations
which singularly or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. The Company is not required under Federal, state, local
or foreign law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under the
Transaction Documents, or issue and sell the Units, the Preferred Shares, the
Common Shares, the Warrants, the Conversion Shares and the Warrant Shares in
accordance with the terms hereof or thereof (other than (x) any consent,
authorization or order that has been obtained as of the date hereof, (y) any
filing or registration that has been made as of the date hereof or (z) any
filings which may be required to be made by the Company with the Commission or
state securities administrators subsequent to the Closing).

     

    (o)           No Conflicts. The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated herein and
therein do not and will not (i) violate any provision of the Articles or Bylaws,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company is a party or by which
it or its properties or assets are bound, (iii) create or impose a lien,
mortgage, security interest, pledge, charge or encumbrance (collectively, “Lien”) of any nature
on any property of the Company under any agreement or any commitment to which
the Company is a party or by which the Company is bound or by which any of its
respective properties or assets are bound, or (iv) result in a violation of any
federal, state, local or foreign statute, rule, regulation, order, judgment or
decree (including Federal and state securities laws and regulations) applicable
to the Company or any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries are bound or affected, provided, however, that,
excluded from the foregoing in all cases are such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (p)           Taxes. Each of the
Company, the non-PRC Subsidiaries and the PRC Subsidiary, to the extent its
applicable, has accurately prepared and filed all federal, state and other tax
returns required by law to be filed by it, has paid or made provisions for the
payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the consolidated financial
statements of the Company for all current taxes and other charges to which the
Company, the non-PRC Subsidiaries or the PRC Subsidiary, if any, is subject and
which are not currently due and payable. None of the federal income tax returns
of the Company have been audited by the Internal Revenue Service. The Company
has no knowledge of any additional assessments, adjustments or contingent tax
liability (whether federal, state or foreign) of any nature whatsoever, whether
pending or threatened against the Company or any Subsidiary for any period, nor
of any basis for any such assessment, adjustment or contingency.

     

    (q)           Certain Fees. Except
as set forth on Schedule 2.1(q)
hereto, no brokers fees, finders fees or financial advisory fees or commissions
will be payable by the Company with respect to the transactions contemplated by
this Agreement and the other Transaction Documents.

     

    (r)           Intentionally
Omitted.

     

    (s)           Intellectual
Property. Each of the Company, the non-PRC Subsidiaries and the PRC
Subsidiary, owns or has the lawful right to use all patents, trademarks, domain
names (whether or not registered) and any patentable improvements or
copyrightable derivative works thereof, websites and intellectual property
rights relating thereto, service marks, trade names, copyrights, licenses and
authorizations, if any, and all rights with respect to the foregoing, if any,
which are necessary for the conduct of their respective business as now
conducted without any conflict with the rights of others, except where the
failure to so own or possess would not have a Material Adverse
Effect.

     

    (t)           Books and Record Internal
Accounting Controls. Except as may have otherwise been disclosed in the
Commission Documents, the books and records of the Company, the non-PRC
Subsidiaries and the PRC Subsidiary accurately reflect in all material respects
the information relating to the business of the Company, the non-PRC
Subsidiaries and the PRC Subsidiary, the location and collection of their
assets, and the nature of all transactions giving rise to the obligations or
accounts receivable of the Company, the non-PRC Subsidiaries or the PRC
Subsidiary.  Except as disclosed on Schedule 2.1(t), the
Company, the non-PRC Subsidiaries and the PRC Subsidiary maintain a system of
internal accounting controls sufficient, in the judgment of the Company, to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate actions are taken
with respect to any differences.

    
      
         

      

      
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    (u)           Material Agreements.
Any and all written or oral contracts, instruments, agreements, commitments,
obligations, plans or arrangements, the Company, the non-PRC Subsidiaries and
the PRC Subsidiary is a party to, that a copy of which would be required to be
filed with the Commission as an exhibit to a registration statement on Form S-1
(collectively, the “Material Agreements”)
if the Company or any Subsidiary were registering securities under the
Securities Act has previously been publicly filed with the Commission in the
Commission Documents.  Each of the Company, the non-PRC Subsidiaries
and the PRC Subsidiary has in all material respects performed all the
obligations required to be performed by them to date under the foregoing
agreements, have received no notice of default and are not in default under any
Material Agreement now in effect the result of which would cause a Material
Adverse Effect.

     

    (v)           Transactions with
Affiliates. Except as set forth in the Financial Statements or in the
Commission Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts or arrangements or other continuing
transactions between (a) the Company or any Subsidiary on the one hand, and (b)
on the other hand, any officer, employee, consultant or director of the Company,
or any of non-PRC Subsidiaries, or any person owning any capital stock of the
Company or any Subsidiary or any member of the immediate family of such officer,
employee, consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder.

     

    (w)           Securities Act of
1933. Assuming the accuracy of the representations of the Purchasers set
forth in Section 2.2 (d)-(i) hereof, the Company has complied with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Units hereunder. Neither the Company nor anyone acting
on its behalf, directly or indirectly, has or will sell, offer to sell or
solicit offers to buy any of the Units, the Preferred Shares, the Common Shares,
the Warrants or similar securities to, or solicit offers with respect thereto
from, or enter into any preliminary conversations or negotiations relating
thereto with, any person, or has taken or will take any action so as to bring
the issuance and sale of any of the Units, the Preferred Shares, the Common
Shares and the Warrants in violation of the registration provisions of the
Securities Act and applicable state securities laws, and neither the Company nor
any of its affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or sale
of any of the Units, the Preferred Shares, the Common Shares and the
Warrants.

     

    (x)           Governmental
Approvals. Except for the filing of any notice prior or subsequent to the
Closing Date that may be required under applicable state and/or Federal
securities laws (which if required, shall be filed on a timely basis), including
the filing of a Form D and a registration statement or statements pursuant to
the Registration Rights Agreement, and the filing of the Series A Certificate of
Designation with the Secretary of State for the State of Nevada, no
authorization, consent, approval, license, exemption of, filing or registration
with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the execution or delivery of the Units, the Preferred Shares,
the Common Shares and the Warrants, or for the performance by the Company of its
obligations under the Transaction Documents.

    
      
         

      

      
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    (y)           Employees. Except as
disclosed on Schedule
2.1(y), neither the Company nor any Subsidiary has any collective
bargaining arrangements covering any of its employees.  Schedule 2.1(y) sets
forth a list of the employment contracts, agreements regarding proprietary
information, non-competition agreements, non-solicitation agreements,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant to be
employed or engaged by the Company. Since September 30, 2009, no officer,
consultant or key employee of the Company or any Subsidiary whose termination,
either individually or in the aggregate, would have a Material Adverse Effect,
has terminated or, to the knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company or any
Subsidiary.

     

    (z)           Absence of Certain
Developments. Except as disclosed on Schedule 2.1(z),
since September 30, 2009, neither the Company, the non-PRC Subsidiaries, nor the
PRC Subsidiary have:

     

     (i)          issued
any stock, bonds or other corporate securities or any rights, options or
warrants with respect thereto;

     

     (ii)         borrowed
any amount or incurred or become subject to any liabilities (absolute or
contingent) except current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the current liabilities
incurred in the ordinary course of business during the comparable portion of its
prior fiscal year, as adjusted to reflect the current nature and volume of the
Company’s or such Subsidiary’s business;

     

     (iii)        discharged
or satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business;

     

     (iv)        declared
or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock;

     

     (v)        
sold, assigned or transferred any other tangible assets, or canceled any debts
or claims, except in the ordinary course of business;

     

     (vi)       
sold, assigned or transferred any patent rights, trademarks, trade names,
copyrights, trade secrets or other intangible assets or intellectual property
rights, or disclosed any proprietary confidential information to any person
except to customers in the ordinary course of business or to the Purchasers or
their representatives;

     

     (vii)     
 suffered any substantial losses or waived any rights of material value,
whether or not in the ordinary course of business, or suffered the loss of any
material amount of prospective business;

     

     (viii)    
 made any changes in employee compensation except in the ordinary course of
business and consistent with past practices;

     

     (ix)       
 made capital expenditures or commitments therefor that aggregate in excess
of $50,000;

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

     (x)         
entered into any other transaction other than in the ordinary course of
business, or entered into any other material transaction, whether or not in the
ordinary course of business;

     

     (xi)       
 made charitable contributions or pledges in excess of
$10,000;

     

     (xii)      
 suffered any material damage, destruction or casualty loss, whether or not
covered by insurance;

     

     (xiii)     
 experienced any material problems with labor or management in connection
with the terms and conditions of their employment;

     

     (xiv)     
 effected any two or more events of the foregoing kind which in the
aggregate would be material to the Company or its subsidiaries; or

     

     (xv)       
entered into an agreement, written or otherwise, to take any of the foregoing
actions.

     

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

     

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

    
      
         

      

      
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    (cc)         No Integrated
Offering. Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales of any security or solicited any offers to buy any security under
circumstances that would cause the offering of the Shares pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes of
the Securities Act which would prevent the Company from selling the Shares
pursuant to Rule 506 under the Securities Act, nor will the Company or any of
its affiliates take any action or steps that would cause the offering of the
Shares to be integrated with other offerings. The Company does not have any
registration statement pending before the Commission or currently under the
Commission’s review and since July 1, 2009, other than as contemplated under the
Transaction Documents, the Company has not offered or sold any of its equity
securities or debt securities convertible into shares of Common
Stock.

     

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

     

    (ee)         Additional PRC Subsidiary’s
Representations and Warranties.

     

     (i)           Schedule 2.1(ee)
hereto sets forth the PRC Subsidiary. All material consents, approvals,
authorizations or licenses requisite under PRC law for the due and proper
establishment and operation of the PRC Subsidiary have been duly obtained from
the relevant PRC governmental authorities and are in full force and
effect.

     

     (ii)           All
filings and registrations with the PRC governmental authorities required in
respect of the PRC Subsidiary and its capital structure and operations
including, without limitation, to the extent applicable, tax bureau and customs
authorities, have been duly completed in accordance with the relevant PRC rules
and regulations, except where the failure to complete such filings and
registrations does not, and would not, individually or in the aggregate, have a
Material Adverse Effect.

     

     (iii)           Neither
the Company, the non-PRC Subsidiaries, nor the PRC Subsidiary or affiliated
entity is in receipt of any letter or notice from any relevant PRC governmental
or quasi-governmental authority notifying it of the revocation, or otherwise
questioning the validity, of any licenses or qualifications issued to it or any
subsidy granted to it by any PRC governmental authority, or the need for
compliance or remedial actions in respect of the activities carried out by the
Company or such Subsidiary.

     

     (iv)           The
PRC Subsidiary has conducted its business activities within its permitted scope
of business or has otherwise operated its businesses in compliance with all
relevant legal requirements and with all requisite licenses and approvals
granted by competent PRC governmental authorities other than such non-compliance
that do not, and would not, individually or in the aggregate, have a Material
Adverse Effect. As to licenses, approvals and government grants and concessions
requisite or material for the conduct of any part of the PRC Subsidiary’
business which is subject to periodic renewal, neither the Company, the non-PRC
Subsidiaries, nor the PRC Subsidiary has any knowledge of any grounds on which
such requisite renewals will not be granted by the relevant PRC governmental
authorities.

    
      
         

      

      
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     (v)           Except
as disclosed in Schedule 2.1(ee), the
PRC Subsidiary has complied with all applicable PRC laws and regulations in all
material respects, including without limitation, laws and regulations pertaining
to welfare fund contributions, social benefits, medical benefits, insurance,
retirement benefits, pensions or the like.

     

    (ff)          No Additional
Agreements.  Neither the Company nor any of its affiliates has
any agreement or understanding with any Purchaser with respect to the
transactions contemplated by the Transaction Documents other than as specified
in the Transaction Documents.

     

    (gg)        Foreign Corrupt Practices
Act.  Neither the Company, the non-PRC Subsidiaries, the PRC
Subsidiary, nor to the knowledge of the Company, the non-PRC Subsidiaries, the
PRC Subsidiary, any agent or other person acting on behalf of the Company, the
non-PRC Subsidiaries or the PRC Subsidiary, has, directly or indirectly, (i)
used any funds, or will use any proceeds from the sale of the Units, for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company, or any Subsidiary of the
Company (or made by any Person acting on their behalf of which the Company is
aware) or any members of their respective management which is in violation of
any applicable law, or (iv) has violated in any material respect any provision
of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder which was applicable to the Company or any of its non-PRC
Subsidiaries.

     

    (hh)        PFIC.  None
of the Company or any of its non-PRC Subsidiaries is or intends to become a
“passive foreign investment company” within the meaning of Section 1297 of the
U.S. Internal Revenue Code of 1986, as amended.

     

    (ii)           OFAC. None of the
Company or any of its non-PRC Subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee, affiliate or person acting on behalf of
any of the Company or any of its non-PRC Subsidiaries, is currently subject to
any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the sale of the
Units, or lend, contribute or otherwise make available such proceeds to any
Subsidiary, joint venture partner or other Person or entity, towards any sales
or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
sanctioned by OFAC or for the purpose of financing the activities of any Person
currently subject to any U.S. sanctions administered by OFAC.

     

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

    
      
         

      

      
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    Section
2.2            Representations and
Warranties of the Purchasers. Each Purchaser hereby makes the following
representations and warranties to the Company as of the date hereof, with
respect solely to itself and not with respect to any other
Purchaser:

     

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

     

    (b)           Authorization and
Power. Each Purchaser has the requisite power and authority to enter into
and perform this Agreement and each of the other Transaction Documents to which
such Purchaser is a party and to purchase the Units, consisting of the Preferred
Shares, the Common Shares and Warrants, being sold to it hereunder. The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which such Purchaser is a party by such Purchaser and
the consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate, partnership or limited
liability company action, and no further consent or authorization of such
Purchaser or its Board of Directors, stockholders, partners, members, or
managers, as the case may be, is required. This Agreement and each of the other
Transaction Documents to which such Purchaser is a party has been duly
authorized, executed and delivered by such Purchaser and constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of such
Purchaser enforceable against such Purchaser in accordance with the terms
hereof.

     

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

     

    (d)           Status of Purchasers.
Each Purchaser is an “accredited investor” as defined in Regulation D, or a
“non-US person” as defined in Regulation S. Such Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act and such
Purchaser is not a broker-dealer, nor an affiliate of a
broker-dealer.

    
      
         

      

      
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    (e)        
   Acquisition for
Investment. Each Purchaser is acquiring the Units, and the underlying
Preferred Shares, Common Shares and the Warrants solely for its own account for
the purpose of investment and not with a view to or for sale in connection with
a distribution. The Purchaser does not have a present intention to sell the
Units, Preferred Shares, Common Shares or the Warrants, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of the Units, Preferred Shares, Common Shares or the Warrants to or
through any person or entity; provided, however, that by
making the representations herein and subject to Section 2.2(h) below, such
Purchaser does not agree to hold the Units, Preferred Shares, Common Shares or
the Warrants for any minimum or other specific term and reserves the right to
dispose of the Units, Preferred Shares, Common Shares or the Warrants at any
time in accordance with Federal and state securities laws applicable to such
disposition. Each Purchaser acknowledges that it is able to bear the financial
risks associated with an investment in the Units, Preferred Shares, Common
Shares and the Warrants and that it has been given full access to such records
of the Company, the non-PRC Subsidiaries and the PRC Subsidiary and to the
officers of the Company, the non-PRC Subsidiaries and the PRC Subsidiary and
received such information as it has deemed necessary or appropriate to conduct
its due diligence investigation and has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the Company’s stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company. Each Purchaser further acknowledges that such Purchaser
understands the risks of investing in companies domiciled and/or which operate
primarily in the PRC and that the purchase of the Units, Preferred Shares,
Common Shares and Warrants involves substantial risks.

     

    (f)         
  Additional
Representations and Warranties of Accredited Investors.  Each
Purchaser indicating that such Purchaser is an Accredited Investor on its
signature page to this Agreement, severally and not jointly, further makes the
representations and warranties to the Company set forth on Exhibit
B-1.

     

    (g)       
    Additional Representations
and Warranties of Non-U.S. Persons.  Each Purchaser indicating
that it is not a U.S. person on its signature page to this Agreement, severally
and not jointly, further makes the representations and warranties to the Company
set forth on Exhibit
B-2.

     

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

     

    (i)           
No General
Solicitation. Each Purchaser acknowledges that the Units were not offered
to such Purchaser by means of any form of general or public solicitation or
general advertising, or publicly disseminated advertisements or sales
literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of
communications.

    
      
         

      

      
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    (j)        
   Rule
144. Such Purchaser understands that the Shares must be held indefinitely
unless such Shares are registered under the Securities Act or an exemption from
registration is available. Such Purchaser acknowledges that such Purchaser is
familiar with Rule 144, of the rules and regulations of the Commission, as
amended, promulgated pursuant to the Securities Act (“Rule 144”), and that
such person has been advised that Rule 144 permits resales only under certain
circumstances. Such Purchaser understands that to the extent that Rule 144 is
not available, such Purchaser will be unable to sell any Shares without either
registration under the Securities Act or the existence of another exemption from
such registration requirement.

     

    (k)           General. Such
Purchaser understands that the Units are being offered and sold in reliance on a
transactional exemption from the registration requirements of Federal and state
securities laws and the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
such Purchaser set forth herein in order to determine the applicability of such
exemptions and the suitability of such Purchaser to acquire the
Units.

     

    (l)      
     Independent
Investment. Except as may be disclosed in any filings with the Commission
by the Purchasers under Section 13 and/or Section 16 of the Exchange Act, no
Purchaser has agreed to act with any other Purchaser for the purpose of
acquiring, holding, voting or disposing of the Shares purchased hereunder for
purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting
independently with respect to its investment in the Shares.

     

    (m)          Brokers. Other than
Tripoint Global Equities and selected dealers of Tripoint Global Equities, no
Purchaser has any knowledge of any brokerage or finder’s fees or commissions
that are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other person or
entity with respect to the transactions contemplated by this
Agreement.

     

    (n)           Confidential
Information.  Each Purchaser agrees that such Purchaser and its
employees, agents and representatives will keep confidential and will not
disclose, divulge or use (other than for purposes of monitoring its investment
in the Company) any confidential information which such Purchaser may obtain
from the Company pursuant to financial statements, reports and other materials
submitted by the Company to such Purchaser pursuant to this Agreement, unless
such information is known to the public through no fault of such Purchaser or
his or its employees or representatives; provided, however, that a Purchaser may
disclose such information (i) to its attorneys, accountants and other
professionals in connection with their representation of such Purchaser in
connection with such Purchaser’s investment in the Company, (ii) to any
prospective permitted transferee of the Shares, so long as the prospective
transferee agrees to be bound by the provisions of this Section 2.2(n), or (iii)
to any general partner or affiliate of such Purchaser.

     

    ARTICLE
III

     

    Covenants

     

    The
Company covenants with each of the Purchasers as follows, which covenants are
for the benefit of the Purchasers and their permitted assignees (as defined
herein).

    
      
         

      

      
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    Section
3.1            Securities
Compliance. The Company shall notify the Commission in accordance with
its rules and regulations, of the transactions contemplated by any of the
Transaction Documents, including filing a Form D with respect to the Units, the
Preferred Shares, Common Shares, Warrants, the Conversion Shares and Warrant
Shares as required under Regulation D and applicable “blue sky” laws, and shall
take all other necessary action and proceedings as may be required and permitted
by applicable law, rule and regulation, for the legal and valid issuance of the
Units, the Preferred Shares, the Common Shares, the Warrants, Conversion Shares
and the Warrant Shares to the Purchasers or subsequent holders.

     

    Section
3.2            Registration and
Listing. The Company shall (a) comply in all respects with its reporting
and filing obligations under the Exchange Act, (b) comply with all requirements
related to any registration statement filed pursuant to the Registration Rights
Agreement, and (c) not take any action or file any document (whether or not
permitted by the Securities Act or the rules promulgated thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the Exchange Act or Securities Act except as
permitted under the Transaction Documents. Subject to the terms of the
Transaction Documents, the Company further covenants that it will take such
further action as the Purchasers may reasonably request, all to the extent
required from time to time to enable the Purchasers to sell the Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act, as
amended.

     

    Section
3.3            Intentionally
Omitted.

     

    Section
3.4            Compliance with Laws.
The Company shall comply, and cause each Subsidiary to comply in all respects,
with all applicable laws, rules, regulations and orders, except for such
non-compliance which singularly or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. .

     

    Section
3.5            Keeping of Records and Books
of Account. The Company shall keep and cause each Subsidiary and each PRC
Subsidiary to keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied, reflecting
all financial transactions of the Company, the non-PRC Subsidiaries and the PRC
Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.

     

    Section
3.6            Reporting
Requirements. If the Commission ceases making periodic reports filed
under the Exchange Act available via the IDEA system, then at a Purchaser’s
request the Company shall furnish the following to such Purchaser so long as
such Purchaser shall beneficially own any Shares:

     

    (a)           Quarterly
Reports filed with the Commission on Form 10-Q as soon as practicable after the
document is filed with the Commission, and in any event within five (5) business
days after the document is filed with the Commission;

    
      
         

      

      
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    (b)           Annual
Reports filed with the Commission on Form 10-K as soon as practicable after the
document is filed with the Commission, and in any event within five (5) business
days after the document is filed with the Commission; and

     

    (c)           Copies
of all notices and information, including without limitation notices and proxy
statements in connection with any meetings, that are provided to holders of
shares of Common Stock, contemporaneously with the delivery of such notices or
information to such holders of Common Stock.

     

    Section
3.7           Amendments. The
Company shall not amend or waive any provision of the Articles or Bylaws of the
Company in any way that would adversely affect the liquidation preferences,
dividends rights, conversion rights, voting rights or redemption rights of the
Preferred Shares; provided, however, that while
the Preferred Shares are outstanding, any creation and issuance of another
series of Junior Stock (as defined in the Series A Certificate of Designation)
shall not be deemed to materially and adversely affect such rights, preferences
or privileges.

     

    Section
3.8            Other Agreements. The
Company shall not enter into any agreement the terms of which would restrict or
impair the ability of the Company to perform its obligations under any
Transaction Document.

     

    Section
3.9            Distributions. So
long as any Preferred Shares remain outstanding, the Company agrees that it
shall not declare or pay any dividends or make any distributions to any
holder(s) of Common Stock unless such dividends or distributions are also
simultaneously paid or made to the holders of the Preferred Shares on an
as-converted basis.

     

    Section
3.10          Reservation of
Shares. So long as any of the Preferred Shares or Warrants remain
outstanding, the Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than one hundred
ten percent (110%) of the aggregate number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares and the Warrant
Shares.

    
      
         

      

      
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    Section
3.11          Transfer
Agent.  The Company has engaged the transfer agent and
registrar listed on Schedule 3.11 hereto
(the “Transfer
Agent”) with respect to its Common Stock, who is DTC and DWAC eligible
and who will recognize, execute and honor the Irrevocable Transfer Agent
Instructions (as defined below).  As a condition to Closing, the
Company shall issue irrevocable instructions to its transfer agent, and any
subsequent transfer agent, to issue certificates, registered in the name of each
Purchaser or its respective nominee(s), for the Conversion Shares and the
Warrant Shares in such amounts as specified from time to time by each Purchaser
to the Company upon conversion of the Preferred Shares or exercise of the
Warrants in the form of Exhibit I attached
hereto (the “Irrevocable Transfer Agent
Instructions”). Prior to registration of the Conversion Shares and the
Warrant Shares under the Securities Act, all such certificates shall bear the
restrictive legend specified in Section 5.1 of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 3.11 will be given by the Company to
its transfer agent with respect to the Conversion Shares and Warrant Shares and
that the Shares shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement, in compliance
with applicable law and the Registration Rights Agreement. If a Purchaser
provides the Company with an opinion of counsel, in a generally acceptable form,
to the effect that a public sale, assignment or transfer of the Shares may be
made without registration under the Securities Act or the Purchaser provides the
Company with reasonable assurances that such Shares can be sold pursuant to Rule
144 without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Company shall permit the
transfer, and, in the case of the Conversion Shares and the Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by such Purchaser and without any
restrictive legend. The Company acknowledges that a breach by it of its
obligations under this Section 3.11 will cause irreparable harm to the
Purchasers by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 3.11 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 3.11, that the Purchasers shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being
required.

     

    Section
3.12          Disposition of
Assets. So long as any Preferred Shares remain outstanding, neither the
Company nor any Subsidiary shall sell, transfer or otherwise dispose of any of
its material properties, assets and rights including, without limitation, its
software and intellectual property, to any person except for (i) sales to
customers in the ordinary course of business (ii) sales or transfers between the
Company, the non-PRC Subsidiaries and the PRC Subsidiary, or (iii) otherwise
with the prior written consent of the holders of a majority of the Preferred
Shares then outstanding.

     

    Section
3.13          Reporting Status. So
long as a Purchaser beneficially owns any of the Shares, the Company shall
timely file all reports required to be filed with the Commission pursuant to the
Exchange Act, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination.

     

    Section
3.14          Disclosure of
Transaction. The Company shall issue a press release describing the
material terms of the transactions contemplated hereby (the “Press Release”) as
soon as practicable after the Closing but in no event later than 9:00 A.M.
Eastern Time on the first Business Day following the Closing. The Company shall
also file with the Commission, the Form 8-K describing the material terms of the
transactions contemplated hereby (and attaching as exhibits thereto this
Agreement, the Registration Rights Agreement, the Series A Certificate of
Designation, the form of Lock-Up Agreement, the Securities Escrow Agreement, the
form of each series of Warrant and the Press Release) within four (4) Business
Days following the Closing Date.  The Press Release and Form 8-K shall
be subject to prior review and comment by counsel for the Purchasers. “Business Day” means
any day during which the NYSE AMEX (“AMEX”) (or other
principal exchange) shall be open for trading.

    
      
         

      

      
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    Section
3.15          Disclosure of Material
Information. The Company, the non-PRC Subsidiaries and the PRC Subsidiary
covenant and agree that neither it nor any other person acting on its or their
behalf has provided or, from and after the filing of the Press Release, will
provide any Purchaser or its agents or counsel with any information that the
Company believes constitutes material non-public information (other than with
respect to the transactions contemplated by this Agreement), unless prior
thereto such Purchaser shall have executed a specific written agreement
regarding the confidentiality and use of such information.  The
Company understands and confirms that each Purchaser shall be relying on the
foregoing covenants in effecting transactions in securities of the
Company.  At the time of the filing of the Press Release, no Purchaser
shall be in possession of any material, nonpublic information received from the
Company, any of its subsidiaries or any of its respective officers, directors,
employees or agents, that is not disclosed in the Press Release.  The
Company shall not disclose the identity of any Purchaser in any filing with the
Commission except as required by the rules and regulations of the Commission
thereunder.  In the event of a breach of the foregoing covenant by the
Company, any of its subsidiaries, or any of its or their respective officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, a Purchaser may notify the Company, and the
Company shall make public disclosure of such material nonpublic information
within two (2) trading days of such notification.

     

    Section
3.16          Pledge of Securities.
The Company acknowledges and agrees that the Shares may be pledged by a
Purchaser in connection with a bona fide margin agreement
or other loan or financing arrangement that is secured by the Common Stock. The
pledge of Common Stock shall not be deemed to be a transfer, sale or assignment
of the Common Stock hereunder, and no Purchaser effecting a pledge of Common
Stock shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document; provided, that a
Purchaser and its pledgee shall be required to comply with the provisions of
Article V hereof in order to effect a sale, transfer or assignment of Common
Stock to such pledgee. At a Purchaser’s expense, the Company hereby agrees to
execute and deliver such documentation as a pledgee of the Common Stock may
reasonably request in connection with a pledge of the Common Stock to such
pledgee by a Purchaser, in accordance with applicable laws relating to the
transfer of the securities.

     

    Section
3.17          Lock-Up Agreements.
The persons listed on Schedule 3.17
attached hereto shall be subject to the terms and provisions of the Lock-Up
Agreement (the “Lock-Up Agreement”),
which shall provide the manner in which certain stockholders of the Company may
sell, transfer or dispose of their shares of Common Stock.

     

    Section
3.18          DTC. Not later than
the effective date of the Registration Statement (as defined in the Registration
Rights Agreement), the Company shall cause its Common Stock to be eligible for
transfer with its transfer agent pursuant to the Depository Trust Company
Automated Securities Transfer Program.

     

    Section
3.19          Sarbanes-Oxley Act.
The Company shall be in compliance with the applicable provisions of the
Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated
thereunder, as required under such Act.

     

    Section
3.20          No Integrated
Offerings. The Company shall not make any offers or sales of any security
(other than the securities being offered or sold hereunder) under circumstances
that would require registration of the securities being offered or sold
hereunder under the Securities Act.

    
      
         

      

      
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    Section
3.21          No Commissions in Connection
with Conversion of Preferred Shares. In connection with the conversion of
the Preferred Shares into Conversion Shares, neither the Company nor any person
acting on its behalf will take any action that would result in the Conversion
Shares being exchanged by the Company other than with the then existing holders
of the Preferred Shares exclusively where no commission or other remuneration is
paid or given directly or indirectly for soliciting the exchange in compliance
with Section 3(a)(9) of the Securities Act.

     

    Section
3.22          No Manipulation of
Price.  The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.

     

    Section
3.23          Subsequent
Financings.

     

    (a)           So
long as a Purchaser owns at least ten percent (10%) of the total number of
Preferred Shares such Purchaser purchased on the date of this Agreement (an
“Eligible
Purchaser”), the Company covenants and agrees to promptly notify in
writing (a "Rights
Notice") the Eligible Purchasers of the terms and conditions of any
proposed offer or sale to, or exchange with (or other type of distribution to)
any third party (a “Subsequent
Financing”), of Common Stock or any debt or equity securities
convertible, exercisable or exchangeable into Common Stock; provided, however, prior to
delivering to each Eligible Purchaser a Rights Notice, the Company shall first
deliver to each Eligible Purchaser a written notice of its intention to effect a
Subsequent Financing (“Pre-Notice”) within
three (3) Business Days of receiving an applicable offer, which Pre-Notice shall
ask such Eligible Purchaser if it wants to review the details of such
financing.  Upon the request of an Eligible  Purchaser, and
only upon a request by such Eligible Purchaser within three (3) Business Days of
receipt of a Pre-Notice, the Company shall promptly, but no later than two (2)
Business Days after such request, deliver a Rights Notice to such Eligible
Purchaser.  The Rights Notice shall describe, in reasonable detail,
the proposed Subsequent Financing, the names and investment amounts of all
investors participating in the Subsequent Financing (if known), the proposed
closing date of the Subsequent Financing, which shall be no earlier than ten
(10) Business Days from the date of the Rights Notice, and all of the terms and
conditions thereof and proposed definitive documentation to be entered into in
connection therewith.  The Rights Notice shall provide each Eligible
Purchaser an option (the “Rights Option”)
during the ten (10) Business Days following delivery of the Rights Notice (the
“Option
Period”) to inform the Company whether such Eligible Purchaser will
purchase up to its pro rata portion of all or a portion of the securities being
offered in such Subsequent Financing on the same, absolute terms and conditions
as contemplated by such Subsequent Financing, provided that, the amount of such
purchase shall not exceed such Eligible Purchaser’s Purchase Price hereunder
except as allowed by the following sentence.  If any Eligible
Purchaser elects not to participate in such Subsequent Financing, the other
Eligible Purchasers may participate on a pro-rata basis so long as such
participation in the aggregate does not exceed the total Purchase Price
hereunder.  For purposes of this Section, all references to “pro rata”
means, for any Eligible Purchaser electing to participate in such Subsequent
Financing, the percentage obtained by dividing (x) the number of Preferred
Shares purchased by such Eligible Purchaser at the Closing by (y) the total
number of all of the Preferred Shares purchased by all of the participating
Eligible Purchasers at the Closing.  Delivery of any Rights Notice
constitutes a representation and warranty by the Company that there are no other
material terms and conditions, arrangements, agreements or otherwise except for
those disclosed in the Rights Notice, to provide additional compensation to any
party participating in any proposed Subsequent Financing, including, but not
limited to, additional compensation based on changes in the Purchase Price or
any type of reset or adjustment of a purchase or conversion price or to issue
additional securities at any time after the closing date of a Subsequent
Financing.  If the Company does not receive notice of exercise of the
Rights Option from any or all of Eligible Purchasers within the Option Period,
the Company shall have the right to close the Subsequent Financing on the
scheduled closing date set forth in the Rights Notice (or within sixty (60) days
thereafter) without the participation of any or all of such Eligible Purchasers;
provided that, all of the material terms and conditions of the closing are the
same as those provided to the Eligible Purchasers in the Rights
Notice.  If the closing of the proposed Subsequent Financing does not
occur on the scheduled closing date set forth in the Rights Notice (or within
sixty (60) days thereafter), any closing of the contemplated Subsequent
Financing or any other Subsequent Financing shall be subject to all of the
provisions of this Section 3.23(a), including, without limitation, the delivery
of a new Rights Notice.  The provisions of this Section 3.23(a) shall
not apply to issuances of securities in a Permitted Financing.

    
      
         

      

      
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    (b)           For
purposes of this Agreement, a Permitted Financing (as defined hereinafter) shall
not be considered a Subsequent Financing.  A "Permitted Financing"
shall mean (i) securities issued pursuant to a bona fide acquisition of another
business entity or business segment of any such entity by the Company pursuant
to a merger, purchase of substantially all the assets or any type of
reorganization (each an “Acquisition”)
provided that (A) the Company will own more than fifty percent (50%) of the
voting power of such business entity or business segment of such entity and (B)
such Acquisition is approved by the Company’s Board of Directors; (ii)
securities issued pursuant to the conversion or exercise of convertible or
exercisable securities issued or outstanding on or prior to the date of this
Agreement or issued pursuant to this Agreement (so long as the terms governing
the conversion or exercise price in such securities are not amended to lower
such price and/or adversely affect the Purchasers); (iii) securities issued in
connection with bona fide strategic license agreements or other partnering
arrangements so long as such issuances are not for the primary purpose of
raising capital; (iv) Common Stock issued or the issuance or grants of options
to purchase Common Stock, in each case, at no less than the then-applicable fair
market value, pursuant to equity incentive plans that are adopted by the
Company’s Board of Directors; (v) securities issued to any placement agent and
its respective designees for the transactions contemplated by this Agreement;
(vi) securities issued at no less than the then-applicable fair market value to
advisors or consultants (including, without limitation, financial advisors and
investor relations firms) in connection with any engagement letter or consulting
agreement, provided that any such issuance is approved by the Company’s Board of
Directors; (vii) securities issued to financial institutions or lessors in
connection with reasonable commercial credit arrangements, equipment financings
or similar transactions, provided that any such issue is approved by the
Company’s Board of Directors; (viii) securities issued to vendors or customers
or to other persons in similar commercial situations as the Company, provided
that any such issue is approved by the Company’s Board of Directors; and (ix)
securities issued in connection with any recapitalization of the
Company.

    
      
         

      

      
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    ARTICLE
IV

     

    CONDITIONS

     

    Section
4.1            Conditions Precedent to the
Obligation of the Company to Sell the Units. The obligation hereunder of
the Company to issue and sell the Units, and the underlying Preferred Shares,
Common Shares and the Warrants to the Purchasers is subject to the satisfaction
or waiver, at or before the Closing, of each of the conditions set forth below.
These conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion.

     

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

     

    (b)           Performance by the
Purchasers. Each Purchaser shall have performed, satisfied and complied
in all respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by such Purchaser at or
prior to the Closing.

     

    (c)           No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.

     

    (d)           Delivery of Purchase
Price. The Purchase Price for each of the Units sold shall have been
delivered to the escrow agent pursuant to the Closing Escrow
Agreement.

     

    (e)           Delivery of Transaction
Documents. The Transaction Documents to which the Purchasers are parties
shall have been duly executed and delivered by the Purchasers to the
Company.

     

    Section
4.2            Conditions Precedent to the
Obligation of the Purchasers to Purchase the Units. The obligation
hereunder of each Purchaser to acquire and pay for the Units is subject to the
satisfaction or waiver, at or before the Closing, of each of the conditions set
forth below. These conditions are for each Purchaser’s sole benefit and may be
waived by such Purchaser at any time in its sole discretion.

     

    (a)           Accuracy of the Company’s
Representations and Warranties. Each of the representations and
warranties of the Company in this Agreement and the other Transaction Documents
that are qualified by materiality or by reference to any Material Adverse Effect
shall be true and correct in all respects, and all other representations and
warranties shall be true and correct in all material respects, as of the date
when made and as of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a particular date,
which shall be true and correct in all respects as of such
date.

    
      
         

      

      
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    (b)           Performance by the
Company. The Company shall have performed, satisfied and complied in all
respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing.

     

    (c)           No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.

     

    (d)           No Proceedings or
Litigation. No action, suit or proceeding before any arbitrator or any
governmental authority shall have been commenced, and no investigation by any
governmental authority shall have been threatened, against the Company or any
Subsidiary, or any of the officers, directors or affiliates of the Company or
any Subsidiary seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.

     

    (e)           Series A Certificate of
Designation of Rights and Preferences. Prior to the Closing, the Articles
of Amendment to the Articles, including the Series A Certificate of Designation
shall have been filed with the Secretary of State of Nevada.

     

    (f)           Opinions of Counsel,
Etc. At the Closing, the Purchasers shall have received an opinion of (i)
Lionel Sawyer & Collins, Nevada legal counsel to the Company, dated the date
of the Closing, in substantially the form of Exhibit J hereto, and
such other certificates and documents as the Purchasers or its counsel shall
reasonably require incident to the Closing, (ii) Loeb & Loeb LLP, securities
counsel to the Company, dated the date of the Closing, in substantially the form
of Exhibit K;
and (iii) Han Kun Law Offices, PRC counsel to the PRC Subsidiary, dated the date
of the Closing with respect to such matters as the Purchasers may reasonably
request.

     

    (g)           Registration Rights
Agreement. On the Closing Date, the Company shall have executed and
delivered the Registration Rights Agreement to each Purchaser.

     

    (h)           Certificates. The
Company shall have executed and delivered to the Purchasers the certificates (in
such denominations as such Purchaser shall request) for the Preferred Shares,
Common Shares and the Warrants being acquired by such Purchaser at the Closing
(in such denominations as such Purchaser shall request) to such address set
forth next to each Purchasers name on Exhibit A with
respect to the Closing.

     

    (i)           Resolutions. The
Board of Directors of the Company shall have adopted resolutions consistent with
Section 2.1(b) hereof in a form reasonably acceptable to such Purchaser (the
“Resolutions”).

    
      
         

      

      
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    (j)           Reservation of
Shares. As of the Closing Date, the Company shall have reserved out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Preferred Shares and the exercise of the Warrants, a
number of shares of Common Stock equal to one hundred ten percent (110%) of the
aggregate number of Conversion Shares issuable upon conversion of the Preferred
Shares issued or to be issued pursuant to this Agreement and the number of
Warrant Shares issuable upon exercise of the number of Warrants issued or to be
issued pursuant to this Agreement.

     

    (k)           Lock-Up Agreements.
As of the Closing Date, the persons listed on Schedule 3.17 shall
have delivered to the Purchasers fully executed Lock-Up Agreements.

     

    (l)        
   Secretary’s
Certificate. The Company shall have delivered to such Purchaser a
secretary’s certificate, dated as of the Closing Date, as to (i) the resolutions
adopted by the Board of Directors of the Company consistent with Section 2.1(b),
(ii) the Articles, (iii) the Bylaws, (iv) the Series A Certificate of
Designation, each as in effect at the Closing, and (v) the authority and
incumbency of the officers of the Company executing the Transaction Documents
and any other documents required to be executed or delivered in connection
therewith.

     

    (m)          Officer’s
Certificate. The Company shall have delivered to the Purchasers a
certificate of an executive officer of the Company, dated as of the Closing
Date, confirming the accuracy of the Company’s representations, warranties and
covenants as of the Closing Date and confirming the compliance by the Company
with the conditions precedent set forth in this Section 4.2 as of the Closing
Date.

     

    (n)       
   Closing Escrow
Agreement. On the Closing Date, the Company and the escrow agent shall
have executed and delivered the Closing Escrow Agreement to each
Purchaser.

     

    (o)           Securities Escrow
Agreement. On the Closing Date, the Securities Escrow Agreement shall
have been executed by the parties thereto and the Escrow Shares (as defined in
the Securities Escrow Agreement) shall have been deposited into the escrow
account pursuant to the terms of the Securities Escrow Agreement.

     

    (p)           Material Adverse
Effect. No Material Adverse Effect shall have occurred at or before the
Closing Date.

     

    (q)           Draft Form 8-K. The
Company shall have delivered to each of the Purchasers, a draft of the Form 8-K
(the “Draft Form
8-K”), in substantially final form, that it proposes to file with the
Commission, which Draft Form 8-K, subject only to Purchaser’s comments, if any,
shall be reasonably acceptable to the Purchasers.

    
      
         

      

      
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    ARTICLE
V

     

    Stock
Certificate Legend

     

    Section
5.1            Legend. Each
certificate representing the Preferred Shares, the Common Shares, the Warrants
and Warrant Shares and if appropriate, securities issued upon conversion or
exercise thereof, shall be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required by
applicable state securities or “blue sky” laws):

     

    “THESE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

     

    Each
certificate representing the Preferred Shares, the Common Shares, the Warrants
and Warrant Shares and if appropriate, securities issued upon conversion or
exercise thereof, if such securities are being offered to Purchasers in reliance
upon Regulation S, shall be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required by
applicable state securities or “blue sky” laws):

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES
ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE
BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER
CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.”

    
      
         

      

      
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    The
Company agrees to reissue certificates representing any of the Conversion Shares
or the Warrant Shares, without the legend set forth above if at such time, prior
to making any transfer of any such securities, such holder thereof shall give
written notice to the Company describing the manner and terms of such sale and
removal as the Company may reasonably request.  Such proposed transfer
and removal will not be effected until: (a) either (i) the Company has received
an opinion of counsel reasonably satisfactory to the Company, to the effect that
the registration of the Conversion Shares or the Warrant Shares under the
Securities Act is not required in connection with such proposed transfer, (ii) a
registration statement under the Securities Act covering such proposed
disposition has been filed by the Company with the Commission and has become
effective under the Securities Act, (iii) the Company has received other
evidence reasonably satisfactory to the Company that such registration and
qualification under the Securities Act and state securities laws are not
required, or (iv) the holder provides the Company with reasonable assurances
that such security can be sold pursuant to Rule 144(i)  under the
Securities Act; and (b) either (i) the Company has received an opinion of
counsel reasonably satisfactory to the Company, to the effect that registration
or qualification under the securities or “blue sky” laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or “blue sky” laws has been effected or a valid
exemption exists with respect thereto. The Company will respond to any such
notice from a holder within five (5) business days. In the case of any proposed
transfer under this Section 5.1, the Company will use reasonable efforts to
comply with any such applicable state securities or “blue sky” laws, but shall
in no event be required, (x) to qualify to do business in any state where it is
not then qualified, (y) to take any action that would subject it to tax or to
the general service of process in any state where it is not then subject, or (z)
to comply with state securities or “blue sky” laws of any state for which
registration by coordination is unavailable to the Company. The restrictions on
transfer contained in this Section 5.1 shall be in addition to, and not by way
of limitation of, any other restrictions on transfer contained in any other
section of this Agreement. Whenever a certificate representing the Conversion
Shares or the Warrant Shares is required to be issued to a Purchaser without a
legend, in lieu of delivering physical certificates representing the Conversion
Shares or the Warrant Shares (provided that a registration statement under the
Securities Act providing for the resale of the Warrant Shares and Conversion
Shares is then in effect), the Company may cause its transfer agent to
electronically transmit the Conversion Shares or Warrant Shares to a Purchaser
by crediting the account of such Purchaser or such Purchaser’s prime broker with
the DTC through its DWAC system (to the extent not inconsistent with any
provisions of this Agreement).

     

    ARTICLE
VI

     

    Indemnification

     

    Section
6.1            General Indemnity.
The Company agrees to indemnify and hold harmless the Purchasers (and their
respective directors, officers, managers, partners, members, shareholders,
affiliates, agents, successors and assigns) from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
the Purchasers as a result of any breach of the representations, warranties or
covenants made by the Company herein. Each Purchaser severally but not jointly
agrees to indemnify and hold harmless the Company and its directors, officers,
affiliates, agents, successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
the Company as a result of any breach of the representations, warranties or
covenants made by such Purchaser herein. The maximum aggregate liability of each
Purchaser pursuant to its indemnification obligations under this Article VI
shall not exceed the portion of the Purchase Price paid by such Purchaser
hereunder. In no event shall any “Indemnified Party” (as defined below) be
entitled to recover consequential or punitive damages resulting from a breach or
violation of this Agreement.

    
      
         

      

      
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    Section
6.2            Indemnification
Procedure. Any party entitled to indemnification under this Article VI
(an “Indemnified
Party”) will give written notice to the indemnifying party of any matters
giving rise to a claim for indemnification; provided, that the
failure of any party entitled to indemnification hereunder to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under this Article VI except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an Indemnified Party in respect of which
indemnification is sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the Indemnified Party a
conflict of interest between it and the indemnifying party may exist with
respect of such action, proceeding or claim, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. In the event that the
indemnifying party advises an Indemnified Party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the Indemnified Party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the Indemnified Party’s
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The Indemnified Party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party which relates to such
action or claim. The indemnifying party shall keep the Indemnified Party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the Indemnified Party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior written consent, provided, however, that the
indemnifying party shall be liable for any settlement if the indemnifying party
is advised of the settlement but fails to respond to the settlement within
thirty (30) days of receipt of such notification. Notwithstanding anything in
this Article VI to the contrary, the indemnifying party shall not, without the
Indemnified Party’s prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future
obligation on the Indemnified Party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all liability in respect of such claim. The
indemnity agreements contained herein shall be in addition to (a) any cause of
action or similar rights of the Indemnified Party against the indemnifying party
or others, and (b) any liabilities the indemnifying party may be subject to
pursuant to the law.

    
      
         

      

      
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    ARTICLE
VII

     

    Miscellaneous

     

    Section
7.1            Fees and Expenses.
Except as otherwise set forth in this Agreement and the other Transaction
Documents, each party shall pay the fees and expenses of its advisors, counsel,
accountants and other experts, if any, and all other expenses, incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement, provided that the Company shall pay all actual
and reasonable attorneys’ fees and expenses (including disbursements and
out-of-pocket expenses) up to a maximum of $30,000 incurred by the Purchasers in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Transaction Documents.  The Company shall also
pay all reasonable fees and expenses incurred by the Purchasers in connection
with the enforcement of this Agreement or any of the other Transaction
Documents, including, without limitation, all reasonable attorneys’ fees and
expenses but only if the Purchasers are successful in any litigation or
arbitration relating to such enforcement.  Any such fees and expenses
that remain outstanding shall be paid out of the escrow account pursuant to the
Closing Escrow Agreement, prior to the release of the Purchase Price to the
Company.

     

    Section
7.2            Specific Enforcement,
Consent to Jurisdiction.

     

    (a)           The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Documents were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement or the other Transaction Documents and to enforce
specifically the terms and provisions hereof or thereof, this being in addition
to any other remedy to which any of them may be entitled by law or
equity.

     

    (b)           Each
of the Company and the Purchasers (i) hereby irrevocably submits to the
jurisdiction of the United States District Court sitting in the Southern
District of New York and the courts of the State of New York located in New York
county for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement or any of the other Transaction Documents or the
transactions contemplated hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchasers
consents to process being served in any such suit, action or 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 in this Section
7.3 shall affect or limit any right to serve process in any other manner
permitted by law.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  The
Company hereby appoints Loeb & Loeb LLP, with offices at 345 Park Avenue,
New York, NY 10153 as its agent for service of process in New
York.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.

    
      
         

      

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

     

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

    

    If to the
Company:

    

    Remediation
Services, Inc.

    c/o China
LianDi Clean Technology Engineering Ltd.

    4th Floor
Tower B. Wanliuxingui Building,

    No. 28
Wanquanzhuang Road, Haidian District

    Beijing,
100089  China

    Attention:
Chief Executive Officer

    Tel. No.:
(86) 010-5872-0171

    
      
         

      

      
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    Fax
No.:  (86) 010-5872-0181

    

    with
copies (which shall not constitute notice) to:

    

    Loeb
& Loeb LLP

    345 Park
Avenue

    New York,
NY 10154

    Attention:
Mitchell S. Nussbaum, Esq.

    Tel. No.:
(212) 407-4000

    Fax No.:
(212) 407-4990

    

    If to any
Purchaser:  At the address of such Purchaser set forth on Exhibit A to this
Agreement, as the case may be, with copies to Purchaser’s counsel as set forth
on Exhibit A or
as specified in writing by such Purchaser.

    

    Any party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.

     

    Section
7.5            Waivers. No waiver by
any party of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any other provisions, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right accruing to it thereafter.

     

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

     

    Section
7.7            Successors and
Assigns.  This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Purchasers, as
applicable, provided, however, that,
subject to federal and state securities laws and as otherwise provided in the
Transaction Documents, a Purchaser may assign its rights and delegate its duties
hereunder in whole or in part (i) to a third party acquiring all or
substantially all of its Shares or Warrants in a private transaction or (ii) to
an affiliate, in each case, without the prior written consent of the Company or
the other Purchasers, after notice duly given by such Purchaser to the Company
provided, that
no such assignment or obligation shall affect the obligations of such Purchaser
hereunder and that such assignee agrees in writing to be bound, with respect to
the transferred securities, by the provisions hereof that apply to the
Purchasers.  The provisions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties.  Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. If any Purchaser transfers Preferred Shares purchased
hereunder, any such penalty shares or liquidated damages, as the case may be,
pursuant to this Agreement shall similarly transfer to such transferee with no
further action required by the purchaser or the Company.

    
      
         

      

      
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    Section
7.8            No Third Party
Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other
person.

     

    Section
7.9            Governing Law. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts of
law principles which would result in the application of the substantive law of
another jurisdiction. This Agreement shall not be interpreted or construed with
any presumption against the party causing this Agreement to be
drafted.

     

    Section
7.10          Survival. The
representations and warranties of the Company and the Purchasers shall survive
the execution and delivery hereof and the Closing hereunder for a period of
three (3) years following the Closing Date.

     

    Section
7.11          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 and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission, 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 signature were the original thereof.

     

    Section
7.12          Publicity. The
Company agrees that it will not disclose, and will not include in any public
announcement, the name of the Purchasers without the consent of the Purchasers
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement.

     

    Section
7.13          Severability. The
provisions of this Agreement and the Transaction Documents are severable and, in
the event that any court of competent jurisdiction shall determine that any one
or more of the provisions or part of the provisions contained in this Agreement
or the Transaction Documents shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement or the Transaction Documents and such provision shall be reformed
and construed as if such invalid or illegal or unenforceable provision, or part
of such provision, had never been contained herein, so that such provisions
would be valid, legal and enforceable to the maximum extent
possible.

     

    Section
7.14          Further Assurances.
From and after the date of this Agreement, upon the request of any Purchaser or
the Company, each of the Company and the Purchasers shall execute and deliver
such instrument, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement, the Preferred Shares, the Common Shares, the
Conversion Shares, the Warrants, the Warrant Shares, the Series A Certificate of
Designation, the Registration Rights Agreement and the other Transaction
Documents.

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

     

    Section
7.15          Currency.  Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
United States Dollars.  All amounts owing under this Agreement or any
Transaction Document shall be paid in US dollars.  All amounts
denominated in other currencies shall be converted in the US dollar equivalent
amount in accordance with the Exchange Rate on the date of
calculation.  “Exchange Rate” means, in relation to any amount of
currency to be converted into US dollars pursuant to this Agreement, the US
dollar exchange rate as published in The Wall Street Journal on the relevant
date of calculation.

     

    Section
7.16          Termination.  This
Agreement may be terminated prior to Closing:

     

    (a)           by
mutual written agreement of the Purchasers and the Company, a copy of which
shall be provided to the escrow agent appointed under the Closing Escrow
Agreement (the “Escrow
Agent”); and

     

    (b)           by
the Company or a Purchaser (as to itself but no other Purchaser) upon written
notice to the other, with a copy to the Escrow Agent, if the Closing shall not
have taken place by 5:00 p.m. Eastern time on February 26, 2010, unless extended
for a period of no more than thirty (30) calendar days by the Company, in which
case the Closing shall not have taken place by 5:00 p.m. Eastern time on March
28, 2010; provided, that the right to terminate this Agreement under this
Section 7.16(b) shall not be available to any person whose failure to comply
with its obligations under this Agreement has been the cause of or resulted in
the failure of the Closing to occur on or before such time.

     

    (c)           In
the event of a termination pursuant to Section 7.16(a) or 7.16(b), each
Purchaser shall have the right to a return of up to its entire Purchase Price
deposited with the Escrow Agent pursuant to this Agreement, without interest or
deduction.  The Company covenants and agrees to cooperate with such
Purchaser in obtaining the return of its Purchase Price, and shall not
communicate any instructions to the contrary to the Escrow Agent.

     

    (d)           In
the event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with
this Section 7.18, the Company and the terminating Purchaser(s) shall not have
any further obligation or liability (including as arising from such termination)
to the other and no Purchaser will have any liability to any other Purchaser
under the Transaction Documents as a result therefrom.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

     

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

    

    
      
        	 
      	
                REMEDIATION
      SERVICES, INC.

              	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	/s/
      Jianzhong Zuo	 
      
	 
      	 
      	
                Name:
      Jianzhong Zuo

              	 
      
	 
      	 
      	
                Title:
      Chief Executive Officer

              	 
      

      

    

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

     

    COUNTERPART
SIGNATURE PAGE

     

    (FOR
ISSUANCES TO AN ENTITY PURSUANT TO SECTION 4(2))

     

    By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of February 26, 2010 by and among Remediation
Services, Inc. and the Purchasers (as defined therein), as to the number of
Units set forth below, and authorizes this signature page to be attached to the
Securities Purchase Agreement or counterparts thereof and for its name, address
and number of Units purchased to be added to Exhibit A of the
Securities Purchase Agreement.

    

    
      
        	 
      	
                [ENTITY
      NAME]

              
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

    

     

    Circle
the category under which you are an “accredited investor” pursuant to Exhibit
B:

     

    1           2           3           7           8

    

    
      
        	 
      	 
      
	
                PRINT
      EXACT NAME IN WHICH YOU WANT THE SECURITIES TO BE
    REGISTERED

              	 
      

      

    

     

    
      
        	
                Attn:

              	 
      	 
      
	 
      	 
      	 
      
	
                Address:

              	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                Phone
      No.

              	 
      	 
      
	 
      	 
      	 
      
	
                Facsimile
      No.

              	 
      	 
      

      

    

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

     

    COUNTERPART
SIGNATURE PAGE

     

    (FOR
ISSUANCES TO AN INDIVIDUAL PURSUANT TO SECTION 4(2))

     

    By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of February 26, 2010 by and among Remediation
Services, Inc. and the Purchasers (as defined therein), as to the number of
Units set forth below, and authorizes this signature page to be attached to the
Securities Purchase Agreement or counterparts thereof and for his or her name,
address and number of Units purchased to be added to Exhibit A of the
Securities Purchase Agreement.

    

    
      
        
          	 
      	 
      
	 
      	
                  Name:

                

        

      

    

     

    Circle
the category under which you are an “accredited investor” pursuant to Exhibit
B:

     

    4           5           6

    

    
      
        	 
      	 
      
	
                PRINT
      EXACT NAME IN WHICH YOU WANT THE SECURITIES TO BE
    REGISTERED

              	 
      

      

    

     

    
      
        	
                Attn:

              	 
      	 
      
	 
      	 
      	 
      
	
                Address:

              	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                Phone
      No.

              	 
      	 
      
	 
      	 
      	 
      
	
                Facsimile
      No.

              	 
      	 
      

      

    

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

     

    COUNTERPART
SIGNATURE PAGE

     

    (FOR
ISSUANCES TO AN ENTITY PURSUANT TO REGULATION S)

     

    By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of February 26, 2010 by and among Remediation
Services, Inc. and the Purchasers (as defined therein), as to the number of
Units set forth below, and authorizes this signature page to be attached to the
Securities Purchase Agreement or counterparts thereof and for its name, address
and number of Units purchased to be added to Exhibit A of the
Securities Purchase Agreement.

    

    
      
        	 
      	
                [ENTITY
      NAME]

              
	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

    

     

    OFFSHORE DELIVERY
INSTRUCTIONS:

    

    
      
        	 
      	 
      
	
                PRINT
      EXACT NAME IN WHICH YOU WANT THE SECURITIES TO BE
    REGISTERED

              	 
      

      

       

      
        Attn:  __________________________________

        

        Address:________________________________

        

        _______________________________________

        

        _______________________________________

        

        Phone
No.       ___________________________

        

        Facsimile
No.  ___________________________

      

       

    

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

     

    COUNTERPART
SIGNATURE PAGE

     

    (FOR
ISSUANCES TO AN INDIVIDUAL PURSUANT TO REGULATION S)

     

    By its
execution and delivery of this signature page, the undersigned Purchaser hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of February 26, 2010 by and among Remediation
Services, Inc. and the Purchasers (as defined therein), as to the number of
Units set forth below, and authorizes this signature page to be attached to the
Securities Purchase Agreement or counterparts thereof and for his or her name,
address and number of Units purchased to be added to Exhibit A of the
Securities Purchase Agreement.

    

    
      
        	 
      	 
      
	 
      	
                Name:

              

      

    

     

    OFFSHORE DELIVERY
INSTRUCTIONS:

    

    
      
        	 
      	 
      
	
                PRINT
      EXACT NAME IN WHICH YOU WANT THE SECURITIES TO BE
    REGISTERED

              	 
      

      

    

    

    Attn:  __________________________________

    

    Address:________________________________

    

    _______________________________________

    

    _______________________________________

    

    Phone
No.       ___________________________

    

    Facsimile
No.  ___________________________

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    EXHIBIT
A TO THE

    SECURITIES
PURCHASE AGREEMENT

      

      
        

      

    

    

    LIST OF
PURCHASERS

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    Investor

                                  	 	
                                    Investment

                                    Amount

                                  	 	
                                    Series
      A

                                    Preferred
      Stock

                                  	 	
                                    Common

                                    Shares

                                  	 	
                                    Series
      A

                                    Warrants

                                  	 	
                                    Series
      B

                                    Warrants

                                  
	 
      	 	 	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	$	 	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 	 	 	 
      	 	 
      	 	 
      	 	 
      
	
                                    Total

                                  	 	$	 	 	 
      	 	 
      	 	 
      	 	 
      

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     EXHIBIT
B TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
 

    DEFINITION
OF “ACCREDITED INVESTOR”

     

    The term
“accredited investor” means:

     

    
      	
            	
              1)

            	
              A
      bank as defined in Section 3(a)(2) of the Securities Act, or a savings and
      loan association or other institution as defined in Section 3(a)(5)(A) of
      the Securities Act, whether acting in its individual or fiduciary
      capacity; a broker or dealer registered pursuant to Section 15 of the
      Securities Exchange Act of 1934; an insurance company as defined in
      Section 2(13) of the Securities Act; an investment company registered
      under the Investment Company Act of 1940 (the “Investment Company Act”) or
      a business development company as defined in Section 2(a)(48) of the
      Investment Company Act; a Small Business Investment Company licensed by
      the U.S. Small Business Administration under Section 301(c) or (d) of the
      Small Business Investment Act of 1958; a plan established and maintained
      by a state, its political subdivisions or any agency or instrumentality of
      a state or its political subdivisions for the benefit of its employees, if
      such plan has total assets in excess of US $5,000,000; an employee benefit
      plan within the meaning of the Employee Retirement Income Security Act of
      1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as
      defined in Section 3(21) of ERISA, which is either a bank, savings and
      loan association, insurance company, or registered investment advisor, or
      if the employee benefit plan has total assets in excess of US $5,000,000
      or, if a self-directed plan, with investment decisions made solely by
      persons that are accredited
investors.

            

    

     

    
      	
            	
              2)

            	
              A
      private business development company as defined in Section 202(a)(22) of
      the Investment Advisers Act of
1940.

            

    

     

    
      	
            	
              3)

            	
              An
      organization described in Section 501(c)(3) of the Internal Revenue Code,
      corporation, Massachusetts or similar business trust, or partnership, not
      formed for the specific purpose of acquiring the securities offered, with
      total assets in excess of US
$5,000,000.

            

    

     

    
      	
            	
              4)

            	
              A
      director or executive officer of the
Company.

            

    

     

    
      	
            	
              5)

            	
              A
      natural person whose individual net worth, or joint net worth with that
      person’s spouse, at the time of his or her purchase exceeds US
      $1,000,000.

            

    

     

    
      	
            	
              6)

            	
              A
      natural person who had an individual income in excess of US $200,000 in
      each of the two most recent years or joint income with that person’s
      spouse in excess of US $300,000 in each of those years and has a
      reasonable expectation of reaching the same income level in the current
      year.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      	
            	
              7)

            	
              A
      trust, with total assets in excess of US $5,000,000, not formed for the
      specific purpose of acquiring the securities offered, whose purchase is
      directed by a sophisticated person as described in Rule 506(b)(2)(ii)
      (i.e., a person who has such knowledge and experience in financial and
      business matters that he is capable of evaluating the merits and risks of
      the prospective investment).

            

    

     

    
      	
            	
              8)

            	
              An
      entity in which all of the equity owners are accredited
      investors.  (The Shareholder must identify each equity owner and
      provide statements signed by each demonstrating how each is qualified as
      an accredited investor.)

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
B-1 TO THE

    SECURITIES
PURCHASE AGREEMENT

    

    
      
 

    EXHIBIT
B-1

     

    ACCREDITED
INVESTOR REPRESENTATIONS

     

    Each
Purchaser indicating that it is an Accredited Investor, severally and not
jointly, further represents and warrants to the Company as follows:

     

    
      	
               
      

            	
              1.

            	
              Such
      person or entity qualifies as an Accredited Investor on the basis set
      forth on its signature page to this
Agreement.

            

    

     

    
      	
               
      

            	
              2.

            	
              Such
      person or entity has sufficient knowledge and experience in finance,
      securities, investments and other business matters to be able to protect
      such Shareholder’s interests in connection with the transactions
      contemplated by this Agreement.

            

    

     

    
      	
               
      

            	
              3.

            	
              Such
      person or entity has consulted, to the extent that it has deemed
      necessary, with its tax, legal, accounting and financial advisors
      concerning its investment in the
Units.

            

    

     

    
      	
               
      

            	
              4.

            	
              Such
      person or entity understands the various risks of an investment in the
      Units and can afford to bear such risks for an indefinite period of time,
      including, without limitation, the risk of losing its entire investment in
      the Units.

            

    

     

    
      	
               
      

            	
              5.

            	
              Such
      person or entity has had access to the Company’s publicly filed reports
      with the Commission and has been furnished during the course of the
      transactions contemplated by this Agreement with all other public
      information regarding the Company that such person or entity has requested
      and all such public information is sufficient for such person or entity to
      evaluate the risks of investing in the
Units.

            

    

     

    
      	
               
      

            	
              6.

            	
              Such
      person or entity has been afforded the opportunity to ask questions of and
      receive answers concerning the Company and the terms and conditions of the
      issuance of the Units.

            

    

     

    
      	
               
      

            	
              7.

            	
              Such
      person or entity is not relying on any representations and warranties
      concerning the Company made by the Company or any officer, employee or
      agent of the Company, other than those contained in this
      Agreement.

            

    

     

    
      	
               
      

            	
              8.

            	
              Such
      person or entity is acquiring the Units for such person’s or entity’s, as
      the case may be, own account, for investment and not for distribution or
      resale to others.

            

    

     

    
      	
               
      

            	
              9.

            	
              Such
      person or entity will not sell or otherwise transfer the Units, unless
      either (a) the transfer of such securities is registered under the
      Securities Act or (b) an exemption from registration of such securities is
      available.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      	
            	
              10.

            	
              Such
      person or entity consents to the placement of a legend on any certificate
      or other document evidencing the Units substantially in the form set forth
      in Section 5.1.

            

    

     

    
      	
            	
              11.

            	
              Such
      person or entity understands and acknowledges that the Units have not been
      recommended by any federal or state securities commission or regulatory
      authority, that the foregoing authorities have not confirmed the accuracy
      or determined the adequacy of any information concerning the Company that
      has been supplied to such person or entity and that any representation to
      the contrary is a criminal
offense.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
B-2 TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
 

    NON
U.S. PERSON REPRESENTATIONS

     

    Each
Purchaser indicating that it is not a U.S. person, severally and not jointly,
further represents and warrants to the Company as follows:

     

    
      	
               
      

            	
              1.

            	
              At
      the time of (a) the offer by the Company and (b) the acceptance of the
      offer by such person or entity, of the Units, such person or entity was
      outside the United States.

            

    

     

    
      	
               
      

            	
              2.

            	
              Such
      person or entity is acquiring the Units for such Shareholder’s own
      account, for investment and not for distribution or resale to others and
      is not purchasing the Units for the account or benefit of any U.S. person,
      or with a view towards distribution to any U.S. person, in violation of
      the registration requirements of the Securities
  Act.

            

    

     

    
      	
               
      

            	
              3.

            	
              Such
      person or entity will make all subsequent offers and sales of the Units
      either (x) outside of the United States in compliance with Regulation S;
      (y) pursuant to a registration under the Securities Act; or (z) pursuant
      to an available exemption from registration under the Securities
      Act.  Specifically, such person or entity will not resell the
      Units to any U.S. person or within the United States prior to the
      expiration of a period commencing on the Closing Date and ending on the
      date that is one year thereafter (the “Distribution Compliance
      Period”), except pursuant to registration under the Securities Act
      or an exemption from registration under the Securities
  Act.

            

    

     

    
      	
               
      

            	
              4.

            	
              Such
      person or entity has no present plan or intention to sell the Units in the
      United States or to a U.S. person at any predetermined time, has made no
      predetermined arrangements to sell the Units and is not acting as a
      Distributor of such securities.

            

    

     

    
      	
               
      

            	
              5.

            	
              Neither
      such person or entity, its affiliates nor any person acting on behalf of
      such person or entity, has entered into, has the intention of entering
      into, or will enter into any put option, short position or other similar
      instrument or position in the U.S. with respect to the Units at any time
      after the Closing Date through the Distribution Compliance Period except
      in compliance with the Securities
Act.

            

    

     

    
      	
               
      

            	
              6.

            	
              Such
      person or entity consents to the placement of a legend on any certificate
      or other document evidencing the Units substantially in the form set forth
      in Section 5.1.

            

    

     

    
      	
               
      

            	
              7.

            	
              Such
      person or entity is not acquiring the Units in a transaction (or an
      element of a series of transactions) that is part of any plan or scheme to
      evade the registration provisions of the Securities
  Act.

            

    

     

    
      	
               
      

            	
              8.

            	
              Such
      person or entity has sufficient knowledge and experience in finance,
      securities, investments and other business matters to be able to protect
      such person’s or entity’s interests in connection with the transactions
      contemplated by this Agreement.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              9.

            	
              Such
      person or entity has consulted, to the extent that it has deemed
      necessary, with its tax, legal, accounting and financial advisors
      concerning its investment in the
Units.

            

    

     

    
      	
            	
              10.

            	
              Such
      person or entity understands the various risks of an investment in the
      Units and can afford to bear such risks for an indefinite period of time,
      including, without limitation, the risk of losing its entire investment in
      the Units.

            

    

     

    
      	
            	
              11.

            	
              Such
      person or entity has had access to the Company’s publicly filed reports
      with the Commission and has been furnished during the course of the
      transactions contemplated by this Agreement with all other public
      information regarding the Company that such person or entity has requested
      and all such public information is sufficient for such person or entity to
      evaluate the risks of investing in the
Units.

            

    

     

    
      	
            	
              12.

            	
              Such
      person or entity has been afforded the opportunity to ask questions of and
      receive answers concerning the Company and the terms and conditions of the
      issuance of the Units.

            

    

     

    
      	
            	
              13.

            	
              Such
      person or entity is not relying on any representations and warranties
      concerning the Company made by the Company or any officer, employee or
      agent of the Company, other than those contained in this
      Agreement.

            

    

     

    
      	
            	
              14.

            	
              Such
      person or entity will not sell or otherwise transfer the Shares unless
      either (A) the transfer of such securities is registered under the
      Securities Act or (B) an exemption from registration of such securities is
      available.

            

    

     

    
      	
            	
              15.

            	
              Such
      person or entity represents that the address furnished on its signature
      page to this Agreement and in Exhibit A is
      the principal residence if he is an individual or its principal business
      address if it is a corporation or other
entity.

            

    

     

    
      	
            	
              16.

            	
              Such
      person or entity understands and acknowledges that the Units have not been
      recommended by any federal or state securities commission or regulatory
      authority, that the foregoing authorities have not confirmed the accuracy
      or determined the adequacy of any information concerning the Company that
      has been supplied to such person or entity and that any representation to
      the contrary is a criminal
offense.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
C TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      

    

     

    FORM
OF SERIES A CERTIFICATE OF DESIGNATION

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
D-1 TO THE

    SECURITIES
PURCHASE AGREEMENT

    

    
      

    

     

    FORM
OF SERIES A WARRANT

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
D-2 TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      

    

     

    FORM
OF SERIES B WARRANT

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
E TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      

    

     

    FORM
OF REGISTRATION RIGHTS AGREEMENT

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    EXHIBIT
F TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      

    

     

    FORM
OF LOCK-UP AGREEMENT

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
G TO THE

    SECURITIES
PURCHASE AGREEMENT

    

    
      
 

    FORM
OF CLOSING ESCROW AGREEMENT

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
H TO THE

    SECURITIES
PURCHASE AGREEMENT

    

    
      
 

    FORM
OF SECURITIES ESCROW AGREEMENT

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
I TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      
 

    IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS

    

    as of
____________, 2010

     

    [Name
and address of Transfer Agent]

    Attn:
_____________

     

    Ladies
and Gentlemen:

     

    Reference
is made to that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated as of February 26, 2010, by and among Remediation Services, Inc., a Nevada
corporation (the “Company”), and each
of the Purchasers of Units whose names are set forth on Exhibit A hereto
(individually, a “Purchaser” and
collectively, the “Purchasers”),
pursuant to which the Company is issuing to the Purchasers units (the “Units”),
consisting of (i) shares of its Series A Convertible Preferred Stock, par value
$0.001 per share, (the “Preferred Shares”)
and (ii) Series A and Series B warrants (the “Warrants”) to
purchase shares of the Company’s common stock, par value $0.001 per share (the
“Common
Stock”). This letter shall serve as our irrevocable authorization and
direction to you (provided that you are the transfer agent of the Company at
such time) to issue shares of Common Stock upon conversion of the Preferred
Shares (the “Conversion Shares”)
and exercise of the Warrants (the “Warrant Shares”) to
or upon the order of a Purchaser from time to time upon (i) surrender to
you of a properly completed and duly executed Conversion Notice or Exercise
Notice, as the case may be, (ii) in the case of the conversion of Preferred
Shares, a copy of the certificates (with the original certificates delivered to
the Company) representing Preferred Shares being converted or, in the case of
Warrants being exercised, a copy of the Warrants (with the original Warrants
delivered to the Company) being exercised (or, in each case, an indemnification
undertaking with respect to such share certificates or the warrants in the case
of their loss, theft or destruction), and (iii) delivery of a treasury
order or other appropriate order duly executed by a duly authorized officer of
the Company. So long as you have previously received (x) written confirmation
from counsel to the Company that a registration statement covering resales of
the Conversion Shares or Warrant Shares, as applicable, has been declared
effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended (the “1933 Act”), and no
subsequent notice by the Company or its counsel of the suspension or termination
of its effectiveness and (y) a copy of such registration statement, and if the
Purchaser represents in writing that the Conversion Shares or the Warrant
Shares, as the case may be, were sold pursuant to the Registration Statement,
then certificates representing the Conversion Shares and the Warrant Shares, as
the case may be, shall not bear any legend restricting transfer of the
Conversion Shares and the Warrant Shares, as the case may be, thereby and should
not be subject to any stop-transfer restriction. Provided, however, that if you
have not previously received those items and representations listed above, then
(i) the certificates to each Purchaser that are not designated with an asterisk
as “Non-U.S. Investor” listed on Exhibit A for the
Conversion Shares and the Warrant Shares shall bear the following
legend:

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR THE
COMPANY SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.”; and

    

    (ii) the
certificates to each Purchaser that are designated with an asterisk as “Non-U.S.
Investors” listed on Exhibit A for the
Conversion Shares and the Warrant Shares shall bear the following
legend:

    

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS
OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF
COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY,
THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN
WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN
OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.  HEDGING TRANSACTIONS INVOLVING THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.”

     

    Please be
advised that the Purchasers are relying upon this letter as an inducement to
enter into the Purchase Agreement and, accordingly, each Purchaser is a third
party beneficiary to these instructions.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Please
execute this letter in the space indicated to acknowledge your agreement to act
in accordance with these instructions. Should you have any questions concerning
this matter, please contact me at ___________.

    

    
      
        
          
            
              
                
                  
                    	 
      	
                            Very
      truly yours,

                          
	 
      	 
      
	 
      	
                            REMEDIATION
      SERVICES, INC.

                          
	 
      	 
      
	 
      	
                            By:

                          	 
      
	 
      	 
      	 
      
	 
      	
                            Name:

                          	 
      
	 
      	 
      	 
      
	 
      	
                            Title:

                          	 
      

                  

                

              

            

          

        

      

    

     

    ACKNOWLEDGED
AND AGREED:

     

    SIGNATURE
STOCK TRANSFER, INC.

    

    
      
        
          
            
              
                	
                        By:

                      	 
      	 
      
	 
      	 
      	 
      
	
                        Name:

                      	 
      	 
      
	 
      	 
      	 
      
	
                        Title:

                      	 
      	 
      
	 
      	 
      	 
      
	
                        Date:

                      	 
      	 
      

              

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    EXHIBIT
J TO THE

    SECURITIES
PURCHASE AGREEMENT

     

    
      

    

     

    FORM
OF OPINION OF NEVADA COUNSEL

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
K TO THE

    SECURITIES
PURCHASE AGREEMENT

    

    
      
 

    FORM
OF LOEB & LOEB LLP OPINIONREGISTRATION RIGHTS
AGREEMENT

    

    This
Registration Rights Agreement (this “Agreement”) is made
and entered into as of February 26, 2010 by and among Remediation Services,
Inc., a Nevada corporation (the “Company”), and the
purchasers listed on Schedule I hereto
(the “Purchasers”).

    

    This
Agreement is being entered into pursuant to the Securities Purchase Agreement
dated as of the date hereof among the Company and the Purchasers (the “Purchase
Agreement”).

    

    The
Company and the Purchasers hereby agree as follows:

    

    1.      
 Definitions.

    

    Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement.  As used in this Agreement, the
following terms shall have the following meanings:

    

    “Advice” shall have
meaning set forth in Section 3(m).

    

    "Affiliate" means,
with respect to any Person, any other Person which directly or indirectly
through one or more intermediaries Controls, is controlled by, or is under
common control with, such Person.  For the avoidance of doubt, with
respect to a Purchaser which is a general or limited partnership, an Affiliate
shall be deemed to include affiliated partnerships managed by the same
management company or managing general partner or by an entity which controls,
is controlled by, or is under common control with, such management company or
managing general partner.

    

    “Board” shall have
meaning set forth in Section 3(n).

    

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

    

    “Closing Date” means
the date of the closing of the purchase and sale of the Units pursuant to the
Purchase Agreement.

    

    “Commission” means the
Securities and Exchange Commission.

    

    “Common Shares” means
shares of Common Stock issued to the Purchasers pursuant to the Purchase
Agreement.

    “Common Stock” means
the Company’s common stock, par value $0.001 per share.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Control” (including
the terms “controlling”, “controlled by” or “under common control with”) means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

    

    “Effectiveness Date”
means with respect to the Registration Statement under Section 2(a), the earlier
of (A) the one hundred fiftieth (150th) day
following the Closing Date (or in the event the Registration Statement receives
a “full review” by the Commission, the one hundred eightieth (180th) day
following the Closing Date) or (B) the date which is within three (3) Business
Days after the date on which the Commission informs the Company (i) that the
Commission will not review the Registration Statement or (ii) that the Company may
request the acceleration of the effectiveness of the Registration Statement;
provided, however, that, if the
Effectiveness Date falls on a Saturday, Sunday or any other day which shall be a
legal holiday or a day on which the Commission is authorized or required by law
or other government actions to close, the Effectiveness Date shall be the
following Business Day.

    

    “Effectiveness Period”
shall have the meaning set forth in Section 2(a).

    

    “Event” shall have the
meaning set forth in Section 7(e).

    

    “Event Date” shall
have the meaning set forth in Section 7(e).

    

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

    

    “Filing Date” means
with respect to a Registration Statement under Section 2(a), the date that is
the thirtieth (30th) day
following Closing Date; provided, however that if the
Filing Date falls on a Saturday, Sunday or any other day which shall be a legal
holiday or a day on which the Commission is authorized or required by law or
other government actions to close, the Filing Date shall be the following
Business Day.

    

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

    

    “Indemnified Party”
shall have the meaning set forth in Section 5(c).

    

    “Indemnifying Party”
shall have the meaning set forth in Section 5(c).

    

    “Losses” shall have
the meaning set forth in Section 5(a).

    

    “Person” means an
individual or a corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.

    
      
         

      

      
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    “Preferred Shares”
means shares of the Company’s Series A Convertible Preferred Stock issued to the
Purchasers pursuant to the Purchase Agreement.

    

    “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 the 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 the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.

    

    “Registrable
Securities” means, collectively (i) the shares of Common Stock issuable
upon conversion of the Preferred Shares (the “Conversion Shares”);
(ii) the Common Shares; (iii) the shares of Common Stock issuable upon exercise
of the Warrants (the “Warrant
Shares”); and (iv) any securities issued or issuable upon any stock
split, dividend or other distribution, recapitalization or similar event with
respect to the foregoing; provided, that the
Holder has completed and delivered to the Company a Selling Stockholder
Questionnaire; and provided, further, that the
Conversion Shares, the Common Shares and the Warrant Shares shall cease to be
Registrable Securities upon the earliest to occur of the following: (A) sale
pursuant to a Registration Statement or Rule 144 under the Securities Act (in
which case, only such security sold shall cease to be a Registrable Security) or
(B) becoming eligible for sale by the Holder pursuant to Rule 144.

    

    “Registration
Statement” means the registration statements and any additional
registration statements contemplated by Section 2, including (in each case) the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration
statement.

    

    “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 158” means Rule
158 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.

    
      
         

      

      
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    “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.

    

    “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.

    

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

    

    “Selling Stockholder
Questionnaire” means a questionnaire in the form attached as Exhibit B hereto, or
such other form of questionnaire as may reasonably be adopted by the Company
from time to time.

    

    “Warrants” means the
warrants to purchase shares of Common Stock issued to the Purchasers pursuant to
the Purchase Agreement.

    

    2.           Resale
Registration.

     

    (a)           On
or prior to the Filing Date, the Company shall prepare and file with the
Commission a “resale” Registration Statement providing for the resale of all
Registrable Securities by means of an offering to be made on a continuous basis
pursuant to Rule 415.  The Registration Statement shall be on Form S-1
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-1, in which case such registration shall be on
another appropriate form in accordance herewith and the Securities Act and the
rules promulgated thereunder).  The Company shall (i) not permit any
securities other than the Registrable Securities to be included in the
Registration Statement except as set forth on Schedule II hereto
and (ii) use its commercially reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the Effectiveness
Date, and to keep such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have been sold or
(y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144 as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company’s transfer agent
to such effect (the “Effectiveness
Period”).  The Company shall request that the effective time of
the Registration Statement be 4:00 p.m. Eastern Time on the Effectiveness
Date.  If at any time and for any reason, an additional Registration
Statement is required to be filed because at such time the actual number of
Registrable Securities exceeds the number of Registrable Securities remaining
under the Registration Statement, the Company shall have twenty (20) Business
Days to file such additional Registration Statement, and the Company shall use
its commercially reasonable efforts to cause such additional Registration
Statement to be declared effective by the Commission as soon as possible, but in
no event later than sixty (60) days after such filing.

    
      
         

      

      
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    (b)           Notwithstanding
anything to the contrary set forth in this Section 2, in the event the
Commission does not permit the Company to register all of the Registrable
Securities in the Registration Statement because of the Commission’s application
of Rule 415, the number of Registrable Securities to be registered on such
Registration Statement will be reduced in the following order (i) first, the
Registrable Securities represented by the total number of shares owned by the
Holders set forth on Schedule II hereto,
applied on a pro-rata basis, (ii) second, the Registrable Securities represented
by the total number of Warrant Shares owned by the Holders, applied on a pro
rata basis, (iii) third, the Registrable Securities represented by the
Conversion Shares, applied on a pro rata basis, and (iv) fourth, the Registrable
Securities represented by the Common Shares, applied on a pro rata
basis.  The Company shall use its commercially reasonable efforts to
file subsequent Registration Statements to register the Registrable Securities
that were not registered in the initial Registration Statement as promptly as
possible but in no event later than on the Filing Date and in a manner permitted
by the Commission.  For purposes of this Section 2(b), “Filing Date” means
with respect to each subsequent Registration Statement filed pursuant hereto,
the later of (i) sixty (60) days following the sale of substantially all of the
Registrable Securities included in the initial Registration Statement or any
subsequent Registration Statement and (ii) six (6) months following the
effective date of the initial Registration Statement or any subsequent
Registration Statement, as applicable, or such earlier date as permitted by the
Commission.  For purposes of this Section 2(b), “Effectiveness Date”
means with respect to each subsequent Registration Statement filed pursuant
hereto, the earlier of (A) the ninetieth (90th) day
following the filing date of such Registration Statement (or in the event such
Registration Statement receives a “full review” by the Commission, the one
hundred twentieth (120th) day
following such filing date) or (B) the date which is within three (3) Business
Days after the date on which the Commission informs the Company (i) that the
Commission will not review such Registration Statement or (ii) that the Company may
request the acceleration of the effectiveness of such Registration Statement;
provided that, if the
Effectiveness Date falls on a Saturday, Sunday or any other day which shall be a
legal holiday or a day on which the Commission is authorized or required by law
or other government actions to close, the Effectiveness Date shall be the
following Business Day.

    

    (c)           Each
Holder agrees to furnish to the Company a completed Selling Stockholder
Questionnaire not more than ten (10) Business Days following the date of this
Agreement. Each Holder further agrees that it shall not be entitled to be named
as a selling security holder in the Registration Statement or use the Prospectus
for offers and resales of Registrable Securities at any time, unless such Holder
has returned to the Company a completed and signed Selling Stockholder
Questionnaire. If a Holder of Registrable Securities returns a Selling
Stockholder Questionnaire after the deadline specified in the previous sentence,
the Company shall use its commercially reasonable efforts to take such actions
as are required to name such Holder as a selling security holder in the
Registration Statement or any pre-effective or post-effective amendment thereto
and to include (to the extent not theretofore included) in the Registration
Statement the Registrable Securities identified in such late Selling Stockholder
Questionnaire; provided that the Company shall not be required to file an
additional Registration Statement solely for such shares. Each Holder
acknowledges and agrees that the information in the Selling Stockholder
Questionnaire will be used by the Company in the preparation of the Registration
Statement and hereby consents to the inclusion of such information in the
Registration Statement.

    
      
         

      

      
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    3.       Registration
Procedures.

    

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

    

    (a)           Prepare
and file with the Commission, on or prior to the Filing Date, a Registration
Statement on Form S-1 (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-1 such registration shall be on
another appropriate form in accordance herewith and the Securities Act and the
rules promulgated thereunder) in accordance with the plan of distribution as set
forth on Exhibit
A hereto and in accordance with applicable law, and cause the
Registration Statement to become effective and remain effective as provided
herein; provided, however, that not
less than five (5) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto, the
Company shall (i) furnish to the Holders copies of all such documents 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 certified public
accountants to respond to such inquiries as shall be necessary to conduct a
reasonable review of such documents.  The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Purchasers shall reasonably object in writing within three
(3) Business Days of their receipt thereof.

    

    (b)           (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements as necessary in order to register for
resale under the Securities Act all of the Registrable Securities; (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
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) respond as promptly as possible, but in no event later than ten (10)
Business Days, to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as possible
provide the Holders true and complete copies of all correspondence from and to
the Commission relating to the Registration Statement; (iv) file the final
prospectus pursuant to Rule 424 of the Securities Act no later than two (2)
Business Days following the date the Registration Statement is declared
effective by the Commission; and (v) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the Effectiveness Period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.

    
      
         

      

      
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    (c)           Notify
the Holders of Registrable Securities as promptly as possible (and, in the case
of (i)(A) below, not less than three (3) Business Days prior to such filing, and
in the case of (iii) below, on the same day of receipt by the Company of such
notice from the Commission) and (if requested by any such Person) confirm such
notice in writing no later than one (1) Business Day following the
day:  (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is 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 and (C) with respect to the 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 the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation or threatening 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; and (v) of the occurrence of any event that makes any statement made in
the 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 the Registration Statement, Prospectus or other
documents so that, in the case of the 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 the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading.

    

    (d)           Use
its commercially reasonable efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of, as promptly as possible, (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction.

    

    (e)           If
requested by the Holders of a majority in interest of the Registrable
Securities, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment.

    

    (f)        
  If requested by any Holder, furnish to such Holder, without charge,
at least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (g)          Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and subject to the
provisions of Sections 3(m) and 3(n), 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.

    

    (h)          Prior
to any public offering of Registrable Securities, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder requests in writing, 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 a
Registration Statement; provided, however, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.

    

    (i)           Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates, to the extent permitted by the
Purchase Agreement and applicable federal and state securities laws, shall be
free of all restrictive legends, and to enable such Registrable Securities to be
in such denominations and registered in such names as any Holder may request in
connection with any sale of Registrable Securities.

    

    (j)           Upon
the occurrence of any event contemplated by Section 3(c)(vi), as promptly as
possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement 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, neither the Registration Statement nor such 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 the case of
the Prospectus, in the light of the circumstances under which they were made)
not misleading.

    

    (k)           Use
its commercially reasonable efforts to cause all Registrable Securities relating
to the Registration Statement, to continued to be quoted or listed on
a  securities exchange, quotation system or market, if any, on which
similar securities issued by the Company are then listed or traded as and when
required pursuant to the Purchase Agreement.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (l)           Comply
in all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders all documents
filed or required to be filed with the Commission, including, but not limited,
to, earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.

    

    (m)           The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and the natural persons thereof that have voting and dispositive control
over the Registrable Securities. During any periods that the Company is unable
to meet its obligations hereunder with respect to the registration of the
Registrable Securities solely because any Holder fails to furnish such
information within five (5) Business Days of the Company’s request, any
liquidated damages that are accruing at such time as to such Holder only shall
be tolled and any Event that may otherwise occur solely because of such delay
shall be suspended as to such Holder only, until such information is delivered
to the Company.

    

    If the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the deletion
of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.

    

    Each
Holder covenants and agrees that it will not sell any Registrable Securities
under the Registration Statement until the Company has electronically filed the
Prospectus as then amended or supplemented as contemplated in Section 3(g) and
notice from the Company that the Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section
3(c).

    

    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(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n),
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
contemplated by Section 3(j), 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.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (n)           If
(i) there is material non-public information regarding the Company which the
Company’s Board of Directors (the “Board”) determines
not to be in the Company’s best interest to disclose and which the Company is
not otherwise required to disclose, (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Board determines not to be in the Company’s best interest to
disclose, or (iii) the Company is required to file a post-effective amendment to
the Registration Statement to incorporate the Company’s quarterly and annual
reports and audited financial statements on Forms 10-Q and 10-K, then the
Company may (x) postpone or suspend filing of a registration statement for a
period not to exceed forty-five (45) consecutive days or (y) postpone or suspend
effectiveness of a registration statement for a period not to exceed forty-five
(45) consecutive days; provided that the
Company may not postpone or suspend effectiveness of a registration statement
under this Section 3(n) for more than ninety (90) days in the aggregate during
any three hundred sixty (360) day period; provided, however, that no such
postponement or suspension shall be permitted for consecutive twenty (20) day
periods arising out of the same set of facts, circumstances or
transactions.

    

    4.           Registration
Expenses.

    

    All fees
and expenses incident to the performance of or compliance with this Agreement by
the Company, except as and to the extent specified in this Section 4, shall be
borne by the Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the 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 any  securities
exchange or market on which Registrable Securities are required hereunder to be
listed, if any (B) with respect to filing fees required to be paid to the
Financial Industry Regulatory Authority, Inc. (including, without limitation,
pursuant to FINRA Rule 5110) and (C) in compliance with state securities or Blue
Sky laws (including, without limitation, fees and disbursements of one counsel
for the Holders up to a maximum amount of $5,000 in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) Securities Act liability insurance, if the
Company so desires such insurance, and (v) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Company’s independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters).  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, the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange if required
hereunder.  The Company shall not be responsible for any discounts,
commissions, transfer taxes or other similar fees incurred by the Holders in
connection with the sale of the Registrable Securities.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    5.           Indemnification.

    

    (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, managers, partners, members, shareholders, agents, brokers,
investment advisors and employees 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, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and attorneys’ fees) and
expenses (collectively, “Losses”), as
incurred, arising out of or relating to any violation of securities laws or
untrue statement of a material fact contained in the 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
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 the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that such
untrue statements or omissions are based solely upon information regarding such
Holder or such other Indemnified Party furnished in writing to the Company by
such Holder for use therein.  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 and 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 any untrue statement of a material
fact contained in the Registration Statement, any Prospectus, or any form of
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 (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder or other Indemnifying Party
to the Company specifically for inclusion in the Registration Statement or such
Prospectus.  Notwithstanding anything to the contrary contained
herein, each Holder shall be liable under this Section 5(b) only for the lesser
of (a) the actual damages incurred or (b) that amount as does not exceed the
gross proceeds to such Holder as a result of the sale of his/her/its Registrable
Securities pursuant to such Registration Statement.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (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 promptly shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall be entitled to 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; or (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 parties 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 or delayed.  No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened Proceeding in respect of which any Indemnified Party is a party
and indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (d)           Contribution. If a
claim for indemnification under Section 5(a) or 5(b) is due but unavailable to
an Indemnified Party because of a failure or refusal of a governmental authority
to enforce such indemnification in accordance with its terms (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 benefits received by the Indemnifying
Party on the one hand and the Indemnified Party on the other from the offering
of the Preferred Stock and Warrants.  If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault, as applicable, 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 statement of a material
fact or 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 5(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.  In no event shall any
selling Holder be required to contribute an amount under this Section 5(d) in
excess of the gross proceeds received by such Holder upon sale of such Holder’s
Registrable Securities pursuant to the Registration Statement giving rise to
such contribution obligation.

    

         The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(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.  No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

    

         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 pursuant to applicable law.

    

    6.           Rule
144.

     

         As
long as any Holder owns Preferred Shares, Common Shares, Warrants or Registrable
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act.  As long as any Holder owns
Preferred Shares, Warrants or Registrable Securities, if the Company is not
required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act,
it will prepare and furnish to the Holders and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act annual and
quarterly financial statements, together with a discussion and analysis of such
financial statements in form and substance substantially similar to those that
would otherwise be required to be included in reports required by Section 13(a)
or 15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been made
under the Exchange Act.  The Company further covenants that it will
take such further action as any Holder may reasonably request, all to the extent
reasonably required from time to time to enable such Person to sell Conversion
Shares, Common Shares and Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including providing any legal opinions
relating to such sale pursuant to Rule 144.  Upon the request of any
Holder, the Company shall deliver to such Holder a written certification of a
duly authorized officer as to whether it has complied with such
requirements.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    7.           Miscellaneous.

    

    (a)           Remedies.  In
the event of a breach by the Company or by a Holder of any of their obligations
under this Agreement, such 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.  Each
of the Company and each Holder agrees 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.

    

    (b)           No Inconsistent
Agreements.  The Company has not entered into, and shall not
enter into on or after the date of this Agreement, any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions
hereof.  Except as disclosed in Schedule II hereto,
the Company has not previously entered into any agreement that
is  currently in effect granting any registration rights with respect
to any of its securities to any Person.  Without limiting the
generality of the foregoing, without the written consent of the Holders of a
majority of the then outstanding Registrable Securities, the Company shall not
grant to any Person the right to request the Company to register any securities
of the Company under the Securities Act unless the rights so granted are subject
in all respects to the prior rights in full of the Holders set forth herein, and
are not otherwise in conflict with the provisions of this
Agreement.

    

    (c)           No Piggyback on
Registrations for Other Securities.  Neither the Company nor
any of its security holders (other than the Holders in such capacity pursuant
hereto or as disclosed in Schedule II hereto)
may include securities of the Company in the Registration Statement, and the
Company shall not after the date hereof enter into any agreement providing such
right to any of its security holders, unless the right so granted is subject in
all respects to the prior rights in full of the Holders set forth herein, and is
not otherwise in conflict with the provisions of this
Agreement.
  

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (d)           Piggy-Back Registrations for
Registrable Securities.  If at any time when there is not an
effective Registration Statement covering (i) Conversion Shares, (ii) Common
Shares or (iii) Warrant Shares, 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, the Company shall send to each holder of Registrable Securities
written notice of such determination and, if within ten (10) calendar days after
receipt of such notice, or within such shorter period of time as may be
specified by the Company in such written notice as may be necessary for the
Company to comply with its obligations with respect to the timing of the filing
of such registration statement, any such holder shall so request in writing
(which request shall specify the Registrable Securities intended to be disposed
of by the Purchasers), the Company will cause the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holder, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered, provided that if
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to such holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 7(d) for the same period as the delay in
registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to
this Section 7(d) that are eligible for sale pursuant to Rule 144 of the
Securities Act.  In the case of an underwritten public offering, if
the managing underwriter(s) or underwriter(s) should reasonably object to the
inclusion of the Registrable Securities in such registration statement, then if
the Company after consultation with the managing underwriter should reasonably
determine that the inclusion of such Registrable Securities would materially
adversely affect the offering contemplated in such registration statement, and
based on such determination recommends inclusion in such registration statement
of fewer or none of the Registrable Securities of the Holders, then (x) the
number of Registrable Securities of the Holders included in such registration
statement shall be reduced among such Holders based upon the number of
Registrable Securities requested to be included in the registration in the order
set forth in Section 2(b) hereof, if the Company after consultation with the
underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y)
none of the Registrable Securities of the Holders shall be included in such
registration statement, if the Company after consultation with the
underwriter(s) recommends the inclusion of none of such Registrable Securities;
provided, however, that if
securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction of
the number of Registrable Securities intended to be offered by the Holders than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company).  For purposes of this Section 7(d),
Registrable Securities shall include any shares actually issued to the Purchaser
pursuant to the Securities Escrow Agreement.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    (e)           Failure to File Registration
Statement and Other Events.  The Company and the Purchasers
agree that the Holders will suffer damages if the Registration Statement is not
filed on or prior to the Filing Date and not declared effective by the
Commission on or prior to the Effectiveness Date and maintained in the manner
contemplated herein during the Effectiveness Period or if certain other events
occur.  The Company and the Holders further agree that it would not be
feasible to ascertain the extent of such damages with
precision.  Accordingly, if (A) the Registration Statement is not
filed on or prior to the Filing Date, or (B) the Registration Statement is not
declared effective by the Commission on or prior to the Effectiveness Date, or
(C) the Company fails to file with the Commission a request for acceleration in
accordance with Rule 461 promulgated under the Securities Act within three (3)
Business Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will not
be “reviewed,” or not subject to further review, or (D) the Registration
Statement is filed with and declared effective by the Commission but thereafter
ceases to be effective as to all Registrable Securities at any time prior to the
expiration of the Effectiveness Period, without being succeeded immediately by a
subsequent Registration Statement filed with and declared effective by the
Commission in accordance with Section 2(a) hereof, or (E) the Company has
breached Section 3(n) of this Agreement, or (F) trading in the Common Stock
shall be suspended or if the Common Stock is no longer quoted on or is delisted
from the NASDAQ (or other principal exchange on which the Common Stock is
traded) for any reason for more than three (3) Business Days in the aggregate
(any such failure or breach being referred to as an “Event,” and for
purposes of clauses (A) and (B) the date on which such Event occurs, or for
purposes of clauses (C) and (F) the date on which such three (3) Business Day
period is exceeded, or for purposes of clause (D) after more than fifteen (15)
Business Days, being referred to as “Event Date”), the
Company shall pay an amount in cash as liquidated damages to each Holder equal
to two percent (2%) of the amount of the Holder’s initial investment in the
Units for each calendar month or portion thereof thereafter from the Event Date
until the applicable Event is cured; provided, however, that in no
event shall the amount of liquidated damages payable at any time and from time
to time to any Holder pursuant to this Section 7(e) exceed an aggregate of ten
percent (10%) of the amount of the Holder’s initial investment in the Units;
and provided,
further, that
in the event the Commission does not permit all of the Registrable Securities to
be included in the Registration Statement because of its application of Rule
415, liquidated damages payable pursuant to this Section shall only be payable
by the Company based on the portion of the Holder’s initial investment in the
Units that corresponds to the number of such Holder’s Registrable Securities
permitted to be registered by the Commission in such Registration Statement
pursuant to Rule 415.  For further clarification, the parties
understand that no liquidated damages shall be payable pursuant to this Section
with respect to any Registrable Securities that the Company is not permitted to
include on such Registration Statement due to the Commission’s application of
Rule 415. In addition, no liquidated damages shall be payable with respect to
Registrable Securities that may be sold pursuant to Rule
144.  Notwithstanding anything to the contrary in this paragraph (e),
if (a) any of the Events described in clauses (A), (B), (C), (D) or (F) shall
have occurred, (b) on or prior to the applicable Event Date, the Company shall
have exercised its rights under Section 3(n) hereof and (c) the postponement or
suspension permitted pursuant to such Section 3(n) shall remain effective as of
such applicable Event Date, then the applicable Event Date shall be deemed
instead to occur on the second Business Day following the termination of such
postponement or suspension.  Liquidated damages payable by the Company
pursuant to this Section 7(e) shall be payable on the Event Date and the first
(1st)
Business Day of each thirty (30) day period following the Event
Date.  Notwithstanding anything to the contrary contained herein, in
no event shall any liquidated damages be payable with respect to the Warrants or
the Warrant Shares.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (f)           Amendments and
Waivers.  The provisions of this Agreement, including the
provisions of this sentence, 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
a majority of the then outstanding Registrable Securities.

    

    (g)           Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be:

     

    
      
        
          	
                  If
      to the Company:   

                	
                  Remediation
      Services, Inc.

                  c/o
      China LianDi Clean Technology Engineering Ltd.

                  4th
      Floor Tower B. Wanliuxingui Building,

                  No.
      28 Wanquanzhuang Road, Haidian District

                  Beijing,
      100089  China

                  Attention:
      Chief Executive Officer

                  Tel.
      No.: (86) 010-5872-0171

                  Fax
      No.:  (86) 010-5872-0181

                
	 
      	 
      
	
                  with
      copies to

                  (which
      shall not

                  constitute
      notice):

                	
                  Loeb
      & Loeb LLP

                  345
      Park Avenue

                  New
      York, NY10154

                  Attn:
      Mitchell S. Nussbaum, Esq.

                  Tel:
      212-407-4159

                  Fax:
      212-407-4990

                
	 
      	 
      
	
                  If
      to any Purchaser:

                	
                  At
      the address of such Purchaser set forth on Schedule
      I to this Agreement

                
	 
      	 
      
	
                  with
      copies to

                  (which
      shall not

                  constitute
      notice):

                	
                  Leser,
      Hunter, Taubman & Taubman

                  17
      State Street, Floor 20

                  New
      York, New York 10004

                  Attention:
      Rachael Schmierer, Esq.

                  Telephone
      No.: 212-732-7184, ext. 215

                  Facsimile
      No.: 212-202-6380

                

        

      

    

    
    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    Any party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.

    

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

    

    (i)           Assignment of Registration
Rights.  The rights of each Holder hereunder, including the
right to have the Company register for resale Registrable Securities in
accordance with the terms of this Agreement, shall be automatically assignable
by each Holder to any Person who acquires all or a portion of the Preferred Shares,
the Warrants or the Registrable Securities if: (i) the Holder agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws unless such securities are registered in a Registration
Statement under this Agreement (in which case the Company shall be obligated to
amend such Registration Statement to reflect such transfer or assignment) or are
otherwise exempt from registration, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions of this Agreement, and (v) such transfer shall have been made in
accordance with the applicable requirements of the Purchase
Agreement.  The rights to assignment shall apply to the Holders (and
to subsequent) successors and assigns.

    

    (j)           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 and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission, 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 signature were the original
thereof.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    (k)           Governing Law;
Jurisdiction.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction.  This
Agreement shall not be interpreted or construed with any presumption against the
party causing this Agreement to be drafted.  The Company and the
Holders agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue.  The Company and
the Holders irrevocably consent to personal jurisdiction in the state and
federal courts of the state of New York.  The Company and the Holders
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof 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 in this
Section 7(k) shall affect or limit any right to serve process in any other
manner permitted by law.  The Company and the Holders hereby agree
that the prevailing party in any suit, action or proceeding arising out of or
relating to this Agreement or the Purchase Agreement, shall be entitled to
reimbursement for reasonable legal fees from the non-prevailing
party.  The parties hereby waive all rights to a trial by
jury.

     

    (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 to be
invalid, illegal, void or unenforceable in any respect, 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 herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

    

    (o)           Shares Held by the Company
and its Affiliates. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its Affiliates (other than any
Holder or transferees or successors or assigns thereof if such Holder is deemed
to be an Affiliate solely by reason of its holdings of such Registrable
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    (p)           Independent Nature of
Purchasers.  The Company acknowledges that the obligations of
each Purchaser under the Transaction Documents are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under the
Transaction Documents.  The Company acknowledges that the decision of
each Purchaser to purchase Securities pursuant to the Purchase Agreement has
been made by such Purchaser independently of any other Purchaser and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or of
its Subsidiaries which may have been made or given by any other Purchaser or by
any agent or employee of any other Purchaser, and no Purchaser or any of its
agents or employees shall have any liability to any Purchaser (or any other
person) relating to or arising from any such information, materials, statements
or opinions.  The Company acknowledges that nothing contained herein,
or in any Transaction Document, and no action taken by any Purchaser pursuant
hereto or thereto (including, but not limited to, the (i) inclusion of a
Purchaser in the Registration Statement and (ii) review by, and consent to, such
Registration Statement by a Purchaser) shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents.  The Company acknowledges
that each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of this Agreement
or out of the other Transaction Documents, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.  The Company acknowledges that it has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by the
Purchasers.  The Company acknowledges that such procedure with respect
to the Transaction Documents in no way creates a presumption that the Purchasers
are in any way acting in concert or as a group with respect to the Transaction
Documents or the transactions contemplated hereby or thereby.

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties hereto
have caused this Registration Rights Agreement to be duly executed by their
respective authorized persons as of the date first indicated above.

    

    
      
        
          
            
              	
                      REMEDIATION
      SERVICES, INC.

                    	 
	 
      	 
      	 
	
                      By:

                    	
                       
      /s/ Jianzhong Zuo 

                    	 
	 
      	
                      Name:
      Jianzhong Zuo

                    	 
	 
      	
                      Title:
      Chief Executive Officer

                    	 
	 
      	 
      	 
	
                      PURCHASER:

                    
	 
      	 
      	 
	
                      By:

                    	 
      	 
	 
      	
                      Name:

                    	 
	 
      	
                      Title:

                    	 

            

          

        

      

    

    

    [Signature
Page to Registration Rights Agreement]

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    Schedule
I

    Purchasers

    

    
      
        	
                Purchaser

              	 
      	
                Address

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

      

    

    
      
         

      

      
        II-1

        
          

        

      

      
         

      

    

    Schedule
II

    Other Securities to be
Included on the Registration Statement

    

    1.
Charles Smith – 5,000 shares of Common Stock

    

    2. Reed
Buley – 50,000 shares of Common Stock

    

    3. Hayden
Communications International Inc. - 89,000 shares of Common
Stock

    

    4.
Chesapeake Group Inc. - 62,400 shares of Common Stock

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Schedule
III

    Names, Addresses and Number
of Shares

    to be Registered for each of
the Holders

    
      
         

      

      
        III-1

        
          

        

      

      
         

      

    

    Exhibit
A

    Plan of
Distribution

     

    The
selling security holders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock being offered under this prospectus on any stock exchange,
market or trading facility on which shares of our common stock are traded or in
private transactions.  These sales may be at fixed or negotiated
prices.  The selling security holders may use any one or more of the
following methods when disposing of shares:

     

    
      	
               
      

            	
              ·

            	
              ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

            

    

     

    
      	
               
      

            	
              ·

            	
              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;

            

    

     

    
      	
               
      

            	
              ·

            	
              purchases
      by a broker-dealer as principal and resales by the broker-dealer for its
      account;

            

    

     

    
      	
               
      

            	
              ·

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

     

    
      	
               
      

            	
              ·

            	
              privately
      negotiated transactions;

            

    

     

    
      	
               
      

            	
              ·

            	
              to
      cover short sales made after the date that the registration statement of
      which this prospectus is a part is declared effective by the
      Commission;

            

    

     

    
      	
               
      

            	
              ·

            	
              broker-dealers
      may agree with the selling security holders to sell a specified number of
      such shares at a stipulated price per
share;

            

    

     

    
      	
               
      

            	
              ·

            	
              a
      combination of any of these methods of sale;
and

            

    

     

    
      	
               
      

            	
              ·

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

     

    The
shares may also be sold under Rule 144 under the Securities Act of 1933, as
amended (“Securities Act”), if available, rather than under this
prospectus.  The selling security holders have the sole and absolute
discretion not to accept any purchase offer or make any sale of shares if they
deem the purchase price to be unsatisfactory at any particular
time.

     

    The
selling security holders may pledge their shares to their brokers under the
margin provisions of customer agreements.  If a selling security
holder defaults on a margin loan, the broker may, from time to time, offer and
sell the pledged shares.

     

    Broker-dealers
engaged by the selling security holders may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling security holders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, which
commissions as to a particular broker or dealer may be in excess of customary
commissions to the extent permitted by applicable law.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    If sales
of shares offered under this prospectus are made to broker-dealers as
principals, we would be required to file a post-effective amendment to the
registration statement of which this prospectus is a part.  In the
post-effective amendment, we would be required to disclose the names of any
participating broker-dealers and the compensation arrangements relating to
such sales.

     

    The
selling security holders and any broker-dealers or agents that are involved in
selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
sales.  Commissions received by these broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.  Any
broker-dealers or agents that are deemed to be underwriters may not sell shares
offered under this prospectus unless and until we set forth the names of the
underwriters and the material details of their underwriting arrangements in a
supplement to this prospectus or, if required, in a replacement prospectus
included in a post-effective amendment to the registration statement of which
this prospectus is a part.

     

    The
selling security holders and any other persons participating in the sale or
distribution of the shares offered under this prospectus will be subject to
applicable provisions of the Exchange Act, and the rules and regulations under
that act, including Regulation M.  These provisions may restrict
activities of, and limit the timing of purchases and sales of any of the shares
by, the selling security holders or any other person.  Furthermore,
under Regulation M, persons engaged in a distribution of securities are
prohibited from simultaneously engaging in market making and other activities
with respect to those securities for a specified period of time prior to the
commencement of such distributions, subject to specified exceptions or
exemptions.  All of these limitations may affect the marketability of
the shares.

     

    If any of
the shares of common stock offered for sale pursuant to this prospectus are
transferred other than pursuant to a sale under this prospectus, then subsequent
holders could not use this prospectus until a post-effective amendment or
prospectus supplement is filed, naming such holders.  We offer no
assurance as to whether any of the selling security holders will sell all or any
portion of the shares offered under this prospectus.

     

    We have
agreed to pay all fees and expenses we incur incident to the registration of the
shares being offered under this prospectus.  However, each selling
security holder and purchaser is responsible for paying any discounts,
commissions and similar selling expenses they incur.

     

    We and
the selling security holders have agreed to indemnify one another against
certain losses, damages and liabilities arising in connection with this
prospectus, including liabilities under the Securities Act.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Exhibit
B

    Selling Stockholder Notice
and Questionnaire

    

    The
undersigned understands that Remediation Services, Inc. (the “Company”) intends to
file with the Securities and Exchange Commission a registration statement on
Form S-1 (the “Resale
Registration Statement”) for the registration and the resale under Rule
415 of the Securities Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities in accordance with the terms of the Registration Rights
Agreement entered into by the Company and the undersigned (the “Agreement”). All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.

    

    In order
to sell or otherwise dispose of any Registrable Securities pursuant to the
Resale Registration Statement, a holder of Registrable Securities generally will
be required to be named as a selling stockholder in the related prospectus or a
supplement thereto (as so supplemented, the “Prospectus”), deliver
the Prospectus to purchasers of Registrable Securities (including pursuant to
Rule 172 under the Securities Act) and be bound by the provisions of the
Agreement (including certain indemnification provisions, as described below).
Holders must complete and deliver this Notice and Questionnaire in order to be
named as selling stockholders in the Prospectus. Holders of Registrable Securities who
do not complete, execute and return this Notice and Questionnaire within ten
(10) Business Days following the date of the Agreement (1) will not be named as
selling stockholders in the Resale Registration Statement or the Prospectus and
(2) may not use the Prospectus for resales of Registrable
Securities. 

    

    Certain
legal consequences arise from being named as a selling stockholder in the Resale
Registration Statement and the Prospectus. Holders of Registrable Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not named as a selling stockholder in the Resale Registration
Statement and the Prospectus.

    

    NOTICE

     

    The
undersigned holder (the “Selling Stockholder”)
of Registrable Securities hereby gives notice to the Company of its intention to
sell or otherwise dispose of Registrable Securities owned by it and listed below
in Item (3), unless otherwise specified in Item (3), pursuant to the Resale
Registration Statement. The undersigned, by signing and returning this Notice
and Questionnaire, understands and agrees that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Agreement.

    

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

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      QUESTIONNAIRE

    

    

    1.           Name.

     

    
      
        	
                (a)

              	
                Full
      Legal Name of Selling Stockholder:

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                (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 Stockholder:

    

    
      
        
          	
                   
      

                
	 
      
	 
      
	
                  Telephone:_____________________________________________________________________________________

                
	
                  Fax:___________________________________________________________________________________________

                
	
                  Contact
      Person:__________________________________________________________________________________

                
	
                  E-mail
      address of Contact
      Person:__________________________________________________________________

                

        

      

    

    

    3.           Beneficial
Ownership of Registrable Securities:

     

    
      
        	
                (a)

              	
                Type
      and Number of Registrable Securities beneficially
  owned:

              

      

    

     

    
      
        
          
            
              	
                       
      

                    
	
                        
      

                    
	
                       
      

                    

            

          

        

      

    

     

    
      
        
          	
                  (b)

                	
                  Number
      of shares of Common Stock to be registered pursuant to this Notice for
      resale:

                

        

      

    

     

    
      
        
          
            
              	
                       
      

                    
	
                        
      

                    
	
                       
      

                    

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    4.           Broker-Dealer
Status:

     

    
      
        	
                (a)

              	
                Are
      you a broker-dealer?

              

      

    

     

    Yes  ̈  No  ̈

     

    (b)              If
“yes” to Section 4(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company?

     

    Yes  ̈  No  ̈

     

    
      
        
          	
                  Note:  

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

                

        

      

    

     

    
      
        	
                (c)

              	
                Are
      you an affiliate of a
broker-dealer?

              

      

    

     

    Yes  ̈  No  ̈

     

    
      
        
          
            	
                    Note:  

                  	
                    If
      yes, provide a narrative explanation
below:

                  

          

        

      

    

     

    
      
        

      

         

    

    
      
        	
                (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
Stockholder.

     

    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:

              
	 
      
	 
      
	 
      
	 
      

      

    

     

    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:

              
	 
      
	 
      
	 
      
	 
      

      

    

    

    7.           Plan
of Distribution:

     

    The
undersigned has reviewed the form of Plan of Distribution attached as Exhibit A
to the Agreement, and hereby confirms that, except as set forth below, the
information contained therein regarding the undersigned and its plan of
distribution is correct and complete.

     

    
      
        	
                State
      any exceptions here:

              
	 
      
	 
      
	 
      
	 
      

      

    

    

    ***********

     

     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 of any applicable Resale Registration Statement.
All notices hereunder shall be made in writing, by hand delivery, confirmed or
facsimile transmission, first-class mail or air courier guaranteeing overnight
delivery at the address set forth below. In the absence of any such
notification, the Company shall be entitled to continue to rely on the accuracy
of the information in this Notice and Questionnaire.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and the inclusion
of such information in the Resale Registration Statement and the Prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of any such Registration
Statement and the Prospectus.

     

    By
signing below, the undersigned acknowledges that it understands its obligation
to comply, and agrees that it will comply, with the provisions of the Exchange
Act and the rules and regulations thereunder, particularly Regulation M in
connection with any offering of Registrable Securities pursuant to the Resale
Registration Statement. The undersigned also acknowledges that it understands
that the answers to this Questionnaire are furnished for use in connection with
Registration Statements filed pursuant to the Agreement and any amendments or
supplements thereto filed with the Commission pursuant to the Securities
Act.

    

    The
undersigned hereby acknowledges and is advised of the following Interpretation
A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations
regarding short selling:

    

    “An
Issuer filed a Form S-3 registration statement for a secondary offering of
common stock which is not yet effective. One of the selling stockholders wanted
to do a short sale of common stock “against the box” and cover the short sale
with registered shares after the effective date. The issuer was advised that the
short sale could not be made before the registration statement become effective,
because the shares underlying the short sale are deemed to be sold at the time
such sale is made. There would, therefore, be a violation of Section 5 if the
shares were effectively sold prior to the effective date.”

    

    By
returning this Questionnaire, the undersigned will be deemed to be aware of the
foregoing interpretation.

    

    I confirm
that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are
correct.

     

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

      

    
      
        
          
            	
                    Dated:_________________________

                  	 
      	
                    Beneficial
      Owner: _______________  

                  	 
	 
      	 
      	
                     
       

                  	 
	 
      	 
      	
                    By:

                  	 
      	 
	 
      	 
      	
                    Name: 

                  	 
      	 
	 
      	 
      	
                    Title:

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