Document:

Execution
      Version

     

     

      
        

      

    

     

    ASSET
      PURCHASE AGREEMENT

     

    BY
      AND AMONG

     

    FUQI
      INTERNATIONAL HOLDINGS CO., LTD.,

     

    BEIJING
      YINZHONG TIANMEI JEWELRY CO., LTD.,

     

    SHANGHAI
      TIANMEI JEWELRY CO., LTD.,

     

    AND

     

    CHUJIAN
      HUANG

     

    DATED
      AS OF APRIL 18, 2008

     

      
        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    TABLE
      OF CONTENTS

     

     

    
      	 	 	 	 	
              Page

            
	
              ARTICLE
                1

            	 Purchase
              and Sale of Assets; Assumption of Certain Specified
              Liabilities	 	
              1

            
	
              1.1

            	 	
              The
                Acquired Assets.

            	 	
              1

            
	
              1.2

            	 	
              Excluded
                Assets.

            	 	
              3

            
	
              1.3

            	 	
              Assumption
                of Certain Liabilities; Retained Liabilities.

            	 	
              4

            
	
              1.4

            	 	
              Purchase
                Price and Payment.

            	 	
              5

            
	
              1.5

            	 	
              Allocation
                of Purchase Price.

            	 	
              6

            
	 	 	 	 	 
	
              ARTICLE
                2

            	 Closing;
              Deliveries of the Parties at Closing	 	
              6

            
	
              2.1

            	 	
              The
                Closing.

            	 	
              6

            
	
              2.2

            	 	
              Conditions
                Precedent to Obligation of Buyer.

            	 	
              6

            
	
              2.3

            	 	
              Conditions
                Precedent to Obligation of Sellers.

            	 	
              8

            
	
              2.4

            	 	
              Seller
                Covenants.

            	 	
              8

            
	
              2.5

            	 	
              Buyer
                Covenants.

            	 	
              11

            
	
              2.6

            	 	
              Deliveries
                at the Closing by Sellers.

            	 	
              11

            
	
              2.7

            	 	
              Deliveries
                at the Closing by Buyer.

            	 	
              12

            
	
              2.8

            	 	
              Passage
                of Title.

            	 	
              13

            
	
              2.9

            	 	
              Transfer
                Taxes, Etc.

            	 	
              13

            
	
              2.10

            	 	
              Right
                to Contest.

            	 	
              13

            
	
              2.11

            	 	
              Non-assignable
                Contracts and Rights.

            	 	
              13

            
	
              2.12

            	 	
              Casualty
                Damage.

            	 	
              13

            
	
              2.13

            	 	
              Evidence
                of No Taxes Due.

            	 	
              14

            
	
              2.14

            	 	
              Fulfillment
                of Conditions and Agreements Prior to Closing.

            	 	
              14

            
	
              2.15

            	 	
              Termination
                Prior to Closing.

            	 	
              14

            
	 	 	 	 	 
	
              ARTICLE
                3

            	 Representations
              and Warranties of Sellers and Seller Principal	 	
              15

            
	
              3.1

            	 	
              Corporate
                Status; Authority.

            	 	
              15

            
	
              3.2

            	 	
              Corporate
                Action; Authority; Execution.

            	 	
              15

            
	
              3.3

            	 	
              No
                Conflicts.

            	 	
              16

            
	
              3.4

            	 	
              Stockholder;
                Equity Interests/Subsidiaries.

            	 	
              16

            
	
              3.5

            	 	
              Financial
                Statements and Records.

            	 	
              16

            
	
              3.6

            	 	
              Undisclosed
                Liabilities.

            	 	
              17

            
	
              3.7

            	 	
              Absence
                of Certain Changes or Events.

            	 	
              17

            
	
              3.8

            	 	
              Licenses,
                Permits and, Authorizations.

            	 	
              18

            
	
              3.9

            	 	
              Assets
                Used in the Business.

            	 	
              18

            
	
              3.10

            	 	
              Acquired
                Assets.

            	 	
              18

            
	
              3.11

            	 	
              Real
                Property.

            	 	
              19

            
	
              3.12

            	 	
              Inventory.

            	 	
              19

            
	
              3.13

            	 	
              Intellectual
                Property.

            	 	
              19

            
	
              3.14

            	 	
              Labor
                and Employee Benefit Matters.

            	 	
              20

            
	
              3.15

            	 	
              Litigation.

            	 	
              21

            
	
              3.16

            	 	
              Brokers.

            	 	
              21

            
	
              3.17

            	 	
              Contracts.

            	 	
              22

            

    

     

    
      
        
        

      

      
        -
          i -

        
          

        

      

      
        
        

      

    

     

    
      	
              3.18

            	 	
              Compliance
                with Laws.

            	 	
              23

            
	
              3.19

            	 	
              Environmental
                Matters.

            	 	
              23

            
	
              3.20

            	 	
              Taxes.

            	 	
              23

            
	
              3.21

            	 	
              Insurance.

            	 	
              24

            
	
              3.22

            	 	
              Transactions
                with Affiliates.

            	 	
              24

            
	
              3.23

            	 	
              Customer
                Relations.

            	 	
              24

            
	
              3.24

            	 	
              Solvency;
                Post-Closing Financial Condition of Sellers.

            	 	
              24

            
	
              3.25

            	 	
              Suppliers;
                Raw Materials.

            	 	
              25

            
	
              3.26

            	 	
              Access
                to Buyer Information.

            	 	
              25

            
	
              3.27

            	 	
              Foreign
                Corrupt Practices Act.

            	 	
              25

            
	
              3.28

            	 	
              Additional
                PRC Representations.

            	 	
              26

            
	
              3.29

            	 	
              Disclosure.

            	 	
              27

            
	
              3.30

            	 	
              Complete
                and Accurate Schedules.

            	 	
              27

            
	 	 	 	 	 
	
              ARTICLE
                4

            	 Representations
              and Warranties of Buyer	 	
              27

            
	
              4.1

            	 	
              Corporate
                Status; Authority.

            	 	
              27

            
	
              4.2

            	 	
              Corporate
                Action.

            	 	
              27

            
	
              4.3

            	 	
              No
                Conflicts.

            	 	
              28

            
	 	 	 	 	 
	
              ARTICLE
                5

            	 Non-competition	 	
              28

            
	
              5.1

            	 	
              Defined
                Terms.

            	 	
              28

            
	
              5.2

            	 	
              Non-competition.

            	 	
              29

            
	
              5.3

            	 	
              Confidentiality.

            	 	
              30

            
	
              5.4

            	 	
              Non-solicitation.

            	 	
              31

            
	
              5.5

            	 	
              Reasonableness
                of Restrictions.

            	 	
              31

            
	
              5.6

            	 	
              Remedy
                for Breach and Right to Injunction.

            	 	
              31

            
	
              5.7

            	 	
              Severability
                and Enforceability.

            	 	
              31

            
	 	 	 	 	 
	
              ARTICLE
                6

            	 Additional
              Covenants	 	
              32

            
	
              6.1

            	 	
              Access
                to Records.

            	 	
              32

            
	
              6.2

            	 	
              Litigation
                Cooperation.

            	 	
              32

            
	
              6.3

            	 	
              Employees.

            	 	
              32

            
	
              6.4

            	 	
              Final
                Sales Tax Return.

            	 	
              33

            
	 	 	 	 	 
	
              ARTICLE
                7

            	 Survival
              of Representations and Warranties; Indemnification	 	
              33

            
	
              7.1

            	 	
              General
                Provisions; Survival.

            	 	
              33

            
	
              7.2

            	 	
              Indemnification
                by Sellers.

            	 	
              33

            
	
              7.3

            	 	
              Indemnification
                by Buyer.

            	 	
              34

            
	
              7.4

            	 	
              Procedures
                Relating to Third Party Claims.

            	 	
              35

            
	
              7.5

            	 	
              Other
                Claims.

            	 	
              36

            
	 	 	 	 	 
	
              ARTICLE
                8

            	 Miscellaneous	 	
              37

            
	
              8.1

            	 	
              Costs
                and Expenses.

            	 	
              37

            
	
              8.2

            	 	
              Assignments.

            	 	
              37

            
	
              8.3

            	 	
              Further
                Assurances.

            	 	
              37

            
	
              8.4

            	 	
              Public
                Announcement.

            	 	
              37

            

    

     

    
      
        
        

      

      
        -
          ii -

        
          

        

      

      
        
        

      

    

     

    
      	
              8.5

            	 	
              Notices.

            	 	
              37

            
	
              8.6

            	 	
              Amendment
                and Modification.

            	 	
              38

            
	
              8.7

            	 	
              Captions.

            	 	
              38

            
	
              8.8

            	 	
              Governing
                Law.

            	 	
              38

            
	
              8.9

            	 	
              Waiver
                of Provisions.

            	 	
              39

            
	
              8.10

            	 	
              Counterparts.

            	 	
              39

            
	
              8.11

            	 	
              Entire
                Agreement.

            	 	
              39

            
	
              8.12

            	 	
              Definitions;
                Construction.

            	 	
              39

            
	
              8.13

            	 	
              No
                Third Party Beneficiaries.

            	 	
              41

            
	
              8.14

            	 	
              Jurisdiction;
                Service of Process.

            	 	
              41

            

    

    

    
      
        
        

      

      
        -
          iii -

        
          

        

      

      
        
        

      

    

    

    ASSET
      PURCHASE AGREEMENT

     

    THIS
      ASSET PURCHASE AGREEMENT (this
      “Agreement”),
      made
      effective as of April 18, 2008, is entered into by and among Fuqi International
      Holdings Co., LTD., a British Virgin Islands company, Beijing YinZhong TianMei
      Jewelry Co., Ltd., a company established under the laws of the PRC
      (“TianMei
      Beijing”),
      Shanghai TianMei Jewelry Co., Ltd., a company established under the laws of
      the
      PRC (the “TianMei
      Shanghai”
and
      together with TianMei Beijing, collectively the “Sellers”
and
      each a “Seller”),
      and
      solely for purposes of Article
      5
      and
Article
      7,
      Chujian
      Huang, an individual residing in the PRC with holder of PRC identity card no.
      440105196302250950 (the “Seller
      Principal”).

     

    RECITALS

     

    WHEREAS,
      Sellers are engaged in the business of (i) licensing, selling and distributing
      jewelry products, and (ii) owning and operating standalone stores and store
      counters for distribution of jewelry products, and (iii) licensing, selling,
      producing and distributing jewelry products, all under the name “Temix” (the
“Business”);
      

     

    WHEREAS,
      Sellers desire to sell, assign, and transfer to Fuqi International Holdings
      Co.,
      LTD. and/or a subsidiary of Fuqi International Holdings Co., LTD. (“Buyer”),
      and
      Buyer desires to purchase from Sellers, substantially all of the assets owned,
      leased or used in connection with the Business, as described in more detail
      below, all on the terms and subject to the conditions described herein. In
      connection therewith, Buyer will assume only certain specified liabilities
      and
      obligations of the Business as further described herein.

     

    NOW,
      THEREFORE, in consideration of the foregoing and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      and
      intending to be legally bound, the parties hereto agree as follows:

     

    ARTICLE
      1

    Purchase
      and Sale of Assets; Assumption of Certain Specified
      Liabilities

     

    1.1 The
      Acquired Assets.

     

    Subject
      to and in reliance upon the representations, warranties, and agreements herein
      set forth, and subject to the terms and conditions herein contained, Sellers
      shall grant, convey, sell, assign, transfer, and deliver to Buyer on the Closing
      Date (as such term is defined herein), and Buyer shall purchase on the Closing
      Date, free and clear of all covenants, restrictions, liens, security interests,
      claims, pledges, assignments, subleases, options, rights of refusal, charges,
      leases, licenses, encumbrances and any other restriction of any kind or nature
      (collectively, “Liens”),
      all
      properties, assets, privileges, rights, interests and claims, real and personal,
      tangible and intangible, of every type and description, wherever located,
      including the Business as a going concern and goodwill, that are owned, used,
      or
      held for use by Sellers and related to the Business, except for those assets
      which are expressly excluded pursuant to Section 1.2
      hereof
      (collectively, the “Acquired
      Assets”).
      Without limiting the generality of the foregoing, the Acquired Assets shall
      include, without limitation, items in the following categories that conform
      to
      the definition of the term “Acquired Assets”:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (a) Inventories.
      All
      inventories (including raw materials, work-in-progress, and finished goods)
      and
      supplies of Sellers (collectively, the “Inventory”),
      including, without limitation, Inventory held at each of the counter and stores
      operated in the Business, except for, if any, inventories held on a consignment
      basis for the other suppliers; 

     

    (b) Prepaid
      Items.
      All
      prepaid items and expenses (other than prepaid Taxes (as such term is defined
      herein));

     

    (c) Machinery,
      Equipment, and Other Personal Property.
      All
      physical assets, machinery, equipment, automobiles, trucks, furniture, fixtures,
      office materials and supplies, computer hardware and software, spare parts,
      and
      other tangible personal property of every kind and description owned, leased,
      or
      licensed by each Seller and used or held for use in connection with the
      Business, including those set forth on Schedule
      3.10(b)
      (the
“Tangible
      Personal Property”);

     

    (d) Real
      Property.
      Each
      Seller’s interest in all of the Real Property leased by each Seller and used or
      held for use in connection with the Business, including the properties listed
      on
Schedule
      3.11
      (collectively, the “Leased
      Real Property”);
      

     

    (e) Contracts.
      Each
      Seller’s rights under all contracts, leases, licenses, indentures, agreements,
      commitments, and all other contractual arrangements, whether oral
      or written,
      express or implied (collectively, the “Contracts”),
      including those Material Contracts listed on Schedule
      3.17,
      subject
      to the provisions of Section 2.11
      (collectively, the “Assumed
      Contracts”);

     

    (f) Intellectual
      Property.
      Each
      Sellers’ rights and goodwill in and to all trademarks, service marks,
      franchises, patents, trade names, jingles, slogans, and logotypes, copyrights
      and other intangible rights (registered or unregistered), including any
      applications therefor and all drawings and designs, know-how, show-how trade
      secrets and secret processes and formulas and licenses with respect to
      intangible property rights, computer programs and program rights, and other
      intangible property and proprietary rights, whether or not subject to statutory
      registration or protection (collectively, the “Intellectual
      Property”);

     

    (g) Files
      and Records.
      All
      files, records, books of account, general, financial, and accounting records,
      invoices, computer programs, tapes, electronic data processing software,
      customer and supplier lists, correspondence, and other records of
      Sellers;

     

    (h) Security
      Deposits.
      All
      security deposits held by third parties for the benefit of any
      Seller;

     

    (i) Goodwill.
      Each
      Seller’s goodwill in, and the going concern value of, the Business;

     

    (j) Permits,
      Licenses, and Authorizations.
      All
      governmental permits, licenses, and authorizations held by any Seller,
      including, without limitation, those listed on Schedule
      3.8,
      to the
      extent the same may be transferred to Buyer, including membership of Shanghai
      Diamond Exchange; 

     

    
      
        
        

      

      
        -
          2 -

        
          

        

      

      
        
        

      

       

    

    (k) Guarantees.
      All
      guarantees, warranties, indemnities, and similar rights in favor of any Seller
      with respect to the Business or any of the Acquired Assets; and

     

    (l) Asset
      List.
      Those
      items listed on the asset list attached as Schedule
      1.1(l)
      hereto.

     

    1.2 Excluded
      Assets.

     

    The
      following shall be excluded from the Acquired Assets and retained by Sellers
      (collectively, the “Excluded
      Assets”):

     

    (a) Cash
      and Investments.
      All
      cash on hand or in bank accounts and other cash items, cash equivalents, and
      short-term investments; 

     

    (b) Claims
      for Taxes.
      Any and
      all claims of any Seller for refunds, carrybacks, carryforwards, and credits
      relative to Taxes paid or attributable to a taxable period (or portion thereof)
      ending on or prior to the Closing Date;

     

    (c) Employee
      Benefit Plans.
      All
      Employee Benefit Plans (as such term is defined herein), including, without
      limitation, employee pension, profit sharing 401(k), medical benefit or health
      plans and trusts, ORSO Scheme, MPF Scheme, and related trust accounts, funds,
      insurance policies, investments, or other assets; 

     

    (d) Retained
      Rights.
      Any
      property, right, or asset arising from and directly related to the defense,
      release, compromise, discharge, or satisfaction of any of the Retained
      Liabilities (as such term is defined herein) unless such property, right, or
      asset is included on the Balance Sheet;

     

    (e) Corporate
      Records.
      The
      minute books, seal, stock records, tax returns and tax records of each
      Seller;

     

    (f) Personnel
      Records.
      The
      personnel records of each Seller with respect to the employees of the
      Business;

     

    (g) Current
      Assets.
      The
      current assets of each Seller listed on Schedule
      1.2(g)
      hereto;
      and

     

    (h) Equity
      Interests.
      The
      equity interests of each Seller.

     

    
      
        
        

      

      
        -
          3 -

        
          

        

      

      
        
        

      

       

    

    1.3 Assumption
      of Certain Liabilities; Retained Liabilities.

     

    (a) Upon
      the
      terms and subject to the conditions of this Agreement, effective as of the
      Closing Date, Buyer shall assume and agree to pay, honor, perform, and discharge
      when due and payable, and indemnify and hold harmless Sellers from and against
      the specific liabilities and obligations set forth below which relate to the
      operation of the Business or the Acquired Assets as of the Closing Date (the
      “Assumed
      Liabilities”),
      which
      assumption by Buyer will be evidenced by the execution and delivery of an
      Assignment and Assumption Agreement substantially in the form of Exhibit
      A
      attached
      hereto (the “Assignment
      and Assumption Agreement”).
      The
      Assumed Liabilities shall consist solely of (i) all liabilities and obligations
      that arise or accrue on or after the Closing Date under the express terms of
      the
      Assumed Contracts, but not including any liability or obligation for any breach
      thereof or default thereunder occurring on or prior to the Closing Date and
      (ii)
      those liabilities as set forth on Schedule
      1.3(a)
      hereto.

     

    (b) Buyer
      shall in no event assume or be deemed to assume, nor shall it be liable for,
      any
      obligations or liabilities of any Seller of any nature whatsoever (whether
      express or implied, fixed or contingent, known or unknown) other than the
      Assumed Liabilities (all obligations and liabilities of any Seller other than
      the Assumed Liabilities are referred to herein collectively as the “Retained
      Liabilities”).
      Without limiting the generality of the foregoing, Retained Liabilities shall
      include:

     

    (i) liabilities
      relating to or arising out of the negotiation, preparation, approval or
      authorization of this Agreement and the consummation of the Contemplated
      Transactions, including all legal and accounting fees and all brokers’ of
      finders’ fees or commissions payable by any Seller;

     

    (ii) liabilities
      of Seller relating to or arising out of the Excluded Assets;

     

    (iii) liabilities
      arising out of any lawsuit or claim, whether or not identified on Schedule
      3.15.

     

    (iv) liabilities
      of any Seller to any Related Party;

     

    (v) liabilities
      to, under or with respect to any Employee Benefit Plan and the administration
      of
      any Employee Benefit Plan, or relating to payroll, vacation, sick leave,
      workers’ compensation, unemployment benefits with respect to employees of former
      employees of any Seller or any of its predecessors, under any employment,
      severance, retention or termination agreement with any employee of any Seller
      or
      any of its Related Parties, or arising out of or relating to any employee
      grievance whether or not the affected employees are hired by Buyer;

     

    (vi) liabilities
      relating to any Taxes, including transfer Taxes and Taxes based on net income
      or
      attributable to sales or use that are assessed, accrued, or attributable for
      periods on or prior to the Closing Date and related penalties and interest,
      if
      any, whether or not be reason of in connection with, transactions contemplated
      by this Agreement;

     

    
      
        
        

      

      
        -
          4 -

        
          

        

      

      
        
        

      

       

    

    (vii) liabilities
      relating to any complaint, action, arbitration or regulatory, administrative
      or
      government proceeding or investigation involving any Seller arising from actions
      of any Seller on or prior to the Closing Date, other than collection actions
      initiated by any Seller relating to the Business;

     

    (viii) liabilities
      of any Seller for borrowed funds, capital leases, and notes
      payable;

     

    (ix) liabilities
      arising out of any transaction affecting any Seller, and liabilities and
      obligations incurred by any Seller, on or after the Closing Date;

     

    (x) liabilities
      arising out of any transaction affecting any Seller, and liabilities and
      obligations incurred by any Seller, prior to the Closing Date to the extent
      such
      liabilities were not incurred under the express terms of the Assumed
      Contracts;

     

    (xi) any
      liability or obligation to indemnify, defend, or hold harmless any Seller’s
      officers, managers, employees, agents, or any Related Party;

     

    (xii) liabilities
      of any Seller or any of its predecessors arising out of or relating to (i)
      any
      action, omission, or condition occurring or existing prior to the Closing Date
      to the extent that such action, omission, or condition constitutes a violation
      or alleged violation by or a liability or obligation of any Seller or any
      subsidiary, affiliate or predecessor under any Environmental Law or (ii) arising
      from the release, investigation, clean-up or remediation of any hazardous
      substance (as defined by the Comprehensive Environmental Response, Compensation
      and Liability Act, as amended (and any applicable similar state laws governing
      the clean-up and remediation of hazardous substances (“CERCLA”)))
      in
      connection with the disposal, treatment, or transport (or arrangement for
      disposal, treatment or transport) of such hazardous substance by any Seller
      o
      any subsidiary, affiliate or predecessor of any Seller, pursuant to CERCLA;
      and

     

    (xiii) any
      liabilities attributable to Excluded Assets.

     

    1.4 Purchase
      Price and Payment.

     

    (a) Aggregate
      Purchase Price.
      The
      aggregate purchase price to be paid by Buyer to the Sellers for the Acquired
      Assets shall be Eighty Million Yuan Renminbi (80,000,000 Yuan RMB) (the
“Purchase
      Price”),
      which
      amount shall be paid in cash as more specifically set forth in this Section
      1.4.

     

    (b) Payment
      of the Purchase Price at Closing.
      The
      Purchase Price shall be payable to Sellers as follows an aggregate of not
      exceeding Sixty-Four Million Yuan Renminbi (64,000,000 Yuan RMB), which is
      equal
      to 80% of the Purchase Price, in cash to be delivered to Sellers at Closing
      by
      wire transfer of immediately available funds pursuant to written instructions
      provided by Sellers to Buyer. 

     

    (c) Escrow
      Deposit.
      At
      Closing, Buyer shall deposit in escrow with Mellon Bank, N.A., as escrow agent
      (the “Escrow
      Agent”),
      an
      amount in cash equal to Sixteen Million Yuan Renminbi (16,000,000 Yuan RMB)
      (the
“Escrow
      Deposit”),
      which
      is equal to twenty percent (20%) of the Purchase Price. The Escrow Deposit
      will
      be held by the Escrow Agent for a period of six (6) months from the Closing
      Date
      and shall be subject to set-off from undiscovered inventory defects or
      descriptions in accordance with the escrow agreement in substantially in the
      form attached hereto as Exhibit
      B
      (the
“Escrow
      Agreement”).

     

    
      
        
        

      

      
        -
          5 -

        
          

        

      

      
        
        

      

       

    

    1.5 Allocation
      of Purchase Price.
      

     

    The
      Purchase Price shall be allocated among the Acquired Assets in accordance with
      the allocations set forth in Annex
      1.
      Sellers
      shall timely and properly prepare, execute, file and deliver any and all
      documents, forms and authorizations (including powers of attorney) as Buyer
      may
      reasonably request in order to prepare and report such allocation (including
      any
      amendments thereto) to Taxing authorities. Buyer and Sellers shall report the
      federal, state and local income and other tax consequences of the purchase
      and
      sale contemplated hereby, including, if applicable, the PRC Enterprise Income
      Tax, stamp duty, the Internal Revenue Code of 1986, as amended (the “Code”),
      in a
      manner consistent with such allocation and shall not take any position
      inconsistent therewith upon examination of any tax return, in any refund claim,
      in any litigation, or otherwise.

     

    ARTICLE
      2

    Closing;
      Deliveries of the Parties at Closing

     

    2.1 The
      Closing.
      

     

    The
      consummation of the transactions provided for in this Agreement (the
“Closing”),
      which
      shall be deemed to occur at the close of business on the Closing Date, shall
      take place at the offices of Kirkpatrick & Lockhart Preston Gates Ellis LLP,
      10100 Santa Monica Boulevard, 7th
      Floor,
      Los Angeles, CA 90034, at 10:00 a.m. PST on the second business day
      following the date on which the last to be fulfilled or waived of the conditions
      set forth in Sections 2.2
      and
2.3
      of this
      Agreement shall be satisfied or waived in accordance with this Agreement (other
      than those conditions that by their nature are to be satisfied at the Closing,
      but subject to the fulfillment or waiver of those conditions) or at such other
      place and/or on such other date as the parties may agree. The date on which
      the
      Closing shall occur is referred to herein as the “Closing
      Date.”

     

    2.2 Conditions
      Precedent to Obligation of Buyer.

     

    The
      obligation of Buyer to proceed with the Closing is expressly subject to the
      fulfillment prior to or at Closing of the conditions precedent set forth in
      this
      Section 2.2.
      Any one
      or more of these conditions precedent may be waived, in whole or in part, in
      writing by Buyer at Buyer’s sole option.

     

    (a) Representations
      and Warranties.
      The
      representations and warranties of each Seller and Seller Principal contained
      in
Article
      3
      shall
      be, individually and collectively, true and correct (in the case of any
      representation or warranty containing any materiality qualification) or true
      and
      correct in all material respects (in the case of any representation or warranty
      without any materiality qualification) (i) at and as of the date of this
      Agreement and (ii) on and as of the Closing Date as if made on the Closing
      Date.

     

    
      
        
        

      

      
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    (b) Agreements.
      Each
      Seller and each Seller Principal, as applicable, shall have performed in all
      material respects all of the agreements and complied with all of the provisions
      required by this Agreement and the Seller Transaction Documents to be performed
      or complied with by such party at or before the Closing Date.

     

    (c) Litigation.
      Neither
      any Seller, any Seller Principal nor Buyer shall be (i) subject to any
      restraining order or injunction restraining or prohibiting the consummation
      of
      the transactions contemplated by this Agreement or (ii) have received written
      notice from any Governmental Entity of its intention to institute any action
      or
      proceeding seeking to restrain, enjoin, or nullify this Agreement or the
      transactions contemplated hereby. Neither any Seller, any Seller Principal
      nor
      Buyer shall have received any claim by any Person (written or oral) asserting
      that any Person other than the respective Seller (x) is the owner of the
      Acquired Assets, (y) has any Lien on the Acquired Assets, or (z) is entitled
      to
      all or any portion of the Purchase Price.

     

    (d) No
      Material Adverse Effect.
      Between
      the date of this Agreement and the Closing Date, no event or events shall have
      occurred which, individually or in the aggregate, has had or could have a Seller
      Material Adverse Effect.

     

    (e) Closing
      Certificate.
      The
      Seller Principal shall have delivered a certificate relating to each Seller,
      dated as of the Closing Date, in a form satisfactory to Buyer, certifying to
      the
      fulfillment of the conditions set forth in subparagraphs (a),
      (b),
      (c),
      and
(d)
      of this
      Section 2.2.
      The
      contents of these certificates shall constitute a representation and warranty
      of
      each Seller and the Seller Principal as of the Closing Date and shall be deemed
      fully incorporated into this Agreement.

     

    (f) Audited
      Financial Statements.
      Buyer
      or its Representatives shall have completed an audit of the books and records
      of
      each Seller satisfactory in form and substance to Buyer, at its sole
      discretion.

     

    (g) Unencumbered
      Title.
      Buyer
      shall have received copies of such releases and documents, and reviewed other
      such evidence as Buyer deems necessary to assure Buyer that the Acquired Assets
      are being delivered free and clear of all Liens and encumbrances.

     

    (h) Equipment
      Leases.
      Any and
      all equipment leases for Tangible Personal Property shall have been paid in
      full
      by the Sellers and Buyer shall have received such evidence as Buyer deems
      necessary, in its sole discretion, to assure Buyer that such equipment is being
      delivered free and clear of all Liens pursuant to the terms of the applicable
      lease.

     

    (i) Leased
      Real Property.
      Each
      landlord under a lease for any Leased Real Property, to the extent required
      under such lease, shall have consented in writing to the assignment of such
      Leased Property to Buyer as contemplated by this Agreement, waived in writing
      any provisions of such lease that would prevent such assignment, cause the
      termination of the lease for such Leased Real Property, or otherwise be
      inconsistent with the transactions contemplated by this Agreement.

     

    
      
        
        

      

      
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    (j) Material
      Consents.
      Each of
      the third party approvals or consents identified in Schedule 2.2(j)
      (the
“Material
      Consents”)
      shall
      have been obtained and shall be in full force and effect.

     

    (k) Required
      Authorizations.
      Each
      Seller and each party to this Agreement shall have received all required
      authorizations under any applicable law necessary to consummate the transactions
      contemplated by this Agreement. 

     

    (l) Closing
      Documents.
      Buyer
      shall have received the other agreements and documents referred to in Section
      2.6.
      All
      certificates, opinions, and other documents delivered by each Seller to Buyer
      under this Agreement shall be in form and substance satisfactory to
      Buyer.

     

    2.3 Conditions
      Precedent to Obligation of Sellers.
      

     

    The
      obligation of each Seller to proceed with the Closing is expressly subject
      to
      the fulfillment prior to or at Closing of the conditions precedent set forth
      in
      this Section 2.3.
      Any one
      or more of these conditions may be waived, in whole or in part, in writing
      by
      any Seller at the sole option of such Seller.

     

    (a) Representations
      and Warranties.
      The
      representations and warranties of Buyer contained in Article
      4
      shall
      be, individually and collectively, true and correct (in the case of any
      representation or warranty containing any materiality qualification) or true
      and
      correct in all material respects (in the case of any representation or warranty
      without any materiality qualification) (i) at and as of the date of this
      Agreement, and (ii) on and as of the Closing Date as if made on the Closing
      Date. 

     

    (b) Agreements.
      Buyer
      shall have performed in all material respects all of the agreements and complied
      with all of the provisions required by this Agreement and the Buyer Transaction
      Documents to be performed or complied with by it at or before the Closing
      Date.

     

    (c) Litigation.
      Buyer
      shall not (i) be subject to any restraining order or injunction restraining
      or
      prohibiting the consummation of the transactions contemplated by this Agreement,
      or (ii) have received written notice from any Governmental Entity of its
      intention to institute any action or proceeding seeking to restrain, enjoin,
      or
      nullify this Agreement or the transactions contemplated hereby.

     

    (d) Closing
      Documents.
      Sellers
      shall have received the documents and other items referred to in Section
2.7.
      

     

    2.4 Seller
      Covenants.

     

    Each
      Seller covenants and agrees as follows:

     

    (a) Pre-Closing
      Conduct of Business.

     

    Between
      the date of this Agreement and the Closing Date, each Seller shall (and the
      Seller Principal shall cause each Seller to) operate the Business and perform
      its obligations under all Contracts and agreements relating to the Business
      in
      the usual and ordinary course of business and in accordance with existing
      policies and past practices, except as expressly contemplated by this Agreement.
      Without limiting the generality of the foregoing, no Seller shall (without
      the
      prior written consent of the Buyer, which it may withhold in its sole
      discretion):

     

    
      
        
        

      

      
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    (i) engage
      in
      any transaction outside the ordinary course of business;

     

    (ii) incur
      or
      commit to incur any indebtedness for borrowed money, or incur any other
      indebtedness outside the ordinary course of business consistent with past
      practice as disclosed by the Sellers in writing to the Buyer;

     

    (iii) assume,
      guarantee, endorse, or otherwise become responsible for the obligations of
      any
      other Person or make any loans or advances to any Person, except in the ordinary
      course of business consistent with past practice as disclosed by the Sellers
      in
      writing to the Buyer;

     

    (iv) issue,
      sell, pledge, lease, dispose of, encumber, or authorize the issuance, sale,
      pledge, lease, disposition, or encumbrance of (i) any shares of capital stock
      of
      any class or any other equity interest or any options, warrants, convertible
      securities, or other rights of any kind to acquire any shares of capital stock
      or equity interest, or any other ownership interest, of such Seller, or (ii)
      any
      assets that are material, individually or in the aggregate, to the Business
      except for the sales of Inventory or repair or rental of equipment in the
      ordinary course of business and in a manner consistent with past practice as
      disclosed by the Sellers in writing to the Buyer;

     

    (v) incur
      any
      obligations for capital expenditures or purchase any fixed assets other than
      in
      the ordinary course of business and in a manner consistent with past practice
      as
      disclosed by the Sellers in writing to the Buyer;

     

    (vi) make
      any
      payments for the benefit of any Seller Principal, including payments of any
      kind
      in respect of any Excluded Assets;

     

    (vii) grant
      or
      pay any bonus, increases in compensation, incentive compensation, or other
      employee benefit to, or enter into any contract with, its officers or its
      employees;

     

    (viii) initiate,
      settle, or compromise any material claims or litigation, enter into, modify,
      amend, or terminate any Contract or, except in the ordinary and usual course
      of
      business, waive, release, or assign any material rights or claims;

     

    (ix) make
      any
      material change in its selling, and distribution, marketing, pricing,
      advertising or collection practices, including any special effort or program
      to
      sell products to customers or to discount, factor or collect sooner than normal
      any accounts receivable;

     

    (x) permit
      any insurance policy naming any Seller as a beneficiary or a loss payable payee
      to be canceled or terminated;

     

    
      
        
        

      

      
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    (xi) take
      any
      action or omit to take any action, which action or omission could result in
      any
      Seller being unable to satisfy any of the conditions set forth in Article
      2;
      nor

     

    (xii) agree
      or
      commit to any of the foregoing.

     

    (b) Business
      and Goodwill.
      Prior
      to the Closing Date, each Seller shall (and the Seller Principal shall cause
      each Seller to) use its reasonable best efforts to preserve intact the Business,
      to preserve and maintain its goodwill and business relationships with customers,
      suppliers, employees and others having business relations with it, and to
      maintain in full force and effect and to protect and enforce, each in accordance
      with past practices, all permits, licenses, authorizations and Intellectual
      Property rights of Sellers.

     

    (c) Insurance.
      Each
      Seller shall (and the Seller Principal shall cause each Seller to) maintain
      or
      cause to be maintained, in full force and effect, through the Closing, all
      of
      the insurance policies of or covering each Seller, the Business, the Acquired
      Assets and each Seller’s employees in effect on the date of this Agreement,
      unless replaced by substantially comparable coverage. Each Seller shall promptly
      advise in writing Buyer of any fire, accident, or other casualty or loss
      occurring on or before the Closing which individually or in the aggregate
      adversely affects the value of the Acquired Assets in an amount in excess of
      $25,000.

     

    (d) Exclusive
      Dealing.
      Until
      the Closing Date or such time, if any, as this Agreement is terminated pursuant
      to the provisions hereof, no Seller or Seller Principal shall, directly or
      indirectly, initiate, encourage or solicit any inquiries or the making of any
      proposal with respect to, or engage in discussions or negotiations with, or
      provide information to any Person in connection with, the possible acquisition
      or disposition of the Business, any of the Acquired Assets, or any other assets
      of any Seller, or any membership interest of any Seller or authorize or permit
      any Person to do so on any Seller’s behalf. 

     

    (e) Access
      to each Seller, Files, and Records.
      At the
      reasonable request of Buyer and upon reasonable advance notice, each Seller
      each
      Seller shall (and the Seller Principal shall cause each Seller to), during
      normal business hours, give or cause to be given to the Representatives of
      Buyer
      (i) full access to the Leased Property, management personnel, property,
      accounts, books, deeds, title papers, insurance policies, licenses, agreements,
      contracts, commitments, logs, records and files of every character, related
      to
      the equipment, machinery, fixtures, furniture, vehicles and notes and accounts
      payable and receivable, and (ii) all such other information as Buyer may
      reasonably request, all as it relates to the Business; provided,
      however,
      that no
      Seller shall be required to permit such access or provide such information
      to
      the extent it unreasonably interferes with the operation of the Business by
      any
      Seller.

     

    (f) Notice
      of Proceedings.
      Each
      Seller shall (and the Seller Principal shall cause each Seller to) promptly
      notify Buyer telephonically and in writing upon that Seller (i) becoming aware
      of any order or decree or any complaint praying for an order or decree
      restraining or enjoining the consummation of this Agreement or the transactions
      contemplated hereunder, or (ii) receiving any notice from any Governmental
      Entity of its intention (A) to institute an investigation into, or institute
      a
      suit or proceeding to restrain or enjoin, the consummation of this Agreement
      or
      such transactions, or (B) to nullify or render ineffective this Agreement or
      such transactions if consummated.

     

    
      
        
        

      

      
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    (g) Required
      Approvals.
      As
      promptly as practicable after the date of this Agreement, each Seller shall
      (and
      the Seller Principal shall cause each Seller to) make all filings required
      by
      law to be made by that Seller in order to consummate the transactions
      contemplated by this Agreement. Each Seller and the Seller Principal shall
      cooperate with Buyer and its Representatives with respect to all filings that
      Buyer elects to make or that the Buyer is required by law to make in connection
      with the transactions contemplated by this Agreement. Each Seller and the Seller
      Principal also shall cooperate with Buyer and its Representatives in obtaining
      all Material Consents.

     

    2.5 Buyer
      Covenants.

     

    Buyer
      covenants and agrees to promptly notify Sellers upon Buyer (a) becoming aware
      of
      any order or decree or any complaint praying for an order or decree restraining
      or enjoining the consummation of this Agreement or the transactions contemplated
      hereunder or (b) receiving any notice from any Governmental Entity of its
      intention (i) to institute an investigation into, or institute a suit or
      proceeding to restrain or enjoin, the consummation of this Agreement or such
      transactions, or (ii) to nullify or render ineffective this Agreement or such
      transactions if consummated.

     

    2.6 Deliveries
      at the Closing by Sellers.

     

    At
      the
      Closing, the Sellers shall deliver to Buyer (unless delivered
      previously):

     

    (a) a
      duly
      executed Bill of Sale in substantially the form of Exhibit
      C
      attached
      hereto (the “Bill
      of Sale”),
      together with assignments, certificates of title and other instruments of sale,
      transfer, and assignment in form and substance reasonably satisfactory to Buyer
      and its counsel sufficient to sell, transfer, and assign to Buyer all right,
      title, and interest of each Seller and good and valid title to each Seller’s
      interest in and to the Acquired Assets;

     

    (b) the
      duly
      executed Assignment and Assumption Agreement;

     

    (c) certified
      copies of resolutions, duly adopted by the Board of Directors and all equity
      holders of each Seller, which shall be in full force and effect at the time
      of
      the Closing, authorizing the execution, delivery, and performance by each Seller
      of this Agreement and the consummation of the transactions contemplated hereby
      and any other authorization required for the transfer of the Acquired Assets
      to
      Buyer;

     

    (d) a
      legal
      opinion of Shanghai Young-Ben Law Firm, legal counsel to Sellers, dated as
      of
      the Closing Date, substantially in the form of Exhibit
      D
      attached
      hereto;

     

    (e) a
      duly
      executed Employment Agreement between Buyer and Seller Principal to be mutually
      agreed upon by Seller Principal and Buyer (the “Employment
      Agreement”);

     

    
      
        
        

      

      
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    (f) a
      certificate executed by an officer of each Seller certifying the accuracy of
      that Seller’s representations and warranties as of the date of this Agreement
      and as of the Closing in accordance with Section 7.1
      and as
      to their compliance with and performance of their covenants and obligations
      to
      be performed or complied with at or before the Closing in accordance with
      Section 2.4;
      

     

    (g) a
      certificate of the Secretary of each Seller certifying, as complete and accurate
      as of the Closing, attached copies of the charter documents, including the
      articles of association and bylaws (the “Governing
      Documents”),
      of
      that Seller, certifying and attaching all requisite resolutions or actions
      of
      that Seller’s board of directors and equity holders approving the execution and
      delivery of this Agreement and the consummation of the transactions contemplated
      by this Agreement and certifying to the incumbency and signatures of the
      officers of that Seller executing this Agreement and any other Transaction
      Document;

     

    (h) all
      termination statements and releases necessary or appropriate to terminate,
      release, and discharge any Liens (other than Permitted Liens) on or affecting
      the Acquired Assets, including, without limitation, any Liens on or affecting
      any equipment included in the Tangible Personal Property; 

     

    (i) a
      duly
      executed Intellectual Property Transfer Agreement between Buyer and Seller
      Principal, substantially in the form of Exhibit
      F
      attached
      hereto (the “IP
      Transfer Agreement”);
      and

     

    (j) such
      other documents or instruments as Buyer or its counsel may request that are
      reasonably required to be delivered by Sellers at or prior to Closing pursuant
      to this Agreement or otherwise required in connection herewith (such items
      referred to in clauses (a) through (j),
      together with this Agreement are collectively referred to as the “Seller
      Transaction Documents”).

     

    2.7 Deliveries
      at the Closing by Buyer.

     

    At
      the
      Closing, Buyer shall deliver to Sellers (unless delivered
      previously):

     

    (a) the
      duly
      executed Assignment and Assumption Agreement;

     

    (b) the
      duly
      executed Employment Agreement;

     

    (c) the
      duly
      executed IP Transfer Agreement;

     

    (d) a
      certificate executed by an officer of Buyer certifying the accuracy of its
      representations and warranties as of the date of this Agreement and as of the
      Closing in accordance with Section 2.3(a)
      and as
      to its compliance with and performance of its covenants and obligations to
      be
      performed or complied with at or before the Closing in accordance with
      Section 2.5;
      and

     

    (e) a
      certificate of the Secretary of Buyer certifying, as complete and accurate
      as of
      the Closing, attached copies the charter documents, including the articles
      of
      association and bylaws, of Buyer, certifying and attaching all requisite
      resolutions or actions of Buyer’s board of directors approving the execution and
      delivery of this Agreement and the consummation of the transactions contemplated
      by this Agreement and certifying to the incumbency and signatures of the
      officers of Buyer executing this Agreement and any other Transaction Document
      (such items referred to in clauses (a) through (e),
      together with this Agreement are collectively referred to as the “Buyer
      Transaction Documents”).

     

    
      
        
        

      

      
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    2.8 Passage
      of Title.
      

     

    Title
      to
      all Acquired Assets shall pass from Sellers to Buyer at Closing, subject to
      the
      terms and conditions of this Agreement.

     

    2.9 Transfer
      Taxes, Etc.

     

    Sellers
      shall pay all transfer, documentary, notarization, sales (including bulk sales),
      use, value added, stamp duty, stamp gross receipts, registration conveyance,
      excise, deed, business, Enterprise Income Tax, import, land appreciation, and
      other similar Taxes and fees (including any penalties, interest and additions
      to
      Tax) (“Transfer
      Taxes”),
      arising out of or attributable to the consummation of the transactions
      contemplated by this Agreement. Each Seller shall prepare and timely file all
      Returns required to be filed in respect of Transfer Taxes. Each Seller and
      Buyer
      shall cooperate to minimize, to the extent permitted by law, the amount of
      any
      Transfer Taxes imposed with respect to the transactions contemplated by this
      Agreement, including by utilizing any applicable sales tax exemptions for
      occasional sales.

     

    2.10 Right
      to Contest.

     

    The
      assumption and agreement by Buyer to pay, perform, and discharge the Assumed
      Liabilities shall not prohibit Buyer from contesting with a third party, in
      good
      faith and at the expense of Buyer, the amount, validity, or enforceability
      of
      any Assumed Liability.

     

    2.11 Non-assignable
      Contracts and Rights.

     

    To
      the
      extent that the assignment by any Seller of any contract, property, right,
      or
      asset to be assigned to Buyer pursuant to this Agreement shall require the
      consent or approval of any other party, and such consent or approval shall
      not
      have been obtained at the time of the Closing, this Agreement shall not
      constitute a contract to assign the same if an attempted assignment would
      constitute a breach thereof or would in any way adversely affect the rights
      of
      the Seller (or Buyer, as assignee) thereunder. If any such consent or approval
      is required but not obtained on the Closing Date, the parties covenant and
      agree
      that in such case, the applicable Seller shall continue to deal with the other
      contracting party or parties, with the benefits of such contract, property,
      right, or asset after the Closing Date accruing to the benefit of Buyer; such
      Seller shall hold all moneys received thereunder for the benefit of Buyer and
      shall pay the same to Buyer when received. Nothing in this Section 2.11
      shall be
      deemed a waiver by Buyer of its right to receive an effective assignment of
      the
      Acquired Assets on the Closing Date, nor shall this Section 2.11
      be
      deemed to constitute an agreement to exclude from the Acquired Assets any assets
      described in this Section 2.11.

     

    
      
        
        

      

      
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    2.12 Casualty
      Damage.

     

    Notwithstanding
      anything else in this Agreement to the contrary, if, prior to Closing, the
      Acquired Assets (or any portion thereof) are damaged by fire or any other cause,
      the reasonable estimate of the immediate repair of which would cost more than
      $100,000, Buyer may, at its option, which may be exercised by written notice
      given to Sellers within ten (10) business days after Buyer’s receipt of notice
      of such loss, declare this Agreement null and void, or Buyer may close subject
      to (a) reduction of the Purchase Price by the amount of any applicable insurance
      deductible which shall be paid by Buyer and (b) assignment to Buyer of the
      proceeds from any insurance carried by any Seller covering such loss. If, prior
      to Closing, the Acquired Assets (or any portion thereof) are damaged by fire
      or
      any other cause, the reasonable estimate of the repair of which would cost
      $100,000 or less, such event shall not excuse Buyer from its obligations under
      this Agreement, but the Cash Purchase Price shall be reduced by an amount equal
      to the amount of such loss in excess of any insurance proceeds actually received
      by Buyer in connection with such loss.

     

    2.13 Evidence
      of No Taxes Due.
      

     

    On
      or
      before the Closing Date, each Seller shall provide to Buyer evidence to the
      satisfaction of Buyer indicating that no Taxes are due to any state or other
      taxing authority for which Buyer could have liability to withhold or pay Taxes
      with respect to the transfer of the Acquired Assets or the
      Business.

     

    2.14 Fulfillment
      of Conditions and Agreements Prior to Closing.

     

    Each
      party shall use commercially reasonable efforts to satisfy all of those
      conditions to the obligations of the other under this Article
      2
      that are
      not beyond its reasonable control on or prior to the Closing Date. Each party
      shall use commercially reasonable efforts to take, or cause to be taken, all
      action and do, or cause to be done, all things necessary, proper or advisable,
      including making or obtaining any and all consents and authorizations, to
      consummate and make effective the transactions contemplated by this Agreement,
      including making all filings required under applicable law. Notwithstanding
      the
      foregoing, Buyer shall not be required to take any action to comply with any
      legal requirement or agree to the imposition of any Governmental Entity order,
      judgment, or decree that would (a) prohibit or restrict the ownership or
      operation by Buyer of any portion of the Acquired Assets, (b) compel Buyer
      to
      dispose of or hold separate any portion of its assets, or (c) impose any
      limitation on the ability of Buyer to own or operate the Business.

     

    2.15 Termination
      Prior to Closing.

     

    (a) Events
      of Termination.
      This
      Agreement may be terminated in writing at any time prior to the Closing by:
      (i)
      the mutual consent of Buyer, on the one hand, and Sellers, on the other hand;
      (ii) Buyer, if any of the conditions specified in Section 2.2
      shall
      not have been fulfilled (or if satisfaction becomes impossible) by August 31,
      2008 and shall not have been waived by Buyer; (iii) Sellers, if any of the
      conditions specified in Section 2.3
      shall
      not have been fulfilled (or if satisfaction becomes impossible) by August 31,
      2008 and shall not have been waived by Sellers; (iv) Buyer, if a material breach
      of any provision of this Agreement has been committed by any Seller and such
      breach has not been cured or waived by Buyer; and (v) Sellers, if a
      material breach of any provision of this Agreement has been committed by Buyer
      and such breach has not been cured or waived by Sellers.

     

    
      
        
        

      

      
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    (b) Consequences
      of Termination.
      If this
      Agreement is terminated by mutual consent of Sellers and Buyer, no party hereto
      shall have any obligation to any other party as a result of that termination.
      If
      any party terminates this Agreement for any other reason described in Section
      2.15(a),
      Buyer,
      on the one hand, and Sellers, on the other hand, shall be liable to the other
      for any material breach of this Agreement by such party which breach led to
      such
      termination. Each party shall also be entitled to any other remedy to which
      it
      may be entitled at law or in equity, including injunctive relief and specific
      performance, in the event of a termination of this Agreement. If the Closing
      does not occur on or before August 31, 2008 or such later date as the parties
      may agree upon, and no party’s material breach of this Agreement was the cause
      of the failure to close by that date, then no party shall have any liability
      to
      the other party under this Agreement, and this Agreement shall terminate. All
      rights and obligations of the parties set forth in Article
      7
      and
      Sections 8.1,
      8.4,
      and
8.5,
      and
      shall survive termination of this Agreement.

     

    ARTICLE
      3

    Representations
      and Warranties of Sellers and Seller Principal

     

    Each
      Seller and Seller Principal hereby jointly and severally represents and warrants
      to Buyer as follows:

     

    3.1 Corporate
      Status; Authority.

     

    Each
      Seller is a corporation duly organized, validly existing and in good standing
      under the laws of the place of its incorporation or establishment. Each Seller
      is duly qualified and in good standing to do business as a foreign entity in
      each jurisdiction in which the conduct or nature of its business or the
      ownership, leasing or holding of its properties makes such qualification
      necessary, except such jurisdictions where the failure to be so qualified or
      in
      good standing, individually or in the aggregate, have not had and will not
      have
      or be reasonably expected to have a material adverse effect (a) on the condition
      (financial or otherwise), liabilities, properties, assets, or results of
      operations of the Business, taken as a whole, or (b) on the ability of any
      Seller to perform its obligations under or to consummate the transactions
      contemplated by this Agreement (a “Seller
      Material Adverse Effect”).
      Each
      Seller has all requisite corporate power to carry on its business and operations
      as it is now being conducted and to own and operate the Business, and to enter
      into this Agreement, to perform its obligations hereunder and to complete the
      transactions contemplated hereby.

     

    3.2 Corporate
      Action; Authority; Execution.

     

    All
      corporate, individual, board and equity holder actions and proceedings necessary
      to be taken by or on the part of each Seller and Seller Principal in connection
      with the transactions contemplated by this Agreement and the Seller Transaction
      Documents have been duly and validly taken, and this Agreement has been duly
      and
      validly authorized, executed, and delivered by each Seller and Seller Principal
      and constitutes, and each of the other Seller Transaction Documents, as
      applicable, will be duly and validly authorized, executed, and delivered by
      each
      Seller and will constitute, the legal, valid, and binding obligation of each
      Seller and Seller Principal, enforceable against each Seller and Seller
      Principal in accordance with and subject to its terms, except as may be limited
      by bankruptcy or other laws affecting creditors’ rights and by equitable
      principles.

     

    
      
        
        

      

      
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    3.3 No
      Conflicts.

     

    Neither
      the execution, delivery, and performance by each Seller of the Seller
      Transaction Documents nor the consummation by each Seller of the transactions
      contemplated thereby is an event that, by itself or with the giving of notice
      or
      the passage of time or both, will (a) conflict with any of the Seller’s charter
      documents, as the same may have been amended from time to time, (b) constitute
      a
      violation of, or conflict with, or result in any breach of or any default under,
      or constitute grounds for termination or acceleration of, any license, mortgage,
      indenture, lease, Contract (including the Assumed Contracts), agreement or
      instrument to which each Seller is a party or by which any Seller is bound
      or
      result in the creation of any Lien (other than a Permitted Lien) upon any of
      the
      Acquired Assets, or (c) violate (i) any judgment, decree, or order or (ii)
      any
      statute, rule, or regulation, in each such case, applicable to any Seller or
      Seller Principal. The execution, delivery, and performance by each Seller of
      this Agreement, and the consummation by each Seller of the transactions
      contemplated hereby, require no action by or in respect of, or filing with,
      any
      Governmental Entity.

     

    3.4 Stockholder;
      Equity Interests/Subsidiaries.

     

    (a) Schedule
      3.4
      identifies each and every holder of any equity interest of each Seller and
      his
      or her respective equity interests in each Seller. Each holder identified on
      Schedule
      3.4
      hereto
      is the bona fide owner of the equity interests set forth opposite his or her
      name. 

     

    (b) The
      Acquired Assets do not include, directly or indirectly, any capital stock of
      or
      other equity interests in any corporation, partnership, limited liability
      company, limited liability partnership or other Person, and no Seller is a
      member of or participant in any partnership, joint venture, limited liability
      company, limited liability partnership or similar Person.

     

    3.5 Financial
      Statements and Records.

     

    (a) Each
      Seller has delivered to Buyer true, correct, and complete copies of the balance
      sheet of Seller as at December 31, 2007 and February 29, 2008 (the “Balance
      Sheets”)
      and
      the statements of income and cash flows of each Seller for the year then ended,
      as well as, in each case, the notes thereto (collectively, the “Financial
      Statements”).
      The
      Financial Statements have been prepared based on the books, records, accounts
      and related records of each Seller maintained with respect to the Business,
      which books, records, accounts and related records are complete and accurately
      and fairly present in detail all of the assets, liabilities, revenues, expenses,
      cash flows and transactions of each Seller and have been maintained in
      accordance with sound business practices, including the maintenance of adequate
      internal controls. The Financial Statements fairly represent in all respects
      the
      financial position of each Seller as at each Balance Sheet Date, as applicable,
      and for the period then ended, all in accordance with GAAP. No Seller has
      engaged in any transaction with respect to the Business or used any of the
      funds
      of any Seller in the conduct of the Business except for transactions and funds
      which have been and are reflected in the normally maintained books and records
      of the Business. 

     

    
      
        
        

      

      
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    (b) The
      books
      of account and related records of each Seller reflect accurately and in detail
      the Acquired Assets and Assumed Liabilities. The books of account of each Seller
      have been maintained in accordance with sound accounting practices, including
      the maintenance of adequate internal controls. The minute books of each Seller
      contain accurate and complete records of all meetings held of, and corporate
      action taken by, the board of each Seller and the committees of the board of
      each Seller. No meeting of board members of any Seller or committees of the
      board of managers of any Seller has been held for which minutes have not been
      prepared and are not contained in the minute books of such Seller. All minute
      books of each Seller have been provided to the Buyer.

     

    3.6 Undisclosed
      Liabilities.

     

    No
      Seller
      has any liabilities or obligations (whether pursuant to Contracts or otherwise)
      of any kind whatsoever (whether accrued, contingent, absolute, determined,
      determinable or otherwise) except: (a) those reflected or reserved against
      on
      the Balance Sheets in the amounts shown thereon; (b) those reflected on
Schedule
      3.6;
      (c)
      those of the same nature as those set forth in the Balance Sheets that have
      arisen in the ordinary course of the Business after the Balance Sheet Date
      through the date hereof, all of which have been consistent in amount and
      character with past practice and experience, none of which, individually or
      in
      the aggregate, have or could have a Seller Material Adverse Effect, and none
      of
      which is a liability for breach of contract or warranty or has arisen out of
      tort, infringement, violation of law or a lawsuit or threat thereof; or (d)
      those arising under this Agreement. From and after the Closing, each Seller
      shall have sufficient funds to satisfy its Retained Liabilities.

     

    3.7 Absence
      of Certain Changes or Events.

     

    (a) Since
      January 1, 2007, each Seller has used its best efforts consistent with past
      practice to preserve the Business and each Seller’s relationships with
      customers, suppliers, lenders, creditors, employees, licensors, licensees,
      distributors and others with whom any Seller has a business or financial
      relationship, and, as of the date hereof, no such Person or group of Persons
      having a business or financial relationship with any Seller has informed any
      employee of such Seller that such Person intends to change or discontinue such
      relationship. Since January 1, 2007, the Business has been conducted in the
      ordinary course consistent with past practice as disclosed by Sellers in writing
      to Buyer (including with respect to the collection of receivables, payment
      of
      payables and other liabilities, advertising activities, sales practices
      (including promotions, discounts and concessions), capital expenditures and
      inventory levels, and contributions to or accruals to or in respect of Benefit
      Plans (as defined herein)) and, except as set forth on Schedule
      3.7,
      there
      has not occurred with respect to the Business:

     

    (i) any
      event, occurrence, or development which, individually or in the aggregate,
      has
      had or could have Seller Material Adverse Effect;

     

    
      
        
        

      

      
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    (ii) any
      material damage, destruction, or property loss not fully covered by
      insurance;

     

    (iii) any
      sale
      or other disposition of any single capital asset used in the Business having
      a
      book value in excess of $10,000, or any group of capital assets used in the
      Business having an aggregate book value in excess of $50,000;

     

    (iv) any
      increase in wage, salary, commission, or other compensation (other than routine
      increases granted in the ordinary course of business and consistent with past
      practice) payable or to become payable by any Seller to any of its employees,
      or
      any change in any existing, or creation of any new, insurance or other plan
      under which such Seller provides benefits to such employees;

     

    (v) any
      release of waiver by any Seller of any claim or right;

     

    (vi) any
      dividends or other distributions to any Seller Principal or Affiliates of the
      any Seller (other than the distributions for tax purposes on the dates and
      in
      the amounts set forth on Schedule
      3.7);
      nor

     

    (vii) any
      event
      that, had it occurred after the signing of this Agreement and prior to he
      Closing, would have constituted a breach of Section 2.4(a)
      if
      written consent of the Buyer had not been previously obtained.

     

    3.8 Licenses,
      Permits and, Authorizations.
      

     

    Schedule
      3.8
      lists
      and describes all licenses, permits and authorizations that are currently held
      by each Seller. The Sellers hold all licenses, permits, and authorizations
      required for the conduct of the Business as currently conducted.  Such
      licenses, permits and authorizations are not subject to any restrictions or
      conditions that would limit the operation of the Business and there are no
      applications by any Seller or complaints by others pending or threatened before
      any Governmental Entity relating to any licenses, permits or authorizations
      involving the Acquired Assets, the Business or any Seller.

     

    3.9 Assets
      Used in the Business.
      

     

    Except
      for the Excluded Assets, the Acquired Assets constitute all of the assets or
      property used or held for use in the Business, and are sufficient to conduct
      the
      Business as the same is now being conducted in all respects and as the same
      is
      to be conducted by Buyer. Each Seller is engaged in the Business and no other
      business. The Business has only been conducted through the Sellers and not
      through any other division or direct or indirect subsidiary or
      Affiliate.

     

    3.10 Acquired
      Assets.
      

     

    (a) The
      Sellers, collectively, have good and valid title to all Acquired Assets, except
      those sold or otherwise disposed of in the ordinary course of business
      consistent with past practice and not in violation of this Agreement, in each
      case, free and clear of all Liens of any kind except (i) such as are set forth
      on Schedule
      3.10(a),
      (ii) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens
      arising or incurred in the ordinary course of business consistent with past
      practice, and (iii) Liens for Taxes, assessments, governmental charges or
      claims that are not yet delinquent (such Liens, encumbrances and imperfections
      of title described in clauses (i), (ii), and (iii) are hereinafter referred
      to
      collectively as “Permitted
      Liens”).
      

     

    
      
        
        

      

      
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    (b) Schedule
      3.10(b)
      sets
      forth a list of all Tangible Personal Property. All Tangible Personal Property
      is in good working condition. All leased personal property used or held for
      use
      in the Business is in all respects in the condition required of such property
      by
      the terms of the lease applicable thereto during the term of the lease and
      upon
      the expiration thereof. 

     

    3.11 Real
      Property.

     

    (a) Schedule
      3.11(a)
      sets
      forth a complete and accurate list and description of all interests in any
      Leased Property and identifies any related leases and reciprocal easements
      or
      operating agreements. Each of the relevant leases is in full force and effect.
      No Seller has received any written notice that any Seller is in default of
      any
      such lease, and no Seller has sent to any landlord notice that such landlord
      is
      in default of any such lease. The current use by each Seller of the plants,
      offices, and other facilities located on any Leased Real Property does not
      violate any local zoning or similar land use or government regulations in any
      respect. During the term of the relevant leases, no condemnation of any portion
      of any of the Leased Properties has occurred, and no Seller has received any
      notice related to any future or proposed condemnation of any portion of any
      of
      the Leased Properties.

     

    (b) For
      purposes of this Agreement, the term “Real
      Property”
      means
      leaseholds, and other estates in real property and appurtenances thereto, and
      all easements, privileges, rights-of-way, lands underlying any adjacent streets
      or roads, licenses, permits and other rights pertaining to or accruing to the
      benefit of such leasehold interests and estates in real property, buildings,
      warehouses, and fixtures and improvements thereon. The Sellers, collectively,
      have good and valid title to the leasehold estates in all the Leased Property,
      in each case free and clear of all Liens and other similar restrictions of
      any
      nature whatsoever.

     

    3.12 Inventory.
      

     

    The
      Inventory is valued on the books and records of each Seller and in the Financial
      Statements at the lower of cost or market. All Inventory is accounted for using
      the Perpetual Standard Cost method of accounting. All of the finished goods
      Inventory is in good, merchantable, and usable condition and is salable in
      the
      ordinary course of business within a reasonable period of time and at normal
      profit margins. All of the raw materials and work-in-progress Inventory of
      Sellers can reasonably be expected to be consumed in the ordinary course of
      business within a reasonable period of time. None of the Inventory is obsolete,
      slow-moving, has been consigned to others or is on consignment from others.
      The
      quantities of Inventory are not excessive, but are reasonable in the present
      and
      anticipated circumstances of the Business.

     

    3.13 Intellectual
      Property.

     

    (a) Schedule
      3.13(a)
      sets
      forth a true and complete list of (i) all Intellectual Property owned, used,
      filed by, registered or licensed to each Seller in connection with the Business,
      and (ii) with respect to registered trademarks, all jurisdictions in which
      such
      trademarks are registered or applied for and all registrations and application
      numbers. The Sellers, collectively, own all right, title and interest in and
      to
      the Intellectual Property, and Sellers, collectively, have the right to use,
      execute, reproduce, display, perform, modify, enhance, distribute, prepare
      derivative works of and license, without payment to any other person, all
      Intellectual Property listed in Schedule
      3.13(a),
      and the
      consummation of the transactions contemplated hereby will not conflict with,
      alter, or impair any such rights. The Sellers, collectively, have all rights
      to
      the Intellectual Property which are necessary in connection with the Business
      as
      it is presently being conducted and the Intellectual Property identified on
      Schedule
      3.13(a)
      is all
      the Intellectual Property necessary for the operation of the
      Business.

     

    
      
        
        

      

      
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    (b) Except
      as
      set forth on Schedule
      3.13(b),
      (i) no
      Seller has granted any licenses or contractual rights relating to Intellectual
      Property or the marketing or distribution thereof, and (ii) no Seller is
      bound by or a party to any Contracts of any kind relating to the Intellectual
      Property of any other Person, except for agreements relating to computer
      software licensed to any Seller in the ordinary course of business consistent
      with past practice. Subject to the rights of third parties set forth on
Schedule 3.13(b),
      each
      Seller warrants that all Intellectual Property listed in Schedule
      3.13(b)
      is free
      and clear of the claims of others and of all Liens whatsoever. The conduct
      of
      the Business as it is presently being conducted does not violate, conflict
      with
      or infringe the Intellectual Property of any other Person. Except as set forth
      on Schedule
      3.13(b),
      no
      claims are pending or, to the knowledge of any Seller, threatened against any
      Seller by any Person with respect to the ownership, validity, enforceability,
      effectiveness or use of any Intellectual Property and no Seller has received
      any
      communications alleging that any Seller has violated any rights relating to
      Intellectual Property of any Person.

     

    3.14 Labor
      and Employee Benefit Matters.

     

    (a) No
      Seller
      has any contracts of employment with any employee and no Seller is a party
      to or
      subject to any collective bargaining agreements with respect to the Business.
      Each Seller has delivered to Buyer a true and complete list of all officers
      and
      key employees and a complete list of all other employees, in each case with
      their job titles and compensation, of the Business as of the Closing Date.
      Each
      of the employees of each of the Sellers who is by law subject to immigration
      control, has been granted appropriate permission to remain in PRC or any other
      applicable jurisdiction and has a valid work permit issued in relation to his
      employment with such Seller and has obtained all necessary extensions to his
      leave to remain in Hong Kong, PRC or any other applicable jurisdiction and
      so
      far as the Seller Principal is aware there are in existence no grounds upon
      which any such leave to remain or work permit might be curtailed or the employee
      may be required to leave PRC or any other applicable jurisdiction in which
      his
      services to such Company are required to be performed.

     

    (b) Each
      Seller does not have an “employee benefit plan” (within the meaning of Section
      3(3) of the Employee Retirement Income Security Act of 1974, as amended
      (“ERISA”),
      as
      applied to the jurisdictions of the Sellers and Seller Principals (“Employee
      Benefit Plan”)),
      and
      each other employment, pension, welfare, savings, deferred compensation,
      severance, termination, holiday, vacation, sick leave, performance, incentive,
      bonus, insurance, stock option, stock purchase or other equity-based plan,
      program, arrangement or understanding with respect to which any Seller
      contributes or has aggregate liability in respect of present or former employees
      of the Business in excess of $10,000 (collectively with each Employee Benefit
      Plan, “Benefit
      Plan”).
      

    
      
        
        

      

      
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    (c) No
      employee of any Seller will be entitled to any additional benefits or any
      acceleration of the time of payment or vesting of any benefits under any Benefit
      Plan as a result of the transactions contemplated by this Agreement.

     

    (d) The
      consummation of the transactions contemplated by this Agreement shall not give
      rise to any liability with respect to any Benefit Plan.

     

    (e) No
      Seller
      is indebted to any of its present or former employees in any amount whatsoever,
      other than for accrued wages, bonuses and related benefits and reasonable
      reimbursable business expenses incurred in the ordinary course of
      business.

     

    (f) No
      Seller
      has outstanding and unsatisfied, in whole or in part, any loan or advance to
      any
      of its present or former employees, other than reasonable advances for business
      and related expenses made in the ordinary course of business.

     

    (g) Each
      Seller has complied in all respects with all laws relating to employment
      practices, terms and conditions of employment, equal employment opportunity,
      nondiscrimination, immigration, wages, hours, benefits, collective bargaining
      and other requirements, the payment of social security and other Taxes and
      occupational safety and health. 

     

    3.15 Litigation.

     

    Schedule
      3.15
      sets
      forth an accurate and complete list of pending lawsuits or claims with respect
      to which (i) any Seller has knowledge, or (ii) any Seller or any employee of
      any
      Seller has been contacted against or affecting the Acquired Assets, the Assumed
      Liabilities, the Business or arising out of the Business. (a) None of the
      lawsuits or claims listed in Schedule
      3.15
      has had
      or will be reasonably expected to have, individually or in the aggregate, a
      Seller Material Adverse Effect, (b) there are no unasserted or threatened claims
      that, if asserted in writing, would be required to be disclosed in Schedule
      3.15,
      (c) no
      Seller is a party or subject to or in default under any judgment, order,
      injunction, or decree of any Governmental Entity or arbitration tribunal
      affecting the Acquired Assets or the transactions contemplated by this
      Agreement, (d) there is no lawsuit or claim by any Seller pending, or which
      any
      Seller intends to initiate, against any other Person, and (e) there is no
      pending or threatened investigation of or affecting the Acquired Assets or
      the
      Business by any Governmental Entity.

     

    3.16 Brokers.

     

    There
      is
      no investment banker, broker or finder or other Person who will have any valid
      claim against any Seller for a commission or brokerage fee in connection with
      this Agreement or the transactions contemplated hereby as a result of any
      agreement of, or action taken by, any Seller.
      No
      Seller has any knowledge of, nor has taken any action which would give rise
      to,
      any claim for a broker’s or finder’s fee to be paid by Buyer in connection with
      the consummation of the transactions contemplated by this
      Agreement.

    
      
        
        

      

      
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    3.17 Contracts.

     

    Schedule
      3.17
      hereto
      contains a complete and accurate list of all Contracts of the types described
      below to which any Seller is currently a party or otherwise bound (“Material
      Contracts”):

     

    (a) Contracts
      with any customer or supplier, all engineering service contracts, and contracts
      with any agent, advertiser, consultant, advisor, sales representative,
      distributor, sales agent or dealer involving an exchange of consideration with
      an aggregate value greater than $10,500;

     

    (b) covenants
      not to compete;

     

    (c) Contracts
      with any Governmental Entity;

     

    (d) agreements,
      Contracts or other instruments under which Sellers has borrowed any money from,
      or issued any note, bond, debenture or other evidence of indebtedness to, any
      Person or any other note, bond, debenture or other evidence of indebtedness
      issued to any Person;

     

    (e) Contracts
      under which (i) any Person has directly or indirectly guaranteed indebtedness,
      liabilities or obligations of any Seller, or (ii) any Seller has directly or
      indirectly guaranteed indebtedness, liabilities or obligations of any
      Person;

     

    (f) pledges,
      security agreements, financing statements or other documents granting a Lien
      on
      any of the Acquired Assets (other than Permitted Liens);

     

    (g) Contracts
      under which any Seller has, directly or indirectly, made any advance, loan,
      extension of credit or capital contribution to, or other investment in, any
      Person;

     

    (h) Contracts
      under which any Seller is lessee of, or holds or operates, any machinery,
      equipment, vehicle or other tangible personal property owned by a third party
      and used in the Business;

     

    (i) Contracts
      or other arrangements with any current or former officer, manager, employee,
      or
      stockholder, or with any relative, beneficiary, or spouse of the foregoing
      Persons, or with any Affiliate of any Seller, or any of its respective
      Affiliates (each, a “Related
      Party”);

     

    (j) each
      joint venture or partnership arrangement or agreement, however named, involving
      a sharing of profits, losses, costs or liabilities by any Seller and any Person
      or entity;

     

    (k) any
      other
      Contract, whether or not made in the ordinary course of business, which is
      material to the Business or the termination of which has had or may have a
      Seller Material Adverse Effect.

    
      
        
        

      

      
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    No
      Seller
      or any other party is (with or without the lapse of time or the giving of notice
      or both) in default in any respect under any Material Contract. The Sellers
      have
      made available to Buyer true and complete copies of all Material Contracts.
      Each
      Material Contract is in full force and effect and constitutes a legal, valid
      and
      binding obligation of the applicable Seller, and the other parties thereto,
      enforceable in accordance with its terms except as may be limited by bankruptcy
      or other laws affecting creditors’ rights and by equitable principles. No Seller
      has received any notice (written or oral) of the intention of any party to
      terminate or fail to renew any Material Contract.

     

    3.18 Compliance
      with Laws.

     

    The
      operations of the Business are not now being conducted and have not been
      conducted in violation of any applicable law, ordinance, statute, rule or
      regulation of any Governmental Entity. No Seller has received any notice from
      any Governmental Entity that the operations of the Business are being conducted
      in violation of any applicable law, ordinance, statute, rule or regulation
      of
      any Governmental Entity, or of any investigation or review pending or threatened
      by any Governmental Entity investigating or reviewing any alleged
      violation.

     

    3.19 Environmental
      Matters. 

     

    Each
      Seller has operated the Business and Leased Property in full compliance with
      all
      applicable Environmental Laws. No Seller is currently subject to any liability,
      penalty or expense (including attorneys’ fees) and will not hereafter suffer or
      incur any loss, liability, penalty or expense (including attorneys’ fees) under
      Environmental Laws in effect on or prior to the Closing Date by virtue of any
      violation of any Environmental Laws occurring on or prior to the Closing Date,
      any activity conducted on or with respect to any property on or prior to the
      Closing Date or any environmental condition existing on or with respect to
      any
      property prior to the Closing Date, in each case whether or not any Seller
      permitted or participated in such act or omission. No Seller has generated,
      transported, stored, treated or disposed of, nor has either of them allowed
      or
      arranged for any third persons to generate, transport, store, treat or dispose
      of, any Hazardous Materials to or at: (a) any location other than a site
      lawfully permitted to receive Hazardous Materials for such purposes or
      (b) any location designated for remedial action pursuant to federal, state
      or local statute and relating to the environment or waste disposal; nor has
      any
      Seller performed, arranged for or allowed by any method or procedure such
      transportation or disposal in contravention of any legal requirements; except
      where such violation would not have a Seller Material Adverse Effect on the
      Business or operations of any Seller. 

    
      
        
        

      

      
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          23
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    3.20 Taxes.

     

    For
      purposes of this Agreement “Taxes”
      shall
      mean all Federal, state, local and foreign taxes or similar charges, including
      all income, franchise, real property, withholding, employment, sales, excise,
      business, value-added, deed, Enterprise Income Tax, import duty, stamp duty,
      land appreciation, and transfer taxes and any interest and penalties thereon.
      Each Seller has timely filed all Tax returns and Tax reports which are required
      to be filed (including proper filing extensions) on or prior to the Closing
      Date
      by the Business (the “Returns”).
      All
      the Returns were complete and correct in all respects at the time of filing.
      All
      Taxes due and payable with respect to taxable periods covered by the Returns,
      or
      with respect to which the Business is or might otherwise be liable for such
      periods (including Taxes which the Business may have been required to withhold
      from amounts owing to any stockholder, employee, creditor or third party),
      have
      been timely paid or are being contested in good faith as disclosed on
Schedule
      3.20.
      No
      Seller is delinquent in the payment of any Tax, nor has any Tax deficiency
      been
      proposed, assessed, or threatened against it. No Liens for Taxes exist with
      respect to any assets of the Business (other than Liens for Taxes, assessments,
      or governmental charges or claims that are not yet delinquent).

     

    3.21 Insurance.

     

    Each
      Seller maintains policies of fire and casualty, liability and other forms of
      insurance with respect to the Business in such amounts, with such deductibles
      and against such risks and losses, as are appropriate in the Business in which
      that Seller is engaged. The insurance policies currently owned and maintained
      by
      each Seller are listed and described on Schedule
      3.21.
      All
      such policies set forth on Schedule
      3.21
      are in
      full force and effect, all premiums due and payable thereon have been paid
      (other than retroactive or retrospective premium adjustments that are not yet,
      but may be, required to be paid with respect to any period ending prior to
      the
      Closing Date), and no notice of cancellation or termination has been received
      with respect to any such policy which has not been replaced on substantially
      similar terms prior to the date of such cancellation. 

     

    3.22 Transactions
      with Affiliates.

     

    (a)
      None
      of the Contracts between any Seller, on the one hand, and any of its Affiliates
      or any Related Party, on the other hand, will continue in effect subsequent
      to
      the Closing, (b) after the Closing, no Seller, Affiliate or Related Party will
      have any interest in any property (personal, tangible or intangible) or Contract
      used in or pertaining to the Business, (c) no Seller, Affiliate or Related
      Party
      has any direct or indirect ownership interest in any Person in which the
      Business has any direct or indirect ownership interest or with which the
      Business competes or has a business relationship,
      and (d)
      no Seller, nor any Affiliate or Related Party provides any products or services
      to the Business.

     

    3.23 Customer
      Relations.

     

    There
      exists no condition or state of facts or circumstances involving any Seller’s
      customers, suppliers, distributors, employees, or sales representatives that
      would reasonably be expected to adversely affect the Acquired Assets or the
      Business after the Closing Date.

     

    3.24 Solvency;
      Post-Closing Financial Condition of Sellers. 

     

    No
      Seller
      is now insolvent nor will any Seller be rendered insolvent by any of the
      transactions contemplated by this Agreement. As used in this section,
“insolvent” means that the sum of the debts and other probable liabilities of
      each Seller exceeds the present fair saleable value of that Seller’s assets.
      Immediately following the Closing Date, (i) each Seller will be able to pay
      its
      liabilities as they become due in the usual course of its business; (ii) no
      Seller will have unreasonably small capital with which to conduct its present
      or
      proposed business; (iii) each Seller will have assets (calculated at fair market
      value) that exceed its liabilities; and (iv) each Seller will have and maintain
      adequate financial resources to pay, perform, and fully discharge all of such
      Seller’s Retained Liabilities and all of such Seller’s obligations set forth in
      this Agreement, including, without limitation, those obligations set forth
      in
      Article 7 hereof.

    
      
        
        

      

      
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    3.25 Suppliers;
      Raw Materials. 

     

    No
      Seller
      has received any notice or has any reason to believe that there has been any
      material adverse change in the price of such raw materials, supplies,
      merchandise or other goods or services, or that any such supplier will not
      sell
      raw materials, supplies, merchandise and other goods to the Buyer at any time
      after the Closing Date on terms and conditions similar to those used in its
      current sales to the Sellers, subject to general and customary price increases.
      No supplier of any Seller has otherwise threatened to take any action described
      in the preceding sentence as a result of the consummation of the transactions
      contemplated by this Agreement.

     

    3.26 Access
      to Buyer Information. 

     

    Seller
      Principal and each of the Sellers has had the opportunity to conduct his and
      its
      own independent investigation of Buyer and collect and review all materials
      made
      available by Buyer to evaluate the transaction contemplated by this Agreement.
      Seller Principal and his representatives have been provided the opportunity
      to
      ask questions of, and receive answers from, the directors and officers of Buyer
      concerning the business of Buyer. The Seller Principal acknowledges that he
      has
      had access to sufficient information to understand the merits and risks
      associated with the transactions contemplated by this Agreement. To the extent
      that Seller Principal has deemed it appropriate to do so, he has retained,
      and
      relied upon, appropriate professional advice concerning the tax, legal, business
      and financial merits and consequences of consummating the transactions
      contemplated by this Agreement and the Transaction Documents.

     

    3.27 Foreign
      Corrupt Practices Act. 

     

    None
      of
      the Sellers, the Seller Principal, any director, officer, agent or employee
      of
      any of them, and any other Person associated with or acting for or on behalf
      of
      any of them has directly or indirectly (1) made any contribution, gift, bribe,
      rebate, payoff, influence payment, kickback, or other payment to any Person,
      private or public, regardless of form, whether in money, property, or services
      (i) to obtain favorable treatment in securing business, (ii) to pay for
      favorable treatment for business secured, (iii) to obtain special concessions
      or
      for special concessions already obtained, for or in respect of any Seller (or
      any Affiliate thereof), in violation of any law or otherwise constituting an
      offence under the Foreign Corrupt Practices Act of 1977 of the United States,
      as
      amended (assuming for these purposes that the Seller Principal and any Seller
      were subject to that Act), or (iv) in violation of any law (including without
      limitation any relevant and applicable Tax laws or in relation to the payment
      or
      non-payment of any Taxes by any Seller or the Seller Principal), or (2)
      established or maintained any fund or asset that has not been recorded in the
      books and records of any Seller, or (3) has violated any anti-corruption or
      anti-bribery laws or regulations of the PRC or equivalent laws and regulations
      promulgated in any other jurisdictions. None of the assets and properties of
      any
      Seller were obtained or procured through any contribution, gift, bribe, rebate,
      payoff, influence payment, kickback, or other payment to any Person, private
      or
      public, regardless of form, whether in money, property, or services that would
      have violated the foregoing representations and warranties.

    
      
        
        

      

      
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    3.28 Additional
      PRC Representations. 

     

    Schedule
      3.28 contains a complete list and accurate corporate particulars of each Seller,
      including details of the holders of any equity interest or joint venture parties
      therein and the extent of their respective interests. Without limiting the
      other
      provisions of this Article 3, the following representations and warranties
      shall
      apply to each Seller: 

     

    (a) The
      articles, other constitutional documents and certificates of approval and any
      related joint venture contracts of the Seller are valid and have been duly
      approved and registered (as applicable) by competent PRC Governmental
      Entity;

     

    (b) All
      business and other licenses, certificates, consents, approvals, qualifications,
      permits and other authorizations required from any Governmental Entity under
      any
      applicable Legal Requirements and Governmental Requirements in the PRC for
      the
      due and proper establishment and operation of the Seller and its business have
      been duly obtained and made and are in full force and effect.

     

    (c) All
      filings, declarations, exemptions and registrations from or with all applicable
      and competent PRC Governmental Entities required in respect of the Seller and
      its operations including, without limitation, registrations with Foreign
      Economic Relations and Trade Commission, State or the relevant local
      Administration of Industry and Commerce, State Administration for Foreign
      Exchange, tax bureau and customs authorities have been duly completed in
      accordance with all applicable Legal Requirements and Governmental Requirements
      in the PRC.

     

    (d) The
      Seller has complied with all applicable Legal Requirements and Governmental
      Requirements in the PRC regarding the contribution and payment of the registered
      or share capital of such Seller, the payment schedule of which has been approved
      by competent PRC Governmental Entities, and all such contributions and payments
      due on or prior to the date of Closing have been fully paid. Particulars of
      any
      such contributions and payments that remain outstanding after the date of
      Closing are fully set forth in Schedule 3.28.

     

    (e) The
      Seller is not in receipt of any letter or notice from any PRC Governmental
      Entity notifying revocation of any permits or licenses issued to it by any
      PRC
      Governmental Entity for non-compliance or the need for compliance or remedial
      actions in respect of the activities carried out by it.

     

    (f) The
      Seller has been conducting and will conduct its business activities within
      the
      permitted scope of its business license or is otherwise operating its business
      in full compliance with all applicable Legal Requirements and Governmental
      Requirements and with all requisite permits and licenses granted by competent
      PRC Governmental Entities or any other Person.

     

    (g) All
      licenses and permits required for the conduct of any part of the Business which
      are subject to periodic renewal have been obtained and there are no grounds
      on
which
      such renewals will not be granted by the relevant PRC Governmental Entities
      or
      other Persons.

    
      
        
        

      

      
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          26
          -

        
          

        

      

      
        
        

      

    

    (h) The
      Seller has complied with all Legal Requirement and Governmental Requirement
      in
      the PRC with regard to employment, labor or labor contracts, staff or labor
      management or protection, including without limitation those pertaining to
      welfare funds, social benefits, social insurance contributions, medical
      benefits, insurance, retirement benefits, pensions and the like.

     

    3.29 Disclosure.

     

    No
      representation, warranty, or statement of any Seller or any Seller Principal
      contained in this Article 3, in any of the Schedules referred to in this Article
      3, or in any certificate, instrument, or document delivered by any Seller or
      any
      Seller Principal to the Buyer pursuant to Section 2.2, including the Seller
      Transaction Documents, contains any untrue statement of a material fact or
      omits
      to state a material fact necessary to make the statements contained herein
      or
      therein not misleading. There is no fact or circumstance known to or anticipated
      by any Seller that has application to any Seller (other than general economic
      or
      industry conditions) and that may adversely affect or threaten the Acquired
      Assets or the Business that has not been set forth in this Agreement or the
      Schedules.

     

    3.30 Complete
      and Accurate Schedules.

     

    Each
      Schedule provided by Sellers under this Article 3 constitutes a complete and
      accurate list of the items specified to be contained in that Schedule. Each
      Seller has furnished to the Buyer complete and accurate copies of all documents
      listed or referred to in any Schedule.

     

    ARTICLE
      4

    Representations
      and Warranties of Buyer

     

    4.1 Corporate
      Status; Authority.

     

    Buyer
      is
      a corporation duly organized, validly existing and in good standing under the
      laws of its place of incorporation. Buyer is duly qualified and in good standing
      to do business in each jurisdiction in which the conduct or nature of its
      business or the ownership, leasing or holding of its properties makes such
      qualification necessary, except such jurisdictions where the failure to be
      so
      qualified or in good standing, individually or in the aggregate, would not
      reasonably be expected to have a material adverse effect (a) on the condition
      (financial or otherwise), business, liabilities, properties, assets or results
      of operations, taken as a whole, or (b) on the ability to perform its
      obligations under or to consummate the transactions contemplated by this
      Agreement (a “Buyer
      Material Adverse Effect”).
      Buyer
      has
      all requisite power to carry on its business as it is now being conducted,
      to
      own and operate such business and Buyer has all requisite power to enter into
      this Agreement, to perform its obligations hereunder and to complete the
      transactions contemplated hereby.

    
      
        
        

      

      
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    4.2 Corporate
      Action.

     

    All
      organizational proceedings necessary to be taken by or on the part of Buyer
      in
      connection with the transactions contemplated by the Buyer Transaction Documents
      have been duly and validly taken, and this Agreement has been duly and validly
      authorized, executed and delivered and constitutes, and each of the other Buyer
      Transaction Documents will be duly and validly authorized, executed and
      delivered and will constitute, the legal, valid and binding obligations of
      Buyer, enforceable against Buyer, in accordance with and subject to its terms,
      except as may be limited by bankruptcy, insolvency, reorganization, or other
      laws affecting creditors’ rights generally and by general equitable
      principles.

     

    4.3 No
      Conflicts.

     

    Neither
      the execution, delivery and performance by each of Buyer of the Buyer
      Transaction Documents, nor the consummation by Buyer of the transactions
      contemplated thereby is an event that, by itself or with the giving of notice
      or
      the passage of time or both, will (a) conflict with the organizational documents
      of Buyer, (b) constitute a violation of, or result in any breach of or any
      default under, or constitute grounds for termination or acceleration of, any
      material mortgage, indenture, lease, contract, agreement or instrument to which
      Buyer is a party or by which it is bound, except for such violations, breaches,
      terminations, and accelerations as individually or in the aggregate would not
      reasonably be expected to have a Buyer Material Adverse Effect or result in
      the
      creation of any material Lien upon any of Buyer’s assets such that it is
      reasonably likely that Buyer will be unable to proceed with the transactions
      contemplated in this Agreement, or (c) violate (i) any judgment, decree or
      order, or (ii) any statute, rule or regulation, in each such case, applicable
      to
      Buyer. The execution, delivery and performance by Buyer of this Agreement,
      and
      the consummation by Buyer of the transactions contemplated hereby, require
      no
      action by or in respect of, or filing with, any Governmental Entity, other
      than
      filings with the SEC and NASDAQ, and other than actions or filings which, if
      not
      taken or made, would not, individually or in the aggregate, reasonably be
      expected to have a Buyer Material Adverse Effect or filings and notices not
      required to be made or given to consummate the transactions contemplated by
      this
      Agreement. 

     

    ARTICLE
      5

    Non-competition

     

    5.1 Defined
      Terms.

     

    For
      purposes of this Agreement:

     

    (a) “Restricted
      Seller”
      means
      the Seller Principal and each Seller identified in this Agreement (collectively
      the “Restricted
      Sellers”
and
      each a “Restricted
      Seller”).

     

    (b) “Restricted
      Employee”
means
      any current or former employee, sales representative, consultant, advisor,
      agent, or contractor of any Restricted Seller who was employed by, worked for,
      or provided services to a Restricted Seller on or before the Closing Date,
      and
      who accepts an offer of employment with Buyer or who works for, becomes employed
      by
      or
      performs services for Buyer after the Closing Date in connection with the
      Acquired Assets of this Agreement.

     

    
      
        
        

      

      
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          28
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    (c) “Competitive
      Business”
means
      any business engaged or preparing to engage in (i) any business competitive
      with
      any of the types of business activities that Restricted Sellers conducted or
      materially prepared to conduct prior to the Closing Date; (ii) manufacturing,
      licensing, producing, selling or distributing jewelry products, and (iii) owning
      and operating standalone stores, store counters, or any other means for
      distribution of jewelry products.

     

    (d) “Specified
      Geographic Area” means
      the
      provinces of Zhejiang, Jiangsu and Hebei, the cities of Beijing and Shanghai
      and
      each and every province, city, county, parish or other political subdivision
      within a two hundred (200)
      mile radius of any store, counter, distribution location, or other locations
      in
      the provinces of Zhejiang, Jiangsu and Heibei, the cities of Beijing and
      Shanghai, as well as anywhere in the countries of China, in which the Restricted
      Sellers conducted its Business or otherwise distributed, licensed, marketed
      or
      sold its products or services as of the Closing Date or at any time during
      the
      twelve (12) month period immediately preceding the Closing Date, so long as
      Buyer, or any person or entity deriving title to the goodwill or ownership
      interest from Buyer, carries on and conducts a like Business therein.

     

    (e) “Confidential
      Information”
means
      any and all information in whatever form, tangible or intangible, that is not
      generally known to the public and that relates in any way to the Business
      conducted by Sellers, including concepts, techniques, processes, methods,
      systems, designs, programs, code, formulas, research, technologies, strategies,
      plans, and trade secrets, as well as customer lists, customer preferences,
      costs, profits, sources of supply, financial data, budgets, marketing data,
      business plans and production methods relating to any aspect of the present
      or
      actual anticipated business of the Sellers; information regarding the skills
      and
      compensation of other employees, consultants, contractors and/or agents of
      the
      Sellers; and customer, client or investor names and contact information and
      other confidential information relating to all such customers, clients and
      investors of Sellers. “Confidential Information” also includes information in
      whatever form, tangible or intangible, that is not generally known to the public
      and that was provided to Buyer by Sellers or the Seller Principal in connection
      with negotiations and other discussions leading up to this Agreement and/or
      that
      Buyer designates as being confidential. “Confidential Information” does not
      include any information that the receiving party can prove becomes publicly
      known through no wrongful act of the receiving party.

     

    5.2 Non-competition.

     

    In
      light
      of the Seller Principal’s ownership interest in the Sellers’ Business, his key
      position with the Sellers, his contributions in the past to the growth and
      development of the Sellers’ Business, his confidential and proprietary
      information relating to the business and operations of the Sellers, and the
      significant financial benefit that each will derive from the sale of the
      Business, including the sale of substantially all of the Sellers’ assets and the
      goodwill value of the Sellers’ Business to Buyer, and in order to preserve for
      Buyer the goodwill, proprietary rights and value of the Sellers’ Business, and
      to protect Buyer’s investment in the Acquired Assets, including the Confidential
      Information of the Sellers, each Restricted Seller hereby covenants and agrees
      that during and for the period commencing on the Closing Date and ending on
      the
      later of
      (i) the
      date that is five (5) years after the Closing Date, or (ii) the date that is
      two
      (2) years after the termination date of Restricted Seller’s employment with
      Buyer or its successors
      (and provided
      that
      Buyer or any person or entity deriving title from Buyer to the Business conducts
      a like Business in the Specified Geographic Area) (hereinafter, the
“Restricted
      Period”),
      the
      Restricted Seller (including any Affiliate) shall not, directly or indirectly,
      except for on behalf of Buyer or with the prior written approval of
      Buyer:

    
      
        
        

      

      
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    (a) engage
      in, operate, control, carry on, manage, direct or otherwise conduct a
      Competitive Business
      within the
      Specified Geographic Area during the Restricted Period; or

     

    (b) work
      for,
      be employed by, accept employment with, serve as an agent for, agree to provide
      advisory services to, consult with or otherwise assist any Person, entity or
      organization that engages in a Competitive Business within the Specified
      Geographic Area during the Restricted Period; or

     

    (c) own,
      finance, lend to, have an economic interest in, or become associated as a
      partner, owner, stockholder, member, or joint venturer, or otherwise have a
      business relationship with, any Person, entity or organization (other than
      Buyer) engaged in, or about to become engaged in, a Competitive Business within
      the Specified Geographic Area during the Restricted Period, provided, however,
      that nothing in this Section 5.2(c) shall prohibit Restricted Seller from
      holding, directly or indirectly, up to two percent (2%) of any securities of
      an
      entity that is quoted on a national securities exchange or inter-dealer
      quotation system; or

     

    (d) plan,
      develop, market, or make any preparations to provide assistance to any
      Competitive Business or to form a Competitive Business, including but not
      limited to any research or development efforts aimed at ultimately benefiting
      a
      Competitive Business, within the Specified Geographic Area during the Restricted
      Period. 

     

    5.3 Confidentiality.

     

    Restricted
      Sellers acknowledge that due to the nature of their association with Sellers’
Business, each has Confidential Information that is of importance to the
      Business of Sellers, affects the value of Sellers’ Business being acquired by
      Buyer, and will continue to be confidential subsequent to the Closing Date,
      such
      that disclosure of such Confidential Information to others or the unauthorized
      use of such Confidential Information would cause substantial loss and harm
      to
      Buyer as purchaser of the Acquired Assets. Accordingly, Restricted Sellers
      agree
      that at all times hereafter, Restricted Sellers shall not, directly or
      indirectly, except for on behalf of Buyer or with the prior written approval
      of
      Buyer: (a) reveal, disclose, publish, communicate or divulge to any person
      or
      entity, in any manner whatsoever, any Confidential Information that has come
      into Restricted Seller’s knowledge or has been designed by, developed, or
      otherwise learned or received by Restricted Seller; (b) authorize, permit or
      allow the publication, communication, or disclosure of any Confidential
      Information; and (c) either on Restricted Seller’s own behalf or on behalf of
      any other Person, use any Confidential Information for any purpose other than
      for the benefit of Buyer. 

     

    The
      terms
      of this confidentiality covenant supplement and do not replace any other
      agreements to which Restricted Seller may be a party or any other obligations
      that Restricted Seller may have under laws regarding confidentiality,
      non-disclosure, assignment of inventions, or the protection of intellectual
      property, including any employment agreement or other agreement between
      Restricted Seller and Buyer or between Restricted Seller and
      Sellers.

    
      
        
        

      

      
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    5.4 Non-solicitation.

     

    During
      the Restricted Period, the Restricted Sellers (including Affiliates) shall
      not,
      directly or indirectly, solicit, encourage, assist, facilitate or induce any
      customer, client, supplier, licensee or franchisee of Sellers as of the Closing
      Date (or who were such at any time during the six (6) month period immediately
      preceding the Closing Date), to breach any agreement or contract with, or to
      discontinue or reduce his, her, or its business relationships with, the Business
      of Sellers being acquired by Buyer within the Specified Geographic Area. Each
      Restricted Seller further covenants and agrees that during the Restricted
      Period, it shall not, and shall cause its Affiliates not to, directly or
      indirectly, except for on behalf of Buyer or with the prior written approval
      of
      Buyer, solicit, recruit, hire, employ or engage any Restricted Employee, or
      assist or facilitate any Person or entity other than Buyer in the hiring or
      recruitment (including assessment) of any Restricted Employee, or otherwise
      encourage, assist, or invite any Restricted Employee to enter into an employment
      relationship or a service arrangement of any kind with any Person or entity
      other than Buyer.

     

    5.5 Reasonableness
      of Restrictions.

     

    Restricted
      Sellers acknowledge that Buyer considers the restrictive covenants of this
      article 5 to be essential and integral to this Agreement, and Buyer would not
      purchase the Acquired Assets without the Restricted Sellers’ execution of this
      Agreement containing these restrictive covenants. Restricted Sellers will derive
      significant financial benefit from the Closing of this transaction, and the
      execution of this Agreement by Restricted Sellers is a condition to the Closing.
      Restricted Sellers further acknowledge and agree that the scope of Sellers’
Business is as defined in this Agreement and that the duration of the Restricted
      Period as well as the geographic scope of the Specified Geographic Area, and
      the
      related prohibitions in this article 5, are reasonable and necessary in order
      to
      protect the value and legitimate interests of Buyer and Buyer’s investment in
      the Acquired Assets, including preserving the goodwill of the Business as
      obtained pursuant to this Agreement and the Confidential Information of the
      Business. Restricted Sellers represent that each will otherwise be able to
      obtain gainful employment during the Restricted Period notwithstanding the
      provisions of this article 5.

     

    5.6 Remedy
      for Breach and Right to Injunction.

     

    Notwithstanding
      other provisions of this Agreement, Restricted
      Sellers agree that damages in the event of a breach by a Restricted Seller
      of
      article 5 of this Agreement would be difficult to ascertain and may be an
      inadequate remedy. The parties agree that Buyer will have the right to an
      immediate injunction or other equitable relief in a state or federal court
      with
      appropriate jurisdiction to enjoin any such threatened or actual breach, without
      any requirement to post bond or provide similar security. The existence of
      this
      right will not preclude Buyer from pursuing any other rights and remedies at
      law
      or in equity that Buyer may have, including recovery of damages for any breach
      by Restricted Sellers of this article 5.

    
      
        
        

      

      
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    5.7 Severability
      and Enforceability.

     

    The
      provisions contained in the above Sections 5.1, 5.2, and 5.4 as to the time
      periods, geographic area, and scope of restricted activities shall be deemed
      severable, so that if any provision contained in any such Section of this
      Agreement is held to be invalid or unenforceable due to the asserted
      unreasonableness of time, scope or geographical restrictions, such covenants
      and
      restrictions will be deemed modified so as to be valid and effective for such
      period of time, scope and/or for such area as may be determined to be reasonable
      by a court of competent jurisdiction and will be enforced accordingly to the
      fullest extent lawfully permitted. If any portion of this article 5 is held
      to
      be invalid or unenforceable for any reason such that it cannot be modified
      with
      respect to the reasonableness of time, scope or geographical restrictions,
      such
      provisions will be severed from this Agreement and the remaining covenants
      and
      restrictions or portions thereof will remain in full force and
      effect.

     

    ARTICLE
      6

    Additional
      Covenants

     

    6.1 Access
      to Records.

     

    Each
      Seller agrees to furnish to Buyer upon request as promptly as practicable,
      such
      information and assistance relating to the Acquired Assets and the Business
      as
      is reasonably necessary for the filing of any tax return, declaration or report,
      the making of any election related to Taxes, the preparation for any audit
      by
      any taxing authority, or the prosecution or defense of any claim, suit, or
      proceeding; provided,
      however,
      that
      such information and assistance shall be provided in a manner that will not
      unreasonably disrupt the business of the party providing information or
      assistance. Each Seller shall cooperate fully as to and to the extent reasonably
      requested by Buyer, in the conduct of any audit, litigation or other proceeding
      to the extent relevant to the Acquired Assets of the Business.

     

    6.2 Litigation
      Cooperation.

     

    In
      the
      event that any Seller or Buyer shall participate in any suit, action, proceeding
      or investigation concerning the Business conducted on or prior to the Closing
      Date (excluding any such suit, action, proceeding or investigation between
      any
      Seller and Buyer), the parties shall, upon the request of the party involved
      in
      such litigation, cooperate fully with such party at such party’s expense in
      connection therewith, except to the extent that such litigation arises from
      or
      constitutes a breach by any such party of any representation, warranty, covenant
      or agreement contained in this Agreement and the other agreements provided
      for
      herein.

     

    6.3 Employees.

     

    (a) Each
      Seller shall terminate all of the employees of the Business as of the Closing
      Date and use all reasonable efforts to cause such employees to make available
      their employment services to Buyer. Buyer may offer at-will employment on or
      after the Closing Date to any
      employee of the Business on the terms and conditions of employment as mutually
      agreed to between Buyer and such employees. Those employees who accept such
      offers of employment shall be referred to herein as the “Transferred
      Employees.” 

    
      
        
        

      

      
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          32
          -

        
          

        

      

      
        
        

      

    

    (b) At
      or
      prior to Closing, each Seller shall insure that all compensation and accrued
      commissions and bonuses shall have been paid to all terminated employees of
      the
      Business. Each Seller shall provide or make available to Buyer copies of said
      termination notices and evidence of their final payments of such compensation,
      commissions and bonuses for all such employees

    6.4 Final
      Sales Tax Return.

     

    Sellers
      shall file its final sales tax Return and pay any and all sales Taxes due,
      if
      any, within the earlier of (i) when due or (ii) One Hundered and Eighty (180)
      days of the Closing Date.

     

    ARTICLE
      7

    Survival
      of Representations and Warranties;
      Indemnification

     

    7.1 General
      Provisions; Survival.

     

    The
      representations and warranties and the covenants and any indemnities with
      respect thereto of the parties set forth in this Agreement shall survive the
      Closing for a period of three (3) years following the Closing Date to the extent
      that claim for breach thereof has not theretofore been made in writing by a
      party to the other party, except that (a) the representations and warranties
      of
      Sellers contained in Sections 3.1, 3.2, and 3.3 shall
      survive indefinitely following the Closing Date, and (b) the representations
      and
      warranties of Sellers contained in Sections 3.19 and 3.20 shall survive for
      a
      period of sixty (60) days following the expiration of the applicable statute
      of
      limitation relating thereto.

     

    Any
      limitation or qualification set forth in any one representation and warranty
      in
      Article 3 or Article 4 or set forth in any one schedule to this Agreement shall
      not limit or qualify, or be deemed to limit or qualify, in any respect, any
      other representation and warranty contained in Article 3 or Article 4. The
      waiver by either party of any condition at Closing of the breach or inaccuracy
      of any representation or warranty, or breach of, or non-compliance with, any
      covenant or obligation, will not affect the right of such party to
      indemnification, payment of Buyer Damages or Seller Damages, as applicable,
      or
      other remedy at law or in equity based on such breach, inaccuracy, or
      noncompliance.

     

    7.2 Indemnification
      by Sellers.

     

    Each
      Seller shall jointly and severally indemnify, defend, save and hold Buyer and
      its officers, directors, employees, agents, Representatives and Affiliates
      (collectively, “Buyer
      Indemnitees”)
      harmless from and against all demands, claims, allegations, assertions, actions
      or causes of action, assessments, losses, damages, deficiencies, liabilities,
      costs, expenses and taxes (including reasonable legal fees, interest, penalties,
      and all reasonable amounts paid in investigation, defense or settlement of
      any
      of the foregoing, whether or not any such demands, claims, allegations, etc.,
      of
      third parties are meritorious; collectively, “Buyer
      Damages”)
      asserted against, imposed upon, resulting to, required to be paid by or incurred
      by any Buyer Indemnitee, directly or indirectly, in connection with or arising
      out of:

     

    (a) any
      Retained Liability;

    
      
        
        

      

      
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          33
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    (b) any
      breach or inaccuracy of any representation or warranty made by any Seller in
      this Agreement;

     

    (c) any
      breach, non-fulfillment, or non-performance of any covenant or agreement made
      by
      Sellers in or pursuant to this Agreement to which Sellers is or is to become
      a
      party; or

     

    (d) any
      and
      all liabilities for any violation of, noncompliance with or failure by any
      Seller existing on the Closing Date or arising out of any transaction entered
      into, or any state of facts existing, prior to the Closing Date.

     

    During
      the term of the Escrow Agreement, Sellers shall pay to Buyer all Buyer Damages
      in accordance with the Escrow Agreement, and thereafter from immediately
      available funds. 

     

    7.3 Indemnification
      by Buyer. 

     

    Buyer
      shall indemnify, defend, save and hold each Seller and its officers, directors,
      employees, Affiliates and agents (collectively, “Seller
      Indemnitees”)
      harmless from and against any and all demands, claims, actions or causes of
      action, assessments, losses, damages, deficiencies, liabilities, costs and
      expenses (including reasonable legal fees, interest, penalties, and all
      reasonable amounts paid in investigation, defense or settlement of any of the
      foregoing, whether or not any such demands, claims, allegations, etc., of third
      parties are meritorious; collectively, “Seller
      Damages”)
      asserted against, imposed upon, resulting to, required to be paid by or incurred
      by any Sellers Indemnitee, directly or indirectly, in connection with or arising
      out of:

     

    (a) any
      Assumed Liability (except to the extent that Buyer is entitled to
      indemnification pursuant to this Article 7 from any Seller with respect to
      such
      Assumed Liability);

     

    (b) any
      breach or inaccuracy of any representation or warranty made by Buyer in this
      Agreement; or

     

    (c) any
      breach, nonperformance, or nonfulfillment of any covenant or agreement made
      by
      Buyer in or pursuant to this Agreement to which Buyer is or is to become a
      party. 

    
      
        
        

      

      
        -
          34
          -

        
          

        

      

      
        
        

      

    

     

    7.4 Procedures
      Relating to Third Party Claims.

     

    In
      order
      for Buyer Indemnitees or Seller Indemnitees, as the case may be, (the
“indemnified
      party”)
      to be
      entitled to any indemnification provided for under this Agreement in respect
      of,
      arising out of, or involving a claim or demand made by any Person against the
      indemnified party (a “Third
      Party Claim”),
      such
      indemnified party must notify the indemnifying party in writing, and in
      reasonable detail, of the Third Party Claim within thirty (30) business days
      after receipt by such indemnified party of written notice of the Third Party
      Claim (the “Claim
      Notice”);
      provided,
      however,
      that
      failure to give such notification shall not affect the indemnification provided
      hereunder except to the extent the indemnifying party demonstrates that it
      has
      been actually prejudiced as a result of such failure (except that the
      indemnifying party shall not be liable for any expenses incurred during the
      period in which the indemnified party failed to give such Claim Notice to the
      extent such expenses resulted from such failure to give notice). Thereafter,
      the
      indemnified party shall deliver to the indemnifying party, within ten (10)
      business days after the indemnified party’s receipt thereof, copies of all
      notices and documents (including court documents) received by the indemnified
      party relating to the Third Party Claim. If a Third Party Claim is made against
      an indemnified party, the indemnified party shall be entitled to conduct and
      control, through counsel of its choosing, the defense of any Third Party
      Claim.

     

    The
      indemnified party may compromise or settle any Third Party Claim so long as
      the
      indemnified party gives the indemnifying party advance notice of any proposed
      compromise or settlement. The indemnified party shall permit the indemnifying
      party to participate in the defense of any Third Party Claim through counsel
      chosen by the indemnifying party, so long as all fees and expenses of such
      counsel are borne by the indemnifying party. If the indemnified party permits
      the indemnifying party to undertake, conduct, and control the defense and
      settlement of a Third Party Claim: (a) the indemnifying party shall not permit
      any lien to exist upon any asset of the indemnified party, including, without
      limitation, the Acquired Assets, (b) the indemnifying party shall not consent
      to
      any compromise or settlement that does not include as an unconditional term
      of
      such compromise or settlement the giving of a complete release from liability
      with respect to such Third Party Claim to the indemnified party, (c) the
      indemnifying party shall permit the indemnified party to participate in such
      defense or settlement through counsel chosen by the indemnified party, and
      (d)
      the indemnifying party shall agree promptly to reimburse the indemnified party
      for the full amount of any damages, including fees and expenses of counsel
      for
      the indemnified party.

     

    If
      the
      indemnified party permits the indemnifying party to assume the defense of any
      Third Party Claim, the indemnified party shall cooperate with the indemnifying
      party in the defense or prosecution thereof. Such cooperation shall include
      the
      retention and (upon the indemnifying party’s reasonable request) the provision
      to the indemnifying party of records and information which are reasonably
      relevant to such Third Party Claim, and making employees available on a
      reasonable basis to provide additional information and explanation of any
      material provided hereunder.

    Within
      ten (10) business days or the receipt of a Claim Notice, the Sellers, Seller
      Principal, or Buyer, as the case may be, shall deliver to the Escrow Agent
      and
      the Sellers, Seller Principal, or Buyer, as the case may be, a notice
      (“Objection
      Notice”)
      stating they intend to contest the claim (a “Contest”)
      or to
      accept liability thereunder.

     

    
      
        
        

      

      
        -
          35
          -

        
          

        

      

      
        
        

      

    

     

    (a) If
      the
      Sellers, Seller Principal, or Buyer, as the case may be, do not give an
      Objection Notice within that ten (10) business day period, the Sellers, Seller
      Principal, or Buyer, as the case may be, will be deemed to accept liability
      as
      it relates to such claim. 

     

    (b) If
      Buyer
      gives a timely Objection Notice, then within thirty (30) business days of the
      receipt thereof, the Sellers, Seller Principal, or Buyer, as the case may be,
      shall select an independent arbitrator (the “Independent
      Arbitrator”).
      The
      Independent Arbitrator shall be selected by the mutual agreement of the Sellers,
      Seller Principal, or Buyer, as the case may be. If the parties cannot agree
      on
      the identity of an Independent Arbitrator within ten (10) business days of
      the
      date of an Objection Notice, then the Independent Arbitrator will be determined
      by an arbitrator selected by the Seller Principal and an arbitrator selected
      by
      Buyer. The decision of the Independent Arbitrator shall be borne as directed
      by
      him. The Sellers, Seller Principal, or Buyer, as the case may be, shall be
      entitled to make such representation and provide such information and reports
      to
      the Independent Arbitrator within twenty (20) business days of the date of
      agreement or, if later, determination of the identity of the Independent
      Arbitrator. The Sellers, Seller Principal, or Buyer, as the case may be, shall
      use their respective commercially reasonable efforts to procure that the
      Independent Arbitrator issues his/her ruling within thirty (30) business days
      after the matter is submitted to him/her for consideration.

     

    (c) If
      the
      Sellers or Seller Principal give a timely Objection Notice, the Escrow Agent
      shall not take any further action with respect to the claim being Contested
      except as further provided in the Escrow Agreement. 

     

    7.5 Other
      Claims.

     

    In
      the
      event any indemnified party should have a claim against any indemnifying party
      under Section 7.2 or 7.3 that does not involve a Third Party Claim being
      asserted against or sought to be collected from such indemnified party, the
      indemnified party shall deliver notice (“Claims
      Notice”)
      of such
      claim with reasonable promptness to the indemnifying party. The failure by
      any
      indemnified party so to notify the indemnifying party shall not relieve the
      indemnifying party from any liability which it may have to such indemnified
      party under Section 7.2 or 7.3, except to the extent that the indemnifying
      party demonstrates that it has been actually prejudiced by such failure or
      to
      the extent such failure extends beyond the applicable survival period set forth
      in Section 7.1. If the indemnifying party does not notify the indemnified party
      within thirty (30) days following its receipt of such Claims Notice that the
      indemnifying party disputes its liability to the indemnified party under Section
      7.2 or 7.3, such claim specified by the indemnified party in such notice shall
      be conclusively deemed a liability of the indemnifying party under Section
      7.2
      or 7.3 and the indemnifying party shall pay the amount of such liability to
      the
      indemnified party on demand or, in the case of any notice in which the amount
      of
      the claim (or any portion thereof) is estimated, on such later date when the
      amount of such claim (or such portion thereof) becomes finally determined.
      If
      the indemnifying party has timely disputed its liability with respect to such
      claim, as provided above, the indemnifying party and
      the
      indemnified party shall proceed in good faith to negotiate a resolution of
      such
      dispute, and, if not resolved through negotiations, such dispute shall be
      resolved by litigation in an appropriate court of competent
      jurisdiction.

    
      
        
        

      

      
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          36
          -

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      8

    Miscellaneous

     

    8.1 Costs
      and Expenses.

     

    Buyer
      will pay all legal fees and appraisal fees prior to Closing and all of such
      amounts paid by Buyer shall be deducted in full from the Cash Purchase Price
      that is to be paid to Sellers. Other than the foregoing, each party hereto
      shall
      bear all its expenses incurred in connection with the transactions contemplated
      by this Agreement, including, without limitation, accounting, legal and
      financial advisory fees and expenses incurred in connection herewith.
      

     

    8.2 Assignments.

     

    No
      party
      hereto may assign any of its rights or delegate any of its duties under this
      Agreement without the prior written consent of the other parties, and any such
      attempted assignment or delegation
      without such consent shall be void
      and of
      no force and effect. Notwithstanding the foregoing, Buyer shall have the right
      to assign its rights and delegate its duties under this Agreement to any of
      its
      Affiliates or any successor companies (whether by merger, operation of law,
      or
      otherwise) or acquirer of all or substantially all of Buyer’s
      assets.

     

    8.3 Further
      Assurances.

     

    The
      parties shall from time to time do and perform such additional acts and execute
      and deliver such additional documents and instruments as may be required or
      reasonably requested by any party to establish, maintain or protect its rights
      and remedies or to effect the purpose of this Agreement. 

     

    8.4 Public
      Announcement.

     

    No
      party
      shall, without the prior approval of the others, make any press release, public
      announcement, or other disclosure concerning the transactions contemplated
      by
      this Agreement, except in the case of Sellers and Buyer, to such of their
      respective employees, agents, and representatives who have a need to
      know.

     

    8.5 Notices.

     

    Notices
      and other communications required or provided for herein shall be in writing
      (which shall include notice by facsimile transmission) and shall be deemed
      to
      have been duly given and received (a) upon receipt, when delivered by hand
      or
      personal delivery, (b) upon transmission, when sent by facsimile transmission
      (with written confirmation of successful transmission), (c) on the second
      business day after the date of mailing, if delivered by a nationally recognized
      overnight delivery service (receipt requested), or (d) upon receipt, if
      delivered by certified or registered mail (receipt requested), in each case
      addressed as follows:

    
      
        
        

      

      
        -
          37
          -

        
          

        

      

      
        
        

      

    

    If
      to
      Sellers or Seller Principal:

     

    Chujian
      Huang__________

    ______________________

    ______________________

    

    with
      a
      copy to:

    

    ______________________

    ______________________

    ______________________

    

    If
      to
      Buyer: 

    

    Fuqi
      International Holdings Co., LTD.

    Unit
      1217, Level 12, Landmark North

    39
      Lung
      Sum Avenue

    Sheung
      Shui, New Territories

    HKSAR

    Attention:
      Yu Kwai Chong 

    

    with
      a
      copy to:

    

    Kirkpatrick
      & Lockhart Preston Gates Ellis LLP

    10100
      Santa Monica Blvd., 7th Floor

    Los
      Angeles, CA 90067

    Attention:
      Thomas J. Poletti, Esq.

    Facsimile
      No.: (310) 552-5001

    

    or
      to
      such other address as a party may from time to time designate in writing to
      each
      of the other parties in accordance with this Section 8.5. 

     

    8.6 Amendment
      and Modification.

     

    This
      Agreement may be amended, modified, or supplemented at any time only by the
      written agreement of the parties hereto. 

     

    8.7 Captions.

     

    The
      captions of Articles and Sections of this Agreement are for convenience only
      and
      shall not control or affect the meaning or construction of any of the provisions
      of this Agreement.

     

    8.8 Governing
      Law.

     

    This
      Agreement shall be governed by, construed, and enforced in accordance with
      the
      laws of the State of Delaware, without regard to the conflict of laws principles
      thereof. 

     

    
      
        
        

      

      
        -
          38
          -

        
          

        

      

      
        
        

      

    

     

    8.9 Waiver
      of Provisions.

     

    The
      terms, covenants, representations, warranties and conditions of this Agreement
      may be amended, modified or waived only by a written instrument executed by
      the
      party sought to be bound thereby. The failure of any party at any time or times
      to require performance of any provision of this Agreement shall in no manner
      affect the right of such party at a later date to enforce the same. No waiver
      by
      any party of any condition or the breach of any provision, term, covenant,
      representation or warranty contained in this Agreement, whether by conduct
      or
      otherwise, in any one or more instances shall be deemed to be or construed
      as a
      further or continuing waiver of any such condition or of the breach of any
      other
      provision, term, covenant, representation or warranty of this
      Agreement.

     

    8.10 Counterparts.

     

    This
      Agreement may be executed in one or more facsimile counterparts, each of which
      shall be deemed to be an original copy of this Agreement, but all of which
      together shall constitute one and the same Agreement.

     

    8.11 Entire
      Agreement.

     

    This
      Agreement, including the Schedules and Exhibits hereto (which are incorporated
      herein by reference), constitutes the entire agreement and understanding of
      the
      parties with respect to the subject matter hereof and thereof and supersedes,
      cancels, and replaces any and all prior or contemporaneous agreements (including
      any letter of intent or term sheet), understandings, and negotiations between
      the parties and constitutes a complete and exclusive statement of the terms
      of
      the agreement between and among the parties with respect to the subject matter
      hereof.
      This
      Agreement is in the English language and shall govern the terms of this
      Agreement over any translated versions of this Agreement.

     

    8.12 Definitions;
      Construction.

     

    (a) As
      used
      herein, the following terms shall have the following meanings:

     

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

     

    “Affiliate”
means,
      with respect to any specified Person, any other Person directly or indirectly
      controlling or controlled by or under the direct or indirect common control
      with
      such specified Person.

     

    “GAAP”
means
      U.S. generally accepted accounting principles.

     

    “Governmental
      Entity”
means
      any domestic or foreign government or political subdivision thereof, whether
      on
      a federal, state or local level and whether executive, legislative or judicial
      in nature, including any agency, authority, board, bureau, commission, court,
      department or other instrumentality thereof.

     

    
      
        
        

      

      
        -
          39
          -

        
          

        

      

      
        
        

      

    

     

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

     

    “Hazardous
      Materials”
means
      all substances defined as any (A) hazardous substance as defined by any
      Environmental Law, (B) any petroleum or petroleum product, oil or waste oil;
      (C)
      any asbestos or polychlorinated byphenyls; (D) any hazardous material, toxic
      substance, toxic pollutant, solid waste, municipal waste, industrial waste,
      hazardous waste, flammable material, radioactive material, pollutant or
      contaminant or words of similar meaning and regulatory effect under any
      applicable Environmental Law; and (E) any other chemical, material, or substance
      exposure to which or whose discharge, emission, disposal or Release is
      prohibited, limited, or regulated under any applicable Environmental
      Law.

     

    “Knowledge,”
      “to
      the knowledge,”
      “known”
or
      similar variations thereof shall mean:, as it relates to the Seller Principal
      or
      any company, the actual knowledge of the Seller Principal, plus such knowledge
      as the Seller Principal or each company would have acquired after due
      investigation of the relevant fact or matter (including making all necessary
      enquiries with the respective officers, directors and employees of each
      company), regardless of whether such investigation has actually occurred, and
      as
      to any other Person, the actual knowledge of a specified Person of any
      particular fact or other matter after due investigation, and the words “aware,”
“known” or similar words, expressions or phrases shall be construed
      accordingly.

     

    “Legal
      Requirement”
means
      any law, regulation, rule, ordinance, decree, order or other standard imposed
      by
      a Governmental Entity applicable to a party or the conduct or operation of
      its
      business or the ownership or use of any of its assets, including, in the case
      of
      any Company, all those imposed under the laws of the PRC, or any equivalent
      or
      similar laws, rules, regulations or requirements of any other applicable
      jurisdiction.

     

    “Person”
means
      an individual, a corporation, a limited liability company, a partnership, a
      joint venture, a business association, a trust or any other entity or
      organization, including a Governmental Entity.

     

    “PRC”
means
      the People’s Republic of China, excluding, for the purposes of this Agreement,
      the Macau Special Administrative Region, Hong Kong and Taiwan.

     

    “Release”
means
      any release, spill, emission, discharge, leaking, pumping, pouring, dumping,
      injection, deposit, disposal, dispersal, leaching or migration of Hazardous
      Materials into the environment (including, without limitation, ambient air,
      surface water, groundwater and surface or subsurface strata). 

    “Representative”
when
      used with respect to any Person means any directors, officers, employees,
      stockholders, agents or representatives (including attorneys, accountants,
      consultants, banks and financial advisors) of such Person. 

     

    
      
        
        

      

      
        -
          40
          -

        
          

        

      

      
        
        

      

    

     

    (b) The
      definitions in this Agreement shall apply equally to both the singular and
      plural forms of the terms defined. Whenever the context may require, any pronoun
      shall include the corresponding masculine, feminine and neuter forms. The words
      “include,” “includes” and “including” shall be deemed to be followed by the
      phrase “without limitation.” All references herein to Articles, Sections,
      Exhibits and Schedules shall be deemed references to Articles and Sections
      of,
      and Exhibits and Schedules to, this Agreement unless the context shall otherwise
      require.

    8.13 No
      Third Party Beneficiaries.

     

    This
      Agreement is not intended to confer upon any Person other than the parties
      hereto and their respective permitted successors and assigns any rights or
      remedies hereunder.

     

    8.14 Jurisdiction;
      Service of Process.

     

    Any
      action or proceeding seeking to enforce any provision of, or based on any right
      arising out of, this Agreement may be brought against either party in the courts
      of the State of Delaware. Each party irrevocably consents to the jurisdiction
      of
      these courts (and of the appropriate appellate courts) in any such action or
      proceeding and waives any objection to venue laid in such courts. Original
      process in any action or proceeding referred to in the preceding sentence may
      be
      served on any party (anywhere in the world) by nationally recognized overnight
      courier service (receipt requested) in accordance with the notice provisions
      set
      forth in this Agreement, and service so made will be conclusively deemed to
      be
      accepted and completed for all purposes (notwithstanding any more restrictive
      service requirements set forth in any applicable federal or state rules of
      civil
      procedure governing service of original process) on the second business day
      after deposit with such courier.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        -
          41
          -

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, Buyer, Sellers, and Seller Principal have each caused this
      Agreement to be duly executed by their duly authorized officers as of the day
      and year first above written.

     

    
      	
              BUYER:

            
	 
	
              FUQI
                INTERNATIONAL HOLDINGS CO., LTD.

            
	 	 
	
              By:
                

            	
              /s/
                Yu Kwai Chong

            
	
              Name:
                

            	
              Yu
                Kwai Chong

            
	
              Title:

            	
              Chairman
                & Chief Executive Officer

            
	 	 
	
              SELLERS:

            
	 
	
              BEIJING
                YINZHONG TIANMEI JEWELRY CO., LTD.

            
	 	 
	
              By:
                

            	
              /s/
                Chujian Huang

            
	
              Name:
                

            	
              Chujian
                Huang

            
	
              Title:
                

            	
              Legal
                Representative

            
	 	 
	
              SHANGHAI
                TIANMEI JEWELRY CO., LTD.

            
	 
	
              By:
                

            	
              /s/
                Chujian Huang

            
	
              Name:
                

            	
              Chujian
                Huang

            
	
              Title:
                

            	
              Legal
                Representative

            
	 	 
	
              SELLER
                PRINCIPAL:

            
	 	 
	
              /s/
                Chujian Huang

            
	
              Chujian
                Huang

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [Exhibit
      A to Asset Purchase Agreement - Form of Assignment and Assumption
      Agreement]

    

    ASSIGNMENT
      AND ASSUMPTION AGREEMENT

     

    THIS
      ASSIGNMENT AND ASSUMPTION AGREEMENT is made the __ day of _____, 2008, by and
      between Fuqi International Holdings Co., LTD., a British Virgin Islands company
      (the “Buyer”),
      Beijing YinZhong TianMei Jewelry Co., Ltd., a company established under the
      laws
      of the PRC (“TianMei
      Beijing”),
      Shanghai TianMei Jewelry Co., Ltd., a company established under the laws of
      the
      PRC (the “TianMei
      Shanghai”
and
      together with TianMei
      Beijing,
      collectively the “Sellers”
and
      each a “Seller”),
      and
      Chujian Huang, an individual residing in the PRC with holder of PRC identity
      card no. 440105196302250950 (the “Seller
      Principal”).
      

    

    WITNESSETH:

     

    WHEREAS,
      Sellers, Buyer and Seller Principal entered into an Asset Purchase Agreement
      dated as of April 18, 2008 (the “Asset
      Purchase Agreement”),
      pursuant to which the Sellers agreed to sell and the Buyer agreed to purchase
      the Acquired Assets; 

    

    WHEREAS,
      the Asset Purchase Agreement provides that the Buyer shall, as of the date
      hereof, assume certain of the Sellers’ obligations and liabilities, subject to
      and in accordance with the terms of the Asset Purchase Agreement;
      and

    

    WHEREAS,
      the Asset Purchase Agreement contemplates that this Assignment and Assumption
      Agreement be entered into and delivered as of the date hereof.

    

    NOW,
      THEREFORE, in consideration of the promises, and the covenants and agreements
      contained herein and in the Asset Purchase Agreement, and intending to be
      legally bound hereby, the Sellers, Seller Principal and the Buyer hereby agree
      as follows:

    

    1. The
      Sellers hereby assign, transfer and deliver to the Buyer all of the Sellers’
right, title and interest in and to the Acquired Assets. The Buyer hereby
      assumes and agrees to perform, pay or discharge all of the Assumed Contracts.
      Notwithstanding the foregoing, the Buyer shall not assume, perform, pay or
      discharge any of the Retained Liabilities. 

    

    2. The
      Sellers, Seller Principal and the Buyer shall execute and deliver, or cause
      to
      be executed and delivered, from time to time hereafter, upon request, all such
      further documents and instruments and shall do and perform all such acts as
      may
      be reasonably necessary to give full effect to the intent of this Assignment
      and
      Assumption Agreement.

    

    3. All
      capitalized terms used herein but not otherwise defined herein shall have the
      respective meanings given them in the Asset Purchase Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4. The
      terms
      of this Assignment and Assumption Agreement shall be binding upon, inure to
      the
      benefit of, and be enforceable by the respective successors and permitted
      assigns of the parties hereto.

    

    5. This
      Assignment and Assumption Agreement shall be governed by the laws of the State
      of Delaware without regard to any conflicts of law provisions. Each of the
      Buyer, Sellers and Seller Principal hereby irrevocably and unconditionally:
      (a)
      agrees that any suit, action or legal proceeding arising out of or relating
      to
      this Assignment and Assumption Agreement or any agreement contemplated hereby
      brought by any such party shall be brought in the courts of the State of
      Delaware; (b) consents to the exclusive jurisdiction of each such court in
      any
      suit, action or proceeding; and (c) waives any objection which it may have
      to
      the laying of venue of any such suit, action or proceeding in any of such courts
      and, in connection therewith, all defenses of lack of personal jurisdiction
      and
      forum inconveniencies.

    

    6. This
      Assignment and Assumption Agreement is made subject to and in accordance with
      the terms of the Asset Purchase Agreement and the Disclosure Schedules, which
      are incorporated herein by reference. 

    

    7. The
      provisions of this Assignment and Assumption Agreement shall not confer any
      rights on any person not a party to (a) the Asset Purchase Agreement or a
      permitted assignee thereof or (b) this Assignment and Assumption Agreement.
      

    

    8. This
      Assignment and Assumption Agreement may be executed in two or more counterparts,
      each of which shall be deemed to be an original but all of which together shall
      be deemed to be one and the same instrument. 

    

    [Remainder
      of Page Intentionally Left Blank]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first set forth above.

    

      
        	
                BUYER:

              
	 
	
                FUQI
                  INTERNATIONAL HOLDINGS CO., LTD.

              
	 
	
                By:  

              	 
	
                Name:
                    Yu Kwai Chong

              
	
                Title:     Chairman
                  & Chief Executive Officer

              
	 
	
                SELLERS:

              
	 
	
                BEIJING
                  YINZHONG TIANMEI JEWELRY CO.,

              
	
                LTD.

              
	 
	
                By:

              	 
	
                Name:
                  Chujian Huang

              
	
                Title:
                  Legal Representative

              
	 
	
                SHANGHAI
                  TIANMEI JEWELRY CO., LTD.

              
	 
	
                By:

              	 
	
                Name:
                  Chujian Huang

              
	
                Title:
                  Legal Representative

              
	 
	
                SELLER
                  PRINCIPAL:

              
	 	 
	 	 
	
                Chujian
                  Huang

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    [Exhibit
      C to Asset Purchase Agreement - Form of Bill of Sale]

    

    BILL
      OF SALE

     

    THIS
      BILL
      OF SALE, dated as of the __ day of _____, 2008, by and between Fuqi
      International Holdings Co., LTD., a British Virgin Islands company (the
“Buyer”),
      Beijing YinZhong TianMei Jewelry Co., Ltd., a company established under the
      laws
      of the PRC (“TianMei
      Beijing”),
      Shanghai TianMei Jewelry Co., Ltd., a company established under the laws of
      the
      PRC (the “TianMei
      Shanghai”
and
      together with TianMei
      Beijing,
      collectively the “Sellers”
and
      each a “Seller”),
      and
      Chujian Huang, an individual residing in the PRC with holder of PRC identity
      card no. 440105196302250950 (the “Seller
      Principal”).

    

    WITNESSETH:

    

    WHEREAS,
      Buyer, Sellers and Seller Principal have entered into that certain Asset
      Purchase Agreement dated as of April 18, 2008 (the“Asset
      Purchase Agreement”),
      which
      provides, inter
      alia,
      for the
      sale by the Sellers to the Buyer of all of the right, title and interest in
      and
      to the Acquired Assets (as defined below).

    

    NOW
      THEREFORE, in consideration of the foregoing and for good and valuable
      consideration, the receipt and adequacy of which are hereby acknowledged, and
      intending to be legally bound, the parties hereto agree as follows:

    

    Section
      1. Definitions.
      Capitalized terms used herein but not otherwise defined herein shall have the
      respective meanings given them in the Asset Purchase Agreement.

    

    Section
      2. Bill
      of Sale.
      The
      Sellers hereby sell, convey, transfer and assign to the Buyer and the Buyer
      hereby purchases, acquires and accepts from the Sellers, all right, title and
      interest in and to all of the Acquired Assets, other than the Excluded Assets
      free and clear of any and all Liens and subject to and in accordance with the
      provisions of the Asset Purchase Agreement.

    

    Section
      3. Effective
      Date.
      The
      sale, conveyance, transfer and assignment by the Sellers, and the acceptance
      by
      the Buyer, of the Acquired Assets, shall be effective as of the date
      hereof.

    

    Section
      4. Further
      Assurances.
      The
      Sellers and Seller Principal shall from time to time, at the Buyer’s request and
      without further consideration, execute and deliver to the Buyer such instruments
      of transfer, conveyance and assignment as the Buyer may reasonably request
      to
      evidence further any transfer, conveyance and assignment of the Acquired Assets
      to the Buyer pursuant to this Bill of Sale.

    

    Section
      5. Miscellaneous.
      This
      Bill of Sale may be executed in two or more facsimile counterparts, each of
      which shall be deemed to be an original, but all of which when taken together
      shall constitute one and the same instrument. The terms and conditions of this
      Bill of Sale shall be binding upon, inure to the benefit of, and be enforceable
      by the respective successors and permitted assigns of the parties
      hereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      6.  Governing
      Law.
      This
      Bill of Sale shall be governed by and construed in accordance with the laws
      of
      the State of Delaware without regard to any conflicts of law provisions. Each
      of
      the Buyer, Sellers and Seller Principal irrevocably and unconditionally: (a)
      agrees that any suit, action or legal proceeding arising out of or relating
      to
      this Bill of Sale brought by either party shall be brought in the courts of
      the
      State of Delaware; (b) consents to the exclusive jurisdiction of each such
      court
      in any suit, action or proceeding; and (c) waives any objection which it may
      have to the laying of venue of any such suit, action or proceeding in any of
      such courts and, in connection therewith, all defenses of lack of personal
      jurisdiction and forum inconveniencies.

    

    [Remainder
      of Page Intentionally Left Blank]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the Sellers have executed this Bill of Sale as of the date
      and
      year first above written.

    

    
      	
              BUYER:

            
	 
	
              FUQI
                INTERNATIONAL HOLDINGS CO., LTD.

            
	 	 
	
              By: 

            	 
	
              Name:
                 Yu Kwai Chong

            
	
              Title:
                   Chairman & C.E.O.

            
	 	 
	
              SELLERS:

            
	 	 
	
              BEIJING
                YINZHONG TIANMEI JEWELRY CO.,

            
	
              LTD.

            
	 	 
	
              By:

            	 
	
              Name:
                Chujian Huang

            
	
              Title:
                Legal Representative

            
	 
	
              SHANGHAI
                TIANMEI JEWELRY CO., LTD.

            
	 	 
	
              By:

            	 
	
              Name:
                Chujian Huang

            
	
              Title:
                Legal Representative

            
	 	 
	
              SELLER
                PRINCIPAL:

            
	 	 
	 	 
	
              Chujian
                HuangINTELLECTUAL
      PROPERTY TRANSFER AGREEMENT

     

    This
      Intellectual Property Transfer Agreement (this “Agreement”)
      is
      entered into on this 18th
      day of
      April, 2008 (the “Effective
      Date”)
      by and
      among Fuqi International Holdings Co., LTD., a British Virgin Islands company
      (“Buyer”),
      and
      wholly-owned subsidiary of Parent (as defined hereinafter), Fuqi International,
      Inc., a Delaware corporation (“Parent”),
      and
      Chujian Huang, an individual residing in the PRC with holder of PRC identity
      card no. 440105196302250950 (the “Seller”
and
      together with Buyer and Parent, the “Parties”).
      Undefined terms contained in this Agreement shall have the meanings as set
      forth
      in the Asset Purchase Agreement, as defined below.

     

    RECITALS

     

    WHEREAS,
      Buyer, Seller, TianMei Beijing, and TianMei Shanghai have entered into that
      certain Asset Purchase Agreement of even date herewith (the “Asset
      Purchase Agreement”)
      pursuant to which Buyer agrees to purchase the Acquired Assets of the TianMei
      Beijing and TianMei Shanghai;

     

    WHEREAS,
      Seller owns certain Intellectual Property (as such term is defined below)
      related to the Business of TianMei Beijing and TianMei Shanghai, and Seller
      desires to sell and transfer such Intellectual Property to Buyer, and Buyer
      desires to purchase such Intellectual Property in accordance with the terms
      and
      conditions of this Agreement;

     

    WHEREAS,
      Buyer’s sale and transfer of the Intellectual Property by Seller to Buyer is a
      material condition for the completion of the transactions contemplated by the
      Asset Purchase Agreement; 

     

    NOW,
      THEREFORE, in consideration of the foregoing recitals and other good and
      valuable consideration, the parties, intending to be legally bound hereby,
      agree
      as follows:

     

    1. Sale
      and Transfer of Intellectual Property.
      Upon
      the
      Closing, Seller shall sell and transfer to Buyer rights and goodwill in and
      to
      all trademarks, service marks, franchises, patents, trade names, jingles,
      slogans, and logotypes, copyrights and other intangible rights (registered
      or
      unregistered), including any applications therefor and all drawings and designs,
      know-how, show-how trade secrets and secret processes and formulas and licenses
      with respect to intangible property rights, computer programs and program
      rights, and other intangible property and proprietary rights, whether or not
      subject to statutory registration or protection, including all of Seller’s
      rights and goodwill in and to the name “Temix” and any derivations thereof
      (collectively, the “Intellectual
      Property”).

     

    2. Purchase
      Price and Payment.

     

    2.1 Purchase
      Price. The aggregate purchase price to be paid by Buyer to the Seller for
      the Intellectual Property shall be Fifty-Five Million Yuan Renminbi (55,000,000
      Yuan RMB) (the “Purchase Price”), which amount shall be paid in common
      shares, $.001 par value per share of the Parent (“Common Shares”) as more
      specifically set forth in this Section 2.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.2 Payment
      of the Purchase Price at Closing. At Closing, Buyer shall pay to Seller the
      Purchase Price as follows: an aggregate of Twenty Seven Million Five Hundred
      Thousand Yuan Renminbi (27,500,000 Yuan RMB) (US$1 equals to 7.0006 RMB Yuan)
      in
      common shares of Parent, or Five Hundred Forty Thousand Three Hundred
      Thirty-Three (540,333) Common Shares of Parent, which is fifty percent (50%)
      of
      the Purchase Price, where such number of Common Shares of Parent has been
      determined at a per share amount equal to the $7.27 per Common Share, the
      average closing price of the Common Shares of Parent as listed on the Nasdaq
      Global Market during the forty-five (45) trading days immediately preceding
      the
      execution date of this Agreement (the “Fuqi Share Price”). 

     

    2.3 Share
      Escrow Deposit. At Closing, Buyer shall deposit in escrow with the Escrow
      Agent an aggregate of Twenty Seven Million Five Hundred Thousand (27,500,000
      Yuan RMB) in common shares of Parent, or Five Hundred Forty Thousand Three
      Hundred Thirty-Three (540,333) Common Shares of Parent (“Escrow Shares”),
      which is fifty percent (50%) of the Purchase Price, where such number of Common
      Shares of Parent has been determined at the Fuqi Share Price. The Share Escrow
      Deposit will be held by the Escrow Agent for a period of twenty-four (24) months
      from the Closing Date and shall be subject to set-off from indemnification
      obligations and failure to meet EBITDA targets, as defined below, and will
      be
      held and disbursed as specified in this Agreement, the Asset Purchase Agreement,
      and the Escrow Agreement.

     

    2.4 Subject
      to the conditions set forth below, Buyer shall cause to be transferred to Seller
      such number of Escrow Shares at such time and in such amounts, if any, as
      determined in accordance with the formulas below. For purposes of determining
      the number of Escrow Shares deliverable to Seller on the third anniversary
      of
      the Closing Date, each Escrow Share shall be deemed to have a value equal to
      the
      Fuqi Share Price. 

     

    “EBITDA”
      shall mean, for any period, the net income or loss of the Business for such
      period before any interest, income tax, depreciation and amortization determined
      on a consolidated basis in accordance with USGAAP as shall be determined by
      the
      Parent and approved by the Parent’s independent auditors. 

     

    
      	 	
              (A)

            	
              the
                “First Release”, if any, shall be due and payable no later than the
                thirtieth (30th) day following the completion of the Parent’s preparation
                of its financial statements for the period (the “2008 Period”)
                commencing on the 1st
                day of the calendar month following immediately following Closing
                and
                terminating on the last day of the twelfth calendar month thereafter.
                If
                EBITDA for the 2008 Period is equal to or greater than US$2.6 million
                (“2008 EBITDA Target”), then one-half of the Escrow Shares shall be
                released to Seller. If EBITDA for the 2008 Period is less than the
                2008
                Net Income Target, the number of Escrow Shares to be released to
                Seller,
                if any, shall be calculated as
                follows:

            

    

     

    One-half
      of Escrow Shares - ( ( 2008 EBITDA Target – EBITDA for 2008 Period ) / Fuqi
      Share Price)

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Any
      Escrow Shares not released to the Seller in the First Release shall be returned
      to the Parent.

     

    
      	 	
              (B)

            	
              the
                “Second Release”, if any, shall be due and payable no later than
                the thirtieth (30th) day following the completion of the Parent’s
                preparation of its financial statements for the period (the “2009
                Period”) commencing on the 1st
                day of thirteenth calendar month following Closing and terminating
                on the
                last day of twenty-fourth calendar month following Closing. If EBITDA
                for
                the 2009 Period is equal to or greater than US$3.7 million (“2009
                EBITDA Target”), then one-half of the Escrow Shares shall be released
                to Seller. If EBITDA for the 2009 Period is less than the 2009 EBITA
                Target, the number of Escrow Shares to be released to Seller, if
                any,
                shall be calculated as follows:

            

    

     

    One-half
      of Escrow Shares – ( ( 2009 EBITDA Target - EBITDA for 2009 Period ) / Fuqi
      Share Price)

     

    Any
      Escrow Shares not released to the Seller in the Second Release shall be returned
      to the Parent.

     

    3. Closing.
      Closing
      shall occur concurrently with the Closing of the Asset Purchase Agreement,
      subject and in accordance with the terms and conditions as set forth in Article
      2 of the Asset Purchase Agreement.

     

    4. Representations
      and Warranties of Seller.
      The
      Seller hereby represents and warrants to Buyer as follows:

     

    4.1 All
      actions and proceedings necessary to be taken by or on the part of the Seller
      in
      connection with the transactions contemplated by this Agreement have been duly
      and validly taken, and this Agreement has been duly and validly authorized,
      executed, and delivered by the Seller and constitutes a duly and validly
      authorized, executed, and delivered by the Seller and will constitute, the
      legal, valid, and binding obligation of the Seller, enforceable against each
      Seller in accordance with and subject to its terms, except as may be limited
      by
      bankruptcy or other laws affecting creditors’ rights and by equitable
      principles.

     

    4.2 Neither
      the execution, delivery, and performance by the Seller of this Agreement nor
      the
      consummation by the Seller of the transactions contemplated thereby is an event
      that, by itself or with the giving of notice or the passage of time or both,
      will constitute a violation of, or conflict with, or result in any breach of
      or
      any default under, or constitute grounds for termination or acceleration of,
      any
      license, mortgage, indenture, lease, agreement or instrument to which the Seller
      is a party or by which the Seller is bound, or violate (i) any judgment, decree,
      or order or (ii) any statute, rule, or regulation, in each such case, applicable
      to the Seller. The execution, delivery, and performance by the Seller of this
      Agreement, and the consummation by the Seller of the transactions contemplated
      hereby, require no action by or in respect of, or filing with, any Governmental
      Entity.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    4.3 Schedule
      4.3 lists and describes all licenses, permits and authorizations that are
      currently held the Seller. The Seller holds all licenses, permits, and
      authorizations required for the ownership and use of the Intellectual Property.
      Such licenses, permits and authorizations are not subject to any restrictions
      or
      conditions that would limit the use of the Intellectual Property and there
      are
      no applications by the Seller or complaints by others pending or threatened
      before any Governmental Entity relating to any licenses, permits or
      authorizations involving the Intellectual Property or the Seller.

     

    4.4 Schedule
      4.4 sets forth a true and complete list of (i) all Intellectual Property owned,
      used, filed by, registered or licensed to the Seller, and (ii) with respect
      to
      registered trademarks, all jurisdictions in which such trademarks are registered
      or applied for and all registrations and application numbers. The Seller own
      all
      right, title and interest in and to the Intellectual Property, and Seller has
      the right to use, execute, reproduce, display, perform, modify, enhance,
      distribute, prepare derivative works of and license, without payment to any
      other person, all Intellectual Property listed in Schedule 4.4, and the
      consummation of the transactions contemplated hereby will not conflict with,
      alter, or impair any such rights. The Seller has all rights to the Intellectual
      Property which are necessary in connection with the Business as it is presently
      being conducted

     

    4.5 Except
      as
      set forth on Schedule 4.5, (i) the Seller has granted any licenses or
      contractual rights relating to Intellectual Property or the marketing or
      distribution thereof, and (ii) the Seller is bound by or a party to any
      Contracts of any kind relating to the Intellectual Property of any other Person,
      except for agreements relating to computer software licensed to any Seller
      in
      the ordinary course of business consistent with past practice. Subject to the
      rights of third parties set forth on Schedule 4.5, the Seller warrants that
      all
      Intellectual Property listed in Schedule 4.5 is free and clear of the claims
      of
      others and of all Liens whatsoever. The conduct of the Business as it is
      presently being conducted does not violate, conflict with or infringe the
      Intellectual Property of any other Person. Except as set forth on Schedule
      4.5,
      no claims are pending or, to the knowledge of the Seller, threatened against
      the
      Seller by any Person with respect to the ownership, validity, enforceability,
      effectiveness or use of any Intellectual Property and the Seller has not
      received any communications alleging that the Seller has violated any rights
      relating to Intellectual Property of any Person.

     

    5. Investment
      Representations of Seller regarding Common Shares.
      The
      Seller hereby warrants and represents to Buyer and Parent that:

     

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

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    5.2 Seller
      meets the criteria established in one or more of subsections (i) and (ii)
      below:

     

    a. Seller
      is
      an “accredited investor” as such term is defined in Rule 501 of Regulation D,
      promulgated under the 1933 Act.

     

    b. Seller
      is
      not a U.S. Person, as defined in Rule 901 of Regulation S, promulgated under
      the
      1933 Act and Seller represents and warrants that:

     

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

     

    (2) Seller
      is
      not acquiring the Purchase Price for the account or benefit of, directly or
      indirectly, any U.S. Person;

     

    (3) Seller
      is
      a resident of the jurisdiction in which he resides;

     

    (4) the
      offer
      and the sale of the Purchase Price to Seller as contemplated in this Agreement
      complies with or is exempt from the applicable securities legislation of the
      jurisdiction in which the Seller resides;

     

    (5) Seller
      is
      outside the United States when receiving and executing this Agreement and that
      the Seller will be outside the United States when acquiring the Purchase Price,
      

     

    (6) and
      the
      Seller covenants with Buyer and Parent that:

     

    
      	 	
              1)

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

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2)

            	
              Seller
                will not engage in hedging transactions with respect to the Purchase
                Price
                until after the expiration of the Distribution Compliance
                Period.

            

    

     

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

     

    5.4 Seller
      understands and acknowledges that an acquirer of Purchase Price must be prepared
      to bear the economic risk of such investment for an indefinite period because
      of: (A) the heightened nature of the risks associated with an investment in
      Parent due to its status as a development stage company; (B) illiquidity of
      the
      Purchase Price due to the fact such stock has not been registered under the
      1933
      Act or any state securities act (nor passed upon by the Securities and Exchange
      Commission (“SEC”) or any state securities commission), and Purchase
      Price has not been registered or qualified by Seller under federal or state
      securities laws solely in reliance upon an available exemption from such
      registration or qualification, and hence such Purchase Price cannot be sold
      unless it is subsequently so registered or qualified (which is not likely),
      or
      are otherwise subject to any applicable exemption from such registration
      requirements; and (C) substantial restrictions on the transfer of Purchase
      Price, as set forth in, among other documents, this Agreement and by legend
      on
      the face or reverse side of any certificate evidencing an ownership interest
      in
      Parent.

     

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

     

    5.6 Seller
      understands and acknowledges that an investment in Purchase Price is speculative
      in nature, and involves certain risks.

     

    5.7 Seller
      is
      not a member of FINRA, or of any other self-regulatory agency which would
      require approval prior to any acquisition of Purchase Price.

     

    5.8 Seller
      is
      acquiring Purchase Price for his own investment, and not with a view toward
      the
      subdivision, resale, distribution, or fractionalization thereof. Seller does
      not
      have any contract, undertaking, arrangement or obligation with or to any person
      to sell, transfer, or otherwise dispose of Purchase Price (or any portion
      thereof hereby acquired), nor has a present intention to enter into any such
      contract, undertaking, agreement or arrangement.

     

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

    
      
        
        

      

      
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    5.10 Seller
      has been advised to consult with an attorney regarding legal matters concerning
      the acquisition and ownership of Purchase Price, and with a tax advisor
      regarding the tax consequences of acquiring such stock.

     

    5.11 Seller
      has not distributed this Agreement, or any other information pertaining to
      the
      acquisition of Purchase Price hereunder, to anyone other than its representative
      and/or its investment, legal or accounting advisors in connection with its
      consideration of an acquisition of Purchase Price.

     

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

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    6. Representations
      and Warranties of Buyer and Parent

     

    6.1 Corporate
      Status; Authority. Each of Buyer and Parent is a corporation duly organized,
      validly existing and in good standing under the laws of its place of
      incorporation. Each of Buyer and Parent is duly qualified and in good standing
      to do business in each jurisdiction in which the conduct or nature of its
      business or the ownership, leasing or holding of its properties makes such
      qualification necessary, except such jurisdictions where the failure to be
      so
      qualified or in good standing, individually or in the aggregate, would not
      reasonably be expected to have a material adverse effect (a) on the condition
      (financial or otherwise), business, liabilities, properties, assets or results
      of operations, taken as a whole, or (b) on the ability to perform its
      obligations under or to consummate the transactions contemplated by this
      Agreement (a “Buyer
      Material Adverse Effect”).
      Each
      of Buyer and Parent has all requisite power to carry on its business as it
      is
      now being conducted, to own and operate such business and Buyer has all
      requisite power to enter into this Agreement, to perform its obligations
      hereunder and to complete the transactions contemplated hereby.

     

    6.2 Corporate
      Action. All organizational proceedings necessary to be taken by or on the
      part of each of Buyer and Parent in connection with the transactions
      contemplated by the this Agreement have been duly and validly taken, and this
      Agreement has been duly and validly authorized, executed and delivered and
      constitutes and will constitute, the legal, valid and binding obligations of
      Buyer and Parent, enforceable against Buyer and Parent, in accordance with
      and
      subject to its terms, except as may be limited by bankruptcy, insolvency,
      reorganization, or other laws affecting creditors’ rights generally and by
      general equitable principles.

     

    6.3 No
      Conflicts. Neither the execution, delivery and performance by each of Buyer
      and Parent of this Agreement, nor the consummation by Buyer or Parent of the
      transactions contemplated thereby is an event that, by itself or with the giving
      of notice or the passage of time or both, will (a) conflict with the
      organizational documents of Buyer or Parent, (b) constitute a violation of,
      or
      result in any breach of or any default under, or constitute grounds for
      termination or acceleration of, any material mortgage, indenture, lease,
      contract, agreement or instrument to which each of Buyer and Parent is a party
      or by which it is bound, except for such violations, breaches, terminations,
      and
      accelerations as individually or in the aggregate would not reasonably be
      expected to have a Buyer Material Adverse Effect or result in the creation
      of
      any material Lien upon any of Buyer’s and Parent’s assets such that it is
      reasonably likely that Buyer or Parent will be unable to proceed with the
      transactions contemplated in this Agreement, or (c) violate (i) any
      judgment, decree or order, or (ii) any statute, rule or regulation, in each
      such
      case, applicable to Buyer and Parent. The execution, delivery and performance
      by
      each of Buyer and Parent of this Agreement, and the consummation by Buyer and
      Parent of the transactions contemplated hereby, require no action by or in
      respect of, or filing with, any Governmental Entity, other than filings with
      the
      SEC and NASDAQ, and other than actions or filings which, if not taken or made,
      would not, individually or in the aggregate, reasonably be expected to have
      a
      Buyer Material Adverse Effect or filings and notices not required to be made
      or
      given to consummate the transactions contemplated by this Agreement.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    7. Lock-Up
      Agreement.

     

    7.1 Seller
      agrees that other than as set forth below, Seller shall not: (i) sell, assign,
      exchange, transfer, pledge, distribute or otherwise dispose of (X) any of the
      shares included in the Purchase Price received by such Seller pursuant to this
      Agreement, or (Y) any interest (including, without limitation, an option to
      buy
      or sell) in any such shares included in the Purchase Price, in whole or in
      part,
      and no such attempted transfer shall be treated as effective for any purpose;
      or
      (ii) engage in any transaction in respect of any such shares received by such
      Seller pursuant to this Agreement or any interest therein, the intent or effect
      of which is the effective economic disposition of such shares (including, but
      not limited to, engaging in put, call, short-sale, straddle or similar market
      transactions) (the foregoing restrictions are referred to herein as “Lock-Up
      Restrictions”). 

     

    7.2 Seller’s
      shares acquired in the Purchase Price pursuant to this Agreement shall be
      released from the Lock-Up Restrictions on the first (1st) anniversary of the
      Closing Date.

     

    7.3 The
      certificates evidencing the shares included in the Purchase Price received
      shall
      bear a legend as set forth below and such legend shall remain during the term
      of
      this Lock-Up Agreement as set forth above:

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER RESTRICTIONS
      SET
      FORTH IN THAT CERTAIN ASSET PURCHASE AGREEMENT BY AND AMONG FUQI INTERNATIONAL,
      INC., A DELAWARE CORPORATION, FUQI INTERNATIONAL, CO., LTD., AND THE HOLDER
      HEREOF (THE “PURCHASE AGREEMENT”), AND MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
      TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED OR OTHERWISE DISPOSED OF PRIOR
      TO
      THAT CERTAIN TIME PERIOD DETAILED IN THE PURCHASE AGREEMENT. THE ISSUER AGREES
      TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER
      AGENT) UPON THE EXPIRATION OF THE TIME PERIOD SPECIFIED IN THE PURCHASE
      AGREEMENT. A COPY OF THE PURCHASE AGREEMENT IS AVAILABLE FOR YOUR REVIEW AT
      THE
      PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER.

     

    8. General.

     

    8.1 Provisions
      Incorporated by Reference. Incorporated Article 7 “Survival of
      Representations and Warranties and Indemnification” and Article 8
“Miscellaneous” of the Asset Purchase Agreement are incorporated by reference
      into this Agreement as it applies to the Seller’s sale of the Intellectual
      Property to the Buyer under this Agreement.

     

    8.2 Binding
      Effect. This Agreement shall be binding upon and inure to the benefit of the
      parties hereto and their respective permitted successors, assigns and legal
      representatives.

     

    8.3 Counterparts.
      This Agreement may be executed in any number of facsimile counterparts, each
      of
      which shall be deemed to be an original and all of which shall constitute
      together one and the same agreement.

     

    8.4 Governing
      Law. This Agreement shall be deemed to be a contract made under the laws of
      the State of Delaware, without giving effect to its provisions relating to
      conflict of laws, and for all purposes it shall be construed in accordance
      with
      and governed by the law of such state.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    8.5 Severability.
      Wherever possible, each provision of this Agreement shall be interpreted in
      such
      manner as to be effective and valid under applicable law, but if any provision
      of this Agreement or any related document shall be prohibited by or invalid
      under applicable law, such provision shall be ineffective only to the extent
      of
      such prohibition or invalidity without invalidating the remainder of such
      provision or the remaining provisions of this Agreement.

     

    8.6 Modification.
      This Agreement may not be and shall not be deemed or construed to have been
      modified, amended, rescinded, canceled, or waived in whole or in part, except
      by
      written instruments signed by the parties hereto.

     

    8.7 Entire
      Agreement. This Agreement constitutes and expresses the entire agreement and
      understanding between the parties hereto in reference to all the matters herein
      referred to, all previous discussions, promises, representations and
      understandings relative thereto, if any, had between the parties hereto, being
      herein merged.

     

    [SIGNATURE
      PAGE TO FOLLOW]

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the duly authorized representatives of each of the parties
      hereto, intending to be legally bound hereby execute this Agreement as of the
      Effective Date.

     

    
      	 	
              SELLER:

            
	 	 
	 	
              /s/
                Chujian Huang

            
	 	
              Chujian
                Huang

            
	 	 
	 	
              BUYER:

            
	 	 
	 	
              FUQI
                INTERNATIONAL HOLDINGS

              CO.,
                LTD.

            
	 	 
	 	
              By:  

            	
              /s/
                Yu Kwai Chong

            
	 	
              Name:
                Yu Kwai Chong

            
	 	
              Title:   Chairman
                & C.E.O.

            
	 	 
	 	
              PARENT:

            
	 	 
	 	
              FUQI
                INTERNATIONAL, INC.

            
	 	 
	 	
              By:  

            	
              /s/
                Yu Kwai Chong

            
	 	
              Name:
                Yu Kwai Chong

            
	 	
              Title:   Chairman
                & C.E.O.

            

    

     

    
      
        
        

      

      
        11

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