Document:

ex10_1.htm

    
      

    

    Exhibit
10.1

    

    PROMISSORY
NOTE AND

    SECURITY
AGREEMENT

    

    

    
      	
              -Credit
      Line-

            	
              February
      28, 2008

            

    

    
       
$700,000

    

    

    FOR VALUE RECEIVED, the undersigned,
Bluegate Corporation and Trilliant Technology Group, Inc. (the “Debtors”),
jointly and severally promise to pay to the order of SAI Corporation or its
assigns (the “Secured Party”), at such place as Secured Party may designate in
writing, in lawful money of the United States of America and in immediately
available funds, up to the full principal amount of $700,000.00 with interest at
the rate of 15% per annum.

    

     Principal and interest due hereunder shall be
payable on demand. Interest payments are due
and payable monthly commencing March 1, 2008 until the outstanding
principal balance is paid in full.

    

    This note possesses a revolving or draw
feature. Debtors shall be entitled to borrow up to the full principal amount of
the note from time to time during the term of the note.   It is
agreed by Debtors that in accordance with this note, as of February 27, 2008,
Secured Party has advanced the aggregate amount of approximately
$500,000.00.

    

    The unpaid principal balance of this
note at any time shall be the total amounts loaned or advanced hereunder by the
Secured Party less the amount of payments or prepayments of principal made
hereon by or for the account of Debtors.  Each time Debtors desire to
receive an advance under this note, Debtors shall deliver a written request for
advance to Secured Party.  Debtors shall give Secured Party no fewer
than one (1) business day’s notice prior to the date Debtors request for any
such advance to be made by Secured Party.   Advances hereunder
may be made by the Secured Party hereof upon request therefor from Debtors and
approval of such request by the Secured Party hereof.  Debtors
covenant that all advances shall be used for working capital and other
expenditures for Debtors’ business.

    

    Debtors shall have the right to prepay
this note, in whole or in part, at any time without penalty.

    

    The entire unpaid principal balance of
this note shall immediately become due and payable, at the option of Secured
Party, upon the occurrence of either of the following events of default (each,
and “event of Default”): (a) Failure by Debtors to pay all interest or principal
hereunder as and when the same becomes due and payable in accordance with the
terms hereof, or (b) failure by Debtors to comply with any other covenant
hereunder and such failure continues for three (3) days after written notice of
such failure.

    

    
      
        
           

        

        
          1

          
            

          

        

        
           

        

      

    

    

    In the event an Event of Default
specified above shall occur, Secured Party may proceed to protect and enforce
its rights by suit in equity and/or by action at law or by other appropriate
proceedings.  No delay on the part of Secured Party in the exercise of
any power or right under this note, or under any other instrument executed
pursuant thereto shall operate as a waiver thereof, nor shall a single or
partial exercise of any other power or right preclude further exercise
thereof.  Notwithstanding anything to the contrary contained herein,
if an Event of Default shall occur, all payments thereafter made hereunder shall
be applied, at the option of Secured Party, first to costs of collection, and
then to principal.

    

    It is hereby specially agreed that if
this note is placed into the hands of an attorney for collection, or if proved,
established, or collected in any court, Debtors agree to pay to Secured Party an
amount equal to all expenses incurred in enforcing or collecting this note,
including court costs and reasonable attorneys’ fees.

    

    Except for the notice expressly
provided herein, Debtors hereby waive presentment for payment, notice of
nonpayment, demand, notice of demand, protest, notice of protest, diligence in
collection, grace and without further notice hereby consents to renewals,
extensions, or partial payments either before or after maturity.

    

    All agreements between Debtors and
Secured Party, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to Secured Party hereof for the use,
forbearance, or detention of the money advance to Debtors, or for the
performance or payment on any covenant or obligation contained herein, exceed
the maximum amount permissible under applicable federal or state
law.

    

    
      
      

      
        This note shall be governed by and
construed in accordance with the laws of the State of Texas and the United States of
America, except
that Chapter 346 of the Texas Finance Code governing the rights and obligations
of parties in certain revolving charge amounts, shall not apply hereto. In the
event any one or more of the provisions contained herein shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected thereby.

      

    

    

    This note cancels and
supersedes that certain Promissory Note dated November 20, 2007 between Debtor Bluegate
Corporation and Secured Party with a credit line of up to $500,000.00
with interest at the rate of 12% per annum.

    

    Grant
of Security Interest

    

    As a
condition for Secured Party to agree to lend Debtors the funds contemplated
herein, Debtors grant to Secured Party, a security interest in its property,
tangible and intangible, including but not limited to:  all accounts,
now existing or subsequently arising; all contract rights of Debtors, now
existing or subsequently arising; all accounts receivable, now existing or
subsequently arising; all chattel paper, documents, and instruments related to
accounts; all inventory, furniture, fixtures, equipment, and supplies now owned
or subsequently acquired; and the proceeds, products, and accessions of and to
any and all of the foregoing (the “Collateral”).

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    This
security interest is granted to secure the debt evidenced by this note and
agreement and all costs and expenses incurred by Secured Party in the collection
of the debt.

    

    Secured Party, in its discretion, may
file one or more financing statements under the Texas Uniform Commercial Code,
naming Debtors as a debtor and Secured Party as secured party and indicating the
Collateral specified in this Promissory Note and Security
Agreement.

    

    
      

      EXECUTED on March 3,
2008.

    

     

    
      

    

    
      
        
          	
                  BLUEGATE
      CORPORATION

                	
                  TRILLIANT
      TECHNOLOGY

                
	 
      	 
      	
                  GROUP,
      INC.

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                  By:

                	
                  /s/William
      E. Koehler

                	
                  By:

                	
                  /s/
      Larry Walker

                
	 
      	
                  William
      E. Koehler

                	 
      	
                  Larry
      Walker

                
	 
      	
                  Its
      President and COO

                	 
      	
                  Its
      President

                

        

      

    

     

     

    3PREFERRED
      STOCK AND WARRANT PURCHASE AGREEMENT

     

    THIS
      PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement")
      is
      entered into as of _______,
      2007,
      by and
      among CHINA POWER EQUIPMENT,
      INC.,
      a
      Maryland corporation (the "Company"), with headquarters located at 76 Cranbrook
      Road, Cockeysville, County of Baltimore, MD 21020, and the purchasers
      (collectively, the "Purchasers" and each a "Purchaser") set forth on
Schedule 1
      hereof,
      with regard to the following:

     

    RECITALS

     

    A. The
      Company and the Purchasers are executing and delivering this Agreement in
      reliance upon the exemption from securities registration afforded by the
      provisions of Regulation D ("Regulation D") and/or Regulation S, as
      promulgated by the United States Securities and Exchange Commission (the "SEC")
      under the Securities Act of 1933, as amended (the "Securities
      Act").

     

    B. The
      Purchasers desire to (a) purchase, upon the terms and conditions stated in
      this Agreement, shares of the Company's Series A Convertible Preferred Stock,
      $.001 par value per share (the "Preferred Stock") and (b) purchase, upon the
      terms and conditions stated in this Agreement, the Common Stock Purchase
      Warrants (the "Warrants") to purchase shares of the Company’s Common Stock,
      $.001 par value per share (“Common Stock”), in the form attached hereto as
Exhibit A.
      The
      shares of Common Stock issuable upon exercise of or otherwise pursuant to the
      Warrants are referred to herein as "Warrant Shares." The Preferred Stock, the
      Warrants and the Warrant Shares are collectively referred to herein as the
      "Securities".
      The
      Warrants and any other documents or agreements executed in connection with
      the
      transactions contemplated hereunder, are hereinafter referred to as the
      "Transaction Documents.”

     

    AGREEMENTS

     

    NOW,
      THEREFORE, in consideration of their respective promises contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Purchasers hereby agree as
      follows:

     

    ARTICLE
      I 

     

    PURCHASE
      AND SALE OF PREFERRED STOCK AND WARRANTS

     

    1.1  Purchase
      of Preferred Stock and Warrants.
      Subject
      to the terms and conditions of this Agreement, the issuance, sale and purchase
      of the Preferred Stock and Warrants shall be consummated in a "Closing." The
      purchase price (the "Purchase Price") shall be TEN
      DOLLARS ($10.00)
      per Unit, for a Unit consisting of one share of Preferred Stock and one Warrant
      to purchase such number of shares of Common Stock as shall be equal to the
      number of shares of Common Stock that one share of Preferred Stock shall have
      been converted into pursuant to a mandatory conversion of Preferred Stock into
      Common Stock made at the option of the Company pursuant to Section 3(d) of
      Article SIXTH of the Certificate of Incorporation of the Company, as amended
      and
      in effect as of the date of the Closing. _______Units
      shall be sold pursuant to this Agreement. On
      the date of the Closing, subject to the satisfaction or waiver of the conditions
      set forth in ARTICLES VI
      and VII
      hereof, the Company shall issue and sell to each Purchaser, and each Purchaser
      severally agrees to purchase from the Company, the number of Units set forth
      on
Schedule
      1
      hereto. Each Purchaser's obligation to purchase Units hereunder is distinct
      and
      separate from each other Purchaser's obligation to purchase, and no Purchaser
      shall be required to purchase hereunder more than the number of Units set forth
      on Schedule
      1
      hereto. The obligations of the Company with respect to each Purchaser shall
      be
      separate from the obligations of each other Purchaser and shall not be
      conditioned as to any Purchaser upon the performance of obligations of any
      other
      Purchaser. .

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.2  Closing
      Date.
      Subject to the satisfaction (or waiver) of the conditions set forth in
ARTICLES VI
      and VII
      below, the date and time of the issuance, sale and purchase of the Preferred
      Stock and Warrants pursuant to this Agreement shall be at 10:00 a.m. New
      York time, on __________, 2007.

     

    ARTICLE
      II

    PURCHASER'S
      REPRESENTATIONS AND

    WARRANTIES

     

    Each
      Purchaser represents and warrants to the Company, as of the date hereof and
      as
      of the Closing, severally and not jointly with respect to itself and its
      purchase hereunder and not with respect to any other Purchaser or the purchase
      hereunder by any other Purchaser that the following statements are true and
      correct:

     

    2.1  Investment
      Purpose.
      Purchaser is purchasing the Preferred Stock and the Warrants for Purchaser's
      own
      account for investment only and not with a view toward or in connection with
      the
      public sale or distribution thereof. Purchaser will not, directly or indirectly,
      offer, sell, pledge or otherwise transfer its Preferred Stock, Warrants or
      any
      interest therein except pursuant to transactions that are exempt from the
      registration requirements of the Securities Act and/or sales registered under
      the Securities Act. Purchaser understands that Purchaser must bear the economic
      risk of this investment indefinitely, unless the Securities are registered
      pursuant to the Securities Act and any applicable state securities laws or
      an
      exemption from such registration is available, and that the Company has no
      present intention of registering any such Securities other than as contemplated
      by the terms of the Company’s Articles of Incorporation setting forth the
      designation, rights and preferences of the Preferred Stock (the “Charter”) and
      the terms of the Warrants set forth in the certificate evidencing the Warrants
      (the “Warrant Certificate”).

     

    2.2  Accredited
      Investor/"Non-U.S."
      Person Status.
      Purchaser is an "accredited investor" as that term is defined in
      Rule 501(a) of Regulation D as provided in Exhibit B hereto or Purchaser is
      a “non-U.S.” Person as defined under Rule 902 of Regulation S.

     

    2.3  Reliance
      on Exemptions.
      Purchaser understands that the Preferred Stock and Warrants are being offered
      and sold to Purchaser in reliance upon specific exemptions from the registration
      requirements of United States federal and state securities laws and that the
      Company is relying upon the truth and accuracy of, and Purchaser's compliance
      with, the representations, warranties, agreements, acknowledgments and
      understandings of Purchaser set forth herein in order to determine the
      availability of such exemptions and the eligibility of Purchaser to acquire
      the
      Common Shares and Warrants.

     

    
      
        
        

      

      
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    2.4  Information.
      Purchaser has been afforded the opportunity to ask questions of the Company,
      was
      permitted to meet with the Company's officers and has received what the
      Purchaser believes to be complete and satisfactory answers
      to any such inquiries. Except for the answers received by Purchaser as a result
      of inquiries made by Purchaser to Company officers, and except as otherwise
      provided in this Agreement, the Purchaser is not relying upon any information,
      representations or warranties of any other party. Neither
      such inquiries nor any other due diligence investigation conducted by Purchaser
      or any of its representations shall modify, amend or affect Purchaser's right
      to
      rely on the Company's representations and warranties contained in ARTICLE III.
      Purchaser understands that Purchaser's investment in the Securities involves
      a
      high degree of risk.

     

    2.5  Governmental
      Review.
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed upon or made any recommendation
      or
      endorsement of the Securities.

     

    2.6  Transfer
      or Resale.
      Purchaser understands that (i) except as provided in the Charter and the
      Warrant Certificate, the Securities have not been and are not being registered
      under the Securities Act or any state securities laws, and may not be offered,
      sold, pledged or otherwise transferred unless subsequently registered thereunder
      or an exemption from such registration is available (which exemption the Company
      expressly agrees may be established as contemplated in clauses (b) and (c)
      of
Section 5.1
      hereof);
      (ii) any sale of such Securities made in reliance on Rule 144 under the
      Securities Act (or a successor rule) ("Rule 144")
      may be made only in accordance with the terms of Rule 144 and further, if
      Rule 144 is not applicable, any resale of such Securities without
      registration under the Securities Act under circumstances in which the seller
      may be deemed to be an underwriter (as that term is defined in the Securities
      Act) may require compliance with some other exemption under the Securities
      Act
      or the rules and regulations of the SEC thereunder in order for such resale
      to
      be allowed, and (iii) the Company is under no obligation to register such
      Securities under the Securities Act or any state securities laws or to comply
      with the terms and conditions of any exemption thereunder (in each case, other
      than pursuant to the Charter and the Warrant Certificate). 

     

    2.7  No
      Directed Selling Efforts.
      Neither
      Purchaser, nor any of his affiliates, nor any person acting on its behalf or
      any
      behalf of any such affiliate, has engaged or will engage in any activity
      undertaken for the purpose of, or that reasonably could be expected to have
      the
      effect of, conditioning the markets in the United States for the Units or Common
      Stock, including but not limited to effecting any sale or short sale of the
      Company’s securities through Purchaser or any of his affiliates prior to the
      expiration of any restricted period contained in Regulation S (any such activity
      being defined herein as a “Directed Selling Effort”). To the best knowledge of
      the undersigned, this Agreement and the transactions contemplated herein are
      not
      part of a plan or scheme to evade the registration provisions of the 1933 Act,
      and the Units are being purchased for investment purposes by Purchaser.
      Purchaser agrees that all offers and sales of the Common Stock from the date
      hereof and through the expiration of the any restricted period set forth in
      Rule
      903 of Regulation S (as the same may be amended from time to time hereafter)
      shall not be made to U.S. Persons or for the account or benefit of U.S. Persons
      and shall otherwise be made in compliance with the provisions of Regulation
      S
      and any other applicable provisions of the Securities Act. Purchaser and its
      representatives have not conducted any Directed Selling Effort as that term
      is
      used and defined in Rule 902 of Regulation S and will not engage in any such
      Directed Selling Effort within the United States through the expiration of
      any
      restricted period set forth in Rule 903 of Regulation S.

     

    
      
        
        

      

      
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    2.8  Legends.
      Purchaser understands that, subject to ARTICLE V
      hereof, the certificate for the Preferred Stock and the Warrant Certificate
      and,
      until such time as the Warrant Shares and shares of Common Stock issuable upon
      conversion of the Preferred Stock (the “Conversion Shares”) have been registered
      under the Securities Act or otherwise may be sold by Purchaser pursuant to
      Rule
      144 (subject to and in accordance with the procedures specified in ARTICLE V
      hereof), the certificates for the Conversion Shares and the Warrant Shares
      will
      bear a restrictive legend (the "Legend"),
      which will include language in substantially the following form:

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
      THE
      UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD
      OR
      OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
      FOR
      THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
      TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OF THOSE LAWS.

     

    2.9  Authorization;
      Enforcement.
      This Agreement has been duly and validly authorized, executed and delivered
      on
      behalf of Purchaser and is a valid and binding agreement of Purchaser
      enforceable in accordance with its terms, except to the extent that such
      validity or enforceability may be subject to or affected by any bankruptcy,
      insolvency, reorganization, moratorium, liquidation or similar laws relating
      to,
      or affecting generally the enforcement of, creditors' rights or remedies of
      creditors, or by other equitable principles of general application.

     

    2.10  Residency.
      Purchaser is a resident of the jurisdiction set forth under Purchaser's name
      on
      the signature page hereto executed by Purchaser.

     

    2.11  Hedging
      Transactions.
      Purchaser does not have an existing short position with respect to the Company’s
      Common Stock. 

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    The
      Company represents and warrants to each Purchaser as of the date hereof and
      as
      of the Closing that the following statements are true and correct, except as
      set
      forth on the disclosure schedules, if any, attached hereto as Schedule
      2
      (the
      "Company Disclosure Schedules"). 

     

    
      
        
        

      

      
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    Organization
      and Qualification.
      Each of
      the Company and its subsidiaries is a corporation duly organized and existing
      in
      good standing under the laws of the jurisdiction in which it is incorporated,
      and has the requisite corporate power to own its properties and to carry on
      its
      business as now being conducted. The Company and each of its subsidiaries is
      duly qualified as a foreign corporation to do business and is in good standing
      in every jurisdiction where the failure so to qualify or be in good standing
      could reasonably be expected to have a Material Adverse Effect. "Material
      Adverse Effect" means any effect which, individually or in the aggregate with
      all other effects, reasonably would be expected to be materially adverse to
      the
      business, operations, properties, financial condition, operating results or
      prospects of the Company and its subsidiaries, taken as a whole on a
      consolidated basis or on the transactions contemplated hereby.

     

    3.1  Authorization;
      Enforcement.
      (a) The Company has the requisite corporate power and authority to enter
      into and perform under the Transaction Documents, and to issue, sell and perform
      its obligations with respect to the Securities in accordance with the terms
      hereof and thereof and in accordance with the terms and conditions of the
      Securities; (b) the execution, delivery and performance of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby (including, without limitation, the issuance
      of
      the Preferred Stock, Conversion Shares and the Warrants and Warrant Shares,
      and
      the reservation for issuance of the Warrant Shares) have been duly authorized
      by
      all necessary corporate action and no further consent or authorization of the
      Company, its board of directors, or its stockholders or any other Person is
      required with respect to any of the transactions contemplated hereby or thereby;
      (c)  this Agreement, the Preferred Stock, and the Warrants have been duly
      executed and delivered by the Company; and (d) this Agreement, the
      Preferred Stock, and the Warrants constitute legal, valid and binding
      obligations of the Company enforceable against the Company in accordance with
      their respective terms, except (i) to the extent that such validity or
      enforceability may be subject to or affected by any bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally the enforcement of, creditors' rights or remedies of
      creditors generally, or by other equitable principles of general application,
      and (ii) as rights to indemnity and contribution may be limited by federal
      or state securities laws. "Person" means any individual, sole proprietorship,
      partnership, limited liability company, joint venture, trust, unincorporated
      association, corporation, entity or government (whether federal, state, county,
      city or otherwise, including, without limitation, any instrumentality, division,
      agency or department thereof).

     

    3.2  Capitalization.
      There are currently 110,000,000 shares of authorized capital stock with
      100,000,000 shares of Common Stock authorized and 10 million shares of preferred
      stock authorized. There are currently ________ shares of Common Stock
      outstanding and ________ shares of preferred stock outstanding. All of such
      outstanding shares of capital stock have been, or upon issuance will be, validly
      issued, fully paid and nonassessable. No shares of capital stock of the Company
      (including the Preferred Stock, the Conversion Shares and the Warrant Shares)
      are subject to preemptive rights or any other similar rights of the stockholders
      of the Company or any liens or encumbrances. Except as disclosed in Schedule 3
      hereof, as of the date of this Agreement, (i) there are no outstanding
      options, warrants, scrip, rights to subscribe for, calls or commitments of
      any
      character whatsoever relating to, or securities or rights convertible into
      or
      exercisable or exchangeable for, any shares of capital stock of the Company
      or
      any of its subsidiaries, or contracts, commitments, understandings or
      arrangements by which the Company or any of its subsidiaries is or may become
      bound to issue additional shares of capital stock of the Company or any of
      its
      subsidiaries, (ii) issuance of the Securities will not trigger
      anti-dilution rights for any other outstanding or authorized securities of
      the
      Company, (iii) up until the date of effectiveness of a registration statement
      registering the re-sale of the Securities, there will be no more than 20 million
      shares of common stock outstanding on a fully diluted basis, and (iv) there
      are no agreements or arrangements under which the Company or any of its
      subsidiaries is obligated to register the sale of any of its or their securities
      under the Securities Act (except for the provisions sets forth in the Charter
      and the Warrant Certificate). The Company has made available to Purchaser true
      and correct copies of the Company's Articles of Incorporation as in effect
      on
      the date hereof ("Articles of Incorporation"), and the Company's By-laws as
      in
      effect on the date hereof (the "By-laws"). The Company has set forth on
Schedule 3
      hereof all instruments and agreements (other than the Articles of Incorporation
      and By-laws) governing securities convertible into or exercisable or
      exchangeable for Common Stock of the Company (and the Company shall provide
      to
      Purchaser copies thereof upon the request of Purchaser).

     

    
      
        
        

      

      
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    3.3  No
      Conflicts.
      The execution, delivery and performance of the Transaction Documents by the
      Company, and the consummation by the Company of transactions contemplated hereby
      and thereby (including, without limitation, the issuance and reservation for
      issuance, as applicable, of the Securities) do not and will not (a) result
      in a violation of the Articles of Incorporation or By-laws or (b) conflict
      with, or constitute a default (or an event which, with notice or lapse of time
      or both, would become a default) under, or give to others any rights of
      termination, amendment, acceleration or cancellation of, any agreement,
      indenture or instrument to which the Company or any of its subsidiaries is
      a
      party, or result in a violation of any law, rule, regulation, order, judgment
      or
      decree (including U.S. federal and state securities laws) applicable to the
      Company or any of its subsidiaries, or by which any property or asset of the
      Company or any of its subsidiaries, is bound or affected (except for such
      possible conflicts, defaults, terminations, amendments, accelerations,
      cancellations and violations as would not, individually or in the aggregate,
      have a Material Adverse Effect). Neither the Company nor any of its subsidiaries
      is in violation of its Articles of Incorporation or other organizational
      documents. Neither the Company nor any of its subsidiaries, is in default (and
      no event has occurred which has not been waived which, with notice or lapse
      of
      time or both, could reasonably be expected to put the Company or any of its
      subsidiaries in default) under, nor has there occurred any event giving others
      (with notice or lapse of time or both) any rights of termination, amendment,
      acceleration or cancellation of, any agreement, indenture or instrument to
      which
      the Company or any of its subsidiaries is a party, except for possible
      violations, defaults or rights as would not, individually or in the aggregate,
      have a Material Adverse Effect. The businesses of the Company and its
      subsidiaries are not being conducted, and shall not be conducted so long as
      a
      Purchaser owns any of the Securities, in violation of any law, ordinance or
      regulation of any governmental entity, except for possible violations the
      sanctions for which either individually or in the aggregate would not have
      a
      Material Adverse Effect. Except as (A) such as may be required under the
      Securities Act in connection with the performance of the Company's obligations
      under the Charter and Warrant Certificate, (B) filing of a Form D with
      the SEC, and (C) compliance with the state securities or Blue Sky laws of
      applicable jurisdictions, the Company is not required to obtain any consent,
      authorization or order of, or make any filing or registration with, any court
      or
      governmental agency or any regulatory or self-regulatory agency in order for
      it
      to execute, deliver or perform any of its obligations under this Agreement
      or to
      perform its obligations in accordance with the terms hereof or
      thereof.

     

    
      
        
        

      

      
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    3.4  Consents.
      The execution, delivery and performance by the Company of the Transaction
      Documents and the offer, issuance and sale of the Securities require no consent
      of, action by or in respect of, or filing with, any Person, governmental body,
      agency, or official other than (i) filings that have been made pursuant to
      applicable state securities laws, (ii) post-sale filings pursuant to applicable
      state and federal securities laws, and (iii) any consent, action or filing
      that
      either individually or in the aggregate would not have a Material Adverse
      Effect. Subject to the accuracy of the representations and warranties of each
      Purchaser set forth in ARTICLE
      II
      hereof, the Company has taken all action necessary to exempt (i) the issuance
      and sale of the Preferred Stock, (ii) the issuance of the Conversion Shares,
      (iii) the issuance of the Warrants, and (iv) the issuance of the Warrant Shares,
      from the provisions of any stockholder rights plan or other “poison pill”
arrangement, any anti-takeover, business combination or control share law or
      statute binding on the Company or to which the Company or any of its assets
      and
      properties may be subject and any provision of the Company’s Articles of
      Incorporation or By-laws that is or could reasonably be expected to become
      applicable to the Purchasers as a result of the transactions contemplated
      hereby, including without limitation, the issuance of the Securities and the
      ownership, disposition or voting of the Securities by the Purchasers or the
      exercise of any right granted to the Purchaser pursuant to this Agreement or
      the
      other Transaction Documents.

     

    3.5  Absence
      of Litigation.
      There is no action, suit, proceeding, inquiry or investigation before or by
      any
      court, public board, government agency, or self-regulatory organization or
      body
      pending or, to the Company's knowledge or any of its subsidiaries, threatened
      against or affecting the Company, any of its subsidiaries, or any of their
      respective directors or officers in their capacities as such. There are no
      facts
      known to the Company which, if known by a potential claimant or governmental
      authority, could reasonably be expected to give rise to a claim or proceeding
      which, if asserted or conducted with results unfavorable to the Company or
      any
      of its subsidiaries, could reasonably be expected to have a Material Adverse
      Effect.

     

    3.6  Disclosure.
      No information relating to or concerning the Company set forth in this Agreement
      contains an untrue statement of a material fact. The Company has not omitted
      to
      state a material fact necessary in order to make the statements made herein
      or
      therein, in light of the circumstances under which they were made, not
      misleading. Except for the execution and performance of this Agreement, no
      material fact (within the meaning of the federal securities laws of the United
      States and of applicable state securities laws) exists with respect to the
      Company which has not been publicly disclosed.

     

    3.7  No
      General Solicitation.
      Neither the Company nor any distributor participating on the Company's behalf
      in
      the transactions contemplated hereby (if any) nor any person acting for the
      Company, or any such distributor, has conducted any "general solicitation,"
      as
      described in Rule 502(c) under Regulation D, with respect to any of
      the Securities being offered hereby.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    3.8  No
      Integrated Offering.
      Neither the Company, nor any of its affiliates, nor any person acting on its
      or
      their behalf, has directly or indirectly made any offers or sales of any
      security or solicited any offers to buy any security under circumstances that
      would prevent the parties hereto from consummating the transactions contemplated
      hereby pursuant to an exemption from the registration under the Securities
      Act
      pursuant to the provisions of Regulation D. The transactions contemplated
      hereby are exempt from the registration requirements of the Securities Act,
      assuming the accuracy of the representations and warranties herein contained
      of
      each Purchaser.

     

    3.9  No
      Brokers.
      The Company has taken no action which would give rise to any claim by any person
      for brokerage commissions, finder's fees or similar payments by Purchaser
      relating to this Agreement or the transactions contemplated hereby.

     

    ARTICLE
      IV 

    COVENANTS

     

    4.1  Reasonable
      Efforts.
      The parties shall use their commercially reasonable efforts to timely satisfy
      each of the conditions described in ARTICLES
      VI
      and VII
      of this Agreement and to seek its Board of Directors' approval of this
      Agreement.

     

    4.2  Securities
      Laws; Disclosure; Press Release.
      The Company agrees to file a Form D with respect to the Securities with the
      SEC as required under Regulation D. The Company shall, on or prior to the date
      of Closing, take such action as is necessary to sell the Securities to each
      Purchaser under applicable securities laws of the states of the United States.
      

     

    4.3  Reservation
      of Common Stock.
      The
      Company shall continue to reserve and keep available at all times, free of
      preemptive rights, a sufficient number of shares of Common Stock for the purpose
      of enabling the Company to issue the Conversion Shares and the Warrant
      Shares. 

     

    4.4  Corporate
      Existence.
      So long as any Purchaser beneficially owns any Securities, the Company shall
      maintain its corporate existence, except in the event of a merger, consolidation
      or sale of all or substantially all of the Company's assets, as long as the
      surviving or successor entity in such transaction assumes the Company's
      obligations hereunder and under the agreements and instruments entered into
      in
      connection herewith.

     

    4.5  Hedging
      Transactions.
      No Purchaser has an existing short position with respect to the Company’s Common
      Stock. Each Purchaser agrees not to, directly or indirectly, enter into any
      short sales with respect to the Common Stock prior to the date on which such
      Purchaser is entitled to sell, transfer the number of shares of Common Stock
      as
      to which such Purchaser proposes to establish a short position. 

     

    4.6  Conversion.

    

      (i)
        Each
        share of Series A Stock shall automatically be converted into shares of Common
        Stock at the Conversion Price (as such term hereinafter defined) for such
        share,
        determined as hereafter provided, immediately upon the closing of the
        corporation's sale of its Common Stock in an offering pursuant to a registration
        statement under the Securities Act of 1933, as amended (a "Qualified IPO").
        The
        date of such closing is hereinafter referred to as the “Automatic Conversion
        Date”. In connection with a Qualified IPO, prior to the initial filing of a
        registration statement related to the Qualified IPO, the corporation shall
        obtain from a person, firm or entity engaged in the business of providing
        evaluations or appraisals of the value of securities of companies which is
        selected in good faith by the Board of Directors of the corporation and is
        independent of the corporation (the “Valuation Firm”) a valuation of the Common
        Stock on a per share basis (the “Valuation Price”) For purposes hereof, the term
“Conversion Price” shall mean the price equal to the product obtained by
        multiplying (x) 1/3, times (y) 80% of the Valuation Price. The number of
        shares
        of Common Stock issuable upon conversion of one share of Series A Preferred
        shall be the quotient obtained by dividing (A) $10 by (B) the Conversion
        Price.
        No fractional shares of Common Stock may be issued upon the conversion of
        any
        share or shares of the Series A Preferred Stock into Common Stock, and the
        number of shares of Common Stock to be issued shall be rounded up to the
        nearest
        whole share. The Conversion Price shall be appropriately adjusted in the
        event
        of a reorganization, recapitalization, stock split, stock dividend, combination
        of shares, or similar change in the corporation's Common Stock. Except as
        set
        forth herein, neither the corporation nor any holder of Series A Preferred
        shall
        have the right to convert, or require the conversion of, Series A Preferred
        into
        Common Stock or any other security or property of the corporation or any
        other
        person. 

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    
      (ii)
        Mechanics
        of Conversion.
        No
        later than five business days after the Automatic
        Conversion Date, the corporation shall deliver or cause to be delivered a
        notice
        to each holder of the Series A Preferred (A) stating that the Series A Preferred
        has been converted; (B) setting forth the number of full shares of Common
        Stock
        to be issued due to such conversion as determined in accordance with this
        Section (3)(d); (C) informing the holder of the address of the Company or
        agent
        to which the holder may deliver its Series A Preferred certificate in exchange
        for a Common Stock certificate representing the number of shares into which
        such
        holder's Series A Preferred has been converted. Such conversion shall be
        deemed
        to have been made upon the surrender of the certificate for the shares of
        Series
        A Preferred to be converted, and the person entitled to receive the shares
        of
        Common Stock issuable upon such conversion shall be treated for all purposes
        as
        the record holder of such shares of Common Stock at and after such
        time.

     

    ARTICLE
      V

    LEGEND
      REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES

     

    5.1  Removal
      of Legend.
      The Legend shall be removed and the Company shall issue a certificate without
      such Legend to the holder of any Security upon which it is stamped, and a
      certificate for a security shall be originally issued without the Legend, if,
      (a) the sale of such Security is registered under the Securities Act,
      (b) such holder provides the Company with an opinion of counsel, in form,
      substance and scope customary for opinions of counsel in comparable transactions
      and reasonably satisfactory to the Company and its counsel (the reasonable
      cost
      of which shall be borne by the Company if, after one (1) year, neither an
      effective registration statement under the Securities Act or Rule 144 is
      available in connection with such sale) to the effect that a public sale or
      transfer of such Security may be made without registration under the Securities
      Act pursuant to an exemption from such registration requirements or
      (c) such Security can be sold pursuant to Rule 144 and the holder
      provides the Company with reasonable assurances that the Security can be so
      sold
      without restriction or (d) such Security can be sold pursuant to
      Rule 144(k). The Company may not make any notation on its records or give
      instructions to any transfer agent of the Company that enlarge the restrictions
      on transfer set forth in this Section. Each Purchaser agrees to sell all
      Securities, including those represented by a certificate(s) from which the
      Legend has been removed, or which were originally issued without the Legend,
      pursuant to an effective registration statement, in accordance with the manner
      of distribution described in such registration statement and to deliver a
      prospectus in connection with such sale, or in compliance with an exemption
      from
      the registration requirements of the Securities Act. In the event the Legend
      is
      removed from any Security or any Security is issued without the Legend and
      the
      Security is to be disposed of other than pursuant to the registration statement
      or pursuant to Rule 144, then prior to, and as a condition to, such
      disposition such Security shall be relegended as provided herein in connection
      with any disposition if the subsequent transfer thereof would be restricted
      under the Securities Act. Also, in the event the Legend is removed from any
      Security or any Security is issued without the Legend and thereafter the
      effectiveness of a registration statement covering the resale of such Security
      is suspended or the Company determines that a supplement or amendment thereto
      is
      required by applicable securities laws, then upon reasonable advance notice
      to
      Purchaser holding such Security, the Company may require that the Legend be
      placed on any such Security that cannot then be sold pursuant to an effective
      registration statement or Rule 144 or with respect to which the opinion referred
      to in clause (b) next above has not been rendered, which Legend shall be
      removed when such Security may be sold pursuant to an effective registration
      statement or Rule 144 or such holder provides the opinion with respect
      thereto described in clause (b) next above.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    5.2  Transfer
      Agent Instructions.
      The Company agrees that following the effective date of the registration
      statement or at such time as such legend is no longer required under Section
      5.1, it will, no later than ten (10) days following the delivery by a Purchaser
      to the Company or the Company's transfer agent of a certificate representing
      Warrant Shares issued with a restrictive legend (such date, the "Legend Removal
      Date"), deliver or cause to be delivered to such Purchaser a certificate
      representing such Securities that is free from all restrictive and other
      legends, registered in the name of each Purchaser or its nominee for the Warrant
      Shares in such amounts determined in accordance with the terms of the Warrants.
      The Company covenants that no instruction other than such instructions referred
      to in this ARTICLE V,
      and stop transfer instructions to give effect to Section 2.6 hereof in the
      case of the Warrant Shares prior to registration of the Warrant Shares under
      the
      Securities Act, will be given by the Company to its transfer agent and that
      the
      Securities shall otherwise be freely transferable on the books and records
      of
      the Company. Nothing in this Section shall affect in any way each Purchaser's
      obligations and agreement set forth in Section 5.1 hereof to resell the
      Securities pursuant to an effective registration statement and to deliver a
      prospectus in connection with such sale or in compliance with an exemption
      from
      the registration requirements of applicable securities laws. If (a) a
      Purchaser provides the Company with an opinion of counsel, which opinion of
      counsel shall be in form, substance and scope customary for opinions of counsel
      in comparable transactions and reasonably satisfactory to the Company and its
      counsel (the reasonable cost of which shall be borne by the Company if, after
      one (1) year, neither an effective registration statement under the
      Securities Act or Rule 144 is available in connection with such sale), to
      the effect that the Securities to be sold or transferred may be sold or
      transferred pursuant to an exemption from registration or (b) a Purchaser
      transfers Securities to an affiliate which is an accredited investor (within
      the
      meaning of Regulation D under the Securities Act) and which delivers to the
      Company in written form the same representations, warranties and covenants
      made
      by Purchaser hereunder or pursuant to Rule 144, the Company shall permit
      the transfer, and, in the case of the Warrant Shares, promptly instruct its
      transfer agent to issue one or more certificates in such name and in such
      denomination as specified by such Purchaser. The Company acknowledges that
      a
      breach by it of its obligations hereunder will cause irreparable harm to a
      Purchaser by vitiating the intent and purpose of the transaction contemplated
      hereby. Accordingly, the Company acknowledges that the remedy at law for a
      breach of its obligations under this ARTICLE V
      will be inadequate and agrees, in the event of a breach or threatened breach
      by
      the Company of the provisions of this ARTICLE V,
      that a Purchaser shall be entitled, in addition to all other available remedies
      to an injunction restraining any breach and requiring immediate issuance and
      transfer, without the necessity of showing economic loss and without any bond
      or
      other security being required.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VI

    CONDITIONS
      TO THE COMPANY'S OBLIGATION TO SELL

     

    6.1  Conditions
      to the Company's Obligation to Sell.
      The obligation of the Company hereunder to issue and sell the Preferred Stock
      and Warrants to a Purchaser at the Closing is subject to the satisfaction,
      as of
      the date of the Closing and with respect to such Purchaser, of each of the
      following conditions thereto, provided that these conditions are for the
      Company's sole benefit and may be waived by the Company at any time in its
      sole
      discretion:

     

    (i)  Such
      Purchaser shall have executed and delivered the signature page to this
      Agreement;

     

    (ii)  Such
      Purchaser shall have wired its aggregate Purchase Price set forth on Schedule
      1
      hereto to the Company;

     

    (iii)  The
      representations and warranties of such Purchaser shall be true and correct
      as of
      the date when made and as of the Closing with the same force and effect as
      though such representations and warranties had been made on and as of the date
      of Closing (except for representations and warranties that speak as of a
      specific date), and such Purchaser shall have performed, satisfied and complied
      in all material respects with the covenants, agreements and conditions required
      by this Agreement to be performed, satisfied or complied with by the applicable
      Purchaser at or prior to the Closing;

     

    (iv)  No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction or any self-regulatory organization having
      authority over the matters contemplated hereby which restricts or prohibits
      the
      consummation of any of the transactions contemplated by this Agreement;
      and

     

    (v)  The
      Company shall have obtained all waivers, authorizations, approvals and consents
      needed to consummate the transaction contemplated by this Agreement which the
      Company agrees to diligently procure.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII 

    CONDITIONS
      TO EACH PURCHASER'S OBLIGATION TO PURCHASE

     

    7.1  The
      obligation of each Purchaser hereunder to purchase the Preferred Stock and
      Warrants to be purchased by it on the date of the Closing is subject to the
      satisfaction of each of the following conditions, provided that these conditions
      are for each Purchaser's sole benefit and may be waived by such Purchaser at
      any
      time in such Purchaser's sole discretion:

     

    (i)  The
      Company shall have executed and delivered the signature page to this
      Agreement;

     

    (ii)  The
      Company shall have delivered to the Purchaser duly issued certificates for
      the
      Preferred Stock and Warrants being so purchased by Purchaser at the
      Closing;

     

    (iii)  The
      representations and warranties of the Company shall be true and correct in
      all
      material respects as of the date when made and as of the Closing with the same
      force and effect as though such representations and warranties had been made
      on
      and as of the date of Closing, and the Company shall have performed, satisfied
      and complied in all material respects with the covenants, agreements and
      conditions required by this Agreement to be performed, satisfied or complied
      with by the Company at or prior to the Closing; and

     

    (iv)  No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction or any self-regulatory organization having
      authority over the matters contemplated hereby which prohibits the consummation
      of any of the transactions contemplated by this Agreement.

     

    ARTICLE
      VIII

    GOVERNING
      LAW; MISCELLANEOUS

     

    8.1  Governing
      Law: Jurisdiction.
      This Agreement shall be governed by and construed in accordance with the
      Maryland General Corporation Law (in respect of matters of corporation law)
      and
      the laws of the State of New York (in respect of all other matters) applicable
      to contracts made and to be performed in the State of New York. The parties
      hereto irrevocably consent to the jurisdiction of the United States federal
      courts and state courts located in the County of New York in the State of New
      York in any suit or proceeding based on or arising under this Agreement or
      the
      transactions contemplated hereby and irrevocably agree that all claims in
      respect of such suit or proceeding may be determined in such courts. The Company
      and each Purchaser irrevocably waives the defense of an inconvenient forum
      to
      the maintenance of such suit or proceeding in such forum. The Company and each
      Purchaser further agrees that service of process upon the Company or such
      Purchaser, as applicable, mailed by the first class mail in accordance with
      Section 8.6 shall be deemed in every respect effective service of process
      upon the Company or such Purchaser in any suit or proceeding arising hereunder.
      Nothing herein shall affect Purchaser's right to serve process in any other
      manner permitted by law. The parties hereto agree that a final non-appealable
      judgment in any such suit or proceeding shall be conclusive and may be enforced
      in other jurisdictions by suit on such judgment or in any other lawful manner.
      The parties hereto irrevocably waive any right to a trial by jury under
      applicable law.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    8.2  Counterparts.
      This Agreement may be executed in two or more counterparts, including, without
      limitation, by facsimile transmission, all of which counterparts shall be
      considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party.
      In
      the event any signature page is delivered by facsimile transmission, the party
      using such means of delivery shall cause additional original executed signature
      pages to be delivered to the other parties as soon as practicable
      thereafter.

     

    8.3  Headings.
      The headings of this Agreement are for convenience of reference and shall not
      form part of, or affect the interpretation of, this Agreement.

     

    8.4  Severability.
      If any provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement or the validity or
      enforceability of this Agreement in any other jurisdiction.

     

    8.5  Entire
      Agreement; Amendments.
      This Agreement and the instruments referenced herein contain the entire
      understanding of the parties with respect to the maters covered herein and
      therein and, except as specifically set forth herein or therein, neither the
      Company nor any Purchaser makes any representation, warranty, covenant or
      undertaking with respect to such matters. No provision of this Agreement may
      be
      waived other than by an instrument in writing signed by the party to be charged
      with enforcement and no provision of this Agreement may be amended other than
      by
      an instrument in writing signed by the Company and each Purchaser.

     

    8.6  Notice.
      Any notice herein required or permitted to be given shall be in writing and
      may
      be personally served or delivered by nationally-recognized overnight courier
      or
      by facsimile machine confirmed telecopy, and shall be deemed delivered at the
      time and date of receipt (which shall include telephone line facsimile
      transmission). The addresses for such communications shall be:

     

    if
      to the Company:

    China
      Power Equipment, Inc.

    [Address]

    Attention:
      

    Facsimile:
      

     

    If
      to the Purchasers:

     

     

    [to
      be supplied]

     

    Each
      party shall provide notice to the other parties of any change in
      address.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    8.7  Successors
      and Assigns.
      This Agreement shall be binding upon and inure to the benefit of the parties
      and
      their successors and assigns. Neither the Company nor any Purchaser shall assign
      this Agreement or any rights or obligations hereunder without the prior written
      consent of the other. 

     

    8.8  Third
      Party Beneficiaries.
      This Agreement is intended for the benefit of the parties hereto and their
      respective permitted successors and assigns and is not for the benefit of,
      nor
      may any provision hereof be enforced by, any other Person.

     

    8.9  Survival;
      Indemnification.
      The representations and warranties of the Company and the agreements and
      covenants shall survive the Closing hereunder notwithstanding any due diligence
      investigation conducted by or on behalf of Purchaser. The Company agrees to
      indemnify and hold harmless each Purchaser and each of each Purchaser's
      officers, directors, employees, partners, agents and affiliates from and against
      any and all losses, claims, damages, liabilities and expenses (including without
      limitation reasonable attorneys' fees and disbursements and other expenses
      incurred in connection with investigating, preparing or defending any action,
      claim or proceeding, pending or threatened and the costs of enforcement thereof)
      (collectively, "Losses") arising as a result of or related to any breach or
      alleged breach by the Company of any of its representations or covenants set
      forth herein, including advancement of expenses as they are incurred. The
      representations and warranties of the Purchasers shall survive the Closing
      hereunder and each Purchaser shall indemnify and hold harmless the Company
      and
      each of its officers, directors, employees, partners, agents and affiliates
      from
      and against any and all Losses arising as a result of the breach of such
      Purchaser's representations and warranties.

     

    8.10  Further
      Assurances.
      Each party shall do and perform, or cause to be done and performed, all such
      further acts and things, and shall execute and deliver all such other
      agreements, certificates, instruments and documents, as the other party may
      reasonably request in order to carry out the intent and accomplish the purposes
      of this Agreement and the consummation of the transactions contemplated
      hereby.

     

    8.11  Remedies.
      No provision of this Agreement providing for any remedy to a Purchaser shall
      limit any remedy which would otherwise be available to such Purchaser at law
      or
      in equity. Nothing in this Agreement shall limit any rights a Purchaser may
      have
      with any applicable federal or state securities laws with respect to the
      investment contemplated hereby. The Company acknowledges that a breach by it
      of
      its obligations hereunder will cause irreparable harm to a Purchaser.
      Accordingly, the Company acknowledges that the remedy at law for a material
      breach of its obligations under this Agreement will be inadequate and agrees,
      in
      the event of a breach or threatened breach by the Company of the provisions
      of
      this Agreement, that a Purchaser shall be entitled, in addition to all other
      available remedies, to an injunction restraining any breach and requiring
      immediate compliance, without the necessity of showing economic loss and without
      any bond or other security being required.

     

    8.12  Final
      Agreement.
      This Agreement, when executed by the parties hereto, shall constitute the final
      agreement between the parties and upon such execution Purchasers and the Company
      accept the terms hereof and have no cause of action against each other for
      prior
      negotiations preceding the execution of this Agreement. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the undersigned Purchasers and the Company have caused this
      Agreement to be duly executed as of the date first above written.

     

    COMPANY:

     

    CHINA
      POWER EQUIPMENT, INC.

    
      	 	 	   
	By: 	
            	  
	 	
              
Name	  
	 	Title	  

    

     

         

    PURCHASERS:

     

    
      
        	 	 	 
	
              	
                $

              	
              
	
                
Signature	 	
                

                Number
                  of Units: ____________

              

      

    

    
       

      
        
          	 	 	 
	
                   

                	
                   

                	
                
	
                  
Name
                  Typed or Printed	 	
                   

                
	 	 	 

        

         

      

      
        
          	 	 	   
	Address:	
                	  
	 	
                  

                	  
	 	
                  
 	  
	 	
                  
                    

                  

                  Telephone:                                                                               

                	 

        

         

        
          
            
            

          

          
            15

            
              

            

          

          
            
            

          

        

      

    

    LIST
      OF EXHIBITS

     

    EXHIBIT
      A - FORM
      OF WARRANT

     

    EXHIBIT
      B - ACCREDITED
      INVESTOR QUESTIONNAIRE

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    To

    Preferred
      Stock and Warrant Purchase Agreement

     

     

    FORM
      OF WARRANT

     

    NEITHER
      THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
      WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      AND
      THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “SECURITIES
      ACT”).
      THIS
      WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT
      BE
      OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER
      THE
      SECURITIES ACT OR UNLESS SUCH OFFER, SALE OR TRANSFER IS EXEMPT FROM SUCH
      REGISTRATION.

    

    CHINA
      POWER EQUIPMENT, INC.

     

    COMMON
      STOCK WARRANT

    

      
        	
                No.
                  __________

              	
                ______,
                  2007

              

      

    

     

    CHINA
      POWER EQUIPMENT, INC.,
      a
      Maryland corporation (the “Company”),
      hereby certifies that ______________________________________, its permissible
      transferees, designees, successors and assigns (collectively, the “Holder”), for
      value received, is entitled to purchase from the Company at any time commencing
      on the date on which a Conversion Price (as defined in Section
      3(d) of Article SIXTH of the Certificate of Incorporation of the Company, as
      amended and in effect as of the date hereof (“Section 3(d)”)) is first
      determinable under such Section 3(d) (such
      time is hereinafter referred to as the “Effective Date”) and terminating on the
      third anniversary of the date hereof (the “Termination Date”) up to such number
      of shares (each, a “Share” and collectively the “Shares”) of the Company’s
      common stock, $.001 par value per Share (the “Common Stock”) as shall be equal
to
      the product obtained by multiplying (x) _________, times (y) the number of
      shares of Common Stock that one share of the
      Company's Series A Convertible Preferred Stock, $.001 par value per share (the
      "Preferred Stock")
      shall have been converted into pursuant to a mandatory conversion of Preferred
      Stock into Common Stock made at the option of the Company pursuant to Section
      3(d).,
      at an
      exercise price per Share equal to 150% of the Conversion Price (as such
      Conversion Price may be adjusted pursuant to the terms of Section 3(d)) in
      effect at the time of exercise.(The purchase price per share of Common Stock
      calculated pursuant to the immediately preceding sentence is hereinafter
      referred to as the “Exercise Price.”) 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    1. Exercise
      of Warrant.

     

    (a)  The
      purchase right represented by this Common Stock Warrant (this "Warrant") is
      exercisable, in whole or in part, at any time and from time to time from and
      after the Effective Date through and including the Termination
      Date.

     

    (b)  Upon
      presentation and surrender of this Warrant, accompanied by a completed Election
      to Purchase in the form attached hereto as Exhibit
      A
      (the
“Election
      to Purchase”)
      duly
      executed, at the principal office of the Company currently located at
      _________________________________, (or such other office or agency of the
      Company within the United States as the Company may designate to the Holder)
      together with a check payable to, or wire transfer to, the Company in the amount
      of the Exercise Price multiplied by the number of Shares being purchased, the
      Company or the Company’s transfer agent, as the case may be, shall within three
      (3) business days deliver to the Holder hereof certificates of fully paid and
      non-assessable Common Stock which in the aggregate represent the number of
      Shares being purchased. The certificates so delivered shall be in such
      denominations as may be requested by the Holder and shall be registered in
      the
      name of the Holder or such other name as shall be designated by the Holder.
      All
      or less than all of the purchase rights represented by this Warrant may be
      exercised and, in case of the exercise of less than all, the Company, upon
      surrender hereof, will at the Company’s expense deliver to the Holder a new
      warrant entitling said holder to purchase the number of Shares represented
      by
      this Warrant which have not been exercised. This Warrant may only be exercised
      to the extent the Company has a sufficient number of Shares of Common Stock
      available for issuance at the time of any exercise. 

     

    2. Warrant.

    

      (a) Exchange,
        Transfer and Replacement.
        At any
        time prior to the exercise hereof, this Warrant may be exchanged upon
        presentation and surrender to the Company, alone or with other warrants of
        like
        tenor of different denominations registered in the name of the same Holder,
        for
        another warrant or warrants of like tenor in the name of such Holder exercisable
        for the aggregate number of Shares as the warrant or warrants
        surrendered.

       

      (b) Replacement
        of Warrant.
        Upon
        receipt of evidence reasonably satisfactory to the Company of the loss, theft,
        destruction, or mutilation of this Warrant and, in the case of any such loss,
        theft, or destruction, upon delivery of an indemnity agreement reasonably
        satisfactory in form and amount to the Company, or, in the case of any such
        mutilation, upon surrender and cancellation of this Warrant, the Company,
        at its
        expense, will execute and deliver in lieu thereof, a new Warrant of like
        tenor.

       

      (c) Cancellation;
        Payment of Expenses.
        Upon
        the surrender of this Warrant in connection with any transfer, exchange or
        replacement as provided in this Section 2, this Warrant shall be promptly
        canceled by the Company. The Holder shall pay all taxes and all other expenses
        (including legal expenses, if any, incurred by the Holder or transferees)
        and
        charges payable in connection with the preparation, execution and delivery
        of
        Warrants pursuant to this Section 2. 

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      (d) Warrant
        Register.
        The
        Company shall maintain, at its principal executive offices (or at the offices
        of
        the transfer agent for the Warrant or such other office or agency of the
        Company
        as it may designate by notice to the holder hereof), a register for this
        Warrant
        (the “Warrant Register”), in which the Company shall record the name and address
        of the person in whose name this Warrant has been issued, as well as the
        name
        and address of each transferee and each prior owner of this
        Warrant.

    

     

    3. Rights
      and Obligations of Holders of this Warrant.
      The
      Holder of this Warrant shall not, by virtue hereof, be entitled to any rights
      of
      a stockholder in the Company, either at law or in equity; provided,
      however,
      that in
      the event any certificate representing shares of Common Stock or other
      securities is issued to the holder hereof upon exercise of this Warrant, such
      holder shall, for all purposes, be deemed to have become the holder of record
      of
      such Common Stock on the date on which this Warrant, together with a duly
      executed Election to Purchase, was surrendered and payment of the aggregate
      Exercise Price was made, irrespective of the date of delivery of such Common
      Stock certificate.  

     

    4. Registration
      Rights.

     

    (a)
      The
      Company, for a period of two years after the Conversion Date (as defined in
      Section 3(d)), will give written notice to each Holder of this Warrant or shares
      of Common Stock issued upon exercise of this Warrant (“Warrant Shares”) not less
      than 20 days in advance of the initial filing of any registration statement
      under the Securities Act of 1933, as amended (other than a registration
      statement pertaining to securities issuable pursuant to employee stock option,
      stock purchase, or similar plans or a registration statement pertaining to
      securities issuable in connection with the acquisition of a business, whether
      through a merger, consolidation, acquisition of assets, or exchange of
      securities), covering any Common Stock or other securities of the Company,
      and
      will afford the Holder the opportunity to have included in such registration
      statement all or such part of the Warrant Shares issued or issuable upon
      exercise of this Warrant, as may be designated by written notice to the Company
      not later than ten days following receipt of such notice from the Company.
      The
      Company shall be entitled to exclude the Warrant Shares held by or issuable
      to
      the Holder from any one, but not more than one, such registration if either
      the
      Company or the underwriter in connection with offering to be made pursuant
      to
      such registration statement in its sole discretion decides that the inclusion
      of
      such shares will materially interfere with the orderly sale and distribution
      of
      the securities being offered under such registration statement by the Company.
      Notwithstanding the foregoing, the Company shall not be entitled to exclude
      the
      Warrant Shares held by or issuable to the Holder if shares of other shareholders
      are being included in any such registration statement and, in such
      circumstances, the Holder shall be entitled to include the Warrant Shares held
      by or issuable to the Holder on a pro-rata basis in the proportion that the
      number of Warrant Shares of Common Stock held by or issuable to the Holder
      bears
      to the shares of Common Stock held by all other shareholders, including shares
      in such registration statement. The Holder shall not be entitled to include
      shares in more than two registration statements pursuant to the provisions
      of
      this Section (3)(e), and all rights of any holder under this Section (3)(e)
      shall terminate after the holder has included shares of Common Stock in two
      registration statements pursuant to this Section (3)(e).

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

      (b)
        The
        Company will pay all out-of-pocket costs and expenses of any registration
        effected pursuant to the provisions of Section 5(a), including registration
        fees, legal fees, accounting fees, printing expenses (including such number
        of
        any preliminary and the final prospectus as may be reasonably requested),
        blue
        sky qualification fees and expenses, and all other expenses, except for
        underwriting commissions or discounts applicable to the shares of Common
        Stock
        being sold by the holder and the fees of counsel for the Holder, all of which
        shall be paid by the Holder.

       

    

    5. Fractional
      Shares.
      In lieu
      of issuance of a fractional share upon any exercise hereunder, the Company
      will
      pay the cash value of that fractional share, calculated on the basis of the
      Exercise Price. 

     

    6. Legends.
      Prior
      to issuance of the shares of Common Stock underlying this Warrant, all such
      certificates representing such shares shall bear a restrictive legend to the
      effect that the Shares represented by such certificate have not been registered
      under the 1933 Act, and that the Shares may not be sold or transferred in the
      absence of such registration or an exemption therefrom, such legend to be
      substantially in the form of the bold-face language appearing at the top of
      Page
      1 of this Warrant. 

     

    7. Disposition
      of Warrants or Shares; Lockup.
      

     

    (a)
      The
      Holder of this Warrant, each transferee hereof and any holder and transferee
      of
      any Shares, by his or its acceptance thereof, agrees that no public distribution
      of Warrants or Shares will be made in violation of the provisions of the
      Securities Act of 1933, as amended. Furthermore, it shall be a condition to
      the
      transfer of this Warrant that any transferee thereof deliver to the Company
      his
      or its written agreement to accept and be bound by all of the terms and
      conditions contained in this Warrant. 

     

    (b)
      The
      Holder may not, without obtaining the prior written consent of the Company,
      directly or indirectly sell, offer to sell, grant an option for the sale of,
      transfer, assign, hypothecate, pledge, distribute or otherwise dispose of or
      encumber any Warrant Shares or any beneficial interest therein until at least
      150 days following the Effective Date; provided, however, after the expiration
      of 90 days after the Effective Date a Holder may sell for a price per share
      equal to or greater than 135% of the price per share of the shares of Common
      Stock sold pursuant to the Registration Statement up to one-third of the Warrant
      Shares issued to such Holder upon exercise of this Warrant, and after the
      expiration of 120 days following the Effective Date a holder may sell for a
      price per share equal to or greater than 135% of the price per share of the
      shares of Common Stock sold in the Qualified IPO up to an additional one-third
      of the Warrant Shares issued to such Holder.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    8. Merger
      or Consolidation.
      The
      Company will not merge or consolidate with or into any other corporation, or
      sell or otherwise transfer its property, assets and business substantially
      as an
      entirety to another corporation, unless the corporation resulting from such
      merger or consolidation (if not the Company), or such transferee corporation,
      as
      the case may be, shall expressly assume, by supplemental agreement reasonably
      satisfactory in form and substance to the Holder, the due and punctual
      performance and observance of each and every covenant and condition of this
      Warrant to be performed and observed by the Company.

     

    9. Notices.
      Except
      as otherwise specified herein to the contrary, all notices, requests, demands
      and other communications required or desired to be given hereunder shall only
      be
      effective if given in writing by certified or registered U.S. mail with return
      receipt requested and postage prepaid; by private overnight delivery service
      (e.g. Federal Express); by facsimile transmission (if no original documents
      or
      instruments must accompany the notice); or by personal delivery. Any such notice
      shall be deemed to have been given (a) on the business day immediately following
      the mailing thereof, if mailed by certified or registered U.S. mail as specified
      above; (b) on the business day immediately following deposit with a private
      overnight delivery service if sent by said service; (c) upon receipt of
      confirmation of transmission if sent by facsimile transmission; or (d) upon
      personal delivery of the notice. All such notices shall be sent to the following
      addresses (or to such other address or addresses as a party may have advised
      the
      other in the manner provided in this Section 10):

     

    if
      to the Company:

     

    China
      Power Equipment, Inc.

     

    [Address]
      

    Attention:
      

    Facsimile:
      

     

    If
      to the Holder:

    

    ____________________

    ____________________

    ____________________

    ____________________

    

    Notwithstanding
      the time of effectiveness of notices set forth in this Section, an Election
      to
      Purchase shall not be deemed effectively given until it has been duly completed
      and submitted to the Company together with this original Warrant and payment
      of
      the Exercise Price in a manner set forth in this Section.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    10. Governing
      Law.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of Maryland applicable to contracts made and to be performed in the State
      of Maryland. 

     

    11. Successors
      and Assigns.
      This
      Warrant shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective successors and assigns.

     

    12. Headings.
      The
      headings of various sections of this Warrant have been inserted for reference
      only and shall not affect the meaning or construction of any of the provisions
      hereof.

     

    13. Severability.
      If any
      provision of this Warrant is held to be unenforceable under applicable law,
      such
      provision shall be excluded from this Warrant, and the balance hereof shall
      be
      interpreted as if such provision were so excluded.

     

    14. Modification
      and Waiver.
      This
      Warrant and any provision hereof may be amended, waived, discharged or
      terminated only by an instrument in writing signed by the Company and the
      Holder. 

     

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

     

    16. Assignment.
      Subject
      to prior written approval by the Company, this Warrant may be transferred or
      assigned, in whole or in part, at any time and from time to time by the then
      Holder by submitting this Warrant to the Company together with a duly executed
      Assignment in substantially the form and substance of the Form of Assignment
      which accompanies this Warrant, as Exhibit B hereto, and, upon the
      Company’s receipt hereof, and in any event, within three (3) business days
      thereafter, the Company shall issue a warrant to the Holder to evidence that
      portion of this Warrant, if any as shall not have been so transferred or
      assigned. 

     

    (signature
      page immediately follows)

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed,
      manually or by facsimile, by one of its officers thereunto duly
      authorized.

     

    
      	 	 	 
	 	CHINA
              POWER EQUIPMENT, INC.
	 
 	 
 	 
 
	
              Date:
                __________, 2007

            	By:  	
            
	 	
              
Name: 
	 	
              Title: President
                

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    TO

    WARRANT
      CERTIFICATE

     

    ELECTION
      TO PURCHASE

     

    To
      Be
      Executed by the Holder

    in
      Order
      to Exercise the Warrant

     

    The
      undersigned Holder hereby elects to purchase _______ Shares pursuant to the
      attached Warrant, and requests that certificates for securities be issued in
      the
      name of: 

    

      
        	 	
                 

              	 
	 	
                (Please
                  type or print name and address)

              	 
	 	
                 

              	 
	 	
                 

              	 
	 	
                 

              	 
	 	
                (Social
                  Security or Tax Identification Number)

              	 

      

       

      
        	
                and
                  delivered

              
	
                to:

              
	
                 

              
	
                (Please
                  type or print name and address if different from
                  above)

              

      

    

     

    If
      such
      number of Shares being purchased hereby shall not be all the Shares that may
      be
      purchased pursuant to the attached Warrant, a new Warrant for the balance of
      such Shares shall be registered in the name of, and delivered to, the Holder
      at
      the address set forth below.

     

    In
      full
      payment of the purchase price with respect to the Shares purchased and transfer
      taxes, if any, the undersigned hereby tenders payment of $__________ by check,
      money order or wire transfer payable in United States currency to the order
      of
      CHINA POWER EQUIPMENT, INC.

     

    
      	 	 	 
	 	
              HOLDER:

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:

            
	 	Title:
	 	
              Address: 

            

    

     

     

    
      Dated:_______________________

    

     

    

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    TO

    WARRANT

     

     

    FORM
      OF
      ASSIGNMENT

    (To
      be
      signed only on transfer of Warrant)

     

    For
      value
      received, the undersigned hereby sells, assigns, and transfers unto
      _____________ the right represented by the within Warrant to purchase ______
      shares of Common Stock of China Power Equipment, Inc., a Maryland corporation,
      to which the within Warrant relates, and appoints ____________________ Attorney
      to transfer such right on the books of China Power Equipment, Inc., a Maryland
      corporation, with full power of substitution of premises.

    
      	 	 	 
	Dated: 	By:  	
            
	 	
              
Name:
	 	Title 
	 	
              (signature
                must conform to name

              of
                holder as specified on the fact of
                the Warrant)

            
	 	 
	 	 
	 	
              Address: 

            

    

     

     

     

    Signed
      in
      the presence of:

     

    Dated:

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    Exhibit
      B

    To

    Preferred
      Stock and Warrant Purchase Agreement

    

     

    FORM
      OF ACCREDITED INVESTOR QUESTIONNAIRE

     

     

    CHINA
      POWER EQUIPMENT, INC.

    

    ACCREDITED
      INVESTOR QUESTIONNAIRE

    

      
        	
                ITEM
                  1.

              	
                All
                  Accredited Investors must initial the following
                  line:

              

      

      

      ________(a) I
        understand that the representations contained in this Questionnaire are made
        for
        the purpose of qualifying me as an accredited investor as that term is defined
        pursuant to Regulation D under the Securities Act of 1933 for the purpose
        of
        inducing a sale of securities to me. I hereby represent that the statement
        or
        statements initialed below are true and correct in all respects. I understand
        that a false representation may constitute a violation of law, and that any
        person who suffers damage as a result of a false representation may have
        a claim
        against me for damages.

      

      
        	
                ITEM
                  2.

              	
                Accredited
                  individual investors must initial one or more of the following
                  three
                  statements:

              

      

      

      ________(a) I
        certify
        that I am an accredited investor because I had individual income (exclusive
        of
        any income attributable to my spouse) of more than $200,000 in each of the
        most
        recent two years and I reasonably expect to have an individual income in
        excess
        of $200,000 for the current year.

      

      ________(b) I
        certify
        that I am an accredited investor because I had individual income (inclusive
        of
        any income attributable to my spouse) of more than $300,000 in each of the
        most
        recent two years and I reasonably expect to have an individual income (inclusive
        of any income attributable to my spouse) in excess of $300,000 for the current
        year.

      

      ________(c) I
        certify
        that I am an accredited investor because I have an individual net worth,
        or my
        spouse and I have a combined individual net worth, in excess of $1,000,000.
        For
        purposes of this questionnaire, "individual net worth" means the excess of
        total
        assets at fair market value, including home and personal property, over total
        liabilities.

      

      
        	
                ITEM
                  3

              	
                Accredited
                  partnerships, corporations, or other entities which are not trusts
                  must
                  initial at least one of the following
                  statements:

              

      

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    

      ________(a) The
        Subscriber hereby certifies that all of the equity owners of the Subscriber
        are
        accredited individual investors as defined in either Item 2(a), 2(b) or 2(c)
        above. Item 5 must be completed by all equity owners.

      

      ________(b) The
        Subscriber hereby certifies that it is a "bank," "savings and loan association,"
        or "insurance company" as defined in the Act.

      

      ________(c) The
        Subscriber hereby certifies that it is an "employee benefit plan" as defined
        in
        the Employee Retirement Income Security Act of 1974 (a "Plan") that has total
        assets in excess of $5,000,000.

      

      ________(d) The
        Subscriber hereby certifies that it is a Plan whose investment decisions,
        including the decision to subscribe for the Shares, are made solely by (i)
        a
        "plan fiduciary" as defined in the Employee Retirement Income Security Act
        of
        1974, which includes a bank, a savings and loan association, an insurance
        company or a registered investment adviser, or (ii) an "accredited investor"
        as
        defined under Rule 501(a) under the Act, for a self-directed plan.

      

      ________(e) The
        Subscriber hereby certifies that it is a broker/dealer registered pursuant
        to
        Section 15 of the Securities Exchange Act of 1934, as amended.

      

      ________(f) The
        Subscriber hereby certifies that it is an investment company registered under,
        or a "business development company" as defined in, the Investment Company
        Act of
        1940. 

      

      ________(g) The
        Subscriber hereby certifies that it is a Small Business Investment Company
        licensed by the U.S. Small Business Administration under the Small Business
        Investment Act of 1958.

      

      ________(h) The
        Subscriber hereby certifies that it is a plan established and maintained
        by a
        state, its political subdivisions, or any agency or instrumentality of a
        state
        or its political subdivisions, for the benefit of its employees and having
        total
        assets in excess of $5,000,000.

      

      ________(i) The
        Subscriber hereby certifies that it is a private business development company
        as
        defined in Section 202(a)(22) of the Investment Advisers Act of
        1940.

      

      ________(j) The
        Subscriber hereby certifies that it is an organization described in Section
        501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar
        business trust or partnership, not formed for the specific purpose of acquiring
        the Shares, with total assets in excess of $5,000,000.

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    

      
        	
                ITEM
                  4.

              	
                Accredited
                  trusts must initial one of the following two
                  statements:

              

      

      

      ________(a) The
        trustee of the trust Subscriber hereby certifies that the trust has total
        assets
        in excess of $5,000,000, the trust was not formed for the specific purpose
        of
        acquiring the Shares whose purchase is directed by a "sophisticated person"
        as
        described in Rule 506(b)(2)(ii) under the Act.

      

      ________(b) The
        trustee of the trust Subscriber hereby certifies that all settlors and
        beneficiaries of the trust are accredited individual investors as defined
        in
        either Item 2(a), 2(b) or 2(c) above. Item 5 must be completed by all equity
        owners.

      

      
        	
                ITEM
                  .5

              	
                Accredited
                  corporations, partnerships, trusts or other entities choosing Item.3(a)
                  OR
                  Item.4(b) above must provide the following
                  information:

              

      

      

      The
        Subscriber hereby certifies that set forth below is a complete list of all
        own-ers of equity in ________________________________ [name of entity], a
        _____________________________ [type of entity] formed pursuant to the laws
        of
        the State of ________________________. The Subscriber also certifies that
        each
        such owner has initialed the space opposite his/her name and that each such
        owner understands that by initialing that space he/she is representing that
        he/she is an accredited individual in-vestor satisfying the test for accredited
        individual investors indi-cated under Item 2 above.

      

        
          	
                  Name
                    of Equity Owner

                	
                  Type
                    of Accredited Investor

                	
                  Initials

                
	 	 	 
	
                  1.

                	 	 
	
                  2.

                	 	 
	
                  3.

                	 	 
	
                  4.

                	 	 
	
                  5.

                	 	 
	
                  6.

                	 	 
	
                  7.

                	 	 
	
                  8.

                	 	 
	
                  9.

                	 	 
	
                  10.

                	 	 

        

         

        
          
            
            

          

          
            28

            
              

            

          

          
            
            

          

        

      

    

    List
      of Schedules

    to

    Common
      Stock and Warrant Purchase Agreement

     

    Schedule 1 - List
      of Investors

     

    Schedule
      2 - Company
      Disclosure Schedules

     

    Schedule 3 - Capitalization

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1

    TO
      PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

    LIST
      OF INVESTORS

     

    
      	
              Investor

              Name
                and Address and Telephone Number

               

            	
              Shares
                of Preferred Stock

               

            	
              Warrant
                Shares

               

            	
              Aggregate
                Purchase Price

               

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
               

               

              Totals:

               

            	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    SCHEDULE
      2

    TO

    PREFERRED
      STOCK AND WARRANT PURCHASE AGREEMENT

    

     

    COMPANY
      DISCLOSURE SCHEDULES

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3

    TO

    PREFERRED
      STOCK AND WARRANT PURCHASE AGREEMENT

     

    CAPITALIZATION

    AS
      OF , 2007

     

    
      	
               

            	 	 	
              Number
                of
                Shares 

            	 
	
              Authorized
                Stock as:

               

            	 	 	 	 
	
              Common
                Stock:

               

            	 	 	
              100,000,000

              
              

            	 
	
              Series
                A Preferred

               

            	 	 	
              5,000,000

              
              

            	 
	
              Blank
                Check Preferred Stock

               

            	 	 	
              5,000,000

              
              

            	 
	
              Outstanding
                Stock:

               

            	 	 	 	 
	
              Common
                Stock:

               

            	 	 	
              0

              
              

            	 
	
               Series
                A Preferred

               

            	 	 	
              0

              
              

            	 
	
               Blank
                Check Preferred Stock

               

            	 	 	
              0

              
              

            	 
	
              Stock
                Options:

               

            	 	 	
              0

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]