THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION AGREEMENT")
RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO
ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").

NONE OF THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT RELATES HAVE BEEN
REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
AND PROVINCIAL LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.

DEBT SETTLEMENT AND SUBSCRIPTION AGREEMENT

THIS DEBT SETTLEMENT AND SUBSCRIPTION AGREEMENT (the "Agreement") made as of the
1st day of August, 2007.

BETWEEN:

Biopack Environmental Solutions Inc. (the "Company")

18/F Metroplaza Tower II, 223 Hing Fong Road, Kwai Chung,

New Territories, Hong Kong

 

AND:

Begonia Participation Corp. (the "Subscriber")

 

WHEREAS:

A.                          Prior to the Company’s acquisition of Roots Biopack
Group Limited (“Roots Biopack”), Roots Biopack entered into a Loan and
Shareholders’ Agreement dated December 21, 2006 with Good Value Galaxy Limited
and the Subscriber, pursuant to which, among other things, the Subscriber agreed
to lend $1,070,000 to Roots Biopack (the “Loan”);

B.                          In the Share Exchange Agreement pursuant to which
the Company acquired all of the issued and outstanding shares of Roots Biopack,
the Subscriber was granted the right, if it so desired, to convert the Loan into
common shares of the Company at a conversion rate of $0.80 per share;

C.                          The Subscriber did not exercise its right to convert
the Loan into common shares of the Company and, on July 3, 2007, the Subscriber
demanded repayment of all sums due under the Loan;

D.                          The Company does not currently have the resources
that would enable it to repay the Loan in cash and the Subscriber has rejected
an offer to settle the Loan in exchange for common shares;

E.                           The Subscriber has agreed to accept, in full
satisfaction of the Loan, two million Preferred Shares of the Company provided
that each Preferred Share has the right to 30 votes at any shareholder meeting
and the right to convert, at any time at the holder’s option, into five common
shares for each Preferred Share;

F.                           The Board desires to settle the Loan with the
Subscriber on the terms suggested by the Subscriber;

 

 

 

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G.                          The amount due under the Loan, including principal
and interest accrued through the date of this Subscription Agreement, is
$1,133,667.70 (the "Outstanding Amount”);

H.                          The Subscriber wishes to apply the Outstanding
Amount in payment of the purchase price for 1,000,000 Series A Preferred Shares
in the capital stock of the Company and 1,000,000 Series B Preferred Shares in
the capital stock of the Company (collectively, the “Shares”), at a deemed price
of $0.5668 per Share, and the Company desires to accept this payment and
subscription; and

I.                            Upon application of the Outstanding Amount to the
purchase of the Shares, and upon issuance of the Shares to the Subscriber, the
Loan will have been repaid in full.

NOW THEREFORE THIS AGREEMENT witnesses that, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

1.

Interpretation

1.1                         In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing gender
shall include all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated organizations,
governmental bodies and other legal or business entities of any kind whatsoever.

1.2                         Any reference to currency is to the currency of the
United States of America unless otherwise indicated.

2.

Acknowledgement of Indebtedness

2.1                         The Company and the Subscriber acknowledge and agree
that the Company is indebted to the Subscriber in the amount of the Outstanding
Amount.

3.

Payment of Indebtedness

3.1                         As full and final payment of the Outstanding Amount
to the Subscriber, and as payment of the Subscription Proceeds to the Company,
the Company will on the Closing Date (as defined herein) issue to the Subscriber
the Shares, as fully paid and non-assessable, and the Subscriber will accept the
Shares as full and final payment of the Outstanding Amount and in full and final
satisfaction of the Loan.

4.

Release

4.1                         The Subscriber hereby agrees that upon delivery of
the Shares by the Company in accordance with the provisions of this Agreement,
the Outstanding Amount and the Loan will be fully satisfied and extinguished,
and the Subscriber will remise, release and forever discharge the Company and
its respective directors, officers, employees, successors, solicitors, agents
and assigns from any and all obligations relating to the Outstanding Amounts.

5.

Documents Required from Subscriber

5.1                         The Subscriber must complete, sign and return to the
Company an executed copy of this Agreement and the original promissory note
evidencing the Loan.

5.2                         The Subscriber shall complete, sign and return to
the Company as soon as possible, on request by the Company, any documents,
questionnaires, notices and undertakings as may be required by regulatory
authorities, stock exchanges and applicable law.

 

 

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6.

Closing

6.1                         Closing of the offering of the Shares (the
"Closing") shall occur on or before August 10, 2007, or on such other date as
may be determined by the Company (the "Closing Date").

7.

Acknowledgements of Subscriber

7.1                         The Subscriber acknowledges:

 

(a)

none of the Shares have been or will be registered under the Securities Act of
1933 (the “1933 Act”), or under any state securities or "blue sky" laws of any
state of the United States, and, unless so registered, may not be offered or
sold in the United States or, directly or indirectly, to U.S. Persons, as that
term is defined in Regulation S under the 1933 Act ("Regulation S"), except in
accordance with the provisions of Regulation S, pursuant to an effective
registration statement under the 1933 Act, or pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the 1933 Act
and in each case only in accordance with applicable state and provincial
securities laws;

 

(b)

the Company has not undertaken, and will have no obligation, to register any of
the Shares under the 1933 Act or any other securities legislation;

 

(c)

he has received and carefully read this Agreement;

 

(d)

he and his advisor(s) have had a reasonable opportunity to ask questions of and
receive answers from the Company in connection with the sale of the Shares
hereunder, and to obtain additional information, to the extent possessed or
obtainable by the Company without unreasonable effort or expense;

 

(e)

the books and records of the Company were available upon reasonable notice for
inspection, subject to certain confidentiality restrictions, by the Subscriber
during reasonable business hours at its principal place of business and that all
documents, records and books in connection with the sale of the Shares hereunder
have been made available for inspection by him and his attorney and/or
advisor(s);

 

(f)

the Company is entitled to rely on the representations and warranties of the
Subscriber contained in this Agreement and the Subscriber will hold harmless the
Company from any loss or damage it or they may suffer as a result of the
Subscriber's failure to correctly complete this Agreement;

 

(g)

the Subscriber has been advised to consult the Subscriber's own legal, tax and
other advisors with respect to the merits and risks of an investment in the
Shares and with respect to applicable resale restrictions, and it is solely
responsible (and the Company is not in any way responsible) for compliance with:

 

(i)

any applicable laws of the jurisdiction in which the Subscriber is resident in
connection with the distribution of the Shares hereunder, and

 

(ii)

applicable resale restrictions;

 

(h)

none of the Shares are listed on any stock exchange or automated dealer
quotation system and no representation has been made to the Subscriber that any
of the Shares will become listed on any stock exchange or automated dealer
quotation system, except that the Company’s common shares are currently approved
for quotation on the National Association of Securities Dealer’s Over the
Counter Bulletin Board.;

 

 

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- 4 -

 

 

 

(i)

none of the Shares may be offered or sold to a U.S. Person or for the account or
benefit of a U.S. Person (other than a distributor) prior to the end of the
Distribution Compliance Period (as defined herein);

 

(j)

neither the SEC nor any other securities commission or similar regulatory
authority has reviewed or passed on the merits of the Shares;

 

(k)

no documents in connection with the sale of the Shares hereunder have been
reviewed by the SEC or any state securities administrators;

 

(l)

there is no government or other insurance covering any of the Shares;

 

(m)

the issuance and sale of the Shares to the Subscriber will not be completed if
it would be unlawful or if, in the discretion of the Company acting reasonably,
it is not in the best interests of the Company;

 

(n)

the Subscriber is purchasing the Shares pursuant to an exemption from the
registration and the prospectus requirements of applicable securities
legislation on the basis that the Subscriber is an insider of the Company and,
as a consequence:

 

(i)

is restricted from using most of the civil remedies available under securities
legislation,

 

(ii)

may not receive information that would otherwise be required to be provided
under securities legislation, and

 

(iii)

the Company is relieved from certain obligations that would otherwise apply
under securities legislation;

 

(o)

the statutory and regulatory basis for the exemption claimed for the offer and
sale of the Shares, although in technical compliance with Regulation S, would
not be available if the offering is part of a plan or scheme to evade the
registration provisions of the 1933 Act; and

 

(p)

this Agreement is not enforceable by the Subscriber unless it has been accepted
by the Company.

8.

Representations, Warranties and Covenants of the Subscriber

8.1                         The Subscriber hereby represents and warrants to the
Company (which representations and warranties shall survive the Closing) that:

 

(a)

the Subscriber is not a U.S. Person;

 

(b)

the Subscriber is not acquiring the Shares for the account or benefit of,
directly or indirectly, any U.S. Person;

 

(c)

the decision to execute this Agreement and purchase the Shares agreed to be
purchased hereunder has not been based upon any oral or written representation
as to fact or otherwise made by or on behalf of the Company and such decision is
based entirely upon a review of any public information which has been filed by
the Company with the Securities and Exchange Commission (the "SEC") in
compliance, or intended compliance, with applicable securities legislation;

 

(d)

the Subscriber is resident in the jurisdiction set out under the heading "Name
and Address of Subscriber" on the signature page of this Agreement and the sale
of the Shares to the Subscriber as contemplated in this Agreement complies with
or is exempt from the applicable securities legislation of the jurisdiction of
residence of the Subscriber;

 

 

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- 5 -

 

 

 

(e)

the Subscriber is purchasing the Shares as principal for investment purposes
only and not with a view to resale or distribution and, in particular, the
Subscriber has no intention to distribute, either directly or indirectly, any of
the Shares in the United States or to U.S. Persons;

 

(f)

the Subscriber is outside the United States when receiving and executing this
Agreement;

 

(g)

the Subscriber is aware that an investment in the Company is speculative and
involves certain risks, including the possible loss of the entire investment;

 

(h)

the Subscriber has made an independent examination and investigation of an
investment in the Shares and the Company and has depended on the advice of its
legal and financial advisors and agrees that the Company will not be responsible
in any way whatsoever for the Subscriber's decision to invest in the Shares and
the Company;

 

(i)

the Subscriber (i) has adequate net worth and means of providing for its current
financial needs and possible personal contingencies, (ii) has no need for
liquidity in this investment, and (iii) is able to bear the economic risks of an
investment in the Shares for an indefinite period of time;

 

(j)

the Subscriber understands and agrees that the Company and others will rely upon
the truth and accuracy of the acknowledgements, representations and agreements
contained in this Agreement and agrees that if any of such acknowledgements,
representations and agreements are no longer accurate or have been breached, the
Subscriber shall promptly notify the Company;

 

(k)

the Subscriber has the legal capacity and competence to enter into and execute
this Agreement and to take all actions required pursuant hereto;

 

(l)

the Subscriber has duly executed and delivered this Agreement and it constitutes
a valid and binding agreement of the Subscriber enforceable against the
Subscriber in accordance with its terms;

 

(m)

the Subscriber is not an underwriter of, or dealer in, any of the shares of the
Company, nor is the Subscriber an affiliate of any underwriter of, or dealer in,
any of the shares of the Company and the Subscriber is not participating,
pursuant to a contractual agreement or otherwise, in the distribution of the
Shares;

 

(n)

the Subscriber is not a registered broker or dealer, nor is it an affiliate of a
registered broker or dealer;

 

(o)

the Subscriber understands and agrees that offers and sales of any of the Shares
(and any of the common shares into which they may be converted) prior to the
expiration of a period of one year after the date of original issuance of the
Shares (the one year period hereinafter referred to as the "Distribution
Compliance Period") shall only be made in compliance with the safe harbor
provisions set forth in Regulation S, pursuant to the registration provisions of
the 1933 Act or an exemption therefrom, and that all offers and sales after the
Distribution Compliance Period shall be made only in compliance with the
registration provisions of the 1933 Act or an exemption therefrom and in each
case only in accordance with applicable state and provincial securities laws;

 

(p)

the Subscriber understands and agrees that the Company will refuse to register
any transfer of the Shares (and any of the common shares into which they may be
converted) not made in accordance with the provisions of Regulation S, pursuant
to an effective registration statement under the 1933 Act or pursuant to an
available exemption from the registration requirements of the 1933 Act;

 

(q)

the Subscriber (i) is able to fend for itself in the subscription; (ii) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of

 

 

--------------------------------------------------------------------------------

- 6 -

 

its investment in the Shares and the Company; and (iii) has the ability to bear
the economic risks of its prospective investment and can afford the complete
loss of such investment;

 

(r)

the Subscriber acknowledges that it has not acquired the Shares as a result of,
and will not itself engage in, any "directed selling efforts" (as defined in
Regulation S under the 1933 Act) in the United States in respect of any of the
Shares which would include any activities undertaken for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the market in
the United States for the resale of any of the Shares (and any of the common
shares into which they may be converted); provided, however, that the Subscriber
may sell or otherwise dispose of any of the Shares (or any of the common shares
into which they may be converted) pursuant to registration thereof under the
1933 Act and any applicable state securities laws or under an exemption from
such registration requirements and as otherwise provided herein;

 

(s)

the Subscriber is not aware of any advertisement of any of the Shares and is not
acquiring the Shares as a result of any form of general solicitation or general
advertising including advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast over radio or
television, or any seminar or meeting whose attendees have been invited by
general solicitation or general advertising; and

 

(t)

no person has made to the Subscriber any written or oral representations:

 

(i)

that any person will resell or repurchase any of the Shares;

 

(ii)

that any person will refund the purchase price of any of the Shares;

 

(iii)

as to the future price or value of any of the Shares; or

 

(iv)

that any of the Shares will be listed and posted for trading on any stock
exchange or automated dealer quotation system or that application has been made
to list and post any of the Shares of the Company on any stock exchange or
automated dealer quotation system.

8.2                         The Subscriber hereby covenants with the Company
(which covenants shall survive the Closing) that:

 

(a)

the Subscriber understands and agrees not to engage in any hedging transactions
involving any of the Shares (or any of the common shares into which they may be
converted) unless such transactions are in compliance with the provisions of the
1933 Act and in each case only in accordance with applicable state and
provincial securities laws;

 

(b)

the Subscriber will indemnify and hold harmless the Company and, where
applicable, its respective directors, officers, employees, agents, advisors and
shareholders from and against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all fees, costs and
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any claim, lawsuit, administrative proceeding or investigation whether
commenced or threatened) arising out of or based upon any representation or
warranty of the Subscriber contained herein or in any document furnished by the
Subscriber to the Company in connection herewith being untrue in any material
respect or any breach or failure by the Subscriber to comply with any covenant
or agreement made by the Subscriber to the Company in connection therewith; and

 

(c)

the Subscriber will not offer or sell any of the Shares (or any of the common
shares into which they may be converted) in the United States or, directly or
indirectly, to U.S. Persons except in accordance with the provisions of
Regulation S, pursuant to an effective registration statement under the 1933
Act, or pursuant to an exemption from, or in a transaction not subject to, the

 

 

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- 7 -

 

registration requirements of the 1933 Act and in each case only in accordance
with applicable state and provincial securities laws.

8.3                         In this Agreement, the term "U.S. Person" shall have
the meaning ascribed thereto in Regulation S.

9.

Representations and Warranties will be Relied Upon by the Company

9.1                         The Subscriber acknowledges that the representations
and warranties contained herein are made by it with the intention that such
representations and warranties may be relied upon by the Company and its legal
counsel in determining the Subscriber's eligibility to purchase the Shares under
applicable securities legislation, or (if applicable) the eligibility of others
on whose behalf it is contracting hereunder to purchase the Shares under
applicable securities legislation. The Subscriber further agrees that by
accepting delivery of the certificates representing the Shares on the Closing
Date, it will be representing and warranting that the representations and
warranties contained herein are true and correct as at the Closing Date with the
same force and effect as if they had been made by the Subscriber on the Closing
Date and that they will survive the purchase by the Subscriber of Shares and
will continue in full force and effect notwithstanding any subsequent
disposition by the Subscriber of such Shares.

10.

Resale Restrictions

10.1                       The Subscriber acknowledges that any resale of the
Shares (and any of the common shares into which they may be converted)will be
subject to resale restrictions contained in the securities legislation
applicable to each Subscriber or proposed transferee. The Subscriber
acknowledges that the Shares have not been registered under the 1933 Act of the
securities laws of any state of the United States. The Shares may not be offered
or sold in the United States unless registered in accordance with United States
federal securities laws and all applicable state and provincial securities laws
or exemptions from such registration requirements are available.

10.2                       The Subscriber acknowledges that restrictions on the
transfer, sale or other subsequent disposition of the Shares by the Subscriber
may be imposed by securities laws in addition to any restrictions referred to in
Section 10.1 above, and, in particular, the Subscriber acknowledges and agrees
that none of the Shares (or any of the common shares into which they may be
converted) may be offered or sold to a U.S. Person or for the account or benefit
of a U.S. Person (other than a distributor) prior to the end of the Distribution
Compliance Period

11.

Acknowledgement and Waiver

11.1                       The Subscriber has acknowledged that the decision to
purchase the Shares was solely made on the basis of publicly available
information. The Subscriber hereby waives, to the fullest extent permitted by
law, any rights of withdrawal, rescission or compensation for damages to which
the Subscriber might be entitled in connection with the distribution of any of
the Shares.

12.

Legending and Registration of Subject Shares

12.1                       The Subscriber hereby acknowledges that a legend may
be placed on the certificates representing any of the Shares (and any of the
common shares into which they may be converted) to the effect that the Shares
(and any of the common shares into which they may be converted) represented by
such certificates are subject to a hold period and may not be traded until the
expiry of such hold period except as permitted by applicable securities
legislation.

12.2                       The Subscriber hereby acknowledges and agrees to the
Company making a notation on its records or giving instructions to the registrar
and transfer agent of the Company in order to implement the restrictions on
transfer set forth and described in this Agreement.

 

 

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13.

Costs

13.1                       The Subscriber acknowledges and agrees that all costs
and expenses incurred by the Subscriber (including any fees and disbursements of
any special counsel retained by the Subscriber) relating to the purchase of the
Shares shall be borne by the Subscriber.

14.

Governing Law

14.1                       This Agreement is governed by the laws of the State
of Nevada and the federal laws of the United States applicable therein.

15.

Survival

15.1                       This Agreement, including without limitation the
representations, warranties and covenants contained herein, shall survive and
continue in full force and effect and be binding upon the parties hereto
notwithstanding the completion of the purchase of the Shares by the Subscriber.

16.

Assignment

16.1                         This Agreement is not transferable or assignable.

17.

Execution

17.1                       The Company shall be entitled to rely on delivery by
facsimile machine of an executed copy of this Agreement and acceptance by the
Company of such facsimile copy shall be equally effective to create a valid and
binding agreement between the Subscriber and the Company in accordance with the
terms hereof.

18.

Severability

18.1                       The invalidity or unenforceability of any particular
provision of this Agreement shall not affect or limit the validity or
enforceability of the remaining provisions of this Agreement.

19.

Entire Agreement

19.1                       Except as expressly provided in this Agreement and in
the agreements, instruments and other documents contemplated or provided for
herein, this Agreement contains the entire agreement between the parties with
respect to the sale of the Shares and there are no other terms, conditions,
representations or warranties, whether expressed, implied, oral or written, by
statute or common law, by the Company or by anyone else.

20.

Notices

20.1                       All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Subscriber
shall be directed to the address on the signature page of this Agreement and
notices to the Company shall be directed to it at 18/F Metroplaza Tower II, 223
Hing Fong Road, Kwai Chung, New Territories, Hong Kong, Attention: The
President, telephone number 011 +852 3586 1383.

 

 

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21.

Counterparts

21.1                       This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall constitute an
original and all of which together shall constitute one instrument.

DELIVERY INSTRUCTIONS

1.

Delivery - please deliver the certificates to:

Hoop & Hoop Laywers, attn> Mr. Dr. Gerold Hoop

Pflugstrasse 7, 9490 Vaduz, Principality of Liechtenstein

2.

Registration - registration of the certificates which are to be delivered at
closing should be made as follows:

                                          
                                          
                                          
                                          

(name)

                                          
                                          
                                          
                                          

(address)

3.

The undersigned hereby acknowledges that it will deliver to the Company all such
additional completed forms in respect of the Subscriber's purchase of the Shares
as may be required for filing with the appropriate securities commissions and
regulatory authorities.

IN WITNESS WHEREOF the Subscriber has duly executed this Agreement effective as
of the date first above mentioned.

 

Begonia Participation Corp.

 

by Dr. Gerold Hoop

 

(Name of Subscriber – Please type or print)

/s/ Gerald Hoop                                          

 

(Signature and, if applicable, Office)

Pasea Estate, Road Town                                

 

(Address of Subscriber)

Tortola, BVI                                          

(City, State or Province, Postal Code of Subscriber)

British Virgin Islands                                      

 

(Country of Subscriber)

 

 

 

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A C C E P T A N C E

The above-mentioned Agreement in respect of the Shares is hereby accepted by
BIOPACK ENVIRONMENTAL SOLUTIONS INC.

DATED at Hong Kong effective the 11th day of August, 2007.

 

 

Per:

/s/ Gerald Lau

 

Authorized Signatory

 

 

 

CW1338296.1