Execution Copy

SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of October 19,
2009, by and among China Agritech, Inc., a Delaware corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively the “Purchasers”).
 
WHEREAS, subject to the terms and conditions set forth in this Agreement, the
Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, securities of
the Company in the amount set forth beside each Purchaser’s name on Schedule
2.1, as more fully described in this Agreement, in reliance upon the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the “Securities
Act”), Rule 506 under Regulation D as promulgated by the United States
Securities and Exchange Commission (the “Commission”) under the Securities Act
(“Regulation D”) and Rule 903 of Regulation S as promulgated by the Commission
under the Securities Act (“Regulation S”).
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:
 
ARTICLE I
DEFINITIONS
 
1.1.           Definitions.  In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:
 
“Action” shall have the meaning ascribed to such term in Section 3.1(j).
 
“Additional Shares” shall have the meaning ascribed to such term in
Section 2.4(d).
 
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 405 under the
Securities Act.  With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.
 
“Agreement” shall have the meaning ascribed to such term in the Preamble to this
Agreement.
 
“Audited 2009 Financials” shall have the meaning ascribed to such term in
Section 2.3(b).
 
“Beneficial Ownership Limitation” shall have the meaning ascribed to such term
in Section 2.4(d).

 
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“Business Day” means any day except Saturday, Sunday, any day which is a federal
legal holiday in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other governmental
action to close.
 
“Chosen Court” shall have the meaning ascribed to such term in Section 5.9.
 
“Closing” means the closing of the purchase and sale of the Shares and the
Warrants pursuant to Section 2.1.
 
“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (a) the Purchasers’ obligations to pay the Subscription
Amount and (b) the Company’s obligations to deliver the Securities have been
satisfied or waived.
 
“Commission” shall have the meaning ascribed to such term in the Recitals to
this Agreement.
 
“Common Stock” means the common stock of the Company, $0.001 par value per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed into.
 
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred shares, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
 
“Company” shall have the meaning ascribed to such term in the Preamble to this
Agreement.
 
“Company Counsel” means Loeb & Loeb LLP, with offices located at 345 Park
Avenue, New York, New York 10154.
 
“Continuous Disclosure Reports” shall have the meaning ascribed to such term in
Section 3.1(h).
 
“DGCL” shall have the meaning ascribed to such term in Section 3.1(e).
 
“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.
 
“Effective Date” means the date that the initial Registration Statement filed by
the Company pursuant to the Registration Rights Agreement is first declared
effective by the Commission.
 
“Environmental Laws” shall have the meaning ascribed to such term in Section
3.1(jj).
 
“Evaluation Date” shall have the meaning ascribed to such term in
Section 3.1(r).

 
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“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
 
“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).
 
“Hazardous Substances” shall have the meaning ascribed to such term in Section
3.1(jj).
 
“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).
 
“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).
 
“Knowledge of the Company” means with respect to any statement made to the
knowledge of the Company, that the statement is based upon the actual knowledge
of the executive officers of the Company after due inquiry.
 
“Legend Removal Date” shall have the meaning ascribed to such term in
Section 4.1(c).
 
“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
 
“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).
 
“Material Permits” shall have the meaning ascribed to such term in
Section 3.1(m).
 
“OFAC” shall have the meaning ascribed to such term in Section 3.1(dd).
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
“PRC” means the People’s Republic of China, but solely for the purposes of this
Agreement, excluding Hong Kong, Macau Special Administrative Region and the
island of Taiwan.
 
“PRC Subsidiaries” shall have the meaning ascribed to such term in
Section 3.1(a).
 
“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
 
“Purchaser” and “Purchasers” shall have the meanings ascribed to such terms in
the Preamble to this Agreement.
 
“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.
 
“Registration Rights Agreement” means the Registration Rights Agreement, dated
as of the Closing Date, by and among the Company and the Purchasers, in
substantially the form of Exhibit A attached hereto.

 
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“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Shares and the Warrant Shares.
 
“Regulation D” shall have the meaning ascribed to such term in the Recitals to
this Agreement.
 
“Regulation S” shall have the meaning ascribed to such term in the Recitals to
this Agreement.
 
“Required Approvals” shall have the meaning ascribed to such term in
Section 3.1(e).
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“Rule 144A” means Rule 144A promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“Securities” means the Shares, the Warrants and the Warrant Shares.
 
“Securities Act” shall have the meaning ascribed to such term in the Recitals to
this Agreement.
 
“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable Common Stock).
 
“Shares” means the Common Stock issued or issuable to each Purchaser pursuant to
Section 2.1 and Section 2.4 of this Agreement.
 
“Stockholder Approval” shall have the meaning ascribed to such term in Section
3.1(e).
 
“Subscription Amount” means, as to each Purchaser, the aggregate amount in
United States dollars to be paid in immediately available funds for Shares and
Warrants purchased hereunder as specified beside such Purchaser’s name on
Schedule 2.1 hereto.
 
“Subsidiary” means any subsidiary of the Company as set forth on
Schedule 3.1(a), and shall, where applicable, include any subsidiary of the
Company formed or acquired after the date hereof.
 
“TS” means Troutman Sanders LLP, with offices located at The Troutman Sanders
Building, 1001 Haxall Point, Richmond, Virginia 23219.

 
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“Trading Day” means (i) a day on which the Common Stock is traded on a Trading
Market or (ii) if the Common Stock is not listed or quoted on any Trading
Market, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the Pink OTC Markets, Inc. (or any similar organization or agency
succeeding to its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in (i) or (ii)
hereof, then Trading Day shall mean a Business Day.
 
“Trading Market” means whichever of the New York Stock Exchange, the American
Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the
NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed
or quoted for trading on the date in question.
 
“Transaction Documents” means this Agreement, the Warrants, the Registration
Rights Agreement, the Voting Agreement and any other documents or agreements
executed in connection with the transactions contemplated hereunder.
 
“Voting Agreement” shall mean the Voting Agreement, dated as of the Closing
Date, by and among the Company, the Purchasers and the other parties named
therein, in substantially the form of Exhibit B attached hereto.
 
“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted for trading as reported by Bloomberg L.P.
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New
York City time)); (b) if the OTC Bulletin Board is not a Trading Market, the
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
quoted for trading on the OTC Bulletin Board and if prices for the Common Stock
is then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per Common Share so reported; or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Purchasers of a majority in
interest of the Shares then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.
 
“Warrants” means, collectively, the Common Stock purchase warrants, in
substantially the form of Exhibit C attached hereto, delivered to the Purchasers
at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be
first exercisable six months after the Closing Date and shall be exercisable for
two years thereafter.
 
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.
 
“Wire Transfer Instructions” shall have the meaning ascribed to such term in
Section 2.1.

 
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ARTICLE II
PURCHASE AND SALE
 
2.1.           Closing.  On the Closing Date, upon the terms and subject to the
conditions set forth herein, the Company shall sell, and each Purchaser shall
purchase, (a) the number of Shares set forth beside such Purchaser’s name in
Column 2 of Schedule 2.1(a) hereto and (b) a Warrant to purchase such number of
Warrant Shares, subject to adjustment as provided in the Warrant, set forth
beside such Purchaser’s name in Column 3 of Schedule 2.1(a) hereto.  Each
Purchaser shall deliver to the Company, via wire transfer of immediately
available funds to such account designated by the Company in accordance with the
wire transfer instructions set forth on Schedule 2.1(b) (the “Wire Transfer
Instructions”), the Subscription Amount of such Purchaser and the Company shall
deliver to each Purchaser its respective Shares and a Warrant, and the Company
and each Purchaser shall deliver the other items set forth in Section 2.2
deliverable at the Closing.  Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of TS,
or such other location as the parties shall mutually agree.
 
2.2.           Deliveries.
 
(a)           On or prior to the Closing Date, the Company shall deliver or
cause to be delivered to each Purchaser the following:
 
(i)           the legal opinion of Company Counsel, dated as of the Closing Date
and in substantially the form of Exhibit D attached hereto, executed by Company
Counsel and addressed to the Purchasers;
 
(ii)          one or more stock certificates evidencing the number of Shares set
forth in Column 2 of Schedule 2.1 beside such Purchaser’s name, registered in
the name of such Purchaser;
 
(iii)         a Warrant to purchase such number of Warrant Shares, subject to
adjustment as provided in the Warrant, set forth beside such Purchaser’s name in
Column 3 of Schedule 2.1 hereto;
 
(iv)         the Registration Rights Agreement, duly executed by the Company;
 
(v)          the Voting Agreement, duly executed by each of the parties thereto
(other than the Purchasers);
 
(vi)         a good standing certificate for the Company, issued by a duly
authorized person within the office of the Secretary of State (or comparable
office) of the state of incorporation, as of a date within five days prior to
the Closing Date;
 
(vii)        a certificate, substantially in the form attached hereto as Exhibit
E, executed by the Secretary of the Company and dated as of the Closing Date,
certifying as to (A) the resolutions of the Company’s Board of Directors
authorizing and approving the transactions contemplated by the Transaction
Documents, including the issuance of the Shares and Warrants, (B) the
certificate of incorporation of the Company, as in effect as of the Closing
Date, (C) the Bylaws, as in effect as of the Closing Date and (D) as to
signatures and authority of the persons signing the Transaction Documents and
related documents on behalf of the Company; and

 
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(viii)      a certificate, substantially in the form attached hereto as Exhibit
F, executed by a duly authorized officer of the Company, dated as of the Closing
Date, certifying that the conditions precedent set forth in Section 2.3(b)(i),
Section 2.3(b)(ii) and Section 2.3(b)(iv) are satisfied as of the Closing Date.
 
(b)           On or prior to the Closing Date, each Purchaser shall deliver or
cause to be delivered to the Company the following:
 
(i)           such Purchaser’s Subscription Amount by wire transfer of
immediately available funds in accordance with the Wire Transfer Instructions;
and
 
(ii)          the Registration Rights Agreement, duly executed by such
Purchaser; and
 
(iii)         the Voting Agreement, duly executed by such Purchaser; and
 
(iv)        a certificate, substantially in the form attached hereto as Exhibit
G, executed by a duly authorized officer of the Purchaser, dated as of the
Closing Date, certifying that the conditions precedent set forth in Section
2.3(a)(i) and Section 2.3(a)(ii) are satisfied as of the Closing Date.
 
2.3.           Closing Conditions.
 
(a)           The obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being met:
 
(i)           the representations and warranties of each Purchaser shall be true
and correct in all material respects (except for those representations and
warranties that are qualified by materiality, which shall be true and correct in
all respects) as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date);
 
(ii)         all obligations, covenants and agreements of each Purchaser
required to be performed at or prior to the Closing Date shall have been
performed;
 
(iii)         each Purchaser shall have delivered each of the items set forth in
Section 2.2(b) of this Agreement that are required to be delivered by such
Purchaser on or prior to the Closing Date; and
 
(iv)         there must not have been commenced or threatened any Proceeding or
Action (A) involving any challenge to, or seeking damages or other relief in
connection with, the transactions contemplated by the Transaction Documents or
(B) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with the transactions contemplated by the Transaction
Documents.

 
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(b)           The respective obligations of the Purchasers hereunder in
connection with the Closing are subject to the following conditions being met:
 
(i)           the representations and warranties of the Company shall be true
and correct in all material respects (except for those representations and
warranties that are qualified by materiality or Material Adverse Effect, which
shall be true and correct in all respects) as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a
specific date);
 
(ii)         all obligations, covenants and agreements of the Company required
to be performed at or prior to the Closing Date shall have been performed;
 
(iii)         the Company shall have delivered each of the items set forth in
Section 2.2(a) of this Agreement required to be delivered by the Company on or
prior to the Closing Date;
 
(iv)        there shall have been no Material Adverse Effect with respect to the
Company and its Subsidiaries since the date hereof;
 
(v)         from the date hereof to the Closing Date, trading in the Common
Stock shall not have been suspended by the Commission or the Company’s principal
Trading Market, at any time prior to the Closing Date, trading in securities
generally as reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of each Purchaser, makes
it impracticable or inadvisable to purchase the Shares and the Warrants at the
Closing;
 
(vi)         there must not have been commenced or threatened any Proceeding or
Action (A) involving any challenge to, or seeking damages or other relief in
connection with, the transactions contemplated by the Transaction Documents or
(B) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with the transactions contemplated by the Transaction
Documents.
 
2.4.           Additional Issuance of Shares.
 
(a)           If the audited, consolidated financial statements (the “Audited
2009 Financials”) of the Company and its Subsidiaries filed in 2010 by the
Company with the Commission as part of the Company’s Annual Report on Form 10-K
reflects Net Income of less than US$11,500,000, then the Company, within ten
days after the date of such filing and without any further action or payment on
the part of the Purchasers, shall issue to each Purchaser, in a transaction that
does not require registration under the Securities Act, a stock certificate
representing such number of duly authorized, validly issued, fully-paid and
non-assessable Shares calculated as follows; provided, however that in no event
shall the Company issue in excess of 3,500,000 Shares in the aggregate under
this Section 2.4:

 
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X = (((P*O) – S) / (1-P)) * Z

Where:

X = 
the number of Shares to be issued to the Purchasers in accordance with this
Section 2.4

P = 
(aggregate Subscription Amount of the Purchasers) / (Net Income * 7.9)

O =
Number of shares of Common Stock outstanding immediately after the issuance of
the Shares to be issued pursuant to Section 2.1

S =
Shares issued to the Purchasers pursuant to Section 2.1

Z =
(Number of Shares issued to such Purchaser pursuant to Section 2.1) / S

(b)           For purposes of this Section 2.4, “Net Income” means the
consolidated net income of the Company and its Subsidiaries for the calendar
year ending December 31, 2009 as reported in the Audited 2009 Financials,
excluding any income attributable to non-recurring, extraordinary transactions,
including acquisitions and divestitures engaged in by the Company and its
Subsidiaries, but increased by (i) any non-cash charges incurred as a result of
the transactions contemplated hereunder and by the other Transaction Documents,
including without limitation, the issuance of the Warrants and any Warrant
Shares issued thereunder, and any issuance of Shares pursuant to this Section
2.4 and (ii) reasonable expenses incurred in connection with any bona fide
public offering of the Company’s securities.
 
(c)           The Company shall use its best efforts to ensure that each and
every representation and warranty in Section 3.1 of this Agreement is true and
correct on and as of the date of issuance of any Shares pursuant to this Section
2.4 with the same force and effect as though made on and as of such date.  In
connection with the issuance of any Shares pursuant to this Section 2.4, the
Company shall deliver to the Purchasers an opinion of Company Counsel, dated as
of such issuance date and in form and substance satisfactory to the Purchasers,
that the Shares issued pursuant to this Section 2.4 have been duly authorized
and such Shares will be validly issued, fully paid and nonassessable prior to or
on such issuance date.

 
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(d)           The Company shall not issue any Shares pursuant to Section 2.4(a)
or any Warrant Shares pursuant to the Warrants (together, “Additional Shares”),
and the Purchasers shall not have the right to be issued any Additional Shares
pursuant to Section 2.4(a) or to exercise any portion of the Warrants, to the
extent that after giving effect to such issuance under Section 2.4(a) or the
Warrants, the Purchasers (together with the Purchasers’ Affiliates, and any
other Person acting as a group together with such Purchasers or any of the
Purchasers’ Affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below).  For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned by the
Purchasers and their Affiliates (together with any other Person acting as a
group together with the Purchasers or any of the Purchasers’ Affiliates) shall
include the number of shares of Common Stock issuable in accordance with Section
2.4(a) and issuable upon exercise of the Warrants with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) exercise of the remaining, nonexercised
portion of the Warrants beneficially owned by the Purchasers or any of their
Affiliates (together with any other Person acting as a group together with the
Purchasers or any of the Purchasers’ Affiliates) and (B) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the
Company (including, without limitation, any other Common Stock Equivalents)
beneficially owned by the Purchasers or any of their Affiliates (together with
any other Person acting as a group together with the Purchasers or any of the
Purchasers’ Affiliates) that are subject to a limitation on conversion or
exercise analogous to the limitation contained in this Section 2.4(d).  Except
as set forth in the preceding sentence, for purposes of this Section 2.4(d),
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.  To the
extent that the limitation contained in this Section 2.4(d) applies or the
similar limitation contained in the Warrants applies, the determination of
whether any Additional Shares are issuable pursuant to Section 2.4(a) or whether
the Warrants are exercisable for Additional Shares (in relation to other
securities owned by the Purchasers together with any Affiliates and any other
Person acting as a group together with the Purchasers or any of the Purchasers’
Affiliates) and of which portion of the Additional Shares issuable pursuant to
Section 2.4(a) or upon exercise of the Warrants, shall be mutually determined
and agreed upon by the Purchasers and the Company.  In addition, a determination
as to any group status as contemplated above shall be determined in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  The “Beneficial Ownership Limitation” shall be 19.99% of the number
of shares of Common Stock outstanding immediately prior to giving effect to the
issuance of the Shares pursuant to Section 2.4(a).  The parties agree that the
number of shares of Common Stock outstanding as of the date hereof is
7,048,063.  The Beneficial Ownership Limitation provisions of this Section
2.4(d) and the similar provision in the Warrants shall no longer apply and there
shall be no such restrictions with respect to the issuance of Additional Shares
upon the Company satisfying in full the provisions of Regulation 14C with
respect to the Stockholder Approval.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES
 
3.1.           Representations and Warranties of the Company.  Matters disclosed
with respect to one Disclosure Schedule shall be deemed disclosed on another
section of the Disclosure Schedule if the relevance of such matter to such other
section is appropriately cross-referenced or is evident from the context of such
disclosure. Except as set forth in the Disclosure Schedules  which Disclosure
Schedules shall be deemed a part hereof and which shall qualify any
representation or warranty set forth in this Article III , the Company hereby
represents and warrants to each Purchaser as follows:
 
(a)           Subsidiaries.  All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 3.1(a).  Except as set forth on
Schedule 3.1(a), the Company owns, directly or indirectly, all of the issued and
outstanding capital shares or other equity interests of each Subsidiary free and
clear of any Liens, and all of the issued and outstanding capital shares of each
Subsidiary have been duly authorized, are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities.  With respect to Beijing Agritech Fertilizer Ltd., Pacific
Dragon Fertilizers Co. Ltd., Anhui Agritech Development Co. Ltd. and Xingjiang
Agritech Agricultural Materials Co. Ltd. (the “PRC Subsidiaries”), China Tailong
Holdings Company Limited and CAI Investment Inc:
 
(i)           the registered capital of Beijing Agritech Fertilizer Ltd. is
US$20,000,000, of which $11,999,900 is paid up.  CAI Investment Inc. legally and
beneficially owns 100% of the equity interest in Beijing Agritech Fertilizer
Ltd. There are no outstanding rights or commitments made by CAI Investment Inc.
to sell any of its equity interest in Beijing Agritech Fertilizer Ltd;

 
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(ii)          the registered capital of Anhui Agritech Development Co., Ltd. is
US$1,500,000, all of which has been fully paid up.  The Company legally and
beneficially owns 100% of the equity interest in Anhui Agritech Development Co.,
Ltd.  There are no outstanding rights or commitments made by the Company to sell
any of its equity interest in Anhui Agritech Development Co., Ltd;
 
(iii)         the registered capital of Pacific Dragon Fertilizers Co., Ltd. is
US$500,000, all of which has been fully paid up.  China Tailong Holdings Company
Limited legally and beneficially owns 100% of the equity interest in Pacific
Dragon Fertilizers Co., Ltd.  There are no outstanding rights or commitments
made by China Tailong Holdings Company Limited to sell any of its equity
interest in Pacific Dragon Fertilizers Co., Ltd;
 
(iv)         the registered capital of Xingjiang Agritech Agricultural Materials
Co. Ltd. is RMB2,000,000, of which RMB400,000 has been paid up.  Beijing
Agritech Fertilizer Ltd. legally and beneficially owns 75% of the equity
interest in Xingjiang Agritech Agricultural Materials Co. Ltd., and Anhui
Agritech Development Co., Ltd. legally and beneficially owns 25% of the equity
interest in Xingjiang Agritech Agricultural Materials Co. Ltd.  There are no
outstanding rights or commitments made by Beijing Agritech Fertilizer Ltd. or
Anhui Agritech Development Co., Ltd. to sell any of its equity interest in
Xingjiang Agritech Agricultural Materials Co. Ltd;
 
(v)         each PRC Subsidiary has been conducting and will conduct its
business activities within the permitted scope of business set forth in its
business license and is otherwise operating its business in full compliance with
all relevant legal requirements and with all requisite licenses, permits and
approvals granted by competent governmental authority;
 
(vi)         none of the PRC Subsidiaries is in receipt of any notice from any
relevant authority notifying such PRC Subsidiary of any actual or threatened
revocation of any permits or licenses issued to it; and
 
(vii)        all filings and registrations with governmental authorities
required in respect of the PRC Subsidiaries and their operations, including, but
not limited to, registrations with the Ministry of Commerce of the PRC or its
relevant sub-branch, the PRC State Administration for Industry and Commerce or
its relevant sub-branch, the PRC State Administration of Foreign Exchange or its
relevant sub-branch, tax authorities, customs and other authorities, have been
duly completed in accordance with the relevant rules and regulations.

 
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(b)           Organization and Qualification.  Except as set forth on Schedule
3.1(b), Company and each of the Subsidiaries is an entity duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business in all material respects as is currently
conducted.  Neither the Company nor any Subsidiary is in violation or default of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Except as
set forth on Schedule 3.1(b), each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
could not have or reasonably be expected to result in (i) a material adverse
effect on the legality, validity or enforceability of any Transaction Document,
(ii) a material adverse effect on the operations, results of operations, assets,
properties, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
 
(c)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals.  Each Transaction Document
has been (or upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by general
equitable principles and laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.
 
(d)           No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Securities
and the consummation by the Company of the other transactions contemplated
hereby and thereby do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or, to
the Knowledge of the Company, give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including foreign, federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected.

 
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(e)           Filings, Consents and Approvals.  None of the Company or any of
its Subsidiaries is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court
or other federal, state, local or other governmental authority or other Person
in connection with the execution, delivery and performance by it of the
Transaction Documents to which it is a party, other than (i) filings required
pursuant to Section 4.3 of this Agreement, (ii) the filing with the Commission
of a Registration Statement pursuant to the Registration Rights Agreement,
(iii) application to each applicable Trading Market for the listing or quoting
of the Securities for trading thereon in the time and manner required thereby,
(iv) the filing of Form D with the Commission and such filings as are required
to be made under applicable state and foreign securities laws and (v) the
Stockholder Approval (collectively, the “Required Approvals”).  This Agreement
and the other Transaction Documents and the transactions contemplated hereby and
thereby have been authorized and approved by the board of directors of the
Company and by the stockholders of the Company, acting by non-unanimous written
consent of the stockholders of the Company holding a majority of the shares of
the Company’s outstanding Common Stock (the “Stockholder Approval”), in each
case, in accordance with the Company’s certificate of incorporation and bylaws
and the General Corporation Law of the State of Delaware (the “DGCL”), and in
the case of the Stockholder Approval, in satisfaction of Nasdaq Marketplace Rule
5635.
 
(f)           Issuance of the Securities.  The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the applicable Transaction Documents.  The Warrant
Shares, when issued in accordance with the terms of the Transaction Documents,
will be validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for in
the Transaction Documents.  The Company has reserved from its duly authorized
capital shares the maximum number of shares of Common Stock issuable pursuant to
this Agreement and the Warrants.
 
(g)           Capitalization.  The capitalization of the Company is as set forth
on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of
shares of Common Stock owned beneficially, and of record, by Affiliates of the
Company as of the date hereof. Except as set forth on Schedule 3.1(g), the
Company has not issued any capital shares since its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans and pursuant to the
conversion or exercise of Common Stock Equivalents outstanding as of the date of
the most recently filed periodic report under the Exchange Act.  No Person has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents.  Except as set forth on Schedule 3.1(g) and as a result of the
purchase and sale of the Securities, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any Common Stock or any equity of any Subsidiary of the Company, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional Common Stock or Common
Stock Equivalents or equity in any Subsidiary other than options with respect to
options granted to employees, consultants, officers and directors of the Company
to purchase Common Stock of the Company.  The issuance and sale of the
Securities will not obligate the Company to issue Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding
capital shares of the Company are validly issued, fully paid and nonassessable,
have been issued in compliance with all foreign, federal and state securities
laws, and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase
securities.  Except as set forth in Section 3.1(e) above, no further approval or
authorization of any stockholder, the Board of Directors of the Company or
others is required for the issuance and sale of the Securities.  There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital shares to which the Company is a party or, to
the Knowledge of the Company, between or among any of the Company’s
stockholders.

 
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(h)           Continuous Disclosure Reports: Financial Statements.  The Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the one year preceding
the date hereof (or such shorter period as the Company was required by law or
regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “Continuous Disclosure Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such Continuous Disclosure Reports prior to the expiration of any such
extension except as disclosed in Schedule 3.1(h).  As of their respective dates,
the Continuous Disclosure Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, except
as disclosed in Schedule 3.1(h) and none of the Continuous Disclosure Reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.  The financial statements of the Company included in
the Continuous Disclosure Reports complied in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.  Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 
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(i)           Material Changes; Undisclosed Events, Liabilities or
Developments.  Since December 31, 2008, except as specifically disclosed in a
subsequent Continuous Disclosure Report filed prior to the date hereof, (i)
there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
and its Subsidiaries have not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s consolidated financial statements
pursuant to GAAP or disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any capital shares and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans.  The Company does not have pending before the Commission any
request for confidential treatment of information.  Except for the issuance of
the Securities contemplated by this Agreement or as set forth on
Schedule 3.1(i), no event, liability or development has occurred or exists with
respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required to be
disclosed by the Company or any Subsidiary thereof under applicable foreign,
federal or state securities laws at the time this representation is made or
deemed made that has not been publicly disclosed at least one Trading Day prior
to the date that this representation is made.
 
(j)           Litigation.  There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the Knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges
or could reasonably be expected to affect or challenge the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect except as disclosed in Schedule 3.1(j) or in
the Continuous Disclosure Reports.  Neither the Company nor any Subsidiary, nor
to the Knowledge of the Company any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
foreign, federal or state securities laws or a claim of breach of fiduciary
duty.  There has not been, and to the Knowledge of the Company, there is not
pending or contemplated, any investigation by the Commission involving the
Company or any Subsidiary thereof or any current or former director or officer
of the Company or any Subsidiary thereof.  The Commission has not issued any
stop order or other order suspending the effectiveness of any document or
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
 
(k)           Labor Relations; Employee Benefits.  No material labor dispute
exists or, to the Knowledge of the Company, is imminent with respect to any of
the employees of the Company or its Subsidiaries.  None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the Company nor
any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their
employees are good.  No executive officer of the Company or any Subsidiary, to
the Knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant in favor of any third party,
and the continued employment of each such executive officer does not subject the
Company or any of its Subsidiaries to any liability with respect to any of the
foregoing matters.  The Company and its Subsidiaries are in compliance with all
federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and
hours, welfare funds, social benefits, medical benefits, insurance, retirement
benefits and pensions, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  Other than statutory social insurance plans operated under the
applicable laws of the PRC, none of the PRC Subsidiaries provides or is required
to provide any retirement, social insurance, life insurance, medical, dental or
other welfare benefits provided on ill-health, injury, death disability or on
termination of employment (whether voluntary or involuntary) to any current or
former employees, officers, consultants, independent contractors or agents of
any PRC Subsidiaries.

 
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(l)           Compliance.  Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business and all such laws that affect the
environment, except in each case as could not have or reasonably be expected to
result in a Material Adverse Effect.
 
(m)           Regulatory Permits.  The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the Continuous Disclosure Reports, except
where the failure to possess such certificates, authorizations and permits could
not reasonably be expected to result in a Material Adverse Effect, and neither
the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificates, authorizations, and
permits.
 
(n)           Title to Assets.  Neither the Company nor any of its Subsidiaries
(i) owns any real property or (ii) owns or possesses any land use rights to real
property located in the PRC.  The Company and its Subsidiaries have good and
marketable title to all personal property owned by the Company and its
Subsidiaries and defensible title to all other property owned by the Company and
its Subsidiaries, free and clear of all Liens and no royalty is payable in
respect of any of them, except such as (i) are disclosed on Schedule 3.1(n) and
(ii) do not, singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by the Company or any of its Subsidiaries.  Any real property and
facilities held under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases.  All property, leases or claims
in which the Company or any Subsidiary has an interest or right have been
validly located and recorded in accordance with all applicable laws and are
valid and subsisting where the failure to be so would have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole.

 
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(o)           Patents and Trademarks.  The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses as described in
the Continuous Disclosure Reports and which the failure to so have could have a
Material Adverse Effect (collectively, the “Intellectual Property
Rights”).  Neither the Company nor any Subsidiary has received a notice (written
or otherwise) that any of the Intellectual Property Rights used by the Company
or any Subsidiary violates or infringes upon the rights of any Person, which
could reasonably be expected to result in a Material Adverse Effect.  To the
Knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights.  The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where the failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 
(p)           Insurance.  The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage at least equal to $6,000,000.  Neither
the Company nor any Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its respective business without a significant increase in cost. The
Company and, if applicable, each of the Subsidiaries has sufficiently provided
for an adequate reserve related to present or future abandonment and related
costs.
 
(q)           Transactions with Affiliates and Employees.  Except as set forth
in the Continuous Disclosure Reports, to the Knowledge of the Company, none of
the officers, directors or employees of the Company or any of its Subsidiaries
is presently a party to any transaction with the Company or any Subsidiary
(other than for services as consultants, employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the Knowledge of the Company, any entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner, in each case in excess of $20,000
other than for (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company or any of its
Subsidiaries and (iii) other employee benefits, including stock option
agreements under any stock option plan of the Company or any of its
Subsidiaries.

 
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(r)           Sarbanes-Oxley; Internal Accounting Controls.  The Company and its
Subsidiaries are in material compliance with all provisions of the
Sarbanes-Oxley Act of 2002 which are effective and applicable to it.  The
Company and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms.  The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report under
the Exchange Act (such date, the “Evaluation Date”).  The Company presented in
its most recently filed periodic report under the Exchange Act the conclusions
of the certifying officers about the effectiveness of the disclosure controls
and procedures based on their evaluations as of the Evaluation Date.  Since the
Evaluation Date, there have been no changes in the Company’s internal control
over financial reporting (as such term is defined in the Exchange Act) that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
 
(s)           Certain Fees.  Other than a 5.0% cash fee payable by the Company
to JP Capital with respect to the US$15,000,000 of Shares and Warrants to be
purchased hereunder, no brokerage or finder’s fees or commissions are or will be
payable by the Company or any of its Subsidiaries to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by the Transaction
Documents.  The Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the
transactions contemplated by the Transaction Documents.
 
(t)           Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers as contemplated hereby.  Subject to obtaining the
required Stockholder Approval and compliance with the provisions of the Exchange
Act, including Schedule 14C thereunder, the issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Trading Market.
 
(u)           Investment Company; PFIC and CFC.  The Company is not, and is not
an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, (i) an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, or (ii) a “passive
foreign investment company” or a “controlled foreign corporation” as such terms
are defined in the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
 
(v)           Registration Rights.  Except as disclosed in Schedule 3.1(v),
other than each of the Purchasers, no Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the
Company.

 
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(w)           Listing and Maintenance Requirements.  The Company’s Common Stock
is registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration.  Except as set forth on
Schedule 3.1(w), the Company has not, in the 12 months preceding the date
hereof, received notice from any Trading Market on which the Common Stock is or
has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market.  The
Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
requirements.
 
(x)           Application of Takeover Protections.  The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchasers’ ownership of the Securities.
 
(y)           Disclosure.  All disclosure furnished by or on behalf of the
Company to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.  The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof.
 
(z)           No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its behalf or their behalves
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the
Company (i) within the last six months for purposes of the Securities Act which
would require the registration of any such securities under the Securities Act,
or (ii) within the last 12 months for the purposes of any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

 
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(aa)           Solvency.  Based on the consolidated financial condition of the
Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder, (i) the fair
saleable value of the Company’s assets exceeds the amount that will be required
to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its
liabilities when such amounts are required to be paid.  Schedule 3.1(aa) sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this Agreement, “Indebtedness” means (a) any
liabilities for borrowed money or amounts owed in excess of $50,000 (other than
trade accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is
in default with respect to any Indebtedness.
 
(bb)           Tax Status.  The Company and its Subsidiaries (i) have prepared
and filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which they are subject,
(ii) have paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith, with respect to which
adequate reserves have been set aside on the books of the Company and its
Subsidiaries and (iii) have set aside on their books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply, except, in the case of
clauses (i) and (ii) above, where the failure to so pay or file any such tax,
assessment, charge or return would not have or reasonably be expected to have a
Material Adverse Effect.
 
(cc)           No General Solicitation; No Directed Selling Efforts.  Neither
the Company nor any Person acting on behalf of the Company has offered or sold
any of the Shares or the Warrants by any form of “general solicitation” or
“general advertising” (as such terms are defined in Regulation D) or has engaged
in any “directed selling efforts” (as such term is defined in Regulation S) in
connection with the offer and sale of the Shares and Warrants to the
Purchasers.  The Company has offered the Shares or the Warrants for sale only to
the Purchasers and such offers and sales have occurred outside the United States
in an “offshore transaction” (as defined in Regulation S).
 
(dd)           Foreign Corrupt Practices.  Neither the Company or any Subsidiary
of the Company, nor, to the Knowledge of the Company, any agent or other Person
acting on behalf of the Company or any Subsidiary of the Company, has (i)
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns or to any officers or employees of any state-owned
enterprises from corporate funds, (iii) failed to disclose fully any
contribution made by the Company or any Subsidiary thereof (or made by any
Person acting on the behalf of the Company or any Subsidiary thereof of which
the Company is aware) which is in violation of law, or (iv) violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or of any
applicable anti-corruption, anti-bribery, anti-graft or similar such laws,
rules, regulations or ordinances.

 
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(ee)           Accountants.  The Company’s auditor is Crowe Horwath LLP.  Such
accounting firm (i) is a registered public accounting firm as required by the
Exchange Act and (ii) has expressed its opinion with respect to the financial
statements included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008.
 
(ff)           No Disagreements with Accountants and Lawyers.  There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company or its Subsidiaries which could affect the
Company’s or any Subsidiary’s ability to perform any of its obligations under
any of the Transaction Documents, and the Company and its Subsidiaries are
current with respect to any fees owed to their accountants and lawyers.
 
(gg)           Acknowledgment Regarding Purchasers’ Purchase of Securities.  The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated thereby.  The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Securities.  The Company
further represents to each Purchaser that the Company’s decision to enter into
this Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
 
(hh)           Acknowledgement Regarding Purchaser’s Trading Activity.  Anything
in this Agreement or elsewhere herein to the contrary notwithstanding (except
for Section 3.2(f) hereof and except as set forth in the Registration Rights
Agreement), it is understood and acknowledged by the Company (i) that none of
the Purchasers has been asked by the Company to agree, nor has any Purchaser
agreed, to desist from purchasing or selling, long and/or short, securities of
the Company, or “derivative” securities based on securities issued by the
Company or to hold the Securities for any specified term; except for the
Purchasers covenant to enter into a lock-up agreement with respect to securities
of the Company held by the Purchasers, as contemplated in Section 4.17 hereof;
(ii) that past or future open market or other transactions by any Purchaser,
including Short Sales, and specifically including, without limitation, Short
Sales or “derivative” transactions, before or after the closing of this or
future private placement transactions, may negatively impact the market price of
the Company’s publicly-traded securities; (iii) that any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a
party, directly or indirectly, presently may have a “short” position in the
Common Stock; and (iv) that each Purchaser shall not be deemed to have any
affiliation with or control over any arm’s length counter-party in any
“derivative” transaction.  The Company further understands and acknowledges that
(a) one or more Purchasers may engage in hedging activities at various times
during the period that the Securities are outstanding, including, without
limitation, during the periods that the Warrants are exercisable and (b) such
hedging activities (if any) could reduce the value of the existing stockholders’
equity interests in the Company at and after the time that the hedging
activities are being conducted.  The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents; provided, however that such hedging activities are in
compliance with the Securities Act.

 
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(ii)           Regulation M Compliance.  The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid, or agreed to
pay to any Person, any compensation for soliciting another Person to purchase
any other securities of the Company.
 
(jj)           Environmental Matters.  With respect to the Company and each of
its Subsidiaries, except to the extent that any violation or other matter
referred to in this subparagraph does not have a Material Adverse Effect (i) the
Company and its Subsidiaries are not in violation of any applicable foreign,
federal, state or local laws, regulations, orders, government decrees or
ordinances with respect to environmental, health or safety matters
(collectively, “Environmental Laws”); (ii) the Company and its Subsidiaries have
operated their business at all times and have received, handled, used, stored,
treated, shipped and disposed of all contaminants without violation of
Environmental Laws; (iii) the Company and its Subsidiaries have had no spills,
releases, deposits or discharges of hazardous or toxic substances, contaminants
or wastes into the earth, air or into any body of water or any municipal or
other sewer or drain water systems that have not been remedied; (iv) no orders,
directions or notices have been issued and remain outstanding pursuant to any
Environmental Laws relating to the business or assets of the Company and its
Subsidiaries; (v) the Company and its Subsidiaries have not failed to report to
the proper foreign, federal, state, local or other political subdivision,
government, department, commission, board, bureau, agency or instrumentality,
domestic or foreign, the occurrence of any event which is required to be so
reported under Environmental Laws; and (vi) the Company and its Subsidiaries
hold all licenses, permits and approvals required under any Environmental Laws
in connection with the operation of its business and the ownership and use of
its assets, all such licenses, permits and approvals are in full force and
effect, and except for (1) notifications and conditions of general application
to assets of the type owned by the Company or its Subsidiaries, and (2)
notifications relating to reclamation, remediation or similar obligations under
Environmental Laws, the Company and its Subsidiaries have not received any
notification pursuant to any Environmental Laws that any work, repairs,
construction or capital expenditures are required to be made by it as a
condition of continued compliance with any Environmental Laws, or any license,
permit or approval issued pursuant thereto, or that any license, permit or
approval referred to above is about to be reviewed, made subject to limitation
or conditions, revoked, withdrawn or terminated.
 
(kk)           OFAC.  Neither the Company nor any of its Subsidiaries nor, to
the Knowledge of the Company, any director, officer, agent, employee, Affiliate
or Person acting on behalf of the Company or any Subsidiary thereof is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
knowingly directly or indirectly use the proceeds of the sale of the Shares and
Warrants, or lend, contribute or otherwise make available such proceeds to any
of its Subsidiaries, joint venture partners or other Persons or entities,
towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any
other country sanctioned by OFAC or for the purpose of financing the activities
of any Person currently subject to any U.S. sanctions administered by OFAC.

 
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(ll)           Money Laundering Laws.  The operations of each of the Company and
any Subsidiary thereof are and have been conducted at all times in compliance
with the money laundering statutes of applicable jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any applicable governmental
agency, and to the Knowledge of the Company, no action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator
involving the Company and/or any Subsidiary thereof with respect to any such
money laundering statutes, rules, regulations or guidelines is pending or
threatened.
 
(mm)       ERISA.  The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder (herein called “ERISA”); no “reportable event” (as defined in ERISA)
has occurred with respect to any “pension plan” (as defined in ERISA) for which
the Company would have any liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan”; or (ii) Section 412 or
Section 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder; and each “Pension Plan”
for which the Company would have liability that is intended to be qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended, is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
 
3.2.         Representations and Warranties of the Purchasers.  Each Purchaser,
for itself and for no other Purchaser, hereby represents and warrants to the
Company as follows:
 
(a)           Organization; Authority.  Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full corporate or partnership power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate or
similar action on the part of such Purchaser.  Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when delivered
by such Purchaser in accordance with the terms hereof, will constitute the valid
and legally binding obligations of such Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by general
equitable principles and laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 
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(b)          Own Account.  Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other Persons to distribute or regarding the distribution of such Securities
(this representation and warranty not requiring such Purchaser to hold the
Securities for any minimum or other specific term nor limiting such Purchaser’s
right to sell the Securities at any time pursuant to the Registration Statement
or otherwise in compliance with foreign, federal and state securities laws) in
violation of the Securities Act or any applicable state securities law.  Such
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business.
 
(c)          Purchaser Status.  At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
exercises any Warrants, it will be an “accredited investor” as defined in Rule
501(a) under the Securities Act and a “qualified institutional buyer” as defined
in Rule 144A under the Securities Act.
 
(d)           Experience of Such Purchaser.  Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities and has so
evaluated the merits and risks of such investment.  Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment. Such Purchaser
acknowledges that it has been encouraged to obtain independent legal, income tax
and investment advice with respect to its subscription for, and the restrictions
on resale of, the Securities and accordingly, has had the opportunity to acquire
an understanding of the meanings of all terms contained herein relevant to such
Purchaser for purposes of giving representations, warranties and covenants under
this Agreement.
 
(e)          General Solicitation.  Such Purchaser is not purchasing the
Securities as a result of any “general solicitation” or “general advertising,”
as such terms are defined in Regulation D, which includes, but is not limited
to, any advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or on the
internet or broadcast over television, radio or the internet or presented at any
seminar or any other general solicitation or general advertisement.
 
(f)           Short Sales and Confidentiality Prior To The Date Hereof.  Other
than consummating the transactions contemplated hereunder, such Purchaser has
not, nor has any Person acting on behalf of or pursuant to any understanding
with such Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during the period
commencing from the time that such Purchaser first received a term sheet
(written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder
until the date hereof (“Discussion Time”).  Notwithstanding the foregoing, in
the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s
assets, the representation set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement.  Other than to
other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).

 
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(g)          Reliance on Exemptions.  Such Purchaser understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of foreign, federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Securities.
 
(h)          No Governmental Review.  Such Purchaser understands that no federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
 
(i)           No Conflicts.  The execution, delivery and performance by such
Purchaser of this Agreement and other Transaction Documents to which it is a
party and the consummation by such Purchaser of the transactions contemplated
hereby and thereby will not (i) result in a violation of the organizational
documents of such Purchaser (to the extent applicable) (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Purchaser is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment  or decree (including foreign,
federal and state securities laws) applicable to such Purchaser, except in the
case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of such Purchaser to
perform its obligations hereunder.
 
(j)           Brokers and Finders.  No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company or such Purchaser for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding with a placement agent entered into by or on behalf of such
Purchaser.
 
(k)          Prior Arrangements.  No Person has made to such Purchaser any
written or oral representations (i) that any Person will resell or repurchase
the Securities, (ii) that any Person will refund the purchase price of the
Securities, or (iii) as to the future price or value of the Securities.
 
(l)           Regulation S Representations and Warranties.
 
(i)           Such Purchaser is not a “U.S. Person” (as such term is defined in
Regulation S) and such Purchaser is not acquiring the Shares or Warrants for the
account or benefit of any U.S. Person. At the time of (a) the offer by the
Company and (b) the acceptance of the offer by such Purchaser, of the
Securities, such Purchaser was outside the United States.
 

 
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(ii)          Such Purchaser is acquiring the Securities for its own account,
for investment and not for distribution or resale to others and is not
purchasing the Securities for the account or benefit of any U.S. person, or with
a view towards distribution to any U.S. person, in violation of the registration
requirements of the Securities Act.
 
(iii)         Such Purchaser will make all subsequent offers and sales of the
Securities either (x) outside of the United States in compliance with Regulation
S; (y) pursuant to a registration under the Securities Act; or (z) pursuant to
an available exemption from registration under the Securities
Act.  Specifically, such Purchaser will not resell the Securities to any U.S.
person or within the United States prior to the expiration of a period
commencing on the Closing Date and ending on the date that is six months
thereafter (the “Distribution Compliance Period”), except pursuant to
registration under the Securities Act or an exemption from registration under
the Securities Act.
 
(iv)        Such Purchaser has no present plan or intention to sell the
Securities in the United States or to a U.S. person at any predetermined time,
has made no predetermined arrangements to sell the Securities and is not acting
as a Distributor of such securities.
 
(v)         Such Purchaser, its affiliates nor any person acting on behalf of
such person or entity, has entered into, has the intention of entering into, or
will enter into any put option, short position or other similar instrument or
position in the U.S. with respect to the Securities at any time after the
Closing Date through the Distribution Compliance Period except in compliance
with the Securities Act.
 
ARTICLE IV
POST-CLOSING COVENANTS AND AGREEMENTS OF THE PARTIES
 
4.1.         Transfer Restrictions.
 
(a)           General.  The Securities may only be disposed of in compliance
with foreign, federal and state securities laws.  In connection with any
transfer of Securities other than (i) pursuant to an effective registration
statement, Rule 144 or Rule 144A, (ii) to the Company, (iii) to an Affiliate of
a Purchaser or (iv) in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel of recognized standing and reasonably acceptable
to the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act and stating
the exemption from registration being relied upon by such transferor in the sale
of the Securities.  As a condition of transfer and pursuant to Section 5.7, any
such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.
 
(b)           Legends.  The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of a legend on any of the Securities in the
following form:

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

The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) of
Regulation D and who agrees to be bound by the provisions of this Agreement and
the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties as long as such transfer complies with applicable
foreign, federal and state securities laws.  Except as set forth herein, such a
pledge or transfer would not be subject to approval of the Company and no legal
opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith; provided, however, with respect to any such
transfer, the Company may reasonably request information from such transferee in
order to satisfy itself that such transfer is exempt from registration under the
applicable foreign, federal and state securities laws.  Notice shall be required
of such pledge.  At the appropriate Purchaser’s expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured party
of Securities may reasonably request in connection with a pledge or transfer of
the Securities, including, if the Securities are subject to registration
pursuant to the Registration Rights Agreement, the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list
of selling shareholders thereunder.

 
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(c)           Removal of Legends.  Certificates evidencing the Shares and the
Warrant Shares shall not contain any legend (including the legend set forth in
Section 4.1(b) hereof):  (i) following any sale of such Shares or Warrant Shares
while a registration statement (including the Registration Statement) other than
on Form S-3 or Form S-1 covering the resale of such Shares or Warrant Shares is
effective under the Securities Act, (ii) following any sale of such Shares or
Warrant Shares pursuant to Rule 144 or 144A, or (iii) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission).  At
any time that a registration statement (including the Registration Statement) on
Form S-1 or Form S-3 covering the resale of Shares or Warrant Shares is
effective under the Securities Act, the Company shall deliver to its transfer
agent a blanket authorization letter to remove any legend upon the resale of any
such Shares or Warrant Shares.  The Company shall cause its counsel to issue a
legal opinion to the Company’s transfer agent if required by the Company’s
transfer agent to effect the removal of legends hereunder.  The Company agrees
at such time as such legend is no longer required under this Section 4.1(c), it
will, no later than three Trading Days following the delivery by a Purchaser to
the Company or the Company’s transfer agent of a certificate representing Shares
or Warrant Shares issued with a restrictive legend (such third Trading Day, the
“Legend Removal Date”), deliver or cause to be delivered to such Purchaser a
certificate representing such shares that is free from all restrictive and other
legends; provided, however that the Legend Removal Date shall be tolled in the
event the Company has not received all of the documentation required or
necessary for delivery of a legal opinion to the Company’s transfer agent to
effect the removal of the legends.  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.  Certificates for
Securities subject to legend removal hereunder shall be transmitted by the
transfer agent of the Company to a Purchaser by crediting the account of such
Purchaser’s prime broker with the Depository Trust Company System or another
established clearing corporation performing similar functions as directed by
such Purchaser.
 
(d)           Liquidated Damages.  In addition to such Purchaser’s other
available remedies, the Company shall pay to a Purchaser, in cash, as partial
liquidated damages and not as a penalty, for each $1,000 of Shares or Warrant
Shares (based on the VWAP of the Common Stock on the date such Securities are
submitted to the Company’s transfer agent) delivered for removal of the
restrictive legend and subject to Section 4.1(c), $10 per Trading Day
(increasing to $20 per Trading Day five (5) Trading Days after such damages have
begun to accrue) for each Trading Day after the 2nd Trading Day following the
Legend Removal Date until such certificate is delivered without a
legend.  Nothing herein shall limit such Purchaser’s right to pursue actual
damages for the Company’s failure to deliver certificates representing any
Securities as required by the Transaction Documents, and such Purchaser shall
have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.

 
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(e)           Agreement of the Purchasers.  Each Purchaser, severally and not
jointly with the other Purchasers, agrees that such Purchaser will sell any
Securities pursuant to (i) Regulation S, (ii) the registration requirements of
the Securities Act, including any applicable prospectus delivery requirements,
or (iii) an exemption from such registration requirements, and that if
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the Company’s
reliance upon this understanding.
 
4.2.         Furnishing of Information.  For so long as a Purchaser owns any
Securities, the Company shall use its best efforts to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act.  As long as any Purchaser owns Securities, if the Company is
not required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the Securities
under Rule 144. The Company further covenants that it will take such further
action as permitted under applicable laws as any holder of Securities may
reasonably request, to the extent required from time to time to enable such
Person to sell such Securities without registration under the Securities Act
within the requirements of the exemption provided by Rule 144 or Rule 144A.
 
4.3.         Securities Laws Disclosure; Publicity.  The Company shall, by 8:30
a.m. (New York City time) on the Trading Day immediately following the date
hereof, issue (i) a Current Report on Form 8-K disclosing the material terms of
the transactions contemplated hereby and filing this Agreement, along with the
exhibits hereto, as exhibits to such Form 8-K.  Neither the Company nor any
Purchaser shall issue any press release regarding the transactions contemplated
by this Agreement or otherwise make any such public statement with respect
thereto without the prior consent of the Company, with respect to any press
release of any Purchaser, or without the prior consent of each Purchaser, with
respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.  Further, the
parties acknowledge and agree that all such press releases shall conform with
the requirements of Rule 135c of the Securities Act. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with
the registration statement contemplated by the Registration Rights Agreement and
(ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under this clause (ii).
 
4.4.         Shareholder Rights Plan.  No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchasers.

 
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4.5.         Non-Public Information.  Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it nor any other Person acting on
its behalf will provide any Purchaser or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information.  The
Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the Company.
 
4.6.         Use of Proceeds.  Except as set forth on Schedule 4.6 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital and business expansion purposes and shall not use
such proceeds for the satisfaction of any portion of the Company’s debt (other
than payment of trade payables in the ordinary course of the Company’s business
and prior practices), or to redeem any Common Stock or Common Stock Equivalents
or to settle any outstanding litigation.
 
4.7.         Indemnification of Purchasers.   Subject to the provisions of this
Section 4.7, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser
Party in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser’s representations,
warranties or covenants under the Transaction Documents or any agreements or
understandings such Purchaser may have with any such stockholder or any
violations by the Purchaser of state, federal or foreign securities laws or any
conduct by such Purchaser which constitutes fraud, gross negligence, willful
misconduct or malfeasance).  If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel
of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser
Party shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that (i)
the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Purchaser
Party, in which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel.  The Company will not be
liable to any Purchaser Party under this Agreement (i) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (ii) to the extent, but only
to the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents.

 
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4.8.         Reservation of Common Stock.  As of the date hereof, the Company
has reserved and 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 Shares issuable pursuant to
this Agreement and Warrant Shares pursuant to any exercise of the Warrants.  If
after the Closing Date, the Company amends its certificate of incorporation or
similar charter document to limit the number of shares of Common Stock that the
Company is authorized to issue, it shall maintain a reserve from its duly
authorized Common Stock for issuance pursuant to the Transaction Documents in
such amount as may be required to fulfill its obligations in full under the
Transaction Documents.
 
4.9.         Listing of Common Stock.  The Company hereby agrees to use best
efforts to maintain the listing or quotation of the Common Stock on the Trading
Market on which the Common Stock is currently listed or quoted and concurrently
with the Closing, the Company shall apply to list or quote all of the Shares and
the Warrant Shares on such Trading Market and promptly secure the listing or
quotation of all of the Shares and Warrant Shares on such Trading Market.  The
Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will include in such application all of the
Shares and Warrant Shares, and will take such other action as is necessary to
cause all of the Shares and Warrant Shares to be listed or quoted on such other
Trading Market as promptly as possible.  The Company will take all action
reasonably necessary to continue the listing or quotation and the trading of its
Common Stock on the Trading Market on which the Common Stock is currently listed
or quoted and will comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of such Trading Market.
 
4.10.       Short Sales and Confidentiality After the Date Hereof.  Each
Purchaser severally and not jointly with the other Purchaser, covenants that
neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any Short Sales during the period commencing
on the date hereof and ending at the time that the transactions contemplated by
this Agreement are first publicly announced following their consummation as
described in Section 4.3.  Each Purchaser, severally and not jointly with the
other Purchaser, covenants that until such time as the transactions contemplated
by this Agreement are publicly disclosed by the Company as described in
Section 4.3, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the Disclosure
Schedules.  Each Purchaser understands and acknowledges, and agrees, severally
and not jointly with any other Purchaser, to act in a manner that will not
violate the positions of the Commission as set forth in Item 65, Section A, of
the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
Notwithstanding the foregoing, no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in Short Sales in the securities of
the Company after the time that the transactions contemplated by this Agreement
are first publicly announced following their consummation as described in
Section 4.3.  Notwithstanding the foregoing, in the case of a Purchaser that is
a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement.

 
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4.11.       Delivery of Securities After Closing.  The Company shall deliver, or
cause to be delivered, the respective Shares and Warrants purchased by each
Purchaser to such Purchaser within two Trading Days after the Closing Date.
 
4.12.       Form D; Blue Sky and other filings.  The Company agrees to timely
file a Form D with respect to the Securities as required under Regulation D and
to provide a copy thereof, promptly upon request of any Purchaser. The Company
shall take such action as the Company shall reasonably determine is necessary in
order to obtain an exemption for, or to qualify the Securities for, sale to the
Purchasers at the Closing under applicable securities or “Blue Sky” laws, and
shall provide evidence of such actions promptly upon request of any Purchaser.
 
4.13.       Exclusivity.  Until the Closing or the termination of this Agreement
pursuant to Section 5.1 hereof, the Company shall not, directly or indirectly,
through any Affiliate or any of its consultants, counsel, accountants,
investment bankers or other representatives (a) initiate, solicit, pursue,
discuss or encourage any inquiries or the making of any proposal or offer with
respect to a private sale, transfer or issuance of any securities of the Company
or any other private financing of the Company, (b) continue or engage in
negotiations or discussions concerning, or provide any information to any Person
relating to, any such transaction, or (c) agree to, approve or recommend, or
otherwise enter into any agreement with respect to, any such transaction.  The
Company agrees to notify the Purchasers immediately if any Person makes any oral
or written inquiry, proposal or offer with respect to any such transaction.
 
4.14.       Information Statement.
 
(a)           Distribution of Information Statement.  As soon as practicable
after the date hereof and, in any event within two Business Days after the date
hereof, the Company shall prepare an information statement as contemplated by
and in accordance with Regulation 14C under the Exchange Act (an “Information
Statement”) and file the Information Statement with the Commission and cause the
definitive Information Statement to be mailed to the stockholders of the Company
in accordance with the provisions of the DGCL and Regulation 14C as soon as
possible after the preliminary Information Statement is cleared with the
Commission; provided, however, that the Company shall provide the Purchasers
with a draft of the Information Statement prior to the filing thereof and the
distribution thereof to the Company’s stockholders and the Company shall give
reasonable consideration to any comments by the Purchasers and their counsel to
such Information Statement.

 
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(b)           The Information Statement shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading.  The
Information Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
 
(c)           If the Information Statement is reviewed by the Commission, the
Company shall use its best efforts to have the Information Statement cleared by
the Commission and its staff under the Exchange Act as promptly as
practicable.  The Company shall promptly notify the Purchasers of the receipt of
any comments from the Commission or its staff and of any request by the
Commission or its staff for amendments or supplements to the Information
Statement or for additional information and shall supply the Purchasers with
copies of all correspondence between the Company or any of its representatives
and the Commission or its staff.
 
4.15.       Right to Participate in Future Financing.  For a period of one year
following the Closing Date (the “Participation Period”), the Purchasers shall
have the right to participate and purchase in the first Qualified Offering
(defined below) during the Participation Period (on a pro rata basis based upon
their original respective Subscription Amounts), collectively, no less than $5
million and no more than $10 million (with the actual amount purchased within
such range to be subject to the sole discretion of the Purchasers) of (a) shares
of Common Stock, (b) debt or equity securities convertible, exercisable or
exchangeable into Common Stock or (c) debt securities.  A “Qualified Offering”
shall mean an offer and sale to a third party, whether private or public and
whether underwritten or not, of securities of the Company of the type referenced
in (a) to (c) in the preceding sentence.  Any such purchase by the Purchasers
shall be on the same terms and conditions and at the same price such securities
are offered to the third party in the Qualified Offering.  The Company covenants
and agrees that it shall promptly notify, in accordance and compliance with all
applicable securities laws, each Purchaser of the terms and conditions of any
proposed Qualified Offering; provided, however, that if the Qualified Offering
is a public offering, the notice from the Company to each Purchaser will set
forth the anticipated price range, as opposed to the actual offering price,
which will not be determined until immediately prior to the effectiveness of the
Qualified Offering.  Within ten Business Days after such notice, each Purchaser
shall notify the Company of the amount it will purchase in the Qualified
Offering pursuant to the terms of this Section 4.15.  This right shall terminate
upon the consummation of a Qualified Offering.
 
4.16.       Investment Company, PFIC and CFC.  The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act of 1940, as amended, and will not be deemed to be a “passive foreign
investment company” or a “controlled foreign corporation” as defined by the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder.

 
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4.17.       Conduct of Business.  Except as expressly approved by the Purchasers
in writing (which approval shall not be unreasonably withheld or delayed),
during the period between the date hereof and the Closing Date, the Company
shall, and the Company shall cause each of its Subsidiaries to, (a) operate its
business only in the ordinary course of business, not introduce any new method
of management or operation and use its reasonable best efforts to preserve its
business intact, (b) use its reasonable best efforts to keep available the
services of its current officers, employees and consultants and (c) use its
reasonable best efforts to preserve the goodwill and present relationships with
customers, vendors, distributors, licensors, licensees, creditors, business
partners and others with which the Company and its Subsidiaries have business
relations.  Without limiting the generality of the preceding sentence, during
the period between the date hereof through the Closing Date, the Company shall
not, and shall cause its Subsidiaries not to, except as expressly required or
permitted by the terms of this Agreement, do or propose or agree to do any of
the following without the prior written consent or direction of the
Purchasers:  (i) amend its certificate of incorporation, articles of
association, bylaws or other constitutional documents; (ii) merge with or
consolidate with any other Person; (iii) issue or sell any Common Stock or
Common Stock Equivalents to any Person other than the Purchasers.
 
4.18.       Board of Directors.  In accordance with the Voting Agreement, within
60 days after the Closing, the Company shall take all necessary corporate action
to cause (a) Anne Wang, as representative designated by the Purchasers, to serve
as a non-independent director on the Board of Directors of the Company and (b)
an individual, nominated by the Company and reasonably satisfactory to the
Purchasers, to serve as an independent director on the Board of Directors of the
Company.  The Purchasers agree that they shall not be unreasonable with respect
to the Company’s selection of the independent director referenced in the prior
sentence.  In accordance with the Voting Agreement, until such date as the
Purchasers, collectively, do not own at least 5.0% of the shares of Common Stock
of the Company, calculated on a fully diluted basis, (i) the Purchasers shall be
entitled to nominate one director to the Board of Directors of the Company, and
(ii) the Company shall nominate and recommend the election of Anne Wang or such
other nominee of the Purchasers to the Board of Directors of the Company to its
stockholders at any meeting of stockholders at which members of the Board of
Directors shall be elected.  Prior to the date that Anne Wang is appointed as a
director of the Company, the Company shall have delivered to the Purchasers a
director indemnification agreement, in form and substance acceptable to the
Purchasers, duly executed by the Company.
 
4.19.       Status of Subsidiaries.
 
(a)           Beijing Agritech Fertilizer Ltd.  On and after the Closing Date,
the Company shall cause its Subsidiary, Beijing Agritech Fertilizer Ltd, to
cease using the name “艾瑞泰克（中國）肥料有限公司”or “Agritech (China) Fertilizer Co., Ltd.”
and to instead use the name “艾瑞泰克（中國）肥料有限公司” or “Beijing Agritech Fertilizer
Ltd.,” including on all signage.
 
(b)           SAFE Circular 75 Filing.  As soon as practicable after the
Closing, the Company shall cause Mr. Chang Yu, to effect any and all
registrations required under the rules and regulations promulgated, or
applicable policies implemented, by the PRC State Administration of Foreign
Exchange or its relevant sub-branch, including, without limitation, SAFE
Circular 75.  The Company shall provide the Purchasers with a complete true copy
of the relevant documentation relating to such registrations.
 
(c)           Payments to the Bank Account of Mr. Chang Yu.  On and after the
Closing Date, the Company shall not, and shall cause its Subsidiaries not to,
arrange, allow or require payments under sales contracts or payments made for
the benefit of the Company or any Subsidiary thereof, to be deposited in any
personal bank account of Mr. Chang Yu.

 
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(d)           CAI Investment, Inc.  The Company shall take such action as may be
necessary to have CAI Investment, Inc. declared in good standing under the laws
of the State of California and shall deliver a good standing certificate issued
by a duly authorized person within the office of the Secretary of State of
California promptly upon the notification from the Secretary of State’s Office
that CAI Investment, Inc. is in good standing.
 
4.20.       Lock-Up Agreement.  In the event the Company undertakes a bona fide
public offering of equity securities, the Purchasers shall agree at the request
of the lead underwriter to execute a lock-up agreement which shall provide that
the Purchasers will not sell, transfer or dispose of their shares of Common
Stock for a period of one hundred eighty days (180) after the effective date of
the registration statement filed in connection with the public offering, or such
shorter period as the underwriters may agree upon; provided, however, that any
such lock-up with respect to the Purchasers shall be on no less favorable terms
than any lock-up executed by any officer, director or 5% stockholder.
 
ARTICLE V
MISCELLANEOUS
 
5.1.         Termination.  This Agreement may be terminated and the sale and
purchase of the Shares and Warrants abandoned at any time prior to the Closing
by either the Company or any Purchaser (with respect to itself only) upon
written notice to the other, if the Closing has not been consummated on or prior
to 5:00 p.m., New York City time, on October 31 ,2009; provided, however, that
the right to terminate this Agreement under this Section 5.1 shall not be
available to any Person whose failure to comply with its obligations under this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or before such time.  Nothing in this Section 5.1 shall be deemed to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents.  Upon a
termination in accordance with this Section 5.1, the Company and the terminating
Purchaser(s) shall not have any further obligation or liability (including
arising from such termination) to the other, and no Purchaser will have any
liability to any other Purchaser under the Transaction Documents as a result
therefrom.
 
5.2.         Fees and Expenses.  The Company shall pay all fees and expenses it
incurs in connection with satisfying its obligations under this Agreement.  The
Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities to the
Purchasers.  Additionally, the Company shall also reimburse the Purchasers for
up to $150,000 of the Purchasers’ reasonable out-of-pocket expenses, including,
without limitation, fees of legal counsel, incurred by them in connection with
the consummation of the transactions contemplated by the Transaction Documents.
 
5.3.         Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 
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5.4.         Notices.  Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given.  The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.
 
5.5.         Amendments; Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Purchasers holding a majority of the Shares at the time
of the amendment or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought.  No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right.
 
5.6.         Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
 
5.7.         Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns;
provided, however, the Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each
Purchaser.  Except as set forth herein, any Purchaser may assign any or all of
its rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions of the
Transaction Documents that apply to the “Purchasers.”
 
5.8.         No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7.

 
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5.9.         Governing Law.  This Agreement, and the determination of any and
all claims arising out of, relating to or in connection with this Agreement and
the other Transaction Documents, shall in all respects and to the maximum extent
permitted by applicable law be governed by the laws of the State of New York,
including all matters of construction, enforcement, validity and performance
(including sections 5-1401 and 5-1402 of the New York General Obligations Law
but excluding all other choice of law and conflicts of law rules).  EACH PARTY
HERETO AGREES THAT IT SHALL BRING ANY AND ALL ACTIONS OR PROCEEDINGS IN RESPECT
OF ANY CLAIM ARISING OUT OF, RELATED TO, OR IN CONNECTION WITH, THIS AGREEMENT
OR THE OTHER TRANSACTION DOCUMENTS, THE TRANSACTIONS CONTAINED IN OR
CONTEMPLATED BY THIS HEREBY OR THEREBY, OR THE RELATIONSHIP BETWEEN THE PARTIES
HERETO, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY NEW
YORK STATE COURT SITTING IN NEW YORK CITY (THE “CHOSEN COURT”) AND (A)
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURT, (B)
WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE
CHOSEN COURT, (C) WAIVES ANY OBJECTION THAT THE CHOSEN COURT IS AN INCONVENIENT
FORUM OR DOES NOT HAVE JURISDICTION OVER ANY PARTY HERETO AND (D) AGREES THAT
SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE
EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH SECTION 5.4 OF THIS
AGREEMENT.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  If any party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then the prevailing party in such action or proceeding shall be
reimbursed by the losing party for its reasonable attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.
 
5.10.       Survival.  The representations and warranties contained herein shall
survive the Closing and the delivery of the Shares and Warrants.
 
5.11.       Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together 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, it being understood that all
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.
 
5.12.       Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
 
5.13.       Rescission and Withdrawal Right.  Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever any Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights; provided,
however, in the case of a rescission of an exercise of a Warrant, the Purchaser
shall be required to return any Common Stock delivered in connection with any
such rescinded exercise notice.

 
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5.14.       Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity and
bond) associated with the issuance of such replacement Securities.
 
5.15.       Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agrees to waive
and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
 
5.16.       Payment Set Aside.  To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
 
5.17.       Independent Nature of Purchasers’ Obligations and Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document.  Nothing contained herein
or in any other Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation, the rights arising
out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other Purchaser to be joined as an additional party in
any proceeding for such purpose.  Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents.

 
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5.18.       Liquidated Damages.  The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
 
5.19.       Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
 
5.20.       Waiver of Jury Trial.  In any action, suit or proceeding in any
jurisdiction brought by any party against any other party, the parties each
knowingly and intentionally, to the greatest extent permitted by applicable law,
hereby absolutely, unconditionally, irrevocably and expressly waives forever
trial by jury.
 
(Signature Pages Follow)

 
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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed by its authorized signatory as of the date first
indicated above.
 
CHINA AGRITECH, INC.
 
Address for Notice:
       
By:  
/s/ Yu Chang
 
Room 3F No. 11 Building
 
Name: Yu Chang
Title: Chief Executive Officer
 
Zhonghong International Business Garden,
Future Business Center
 
 
 
Chaoyang North Road, Chaoyang District,
     
Beijing, China  100024
With a copy to (which shall not constitute notice):  
Attention:                                          
     
Fax:                                           
Loeb & Loeb LLP     345 Park Avenue     New York, New York  10154    
Attention:  Mr. Mitchell S. Nussbaum     Fax:  (212) 504-3013    

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]

 
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[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed by its authorized signatory as of the date first
indicated above.
 
CARLYLE ASIA GROWTH PARTNERS IV, L.P.
       
By:
CAGP General Partner, L.P., as its General Partner
By:
CAGP Ltd., as its General Partner
     
By:  
/s/ Curtis Buser
   
Name: Curtis Buser
   
Title: Director
 

Address for Notice of Purchaser:
Suite 2801, 28/F, Two Pacific Place
 
88 Queensway, Hong Kong
   
With a copy to
 
(which shall not constitute notice):
Troutman Sanders LLP
 
34F Two Exchange Square
 
8 Connaught Place, Central
 
Hong Kong
 
Attention:  Ms. Olivia S. Lee
 
Fax:  (852) 2533-7898

[SIGNATURE PAGES CONTINUE]

 
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[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed by its authorized signatory as of the date first
indicated above.
 
CAGP IV CO-INVESTMENT, L.P.
       
By:
CAGP General Partner, L.P., as its General Partner
By:
CAGP Ltd., as its General Partner
     
By:  
/s/ Curtis Buser    
Name: Curtis Buser
   
Title: Director
 

Address for Notice of Purchaser:
Suite 2801, 28/F, Two Pacific Place
 
88 Queensway, Hong Kong
   
With a copy to
 
(which shall not constitute notice):
Troutman Sanders LLP
 
34F Two Exchange Square
 
8 Connaught Place, Central
 
Hong Kong
 
Attention:  Ms. Olivia S. Lee
 
Fax:  (852) 2533-7898

[SIGNATURE PAGES CONTINUE]

 
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