China Agritech, Inc. - Exhibit 10.1




 



STOCK PURCHASE AGREEMENT 

THIS STOCK PURCHASE AGREEMENT (the "Agreement")
is made and entered into as of the 13th day of January, 2006, by and between the
investors as listed in Exhibit A (each an "Investor" or "Purchaser"
and collectively, the "Investors" or "Purchasers") and CHINA
AGRITECH, INC., a Delaware corporation (the "Company"). 


W I T N E S S E T H: 

WHEREAS, the Company desires to sell
to the Purchasers and the Purchasers desire to purchase from the Company
4,800,000 shares of Common Stock of the Company, par value $0.001 per share (the
"Shares"), in reliance upon Rule 506 of Regulation D under the Securities
Act of 1933, as amended (the "Act") and upon the terms, provisions, and
conditions and for the consideration hereinafter set forth. 


NOW, THEREFORE, for and in
consideration of the promises and mutual covenants and agreements contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby represent, warrant,
covenant, and agree as follows: 


DEFINITIONS 

Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the meanings indicated below:



  "Accredited Investor" means an investor that meets or
  exceeds the criteria established in Rule 501(a) of Regulation D promulgated
  under the Act. 

  "Action" means an 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,
  provincial, county, local or foreign). 

  "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 144 under the Act. 

  "Business Day" means any day except
  Saturday, Sunday and any day which shall be a federal legal holiday in the
  United States or a day on which banking institutions in the State of Delaware
  are authorized or required by law or other government action to close. 
  

  "Common Stock" means the common shares of the shares capital
  of the Company, par value $0.001 per share. 

  "Disclosure Schedules" shall have the meaning ascribed to
  such term in Section 6. 







  "Exchange Act" means the Securities Exchange Act of 1934, as
  amended, and the rules and regulations promulgated thereunder. 

  "Liens" means a lien, charge, security interest,
  encumbrance, right of first refusal, preemptive right or other restriction.
  

  "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. 

  "Regulation S" means Rules 901 through 905
  promulgated by the SEC pursuant to the 1933 Act, 17 C.F.R. Sections
  230.901-905, as such Rules may be amended from time to time, or any similar
  rules or regulations hereafter adopted by the SEC having substantially the
  same effect as such Rules. 

  "Rule 144" means Rule 144 promulgated by the
  SEC pursuant to the Act, as such Rule may be amended from time to time, or any
  similar rule or regulation hereafter adopted by the SEC having substantially
  the same effect as such Rule. 

  "SEC" means the U.S. Securities and Exchange Commission.
  "SEC Reports" shall have the meaning ascribed to such term in Section [6.8.]
  "Subsidiary" means any subsidiary of the Company as set forth on Schedule
  [6.2]. 

  "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
  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 Sheets, LLC. 

  "Trading Market" means whichever of the New York Stock
  Exchange, the American Stock Exchange, the NASDAQ National Market, the NASDAQ
  SmallCap Market or OTC Bulletin Board on which the Common Stock is listed or
  quoted for trading on the date in question. 




Section 1. Issuance and Sale of Shares. 


Based upon the representations, warranties, and covenants and
subject to the terms, provisions, and conditions contained in this Agreement and
other documents related to this transaction ("Transaction Documents"),
the Company agrees to sell, issue and deliver to the Purchasers the Shares, free
and clear of all liens, pledges, encumbrances, security interests, and adverse
claims, and the Purchasers agree to purchase the Shares from the Company for the
consideration hereinafter set forth. 


Section 2. Legend. 


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(a) Shares may only be disposed of in compliance with state
and federal securities laws in the United States and other applicable
jurisdictions. In connection with any transfer of the Shares other than pursuant
to an effective registration statement, to the Company or to an Affiliate of an
Investor, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, 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 Shares
under the Act. 

(b) Certificates evidencing the Shares will contain the
following legend, until such time as they are not required under Section 2.1(c):



  
    THESE SECURITIES HAVE NOT BEEN REGISTERED
    WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
    ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
    SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
    MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
    STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
    FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
    THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS
    AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
    THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
    SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
    SECURED BY SUCH SECURITIES. 

  



(c) Certificates evidencing the Shares shall not contain any
legend (including the legend set forth in Section 2.1(b)): (i) following a sale
or transfer of such Shares pursuant to an effective registration statement
(including the Registration Statement, as defined below), or (ii) following a
sale or transfer of such Shares pursuant to Rule 144 under the Act as evidenced
by an opinion of counsel selected by the transferor, 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 Shares
under the Act (assuming the transferor is not an Affiliate of the Company), or
(iii) while such Shares are eligible for sale under Rule 144(k) and the
transferor has provided the Company with an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such Shares are eligible for
sale under Rule 144(k). The Company may not make any notation on its records or
give instructions to any transfer agent of the Company that enlarge the
restrictions on transfer set forth in this Section. 


Section 3. Number of Shares; Purchase Price. 


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Upon execution hereof, the Purchasers shall purchase, and the Company shall
sell, issue and deliver to the Purchasers, 4,800,000 Shares at a purchase price
of $2.50 per Share as set forth on Exhibit B hereto, in the total amount of
$12,000,000. 


Section 4. The Closing. 


Upon execution of this Agreement, the Company shall deliver to
the Purchasers certificates evidencing the Shares to be purchased by the
Purchasers hereunder (the "Closing"). Such certificates shall be issued
in the name of Purchasers. Immediately upon Closing and delivery to each of the
Purchasers of the foregoing certificates, the Purchasers shall deliver to
Securities Transfer Corporation, as the Company's escrow agent (the "Escrow
Agent") the aggregate purchase price payable for the Shares acquired by the
Purchasers hereunder (the "Purchase Price"). The release of the Purchase
Price to the Company shall be effected in accordance with the terms of this
Agreement and an escrow agreement to be entered into by and among the Escrow
Agent, the parties hereto and such other parties referenced therein. 


Section 5. Representations and Warranties of the Purchasers.



Each of the Purchasers acknowledges and
understands that the Shares are being acquired for investment in a transaction
undertaken in reliance upon the exemption from registration under Rule 506 of
Regulation D under the Act. Each Purchasers hereby represents and warrants to
the Company that: 

(a) The Purchaser is acquiring the Shares solely for
investment purposes and not with a view to, or for resale in connection with,
any distribution thereof or with any present intention of distributing or
selling any of the Shares, except in accordance with applicable provisions of
the Act. 

(b) The Purchaser will hold the Shares subject to all of the
applicable provisions of the Act, and the Purchaser will not at any time make
any sale, transfer, or other disposition of the Shares in contravention of said
Act (references herein to the Act shall include the rules and regulations
thereunder). 

(c) The sale of the Shares to Purchasers is being made without
any public solicitation or advertisements. 

(d) The Purchaser or beneficial purchaser, if any, for whom
the Purchaser is acting as trustee or agent has not received, nor has it
requested, nor does it have any need to receive, any offering memorandum or any
other document describing the business and affairs of the Company (other than
this Agreement), nor has any document been prepared for delivery to, or review
by, prospective purchasers in order to assist them in making an investment
decision in respect of the Shares. 

(e) The representations and warranties set forth in Schedule A
- U.S. Accredited Investor Certificate attached hereto are true and correct as
at the Closing Date and that the Purchaser is an Accredited Investor and that it
undertakes to complete, sign and return Schedule A to the Company. 

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(f) The Purchaser has been independently advised as to the
restrictions with respect to trading in the Purchaser's Shares imposed by
applicable securities legislation in the jurisdiction in which it resides,
confirms that no representation has been made to it by or on behalf of the
Company with respect thereto, acknowledges that it is aware of the
characteristics of the Purchaser's Shares, the risks relating to an investment
therein and of the fact that it may not be able to resell the Purchaser's Shares
except in accordance with limited exemptions under applicable securities
legislation and regulatory policy. 

(g) The Purchaser understands and acknowledges that the
Purchaser's Shares have not and may not be registered under the Act, or the
securities laws of any state of the United States and that: (i) the sale
contemplated hereby is being made in reliance upon the exemption from
registration under the Act provided by Section 4(2) thereof and Rule 506
thereunder and exemptions from registration under applicable state securities
laws; and (ii) all such sales are being made in transactions not involving any
public offering within the meaning of the Act. Accordingly, the Purchaser's
Shares will be "restricted securities" within the meaning of the Rule 144, and
therefore may not be offered or sold by it without registration under United
States federal and state securities laws, except in compliance with the Act.


(h) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Purchaser's Shares and it is able to bear the
economic risk of loss of its entire investment. 

(i) The Purchaser has had access to such additional
information, if any, concerning the Company as it has considered necessary in
connection with an investment in the Purchaser's Shares. 


Section 6. Representations and Warranties of the Company.



The Company hereby represents and warrants to each Purchasers
as follows, it being understood that each reference to the Company hereafter
with respect to each such representation and warranty shall pertain to the
Company and any direct and indirect subsidiaries: 

6.1 Capital Structure. The authorized capital stock of the
Company consists of 100 million shares of Common Stock, par value $.001 per
share. On the date of Closing (the "Closing Date"), there will be
19,143,615 shares of Common Stock issued and outstanding. The number of shares
and type of all authorized, issued and outstanding capital stock of the Company,
and all shares of Common Stock reserved for issuance under the Company's various
option and incentive plans, are specified in the SEC Reports. Except as
specified in the SEC Reports, no securities of the Company are entitled to preemptive or similar rights, and 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 specified
in the SEC Reports, 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 exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares of
Common Stock. The issue and 

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sale of the Shares will not, immediately or
with the passage of time, obligate the Company to issue shares of Common Stock
or other securities to any Person (other than the Investors) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. 

6.2 Subsidiaries. The Company has no direct or indirect
Subsidiaries other than as specified in the SEC Reports. The Company owns,
directly or indirectly, all of the capital stock of each Subsidiary free and
clear of any and all Liens, and all the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights. 

6.3 Organization and Qualification. The Company and each
Subsidiary are 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 as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. The Company and each Subsidiary are
duly qualified to conduct its respective businesses and are 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, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect. For purposes of this
Agreement, the term "Material Adverse Effect" means any material adverse effect
with respect to the Company, taken as a whole, or any change or effect that
adversely, or is reasonably expected to adversely, affect the ability of the
Company to maintain its current business operations or to consummate the
transactions contemplated by this Agreement in any material respect. 

6.4 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 thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company in
connection therewith. 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, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. 

6.5 No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated 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, or give to others any
rights of 

6 




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) 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 federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect. 


6.6 Filings, Consents and Approvals. The Company is not
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 the Company of the Transaction
Documents, other than (i) the filing with the SEC of one or more Registration
Statements in accordance with the requirements of the Registration Rights
Agreement, (ii) filings required by state securities laws, (iii) the filing of a
Notice of Sale of Securities on Form D with the SEC under Regulation D of the
Act, and (iv) those that have been made or obtained prior to the date of this
Agreement. 

6.7 Issuance of the Shares. The Shares have been duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Company has reserved from its duly authorized
capital stock the shares of Common Stock issuable pursuant to this Agreement in
order to issue the Shares. 

6.8 SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it under the Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the twelve months
preceding the date hereof (or such shorter period as the Company was required by
law to file such reports) (the foregoing materials being collectively referred
to herein as the "SEC Reports" and, together with the Disclosure
Schedules to this Agreement (if any), the "Disclosure Materials") on a
timely basis or has timely filed a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Act and the Exchange Act and the rules and
regulations of the SEC promulgated thereunder, and none of the SEC 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 light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the SEC with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved, except as
may be otherwise specified in such financial statements or the notes thereto,
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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6.9 Press Releases. The press releases disseminated by the
Company during the twelve months preceding the date of this Agreement taken as a
whole do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made and
when made, not misleading. 

6.10 Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (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 has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables, accrued expenses and
other liabilities incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting or
the identity of its auditors, (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 shares of
its capital stock, 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 SEC any request for
confidential treatment of information. 

6.11 Litigation. There is no Action which (i) adversely
affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Shares, or (ii) except as specifically disclosed in
the SEC Reports, could, if there were an unfavorable decision, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof (in his or her capacity as such), is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty, except as specifically
disclosed in the SEC Reports. There has not been, and to the knowledge of the
Company, there is not pending any investigation by the SEC involving the Company
or any current or former director or officer of the Company (in his or her
capacity as such). The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Act. 

6.12 Labor Relations. No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company. 

6.13 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 relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor 

8 




matters, except in each case as could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. 

6.14 Regulatory Permits. The Company and the 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 SEC Reports, except where the
failure to possess such permits could not, individually or in the aggregate,
have or 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 permits. 

6.15 Title to Assets. The Company and the Subsidiaries have
good and marketable title in fee simple to all real property owned by them that
is material to their respective businesses and good and marketable title in all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in compliance, except as
could not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. 

6.16 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, copyrights, licenses and
other similar rights that are necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which the
failure to so have could, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect (collectively, the 
"Intellectual Property Rights"). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person.
Except as set forth in the SEC Reports, 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.


6.17 Transactions With Affiliates and Employees. Except as set
forth in the SEC Reports, none of the officers or directors of the Company and,
to the knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as 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 officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner. 

6.18 Solvency. Based on the financial condition of the Company
as of the Closing Date (and assuming that the Closing shall have occurred), (i)
the Company's fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company's 

9 




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 debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt). 

6.19 Certain Fees. Except as described in Schedule 6.19, no
brokerage or finder's fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by such
Investor which fees or commissions shall be the sole responsibility of such
Investor) 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 this Agreement. 

6.20 Certain Registration Matters. Assuming the accuracy of
the Investors' representations and warranties, no registration under the Act is
required for the offer and sale of the Shares by the Company to the Investors
under the Transaction Documents. The Company is eligible to register its Common
Stock for resale by the Investors under Form SB-2 promulgated under the Act.
Except as disclosed in the SEC Reports, the Company has not granted or agreed to
grant to any Person any rights (including "piggy-back" registration rights) to
have any securities of the Company registered with the SEC or any other
governmental authority that have not been satisfied. 

6.21 Listing and Maintenance Requirements. Except as specified
in the SEC Reports, the Company has not, in the two years preceding the date
hereof, received notice from any Trading Market to the effect that the Company
is not in compliance with the listing or maintenance requirements thereof. The
Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with the listing and maintenance
requirements for continued listing of the Common Stock on the Trading Market on
which the Common Stock is currently listed or quoted. The issuance and sale of
the Shares under the Transaction Documents does not contravene the rules and
regulations of the Trading Market on which the Common Stock is currently listed
or quoted, and no approval of the shareholders of the Company thereunder is
required for the Company to issue and deliver to the Investors the Shares
contemplated by Transaction Documents. 

6.22 Investment Company. The Company is not, and is not an
Affiliate of, and immediately following the Closing will not have become, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. 

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6.23 Application of Takeover Protections. The Company has
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
Investors as a result of the Investors and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation the Company's issuance of the Shares and the
Investors' ownership of the Shares. 

6.24 No Additional Agreements. The Company does not have any
agreement or understanding with any Investor with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents. 

6.25 Disclosure. The Company confirms that neither it nor any
Person acting on its behalf has provided any Investor or its respective agents
or counsel with any information that the Company believes constitutes material,
non-public information except insofar as the existence and terms of the proposed
transactions hereunder may constitute such information. The Company understands
and confirms that the Investors will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All disclosure
provided to the Investors regarding the Company, its business and the
transactions contemplated hereby, furnished by or on behalf of the Company
(including the Company's representations and warranties set forth in this
Agreement) are true and correct and do 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. 


Section 6A. Covenants of the Majority Shareholder. 


The majority shareholder of the Company, Mr. Chang Yu ("Chang
Yu") hereby agrees to each Purchasers as follows: 

6A.1 Make Good Shares. In the event the consolidated financial
statements of the Company reflect less than $7 million of After-Tax Net Income
for the fiscal year ending December 31, 2006 (the "First Guaranteed NI"),
Chang Yu agrees to transfer to the Purchasers on a pro rata basis for no
purchase price that certain number of shares of the Company's Common Stock which
represent 5% of the total Common Stock that Chang Yu owns directly or indirectly
(the "5% Make Good Shares") as of August 30, 2005, i.e., 544,096
shares of the Company's Common Stock. In the event the consolidated financial
statements of the Company reflect between $7 million and $7.5 million of
After-Tax Net Income for the fiscal year ending December 31, 2006 (the "Second
Guaranteed NI"), Chang Yu agrees to transfer to the Purchasers on a pro
rata basis for no purchase price that certain number of shares of the Company's
Common Stock which represent 2.5% of the total Common Stock that Chang Yu owns
directly or indirectly as of August 30, 2005 (the "2.5% Make Good
Shares"), i.e., 272,048 shares of the Company's Common Stock. In the event
the consolidated financial statements of the Company reflect greater than $7.5
million of After-Tax Net Income for the fiscal year ending December 31, 2006, no
transfer shall be required by Chang Yu to the Purchasers under this Section.
Nonrecurring expenses of the Company shall not be deducted from After-Tax Net
Income for the purposes of calculating the First Guaranteed NI or the Second
Guaranteed NI. Any such transfer of the 5% Make Good Shares 

11 




or the 2.5% Make Good Shares under this Section shall be made within 10
business days after the date which the 2006 audit report for the Company is
filed with the SEC. 


Section 7. Registration Rights. 


7.1 Registration by the Company. 

(a) Mandatory Registration. As promptly as practicable (but in
no event later than 30 days) after the closing date of this Agreement, the
Company shall file a registration statement or an amendment to a registration
statement already filed but not yet declared effective by the SEC (such
registration statement or any such amendment, the "Registration Statement"),
with the SEC under the Act to register the Shares. 

(b) Registration Statement Form. Registrations under this
Section7.1 shall be on such appropriate registration form of the SEC as shall be
reasonably selected by the Company and approved by each Purchaser, which
approval shall not be unreasonably withheld. The Company shall provide drafts of
the Registration Statement proposed to be filed by it to the Purchaser in
advance of the filing thereof and provide the Purchaser with a reasonable amount
of time to review and comment on the same prior to its filing. 

(c) Effective Registration Statement. A registration required
pursuant to this Section 7.1 shall not be deemed to have been effected unless
the Registration Statement has been declared effective by the SEC and has
remained effective until the earlier of (i) the second anniversary of the
declaration of its effectiveness by the SEC or (ii) such time as all of the
Shares have been disposed of in accordance with the intended methods of
disposition by each Purchaser set forth in such Registration Statement (unless
the failure to so dispose of such Shares shall be caused solely by reason of a
failure on the part of the Purchaser) and in compliance with the provisions of
the Act with respect to the disposition of all of the Shares covered by such
Registration Statement. Such Registration Statement shall not cease to be
available and effective as to all shares which is required to cover for more
than 20 trading days in any 12-month period. 

7.2 Priority Registrations. Notwithstanding anything else set
forth herein and subject to the limitations set forth below, the Registration
Statement may include, in addition to the Shares, other securities of the
Company which are proposed to be sold for the account of the Company or any
other stockholders thereof. 

7.3 Registration Procedures. The Company shall, as
expeditiously as possible: 

(a) prepare and file with the SEC the requisite Registration
Statement to effect such registration and thereafter use its reasonable best
efforts to cause such Registration Statement to be declared effective by the
SEC; 

(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the Act with respect to the disposition of all
the Shares covered by such Registration Statement until the earlier of the time
as all of such Shares have been disposed of in accordance with the intended
methods of 

12 




disposition by the Purchaser set forth in such Registration
Statement or the date that the Shares are eligible for resale pursuant to the
provisions of Rule 144 under the Act; 

(c) furnish such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such Registration Statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Act, in conformity with the requirements of the Act, and such other
documents, as the Purchaser may reasonably request; 

(d) use its reasonable best efforts (i) to register or qualify
the Shares under such other securities or blue sky laws of such States of the
United States of America where an exemption is not available and as Purchaser
shall reasonably request, (ii) to keep such registration or qualification in
effect for so long as such Registration Statement remains in effect, and (iii)
to take any other action which may be reasonably necessary or advisable to
enable the Purchaser to consummate the disposition in such jurisdictions of the
securities to be sold by the Purchaser, except that the Company shall not for
any such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the requirements of
this subdivision (d) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction; 

(e) use its reasonable best efforts to cause all Shares
covered by such Registration Statement to be registered with or approved by such
other federal or state governmental agencies or authorities as may be necessary
in the opinion of counsel to the Company and counsel to the Purchaser to enable
the Purchaser to consummate the disposition of such Shares; 

(f) notify the Purchaser at any time when a prospectus
relating thereto is required to be delivered under the Act, upon discovery that,
or upon the happening of any event as a result of which, the prospectus included
in such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, in the light
of the circumstances under which they were made, and at the request of the
Purchaser promptly prepare and furnish to it a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the Purchaser of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made;


(g) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC, and, if required, make
available to its security holders simultaneously with its disclosure to the
public, an earnings statement covering the period of at least twelve months, but
not more than eighteen months, beginning with the first full calendar month
after the effective date of such Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Act and Rule 158
promulgated thereunder, and promptly furnish to Purchaser a copy of any
amendment or supplement to such Registration Statement or prospectus; 


13 




(h) provide and cause to be maintained a
transfer agent and registrar (which, in each case, may be the Company) for all
the Shares covered by such Registration Statement from and after a date not
later than the effective date of such registration; and 

(i) use its reasonable best efforts to list the Shares on any
national securities exchange on which the shares of the same class covered by
such Registration Statement are then listed. 

Each Purchaser agrees by acquisition of the Shares that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in subdivision (f) of this Section 7.3, such holder will forthwith
discontinue such disposition of the Shares pursuant to the Registration
Statement until Purchaser's receipt of the copies of the supplemented or amended
prospectus contemplated by subdivision (f) of this Section 7.3 and, if so
directed by the Company, will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in such holder's possession
of the prospectus relating to the Shares current at the time of receipt of such
notice. 


Section 8. Event of Force Majeure. 


(a) For the purpose of Section 8, "Force Majeure" shall mean
all events, which were unforeseeable at the time this Agreement is signed, the
occurrence and consequences of which cannot be avoided or overcome, and which
arises after this Agreement is signed and prevent total or partial performance
by any Party of this Agreement. Such events shall include earthquakes, typhoons,
flood, fire, war, failures of international or domestic transportation, acts of
government or public agencies, epidemics, civil disturbances, strikes and any
other instances which cannot be foreseen, avoided or overcome. 

(b) If an event of Force Majeure occurs, a Party's obligations
under this Agreement affected by such an event shall be excused, without
assuming the liability of breach of this Agreement. 

(c) The Party claiming Force Majeure shall
promptly inform the other Party in writing and shall furnish within 30 days
sufficient evidence of the occurrence and duration of such Force Majeure. 



Section 9. Agreements of the Company. 


9.1 Securities Laws Disclosure; Publicity. By 9:30 a.m. (New
York time) on the Trading Day following the execution of this Agreement, and by
9:30 a.m. (New York time) on the Trading Day following the Closing Date, the
Company shall issue press releases disclosing the transactions contemplated
hereby and the Closing. On the Trading Day following the execution of this
Agreement the Company will file a Current Report on Form 8-K disclosing the
material terms of the Transaction Documents (and attach as exhibits thereto the
Transaction Documents), and on the Trading Day following the Closing Date the
Company will file an additional Current Report on Form 8-K to disclose the
Closing. In addition, the Company will make such other filings and notices in
the manner and time required by the Commission and the Trading Market on which
the Common Stock is listed. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Investor, or include the name of any Investor
in any filing with the SEC (other than the Registration Statement and any
exhibits to filings made in respect of this transaction in 

14 




accordance with periodic filing requirements under the
Exchange Act) or any regulatory agency or Trading Market, without the prior
written consent of such Investor, except to the extent such disclosure is
required by law or Trading Market regulations. 

9.2 Independent Nature of Investors' Obligations and Rights.
The obligations of each investor under any Transaction Document are several and
not joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Shares pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors 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
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Shares or enforcing its rights under the Transaction
Documents. Each Investor 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 Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor. 

9.3 Limitation of Liability. Notwithstanding anything herein
to the contrary, the Company acknowledges and agrees that the liability of an
Investor arising directly or indirectly, under any Transaction Document of any
and every nature whatsoever shall be satisfied solely out of the assets of such
Investor, and that no trustee, officer, other investment vehicle or any other
Affiliate of such Investor or any investor, shareholder or holder of shares of
beneficial interest of such a Investor shall be personally liable for any
liabilities of such Investor. 

9.4 Furnishing of Information. As long as any Investor owns
the Shares, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Investor owns Shares, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares under Rule 144.
The Company further covenants that it will take such further action as any
holder of Shares may reasonably request, all to the extent required from time to
time to enable such Person to sell the Shares without registration under the Act
within the limitation of the exemptions provided by Rule 144. 

9.5 Integration. The Company shall not, and
shall use its best efforts to ensure that no Affiliate of the Company shall,
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in Section 2 of the Act) that would be integrated
with the offer or sale of the Shares in a manner that would require the
registration under the Act of the sale of the Shares to the Investors, or that
would be integrated with the offer or sale of the Shares for purposes 


15 




of the rules and regulations of any trading market in a manner
that would require stockholder approval of the sale of the securities to the
Investors. 

9.6 Indemnification of Investors. The Company will indemnify
and hold the Investors and their directors, officers, shareholders, partners,
employees and agents (each, an "Investor 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 (collectively, "Losses")
that any such Investor Party may suffer or incur as a result of or relating to
any misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in this Agreement. In addition to the
indemnity contained herein, the Company will reimburse each Investor Party for
its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. 

9.7 Non-Public Information. The Company covenants and agrees
that neither it nor any other Person acting on its behalf will provide any
Investor or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Investor
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Investor shall
be relying on the foregoing representations in effecting transactions in
securities of the Company. 

9.8 Listing of Shares. The Company agrees, (i) if the Company
applies to have the Common Stock traded on any other trading market, it will
include in such application the Shares, and will take such other action as is
necessary or desirable to cause the Shares to be listed on such other trading
market as promptly as possible, and (ii) it will take all action reasonably
necessary to continue the listing and trading of its Common Stock on a trading
market and will comply in all material respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the trading market.


Replacement of Shares. If any certificate or
instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefore, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Shares. If a replacement
certificate or instrument evidencing any Shares is requested due to a mutilation
thereof, the Company may require delivery of such mutilated certificate or
instrument as a condition precedent to any issuance of a replacement. 


9.9 The Company acknowledges and agrees that an Investor may
from time to time pledge, and/or grant a security interest in some or all of the
Shares pursuant to a bona fide margin agreement in connection with a bona fide
margin account and, if required under the terms of such agreement or account,
such Investor may transfer pledged or secured Shares to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval or consent
of the Company and no legal opinion of legal counsel to the pledgee, secured
party or pledgor shall be 

16 




required in connection with the pledge, but such legal opinion may be
required in connection with a subsequent transfer following default by the
Investor transferee of the pledge. No notice shall be required of such pledge.
At the appropriate Investor's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Act or other applicable provision of the Act to appropriately
amend the list of Selling Stockholders thereunder. 


Section 10. Survival of Representations and Warranties. 



All representations, warranties, covenants, and agreements contained herein
shall not be discharged or dissolved upon, but shall survive the Closing and
shall be unaffected by any investigation made by any party at any time. 


Section 11. Board Representation. 


Upon Closing, the Purchasers shall, collectively, have no right to designate
any member of the Company's board of directors. 


Section 12. Entirety and Modification. 


This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes any and all prior
agreements and understandings, whether oral or written, between the parties
hereto relating to such subject matter. No modification, alteration, amendment,
or supplement to this Agreement shall be valid or effective unless the same is
in writing and signed by all parties hereto. 


Section 13. Amendments; Waivers; No Additional Consideration.



No provision of this Agreement may be waived or amended except in a written
instrument signed by the Company and the Investors holding a majority of the
Shares. 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 either party
to exercise any right hereunder in any manner impair the exercise of any such
right. No consideration shall be offered or paid to any Investor to amend or
consent to a waiver or modification of any provision of any transaction document
unless the same consideration is also offered to all Investors who then hold
Shares. 


Section 14. 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 the Indemnification of Investors section. 


Section 15. Execution and Counterparts 


17 




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 both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, 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 signature page were an original thereof.



Section 16. Successors and Assigns. 


This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto, their successors and permitted assigns, heirs, and
personal representatives. 


Section 17. Governing Law. 


This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware. 


IN WITNESS WHEREOF, the parties hereto have duly executed this agreement
as of the date first written above. 


CHINA AGRITECH, INC. 


By: /s/ Chang Yu 

    Name: Chang Yu 

    Title: CEO 


WITH RESPECT TO SECTION 6A ONLY MAJORITY SHAREHOLDER: 



By: /s/ Chang Yu 


Name: Chang Yu 

18 



	INVESTORS	 
	 	 
	Ardsley Partners Offshore	By: /s/ Steven Napoli
	Fund, Ltd.	 
	 	   Name: Steven Napoli
	 	   Title: Partner/Agent
	 	  
	Ardsley Partners Fund II, L.P.	By: /s/ Steven Napoli
	 	 
	 	   Name: Steven Napoli
	 	   Title: Partner
	 	 
	Ardsley Partners Institutional	By: /s/ Steven Napoli
	Fund, L.P.	 
	 	   Name: Steven Napoli
	 	   Title: Partner
	 	 
	Pinnacle China Fund, L.P.	By: /s/ Barry M. Kitt
	 	 
	 	   Name: Barry M. Kitt
	 	   Title: Sole Member, Kitt China
    Management, L.L.C.,
	 	         
    the Manager of Pinnacle China Management, L.L.C.,
	 	         
    the General Partner of Pinnacle China Advisors, L.P.,
	 	         
    the General Partner of Pinnacle China Fund, L.P.
	 	 
	Jayhawk China Fund	By: /s/ Marcey Berges
	(Cayman), Ltd.	 
	 	   Name: Marcey Berges
	 	   Title: CFO
	 	 
	 	 
	Renaissance U.S. Growth	By: /s/ Russell Cleveland
	Investment Trust PLC	 
	 	   Name: Russell Cleveland
	 	   Title: President
	 	 
	 	RENN Capital Group, Inc., Investment Manager
	 	 
	BFS U.S. Special	By: /s/ Russell Cleveland
	Opportunities Trust PLC	 
	 	   Name: Russell Cleveland
	 	   Title: President
	 	 
	 	RENN Capital Group, Inc., Investment Adviser




19 



	Gary C. Evans	Signature: /s/ Gary C. Evans
	 	 
	Daniel Conwill IV	Signature: /s/ Daniel Conwill IV
	 	 
	Chet Morrison	Signature: /s/ Chet Morrison
	 	 
	David Kenkel	Signature: /s/ David Kenkel
	 	 
	George Resta	Signature: /s/ George Resta
	 	 
	Bob Jackson	Signature: /s/ Bob Jackson
	 	 
	Tom Matava	Signature: /s/ Tom Matava
	 	 
	Carolyn Prahl	Signature: /s/ Carolyn Prahl
	 	 
	Jim Brown	Signature: /s/ Jim Brown
	 	 
	James Lynch	Signature: /s/ James Lynch
	 	 
	Edwin Young	Signature: /s/ Edwin Young
	 	 
	Mike Studer	Signature: /s/ Mike Studer
	 	 
	John Trescot Jr.	Signature: /s/ John Trescot Jr.
	 	 
	W. W. Gay	Signature: /s/ W. W. Gay
	 	 
	Harold E. Gear	Signature: /s/ Harold E. Gear




20 




Exhibit A 

List of the Investors (Purchasers) 


	1.	Ardsley Partners
    Offshore Fund, Ltd.
	2.	Ardsley Partners Fund
    II, L.P.
	3.	Ardsley Partners
    Institutional Fund, L.P.
	4.	Pinnacle China Fund,
    L.P.
	5.	Jayhawk China Fund
    (Cayman), Ltd.
	6.	Renaissance U.S.
    Growth Investment Trust PLC
	7.	BFS U.S. Special
    Opportunities Trust PLC
	8.	Gary C. Evans
	9.	Daniel Conwill IV
	10.	Chet Morrison
	11.	David Kenkel
	12.	George Resta
	13.	Bob Jackson
	14.	Tom Matava
	15.	Carolyn Prahl
	16.	James Brown
	17.	James Lynch
	18.	Edwin Young
	19.	Mike Studer
	20.	John Trescot Jr.
	21.	W. W. Gay
	22.	Harold E. Gear





Exhibit B 

Table of the Shares Purchased By Purchasers


	 	 	 
	Purchasers	
    Purchase Price	
    Shares Purchased
	Ardsley Partners
    Offshore	
    $1,587,500	635,000
	Fund, Ltd.	 	 
	Ardsley Partners Fund
    II, L.P.	
    $1,187,500	475,000
	 	 	 
	Ardsley Partners
    Institutional	$725,000	290,000
	Fund, L.P.	 	 
	Pinnacle China Fund,
    L.P.	
    $3,000,000	
    1,200,000
	Jayhawk China Fund	
    $1,800,000	720,000
	(Cayman), Ltd.	 	 
	Renaissance U.S.
    Growth	$900,000	360,000
	Investment Trust PLC	 	 
	BFS U.S. Special	$900,000	360,000
	Opportunities Trust
    PLC	 	 
	Gary C. Evans	$500,000	200,000
	 	 	 
	Daniel Conwill IV	$250,000	100,000
	Chet Morrison	$150,000	60,000
	David Kenkel	$100,000	40,000
	George Resta	$100,000	40,000
	Bob Jackson	$100,000	40,000
	Tom Matava	$100,000	40,000
	Carolyn Prahl	$100,000	40,000
	James Brown	$100,000	40,000
	James Lynch	$100,000	40,000
	Edwin Young	$100,000	40,000
	Mike Studer	$100,000	40,000
	John Trescot Jr.	$33,330	13,332
	W. W. Gay	$33,335	13,334
	Harold E. Gear	$33,335	13,334
	TOTAL:	
    $12,000,000	
    4,800,000





SCHEDULE A 

U.S. ACCREDITED INVESTOR CERTIFICATE 


NOTE: The investor should place an "X" in the appropriate box
and initial beside the category applicable to it on Schedule "A". 

All terms used in this Schedule "A" that are defined in the
Agreement have the meanings given them in the Agreement. 

The Purchaser covenants, represents and warrants to the
Company that: 


  (a) it is in the
  United States or a "U.S. person" as defined in Regulation S under United
  States Securities Act of 1933, as amended (the "Act"), which definition
  includes, but is not limited to, an individual resident in the United States,
  an estate or trust of which any executor or administrator or trustee,
  respectively, is a U.S. Person, and any partnership or corporation organized
  or incorporated under the laws of the United States; 

  (b) the Purchaser
  understands and agrees that there may be material tax consequences to the
  Purchaser of an acquisition or disposition of the Purchaser's Shares. The
  Company gives no opinion and makes no representation with respect to the tax
  consequences to the Purchaser under United States, state, local or foreign tax
  law of the undersigned's acquisition or disposition of such Purchaser's
  Shares. In particular, no determination has been made whether the Company will
  be a "passive foreign investment company" ("PFIC") within the meaning of
  Section 1291 of the United States Internal Revenue Code; 

  (c) SATISFY ONE OR
  MORE OF THE CATEGORIES INDICATED BELOW (PLEASE PLACE AN "X" IN THE APPROPRIATE
  BOXES): 



	
    	Category 1	a bank as defined in
    Section 3(a)(2) of the Act whether acting in its individual or
	 	 	fiduciary capacity; or
	
    	Category 2	a savings and loan
    association or other institution as defined in Section 3(a)(5)(A)
	 	 	of the Act, whether
    acting in its individual or fiduciary capacity; or
	
    	Category 3	a broker or dealer
    registered pursuant to Section 15 of the Securities Exchange Act
	 	 	of 1934; or
	
    	Category 4	an insurance company
    as defined in Section 2(1) of the Act; or
	
    	Category 5	an investment company
    registered under the Investment Company Act of 1940; or
	
    	Category 6	an business
    development company as defined in Section 2(a)(48) of the
	 	 	Investment Company
    Act of 1940; or
	
    	Category 7	a small business
    investment company licensed by the U.S. Small Business
	 	 	Administration under
    Section 301(c) or (d) of the Small Business Investment Act
	 	 	of 1958; or
	
    	Category 8	an employee benefit
    plan within the meaning of the Employee Retirement Income
	 	 	Security Act 
    of 1974, if the investment decision is made by a plan fiduciary, as
	 	 	defined in Section
    3(21) of such act, which is either a bank, savings and loan
	 	 	association, insurance
    company, or registered investment adviser, or if the




	 	 	 
	 	 	 
	 	 	employee benefit plan
    has total assets in excess of United States dollars ("USD.")
	 	 	$5,000,000, or, if a
    self-directed plan, with investment decisions made solely by
	 	 	persons that are
    accredited investors; or
	
    	Category 9	a private business
    development company as defined in Section 202(a)(22) of the
	 	 	Investment Advisers
    Act of 1940; or
	
    	Category 10	an organization
    described in Section 501(c)(3) of the Internal Revenue Code, a
	 	 	corporation, a
    Massachusetts or similar business trust, or a partnership, not
	 	 	formed for the
    specific purpose of acquiring the Purchaser's Shares, with total
	 	 	assets in excess of
    USD. $5,000,000; or
	
    	Category 11	a plan established and
    maintained by a state, its political subdivisions, or any
	 	 	agency or
    instrumentality of a state or its political subdivisions, for the benefit of
	 	 	its employees, if such
    plan has total assets in excess of USD. $5,000,000; or
	
    	Category 12	a director, executive
    officer or general partner of the Company; or
	
    	Category 13	a natural person whose
    individual net worth, or joint net worth with that person's
	 	 	spouse, at the time of
    his purchase exceeds USD. $1,000,000; or
	
    	Category 14	a natural person who
    had an individual income in excess of USD. $200,000 in
	 	 	each of the two most
    recent years or joint income with that person's spouse in
	 	 	excess of USD.
    $300,000 in each of those years and has a reasonable expectation
	 	 	of reaching the same
    income level in the current year; or
	
    	Category 15	a trust, with total
    assets in excess of USD. $5,000,000, not formed for the specific
	 	 	purpose of acquiring
    the Purchaser's Shares, whose purchase is directed by a
	 	 	sophisticated person
    as described in Securities and Exchange Commission Rule
	 	 	506(b)(2)(ii); or
	
    	Category 16	an entity in which all
    of the equity owners meet one or more of the categories set
	 	 	forth above;
	 	 	 
	Date:	 	 
	 	Duly
    authorized signatory for Purchaser
	 	 	 
	 	 	 
	 	(Print
    name of Purchaser)






Disclosure Schedules 

Schedule 6.19 


5.15% brokerage commissions of the total amount raised in the
amount of $618,000, will be payable by the Company to its financial advisor or
consultant, Global Hunter Securities, LLC, with respect to the transactions
contemplated by this Agreement. 

$252,000 will be payable by the Company to its financial
adviser, HFG Investment Advisory Co., Ltd.