Unassociated Document


    Exhibit
10.4

    


    SUBSCRIPTION
AGREEMENT

    


    THIS SUBSCRIPTION
AGREEMENT (this “Agreement”), is dated as of
January 22, 2010, by and between China Yongxin Pharmaceuticals, Inc. (formerly
FreePCSQuote), a Delaware corporation (the “Company”), and the subscribers
listed on Schedule I hereto
(the “Subscribers”).

    


    WHEREAS, the Company and the
Subscribers are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6) and/or Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “1933 Act”);

    


    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscribers, as provided herein, and the Subscribers
shall purchase, in the aggregate, purchase: (i) not less than $350,000 nor
more than $1,500,000 of principal amount (“Principal Amount”) of
secured  promissory notes of the Company (“Note” or “Notes”), a form of which is
annexed hereto as Exhibit
A, convertible into shares of the Company’s Common Stock, $0.001 par
value (the “Common Stock”) at a per share
conversion price set forth in the Notes (“Conversion Price”); and (ii)
share purchase warrants (the “Warrants”) in the form
attached hereto as Exhibit
B, to purchase shares of the Company’s Common Stock (the “Warrant Shares”) (the “Offering”).  The Notes,
shares of Common Stock issuable upon conversion of the Notes (the “Conversion Shares”), the
Warrants and the Warrant Shares are collectively referred to herein as the
“Securities.”;
and

    


    WHEREAS, the aggregate
proceeds of the sale of the Notes and the Warrants contemplated hereby (“Purchase Price”) shall be held
in escrow by Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New
York, New York 10176 (the “Escrow Agent”) pursuant to the
terms of an Escrow Agreement to be executed by the parties substantially in the
form attached hereto as Exhibit C (the “Escrow
Agreement”).

    


    NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Subscribers hereby agree as follows:

    


    1. 
       Closing Date. 
 The “Closing Date”
shall be the date that the Purchase Price is transmitted by wire transfer or
otherwise credited to or for the benefit of the Company. The consummation of the
transactions contemplated herein shall take place at the offices of Grushko
& Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
upon the satisfaction or waiver of all conditions to closing set forth in this
Agreement.   Subject to the satisfaction or waiver of the terms and
conditions of this Agreement, on the Closing Date, Subscribers shall purchase
and the Company shall sell to Subscribers the Notes and Warrants as described in
Section 2 of this Agreement.  The transactions contemplated herein may be
conducted in one or more closings until the maximum Principal Amount has been
subscribed for, on such dates as mutually agreed between the Company and
subsequent Subscribers, with each such closing date referred to as a “Closing
Date” hereunder.

    


    2. 
       Notes and
Warrants.

    


    (a)          Notes. 
 Subject to the satisfaction or waiver of the terms and conditions of this
Agreement, on the Closing Date, each Subscriber shall purchase from the Company,
and the Company shall sell to each such Subscriber a Note in the Principal
Amount set forth on Schedule
I hereto for each such Subscriber’s Purchase Price indicated
thereon.

    


     (b)         Warrants.  On
the Closing Date, the Company will issue and deliver the Warrants to the
Subscribers.  Warrants to purchase five Shares will be issued for each one
dollar of Purchase Price as set forth on Schedule I.  The exercise
price to acquire a Warrant Share upon exercise of a Warrant shall be the lesser
of $0.50, or 110% of the average closing bid price of the Common Stock as
reported by Bloomberg L.P. for the Principal Market as defined in Section 9(b)
for the five (5) trading days immediately preceding the Closing Date, subject to
reduction as described in the Warrants.  The Warrants shall be exercisable
until three years after the Closing Date.


    
      
         


      

      
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    (c)           Allocation of Purchase
Price.   The Purchase Price will be allocated by each
Subscriber, among the components of the Securities so that each component of the
Securities will be fully paid and non-assessable.

    


    3. 
       Security
Interest.   Subject to agreed upon exclusions, the Subscribers
will be granted a security interest in the assets of the Company including
ownership of the Subsidiaries, and in the assets of the Subsidiaries, which
security interest will be memorialized in a “Security Agreement,” a form of
which is annexed hereto asExhibit D.   The
Subsidiaries will guaranty the Company’s obligations under the Transaction
Documents as defined in Section 5(c).   Such guaranties will be
memorialized in a “Subsidiary
Guaranty”, the form of which is annexed hereto as Exhibit E.  The holders,
identified on Schedule
3 hereto (“Pledgors”), of the Company’s
outstanding Common Stock (the “Pledged Stock”) will pledge
the Pledged Stock as set forth on Schedule 3, as further
security for the Company’s obligations.  The pledge will be memorialized in
a “Stock Pledge
Agreement”, the form of which is annexed hereto as Exhibit F.   The
Company will acknowledge the appointment of a collateral agent (the “Collateral Agent”) to act on
behalf of the Subscribers as memorialized in a “Collateral Agent Agreement”, a
form of which is annexed hereto as Exhibit G. The Company,
Subsidiaries and Pledgors will execute such other agreements, documents and
financing statements reasonably requested by the Subscribers and Collateral
Agent, which may be filed at the Company’s expense with the jurisdictions,
states and counties designated by the Subscribers. The Company will also execute
all such documents reasonably necessary in the opinion of the Subscribers and
Collateral Agent to memorialize and further protect the security interest
described herein which will be prepared and filed at the Company’s expense with
the jurisdictions, states and filing offices designated by the Subscribers and
Collateral Agent.

    


    4. 
       Subscriber
Representations
and Warranties.  Each of the Subscribers hereby represents and
warrants to and agrees with the Company with respect only to such Subscriber
that:

    


    (a)          Organization and Standing of
the Subscriber.  Subscriber, to the extent applicable, is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.

    


    (b)          Authorization and
Power.  Subscriber has the requisite power and authority to enter
into and perform this Agreement and the other Transaction Documents and to
purchase the Note and Warrants being sold to it hereunder.  The execution,
delivery and performance of this Agreement and the other Transaction Documents
by Subscriber and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action, and no
further consent or authorization of Subscriber or its Board of Directors or
stockholders, if applicable, is required.  This Agreement and the other
Transaction Documents have been duly authorized, executed and when delivered by
Subscriber and constitute, or shall constitute when executed and delivered, a
valid and binding obligation of Subscriber, enforceable against Subscriber in
accordance with the terms thereof.

    


     (c)         No Conflicts. 
The execution, delivery and performance of this Agreement and the other
Transaction Documents and the consummation by Subscriber of the transactions
contemplated hereby and thereby or relating hereto do not and will not (i)
result in a violation of Subscriber’s charter documents, bylaws or other
organizational documents, if applicable, (ii) conflict with nor constitute a
default (or an event which with notice or lapse of time or both would become a
default) under any agreement to which Subscriber is a party, nor (iii) result in
a violation of any law, rule, or regulation, or any order, judgment or decree of
any court or governmental agency applicable to Subscriber or its properties
(except for such conflicts, defaults and violations as would not, individually
or in the aggregate, have a material adverse effect on Subscriber). 
Subscriber is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement and the other Transaction Documents  nor to purchase the
Securities in accordance with the terms hereof, provided that for purposes of
the representation made in this sentence, Subscriber is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.

    


    (d)          Information on
Company.   Subscriber has been furnished with or has had access
at the EDGAR Website of the Commission to the Company's filings made with the
Commission through the fifth business day preceding the Closing Date
(hereinafter referred to collectively as the "Reports").  In addition,
Subscriber may have received in writing from the Company such other information
concerning its operations, financial condition and other matters as Subscriber
has requested in writing, identified thereon as OTHER WRITTEN INFORMATION (such
other information is collectively, the "Other Written Information"),
and considered all factors Subscriber deems material in deciding on the
advisability of investing in the Securities.


    
      
         


      

      
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    (e)          Information on
Subscriber.   Subscriber is, and will be at the time of the
conversion of the Notes and exercise of the Warrants, an "accredited investor", as such
term is defined in Regulation D promulgated by the Commission under the 1933
Act, is experienced in investments and business matters, has made investments of
a speculative nature and has purchased securities of United States
publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed purchase, which
represents a speculative investment.  Subscriber has the authority and is
duly and legally qualified to purchase and own the Securities.  Subscriber
is able to bear the risk of such investment for an indefinite period and to
afford a complete loss thereof.  The information set forth on Schedule
I hereto
regarding Subscriber is accurate.

    


    (f)           Purchase of
Notes  and Warrants.  On the
Closing Date, Subscriber will purchase a Note and Warrants as principal for its
own account for investment only and not with a view toward, or for resale in
connection with, the public sale or any distribution thereof.

    


    (g)          Compliance with Securities
Act.   Subscriber understands and agrees that the Securities
have not been registered under the 1933 Act or any applicable state securities
laws, by reason of their issuance in a transaction that does not require
registration under the 1933 Act (based in part on the accuracy of the
representations and warranties of the Subscriber contained herein), and that
such Securities must be held indefinitely unless  the Securities are
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration.

    


    (h)          Conversion Shares and
Warrant Shares Legend.  The Conversion Shares and Warrant Shares
shall bear the following or similar legend:

    


    "THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES LAWS. 
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. 
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES."

    


    (i)           Notes and
Warrants Legend.  The Notes and Warrants shall bear the
following legend:

    


    "NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE –OR-EXERCISABLE] HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES."


    
      
         


      

      
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    (j)           Communication of
Offer.  The offer to sell the Securities was directly communicated
to Subscriber by the Company.  At no time was Subscriber presented with or
solicited by any leaflet, newspaper or magazine article, radio or television
advertisement, or any other form of general advertising or solicited or invited
to attend a promotional meeting otherwise than in connection and concurrently
with such communicated offer.

    


    (k)          Restricted
Securities.   Subscriber understands that the Securities have
not been registered under the 1933 Act and Subscriber will not sell, offer to
sell, assign, pledge, hypothecate or otherwise transfer any of the Securities
unless pursuant to an effective registration statement under the 1933 Act, or
unless an exemption from registration is available.  Notwithstanding
anything to the contrary contained in this Agreement, Subscriber may
transfer (without restriction and without the need for an opinion of counsel)
the Securities to its Affiliates (as defined below) provided that each such
Affiliate is an “accredited investor” under Regulation D and such Affiliate
agrees to be bound by the terms and conditions of this Agreement. For the
purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity.  Affiliate includes each Subsidiary of the Company.  For
purposes of this definition, “control” means the power to
direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

    


    (l)           No Governmental
Review.  Subscriber understands that no United States federal or
state agency or any other governmental or state agency has passed on or made
recommendations or endorsement of the Securities or the suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.

    


    (m)         Correctness of
Representations.  Subscriber represents that the foregoing
representations and warranties are true and correct as of the date hereof and,
unless Subscriber otherwise notifies the Company prior to the Closing Date,
shall be true and correct as of the Closing Date.

    


    (n)          Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

    


    5. 
       Company Representations and
Warranties.  Except as set forth in the Schedules, the Company
represents and warrants to and agrees with each Subscriber that:

    


    (a)          Due
Incorporation.  The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power to own its properties and to
carry on its business as presently conducted.  The Company is duly
qualified as a foreign corporation to do business and is in good standing
in each jurisdiction where the nature of the business conducted or property
owned by it makes such qualification necessary, other than those jurisdictions
in which the failure to so qualify would not have a Material Adverse
Effect.  For purposes of this Agreement, a “Material Adverse Effect” shall
mean a material adverse effect on the financial condition, results of
operations, prospects, properties or business of the Company and its
Subsidiaries taken as a whole.  For purposes of this Agreement, “Subsidiary” means, with
respect to any entity at any date, any direct or indirect corporation, limited
or general partnership, limited liability company, trust, estate, association,
joint venture or other business entity of which (A) more than 40% of
(i) the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors or other managing body of such entity,
(ii) in the case of a partnership or limited liability company, the
interest in the capital or profits of such partnership or limited liability
company or (iii) in the case of a trust, estate, association, joint venture
or other entity, the beneficial interest in such trust, estate, association or
other entity business is, at the time of determination, owned or controlled
directly or indirectly through one or more intermediaries, by such entity, or
(B) is under the actual control of the Company.  As of the Closing Date,
all of the Company’s Subsidiaries and the Company’s all other ownership
interests therein are set forth on Schedule
5(a). The Company represents that it owns all of the equity of the
Subsidiaries and rights to receive equity of the Subsidiaries set forth
on Schedule
5(a), free and clear of all liens, encumbrances and claims, except as set
forth on Schedule
5(a).  No person or entity other than the Company has the right to
receive any equity interest in the Subsidiaries.  The Company further
represents that the Subsidiaries have not been known by any other names for the
prior five years.


    
      
         


      

      
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    (b)          Outstanding
Stock.  All issued and outstanding shares of capital stock and
equity interests in the Company have been duly authorized and validly issued and
are fully paid and non-assessable.

    


    (c)          Authority;
Enforceability.  This Agreement, the Notes, Warrants, Security
Agreement, Subsidiary Guaranty, Stock Pledge Agreement, Collateral Agent
Agreement, the Escrow Agreement, and any other agreements required to be
delivered pursuant to this Agreement (collectively “Transaction Documents”) have
been duly authorized, executed and delivered by the Company, Subsidiaries and
Pledgors, as the case may be, and are valid and binding agreements of the
Company, Subsidiaries and Pledgors, as the case may be, enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity.  The Company, Subsidiaries and Pledgors, as the case may be,
have full corporate power and authority necessary to enter into and deliver the
Transaction Documents and to perform their obligations thereunder.

    


    (d)          Capitalization
and Additional Issuances. 
 The authorized and outstanding capital stock of the Company and
Subsidiaries on a fully diluted basis as of the date of this Agreement and the
Closing Date (not including the Securities) are set forth on Schedule
5(d).  Except as set forth on Schedule
5(d), there are no options, warrants, or rights to subscribe to,
securities, rights, understandings or obligations convertible into or
exchangeable for or giving any right to subscribe for any shares of capital
stock or other equity interest of the Company or any of the Subsidiaries. 
The only officer, director, employee and consultant stock option or stock
incentive plan or similar plan currently in effect or contemplated by the
Company is described on Schedule
5(d).  There are no outstanding agreements or preemptive or similar
rights affecting the Company's Common Stock.

    


    (e)          Consents.  No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, Subsidiaries, Pledgors,
or any of their Affiliates, OTC Bulletin Board (“Bulletin Board”), any other
Principal Market, or the Company's stockholders is required for the execution by
the Company of the Transaction Documents and compliance and performance by the
Company, Subsidiaries and Pledgors of their obligations under the Transaction
Documents, including, without limitation, the issuance and sale of the
Securities.  The Transaction Documents and the Company’s performance of its
obligations thereunder has been approved by the Company’s Board of
Directors in accordance with the Company’s Certificate of Incorporation and
applicable law.  Any such qualifications and filings will, in the case of
qualifications, be effective upon Closing and will, in the case of filings, be
made within the time prescribed by law. Under the Regulations on the
Acquisitions by Foreign Investors of Domestic Enterprises jointly promulgated by
the PRC Ministry of Commerce (“MOFCOM”), the China Securities
Regulatory Commission (“CSRC”), the State Owned Assets
Supervision and Management Commission, the General Administration of Taxation
and the State Administration of Foreign Exchange in effect on the Closing Date,
neither the Company nor any Subsidiary is required, as of the date of this
Agreement and as of the Closing, to obtain any approvals of the CSRC in
connection with the transactions contemplated by the Transaction Documents. No
further approval by, or registration or filing with State Administration of
Foreign Exchange (“SAFE”) other than typical SAFE
foreign exchange processing procedural registrations are expressly required
under the current effective and applicable governing regulations for matters
including but not limited to the payment by any Subsidiary of dividends to the
Company in foreign currency, such as U.S. Dollars. The Company has or will have
obtained or made all necessary consents, approvals, registrations and filings
with relevant governmental authorities in the PRC on or before the Closing Date
in accordance with the then effective and applicable PRC regulations to complete
the transactions contemplated in the Transaction Documents, except as would not
have a Material Adverse Effect.

    


    (f)           No Violation or
Conflict.  Assuming the representations and warranties of the
Subscriber in Section 4 are true and correct, neither the issuance and sale of
the Securities nor the performance of the Company’s obligations under this
Agreement and all other agreements entered into by the Company relating thereto
by the Company will:


    
      
         


      

      
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    (i)           violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or over the properties or assets
of the Company or any of its Affiliates, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party except the violation, conflict,
breach, or default of which would not have a Material Adverse Effect;
or

    


    (ii)          result
in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its Affiliates except
in favor of Subscribers as described herein; or

    


    (iii)         result
in the activation of any anti-dilution rights or a reset or repricing of any
debt, equity or security instrument of any creditor or equity holder of the
Company, or the holder of the right to receive any debt, equity or security
instrument of the Company nor result in the acceleration of the due date of any
obligation of the Company; or

    


    (iv)       
 result in the triggering of any piggy-back or other registration rights of
any person or entity holding securities of the Company or having the right to
receive securities of the Company.

    


    (g)           The Securities. 
The Securities upon issuance:

    


    (i)           are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject only to restrictions upon transfer under the 1933 Act and
any applicable state securities laws;

    


    (ii)          have
been, or will be, duly and validly authorized and on the dates of issuance,
conversion or exercise, as the case may be, of the Notes, Warrants, Conversion
Shares upon conversion of the Notes, and the Warrant Shares upon exercise of the
Warrants, such Notes, Warrants, Conversion Shares and Warrant Shares will be
duly and validly issued, fully paid and non-assessable and if registered
pursuant to the 1933 Act and resold pursuant to an effective registration
statement or exempt from registration will be free trading, unrestricted and
unlegended;

    


    (iii)         will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company or rights to acquire
securities of the Company;

    


    (iv)
        will not subject the holders
thereof to personal liability by reason of being such holders; and

    


    (v)         assuming
the representations and warranties of the Subscribers as set forth in Section 4
hereof are true and correct, will not result in a violation of Section 5 under
the 1933 Act.

    


    (h)          Litigation. 
There is no pending or, to the best knowledge of the Company, threatened action,
suit, proceeding or investigation before any court, governmental agency or body,
or arbitrator having jurisdiction over the Company, or any of its Affiliates
that would affect the execution by the Company or the complete and timely
performance by the Company of its obligations under the Transaction
Documents.  Except as disclosed in the Reports, there is no pending or, to
the best knowledge of the Company, basis for or threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates which
litigation if adversely determined would have a Material Adverse
Effect.


    
      
         


      

      
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    (i)           Reserved.

    


    (j)           Information Concerning
Company.  The Reports and Other Written Information contain all
material information relating to the Company and its operations and financial
condition as of their respective dates which information is required to be
disclosed therein.   Since December 31, 2008 and except as disclosed
in the Reports or modified in the Other Written Information or in the Schedules
hereto, there has been no Material Adverse Event relating to the Company's
business, financial condition or affairs. The Reports and Other Written
Information including the financial statements included therein do not contain
any 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, taken
as a whole, not misleading in light of the circumstances and when
made.

    


    (k)          Solvency.  Based
on the financial condition of the Company as of the Closing Date, (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 existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) to the
Company’s best knowledge, 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).

    


    (l)           Defaults.  The
Company is not in violation of its articles of incorporation or bylaws. 
 The Company is (i) not in default under or in violation of any other
material agreement or instrument to which it is a party or by which it or any of
its properties are bound or affected, which default or violation would have a
Material Adverse Effect, (ii) not in default with respect to any order of any
court, arbitrator or governmental body or subject to or party to any order of
any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) not in
violation of any statute, rule or regulation of any governmental authority which
violation would have a Material Adverse Effect.

    


    (m)         No Integrated
Offering. Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf, has directly or indirectly made any offers
or sales of any security of the Company nor solicited any offers to buy any
security of the Company under circumstances that would cause the offer of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
the Bulletin Board.  No prior offering will impair the exemptions relied
upon in this Offering or the Company’s ability to timely comply with its
obligations hereunder.  Neither the Company nor any of its Affiliates will
take any action or steps that would cause the offer or issuance of the
Securities to be integrated with other offerings which would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.  The Company will not conduct any
offering other than the transactions contemplated hereby that may be integrated
with the offer or issuance of the Securities or that would impair the exemptions
relied upon in this Offering or the Company’s ability to timely comply with its
obligations hereunder.

    


    (n)          No General
Solicitation.  Neither the Company, nor any of its Affiliates, nor
to its knowledge, any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

    


    (o)          No Undisclosed
Liabilities.  The Company has no liabilities or obligations which
are material, individually or in the aggregate, other than those incurred in the
ordinary course of the Company businesses since December 31, 2008 and which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, except as disclosed in the Reports or on Schedule
5(o).


    
      
         


      

      
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    (p)          No Undisclosed Events or
Circumstances.  Since December 31, 2008, except as disclosed in the
Reports, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the Reports.

    


    (q)          Banking.  Schedule
5(q) contains a list of all financial institutions at which the
Company and Subsidiaries maintain deposit, checking and other accounts. The list
includes the accurate addresses of such financial institutions and account
numbers of such accounts.

    


    (r)           Dilution. 
 The Company's executive officers and directors understand the nature of
the Securities being sold hereby and recognize that the issuance of the
Securities will have a potential dilutive effect on the equity holdings of other
holders of the Company’s equity or rights to receive equity of the
Company.  The board of directors of the Company has concluded, in its good
faith business judgment, that the issuance of the Securities is in the best
interests of the Company.  The Company specifically acknowledges that its
obligation to issue the Conversion Shares upon conversion of the Notes and the
Warrant Shares upon exercise of the Warrants is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other stockholders of the Company or parties entitled to receive
equity of the Company.

    


    (s)          No Disagreements with
Accountants and Lawyers. There are no material disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise
between the Company and the accountants and lawyers previously and presently
employed by the Company, including but not limited to disputes or conflicts over
payment owed to such accountants and lawyers, nor have there been any such
disagreements during the two years prior to the Closing Date.  The
Company’s regularly engaged auditors and contact information are set forth
on Schedule
5(s).

    


    (t)           Investment
Company.   Neither the Company nor any Affiliate of the Company
is an “investment company” within the meaning of the Investment Company Act of
1940, as amended.

    


    (u)          Foreign Corrupt
Practices.  Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any 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 from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is  in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.

    


    (v)          Reporting Company/Shell
Company.  The Company is a publicly-held company subject to
reporting obligations pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "1934
Act") and has a class of Common Stock registered pursuant to Section
12(g) of the 1934 Act.  Pursuant to the provisions of the 1934 Act, the
Company has timely filed all reports and other materials required to be filed
thereunder with the Commission during the preceding twelve months.  As of
the Closing Date, the Company is not a “shell company” nor a “former shell
company” as those terms are employed in Rule 144 under the 1933
Act.

    


    (w)         Listing.  The
Company's Common Stock is quoted on the Bulletin Board under the symbol
CYXN.  The Company has not received any pending oral or written notice that
its Common Stock is not eligible nor will become ineligible for quotation on the
Bulletin Board nor that its Common Stock does not meet all requirements for the
continuation of such quotation and (ii) the Company satisfies all the
requirements for the continued quotation of its Common Stock on the
Bulletin Board.

    


    (x)           DTC Status. 
 The Company’s transfer agent is a participant in, and the Common Stock is
eligible for transfer pursuant to, the Depository Trust Company Automated
Securities Transfer Program. The name, address, telephone number, fax number,
contact person and email address of the Company transfer agent is set forth
on Schedule
5(x) hereto.


    
      
         


      

      
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    (y)          Company Predecessor and
Subsidiaries.  The Company makes each of the representations
contained in Sections 5(a), (b), (c), (d), (e), (f), (h), (j), (k), (l), (o),
(p), (q), (s), (t) and (u) of this Agreement, as same relate or could be
applicable to each Subsidiary.  All representations made by or relating to
the Company of a historical or prospective nature and all undertakings described
in Sections 9(g) through 9(l) shall relate, apply and refer to the Company and
its predecessors and successors.

    


    (z)           Correctness of
Representations.  The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies the Subscribers
prior to the Closing Date, shall be true and correct in all material respects as
of the Closing Date; provided, that, if such representation or warranty is made
as of a different date, in which case such representation or warranty shall be
true as of such date.

    


    (AA) 
     Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

    


    6. 
       Regulation D Offering/Legal
Opinion.  The offer and issuance of the Securities to the
Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder.  On the Closing
Date, the Company will provide an opinion reasonably acceptable to the
Subscribers from the Company's legal counsel opining on the availability of an
exemption from registration under the 1933 Act as it relates to the offer and
issuance of the Securities and other matters reasonably requested by
Subscribers.  A form of the legal opinion is annexed hereto as Exhibit H.  The Company
will provide, at the Company's expense, to the Subscribers, such other legal
opinions, if any, as are reasonably necessary in each Subscriber’s opinion for
the issuance and resale of the Notes, Warrants, Conversion Shares and Warrant
Shares pursuant to an effective registration statement, Rule 144 under the 1933
Act or an exemption from registration.

    


    7.1. 
        Conversion of
Notes.

    


    (a)          Upon
the conversion of a Note or part thereof, the Company shall, at its own cost and
expense, take all necessary action, including obtaining and delivering an
opinion of counsel if necessary, to assure that the Company's transfer agent
shall issue stock certificates in the name of a Subscriber (or its permitted
nominee) or such other persons as designated by Subscriber and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion.  The Company warrants that no
instructions other than these instructions have been or will be given to the
transfer agent of the Company's Common Stock and that the certificates
representing such shares shall contain no legend other than the legend set forth
in Section 4(h).  If and when a Subscriber sells the Conversion Shares,
assuming (i) a registration statement including such Conversion Shares for
registration has been filed with the Commission, is effective and the
prospectus, as supplemented or amended, contained therein is current and (ii)
Subscriber or its agent confirms in writing to the transfer agent that
Subscriber has complied with the prospectus delivery requirements, the Company
will reissue the Conversion Shares without restrictive legend and the Conversion
Shares will be free-trading, and freely transferable.  In the event that
the Conversion Shares are sold in a manner that complies with an exemption from
registration, the Company will promptly instruct its counsel to issue to the
transfer agent an opinion permitting removal of the legend indefinitely if
such sale is pursuant to Rule 144(b)(1)(i) of the 1933 Act, provided that
Subscriber delivers reasonably requested representations in support of such
opinion.

    


    (b)          Each
Subscriber will give notice of its decision to exercise its right to convert its
Note, interest, or part thereof by telecopying or otherwise delivering a
completed Notice of Conversion (a form of which is annexed as Exhibit A to the Note) to
the Company via confirmed telecopier transmission or otherwise pursuant to
Section 13(a) of this Agreement.  Subscriber will not be required to
surrender the Note until the Note has been fully converted or satisfied. 
Each date on which a Notice of Conversion is telecopied to the Company in
accordance with the provisions hereof by 6 PM Eastern Time (“ET”) (or if
received by the Company after 6 PM ET, then the next business day) shall be
deemed a “Conversion Date.”  The
Company will itself or cause the Company’s transfer agent to transmit the
Company's Common Stock certificates representing the Conversion Shares issuable
upon conversion of the Note to Subscriber via express courier for receipt by
Subscriber within three (3) business days after the Conversion Date (such third
day being the "Delivery
Date").  In the event the Conversion Shares are electronically
transferable, then delivery of the Shares must be made by
electronic transfer provided request for such electronic transfer has been made
by the Subscriber.   A Note representing the balance of the Note not
so converted will be provided by the Company to Subscriber if requested by
Subscriber, provided Subscriber delivers the original Note to the
Company.


    
      
         


      

      
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    (c)          The
Company understands that a delay in the delivery of the Conversion Shares in the
form required pursuant to Section 7.1 hereof later than the Delivery Date could
result in economic loss to the Subscribers.  As compensation to Subscribers
for such loss, the Company agrees to pay (as liquidated damages and not as a
penalty) to each applicable Subscriber for late issuance of Conversion Shares in
the form required pursuant to Section 7.1 hereof upon Conversion of the Note,
the amount of $100 per business day after the Delivery Date for each
$10,000 of Note principal amount and interest (and proportionately for other
amounts) being converted of the corresponding Conversion Shares which are not
timely delivered.  The Company shall pay any payments incurred under this
Section upon demand.  Furthermore, in addition to any other remedies which
may be available to the Subscribers, in the event that the Company fails for any
reason to effect delivery of the Conversion Shares on or before the
Delivery Date, the Subscriber will be entitled to revoke all or part of the
relevant Notice of Conversion by delivery of a notice to such effect to the
Company whereupon the Company and Subscriber shall each be restored to their
respective positions immediately prior to the delivery of such notice, so long
as such notice is received prior to Subscriber’s actual receipt of the
Conversion Shares, except that the damages payable in connection with the
Company’s default shall be payable through the date notice of revocation or
rescission is given to the Company.

    


    7.2. 
         Mandatory Redemption at
Subscriber’s Election.  In
the event (i) the Company is prohibited from issuing Conversion Shares, (ii)
upon the occurrence of any other Event of Default (as defined in the Note, this
Agreement or any other Transaction Document), that continues for more than
thirty (30) business days, (iii) a Change in Control (as defined below), or (iv)
of the liquidation, dissolution or winding up of the Company or any Subsidiary,
then at the Subscriber's election, the Company must pay to each Subscriber not
later than ten (10) business days after request by such Subscriber, a sum of
money determined by multiplying up to the outstanding principal amount of the
Note designated by each such Subscriber by 115%, plus accrued but unpaid
interest and any other amounts due under the Transaction Documents ("Mandatory Redemption
Payment"). The Mandatory Redemption Payment must be received by each
Subscriber on the same date as the Conversion Shares otherwise deliverable or
within ten (10) business days after request, whichever is sooner ("Mandatory Redemption Payment
Date"). Upon receipt of the Mandatory Redemption Payment, the
corresponding Note principal, interest and other amounts will be deemed paid and
no longer outstanding.  The Subscriber may rescind the election to receive
a Mandatory Redemption Payment at any time until such payment is actually
received.  Liquidated damages calculated pursuant to Section 7.1(c) hereof,
that have been paid or accrued for the ten day period prior to the actual
receipt of the Mandatory Redemption Payment by such Subscriber shall be credited
against the Mandatory Redemption Payment.  For purposes of this Section
7.2, “Change in Control”
shall mean (i) the Company  becoming a Subsidiary of another entity
(other than a corporation formed by the Company for purposes of reincorporation
in another U.S. jurisdiction), (ii) the sale, lease or transfer of substantially
all the assets of the Company or its Subsidiaries, or (iii) a majority of the
members of the Company’s board of directors as of the Closing Date no longer
serving as directors of the Company, except as a result of natural causes or as
a result of hiring additional outside directors in order to meet appropriate
stock exchange requirements or with the prior written consent of the
Subscribers.

    


    7.3. 
        Maximum
Conversion.  A Subscriber shall not be entitled to convert on a
Conversion Date that amount of a Note nor may the Company make any payment
including principal, interest, or liquidated or other damages by delivery of
Conversion Shares in connection with that number of Conversion Shares which
would be in excess of the sum of (i) the number of shares of Common Stock
beneficially owned by such Subscriber and its Affiliates on a Conversion Date or
payment date, and (ii) the number of Conversion Shares issuable upon the
conversion of the Note with respect to which the determination of this provision
is being made on a calculation date, which would result in beneficial ownership
by Subscriber and its Affiliates of more than 4.99% of the outstanding shares of
Common Stock of the Company on such Conversion Date.  Subscriber shall
notify Company if any conversion less than 4.99% of the outstanding shares of
Common Stock will cause an issuance of Conversion Shares that breaches the prior
sentence and the Company shall be deemed not to have breached the covenant of
the prior sentence if it does not receive such notice.  For the purposes of
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Rule 13d-3 thereunder.  Subject to the foregoing, the
Subscriber shall not be limited to aggregate conversions of only 4.99% and
aggregate conversions by the Subscriber may exceed 4.99%.  The Subscriber
may increase the permitted beneficial ownership amount up to 9.99% upon and
effective after 61 days prior written notice to the Company.  Subscriber
may allocate which of the equity of the Company deemed beneficially owned
by Subscriber shall be included in the 4.99% amount described above and which
shall be allocated to the excess above 4.99%.


    
      
         


      

      
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    7.4.
     Injunction Posting of
Bond.  In the event a Subscriber shall elect to convert a Note or
part thereof, the Company may not refuse conversion based on any claim that
Subscriber or any one associated or affiliated with Subscriber has been engaged
in any violation of law, or for any other reason, unless, a final non-appealable
injunction from a court made on notice to Subscriber, restraining and or
enjoining conversion of all or part of such Note shall have been sought and
obtained by the Company and the Company has posted a surety bond for the benefit
of Subscriber equal to the greater of (i) 120% of the outstanding principal and
accrued but unpaid interest of the Note, and the aggregate purchase price of the
Conversion Shares which are sought to be subject to the injunction, or (ii) the
closing price of the Common Stock on the trading day before the issue date of
the injunction multiplied by the number of Conversion Shares issuable upon
conversion of the Note, which bond shall remain in effect until the completion
of arbitration/litigation of the dispute and the proceeds of which shall be
payable to Subscriber to the extent the judgment or decision is in Subscriber’s
favor.

    


    7.5.
     Buy-In. 
 In addition to any other rights available to Subscribers, if the Company
fails to deliver to a Subscriber Conversion Shares by the Delivery Date and if
after the Delivery Date Subscriber or a broker on Subscriber’s behalf purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by Subscriber of the Common Stock which Subscriber was
entitled to receive upon such conversion (a "Buy-In"), then the Company
shall pay to Subscriber (in addition to any remedies available to or elected by
the Subscriber) the amount by which (A) Subscriber's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (B) the aggregate principal and/or interest amount of the Note
for which such conversion request was not timely honored together with interest
thereon at a rate of 10% per annum, accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated
damages and not as a penalty).  For example, if a Subscriber purchases
shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of $10,000 of Note principal
and/or interest, the Company shall be required to pay Subscriber $1,000 plus
interest. Subscriber shall provide the Company written notice and evidence
indicating the amounts payable to Subscriber in respect of the
Buy-In.

    


    7.6. 
    Redemption. 
  The Note shall not be redeemable or callable by the Company, except
as described in the Note.

    


    8. 
       Fees.

    


    (a)          Broker’s Commission. 
The Company on the one hand, and each Subscriber (for himself only) on the other
hand, agrees to indemnify the other against and hold the other harmless from any
and all liabilities to any persons claiming brokerage commissions or similar
fees other than other than StreetCapital Corp. (“Broker”) on account of
services purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby and
arising out of such party’s actions.  Anything in this Agreement to the
contrary notwithstanding, each Subscriber is providing indemnification only for
such Subscriber’s own actions and not for any action of any other
Subscriber.  The liability of the Company and each Subscriber’s liability
hereunder is several and not joint.  The Company agrees that it will
pay the Broker the fees set forth on Schedule 8(a) hereto
(“Broker’s Fees”).  The Company
represents that to the best of its knowledge there are no other parties entitled
to receive fees, commissions, or similar payments in connection with the
offering described in this Agreement except the Broker.

    


    (b)          Collateral Agent
Fee.   Upon Closing, the Company will pay the Collateral Agent
the fee designated in the Collateral Agent Agreement (“Collateral Agent Fee”). 
Such fee will be paid out of the funds held pursuant to the Escrow
Agreement.

    


    (c)          Subscriber’s Legal Fees. 
 The Company shall pay to Grushko & Mittman, P.C., a cash fee of
$20,000 (“Legal Fees”)
of which $2,490 has been received, as reimbursement for services rendered in
connection with the transactions described in the Transaction Documents. The
Legal Fees will be payable out of funds held pursuant to the Escrow
Agreement.  Grushko & Mittman, P.C. will be reimbursed at Closing
by Subscribers for all lien searches, filing fees, and reasonable printing and
shipping costs for the closing statements to be delivered to
Subscribers.


    
      
         


      

      
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    9. 
       Covenants of the
Company.  The Company covenants and agrees with the Subscribers as
follows:

    


    (a)          Stop Orders. 
Subject to the prior notice requirement described in Section 9(n), the Company
will advise the Subscribers, within twenty-four hours after it receives notice
of issuance by the Commission, any state securities commission or any other
regulatory authority of any stop order or of any order preventing or suspending
any offering of any securities of the Company, or of the suspension of the
qualification of the Common Stock of the Company for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purpose. 
The Company will not issue any stop transfer order or other order impeding the
sale, resale or delivery of any of the Securities, except as may be required by
any applicable federal or state securities laws and unless contemporaneous
notice of such instruction is given to the Subscribers.

    


    (b)          Listing/Quotation. 
The Company shall promptly secure the quotation or listing of the Conversion
Shares and Warrant Shares upon each national securities exchange, or automated
quotation system upon which the Company’s Common Stock is quoted or listed and
upon which such Conversion Shares and Warrant Shares are or become eligible for
quotation or listing (subject to official notice of issuance) and shall
maintain same so long as any Notes and Warrants are outstanding.  The
Company will maintain the quotation or listing of its Common Stock on the
American Stock Exchange, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq
Global Select Market, Bulletin Board, or New York Stock Exchange (whichever of
the foregoing is at the time the principal trading exchange or market for the
Common Stock (the “Principal
Market”), and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Principal Market,
as applicable. The Company will provide Subscribers with copies of all notices
it receives notifying the Company of the threatened and actual delisting of the
Common Stock from any Principal Market.  As of the date of this Agreement
and the Closing Date, the Bulletin Board is and will be the Principal
Market.

    


    (c)          Market
Regulations.  If required, the Company shall notify the Commission,
the Principal Market and applicable state authorities, in accordance with their
requirements, of the transactions contemplated by this Agreement, and shall take
all other necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance of the
Securities to the Subscribers and promptly provide copies thereof to the
Subscribers.

    


    (d)          Filing
Requirements.  From the date of this Agreement and until the last to
occur of (i) all the Conversion Shares have been resold or transferred by the
Subscribers pursuant to a registration statement or pursuant to Rule
144(b)(1)(i), or (ii) the Notes and Warrants are no longer outstanding (the date
of such latest occurrence being the “End Date”), the Company will
(A) cause its Common Stock to continue to be registered under Section 12(b) or
12(g) of the 1934 Act, (B) comply in all respects with its reporting and filing
obligations under the 1934 Act, (C) voluntarily comply with all reporting
requirements that are applicable to an issuer with a class of shares registered
pursuant to Section 12(g) of the 1934 Act, if the Company is not subject to such
reporting requirements, and (D) comply with all requirements related to any
registration statement filed pursuant to this Agreement.  The Company will
use its best efforts not to take any action or file any document (whether or not
permitted by the 1933 Act or the 1934 Act or the rules thereunder) to terminate
or suspend such registration or to terminate or suspend its reporting and filing
obligations under said acts until the End Date.  Until the End Date, the
Company will continue the listing or quotation of the Common Stock on a
Principal Market and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Principal
Market.  The Company agrees to timely file a Form D with respect to the
Securities if required under Regulation D and to provide a copy thereof to
Subscribers promptly after such filing.

    


    (e)          Use of
Proceeds.   The proceeds of the Offering will be substantially
employed by the Company for the purposes set forth onSchedule
9(e) hereto.  Except as described on Schedule
9(e), the Purchase Price may not and will not be used for accrued and
unpaid officer and director salaries, nor payment of financing related debt nor
redemption of outstanding notes or equity instruments of the Company nor
non-trade payables outstanding on the Closing Date.  For so long as any
Note is outstanding, the Company will not prepay any financing related debt
obligations, except equipment payments, nor redeem any equity instruments of the
Company without the prior consent of the Subscribers.


    
      
         


      

      
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    (f)           Reservation. 
 Prior to the Closing, the Company undertakes to reserve on behalf of
Subscribers from its authorized but unissued Common Stock, a number of shares of
Common Stock equal to 130% of the amount of Common Stock necessary to allow
Subscribers to be able to convert the entire Notes and 100% of the amount of
Warrant Shares issuable upon exercise of the Warrants (“Required Reservation”). 
 Failure to have sufficient shares reserved pursuant to this Section 9(f)
at any time shall be a material default of the Company’s obligations under this
Agreement and an Event of Default under the Notes.  Without waiving the
foregoing requirement, if at any time Notes and Warrants are outstanding the
Company has reserved on behalf of the Subscribers less than 125% of the amount
necessary for full conversion of the outstanding Note principal and interest at
the conversion price in effect on every such date and 100% of the Warrant Shares
issuable upon exercise of outstanding Warrants (“Minimum Required
Reservation”), the Company will promptly reserve the Minimum Required
Reservation, or if there are insufficient authorized and available shares of
Common Stock to do so, the Company will take all action necessary to increase
its authorized capital to be able to fully satisfy its reservation requirements
hereunder, including the filing of a preliminary proxy with the Commission not
later than fifteen business days after the first day the Company has reserved
less than the Minimum Required Reservation.  The Company agrees to provide
notice to the Subscribers not later than three days after the date the Company
has less than the Minimum Required Reservation reserved on behalf of the
Subscribers.

    


    (g)          DTC Program.  At
all times that Notes or Warrants are outstanding, the Company will employ as the
transfer agent for the Common Stock, Conversion Shares and Warrant Shares a
participant in the Depository Trust Company Automated Securities Transfer
Program.

    


    (h)          Taxes.  From the
date of this Agreement and until the End Date, the Company will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Company; provided, however, that any such
tax, assessment, charge or levy need not be paid if the validity thereof
shall currently be contested in good faith by appropriate proceedings and if the
Company shall have set aside on its books adequate reserves with respect
thereto, and provided, further, that the Company will pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefore.

    


    (i)           Insurance.  From
the date of this Agreement and until the End Date, the Company will keep its
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company’s line of business and
location, in amounts and to the extent and in the manner customary for companies
in similar businesses similarly situated and located and to the extent available
on commercially reasonable terms.

    


    (j)           Books and Records. 
From the date of this Agreement and until the End Date, the Company will
keep true records and books of account in which full, true and correct entries
will be made of all dealings or transactions in relation to its business and
affairs in accordance with generally accepted accounting principles applied on a
consistent basis.

    


    (k)          Governmental
Authorities.   From the date of this Agreement and until the
End Date, the Company shall duly observe and conform in all material respects to
all valid requirements of governmental authorities relating to the conduct of
its business or to its properties or assets.

    


    (l)           Intellectual
Property.  From the date of this Agreement and until the End Date,
the Company shall maintain in full force and effect its corporate existence,
rights and franchises and all licenses and other rights to use intellectual
property owned or possessed by it and reasonably deemed to be necessary to the
conduct of its business, unless it is sold for value. Schedule
9(l) hereto identifies all of the intellectual property owned by the
Company and Subsidiaries, which schedule includes but is not limited to patents,
patents pending, patent applications, trademarks, tradenames, service marks and
copyrights.


    
      
         


      

      
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    (m)         Properties. 
From the date of this Agreement and until the End Date, the Company will
keep its properties in good repair, working order and condition, reasonable wear
and tear excepted, and from time to time make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto; and the
Company will at all times comply with each provision of all leases and
claims to which it is a party or under which it occupies or has rights to
property if the breach of such provision could reasonably be expected to have a
Material Adverse Effect.  The Company will not abandon any of its assets
except for those assets which have negligible or marginal value or for which it
is prudent to do so under the circumstances.

    


    (n)          Confidentiality/Public
Announcement.   From the date of this Agreement and until the
End Date, the Company agrees that except in connection with a Form 8-K, Form
10-Q, Form 10-K and the registration statement or statements regarding the
Subscribers’ Securities or in correspondence with the Commission regarding same,
it will not disclose publicly or privately the identity of the Subscribers
unless expressly agreed to in writing by Subscribers or only to the extent
required by law and then only upon not less than three days prior notice to
Subscribers.  In any event and subject to the foregoing, the Company
undertakes to file a Form 8-K describing the Offering not later than the second
(2nd)
business day after the Closing Date.  Prior to the filing date of such Form
8-K, a draft in the final form will be provided to Subscribers for Subscribers’
review and reasonable approval.  In the Form 8-K, the Company will
specifically disclose the amount of Common Stock outstanding immediately after
the Closing.  Upon  delivery by the Company to the Subscribers
after the Closing Date of any notice or information, in writing, electronically
or otherwise, and while a Note, Conversion Shares or Warrants are held by
Subscribers, unless the  Company has in good faith determined that the
matters relating to such notice do not constitute material, nonpublic
information relating to the Company or
Subsidiaries, the Company  shall within one business day after
any such delivery publicly disclose such  material,  nonpublic 
information on a Report on Form 8-K.  In
the event that the Company believes that a
notice or communication to Subscribers contains material, nonpublic
information relating to the Company or Subsidiaries, except as required to be
delivered in connection with this Agreement, the Company shall so indicate to
Subscribers prior to delivery of such notice or information.  Subscribers
will be granted three (3) business days to notify the Company that Subscriber
elects not to receive such information.   In the case that Subscriber
elects not to receive such information, the Company will not deliver
such information to Subscribers.  If the Subscriber does not provide
any affirmative election, it will be deemed as an election to receive such
information.  In the absence of any such Company
indication, Subscribers shall be allowed to presume that all matters
relating to such notice and information do not constitute material,
nonpublic information relating to the Company or Subsidiaries.

    


    (o)          Non-Public
Information.  The Company covenants and agrees that except for the
Reports, Other Written Information and schedules and exhibits to this Agreement
and the Transaction Documents, which information the Company undertakes to
publicly disclose on the Form 8-K described in Section 9(n) above, neither it
nor any other person acting on its behalf will at any time provide a Subscriber
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such
Subscriber, its agent or counsel shall have agreed in writing to accept such
information as described in Section 9(n) above.  The Company understands
and confirms that the Subscribers shall be relying on the foregoing
representations in effecting transactions in securities of the Company. 
The Company agrees that any information known to Subscriber not already made
public by the Company, may be made public and disclosed by the
Subscriber.

    


    (p)          Negative
Covenants.   So long as a Note is outstanding, without the
consent of the Subscribers, the Company will not and will not permit any of its
Subsidiaries to directly or indirectly:

    


    (i)           create,
incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, security title, mortgage,
security deed or deed of trust, easement or encumbrance, or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction) (each, a “Lien”) upon any of its
property, whether now owned or hereafter acquired except for:  (A) the
Excepted Issuances (as defined in Section 12 hereof), and (B) Permitted Liens
(as defined in the Security Agreement);


    
      
         


      

      
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    (ii)          amend
its certificate of incorporation, bylaws or its charter documents so as to
materially and adversely affect any rights of the Subscribers (an increase in
the amount of authorized shares, name change, transactions solely to change of
domicile of the Company, or a change in capitalization such as a forward or
reverse stock split which applies evenly to all holders of capital stock, will
not be deemed adverse to the rights of the Subscribers);

    


    (iii)         repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Common Stock, preferred stock,
or other equity securities other than to the extent permitted or required under
the Transaction Documents;

    


    (iv)         engage
in any transactions with any officer, director, employee or any Affiliate of the
Company, 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, in each case in excess
of $100,000 other than (i) for payment of salary, or fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company, (iii) for
other employee benefits, including stock option agreements under any stock
option plan of the Company or (iv) other transactions disclosed on the Reports;
or

    


    (v)         prepay
or redeem any financing related debt or past due obligations or securities
outstanding as of the Closing Date, or past due obligations (except with respect
to vendor obligations, or any such obligations which in management’s good faith,
reasonable judgment must be repaid to avoid disruption of the Company’s
businesses).

    


    (q)          Reserved.

    


    (r)           Seniority. 
 Except for Permitted Liens, until the Notes are fully satisfied or
converted, the Company shall not grant nor allow any security interest to be
taken in any assets of the Company or any Subsidiary or any Subsidiary’s assets;
nor issue or amend any debt, equity or other instrument which would give the
holder thereof directly or indirectly, a right in any assets of the Company or
any Subsidiary or any right to payment equal to or superior to any right of the
Subscribers as holders of the Notes in or to such assets or payment, nor issue
or incur any debt not in the ordinary course of business.

    


    (s)          Notices. 
 For so long as the Subscribers hold any Notes or Warrants, the Company
will maintain a United States address and United States fax number for notice
purposes under the Transaction Documents.

    


    (t)           Transactions With
Insiders.  So long as the Notes are outstanding, the Company shall
not, and shall cause each of its Subsidiaries not to, enter into, materially
amend, materially modify or materially supplement, or permit any Subsidiary to
enter into, materially amend, materially modify or materially supplement, any
agreement, transaction, commitment, or arrangement relating to the sale,
transfer or assignment of any of the Company’s tangible or intangible
assets with any of its Insiders (as defined below)(or any persons who were
Insiders at any time during the previous two (2) years), or any Affiliates (as
defined below) thereof, or with any individual related by blood, marriage, or
adoption to any such individual; provided that this provision shall not restrict
the Company or Subsidiary from amending or modifying any existing agreement or
transaction for the benefit of the Company or Subsidiary (e.g. extension of
maturity date).  “Affiliate” for purposes of this Section 9(u) means,
with respect to any person or entity, another person or entity that, directly or
indirectly, (i) has a ten percent (10%) or more equity interest in that person
or entity, (ii) has ten percent (10%) or more common ownership with that person
or entity, (iii) controls that person or entity, or (iv) shares common control
with that person or entity.  “Control” or “Controls” for purposes of the
Transaction Documents means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or entity. 
For purposes hereof, “Insiders” shall mean any officer, director or manager of
the Company, including but not limited to the Company’s president, chief
executive officer, chief financial officer and chief operations officer, and any
of their affiliates or family members.

    


    (u)          Lockup Agreement. 
 The Company will deliver to the Subscribers on or before the
Closing Date and enforce the provisions of irrevocable lockup agreements (“Lockup Agreement”) in the
forms annexed hereto as Exhibit I and Exhibit J, with the persons
identified on Schedule
9(u) with respect to the Common Stock identified on Schedule
9(u).


    
      
         


      

      
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    (v)          No Change in Transfer
Agent.  So long as the Notes are outstanding, the Company shall not
take any action to cause a change in the Company’s transfer agent of record,
without prior written consent to take such action from the Collateral
Agent.

    


    10. 
     Covenants of the Company
Regarding Indemnification.  The Company agrees to indemnify, hold
harmless, reimburse and defend the Subscribers, the Subscribers’ officers,
directors, agents, counsel, Affiliates, members, managers, control persons, and
principal stockholders, against any claim, cost, expense, liability, obligation,
loss or damage (including reasonable legal fees) of any nature, incurred by or
imposed upon the Subscribers or any such person which results, arises out of or
is based upon (i) any material misrepresentation by Company or breach of any
representation or warranty by Company in this Agreement or in any Exhibits or
Schedules attached hereto in any Transaction Document, or other agreement
delivered pursuant hereto or in connection herewith, now or after the date
hereof; or (ii) after any applicable notice and/or cure periods, any breach or
default in performance by the Company of any covenant or undertaking to be
performed by the Company hereunder, or any other agreement entered into by the
Company and Subscribers relating hereto.

    


    11. 
     Unlegended Shares and 144
Sales.

    


    (a)          Delivery of Unlegended
Shares.  Within five (5) business days (such fifth business day
being the “Unlegended Shares
Delivery Date”) after the day on which the Company has received (i) a
notice that Conversion Shares, Warrant Shares or any other Common Stock held by
Subscriber has been sold pursuant to a registration statement or Rule 144 under
the 1933 Act, (ii) a representation that the prospectus delivery requirements,
or the requirements of Rule 144, as applicable and if required, have been
satisfied, (iii) the original share certificates representing the shares of
Common Stock that have been sold, and (iv) in the case of sales under Rule 144,
customary representation letters of the Subscriber and, if
required, Subscriber’s broker regarding compliance with the requirements of
Rule 144, the Company at its expense, (y) shall deliver, and shall cause legal
counsel selected by the Company to deliver to its transfer agent (with copies to
Subscriber) an appropriate instruction and opinion of such counsel, directing
the delivery of shares of Common Stock without any legends including the legend
set forth in Section 4(h) above (the “Unlegended Shares”); and (z)
cause the transmission of the certificates representing the Unlegended Shares
together with a legended certificate representing the balance of the submitted
Common Stock certificate, if any, to the Subscriber at the address specified in
the notice of sale, via express courier, by electronic transfer or otherwise
on or before the Unlegended Shares Delivery Date.

    


    (b)          DWAC.   In
lieu of delivering physical certificates representing the Unlegended Shares,
upon request of Subscribers, so long as the certificates therefor do not bear a
legend and the Subscriber is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the account of
Subscriber’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission system, if such transfer agent participates in such
DWAC system.  Such delivery must be made on or before the Unlegended Shares
Delivery Date.

    


    (c)          Late Delivery of Unlegended
Shares.   The Company understands that a delay in the delivery
of the Unlegended Shares pursuant to Section 11 hereof later than the Unlegended
Shares Delivery Date could result in economic loss to a Subscriber.  As
compensation to a Subscriber for such loss, the Company agrees to pay late
payment fees (as liquidated damages and not as a penalty) to the Subscriber for
late delivery of Unlegended Shares in the amount of $100 per business day after
the Unlegended Shares Delivery Date for each $10,000 of purchase price of the
Unlegended Shares subject to the delivery default.  If during any 360 day
period, the Company fails to deliver Unlegended Shares as required by this
Section 11 for an aggregate of thirty days, then each Subscriber or assignee
holding Securities subject to such default may, at its option, require the
Company to redeem all or any portion of the Unlegended Shares subject to such
default at a price per share equal to the greater of (i) 115% of the Purchase
Price paid by the Subscriber for the Unlegended Shares that were not timely
delivered, or (ii) a fraction in which the numerator is the highest closing
price of the Common Stock during the aforedescribed thirty day period and the
denominator of which is the lowest conversion price or exercise price, as the
case may be, during such thirty day period, multiplied by the price paid by
Subscriber for such Common Stock (“Unlegended Redemption
Amount”).  The Company shall pay any payments incurred under this
Section in immediately available funds upon demand.


    
      
         


      

      
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    (d)          Injunction.  In
the event a Subscriber shall request delivery of Unlegended Shares as described
in Section 11 and the Company is required to deliver such Unlegended Shares
pursuant to Section 11, the Company may not refuse to deliver Unlegended Shares
based on any claim that such Subscriber or any one associated or affiliated
with such Subscriber has been engaged in any violation of law, or for any other
reason, unless, an injunction or temporary restraining order from a court, on
notice, restraining and or enjoining delivery of such Unlegended Shares shall
have been sought and obtained by the Company and the Company has posted a surety
bond for the benefit of such Subscriber in the amount of the greater of (i) 120%
of the amount of the aggregate purchase price of the Common Stock which is
subject to the injunction or temporary restraining order, (ii) the closing price
of the Common Stock on the trading day before the issue date of the injunction
multiplied by the number of Unlegended Shares to be subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation
of the dispute and the proceeds of which shall be payable to such Subscriber to
the extent Subscriber obtains judgment in Subscriber’s favor.

    


    (e)          Buy-In. 
 In addition to any other rights available to Subscriber, if the Company
fails to deliver to a Subscriber Unlegended Shares as required pursuant to this
Agreement and after the Unlegended Shares Delivery Date the Subscriber, or a
broker on the Subscriber’s behalf, purchases (in an open market transaction or
otherwise) shares of common stock to deliver in satisfaction of a sale by such
Subscriber of the shares of Common Stock which the Subscriber was entitled to
receive from the Company (a "Buy-In"), then the Company
shall promptly pay in cash to the Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A) the
Subscriber's total purchase price (including brokerage commissions, if any) for
the shares of common stock so purchased exceeds (B) the aggregate
purchase price of the shares of Common Stock delivered to the Company for
reissuance as Unlegended Shares together with interest thereon at a rate of
15% per annum accruing until such amount and any accrued interest thereon is
paid in full (which amount shall be paid as liquidated damages and not as a
penalty).  For example, if a Subscriber purchases shares of Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to
$10,000 of purchase price of shares of Common Stock delivered to the Company for
reissuance as Unlegended Shares, the Company shall be required to pay the
Subscriber $1,000, plus interest. The Subscriber shall provide the Company
written notice indicating the amounts payable to the Subscriber in respect of
the Buy-In.

    


    (f)           144 Default. 
 At any time commencing six months after the Closing Date, in the event the
Subscriber is not permitted to sell any of the Conversion Shares or Warrant
Shares without any restrictive legend or if such sales are permitted but subject
to volume limitations or further restrictions on resale as a result of the
unavailability to Subscriber of Rule 144(b)(1)(i) under the 1933 Act or any
successor rule (a “144
Default”), for any reason including but not limited to failure by the
Company to file quarterly, annual or any other filings required to be made by
the Company by the required filing dates, or the Company’s failure to make
information publicly available which would allow Subscriber’s reliance on Rule
144 in connection with sales of Conversion Shares or Warrant Shares, except due
to a change in current applicable securities laws or because the Subscriber is
an Affiliate (as defined under Rule 144) of the Company, then the Company shall
pay such Subscriber as liquidated damages and not as a penalty for each
thirty days (or such lesser pro-rata amount for any period less than thirty
days) an amount equal to two percent (2%) of the purchase price of the
Conversion Shares and Warrant Shares subject to such 144 Default but no more
than 30% of such purchase price.  Liquidated Damages shall not be payable
pursuant to this Section 11(f) in connection with Shares for such times as such
Shares may be sold by the holder thereof without any legend or volume or other
restrictions pursuant to Section 144(b)(1)(i) of the 1933 Act or pursuant to an
effective registration statement.


    
      
         


      

      
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    12. 
        (a)          Favored Nations
Provision.  Other than in connection with (i) full or partial
consideration in connection with a strategic merger, acquisition, consolidation
or purchase of substantially all of the securities or assets of a corporation or
other entity so long as such issuances are not for the purpose of raising
capital and which holders of such securities or debt are not at any time granted
registration rights, (ii) the Company’s issuance of securities in connection
with strategic license agreements and other partnering arrangements so long as
such issuances are not for the purpose of raising capital and which holders of
such securities or debt are not at any time granted registration rights, (iii)
the Company’s issuance of Common Stock or the issuances or grants of options to
purchase Common Stock to employees, directors, and consultants for compensation
pursuant to plans approved by the independent members of the Company’s board of
directors, or if there are no independent members, approved by the board of
directors as a whole, provided the holders thereof are not granted registration
or registration rights, and which, in the aggregate, do not exceed 10,000,000
shares of Common Stock, (iv) securities upon the exercise or exchange of or
conversion of any securities exercisable or exchangeable for or convertible into
shares of Common Stock issued and outstanding on the date of this Agreement on
the terms disclosed in the Reports or described on Schedule 12(a),
(v) as a result of the conversion of Notes which are granted or issued pursuant
to this Agreement, and (vi) the Company’s issuance of securities in connection
with stock dividends, stock splits, or similar events (collectively, the
foregoing (i) through (v) are “Excepted Issuances”), if at
any time the Notes are outstanding, the Company shall agree to or issue (the
“Lower Price Issuance”)
any Common Stock or securities convertible into or exercisable for shares of
Common Stock (or modify any of the foregoing which may be outstanding) to any
person or entity at a price per share or conversion or exercise price per share
which shall be less than the Conversion Price in effect at such time, or if
less than the Warrant exercise price in effect at such time, without the
consent of the Subscribers, then the Conversion Price shall automatically
be reduced to such other lower price. The average Conversion Price of the
Conversion Shares and average exercise price in relation to the Warrant
Shares shall be calculated separately for the Conversion Shares and Warrant
Shares.  Common Stock issued or issuable by the Company for no
consideration will be deemed issuable or to have been issued for $0.001 per
share of Common Stock.  For purposes of the issuance and adjustments
described in this paragraph, the issuance of any security of the Company
carrying the right to convert such security into shares of Common Stock or any
warrant, right or option to purchase Common Stock shall result in the issuance
of the additional shares of Common Stock upon the sooner of the agreement to or
actual issuance of such convertible security, warrant, right or options and
again at any time upon any subsequent issuances of shares of Common Stock upon
exercise of such conversion or purchase rights if such issuance is at a price
lower than the Conversion Price or Warrant exercise price in effect upon such
issuance.  The rights of Subscribers set forth in this Section 12 are in
addition to any other rights the Subscribers have pursuant to this Agreement,
the Notes, Warrants any other Transaction Document, and any other agreement
referred to or entered into in connection herewith or to which Subscribers and
Company are parties.

    


    (b)          Maximum Exercise of
Rights.   In the event the exercise of the rights described in
Section 12(a) would or could result in the issuance of an amount of Common Stock
of the Company that would exceed the maximum amount that may be issued to
Subscribers calculated in the manner described in Section 7.3 of this Agreement,
then the issuance of such additional shares of Common Stock of the Company to
Subscribers will be deferred in whole or in part until such time as
Subscribers are able to beneficially own such Common Stock without
exceeding the applicable maximum amount set forth calculated in the manner
described in Section 7.3 of this Agreement and notifies the Company
accordingly.

    


    13. 
        Miscellaneous.

    


    (a)          Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or permitted
to be given hereunder shall be deemed effective (a) upon hand delivery or
delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: China Yongxin
Pharmaceuticals, Inc., 927 Canada Court, City of Industry, CA 91748, Attn:
Yongxin Liu, CEO, facsimile: (626) 581-9138, with a copy to: Richardson &
Patel, LLP, 10900 Wilshire Blvd., Suite 500, Los Angeles, CA 90024, Attn: Ryan
Hong, Esq., facsimile: (310) 208-1154, (ii) if to the Subscribers, to: the
addresses and fax numbers indicated on Schedule
I hereto, with an additional copy by fax only to: Grushko &
Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
facsimile: (212) 697-3575, and (iii) if to the Broker, to: StreetCapital Corp.,
300 Colonial Center Parkway, Suite 260, Roswell, GA 30076, Attn: Vince Sbarra,
facsimile: (678) 353-2188.


    
      
         


      

      
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    (b)          Entire
Agreement;
Assignment.  This Agreement and other documents delivered in
connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by both parties.  Neither the Company nor the Subscribers has
relied on any representations not contained or referred to in this Agreement and
the documents delivered herewith.   No right or obligation of the
Company shall be assigned without prior notice to and the written consent of the
Subscribers.

    


    (c)          Counterparts/Execution. 
This Agreement may be executed in any number of counterparts and by the
different signatories hereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.  This Agreement may be executed
by facsimile signature and delivered by electronic transmission.

    


    (d)          Law Governing this
Agreement.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state
and county of New York.  The parties to this Agreement hereby irrevocably
waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or based
upon forum
non
conveniens.  The
parties executing this Agreement and other agreements referred to herein or
delivered in connection herewith on behalf of the Company agree to submit to the
in personam jurisdiction of such courts and hereby irrevocably waive trial by
jury.  The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs.  In the event that any provision of
this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision of any agreement.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any suit, action or
proceeding in connection with this Agreement or any other Transaction Document
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law.

    


    (e)          Specific Enforcement, Consent to
Jurisdiction.  The Company and Subscribers acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached.  It is accordingly agreed that the parties shall
be entitled to seek an injunction or injunctions to prevent or cure breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.  Subject to Section 13(d) hereof,
the Company and each Subscriber hereby irrevocably waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction in New York of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper.  Nothing in this Section shall
affect or limit any right to serve process in any other manner permitted by
law.

    


    (f)           Damages. 
 In the event the Subscriber is entitled to receive any liquidated damages
pursuant to the Transactions Documents, the Subscriber may elect to receive the
greater of actual damages or such liquidated damages.

    


    (g)          Maximum
Payments.   Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that the
rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum
shall be credited against amounts owed by the Company to the Subscribers and
thus refunded to the Company.  The Company agrees that it may not and
actually waives any right to challenge the effectiveness or applicability of
this Section 13(g).


    
      
         


      

      
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    (h)          Calendar Days. 
 All references to “days” in the Transaction Documents shall mean calendar
days unless otherwise stated.  The terms “business days” and “trading days”
shall mean days that the New York Stock Exchange is open for trading for three
or more hours.  Time periods shall be determined as if the relevant action,
calculation or time period were occurring in New York City.  Any deadline
that falls on a non-business day in any of the Transaction Documents shall be
automatically extended to the next business day and interest, if any, shall be
calculated and payable through such extended period.

    


    (i)           Captions: Certain
Definitions.  The captions of the various sections and paragraphs of
this Agreement have been inserted only for the purposes of convenience; such
captions are not a part of this Agreement and shall not be deemed in any manner
to modify, explain, enlarge or restrict any of the provisions of this
Agreement.  As used in this Agreement the term “person” shall mean
and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.

    


    (j)           Consent. 
 As used in this Agreement and the Transaction Documents and any other
agreement delivered in connection herewith, “consent of the Subscribers” or
similar language means the consent of holders of not less than 75% of the
outstanding principal amount of the Notes on the date consent is requested (such
amount being a “Majority in
Interest”).  A Majority in Interest may consent to take or forebear
from any action permitted under or in connection with the Transaction Documents,
modify any Transaction Documents or waive any default or requirement applicable
to the Company, Subsidiaries or Subscribers under the Transaction Documents
provided the effect of such action does not waive any accrued interest or
damages and further provided that the relative rights of the Subscribers to each
other remains unchanged.

    


    (k)          Severability. 
In the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality
or enforceability: (i) by or before that authority of the remaining terms
and provisions of this Agreement, which shall be enforced as if the
unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.

    


    (l)           Successor Laws. 
References in the Transaction Documents to laws, rules, regulations and forms
shall also include successors to and functionally equivalent replacements of
such laws, rules, regulations and forms.  A successor rule to Rule
144(b)(1)(i) shall include any rule that would be available to a non-Affiliate
of the Company for the sale of Common Stock not subject to volume restrictions
and after a six month holding period.

    


    (m)         Maximum
Liability.   In no event shall the liability of the Subscribers
or permitted successor hereunder or under any Transaction Document or other
agreement delivered in connection herewith be greater in amount than the dollar
amount of the net proceeds actually received by such Subscriber or successor
upon the sale of Conversion Shares.

    


    (n)          Independent Nature of
Subscribers.    The Company acknowledges that the
obligations of each Subscriber under the Transaction Documents are several and
not joint with the obligations of any other Subscriber, and no Subscriber shall
be responsible in any way for the performance of the obligations of any other
Subscriber under the Transaction Documents. The Company acknowledges that each
Subscriber has represented that the decision of each Subscriber to purchase
Securities has been made by such Subscriber independently of any other
Subscriber and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to
any other Subscriber (or any other person) relating to or arising from any such
information, materials, statements or opinions.  The Company acknowledges
that nothing contained in any Transaction Document, and no action taken by any
Subscriber pursuant hereto or thereto shall be deemed to constitute the
Subscribers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Subscribers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents.  The Company acknowledges that
it has elected to provide all Subscribers with the same terms and Transaction
Documents for the convenience of the Company and not because Company was
required or requested to do so by the Subscribers.  The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Subscribers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated thereby.


    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    (o)          Equal
Treatment.   No consideration shall be offered or paid to any
person to amend or consent to a waiver or modification of any provision of the
Transaction Documents unless the same consideration is also offered and paid to
all the Subscribers and their permitted successors and assigns.

    


    [SIGNATURE
PAGE FOLLOWS]


    
      
         


      

      
        21

        
          

        

      

      
         


      

    


    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT

    


    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    


    
      
        	 	
                CHINA
      YONGXIN PHARMACEUTICALS,

                INC.,
      a Delaware corporation

              
	 	 
      	 
      
	 	
                By: 

              	
                  

              
	 	 
      	
                Name:
      Yongxin Liu

              
	 	 
      	
                Title:
      Chief Executive Officer

              
	 	 
      	 
      
	 	
                Dated:
      January ___, 2010

              


      

    

    


    
      
        	
                SUBSCRIBER

              	 
      	
                PRINCIPAL

                AMOUNT

              	 
      	
                WARRANTS

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                  

              	 
      	
                  

              	 
      


      

    

     

    
      
         


      

      
        22

        
          

        

      

      
         


      

    


    LIST OF EXHIBITS AND
SCHEDULES

    


    
      
        	
                Exhibit
      A

              	
                Form
      of Note (Included as separate document filed with the
  SEC)

              
	 
      	 
      
	
                Exhibit
      B

              	
                Form
      of Warrant (Included as separate document filed with the
    SEC)

              
	 
      	 
      
	
                Exhibit
      C

              	
                Escrow
      Agreement (Included as separate document filed with the
    SEC)

              
	 
      	 
      
	
                Exhibit
      D

              	
                Form
      of Security Agreement (Included as separate document filed with the
      SEC)

              
	 
      	 
      
	
                Exhibit
      E

              	
                Form
      of Subsidiary Guaranty (Included as separate document filed with the
      SEC)

              
	 
      	 
      
	
                Exhibit
      F

              	
                Form
      of Stock Pledge Agreement (Included as separate document filed with the
      SEC)

              
	 
      	 
      
	
                Exhibit
      G

              	
                Collateral
      Agent Agreement (Included as separate document filed with the
      SEC)

              
	 
      	 
      
	
                Exhibit
      H

              	
                Form
      of Legal Opinion

              
	 
      	 
      
	
                Exhibit
      I

              	
                Form
      of Lockup Agreement (Included as separate document filed with the
      SEC)

              
	 
      	 
      
	
                Exhibit
      J

              	
                Form
      of Leakout Agreement from Umesh Patel (Included as separate document filed
      with the SEC)

              
	 
      	 
      
	
                Schedule
      I

              	
                List
      of Subscribers

              
	 
      	 
      
	
                Schedule
      3

              	
                Pledgors
      and Pledged Stock

              
	 
      	 
      
	
                Schedule
      5(a)

              	
                Subsidiaries

              
	 
      	 
      
	
                Schedule
      5(d)

              	
                Capitalization
      and Additional Issuances

              
	 
      	 
      
	
                Schedule
      5(o)

              	
                Undisclosed
      Liabilities

              
	 
      	 
      
	
                Schedule
      5(q)

              	
                Banking

              
	 
      	 
      
	
                Schedule
      5(s)

              	
                Auditors

              
	 
      	 
      
	
                Schedule
      5(x)

              	
                Transfer
      Agent

              
	 
      	 
      
	
                Schedule
      8(a)

              	
                Broker’s
      Commission

              
	 
      	 
      
	
                Schedule
      9(e)

              	
                Use
      of Proceeds

              
	 
      	 
      
	
                Schedule
      9(l)

              	
                Intellectual
      Property

              
	 
      	 
      
	
                Schedule
      9(u)

              	
                Lockup
      Providers

              
	 
      	 
      
	
                Schedule
      12(a)

              	
                Excepted
      Issuances

              


      

    


    
      
         


      

      
        23

        
          

        

      

      
         


      

    


    EXHIBIT
H

    


    To the
Subscribers identified on Schedule A hereto:

    


    Re:         China Yongxin
Pharmaceuticals, Inc. $1,500,000 Note and Warrant Financing

    


    We have
acted as counsel to China Yongxin Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), in
connection with the offer and sale by the Company of secured promissory notes in
the principal amount of up to $1,500,000 (the “Notes”), and common
stock purchase warrants (“Warrants”) to the
Subscribers identified on Schedule A hereto (each a “Subscriber”), in the
amounts designated thereon, for an aggregate purchase price of up to $1,500,000
pursuant to the exemption from registration under the Securities Act of 1933, as
amended (the “Act”) as set forth in
Regulation D (“Regulation D”)
promulgated thereunder. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the subscription agreement (the
“Agreement”) by
and between the Company and Subscriber entered into at or about the date
hereof.  The Agreement, and the agreements described below are sometimes
hereinafter referred to collectively as the “Documents”.

    


    In
connection with the opinions expressed herein, we have made such examination of
law as we considered appropriate or advisable for purposes hereof.  As to
matters of fact material to the opinions expressed herein, we have relied, with
your permission, upon the representations and warranties as to factual matters
contained in and made by the Company and each Subscriber pursuant to the
Documents and upon certificates and statements of certain government officials
and of officers of the Company as described below.  We have also examined
originals or copies of certain corporate documents or records of the Company as
described below:

    


    
      
        
          
            	 
      	
                    (a) 

                  	
                    Bylaws
      of the Company;

                  
	 
      	
                    (b) 

                  	
                    Certificate
      of Incorporation of the Company, as amended;

                  
	 
      	
                    (c) 

                  	
                    Collateral
      Agent Agreement;

                  
	 
      	
                    (d) 

                  	
                    Escrow
      Agreement;

                  
	 
      	
                    (e) 

                  	
                    Form
      of Agreement;

                  
	 
      	
                    (f) 

                  	
                    Form
      of Common Stock Purchase Warrant (the “Warrants”);

                  
	 
      	
                    (g) 

                  	
                    Form
      of Note;

                  
	 
      	
                    (h)

                  	
                    Resolutions
      of the Company’s Board of Directors, including unanimous Board of
      Directors approval of the Documents, a copy of which is annexed
      hereto;

                  
	 
      	
                    (i)

                  	
                    Security
      Agreement;

                  
	 
      	
                    (j) 

                  	
                    Stock
      Pledge Agreement;

                  
	 
      	
                    (k) 

                  	
                    Subsidiary
      Guaranty;

                  
	 
      	
                    (l) 

                  	
                    Form
      of Lockup Agreement with certain Company shareholders;
  and

                  
	 
      	
                    (m) 

                  	
                    Leakout
      Agreement between the Company and Umesh Patel dated
    1/15/2010.

                  


          

        

      

    

    


    In rendering this opinion, we have,
with your permission, assumed: (a) the authenticity of all documents submitted
to us as originals; (b) the conformity to the originals of all documents
submitted to us as copies; (c) the genuineness of all signatures; (d) the legal
capacity of natural persons; (e) the truth, accuracy and completeness of the
information, factual matters, representations and warranties contained in all of
such documents; (f) the due authorization, execution and delivery of all such
documents by the Subscribers, and the legal, valid and binding effect thereof on
the Subscribers; and (g) that the Company and the Subscribers will act in
accordance with their respective representations and warranties as set forth in
the Documents.  In rendering this opinion, we also have assumed, with your
permission, (A) that the representations and warranties made in the Agreement by
you are true and correct; (B) that any wire transfers, drafts or checks tendered
by you will be honored; and (C) if you are a corporation or other entity, that
you have filed any required state franchise, income or similar tax returns and
have paid any required state franchise, income or similar taxes.

    


    We are
members of the bar of the State of California.  Our opinions hereafter
expressed are limited to the General Corporation Law of the State of California
and Federal law, and we express no opinion as to the laws of any other
jurisdiction.  We express no opinion with respect to the effect or
application of any other laws.  To the extent the Documents provide
that they are to be governed by the laws of any jurisdiction other than the
State of California, our opinions regarding the Documents are being rendered,
with your concurrence, as if only the internal laws of the State of California
were applicable thereto, notwithstanding the governing law provisions of the
Documents to the contrary.  Furthermore, we invite your attention to the
fact that the Documents state that they are governed by the laws of the State of
New York, that one or more Subscribers may have a mailing address in certain
foreign jurisdictions, and that the Company has wholly owned subsidiaries
located in the People’s Republic of China (PRC) (each, a “Subsidiary” and
collectively, the “Subsidiaries”).  We
have made no investigation of laws in New York, the PRC or any other foreign
jurisdiction. Special rulings of authorities administering any of such laws or
opinions of other counsel have not been sought or obtained by us in connection
with rendering the opinions expressed herein.


    
      
         


      

      
        24

        
          

        

      

      
         


      

    


    As used
in this opinion letter, the expression “we are not aware” or the phrase “to our
knowledge,” or any similar expression or phrase with respect to our knowledge of
matters of fact, means as to matters of fact that, based on the actual knowledge
of individual attorneys within the firm principally responsible for handling
current matters for the Company (and not including any constructive or imputed
notice of any information), and after an examination of documents referred
to herein and after inquiries of the Chief Executive Officer of the Company, no
facts have been disclosed to us that have caused us to conclude that the
opinions expressed are factually incorrect; but beyond that we have made no
factual investigation for the purposes of rendering this opinion letter. 
Specifically, but without limitation, we have not searched the dockets of any
courts and we have made no inquiries of securities holders or employees of the
Company, other than the Chief Executive Officer.

    


    1. 
         The Company and each
Subsidiary is duly incorporated, validly existing and in good standing in the
jurisdictions of their formation; have qualified to do business in each state
and jurisdiction where required unless the failure to do so would not have a
material impact on their operations; and have the requisite corporate power and
authority to conduct their businesses, and to own, lease and operate their
properties.

    


    2. 
         The Company and each
Subsidiary has the requisite corporate power and authority to execute, deliver
and perform its obligations under the Documents.  The Documents, and the
issuance of the Notes, and Warrants and the reservation and issuance of Common
Stock issuable upon conversion of the Notes and exercise of the Warrants have
been (a) duly approved by the Board of Directors of the Company and each
Subsidiary, as required, and (b) the Securities, when issued pursuant to the
Agreement and upon delivery, shall be validly issued and outstanding, fully paid
and non assessable.

    


    3. 
         The execution, delivery
and performance of the Documents by the Company and each Subsidiary and the
consummation of the transactions contemplated thereby, will not, with or without
the giving of notice or the passage of time or both:

    


    (a)           Violate
the provisions of the Certificate of Incorporation or bylaws of the Company or
each Subsidiary; or

    


    (b)           To
the best of counsel's knowledge, violate any judgment, decree, order or award of
any court binding upon the Company or each Subsidiary.

    


    4. 
         The Documents constitute
the valid and legally binding obligations of the Company and each Subsidiary and
are enforceable against the Company and each Subsidiary in accordance with their
respective terms.

    


    5. 
         The Securities have not
been registered under the Securities Act of 1933, as amended (the “Act”) or under the
laws of any state or other jurisdiction, and are or will be issued pursuant to a
valid exemption from registration.

    


    6. 
         The holders of the
Securities will not be subject to the provisions of the anti-takeover statutes
of Delaware.

    


    7. 
         The Company and each
Subsidiary has either obtained the approval of the transactions described in the
Documents from its Principal Market and stockholders, or no such approval is
required.

    


    8. 
         The Subscriber has been
granted valid security interests in the Collateral and Pledged Stock (as defined
in the Security Agreement and Stock Pledge Agreement, respectively) pursuant to
the Documents, enforceable against the Company, and each Subsidiary and each
Pledgor in accordance with their respective terms and provisions, and to the
extent such security interest may be perfected under the Uniform Commercial Code
by the filing of financing statements, then upon the due and timely filing of
Uniform Commercial Code financing statements respecting the Company, with the
Secretary of State of the State of Delaware, those security interests will be
perfected in such Collateral to the extent described in those statements and the
Security Agreement.


    
      
         


      

      
        25

        
          

        

      

      
         


      

    


    9. 
         The Company, Subsidiaries
and their Boards 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 and Subsidiaries’
Certificate of Incorporation (or similar charter documents) or the laws of their
respective jurisdictions of incorporation that is or could become applicable to
the Subscriber as a result of the Subscriber, the Company and Subsidiaries
fulfilling their obligations or exercising their rights under the Documents,
including without limitation as a result of the Company’s issuance of the Notes,
Warrants and Common Stock issuable upon conversion of the Notes and exercise of
the Warrants and the Subscriber’ ownership of the Notes, Warrants and Common
Stock issuable upon conversion of the Notes and exercise of the
Warrants.

    


    Our
opinions expressed above are specifically subject to the following limitations,
exceptions, qualifications and assumptions:

    


    A. 
        The effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting the
relief of debtors or the rights and remedies of creditors generally, including
without limitation the effect of statutory or other law regarding fraudulent
conveyances and preferential transfers.

    


    B. 
        Limitations imposed by state
law, federal law or general equitable principles upon the specific
enforceability of any of the remedies, covenants or other provisions of any
applicable agreement and upon the availability of injunctive relief or other
equitable remedies, regardless of whether enforcement of any such agreement is
considered in a proceeding in equity or at law.

    


    C. 
        For purposes of this opinion, we
are assuming that the Subscribers have all requisite power and authority, and
have taken any and all necessary corporate or partnership action, to execute and
deliver the Documents, and we are assuming that the representations and
warranties made by each Subscriber in the Documents and pursuant thereto are
true and correct.

    


    D. 
       The legality, validity, binding nature
and enforceability of the Company’s obligations under the Documents may be
subject to or limited by (a) principles requiring the consideration of the
impracticability or impossibility of performance of the Company’s obligations at
the time of the attempted enforcement of such obligations, and (b) the effect of
California or other state court decisions and statutes which indicate that
provisions of the Documents which permit any of you to take action or make
determinations may be subject to a requirement that such action be taken or such
determinations be made on a reasonable basis in good faith or that it be
shown that such action is reasonably necessary for your protection.

    


    E. 
        We express no opinion as to the
Company’s or this transaction’s compliance or noncompliance with applicable
federal or state antifraud or antitrust statutes, laws, rules and regulations,
or the Exon-Florio Amendment, or usury laws.

    


    F. 
        We express no opinion concerning
the past, present or future fair market value of any securities.

    


    G. 
        With respect to our opinions, we
have assumed full disclosure to the Subscribers of all material facts and, with
respect to performance by the Company of its obligations under the Documents,
compliance by the Company at such time with the requirements to file documents
pursuant to Exchange Act of 1934 (the “Exchange Act”), with
applicable state securities laws and with any rules, regulations or
pronouncements issued or promulgated pursuant to such laws.

    


    H. 
        We express no opinion as to the
enforceability under certain circumstances of any provisions indemnifying a
party against, or requiring contributions toward, that party’s liability for its
own wrongful or negligent acts, or where indemnification or contribution is
contrary to public policy or prohibited by law.  In this regard, we advise
you that in the opinion of the Securities and Exchange Commission,
indemnification of directors, officers and controlling persons of an issuer
against liabilities arising under the Securities Act of 1933, as amended, is
against public policy and is therefore unenforceable.


    
      
         


      

      
        26

        
          

        

      

      
         


      

    


    I. 
         We express no opinion as
to the enforceability under certain circumstances of any provisions prohibiting
waivers of any terms of the Documents other than in writing, or prohibiting oral
modifications thereof or modification by course of dealing.  In addition,
our opinions are subject to the effect of judicial decisions which may permit
the introduction of extrinsic evidence to interpret the terms of written
contracts.

    


    J. 
         The enforceability under
certain circumstances of provisions to the effect that rights or remedies may be
exercised without notice, that failure to exercise or delay in exercising rights
or remedies will not operate as a waiver of any such right or remedy, that
rights or remedies are not exclusive, that every right or remedy is cumulative
and may be exercised in addition to or with any other right or remedy, or that
election of a particular remedy or remedies does not preclude recourse to one or
more remedies.

    


    K. 
        Any provision providing for the
exclusive jurisdiction of a particular court or purporting to waive rights to
trial by jury, service of process or objections to the laying of venue or to
forum on the basis of forum non conveniens, in connection with any litigation
arising out of or pertaining to the Documents.

    


    L. 
        The effect of any governing
state law, federal law or equitable principles which limit the amount of
attorneys’ fees that can be recovered under certain circumstances.

    


    M. 
       We express no opinion as to the effect
of subsequent issuances of securities of the Company, to the extent that (i)
further issuances which may be integrated with the Closing may include
Subscribers that do not meet the definition of “accredited investors” under Rule
501 of Regulation D and equivalent definitions under state securities or “blue
sky” laws and (ii) to the extent that notwithstanding its reservation of shares
the Company may issue an excessive number of shares of Common Stock such that
there are insufficient remaining authorized but unissued shares of Common Stock
for the conversion of the Notes.  For purposes of our opinion in paragraph
6, we note that stockholder approval is required in order to amend the Company’s
Certificate of Incorporation to increase the authorized number of shares that
can be issued by the Company.  We express no opinion as to whether the
Company will or will not obtain stockholder approval for this
purpose.

    


    N. 
        With respect to our opinion in
Paragraph 1 that the Company is duly incorporated, validly existing under the
laws of the state of its incorporation, is in good standing in its jurisdiction
of incorporation, we have relied solely upon written representations made to us
in a certificate furnished by the Chief Executive Officer of the Company and the
certificates of public officials including a certificate of good standing issued
by the Delaware Secretary of State, dated January 22, 2010 attesting to the
Company’s good standing in such jurisdiction.

    


    O. 
        This opinion letter is governed
by, and shall be interpreted in accordance with, the Legal Opinion Accord (the
“Accord”) of
the ABA Section of Business Law (1991). As a consequence, it is subject to a
number of qualifications, exceptions, definitions, limitations on coverage and
other limitations, all as more particularly described in the Accord, including
the General Qualifications and the Equitable Principles Limitation, and this
opinion letter should be read in conjunction therewith.

    


    This
opinion is rendered as of the date first written above, is solely for your
benefit in connection with the Agreement and may not be relief upon or used by,
circulated, quoted, or referred to nor may any copies hereof by delivered to any
other person without our prior written consent.  We disclaim any obligation
to update this opinion letter or to advise you of facts, circumstances, events
or developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinions expressed herein.

    


    
      
        	 
      	
                Very
      truly yours,

              
	 
      	 
      
	 
      	
                Richardson
      & Patel LLP

              


      

    


    
      
         


      

      
        27

        
          

        

      

      
         


      

    


    SCHEDULE A TO LEGAL
OPINION

    


    First Financing (January 22,
2010)

    


    
      
        
          
            
              
                	
                        Subscribers

                      	  	
                        Note

                        Principal

                        Amount

                      	  	  	
                        Shares for

                        which

                        Warrant

                        can be

                        Exercised

                      	  
	
                        Excalibur
      Special Opportunities LP

                      	 
      	
                        $

                      	
                        300,000.00

                      	 
      	 
      	 
      	
                        1,500,000

                      	 
      
	
                        Dana
      Katzenmeier

                      	 
      	
                        $

                      	
                        50,000.00

                      	 
      	 
      	 
      	
                        250,000

                      	 
      
	
                        Fourth
      Street Holdings, LP

                      	 
      	
                        $

                      	
                        100,000.00

                      	 
      	 
      	 
      	
                        500,000

                      	 
      
	
                        Robert
      B. Prag

                      	 
      	
                        $

                      	
                        100,000.00

                      	 
      	 
      	 
      	
                        500,000

                      	 
      
	
                        Peter
      B. Tentler

                      	 
      	
                        $

                      	
                        50,000.00

                      	 
      	 
      	 
      	
                        250,000

                      	 
      
	
                        Richardson
      & Patel LLP

                      	 
      	
                        $

                      	
                        100,000.00

                      	 
      	 
      	 
      	
                        500,000

                      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        TOTAL

                      	 
      	
                        $

                      	
                        700,000.00

                      	 
      	 
      	 
      	
                        3,500,000

                      	 
      


              

            

          

        

      

    

    


     Second
Financing (March
4,
2010)

    


    
      
        
          
            
              
                	
                        Subscribers

                      	  	
                        Note

                        Principal

                        Amount

                      	  	  	
                        Shares for

                        which

                        Warrant

                        can be

                        Exercised

                      	 
      
	
                        Marc
      Freeman

                      	 
      	
                        $

                      	
                        75,000.00

                      	 
      	 
      	 
      	
                        15,000

                      	 
      
	
                        Paul
      T. Mannion Jr.

                      	 
      	
                        $

                      	
                        25,000.00

                      	 
      	 
      	 
      	
                        5,000

                      	 
      
	
                        Linda
      Hecter

                      	 
      	
                        $

                      	
                        25,000.00

                      	 
      	 
      	 
      	
                        5,000

                      	 
      
	
                        TOTAL

                      	 
      	
                        $

                      	
                        125,000.00

                      	 
      	 
      	 
      	
                        25,000

                      	 
      


              

            

          

        

      

    

    


    First Financing
(May
3,
2010)

    


    
      
        
          
            
              
                	
                        Subscribers

                      	  	
                        Note

                        Principal

                        Amount

                      	  	  	
                        Shares for

                        which

                        Warrant

                        can be

                        Exercised

                      	  
	
                        Excalibur Special Opportunities LP

                      	  	
                        $

                      	
                        100,000.00

                      	 
      	 
      	 
      	
                        500,000

                      	 
      
	
                        Dana
      Katzenmeier

                      	 
      	
                        $

                      	
                        25,000.00

                      	 
      	 
      	 
      	
                        125,000

                      	 
      
	
                        Fourth
      Street Holdings, LP

                      	 
      	
                        $

                      	
                        40,000.00

                      	 
      	 
      	 
      	
                        200,000

                      	 
      
	
                        Robert
      B. Prag

                      	 
      	
                        $

                      	
                        50,000.00

                      	 
      	 
      	 
      	
                        250,000

                      	 
      
	
                        Peter
      B. Tentler

                      	 
      	
                        $

                      	
                        25,000.00

                      	 
      	 
      	 
      	
                        125,000

                      	 
      
	
                        Paul
      T. Mannion Jr.

                      	 
      	
                        $

                      	
                        10,000.00

                      	 
      	 
      	 
      	
                        50,000

                      	 
      
	
                        TOTAL

                      	 
      	
                        $

                      	
                        250,000.00

                      	 
      	 
      	 
      	
                        1,250,000

                      	 
      


              

            

          

        

      

    


    
      
         


      

      
        28

        
          

        

      

      
         


      

    


    SCHEDULE
I

    


    Schedule
prepared in accordance with Instruction 2 to Item 601 of Regulation
S-K

    


    The
Subscription Agreements dated January 22, 2010, are substantially identical in
all material respects except as to the subscribers, the note principal amount
and the number of shares for which warrant can be exercised.

    


    
      
        
          
            
              
                	
                        Subscribers

                      	  	
                        Note

                        Principal

                        Amount

                      	  	  	
                        Shares for

                        which

                        Warrant

                        can be

                        Exercised

                      	  
	
                        Excalibur Special Opportunities
      LP

                      	 
      	
                        $

                      	
                        300,000.00

                      	 
      	 
      	 
      	
                        1,500,000

                      	 
      
	
                        Dana
      Katzenmeier

                      	 
      	
                        $

                      	
                        50,000.00

                      	 
      	 
      	 
      	
                        250,000

                      	 
      
	
                        Fourth
      Street Holdings, LP

                      	 
      	
                        $

                      	
                        100,000.00

                      	 
      	 
      	 
      	
                        500,000

                      	 
      
	
                        Robert
      B. Prag

                      	 
      	
                        $

                      	
                        100,000.00

                      	 
      	 
      	 
      	
                        500,000

                      	 
      
	
                        Peter
      B. Tentler

                      	 
      	
                        $

                      	
                        50,000.00

                      	 
      	 
      	 
      	
                        250,000

                      	 
      
	
                        Richardson
      & Patel LLP

                      	 
      	
                        $

                      	
                        100,000.00

                      	 
      	 
      	 
      	
                        500,000

                      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        TOTAL

                      	 
      	
                        $

                      	
                        700,000.00

                      	 
      	 
      	 
      	
                        3,500,000

                      	 
      


              

            

          

        

      

    

    


    The
Subscription Agreements dated March 4, 2010, are substantially identical in all
material respects except as to the subscribers, the note principal amount and
the number of shares for which warrant can be exercised.

    


    
      
        
          
            
              
                
                  	
                          Subscribers

                        	  	
                          Note

                          Principal

                          Amount

                        	  	  	
                          Shares for

                          which

                          Warrant

                          can be

                          Exercised

                        	  
	
                          Marc Freeman

                        	  	
                          $

                        	
                          75,000.00

                        	 
      	 
      	 
      	
                          15,000

                        	 
      
	
                          Paul
      T. Mannion Jr.

                        	 
      	
                          $

                        	
                          25,000.00

                        	 
      	 
      	 
      	
                          5,000

                        	 
      
	
                          Linda
      Hecter

                        	 
      	
                          $

                        	
                          25,000.00

                        	 
      	 
      	 
      	
                          5,000

                        	 
      
	
                          TOTAL

                        	 
      	
                          $

                        	
                          125,000.00

                        	 
      	 
      	 
      	
                          25,000

                        	 
      


                

              

            

          

        

      

    

    


    The
Subscription Agreements dated May 3, 2010, are substantially identical in all
material respects except as to the subscribers, the note principal amount and
the number of shares for which warrant can be exercised.

    


    
      
        
          
            
              
                	
                        Subscribers

                      	  	
                        Note

                        Principal

                        Amount

                      	  	  	
                        Shares for

                        which

                        Warrant

                        can be

                        Exercised

                      	  
	
                        Excalibur Special
      Opportunities LP

                      	 
      	
                        $

                      	
                        100,000.00

                      	 
      	 
      	 
      	
                        500,000

                      	 
      
	
                        Dana
      Katzenmeier

                      	 
      	
                        $

                      	
                        25,000.00

                      	 
      	 
      	 
      	
                        125,000

                      	 
      
	
                        Fourth
      Street Holdings, LP

                      	 
      	
                        $

                      	
                        40,000.00

                      	 
      	 
      	 
      	
                        200,000

                      	 
      
	
                        Robert
      B. Prag

                      	 
      	
                        $

                      	
                        50,000.00

                      	 
      	 
      	 
      	
                        250,000

                      	 
      
	
                        Peter
      B. Tentler

                      	 
      	
                        $

                      	
                        25,000.00

                      	 
      	 
      	 
      	
                        125,000

                      	 
      
	
                        Paul
      T. Mannion Jr.

                      	 
      	
                        $

                      	
                        10,000.00

                      	 
      	 
      	 
      	
                        50,000

                      	 
      
	
                        TOTAL

                      	 
      	
                        $

                      	
                        250,000.00

                      	 
      	 
      	 
      	
                        1,250,000

                      	 
      


              

            

          

        

      

    

    


    The text
of the Subscription Agreements is incorporated by reference from Exhibit 10.1 to
the Company’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 26, 2010.


    
      
         


      

      
        29

        
          

        

      

      
         


      

    


    Schedule
3

    


    (Pledgors
and Pledged Stock)

    


    
      
        	
                Pledgors

              	 
      	
                Pledged Stock

              
	 
      	 
      	 
      
	
                MISALA
      HOLDINGS INC. (BVI)

              	 
      	
                12,000,000
      shares of common stock

              
	 
      	 
      	 
      
	
                BOOM
      DAY INVESTMENTS LTD. (BVI)

              	 
      	
                7,999,998
      shares of common stock

              
	 
      	 
      	
                5,400,000
      shares of common stock

              
	 
      	 
      	 
      
	
                PERFECT
      SUM INVESTMENTS LTD (BVI)

              	 
      	
                1,200,000
      shares of common stock

              


      

    


    
      
         


      

      
        30

        
          

        

      

      
         


      

    


    Schedule
5(a)

    


    (Subsidiaries)

    


    Changchun
Yongxin Dirui Medical Co., Ltd., a company organized under the laws of the
People’s Republic of China

    


    Jilin
Province Yongxin Chain Drugstore Ltd., a company organized under the laws of the
People’s Republic of China

    


    Jilin
Dingjian Natural & Health Products Co., Ltd., a company organized under the
laws of the People’s Republic of China

    


    Tianjin
Jingyongxin Chain Drugstore Ltd., a company organized under the laws of the
People’s Republic of China

    


    Baishan
Caoantang Chain Drugstore Ltd., a company organized under the laws of the
People’s Republic of China

    


    Digital
Learning Institute Inc., a Delaware corporation

    


    Software
Education of America, Inc., a California corporation

    


    McKinley
Educational Services, Inc., a California corporation

    


    Digital
Knowledge Works, Inc., a Delaware corporation

    


    Coursemate,
Inc., a California corporation.


    
      
         


      

      
        31

        
          

        

      

      
         


      

    


    Schedule
5(d)

    


    (Capitalization
and Additional Issuances)

    


    Common
Stock

    


    Authorized:
75,000,000 shares

    Issued
and Outstanding:  56,448,923 shares

    


    Preferred
Stock

    


    Authorized:
5,000,000 shares

    Issued
and Outstanding:  1,666,667 shares


    
      
         


      

      
        32

        
          

        

      

      
         


      

    


    Schedule
5(o)

    


    (Undisclosed
Liabilities)

    


    Even
though the $219,000 judgment in relation to a legal proceeding called Wells Fargo Bank. N.A. v. Software
Education for America Inc. has been previously disclosed, the
Subscribers are advised that the Company contemplates settling the judgment at a
later time by issuance of corporate stock, but it is still subject to
negotiation.


    
      
         


      

      
        33

        
          

        

      

      
         


      

    


    Schedule
5(q)

    


    (Banking
Information)

    


    
      
        
          
            
              
                	
                        Bank

                      	 
      	
                        Bank Address

                      
	 
      	 
      	 
      
	
                        Changchun
      Yongxin Dirui Medical Co., Ltd.

                      	 
      	 
      
	
                        ICBC,
      branch of Changchun Development District

                      	 
      	
                        1
      Shen Zhen St.,

                        Changchun

                      
	 
      	 
      	 
      
	
                        Jilin
      Province Yongxin Chain Drugstore Ltd.

                      	 
      	 
      
	
                        Bank
      of Jilin, branch of Gaoxin Development District

                      	 
      	
                        3258
      Gui Gu Blvd., Gao Xin District,

                        Changchun

                      
	 
      	 
      	 
      
	
                        Tianjin
      Jinyongxin Charin Drugstore Ltd.

                      	 
      	 
      
	
                        Agricultural
      Bank of China, branch of West Bing Shui Blvd.

                      	 
      	
                        26
      W Bing Shui Blvd.,

                        Nan
      Kai District,

                        Changchun

                      
	 
      	 
      	 
      
	
                        Baishan
      Caoantang Chain Drugstore Ltd.

                      	 
      	 
      
	
                        ICBC,
      branch of Ba Dao Jiang

                      	 
      	
                        47
      Hun Jiang Blvd.,

                        Changchun

                      
	 
      	 
      	
                         
      

                      
	
                        Jilin
      Dingjian Natural & Health Products Co., Ltd.

                      	 
      	
                         
      

                      
	
                        ICBC,
      branch of Changchun Development District

                      	
                          

                      	
                        1
      Shen Zhen St.,

                        Changchun

                      


              

            

          

        

      

    


    
      
         


      

      
        34

        
          

        

      

      
         


      

    


    Schedule
5(s)

    


    (Auditors)

    


    Kabani
& Company Inc.

    6033 West
Century Boulevard

    Los
Angeles, CA 90045-6410

    (310)
410-0371


    
      
         


      

      
        35

        
          

        

      

      
         


      

    


    Schedule
5(x)

    


    (Transfer
Agent)

    


    Joanna
DiBella

    Pacific
Stock Transfer Company

    500 E.
Warm Springs Road, Suite 240

    Las
Vegas, NV 89119

    Email: joanna@pacificstocktransfer.com

    Telephone:
702-361-3033

    Fax:
702-433-1979

    Web:
 www.pacificstocktransfer.com


    
      
         


      

      
        36

        
          

        

      

      
         


      

    


    Schedule
8(a)

    


    (Broker’s
Commission)

    


    
      
        
          
            	
                    BROKER:

                  	
                    STREETCAPITAL
      CORP.

                  
	 
      	
                    300
      Colonial Center Parkway, Suite 260

                  
	 
      	
                    Roswell,
      GA 30076

                  
	 
      	
                    Attn:
      Vince Sbarra

                  
	 
      	
                    Fax:
      (678) 353-2188

                  


          

        

      

    

    


    The total
amount of compensation to the Broker in connection with the Closing of the
Offering shall be as follows:

    


    Cash Fee. 
 The Company agrees that it will pay the Broker, on the Closing Date
a fee of eight percent (8%) of the Purchase Price (“Broker’s Cash Fee”).  The
Company represents that there are no other parties entitled to receive fees,
commissions, or similar payments in connection with the Offering except the
Broker.

    


    Warrant Exercise
Compensation.  The Broker will also be paid by the Company four
percent (4%) of the cash proceeds received by the Company from exercise of the
Warrants (“Warrant Exercise
Compensation”), upon receipt of such proceeds.

    


    Broker’s Warrants.  On
the Closing Date, the Company will issue to the Broker a warrant for the
purchase of up to 225,000 shares of common stock (or an amount equal to 3% of
the total number of shares of common stock into which the Notes are convertible
at the Closing Date, if less) of the Company with an exercise price of $0.50 per
share (“Broker’s Warrant”).  The Broker’s Warrant will be similar to and
carrying the same rights as the Warrants issuable to the Subscribers except that
Warrant Exercise Compensation will not be payable in connection with such
Broker’s Warrant.

    


    The
Broker agrees to execute and deliver to the Company written representations,
warranties and covenants which are reasonably acceptable to the Company and
substantially similar to those made by the Subscribers in the Agreement, in
connection with the Broker’s acquisition of the Broker’s
Warrants.


    
      
         


      

      
        37

        
          

        

      

      
         


      

    


    Schedule
9(e)

    


    (Use of
Proceeds)

    


    The use
of proceeds shall include, but not limited to, the
following:  auditing expenses, legal fees, operating expenses, payment
for suppliers, and general working capital.


    
      
         


      

      
        38

        
          

        

      

      
         


      

    


    Schedule
9(l)

    


    (Intellectual
Property)

    


    
      
        	
                Type

              	 
      	
                Name

              	 
      	
                Category Number and

                Description

              	 
      	
                Issued By

              	 
      	
                Duration

              	 
      	
                Description

              
	
                Trademark

              	 
      	
                朗莱孚 Longlife

              	 
      	
                5
      (Pharmaceutical and veterinary preparations; sanitary preparations for
      medical purposes; dietetic substances adapted for medical use, food for
      babies; plasters, materials for dressings; material for stopping teeth,
      dental wax; disinfectants; preparations for destroying vermin; fungicides,
      herbicides)

              	 
      	
                Trademark
      Administration of the National Administration of Industry and Commerce
      (the “PRC Trademark Bureau”)

              	 
      	
                May
      16, 2007 to May 16, 2017

                (10
      years)

              	 
      	
                Logo,
      brand name used in our products

                 

                Registration
      No.: ZC5747465SL

                 

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Trademark

              	 
      	
                姿諾Zinuo

              	 
      	
                3
      (Bleaching preparations and other substances for laundry use; cleaning,
      polishing, scouring and abrasive preparations; soaps; perfumery, essential
      oils, cosmetics, hair lotions; dentifrices)

              	 
      	
                PRC
      Trademark Bureau

              	 
      	
                May
      16, 2007 to May 16, 2017

                 (10
      years)

              	 
      	
                Logo,
      brand name used in our products

                 

                Registration
      No.: ZC5747467SL

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Trademark

              	 
      	
                永新堂 Yongxintang

              	 
      	
                5
      (Pharmaceutical and veterinary preparations; sanitary preparations for
      medical purposes; dietetic substances adapted for medical use, food for
      babies; plasters, materials for dressings; material for stopping teeth,
      dental wax; disinfectants; preparations for destroying vermin; fungicides,
      herbicides)

              	 
      	
                PRC
      Trademark Bureau

              	 
      	
                October
      10, 2007 to October 10, 2017

                 (10
      years)

              	 
      	
                Logo,
      brand name used in our products

                 

                Registration
      No.: ZC6205067SL

              


      

    

    
    

    
      
        
          
            
              
                
                  
                    	
                            Trademark

                          	 
      	
                            永新堂 Yongxintang

                          	 
      	
                            29
      (Meat, fish, poultry and game; meat extracts; preserved, dried and cooked
      fruits and vegetables; jellies, jams, fruit sauces; eggs, milk and milk
      products; edible oils and fats)

                          	 
      	
                            PRC
      Trademark Bureau

                          	 
      	
                            October
      10, 2007 to October 10, 2017

                             (10
      years)

                          	 
      	
                            Logo,
      brand name used in our products

                             

                            Registration
      No.: ZC6205065SL

                          
	
                               

                          	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                            Trademark

                          	 
      	
                            永新堂 Yongxintang

                          	 
      	
                            30
      (Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour
      and preparations made from cereals, bread, pastry and confectionery, ices;
      honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces
      (condiments); spices; ice)

                          	 
      	
                            PRC
      Trademark Bureau

                          	 
      	
                            October
      10, 2007 to October 10, 2017

                             (10
      years)

                          	 
      	
                            Logo,
      brand name used in our products

                             

                            Registration
      No.:
ZC6205066SL

                          


                  

                

              

            

          

        

      

    

    

      
        
           


        

        
          39

          
            

          

        

        
           


        

      

    

     

    
      
        
          
            	
                    Trademark

                  	 
      	
                    永新堂 Yongxintang

                  	 
      	
                    32
      (Beers; mineral and aerated waters and other non-alcoholic drinks; fruit
      drinks and fruit juices; syrups and other preparations for making
      beverages)

                  	 
      	
                    PRC
      Trademark Bureau

                  	 
      	
                    October
      10, 2007 to October 10, 2017

                     (10
      years)

                  	 
      	
                    Logo,
      brand name used in our products

                     

                    Registration
      No.: ZC6205064SL

                  
	
                      

                  	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                    Trademark

                  	 
      	
                    永新堂 Yongxintang

                  	 
      	
                    33
      (Alcoholic beverages (except beers))

                  	 
      	
                    PRC
      Trademark Bureau

                  	 
      	
                    October
      10, 2007 to October 10, 2017

                     (10
      years)

                  	 
      	
                    Logo,
      brand name used in our products

                     

                    Registration
      No.: ZC6205063SL

                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                    Trademark

                  	
                      

                  	
                    高麗元Gaoliyuan

                  	
                      

                  	
                    30
      (Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour
      and preparations made from cereals, bread, pastry and confectionery, ices;
      honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces
      (condiments); spices; ice)

                  	
                      

                  	
                    PRC
      Trademark Bureau

                  	
                      

                  	
                    October
      25, 2006 to October 25, 2016

                     (10
      years)

                  	
                      

                  	
                    Logo,
      brand name used in our products

                     

                    Registration
      No.: ZC5410005SL

                  


          

        

      

    

     

    
      
         


      

      
        40

        
          

        

      

      
         


      

    


    Schedule
9(u)

    


    (Lockup
Providers)

    


    
      
        	
                Misala
      Holdings Inc. (BVI)

              	
                12,000,000
      shares of common stock

              
	
                Yongxin
      Liu

              	 
      
	 
      	 
      
	
                Boom
      Day Investments Ltd. (BVI)

              	
                7,
      999,998 shares of common stock; and

              
	
                Yongkui
      Liu

              	
                5,400,000
      shares of common stock

              
	 
      	 
      
	
                Perfect
      Sum Investments Ltd. (BVI)

              	
                1,200,000
      shares of common stock

              
	
                Yongmei
      Wang (spouse of Yongkui Liu)

              	 
      
	 
      	 
      
	
                Accord
      Success Ltd. (BVI)

              	
                5,400,000
      shares of common stock

              
	 
      	 
      
	
                Full
      Spring Group Ltd. (BVI)

              	
                1,800,000
      shares of common stock

              
	 
      	 
      
	
                Umesh
      Patel

              	
                2,638,099
      shares of common stock

              
	 
      	
                (Mr.
      Patel is signing an agreement that permits the sale of a limited number of
      shares in the form attached as Exhibit
J)

              


      

    


    
      
         


      

      
        41

        
          

        

      

      
         


      

    


    Schedule
12(a)

    


    (Excepted
Issuances)

    


    On the
Closing Date, Richardson & Patel LLP (counsel to the Company) is converting
$100,000 in past legal fees into notes and warrants on the same terms as the
Subscribers under the Subscription Agreement dated January 22,
2010.


    
      
         


      

      
        42