Unassociated Document


    


     

    SECURITIES
      ESCROW AGREEMENT

     

    THIS
      SECURITIES ESCROW AGREEMENT (the “Agreement”),
      dated
      as of October 3, 2007, is entered into by and among Victory Divide Mining
      Company., a Nevada corporation (the “Company”),
      Vision Opportunity Master Fund, Ltd., a Cayman Islands company, as
      representative of the Purchasers (the “Purchaser
      Representative”),
      Winner State International Limited, a British Virgin Islands company (the
“Principal
      Stockholder”),
      and
      Loeb & Loeb LLP, with an address at 345 Park Avenue New York, NY 10154 (the
“Escrow
      Agent”).
      Capitalized terms used but not defined herein shall have the meanings set forth
      in the Purchase Agreement (as defined below).

     

    WITNESSETH:

     

    WHEREAS,
      the Purchasers will be purchasing from the Company shares of the Company’s
      Series A Convertible Preferred Stock, par value $0.001 per share (the
“Series
      A Preferred”),
      convertible into shares of the Company’s common stock, par value $0.001 per
      share (the “Common
      Stock”),
      and
      certain common stock purchase warrants (the “Warrants”)
      pursuant to a Series A Convertible Preferred Stock Purchase Agreement dated
      as
      of the date hereof (the “Closing
      Date”)
      by and
      among the Company and the Purchasers (the “Purchase
      Agreement”);
      and

     

    WHEREAS,
      the Company and the Purchasers agree that the capitalization table upon which
      the transactions contemplated by this Agreement and the Purchase Agreement
      are
      based is set forth as Schedule
      A
      hereto;
      and

     

    WHEREAS,
      as an inducement to the Purchasers to enter into the Purchase Agreement, the
      Principal Stockholder has agreed to place the Escrow Shares (as hereinafter
      defined) into escrow for the benefit of the Purchasers in the event the Company
      fails to achieve the following financial performance thresholds for the 12-month
      periods ending December 31, 2007 (“2007”)
      and
      December 31, 2008 (“2008”):

     

    (a) In
      2007,
      (i) Earnings Per Share of $0.34, such “Earnings Per Share” to be calculated by
      dividing (A) Net Income, as defined in accordance with US GAAP and reported
      by
      the Company in its audited financial statements for 2007 (the “2007
      financial statements”)
      plus
      any
      amounts that may have been recorded as charges or liabilities on the 2007
      financial statements due to the application of EITF No. 00-19 that are
      associated with (1) any outstanding Warrants of the Company, (2) any issuance
      under a performance based stock incentive plan that was in existence on the
      Closing Date or (3) the transactions contemplated by this Agreement and Section
      7.1 of the Share Exchange Agreement dated as of the date hereof by and between
      the Company and Winner State (the “Share
      Exchange Agreement”)
      (“2007
      Net Income”)
      by the
      Outstanding Shares (as hereinafter defined) and (ii) Cash Earnings Per Share
      of
      $0.27, such “Cash Earnings Per Share” to be calculated by dividing cash from
      operations reported by the Company on the 2007 financial statements, by the
      aggregate number of shares of then outstanding Common Stock on a fully-diluted
      basis, which number shall include, without limitation, the number of shares
      of
      Common Stock issuable upon conversion of the Company’s then outstanding shares
      of Preferred Stock, par value $0.001 per share and the number of shares of
      Common Stock issuable upon the exercise of any then outstanding warrants or
      options of the Company, provided,
      however,
      that
      such number shall not include (X) shares of the Company’s Series A Convertible
      Preferred Stock, par value $0.001 per share (“Series
      A Preferred”)
      or
      Common Stock issued to the Principal Stockholder pursuant to Section 7.1 of
      the
      Share Exchange Agreement and (Y) shares of Common Stock issuable upon exercise
      of the Company’s Series A Warrants, Series B Warrants, Series C Warrants and
      Series D Warrants and issuable upon conversion of the Series B Convertible
      Preferred Stock, par value $0.001 that is issuable upon exercise of the
      Company’s Series J Warrants, and warrants issued to the Company’s placement
      agent in connection with the transactions contemplated by the Purchase
      Agreement, dated the date hereof (such number shall be referred to herein as
      the
“Outstanding
      Shares”)
      (the
      performance thresholds set forth in (i) and (ii) above shall be collectively
      referred to herein as the “2007
      Performance Threshold”);

    


    
      
        
          
          

        

        
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    (b) In
      2008,
      (i) Earnings Per Share of $0.43, such “Earnings Per Share” to be calculated by
      dividing (A) Net Income, as defined in accordance with US GAAP and reported
      by
      the Company in its audited financial statements for 2008 (the “2008
      financial statements”)
      plus
      any
      amounts that may have been recorded as charges or liabilities on the 2008
      financial statements due to the application of EITF No. 00-19 that are
      associated with (1) any outstanding Warrants of the Company, (2) any issuance
      under a performance based stock incentive plan that was in existence on the
      Closing Date or (3) the transactions contemplated by this Agreement and Section
      7.1 of the Share Exchange Agreement (“2008
      Net Income”)
      by the
      Outstanding Shares and (ii) Cash Earnings Per Share of $0.37, such “Cash
      Earnings Per Share to be calculated by dividing cash from operations reported
      by
      the Company on the 2008 financial statements by the Outstanding Shares (the
      performance thresholds set forth in (i) and (ii) above shall be collectively
      referred to herein as the “2008
      Performance Threshold”);
      and

     

    WHEREAS,
      the Company, the Purchaser Representative and the Purchasers have requested
      that
      the Escrow Agent hold the Escrow Shares on the terms and conditions set forth
      in
      this Agreement and the Escrow Agent has agreed to act as escrow agent pursuant
      to the terms and conditions of this Agreement.

     

    NOW,
      THEREFORE, in consideration of the covenants and mutual promises contained
      herein and other good and valuable consideration, the receipt and legal
      sufficiency of which are hereby acknowledged and intending to be legally bound
      hereby, the parties agree as follows:

     

    ARTICLE
      I

     

    TERMS
      OF
      THE ESCROW

     

    1.1. The
      parties hereby agree to establish an escrow account with the Escrow Agent
      whereby the Escrow Agent shall hold the Escrow Shares as contemplated by this
      Agreement.

     

    1.2. Upon
      the
      execution of this Agreement, the Principal Stockholder shall deliver to the
      Escrow Agent stock certificates evidencing one hundred percent (100%) of the
      shares of Common Stock underlying the Preferred Shares issuable under the
      Purchase Agreement (such shares of Common Stock plus such additional number
      of
      shares of Common Stock as may be required to be deposited hereunder pursuant
      to
      Section 1.3(i) or 1.3(ii) hereof shall be collectively referred to in this
      Agreement as the “Escrow
      Shares”),
      along
      with updated stock powers executed in blank with signature medallion
      guaranteed.

    


    
      
        
          
          

        

        
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    1.3. The
      parties hereby agree that the 2007 Escrow Shares (as hereinafter defined) shall
      be delivered based on the achievement of the 2007 Performance Threshold as
      set
      forth below:

     

    (i) If
      the
      Company’s Earnings Per Share and Cash Earnings Per Share for 2007 is less than
      50% of the 2007 Performance Threshold, then all of the Escrow Shares (the
“2007
      Escrow Shares”)
      shall
      be distributed on a pro rata basis to the Purchasers based on the number of
      shares of Series A Preferred owned by such Purchasers as of the date thereof.
      Within five (5) business days of the Purchaser Representative’s receipt of the
      2007 financial statements, the Company and the Purchaser Representative shall
      provide written instruction to the Escrow Agent instructing the Escrow Agent
      to
      issue and deliver the 2007 Escrow Shares to the Purchasers on a pro rata basis
      to the Purchasers based on the number of shares of Series A Preferred owned
      by
      such Purchasers as of the date thereof. Within five (5) business days after
      the
      release of the 2007 Escrow Shares to the Purchasers, the Principal Stockholder
      shall deposit into the escrow account maintained by the Escrow Agent, stock
      certificates evidencing one hundred percent (100%) of the shares of Common
      Stock
      underlying the Preferred Shares issuable under the Purchase Agreement.


     

    (ii) If
      the
      Company’s Earnings Per Share for 2007 is greater than or equal to 50% but less
      than 95% of the 2007 Performance Threshold, the Escrow Agent shall deliver
      to
      the Purchasers, on a pro rata basis based on the number of shares of Series
      A
      Preferred owned by such Purchasers as of the date thereof, the number of 2007
      Escrow Shares multiplied by the percentage by which the 2007 Performance
      Threshold was not achieved and multiplied by 200%. By way of example, if the
      Company’s Earnings Per Share for 2007 is an amount equal to 60% of the 2007
      Performance Threshold, the Purchasers shall receive 200% of the product of
      40%
      of the 2007 Escrow Shares (100% -60%) and, the remaining Escrow Shares shall
      continue to be held in escrow hereunder. Within five (5) business days of the
      Purchaser Representative’s receipt of the 2007 financial statements, the Company
      and the Purchaser Representative shall provide written instructions to the
      Escrow Agent instructing the Escrow Agent to deliver the applicable number
      of
      2007 Escrow Shares to the Purchasers and to hold the remaining Escrow Shares
      in
      escrow. Within five (5) business days after the release of the 2007 Escrow
      Shares to the Purchasers, the Principal Stockholder shall deposit into the
      escrow account maintained by the Escrow Agent, stock certificates evidencing
      such number of shares of Common Stock so that the number of Escrow Shares shall
      equal the number of shares of Common Stock initially deposited pursuant to
      Section 1.2.

     

    (iii) If
      the
      Company’s Earnings Per Share for 2007 equals or exceeds 95% of the 2007
      Performance Threshold, then the Escrow Shares shall continue to be held in
      escrow hereunder. 

     

    Notwithstanding
      anything to the contrary set forth herein, only those Purchasers who own shares
      of Series A Preferred acquired under the Purchase Agreement and remain
      shareholders of the Company at the time that any 2007 Escrow Shares become
      deliverable hereunder shall be entitled to their pro rata portion of such 2007
      Escrow Shares calculated based on their ownership interest at the time when
      the
      2007 Escrow Shares become deliverable hereunder. Any 2007 Escrow Shares not
      delivered to Purchasers because the Purchasers no longer hold shares of Series
      A
      Preferred acquired under the Purchase Agreement shall remain in escrow with
      the
      Escrow Agent.

    


    
      
        
          
          

        

        
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    1.4. The
      parties hereby agree that the 2008 Escrow Shares (as hereinafter defined) shall
      be delivered based on achievement of the 2008 Performance Threshold as set
      forth
      below:

     

    (i) If
      the
      Company’s Earnings Per Share for 2008 is less than 50% of the 2008 Performance
      Threshold, then all of the Escrow Shares (the “2008
      Escrow Shares”),
      shall
      be distributed on a pro rata basis to the Purchasers based on the number of
      shares of Series A Preferred owned by such Purchasers as of the date thereof.
      Within five (5) business days of the Purchaser Representative’s receipt of the
      2008 financial statements, the Company and the Purchaser Representative shall
      provide written instruction to the Escrow Agent instructing the Escrow Agent
      to
      issue and deliver the 2008 Escrow Shares to the Purchasers on a pro rata basis
      based on the number of shares of Series A Preferred owned by such Purchasers
      as
      of the date thereof.

     

    (ii) If
      the
      Company’s Earnings Per Share for 2008 is greater than or equal to 50% but less
      than 95% of the 2008 Performance Threshold, (a) the Escrow Agent shall deliver
      to the Purchasers, on a pro rata basis based on the number of shares of Series
      A
      Preferred owned by such Purchasers as of the date thereof, the number of 2008
      Escrow Shares equal to the number of 2008 Escrow Shares multiplied by the
      percentage by which the 2008 Performance Threshold was not achieved and
      multiplied by 200% and (b) the remaining 2008 Escrow Shares shall be returned
      to
      the Principal Stockholder. By way of example, if the Company’s Earnings Per
      Share for 2008 is an amount equal to 60% of the 2008 Performance Threshold, the
      Purchasers shall receive 200% of 40% of the 2008 Escrow Shares (100% - 60%)
      and
      the remaining 2008 Escrow Shares shall be returned to the Principal Stockholder.
      Within five (5) business days of the Purchaser Representative’s receipt of the
      2008 financial statements, the Company and the Purchaser Representative shall
      provide written instructions to the Escrow Agent instructing the Escrow Agent
      to
      deliver the applicable number of 2008 Escrow Shares to the Purchasers and to
      the
      Principal Stockholder.

     

    (iii) In
      the
      event the Company equals or exceeds 95% of the 2008 Performance Threshold,
      all
      of the 2008 Escrow Shares shall be returned to the Principal Stockholder- at
      the
      address set forth in Section 5.3 hereof.

     

    Notwithstanding
      anything to the contrary set forth herein, only those Purchasers who own shares
      of Series A Preferred acquired under the Purchase Agreement and remain
      shareholders of the Company at the time that the 2008 Escrow Shares become
      deliverable hereunder shall be entitled to their pro rata portion of such 2008
      Escrow Shares calculated based on their ownership interest at the time when
      such
      2008 Escrow Shares become deliverable hereunder. Any 2008 Escrow Shares not
      delivered to Purchasers because the Purchasers no longer hold shares of Series
      A
      Preferred acquired under the Purchase Agreement will be delivered to the
      Company.

    


    
      
        
          
          

        

        
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    1.5. If
      the
      Company fails to timely comply with its obligations set forth in Section 3.25
      of
      the Purchase Agreement (the “Listing
      Obligation”),
      then
      1,000,000 shares of Common Stock owned by the Principal Stockholder (the
“Penalty
      Shares”)
      shall
      be distributed to the Purchasers on a pro rata basis as set forth in Section
      3.25 of the Purchase Agreement.

     

    1.6. If
      the
      Company does not achieve the 2007 Performance Threshold for 2007 or the 2008
      Performance Threshold and/or if the Company does not comply with the Listing
      Obligation, the Company shall use best efforts to promptly cause the 2007 Escrow
      Shares, the 2008 Escrow Shares or the Penalty Shares, as applicable, to be
      delivered to the Purchasers, including causing its transfer agent promptly
      to
      issue the certificates in the names of the Purchasers and causing its securities
      counsel to provide any written instruction required by the Escrow Agent in
      a
      timely manner so that the issuances and delivery contemplated above can be
      achieved within five business days following delivery of the 2007 financial
      statements or 2008 financial statements in the case of the 2007 Escrow Shares
      or
      the 2008 Escrow Shares, as applicable, to the Purchaser Representative, or,
      within five business days of December 31, 2008, in the case of the Penalty
      Shares.

     

    1.7. The
      Company will provide the Purchaser Representative with (i) the Company’s audited
      financial statements for 2007, prepared in accordance with US GAAP, on or before
      March 31, 2008 and (ii) the Company’s audited financial statements for 2008,
      prepared in accordance with US GAAP, on or before March 31, 2009, so as to
      allow
      the Purchaser Representative the opportunity to evaluate whether the 2007
      Performance Threshold and the 2008 Performance Threshold were
      attained.

     

    1.8. Upon
      the
      written request of the Company and Purchaser Representative, the Escrow Agent
      shall deliver the 2007 Escrow Shares and the 2008 Escrow Shares, as applicable,
      to each Purchaser and/or the Principal Stockholder pursuant to the written
      instructions of the Company and Purchaser Representative.

     

    ARTICLE
      II

     

    REPRESENTATIONS
      OF THE PRINCIPAL STOCKHOLDER

     

    2.1. The
      Principal Stockholder hereby represents and warrants to the Purchasers and
      the
      Purchaser Representative as follows:

     

    (i) The
      Escrow Shares placed into escrow hereunder by the Principal Stockholder are
      validly issued, fully paid and nonassessable shares of the Company. The
      Principal Stockholder is the record and beneficial owner of the Escrow Shares
      placed into escrow pursuant to this Agreement by the Principal Stockholder
      and
      has good title to such Escrow Shares, free and clear of all pledges, liens,
      claims and encumbrances, except encumbrances created by this Agreement. There
      are no restrictions on the ability of the Principal Stockholder to transfer
      the
      Escrow Shares placed into escrow pursuant to this Agreement by the Principal
      Stockholder or to enter into this Agreement other than transfer restrictions
      under applicable federal and state securities laws. Upon any delivery of Escrow
      Shares placed into escrow pursuant to this Agreement by the Principal
      Stockholder to the Purchasers hereunder, the Purchasers will acquire good and
      valid title to such Escrow Shares, free and clear of any pledges, liens, claims
      and encumbrances.

    


    
      
        
          
          

        

        
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    (ii) The
      performance of this Agreement and compliance with the provisions hereof will
      not
      violate any provision of any law applicable to the Principal Stockholder and
      will not conflict with or result in any breach of any of the terms, conditions
      or provisions of, or constitute a default under, or result in the creation
      or
      imposition of any lien, charge or encumbrance upon, any of the properties or
      assets of the Principal Stockholder pursuant to the terms of the certificate
      of
      incorporation or by-laws of the Company or any indenture, mortgage, deed of
      trust or other agreement or instrument binding upon the Principal Stockholder
      or
      affecting the Escrow Shares. No notice to, filing with, or authorization,
      registration, consent or approval of any governmental authority or other person
      is necessary for the execution, delivery or performance of this Agreement or
      the
      consummation of the transactions contemplated hereby by the Principal
      Stockholder.

     

    ARTICLE
      III

    COVENANTS

     

    3.1. [Intentionally
      Omitted.]

     

    3.2. [Intentionally
      Omitted.]

     

    ARTICLE
      IV

    MISCELLANEOUS

     

    4.1. The
      Company will pay Escrow Agent a total of $1,000 for all services rendered by
      Escrow Agent hereunder.

     

    4.2. No
      waiver
      or any breach of any covenant or provision herein contained shall be deemed
      a
      waiver of any preceding or succeeding breach thereof, or of any other covenant
      or provision herein contained. No extension of time for performance of any
      obligation or act shall be deemed an extension of the time for performance
      of
      any other obligation or act.

     

    All
      notices, demands, consents, requests, instructions and other communications
      to
      be given or delivered or permitted under or by reason of the provisions of
      this
      Agreement or in connection with the transactions contemplated hereby shall
      be in
      writing and shall be deemed to be delivered and received by the intended
      recipient as follows: (i) if personally delivered, on the business day of such
      delivery (as evidenced by the receipt of the personal delivery service), (ii)
      if
      mailed certified or registered mail return receipt requested, two (2) business
      days after being mailed, (iii) if delivered by overnight courier (with all
      charges having been prepaid), on the business day of such delivery (as evidenced
      by the receipt of the overnight courier service of recognized standing), or
      (iv)
      if delivered by facsimile transmission, on the business day of such delivery
      if
      sent by 6:00 p.m. in the time zone of the recipient, or if sent after that
      time,
      on the next succeeding business day (as evidenced by the printed confirmation
      of
      delivery generated by the sending party’s telecopier machine). If any notice,
      demand, consent, request, instruction or other communication cannot be delivered
      because of a changed address of which no notice was given (in accordance with
      this Section 4), or the refusal to accept same, the notice, demand, consent,
      request, instruction or other communication shall be deemed received on the
      second business day the notice is sent (as evidenced by a sworn affidavit of
      the
      sender). All such notices, demands, consents, requests, instructions and other
      communications will be sent to the following addresses or facsimile numbers
      as
      applicable.

    


    
      
        
          
          

        

        
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    If
      to
      Escrow Agent: Loeb & Loeb LLP

     

    345
      Park
      Avenue

    New
      York,
      New York 10154

    Attention:
      Mitchell Nussbaum, Esq

    Tel
      No.:212-407-4000

    Fax
      No.:
      212-407-4990

     

    If
      to the
      Company or the Principal Stockholder:

     

    Victory
      Divide Mining Company.

    c/o
      Winner State International Limited

    Attention:
      Shulin Liu

    Tel.
      No.:
      86-469-467-8077

    Fax
      No.:
      86-469-469-3000

     

    With
      a
      copy to:

    Guzov
      Ofsink, LLC

    600
      Madison Avenue, 14th Floor

    New
      York,
      New York 10022

    Attention:
      Darren Ofsink

    Tel.
      No.:
      (212) 371-8008, ext. 127

    Fax
      No.:
      (212) 688-7273

     

    If
      to the
      Purchaser              
Vision
      Opportunity Master Fund, Ltd.

    Representative:                   
      20
      W.
      55th Street, 5th Floor

    New
      York,
      New York 10019

    Attention:
      Yiting Liu

    Tel.
      No.:
      (212) 849-8238

    Fax
      No.:
      (212) 867-1416

     

    or
      to
      such other address and to the attention of such other person as any of the
      above
      may have furnished to the other parties in writing and delivered in accordance
      with the provisions set forth above.

     

    4.3. This
      Escrow Agreement shall be binding upon and shall inure to the benefit of the
      permitted successors and permitted assigns of the parties hereto.

     

    4.4. This
      Escrow Agreement is the final expression of, and contains the entire agreement
      between, the parties with respect to the subject matter hereof and supersedes
      all prior understandings with respect thereto. This Escrow Agreement may not
      be
      modified, changed, supplemented or terminated, nor may any obligations hereunder
      be waived, except by written instrument signed by the parties to be charged
      or
      by its agent duly authorized in writing or as otherwise expressly permitted
      herein.

    


    
      
        
          
          

        

        
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    4.5. Whenever
      required by the context of this Escrow Agreement, the singular shall include
      the
      plural and masculine shall include the feminine. This Escrow Agreement shall
      not
      be construed as if it had been prepared by one of the parties, but rather as
      if
      both parties had prepared the same. Unless otherwise indicated, all references
      to Articles are to this Escrow Agreement.

     

    4.6. The
      parties hereto expressly agree that this Escrow Agreement shall be governed
      by,
      interpreted under and construed and enforced in accordance with the laws of
      the
      State of New York, without regard to conflicts of law principles that would
      result in the application of the substantive laws of another jurisdiction.
      Any
      action to enforce, arising out of, or relating in any way to, any provisions
      of
      this Escrow Agreement shall only be brought in a state or Federal court sitting
      in New York City, Borough of Manhattan.

     

    4.7. The
      Escrow Agent’s duties hereunder may be altered, amended, modified or revoked
      only by a writing signed by the Company, the Principal Stockholder, the
      Purchaser Representative and the Escrow Agent.

     

    4.8. The
      Escrow Agent shall be obligated only for the performance of such duties as
      are
      specifically set forth herein and may rely and shall be protected in relying
      or
      refraining from acting on any instrument reasonably believed by the Escrow
      Agent
      to be genuine and to have been signed or presented by the proper party or
      parties. The Escrow Agent shall not be personally liable for any act the Escrow
      Agent may do or omit to do hereunder as the Escrow Agent while acting in good
      faith and in the absence of gross negligence, fraud and willful misconduct,
      and
      any act done or omitted by the Escrow Agent pursuant to the advice of the Escrow
      Agent’s attorneys-at-law shall be conclusive evidence of such good faith, in the
      absence of gross negligence, fraud and willful misconduct.

     

    4.9. The
      Escrow Agent is hereby expressly authorized to disregard any and all warnings
      given by any of the parties hereto or by any other person or corporation,
      excepting only orders or process of courts of law and is hereby expressly
      authorized to comply with and obey orders, judgments or decrees of any court.
      In
      case the Escrow Agent obeys or complies with any such order, judgment or decree,
      the Escrow Agent shall not be liable to any of the parties hereto or to any
      other person, firm or corporation by reason of such decree being subsequently
      reversed, modified, annulled, set aside, vacated or found to have been entered
      without jurisdiction.

     

    4.10. The
      Escrow Agent shall not be liable in any respect on account of the identity,
      authorization or rights of the parties executing or delivering or purporting
      to
      execute or deliver any documents or papers deposited or called for thereunder
      in
      the absence of gross negligence, fraud and willful misconduct.

     

    4.11. The
      Escrow Agent shall be entitled to employ such legal counsel and other experts
      as
      the Escrow Agent may deem necessary properly to advise the Escrow Agent in
      connection with the Escrow Agent’s duties hereunder, may rely upon the advice of
      such counsel, and may pay such counsel reasonable compensation therefor which
      shall be paid by the Escrow Agent. The
      Escrow Agent has acted as legal counsel for one of the Purchasers and may
      continue to act as legal counsel for such Purchaser from time to time,
      notwithstanding its duties as the Escrow Agent hereunder. The Company and the
      Purchasers consent to the Escrow Agent in such capacity as legal counsel for
      one
      of the Purchasers and waive any claim that such representation represents a
      conflict of interest on the part of the Escrow Agent. The Company and the
      Purchasers understand that the Escrow Agent is relying explicitly on the
      foregoing provision in entering into this Escrow
      Agreement.

    


    
      
        
          
          

        

        
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    4.12. The
      Escrow Agent’s responsibilities as escrow agent hereunder shall terminate if the
      Escrow Agent shall resign by giving written notice to the Company and the
      Purchasers. In the event of any such resignation, the Purchasers and the Company
      shall appoint a successor Escrow Agent and the Escrow Agent shall deliver to
      such successor Escrow Agent any escrow funds and other documents held by the
      Escrow Agent.

     

    4.13. If
      the
      Escrow Agent reasonably requires other or further instruments in connection
      with
      this Escrow Agreement or obligations in respect hereto, the necessary parties
      hereto shall join in furnishing such instruments.

     

    4.14. It
      is
      understood and agreed that should any dispute arise with respect to the delivery
      and/or ownership or right of possession of the documents or the Escrow Shares
      held by the Escrow Agent hereunder, the Escrow Agent is authorized and directed
      in the Escrow Agent’s sole discretion (1) to retain in the Escrow Agent’s
      possession without liability to anyone all or any part of said documents or
      the
      Escrow Shares until such disputes shall have been settled either by mutual
      written agreement of the parties concerned by a final order, decree or judgment
      or a court of competent jurisdiction after the time for appeal has expired
      and
      no appeal has been perfected, but the Escrow Agent shall be under no duty
      whatsoever to institute or defend any such proceedings or (2) to deliver the
      Escrow Shares and any other property and documents held by the Escrow Agent
      hereunder to a state or Federal court having competent subject matter
      jurisdiction and located in the City of New York, Borough of Manhattan, in
      accordance with the applicable procedure therefor.

     

    4.15. The
      Company agrees to indemnify and hold harmless the Escrow Agent and its partners,
      employees, agents and representatives from any and all claims, liabilities,
      costs or expenses in any way arising from or relating to the duties or
      performance of the Escrow Agent hereunder or the transactions contemplated
      hereby or by the Purchase Agreement other than any such claim, liability, cost
      or expense to the extent the same shall have been determined by final,
      unappealable judgment of a court of competent jurisdiction to have resulted
      from
      the gross negligence, fraud or willful misconduct of the Escrow
      Agent.

     

    [Signature
      Page Follows]

    


    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

    


     

    [SIGNATURE
      PAGE TO SECURITIES ESCROW AGREEMENT]

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of this
      3rd
      day of October, 2007.

     

    VICTORY
      DIVIDE MINING COMPANY

     

    By:
       /s/
      Shulin Liu  

    Name:
      Shulin Liu

    Title:
      Chief Executive Officer

     

    PURCHASER
      REPRESENTATIVE:

     

    VISION
      OPPORTUNITY MASTER FUND, LTD.

     

    By:
       /s/
      Adam Benowitz  

    Name:
      Adam Benowitz

    Title:
      Director

     

    ESCROW
      AGENT:

     

    Loeb
      & Loeb LLP

     

    By:
       /s/
      Mitchell S. Nussbaum 

    Name:
      Mitchell S. Nussbaum

    Title:
      Partner


    


    PRINCIPAL
      STOCKHOLDER:

    


    WINNER
      STATE INTERNATIONAL LIMITED


     

    By:
       /s/
      Shulin Liu    

    Name:
      Shulin Liu

    Title:
      Chief Executive Officer

    


    


    


    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

     

    Schedule
      A

     

    Capitalization
      Table

     

    
      
        

          
            	
                    Yanglin
                      Capitalization Table

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Post
                      Deal Shares in Victory Divide Mining Company

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 


          

           

          
            	 	 	
                    Amount
                      Invested

                  	
                     

                  	
                    Common
                      Stock

                  	
                     

                  	
                    Series
                      A Preferred

                  	 	
                    Series
                      B Preferred potentially issuable if Series J Exercised

                  	
                     

                  	
                    Series
                      A Warrants

                  	
                     

                  	
                    Series
                      B Warrants

                  	
                     

                  	
                    Setries
                      J Warrants

                  	
                     

                  	
                    Series
                      C Warrants

                  	
                     

                  	
                    Series
                      D Warrants

                  	
                     

                  	
                    Series
                      E Warrants

                  	
                     

                  	
                    Series
                      F Warrants

                  	
                     

                  	
                    %
                      of Outstanding Common

                  	
                     

                  	
                    %
                      of Outstanding Assuming Preferred is Converted

                  	
                     

                  	
                    %
                      Fully Diluted

                  	 
	
                    Winner
                      State International Limited 

                  	 	 	 	 	 	
                    18,200,000

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    91.00

                  	
                    %

                  	 	
                    60.67

                  	
                    %

                  	 	
                    24.66

                  	
                    %

                  
	
                     Beneficial
                      Ownership

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Shulin
                      Liu

                  	 	 	 	 	 	
                    9,100,000

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Huanqin
                      Ding

                  	 	 	 	 	 	
                    9,100,000

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Investors

                  	 	
                    $

                  	
                    21,500,000.00

                  	 	 	
                    525,000

                  	 	 	
                    10,000,000

                  	 	 	
                    7,801,268

                  	 	 	
                    10,000,000

                  	 	 	
                    5,000,000

                  	 	 	
                    7,801,268

                  	 	 	
                    7,801,268

                  	 	 	
                    3,900,634

                  	 	 	
                    0

                  	 	 	
                    0

                  	 	 	
                    2.63

                  	
                    %

                  	 	
                    35.08

                  	
                    %

                  	 	
                    71.58

                  	
                    %

                  
	
                    Vision
                      Opportunity Master Fund, Ltd.

                  	 	
                    $

                  	
                    8,000,000.00

                  	 	 	
                    525,000

                  	 	 	
                    3,720,930

                  	 	 	
                    3,382,664

                  	 	 	
                    3,720,930

                  	 	 	
                    1,860,465

                  	 	 	
                    3,382,664

                  	 	 	
                    3,382,664

                  	 	 	
                    1,691,332

                  	 	 	 	 	 	 	 	 	
                    2.63

                  	
                    %

                  	 	
                    14.15

                  	
                    %

                  	 	
                    29.36

                  	
                    %

                  
	
                    Sansar
                      Capital Special Opportunity Master Fund, LP (Cayman
                      Master)

                  	 	
                    $

                  	
                    5,950,000.00

                  	 	 	 	 	 	
                    2,767,442

                  	 	 	
                    2,515,856

                  	 	 	
                    2,767,442

                  	 	 	
                    1,383,721

                  	 	 	
                    2,515,856

                  	 	 	
                    2,515,856

                  	 	 	
                    1,257,928

                  	 	 	 	 	 	 	 	 	
                    0.00

                  	
                    %

                  	 	
                    9.22

                  	
                    %

                  	 	
                    21.31

                  	
                    %

                  
	
                    Vicis
                      Capital Master Fund

                  	 	
                    $

                  	
                    4,500,000.00

                  	 	 	 	 	 	
                    2,093,023

                  	 	 	
                    1,902,748

                  	 	 	
                    2,093,023

                  	 	 	
                    1,046,512

                  	 	 	
                    1,902,748

                  	 	 	
                    1,902,748

                  	 	 	
                    951,374

                  	 	 	 	 	 	 	 	 	
                    0.00

                  	
                    %

                  	 	
                    6.98

                  	
                    %

                  	 	
                    16.11

                  	
                    %

                  
	
                    Precept
                      Capital Master Fund, GP

                  	 	
                    $

                  	
                    500,000.00

                  	 	 	 	 	 	
                    232,558

                  	 	 	 	 	 	
                    232,558

                  	 	 	
                    116,279

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    0.00

                  	
                    %

                  	 	
                    0.78

                  	
                    %

                  	 	
                    0.79

                  	
                    %

                  
	
                    Penn
                      Footwear

                  	 	
                    $

                  	
                    250,000.00

                  	 	 	 	 	 	
                    116,279

                  	 	 	 	 	 	
                    116,279

                  	 	 	
                    58,140

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    0.00

                  	
                    %

                  	 	
                    0.39

                  	
                    %

                  	 	
                    0.39

                  	
                    %

                  
	
                    Crescent
                      International Ltd.

                  	 	
                    $

                  	
                    300,000.00

                  	 	 	 	 	 	
                    139,535

                  	 	 	 	 	 	
                    139,535

                  	 	 	
                    69,767

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    0.00

                  	
                    %

                  	 	
                    0.47

                  	
                    %

                  	 	
                    0.47

                  	
                    %

                  
	
                    Benefit
                      Grand Investments Limited

                  	 	
                    $

                  	
                    500,000.00

                  	 	 	 	 	 	
                    232,558

                  	 	 	 	 	 	
                    232,558

                  	 	 	
                    116,279

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    0.00

                  	
                    %

                  	 	
                    0.78

                  	
                    %

                  	 	
                    0.79

                  	
                    %

                  
	
                    Golden
                      Bridge Asset Management

                  	 	
                    $

                  	
                    1,000,000.00

                  	 	 	 	 	 	
                    465,116

                  	 	 	 	 	 	
                    465,116

                  	 	 	
                    232,558

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    0.00

                  	
                    %

                  	 	
                    1.55

                  	
                    %

                  	 	
                    1.58

                  	
                    %

                  
	
                    Leland
                      C Ackerley

                  	 	
                    $

                  	
                    250,000.00

                  	 	 	 	 	 	
                    116,279

                  	 	 	 	 	 	
                    116,279

                  	 	 	
                    58,140

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    0.00

                  	
                    %

                  	 	
                    0.39

                  	
                    %

                  	 	
                    0.39

                  	
                    %

                  
	
                    Newberg
                      Road Partners, LP

                  	 	
                    $

                  	
                    250,000.00

                  	 	 	 	 	 	
                    116,279

                  	 	 	 	 	 	
                    116,279

                  	 	 	
                    58,140

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    0.00

                  	
                    %

                  	 	
                    0.39

                  	
                    %

                  	 	
                    0.39

                  	
                    %

                  
	
                    Kuhns
                      Brothers Securities, Inc.

                  	 	 	 	 	 	
                    487,500

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    1,000,000

                  	 	 	 	 	 	
                    2.44

                  	
                    %

                  	 	
                    1.63

                  	
                    %

                  	 	
                    2.02

                  	
                    %

                  
	
                    Public
                      Shareholders//Glenn Little

                  	 	 	 	 	 	
                    487,500

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    2.44

                  	
                    %

                  	 	
                    1.63

                  	
                    %

                  	 	
                    0.66

                  	
                    %

                  
	
                    Mass
                      Harmony Assets

                  	 	 	 	 	 	
                    300,000

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    500,000

                  	 	 	
                    1.50

                  	
                    %

                  	 	
                    1.00

                  	
                    %

                  	 	
                    1.08

                  	
                    %

                  
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Totals

                  	 	
                    $

                  	
                    21,500,000

                  	 	 	
                    20,000,000

                  	 	 	
                    10,000,000

                  	 	 	
                    7,801,268

                  	 	 	
                    10,000,000

                  	 	 	
                    5,000,000

                  	 	 	
                    7,801,268

                  	 	 	
                    7,801,268

                  	 	 	
                    3,900,634

                  	 	 	
                    1,000,000

                  	 	 	
                    500,000

                  	 	 	
                    100.00

                  	
                    %

                  	 	
                    100.00

                  	
                    %

                  	 	
                    100.00

                  	
                    %

                  


          

           

          
            	
                    Legend

                  	 	  	 
	
                    Series
                      A Convertible Preferred Stock - Convertible into common at
                      the option of
                      the holder 1:1. Price per share

                  	 	
                    $

                  	
                    2.15

                  	 
	
                    Series
                      A Warrants - five year term with an exercise price of 

                  	 	
                    $

                  	
                    2.75

                  	 
	
                    Series
                      B Warrants - five year term with an exercise price of 

                  	 	
                    $

                  	
                    3.50

                  	 
	
                    Series
                      J Warrants - 18 month term with an exercise price of 

                  	 	
                    $

                  	
                    2.37

                  	 
	
                    Series
                      C Warrants - five year term with an exercise price of 

                  	 	
                    $

                  	
                    3.03

                  	 
	
                    Series
                      D Warrants - five year term with an exercise price of 

                  	 	
                    $

                  	
                    3.85

                  	 
	
                    Series
                      E Warrants - only for the placement agent - five year term
                      with an
                      exercise price of

                  	 	
                    $

                  	
                    2.58

                  	 
	
                    Series
                      F Warrants - only for Mass Harmony Assets, the financial cousulting
                      firm -
                      five year term with an exercise price of 

                  	 	
                    $

                  	
                    3.01

                  	 
	 	 	 	 	 
	
                    Total
                      Common Outstanding Post-Reverse and Post-Finacing

                  	 	 	
                    20,000,000

                  	 
	
                    Total
                      Series A Preferred Stock to be sold

                  	 	 	
                    10,000,000

                  	 
	
                    Fully
                      Diluted Calculation Assumes the Conversion of all preferred
                      and exercise
                      of all warrant for outstanding shares of 

                  	 	 	
                    73,804,440

                  	 


          

 

      

    

    


    
      
        
          
          

        

        
          11