Document:

Unassociated Document

     

    Exhibit
10.2

     

    THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS.  THIS WARRANT AND THE COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO NEW ORIENTAL ENERGY & CHEMICAL CORP. THAT
SUCH REGISTRATION IS NOT REQUIRED.

     

    Right to
Purchase up to [________] Shares of
Common Stock of

     

    New
Oriental Energy & Chemical Corp.

     

    (subject
to adjustment as provided herein)

     

    COMMON
STOCK PURCHASE WARRANT

    
      	
              No.                                    

            	
              Date:   [___],
      2010

            

    

     

    New Oriental Energy & Chemical
Corp., a corporation organized under the laws of the State of Delaware
(the “Company”), hereby
certifies that, for value received, [_____________________]
or its assigns (the “Holder”), is entitled, subject
to the terms set forth below, to purchase from the Company from and after [___], 2010 (a date
that is six (6) months after the issuance of this Common Stock Purchase Warrant
(the “Warrant”) in
connection with a private placement by the Company) (the “Issue Date”) and at any time
or from time to time before 5:00 p.m., New York time, through the close of
business [___],
2013 (a date that is three (3) years after the issuance of the Warrant) (the
“Expiration Date”), up
to [______]
fully paid and nonassessable shares of Common Stock (as hereinafter defined),
$0.001 par value per share, at the applicable Exercise Price (as defined below)
per share.  The number and character of such shares of Common Stock
and the applicable Exercise Price per share are subject to adjustment as
provided herein.

     

    As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:

     

    (a)           “Common
Stock” means (i) the Company’s Common Stock, par value $0.001 per share; and
(ii) any other securities into which or for which any of the securities
described in the preceding clause (i) may be converted or exchanged pursuant to
a plan of recapitalization, reorganization, merger, sale of assets or
otherwise.

     

    (b)           “Company”
means New Oriental Energy & Chemical Corp. and any person or entity which
shall succeed, or assume the obligations of, New Oriental Energy & Chemical
Corp. hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)           “Exercise
Price” means a price of $2.00.

     

    (d)           “Other
Securities” means any stock (other than Common Stock) and other securities of
the Company or any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have received, on the
exercise of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 3 or
otherwise.

     

    1.           Exercise of
Warrant.

     

    1.1           Number of Shares Issuable
upon Exercise.  From and after the Issue Date through and
including the Expiration Date, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part, by delivery of an original or fax
copy of an exercise notice in the form attached hereto as Exhibit A (the “Exercise Notice”), shares of
Common Stock of the Company, subject to adjustment pursuant to Section
4.

     

    1.2           Company
Acknowledgment.  The Company will, at the time of the exercise
of this Warrant, upon the request of the Holder hereof, acknowledge in writing
its continuing obligation to afford to such Holder any rights to which such
Holder shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant.  If the Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such Holder any such rights.

     

    1.3           Trustee for Warrant
Holders.  In the event that a bank or trust company shall have
been appointed as trustee for the Holders of this Warrant pursuant to Subsection
3.2, such bank or trust company shall have all the powers and duties of a
warrant agent (as hereinafter described) and shall accept, in its own name for
the account of the Company or such successor person as may be entitled thereto,
all amounts otherwise payable to the Company or such successor, as the case may
be, on exercise of this Warrant pursuant to this Section 1.

     

    2.           Procedure for
Exercise.

     

    2.1           Delivery of Stock
Certificates, Etc., on Exercise.  The Company agrees that the
shares of Common Stock purchased upon exercise of this Warrant shall be deemed
to be issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment shall have been made for such shares in accordance
herewith.  Each date on which an Exercise Notice is delivered or
telecopied to the Company in accordance with the provisions hereof shall be
deemed an Exercise Date (the “Exercise
Date”).  Pursuant to the terms of each Exercise Notice, the
Company at its expense (including the payment by it of any applicable issue
taxes) will issue instructions to the transfer agent within one (1) business day
of the date of the delivery to the Company of an Exercise Notice and shall cause
the transfer agent to transmit the certificates representing the shares of
Common Stock (“Warrant
Shares”) purchased and issuable upon such exercise to the Holder by
crediting the account of the Holder’s designated broker with the Depository
Trust Corporation (“DTC”) through its Deposit
Withdrawal Agent Commission (“DWAC”) system within three (3)
business days after receipt by the Company of the Exercise Notice.  In
the case of the exercise of this Warrant such exercise shall be deemed to have
been exercised and the Warrant Shares shall be deemed to have been issued upon
the date of receipt by the Company of the Exercise Notice.  The Holder
shall be treated for all purposes as the record holder of the Warrant
Shares.

     

    
      
        
        

      

      
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    2.2           Exercise.  Payment
may be made either in cash, by wire transfer, or by certified or official bank
check payable to the order of the Company in an amount equal to the applicable
aggregate Exercise Price, for the number of shares of Common Stock specified in
the Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the Holder
per the terms of this Warrant) and the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.

     

    3.           Effect of Reorganization,
Etc.; Adjustment of Exercise Price.

     

    3.1           Reorganization,
Consolidation, Merger, Etc.  In case at any time or from time
to time, the Company shall (a) effect a reorganization, (b) consolidate with or
merge into any other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder, on the exercise
hereof as provided in Section 2, at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such transaction, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.

     

    3.2           Dissolution.  In
the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the
Holder  pursuant to Section 3.1, or, if the Holder shall so instruct
the Company, to a bank or trust company specified by the Holder and having its
principal office in New York, NY as trustee for the Holder  (the
“Trustee”).

     

    3.3           Continuation of
Terms.  Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided hereunder.  In
the event this Warrant does not continue in full force and effect after the
consummation of the transactions described in this Section 3, then the Company’s
securities and property (including cash, where applicable) receivable by the
Holder  will be delivered to the Holder or the Trustee as contemplated
by Section 3.2.

     

    
      
        
        

      

      
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    4.           Extraordinary Events
Regarding Common Stock.  If the Company at any time on or after
the Issue Date subdivides (by any stock split, stock dividend, recapitalization
or otherwise) one or more classes of its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced and the number of Warrant
Shares will be proportionately increased.  If the Company at any time
on or after the Issue Date combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of Warrant Shares
will be proportionately decreased. In no event shall the holder pay an Exercise
Price that in the aggregate exceeds the aggregate Exercise Price in effect prior
to the proposed adjustment.  Any adjustment under this Section 4 shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

     

    5.           Certificate as to
Adjustments.  In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable on the exercise of
this Warrant, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Exercise Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant.  The Company will forthwith
mail a copy of each such certificate to the Holder and any warrant agent of the
Company (appointed pursuant to Section 10 hereof).

     

    6.           Reservation of Stock, Etc.,
Issuable on Exercise of Warrant.  The Company will at all times
reserve and keep available, solely for issuance and delivery on the exercise of
this Warrant, shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of this Warrant.

     

    7.           Assignment; Exchange of
Warrant.  Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a “Transferor”) in whole or in
part.  On the surrender for exchange of this Warrant, with the
Transferor’s endorsement in the form of Exhibit B attached
hereto (the “Transferor
Endorsement Form”) and together with evidence reasonably satisfactory to
the Company demonstrating compliance with applicable securities laws, which
shall include, without limitation, the provision of a legal opinion from the
Transferor’s counsel (at the Company’s expense) that such transfer is exempt
from the registration requirements of applicable securities laws, the Company at
its expense (but with payment by the Transferor of any applicable transfer
taxes) will issue and deliver to or on the order of the Transferor thereof a new
Warrant of like tenor, in the name of the Transferor and/or the transferee(s)
specified in such Transferor Endorsement Form (each a “Transferee”), calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant so surrendered by the
Transferor.

     

    
      
        
        

      

      
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    8.           Replacement of
Warrant.  On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

     

    9.           Maximum
Exercise.  Notwithstanding anything contained herein to the
contrary, the Holder shall not be entitled to exercise this Warrant in
connection with that number of shares of Common Stock which would exceed the
difference between (i) 19.99% of the issued and outstanding shares of Common
Stock and (ii) the number of shares of Common Stock beneficially owned by the
Holder.  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 Regulation 13d-3
thereunder.

     

    10.           Warrant
Agent.  The Company may, by written notice to the Holder of the
Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such
agent.

     

    11.           Transfer on the Company’s
Books.  Until this Warrant is transferred on the books of the
Company, the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the
contrary.

     

    12.           Notices,
Etc.  All notices and other communications from the Company to
the Holder shall be mailed by first class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company in writing by
such Holder or, until any such Holder furnishes to the Company an address, then
to, and at the address of, the last Holder who has so furnished an address to
the Company.

     

    
      
        
        

      

      
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    13.           Miscellaneous.  This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.  THIS
WARRANT 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 CONCERNING THE TRANSACTIONS CONTEMPLATED BY
THIS WARRANT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE
FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE
HOLDER MAY CHOOSE TO WAIVE THIS PROVISION AND BRING AN ACTION OUTSIDE THE STATE
OF NEW YORK.  The individuals executing this Warrant on behalf of the
Company agree to submit to the jurisdiction of such courts and waive trial by
jury.  The prevailing party shall be entitled to recover from the
other party its reasonable attorneys’ fees and costs.  In the event
that any provision of this Warrant 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 this
Warrant.  The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms
hereof.  The Company acknowledges that legal counsel participated in
the preparation of this Warrant and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Warrant to favor any party
against the other party.

     

     [BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;

    SIGNATURE
PAGE FOLLOWS]

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the Company has executed this Common Stock Purchase Warrant as
of the date first written above.

     

    
      
        	 	

                NEW
      ORIENTAL ENERGY & CHEMICAL CORP.

              
	 	 
	 	 	 	 
	
                 

              	
                By:
      

              	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

      

       

      
        
          
          

        

        
          
            [Signature
Page to Investor Warrant]

          

          
            

          

        

        
          
          

        

      

    

    

    Exhibit
A

     

    FORM
OF SUBSCRIPTION

    (To Be
Signed Only On Exercise Of Warrant)

     

    TO:           NEW
ORIENTAL ENERGY & CHEMICAL CORP.

    [_____________________]

    [_____________________]

     

    Attention:                                Chief
Financial Officer

     

    The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase ________ shares of the Common
Stock covered by such Warrant.

     

    The
undersigned herewith makes payment of the full Exercise Price for such shares at
the price per share provided for in such Warrant, which is
$___________.  Such payment takes the form of $__________ in lawful
money of the United States.

     

    The
undersigned requests that the certificates for such shares be issued in the name
of, and delivered to ______________________________________________ whose
address is
___________________________________________________________________________.

     

    The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the “Securities Act”) or pursuant to an exemption from registration
under the Securities Act.

    
      	Dated: 	
               

            	 	 
	 	 
      	 	
              (Signature
      must conform to name of holder as specified on the face of the
      Warrant)

            
	 	 
      	 	 
      	 
	 	 
      	 	
              Address:

            	 
      
	 	 
      	 	 
      	  

    

     

    
      
        
        

      

      
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    Exhibit
B

     

    FORM
OF TRANSFEROR ENDORSEMENT

    (To Be
Signed Only On Transfer Of Warrant)

     

    For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of New Oriental Energy & Chemical Corp. into which the within Warrant
relates specified under the headings “Percentage Transferred” and “Number
Transferred,” respectively, opposite the name(s) of such person(s) and appoints
each such person attorney to transfer its respective right on the books of New
Oriental Energy & Chemical Corp. with full power of substitution in the
premises.

    
      	
              Transferees

            	 	
              Address

            	 	
              Percentage Transferred

            	 	
              Number Transferred

            
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      

    

     

    
      
        	Dated: 	
                 

              	 	 
	 	 
      	 	
                

                  (Signature
      must conform to name of holder as specified on the face of the
      Warrant)

                

              
	 	 
      	 	 
      	 
	 	 
      	 	
                Address:

              	 
      
	 	 
      	 	 
      	  
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	

                SIGNED
      IN THE PRESENCE OF:

              
	 	 	 	 
	 	 	 	

                (Name)

              
	 	 	 	 
	

                ACCEPTED
      AND AGREED:

              	 	 	 
	[TRANSFEREE]	 	 	 
	 	 	 	 
	

                (Name)

              	 	 	 

      

    

     

    
      
        
        

      

      
        B-1AMENDED AND RESTATED
SUBSIDIARY GUARANTY

     

    1.           Identification.

    

    This
Amended and Restated Guaranty (the “Guaranty”), dated as
of May __, 2010, is entered into by [_______________________], a company
organized in the People’s Republic of China (“Guarantor”), for the
benefit of the Collateral Agent identified below and the parties identified on
Schedule A hereto (each a “Lender” and
collectively, the “Lenders”).

    

    2.           Recitals.

    

    2.1           Guarantor
is a direct or indirect subsidiary of China Yongxin Pharmaceuticals Inc., a
Delaware corporation (“Parent”).  The
Lenders have made and/or are making loans to Parent (the “Loans”).  Guarantor
will obtain substantial benefit from the proceeds of the Loans.

    

    2.2           The
Loans are and will be evidenced by certain senior secured promissory Notes
(collectively, “Note” or “Notes”) issued by
Parent on January 22, 2010 pursuant to a private placement that consummated on
January 25, 2010 (the “First Closing”), and
a second private placement that consummated on March 4, 2010 (the “Second Closing”) and
on or about or after the date of this Guaranty pursuant to subscription
agreements dated at January 22, 2010, March 4, 2010 and at about the date hereof
(“Subscription
Agreements”).  The Notes are further described on Schedule A
hereto and were and or be executed by Parent as “Borrower” for the benefit of
each Lender as the “Holder” thereof.  The securities issued under the
Subscription Agreements on or about or after the date of this Guaranty are being
issued in a third closing (“Third
Closing”).

    

    2.3           In
consideration of the Loans made and to be made by Lenders to Parent and for
other good and valuable consideration, and as security for the performance by
Parent of its obligations under the Notes and as security for the repayment of
the Loans and all other sums due from Debtor to Lenders arising under the Notes
(collectively, the “Obligations”),
Guarantor, for good and valuable consideration, receipt of which is
acknowledged, has agreed to enter into this Guaranty.

    

    2.4           The
Lenders have appointed Collateral Agents, LLC, a Delaware Limited Liability
Company as Collateral Agent pursuant to that certain Collateral Agent Agreement
dated at or about the date of this Agreement (“Collateral Agent
Agreement”), among the Lenders and Collateral Agent.

    

    3.           Guaranty.

    

    3.1           Guaranty.  Guarantor
hereby unconditionally and irrevocably guarantees, jointly and severally with
any other guarantor of the Obligations, the punctual payment, performance and
observance when due, whether at stated maturity, by acceleration or otherwise,
of all of the Obligations now or hereafter existing, whether for principal,
interest (including, without limitation, all interest that accrues after the
commencement of any insolvency, bankruptcy or reorganization of Parent, whether
or not constituting an allowed claim in such proceeding), fees, commissions,
expense reimbursements, liquidated damages, indemnifications or otherwise (such
obligations, to the extent not paid by Parent being the “Guaranteed
Obligations”), and agrees to pay any and all reasonable costs, fees and
expenses (including reasonable counsel fees and expenses) incurred by Collateral
Agent and the Lenders in enforcing any rights under the guaranty set forth
herein.  Without limiting the generality of the foregoing, Guarantor’s
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by Parent to Collateral Agent and the Lenders, but
for the fact that they are unenforceable or not allowable due to the existence
of an insolvency, bankruptcy or reorganization involving Parent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.2           Guaranty
Absolute.  Guarantor guarantees that the Guaranteed Obligations
will be paid strictly in accordance with the terms of the Notes, regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Collateral Agent or the Lenders
with respect thereto.  The obligations of Guarantor under this
Guaranty are independent of the Guaranteed Obligations, and a separate action or
actions may be brought and prosecuted against Guarantor to enforce such
obligations, irrespective of whether any action is brought against Parent or any
other Guarantor or whether Parent or any other Guarantor is joined in any such
action or actions.  The liability of Guarantor under this Guaranty
constitutes a primary obligation, and not a contract of surety, and to the
extent permitted by law, shall be irrevocable, absolute and unconditional
irrespective of, and Guarantor hereby irrevocably waives any defenses it may now
or hereafter have in any way relating to, any or all of the
following:

    

    (a)  any
lack of validity of the Notes or any agreement or instrument relating
thereto;

     

    (b)  any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from the Notes, including, without limitation, any increase
in the Guaranteed Obligations resulting from the extension of additional credit
to Parent or otherwise;

     

    (c)  any
taking, exchange, release, subordination or non-perfection of any Collateral, or
any taking, release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed Obligations;

     

    (d)  any
change, restructuring or termination of the corporate, limited liability company
or partnership structure or existence of Parent; or

     

    (e)  any
other circumstance (including, without limitation, any statute of limitations)
or any existence of or reliance on any representation by Collateral Agent
or  the Lenders that might otherwise constitute a defense available
to, or a discharge of, Parent or any other guarantor or surety.

    

    This
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Guaranteed Obligations is rescinded or
must otherwise be returned by Collateral Agent, the Lenders or any other entity
upon the insolvency, bankruptcy or reorganization of the Parent or otherwise
(and whether as a result of any demand, settlement, litigation or otherwise),
all as though such payment had not been made.

    

    3.3           Waiver.  Guarantor
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that Collateral Agent or the Lenders exhaust any right or take any
action against any Borrower or any other person or entity or any
Collateral.  Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waiver set forth in this Section 3.3 is knowingly made in contemplation
of such benefits.  Guarantor hereby waives any right to revoke this
Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the
future.

    

    3.4       Continuing Guaranty;
Assignments.  This Guaranty is a continuing guaranty and shall
(a) remain in full force and effect until the later of the indefeasible cash
payment in full of the Guaranteed Obligations , (b) be binding upon Guarantor,
its successors and assigns and (c) inure to the benefit of and be enforceable by
the Lenders and their successors, pledgees, transferees and
assigns.  Without limiting the generality of the foregoing
clause (c), any Lender may pledge, assign or otherwise transfer all or any
portion of its rights and obligations under this Guaranty (including, without
limitation, all or any portion of its Notes owing to it) to any other Person,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted such Collateral Agent or Lender herein or
otherwise.

     

    
      
        
        

      

      
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    3.5          Subrogation.  Guarantor
will not exercise any rights that it may now or hereafter acquire against the
Collateral Agent or any Lender or other Guarantor (if any) that arise from the
existence, payment, performance or enforcement of such Guarantor’s obligations
under this Guaranty, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Collateral Agent or any Lender or other Guarantor (if any), directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been indefeasibly paid in full.

     

    3.6     Maximum Obligations.
Notwithstanding any provision herein contained to the contrary, Guarantor’s
liability with respect to the Obligations shall be limited to an amount not to
exceed, as of any date of determination, the amount that could be claimed by
Lenders from Guarantor without rendering such claim voidable or avoidable under
Section 548 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law.

     

    4.           Miscellaneous.

     

    4.1           Expenses.  Guarantor
shall pay to the Lenders, on demand, the amount of any and all reasonable
expenses, including, without limitation, reasonable attorneys’ fees, reasonable
legal expenses and reasonable brokers’ fees, which the Lenders may incur in
connection with exercise or enforcement of any the rights, remedies or powers of
the Lenders hereunder or with respect to any or all of the
Obligations.

    

    4.2           Waivers, Amendment and
Remedies.  No course of dealing by the Lenders and no failure
by the Lenders to exercise, or delay by the Lender in exercising, any right,
remedy or power hereunder shall operate as a waiver thereof, and no single or
partial exercise thereof shall preclude any other or further exercise thereof or
the exercise of any other right, remedy or power of the Lenders.  No
amendment, modification or waiver of any provision of this Guaranty and no
consent to any departure by Guarantor therefrom, shall, in any event, be
effective unless contained in a writing signed by the Guarantor and the Majority
in Interest (as such term is defined in the Collateral Agent Agreement) of the
Lender or Lenders against whom such amendment, modification or waiver is sought,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.  The rights, remedies
and powers of the Lenders, not only hereunder, but also under any instruments
and agreements evidencing or securing the Obligations and under applicable law
are cumulative, and may be exercised by the Lenders from time to time in such
order as the Lenders may elect.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    4.3           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 (a) personally served, (b) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (c)
delivered by a reputable overnight courier service with charges prepaid, or (d)
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 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, or the first business day following
such delivery (if delivered other than on a business day during normal business
hours), (ii) on the first business day following the date deposited with an
overnight courier service with charges prepaid, or (iii) on the fifth business
day following the date of mailing pursuant to subpart (b) above, or upon actual
receipt of such mailing, whichever shall first occur.  The addresses for such communications
shall be:

     

    
      	
            	
              To
      Guarantor, to:

            	
              China Yongxin Pharmaceuticals,
      Inc.

              
                927 Canada
      Court

                City of Industry, CA
      91748

                Attn: Yongxin Liu, CEO

                Fax: (626)
      581-9138

              

            

    

     

    With a copy by
facsimile only to:

     

    
      
        	
              	
                 

              	
                
                  Richardson
      & Patel, LLP

                  10900
      Wilshire Blvd., Suite 500

                  Los
      Angeles, CA 90024

                  Attn:
      Ryan Hong, Esq.

                  Fax:
      (310) 208-1154

                

              

      

      
         

        
          
            	
                  	
                    To
      Lenders:  

                  	
                    
                      To
      the addresses and telecopier numbers set

                      Forth
      on Schedule A

                    

                  

          

           

          
            
              	
                    	
                      To
      the Collateral Agent:

                    	
                      Collateral
      Agents, LLC

                      111
      West 57th
      Street, Suite 1416

                      New
      York, NY 10019

                      Attn:
      General Counsel

                      Fax:
      (212) 245-9101

                    

            

             

          

        

      

    

    If to Guarantor, Lender
or

    Collateral Agent, with a copy by
telecopier only to:

    
       

      
        
          	
                	
                   

                	
                  
                    Grushko
      & Mittman, P.C.

                    551
      Fifth Avenue, Suite 1601

                    New
      York, New York 10176

                    Fax:
      (212) 697-3575

                  

                

        

         

      

    

    Any party
may change its address by written notice in accordance with this
paragraph.

    

    4.4           Term; Binding
Effect.  This Guaranty shall (a) remain in full force and
effect until payment and satisfaction in full of all of the Guaranteed
Obligations; (b) be binding upon Guarantor and its successors and permitted
assigns; and (c) inure to the benefit of the Lenders and their respective
successors and assigns.  All the rights and benefits granted by
Guarantor to the Collateral Agent and Lenders hereunder and other agreements and
documents delivered in connection therewith are deemed granted to both the
Collateral Agent and Lenders.  Upon the payment in full of the
Obligations, (i) this Guaranty shall terminate and (ii) the Lenders will, upon
Guarantor’s request and at Guarantor’s expense, execute and deliver to Guarantor
such documents as Guarantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse
whatsoever.

    

    4.5           Captions.  The
captions of Paragraphs, Articles and Sections in this Guaranty have been
included for convenience of reference only, and shall not define or limit the
provisions hereof and have no legal or other significance
whatsoever.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    4.6           Governing Law; Venue;
Severability.  This Guaranty shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts or choice of law.  Any legal action or
proceeding against Guarantor with respect to this Guaranty may be brought in the
courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Guaranty, Guarantor
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid
courts.  Guarantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Guaranty brought in the
aforesaid courts and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.  If any
provision of this Guaranty, or the application thereof to any person or
circumstance, is held invalid, such invalidity shall not affect any other
provisions which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable and the
remaining, valid provisions shall remain of full force and
effect.  This
Guaranty shall be deemed an unconditional obligation of Guarantor for the
payment of money and, without limitation to any other remedies of Lenders, may
be enforced against Guarantor by summary proceeding pursuant to New York Civil
Procedure Law and Rules Section 3213 or any similar rule or statute in the
jurisdiction where enforcement is sought.  For purposes of such rule
or statute, any other document or agreement to which Lenders and Guarantor are
parties or which Guarantor delivered to Lenders, which may be convenient or
necessary to determine Lenders’ rights hereunder or Guarantor’s obligations to
Lenders are deemed a part of this Guaranty, whether or not such other document
or agreement was delivered together herewith or was executed apart from this
Guaranty.  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.  Each Guarantor irrevocably
appoints Parent its true and lawful agent for service of process upon whom all
processes of law and notices may be served and given in the manner described
above; and such service and notice shall be deemed valid personal service and
notice upon each such Guarantor with the same force and validity as if served
upon such Guarantor.

    

    4.7           Satisfaction of
Obligations.  For all purposes of this Guaranty, the payment in
full of the Obligations shall be conclusively deemed to have occurred when the
Obligations have been indefeasibly paid pursuant to the terms of the Notes and
the Subscription Agreements.

    

    4.8           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.

    

    

    

    [THE
BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the
undersigned have executed and delivered this Guaranty, as of the date first
written above.

    

    

    “GUARANTOR”

    

    

    [___________________________________________]

    a company
organized in the People’s Republic of China

    

    

    

    

    By:
_____________________________________

    

    Its: _____________________________________

    

     

     

     

     

     

     

    

    

    This Guaranty Agreement may be signed by
facsimile signature and

    delivered by confirmed facsimile
transmission.

     

     

    
      
        
        

      

      
        6

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