Document:

f8k2011ex10xix_medicalcare.htm

Exhibit 10.19

 

 

Dated the 28th day of April, 2011

 

 

Medical Care Technologies Inc.

 

and

 

Ocean Wise International Industrial Limited

 

 

 

JOINT-VENTURE MASTER AGREEMENT

 

 

 

 

 

 

  

  

  

 

Table of Contents

 

	  	  	  	  
	
Chapter

	  	
1.

	
  

	
General

	
  

	
3

	  	  	  	  
	  	  	
2.

	
  

	
Parties

	
  

	
3

	  	  	  	  
	  	  	
3.

	
  

	
Establishment of Joint Venture Company

	
  

	
3

	  	  	  	  
	  	  	
4.

	
  

	
Purposes, Scope and Scale of Business

	
  

	
4

	  	  	  	  
	  	  	
5.

	
  

	
Total Amount of Investment and Registered Capital

	
  

	
4

	  	  	  	  
	  	  	
6.

	
  

	
Responsibilities of the Parties

	
  

	
6

	  	  	  	  
	  	  	
7.

	
  

	
Doing Business

	
  

	
8

	  	  	  	  
	  	  	
8.

	
  

	
Board of Directors

	
  

	
8

	  	  	  	  
	  	  	
9.

	
  

	
Management Organs

	
  

	
10

	  	  	  	  
	  	  	
10.

	
  

	
Labor Management

	
  

	
12

	  	  	  	  
	  	  	
11.

	
  

	
Taxation, Finance, Accounting and Audit

	
  

	
13

	  	  	  	  
	  	  	
12.

	
  

	
Foreign Exchange Management

	
  

	
14

	  	  	  	  
	  	  	
13.

	
  

	
Distribution of Profits

	
  

	
14

	  	  	  	  
	  	  	
14.

	
  

	
Term of Joint Venture

	
  

	
15

	  	  	  	  
	  	  	
15.

	
  

	
Dissolution of the Joint Venture Company

	
  

	
15

	  	  	  	  
	  	  	
16.

	
  

	
Disposition of Assets

	
  

	
16

	  	  	  	  
	  	  	
17.

	
  

	
Insurance and Confidentiality

	
  

	
16

	  	  	  	  
	  	  	
18.

	
  

	
Amendment of the Agreement

	
  

	
17

	  	  	  	  
	  	  	
19.

	
  

	
Liability for Breach

	
  

	
17

	  	  	  	  
	  	  	
20.

	
  

	
Force Majeure

	
  

	
17

	  	  	  	  
	  	  	
21.

	
  

	
Governing Law and Resolution of Disputes

	
  

	
17

	  	  	  	  
	  	  	
22.

	
  

	
Languages

	
  

	
18

	  	  	  	  
	  	  	
23.

	
  

	
Effectiveness of the Agreement and Others

	
  

	
18

 

 

  

2

  

JOINT VENTURE AGREEMENT

 

Chapter 1. General

 

In accordance with the laws of the Hong Kong Special Administrative Region (hereinafter referred to as “Hong Kong”) of the People’s Republic of China (hereinafter referred to as “China”), Medical Care Technologies Inc., established in accordance with the laws of the State of Nevada, United States of America (hereinafter referred to as “Medical Care” for the First Party) with its principal office at Room 815, No. 2 Building Beixiaojie, Dongzhimen Nei, Beijing, China 10009 and Ocean Wise International Industrial Limited, established in accordance with the laws of Hong Kong with its principal office located at 1301 Bank of America Tower, 12 Harcourt Road, Central Hong Kong, China (“hereinafter referred to as “OW” or the Second Party) hereby agree to establish a joint venture company with investment jointly contributed by the parties, at Hong Kong, China, based on the principles of equality and mutual benefit as well as through friendly negotiations on this 28th day of April 2011. The parties shall hereinafter be referred to individually as the “Party” or collectively as the “Parties”.

 

Chapter 2. Parties

 

Article 1

 

The Parties to this Agreement shall be as follows:

 

First Party: Medical Care Technologies Inc.

 

Its registered location: Nevada, USA

 

Its registered address: Room 815, No. 2 Building Beixiaojie, Dongzhimen Nei, Beijing, China 10009

 

Its legal representative: Mr. David Lubin of David Lubin & Associates PLLC, New York

 

Second Party: Ocean Wise International Industrial Limited

 

Its registered location: Hong Kong, China

 

Its registered address: 1301 Bank of America Tower, 12 Harcourt Road, Central Hong Kong

 

 

Chapter 3. Establishment of the Joint Venture Company

 

Article 2

 

Based on the laws of Hong Kong the Parties hereto agree to set up “ReachOut Holdings Limited”, a joint venture company incorporated under the laws of Hong Kong, China (hereinafter referred to as the “JVC” or “ReachOut”).

 

  

3

  

Based on the laws of China using Chinese and Foreign Investment and other related laws and regulations of China, the JVC hereby agree to establish a subsidiary in Dongguan, China (hereinafter referred to as the “Subsidiary” or “Dongguan Subsidiary”).

 

Article 3

 

The name of the JVC its legal address shall be as follows:

 

Name in Chinese: ________________________

 

Name in English: ReachOut Holdings Limited

 

Legal Address: 1301 Bank of America Tower, 12 Harcourt Road, Central Hong Kong

 

Article 4

 

The JVC will be a Hong Kong incorporated company. Each Party shall be entitled to the profits in accordance with the ratio of its shareholding in the capital of the JVC, which its investment bears to the registered capital, and shall share risks and profits within the limit of the capital contributed by it. The Subsidiary shall also be a limited liability company under the laws of China, where as the wholly owned subsidiary, the JVC shall be entitled to its entire profits.

 

Chapter 4. Purposes, Scope and Scale of Business

 

Article 5

 

The purpose of the joint venture is, under the common idea of strengthening economic and technical cooperation between the Parties, to open and operate private pediatric health center(s) in China through the Subsidiary to be established in China, by providing high quality pediatric healthcare through high caliber pediatric physicians, professional management and strong marketing of pediatric health centers to achieve the economic development of thereby attaining economic benefits satisfactory to the Parties.

 

Article 6

 

The business scope of the JVC shall be as follows:

 

	  	
(1)

	
To set up the Subsidiary in China to conduct its business, in the pediatric healthcare sector (integrated pediatric health services of a preventative nature only, health center promotion, marketing and sales, health center operation and budget, branding and design, customer service, etc.); and

 

	  	
(2)

	
Coordinate the business efforts between Medical Care and OW with the Subsidiary.

 

The business scope of the Subsidiary shall be as follows:

 

	  	
(1)

	
Operating private pediatric health centers (including integrated pediatric health services of a preventative nature only, health center promotion, marketing and sales, health center operation and budget, branding and design, customer service, etc.) within China; and

 

	  	
(2)

	
Such new business as may be agreed to between the Parties.

 

  

4

  

Chapter 5. Total Amount of Investment and Registered Capital

 

Article 7

 

The registered share capital of the JVC at the commencement of the joint venture of the Parties hereunder shall be ten thousand Hong Kong Dollars (hereinafter referred to as “HKD” or “HK$”) (HK$10,000).

 

Article 8

 

The investment amount and ratio of shareholding of the Parties shall be as follows:

 

	
Medical Care Technologies Inc.:

	  	
HK$65 for 65%

	
Ocean Wise International Industrial Limited:

	  	
HK$35 for 35%

 

Article 9

 

The Parties shall contribute as follows:

 

	
Medical Care Technologies Inc.:

	
  

	
cash

	
  

	
US$

	
167,500

	  	  	  
	
Ocean Wise International Industrial Limited:

	
  

	
cash

	
  

	
US$

	
90,195

	  	  	  
	  	
  

	
total

	
  

	
US$

	
257,695

 

Article 10

 

	
1.

	
Medical Care shall make its entire investment payment of one hundred sixty seven thousand five hundred USD (US$ 167,500) promptly after the execution of this Agreement. OW shall make its entire investment payment of ninety thousand one hundred ninety five USD (US$90,195) promptly after the execution of this Agreement. The shares in the JVC will be issued only when the full investment payment aforesaid of each relevant Party is actually received by the JVC, their respective shareholdings in the JVC will be as stipulated in Article 8 hereof.

 

	
2.

	
Share certificates will be issued by the JVC to the relevant Party when such Party has completely made its investment payment to the JVC as set out in this Article 10.

 

Article 11

 

	
1.

	
Subject to the following paragraphs of this Article 11, before any shares in the JVC (“Shares”) may be sold or otherwise transferred or disposed of by a shareholder of the JVC (the “Selling Shareholder”) (including transfer by gift), all the other shareholders of the JVC (“Remaining Shareholders”) shall have a right of first refusal (“Right of First Refusal”) to purchase such Shares (“Selling Shares”); and Parties shall have the right to co-sale (“Co-Sale”) in accordance with the terms of this Article.

 

  

5

  

Right of First Refusal

 

	
2.

	
Before the transfer of any Selling Shares, the Selling Shareholder shall deliver to the JVC and the Remaining Shareholders a written notice (“Transfer Notice”) stating: -

 

	  	
(a)

	
the Selling Shareholder’s intention to sell or otherwise transfer or otherwise dispose of such Selling Shares;

 

	  	
(b)

	
the name of each proposed purchaser or other transferee (a “Proposed Transferee”);

 

	  	
(c)

	
the number of Selling Shares to be transferred to each Proposed Transferee; and

 

	  	
(d)

	
the bona fide cash price and/or other consideration for which, and other terms and conditions on which, the Selling Shareholder proposes to transfer the Selling Shares (“Offered Terms”).

 

The Transfer Notice shall constitute an irrevocable offer by the Selling Shareholder to sell the Pre-emptive Shares at the Offered Terms to the Remaining Shareholders.

 

	
3.

	
Each Remaining Shareholder shall have the right, by serving notice to the Selling Shareholder at any time within fourteen (14) days after receipt of the Transfer Notice (“Purchase Right Period”), to purchase its Pro Rata Share (as defined below) of all or any of such Selling Shares at the same price and upon the same terms (or terms as similar as reasonably possible) as the Offered Terms, and the Selling Shareholder shall, upon receipt of the notice of purchase from the Remaining Shareholder, sell such Selling Shares to such Remaining Shareholder pursuant to such terms. In respect of a Remaining Shareholder, his “Pro Rata Share” for the purposes of this Article shall mean the ratio of (i) the number of Shares held by such Remaining Shareholders bears to (ii) the total number of Shares held by all Remaining Shareholders.

 

	  	  

Co-Sale

 

	
4.

	
The Parties shall have a co-sale right to sell a proportionate part of its Shares to the Proposed Transferee together with such Selling Shareholder in the proposed sale or transfer on the same terms offered by such Proposed Transferee.

 

	
5.

	
The Parties may sell all or any part of that number of Shares equal to the product obtained by multiplying (i) the Selling Shares that the Selling Shareholder proposed to sell or transfer to the Proposed Transferee, by (ii) a fraction, the numerator of which is the number of Shares (on an as-converted basis) owned by the Party at the time the co-sale right is exercised and the denominator of which is the total number of Shares (on an as-converted basis) owned by the Selling Shareholders and the Party on the same day.

 

	
6.

	
If the Proposed Transferee prohibits such transfer or otherwise refuses to purchase Shares from the Party exercising its co-sale right hereunder, the Selling Shareholder shall not sell or transfer its Selling Shares to such Proposed Transferee unless and until, simultaneously with such sale or transfer, the Selling Shareholder shall itself purchase such amount of Shares as provided in item 5 above from the Party for the same consideration and on the same terms.

 

General

 

	
7.

	
If any of the Selling Shares proposed in the Transfer Notice to be transferred are not purchased by the Remaining Shareholders or affected by any Co-Sale right, then the Selling Shareholder may sell or otherwise transfer or dispose of such Selling Shares which have not been purchased to the Proposed Transferee(s) at the Offered Terms or at a higher price and/or better terms, provided that such sale or other transfer shall be completed and consummated within thirty (30) days after the expiration of the Purchase Right Period. If the Selling Shares described in the Transfer Notice are not transferred to the Proposed Transferee(s) within such thirty (30) day period, such Selling Shareholder shall not transfer or dispose of any Selling Shares unless such Selling Shares are first re-offered to the Remaining Shareholders in accordance with this Article.

 

  

6

  

	
8.

	
The Right of First Refusal and Co-Sale right set forth in this Article shall not apply to any transfer of Shares (i) to the holding company or the wholly-owned subsidiary of the Selling Shareholder or a wholly-owned subsidiary of the holding company of the Selling Shareholder (each a “Permitted Transferee”) provided that in each case the Selling Shareholder shall remain to be bound by this Agreement and the Permitted Transferee shall agree to be bound by this Agreement and that the Selling Shareholder shall procure the Permitted Transferee shall not transfer its Shares except to the Selling Shareholder or other Permitted Transferee(s) and further that after the transfer such Permitted Transferee shall remain qualified to be a Permitted Transferee as defined above; or (ii) consequential to the exercise of the rights and powers by the chargee or mortgagee under a charge or mortgage of the Shares.

 

Chapter 6. Responsibilities of the Parties

 

Article 12

 

Each Party shall, in addition to performing its obligations provided in other provisions of this Agreement, perform the following items under its responsibility and at its own expense, except where there is a separate provision in this Agreement or there is a separate agreement with the JVC including but not limited to the license agreement to be signed between the Subsidiary and the JVC (“License Agreement”) that provides for the operation of the pediatric health center (“PRC License”) by Subsidiary.

 

	
1.

	
Responsibilities of Medical Care

 

	  	
(1)

	
Entering into and execution of the JV Master Agreement.

 

	  	
(2)

	
Providing the medical/healthcare software technology and other necessary information, to the extent necessary for the execution of this Agreement.

 

	  	
(3)

	
Reasonable training of the software technicians and employees of the JVC or the Subsidiary, to the extent necessary for the execution of this Agreement.

 

	  	
(4)

	
Meeting the technological requirements for the JVC in localization, upgrading and further development of the medical/healthcare software and other necessary information.

 

	  	
(5)

	
Other matters reasonably requested by the JVC.

 

	
2.

	
Responsibilities of OW

 

	  	
(1)

	
Establishment and operation of the JVC in Hong Kong and the Subsidiary in China. Applying and negotiating approval application to the pertinent Chinese government agencies registration, acquisition of business license and other matters required for the establishment and operation of the Subsidiary.

 

  

7

  

	  	
(2)

	
Providing the professional management team and the strong marketing expertise. As well as the marketing communications, media relationship and established network channels.

 

	  	
(3)

	
Introducing the network of venture capital and corporate finance partners to enable the JVC and the Subsidiary to achieve the goals of being able to operate successfully in the China healthcare market.

 

	  	
(4)

	
Applying for the acquisition of the right to use the land (for operations) during the term of the joint venture relating to the land, and assisting in concluding a contract for the use of land by the Subsidiary. Provided that the terms and conditions of such a contract shall require advance consent of the other parties.

 

	  	
(5)

	
Assisting in customs clearance of licensed programs, office equipment and transportation for the Subsidiary in procuring or leasing inside China, and in transportation thereof in China.

 

	  	
(6)

	
Assisting in securing the most favorable conditions for means of transportation, office equipment and communication facilities procured or leased by the JVC in Hong Kong and the Subsidiary in China.

 

	  	
(7)

	
Assisting in acquiring at the most favorable conditions the supply of basic facilities such as water main, server system, electric power, steam, gas, roads, transportation means, communication means, air purifying system and the like for the Subsidiary in China.

 

	  	
(8)

	
Dispatching management personnel requested by the JVC and seconding management personnel, technicians, workers and other necessary personnel who are the Chinese nationality and have sufficient experiences or assisting in recruiting such personnel, and assisting in resolving labor management problems.

 

	  	
(9)

	
Assisting in obtaining entry visas, processing work permits and arranging for travels needed by the foreign nationality personnel of the JVC and by the personnel of Medical Care as well as assisting in availing conveniences for the daily life of foreign nationality personnel.

 

	  	
(10)

	
Providing the JVC with relevant laws and regulations of China concerning the establishment, operation and carrying out of business of the JVC.

 

	  	
(11)

	
Assisting the JVC and the Subsidiary in obtaining tax and other benefits according to concerned regulations granting benefits of the Chinese government and the Hong Kong Region Government.

 

	  	
(12)

	
Assisting in processing the remittance of foreign exchanges needed by the JVC.

 

	  	
(13)

	
Other matters reasonably requested by the JVC.

 

Chapter 7. Doing Business

 

Article 13

 

The JVC shall establish the Subsidiary in China to do business provided in Article 6 above in China.

 

  

8

  

Article 14

 

The trade mark(s) used by the JVC and the Subsidiary shall be as described on Appendix hereof.

 

Chapter 8. Board of Directors

 

Article 15

 

The JVC and the Subsidiary shall establish a Board of Directors, and the date of registration of the JVC and the Subsidiary respectively, shall be the date of establishment of the Board of Directors of the JVC and the Subsidiary respectively.

 

Article 16

 

	
1.

	
The Board of Directors of the JVC and the Subsidiary shall each be composed of three (3) Directors (including Chairman), of whom one (1) shall be nominated by Ocean Wise, and two (2) by Medical Care. The term of a Director shall be three (3) years. Provided that each Party may change the director nominated and dispatched by it during the term by giving thirty (30) days advance notice to the other Party. Provided that any damages caused thereby shall be borne by the concerned Party who shall hold other Party harmless. The term of the new Director nominated as the result of the change shall be the remaining term of his predecessor. If upon the expiration of the term of a Director, each Party desires the same person to continue his/her position, then such Director shall be re-nominated.

 

	
2.

	
The Board of Directors of the JVC and the Subsidiary shall have one each of the Chairman and Vice Chairman, and unless as otherwise resolved among the Parties, the Chairman shall be nominated and dispatched by Medical Care, the Vice Chairman to be nominated and dispatched by OW after consultation, and the remaining third Director by Medical Care.

 

	
3.

	
Each Party shall cause the directors appointed by them respectively to approve the establishment of the Subsidiary by the JVC in China at the first board meeting of the JVC.

 

Article 17

 

	
1.

	
The Board of Directors shall be the highest organ of the JVC and the Subsidiary and shall decide the following important matters (hereinafter referred to as “Matters Requiring the Board Approval”).

 

	  	
(1)

	
Amendment of the Articles of Association of the JVC and the Subsidiary.

 

	  	
(2)

	
Dissolution and suspension of the JVC and the Subsidiary or extension of the term of the joint venture.

 

	  	
(3)

	
Increase of the registered capital of the JVC and the Subsidiary and transfer thereof.

 

	  	
(4)

	
Merger of the JVC and the Subsidiary with another economic organization.

 

	  	
(5)

	
Sale of all or substantial portion of the assetsof the JVC and the Subsidiary.

 

	  	
(6)

	
Taking over substantial assets from another economic organization.

 

	  	
(7)

	
Reporting and approval of the annual budget, settlement and annual accounting of the JVC and the Subsidiary.

 

  

9

  

	  	
(8)

	
Deciding annual and long and medium term investment and borrowing plans.

 

	  	
(9)

	
Deciding on the proposals for the annual distribution of profits and disposition of loss of the JVC and the Subsidiary.

 

	  	
(10)

	
 Approval of the principles of property disposal procedures, selection of the liquidation committee, report of the liquidation and the like of the JVC and the Subsidiary.

 

	  	
(11)

	
 Conclusion, amendment or termination of important contracts.

 

	  	
(12)

	
 Deciding important rules and system of the JVC and the Subsidiary.

 

	  	
(13)

	
 Deliberation and decision of agenda proposed by a Director.

 

	  	
(14)

	
 Sublicense of the intellectual property rights, if necessary.

 

	  	
(15)

	
 Such other items for which approval of the Board of Directors is required under this Agreement or the Articles of Association.

 

	
2.

	
Of the resolutions of the Board of Directors, the matters provided in preceding Paragraph 1, Items (1) through (10) shall require the unanimous vote of all the Directors or their proxies in attendance.

 

	
3.

	
Of the resolutions of the Board of Directors, the matters as provided in preceding paragraph 1, items (11) through (15) shall require the affirmative vote of 2/3 or more of the Directors or their proxies in attendance.

 

	
4.

	
The detailed rules concerning the Board of Directors not provided in this Agreement shall follow relevant provisions of the Articles of Association or the rules of the Board of Directors of the JVC and the Subsidiary.

 

Article 18

 

The Chairman, for each company, if legal counsel not present, shall be the legal representative of the JVC and the Subsidiary. Each Chairman shall represent the acts of the JVC and the Subsidiary, externally in accordance with the decision of the Board of Directors. If the Chairman is unable to perform his duties, the Vice Chairman shall perform the duties on behalf of the Chairman. If the Vice Chairman is also unable to perform the duties, a Director in the other predetermined by the Board of Directors shall perform the duties of the Chairman.

 

Article 19

 

	
1.

	
In principle, the meeting of the Board of Directors shall be held once a year at the location of the JVC and the Subsidiary and the Chairman for each company shall have the responsibility for convening the meeting. By agreement of the Chairman and the Vice Chairman, the meeting may be held at another place. When more than one-third of the Directors request, the Chairman shall call the meeting. The first meeting of the Board of Directors shall be held within thirty (30) days after the establishment of each company.

 

	
2.

	
The Chairman of each company shall send a notice in writing to each Director stating the agenda of the ordinary or extraordinary meeting of the Board of Directors, date and place of his company. Provided that the number of days may be reduced upon unanimous agreement in advance of the Directors.

 

  

10

  

	
3.

	
The quorum of the meeting of the Board of Directors of each company shall be constituted upon the presence of majority of members or proxies as provided herein, and falling short thereof, the quorum will not be constituted and any resolution made thereby shall be void. If a Director is unable to attend the meeting of the Board of Directors, he may exercise his voting right by sending his proxy to the meeting of the Board of Directors with the submission of the power of attorney. Each Party shall be responsible for causing the directors nominated and sent by it or proxies to attend the meeting of the Board of Directors and secure their attendance.

  

	
4.

	
Upon agreement of the Chairman and the Vice Chairman of each company, the convening of the meeting of the Board of Directors and resolution may be substituted by writing such as facsimile circulated and resolved by all of its Directors.

 

	
5.

	
Of the reasonable expenses to be incurred in connection with attending the meeting of the Board of Directors, travel expenses, transportation expenses, lodging expenses meals and other the Board of Directors meeting related expenses shall be borne by each company.

 

	
6.

	
The minutes of the meeting of the Board of Directors shall be made in three languages of English, Cantonese and Mandarin, which shall be equally valid. The company shall keep the minutes for the duration of its term after the directors or proxies attended affixed their signatures, and shall send without delay a copy thereof to each Director after the meeting of the Board of Directors is finished.

 

Chapter 9. Management Organs

 

Article 20

 

	
1.

	
The JVC and the Subsidiary shall each set up, the operation management organ below the Board of Directors and shall cause to take charge of the daily operation management affairs.

 

	
2.

	
The Board of Directors of the JVC and the Subsidiary shall each designate one Executive Director to take charge of the daily operation, management and administration. Under the Executive Director, there shall be one General Manager and a few senior management officers, if necessary.

 

	
3.

	
The Board of Directors of JVC and the Subsidiary shall appoint the person nominated by Medical Care as the Executive Director and the person nominated by OW as the General Manager, and shall decide their authority, compensation and dismissal. For other senior management officers, the Board of Directors shall decide the establishment, number, selection, authority, remuneration, dismissal and the like shall be decided and selected by the Board of Directors in accordance with the need in performing the affairs of the JVC and the Subsidiary.

 

	
4.

	
The terms of the Executive Director, the General Manager shall be three (3) years and may be renewed. In the case of replacement during the term, the Party who nominated and sent him shall send thirty (30) days advance notice to the other Party and the Board of Directors, and shall bear all damages caused thereby, and hold other Party harmless.

 

  

11

  

Article 21

 

	
1.

	
The JVC and the Subsidiary shall each have the system under the guidance of the Board of Directors and the Executive Director shall be the highest person responsible for daily operation and management affairs. The Executive Director may also be appointed as General Manager and therefore act in dual capacity. The Executive Director shall represent the company externally within the scope of authority given by the Board of Directors, and internally shall exercise the authority over daily operation management.

 

	
2.

	
When the General Manager is unable to perform his duties, the senior management officers shall perform the duties of the General Manager in his/her behalf.

 

	
3.

	
The General Manager shall set up departments within the operation management organ and appoint the department managers to head each department. The department manager shall be responsible for the affairs of department in charge, handle such matters as may be entrusted by the Executive Director, the General Manager shall be responsible to the Executive Director.

 

	
4.

	
The General Manager shall make decision together of the followings:

 

	  	
(1)

	
Deciding the management policy, and plans for operation of health center, sale of nutraceuticals and procurement for the long and medium terms.

 

	  	
(2)

	
Appointment and dismissal of the managing director and other high-ranking officer of the JVC and the Subsidiary as well as deciding their scope of authority and compensation.

 

	  	
(3)

	
Establishment of management control organs, division and branch of the JVC and the Subsidiary as well as deciding and revocation of the authority thereof.

 

	  	
(4)

	
Establishment of the standards concerning the labor conditions such as wages of medical and administrative personnel of the JVC and the Subsidiary, and their bonus, welfare and the like.

 

Article 22

 

The General Manager shall be responsible to the Executive Director directly and shall perform the following listed duties.

 

	
1.

	
Submitting the following drafts or plans to the Executive Director and carrying out after approval by the Board of Directors.

 

	  	
(1)

	
Annual Business Plan.

 

	  	
(2)

	
Management policy and medium and long term development plans of the JVC and the Subsidiary.

 

	  	
(3)

	
Selection, authority, remuneration and dismissal of department managers and senior management officers.

 

	  	
(4)

	
Rules and systems concerning the operation management of the JVC and the Subsidiary.

 

	  	
(5)

	
Other matters which require the decision of the Board of Directors.

 

	
2.

	
In compliance with the resolutions of the Board of Directors, making decisions independently and carrying out the following matters.

 

  

12

  

	  	
(1)

	
Retailed implementation of items (1) through (5) of the preceding paragraph.

 

	  	
(2)

	
Establishment of the operation management organs below the department managers and the selection of personnel.

 

	  	
(3)

	
Employment, dismissal, assignment, awards, punishment and the like of medical personnel and health center staff.

 

	  	
(4)

	
Establishment of various rules, regulations and criteria concerning the daily operation management affairs.

 

	  	
(5)

	
Plan for training of medical personnel and health center staff and arrangement for execution.

 

	  	
(6)

	
Negotiation, conclusion and performance of contracts representing the company.

 

	  	
(7)

	
Other important matters in the daily operation.

 

Article 23

 

The General Manager shall also be responsible to the Executive Director directly and shall perform the following listed duties with fully consulting with the Executive Director:

 

	
1.

	
Submitting the following drafts or plans to the Executive Director and carrying out after approval by the Board of Directors.

 

	  	
(1)

	
Annual business finance plan.

 

	  	
(2)

	
Annual budget, settlement of accounts, dividends, disposition of losses of the JVC and the Subsidiary.

 

	  	
(3)

	
Plans for procurement, management and enforcement of finances and investments.

 

	
2.

	
In compliance with the resolutions of the Board of Directors, making decisions independently and carrying out the following matters.

 

	  	
(1)

	
Wages, wage form, compensation, welfare, labor protection criteria.

 

	  	
(2)

	
Finance and accounting management related affairs.

 

Article 24

 

The Executive Director, the General Manager may not become the President or the Vice President of another economic organization without prior approval of the Board of Directors, and may not involve in commercial activities of another economic organization competing against the company.

 

  

13

  

In the event that the Executive Director, the General Manager commits dishonest act or brings substantial economic loss to the company by dereliction of his duties, or there is a just reason indicating that he is not a appropriate person for the job, he may be dismissed at any time according to the resolution of the Board of Directors without making any compensation. After dismissal as aforesaid, the new Executive Director, the new General Manager shall be nominated by the Party who nominated the former Executive Director, the former General Manager and shall be appointed by the Board of Directors, their term to be the remaining term of the predecessors.

 

Chapter 10. Labor Management

 

Article 25

 

	
1.

	
For the matters concerning the recruitment, employment, dismissal and resignation, wages, labor insurance, welfare, rewards, penalty and other matters concerning the staff and workers of the JVC, the Executive Director, General Manager shall decide the detailed implementing methods according to the standards reviewed and decided by the Board of Directors shall be determined by the Board of Directors and establish the employment rules of the JVC and other related regulations.

 

	
2.

	
For the matters concerning the recruitment, employment, dismissal and resignation, wages, labor insurance, welfare, rewards, penalty and other matters concerning the staff and workers of the Subsidiary, the Executive Director, General Manager shall decide the detailed implementing methods according to the standards reviewed and decided by the Board of Directors shall be determined by the Board of Directors in accordance with the Regulations of the People’s Republic of China on Labor Management in Joint Ventures Using Chinese and Foreign Investment and its Implementation Rules, and other related laws and regulations, and establish the employment rules of the Subsidiary and other related regulations.

 

Article 26

 

Wage level, system and welfare of the staffs and workers of the Subsidiary shall be decided by the General Manager in accordance with the related laws and regulations of China and the standards decided by the Board of Directors. Such matters shall be adjusted in principle every year according to the business situation of the Subsidiary.

 

Article 27

 

The Subsidiary shall decide employment of the staffs and workers according to the business need and employ by selecting superior persons through the testing method. The Subsidiary shall separately enter into a labor contract with each staff and worker to be employed and file it with the agency in charge.

 

Article 28

 

The Subsidiary shall have the right to hand out, depending on the degree, reprimand, fine, pay reduction, demotion, suspension of working, advising retirement, dismissal and the like to the staffs and workers who violated various rules of the Subsidiary and the labor contract, and report the results thereof to the agency in charge.

 

Article 29

 

	
1.

	
The criteria of salary, insurance, welfare and travel expenses shall be determined by the Board of Directors and the General Manager shall have the responsibility for the details thereof.

 

	
2.

	
All pay and compensation of the high-ranking management personnel of the JVC shall be fixed in USD.

 

  

14

  

Chapter 11. Taxes; Finance; Accounting Audit

 

Article 30

 

	
1.

	
The JVC shall pay taxes in accordance with relevant laws and regulations of Hong Kong and receive tax preference according to relevant laws and regulations.

 

	
2.

	
The Subsidiary shall pay taxes in accordance with relevant laws and regulations of China and receive tax preference according to relevant laws and regulations.

 

Article 31

 

	
1.

	
The accounting of the JVC and the Subsidiary shall follow the International Accounting System.

 

	
2.

	
The fiscal year of the JVC and the Subsidiary shall be from January 1 by the solar calendar of each year to December 31. Provided that the first fiscal year shall be from the date of establishment of the JVC to December 31 of the relevant year.

 

	
3.

	
The accounting of the JVC and the Subsidiary shall employ the accrual basis and the double entry system, which are used internationally. The completeness in procedures, the perfectness in the contents and the timeliness shall be the principles.

 

	
4.

	
In principle, all vouchers, slips, balance sheets, and books shall be prepared in Chinese. Provided that in case where the General Manager deems it necessary, they shall be prepared in Chinese and English.

 

	
5.

	
The Subsidiary may use RMB as the currency for its books.

 

Article 32

 

	
1.

	
The JVC and Subsidiary shall prepare a loss and profit statement, balance sheets and other fiscal year reports for each month, each quarter and each fiscal year. The monthly accounting report shall be made by the end of the following month and the quarterly report shall be sent within thirty (30) days of the end of the relevant quarter, to each Party and at the same time, the Subsidiary’s financial information shall be submitted to concerned authorities of China.

 

	
2.

	
The JVC and the Subsidiary shall prepare the accounting report of each fiscal year by the end of March of the following year, and report to the Board of Directors after obtaining audit by a certified public accountant registered in China. Upon approval thereby, the JVC and the Subsidiary shall send it to each Party and at the same time, the Subsidiary will submit such report to concerned authorities of China. All reports and financial statements shall be prepared in both Chinese and English.

 

Article 33

 

Each Party may invite a certified public accountant from inside or outside China to have the annual financial situation of the JVC and the Subsidiary audited, and the other Party shall give its consent thereto. The Party conducting the audit shall notify the JVC and the Subsidiary thirty (30) days beforehand and the JVC shall cooperate with such audit and make available all books and financial records of the JVC. Provided that expenses incurred for the audit shall be borne by the Party conducting the audit.

 

  

15

  

Article 34

 

The Directors of the JVC may examine vouchers and accounting records of the JVC and the Subsidiary from time to time.

 

Chapter 12. Foreign Exchange Management

 

Article 35

 

Foreign exchange management of the Subsidiary shall follow the Foreign Exchange Control Regulations of the People’s Republic of China and the rules for relevant management method.

 

Article 36

 

After obtaining the business license, the Subsidiary may open foreign currency accounts and RMB accounts at a bank inside and outside China and other financial institution, which the Bank of China or the State Foreign Exchange Control Bureau of china (or branch Bureau) and the Executive Director General Manager of the Subsidiary recognize.

 

Chapter 13. Distribution of Profits

 

Article 37

 

	
1.

	
The JVC shall, according to the criteria stipulated below, carry out profit distribution and loss disposition.

 

	  	
(1)

	
Profit distribution shall not be made until the accumulated losses are replenished.

 

	  	
(2)

	
Undistributed profits of the previous fiscal year may be distributed by including in the profits carried forward in the current fiscal year.

 

	  	
(3)

	
Profits after tax of each fiscal year of the JVC shall be distributed at the end of the relevant fiscal year according to the investment ratio of the Parties, limiting, however, to the amount which, the Board of Directors approved by the unanimous vote that there will be no hindrance to the future production plan and fund plan of the JVC.

 

	  	
(4)

	
All profit distribution shall be paid in USD at the most favorable exchange rate to the Parties.

 

	
2.

	
The Subsidiary shall, according to the criteria stipulated below, carry out profit distribution and loss disposition.

 

	  	
(1)

	
Profit distribution shall not be made until the accumulated losses are replenished.

 

	  	
(2)

	
Undistributed profits of the previous fiscal year may be distributed by including in the profits carried forward in the current fiscal year.

 

	  	
(3)

	
Profits after tax of each fiscal tear of the Subsidiary shall be distributed at the end of the relevant fiscal year to the JVC.

 

  

16

  

Article 38

 

Except where there is an unavoidable situation, the distribution of profits to each Party shall be deposited in the bank account designated by each Party within forty-five (45) days after the resolution of the Board of Directors of the JVC and deposit charges shall be deducted from the profits distributed to each Party.

 

Chapter 14. Term of the Joint Venture

 

Article 39

 

	
1.

	
The term of the joint venture shall be ten (10) years, which shall be computed from the date of issuance of the business license of the JVC unless prior written termination notice is given by one Party to another or an event occurs as described in Article 40. Such term may be extended under the same or new terms and conditions with the written consent of both Parties, at least six (6) months prior to the expiration date.

 

Chapter 15 Dissolution

 

Article 40

 

	
1.

	
Upon occurrence of any of the events below to the JVC as well as to the Subsidiary, any Party (excepting the Party falling under items (2) and (4) of this paragraph) may notify in writing the other Party demanding the consultation of the continued existence of the JVC or the Subsidiary. If the Parties (excepting the Party falling under items (2) and (4) of this paragraph) cannot reach an agreement on the resolution (including purchase by those desiring the continued existence of the investment of those desiring the dissolution) within 90 days after receipt of the notice, the Board of Directors of the JVC or the Subsidiary shall submit an application for dissolution and upon obtaining approval of the approving authorities shall dissolve the JVC or the Subsidiary. In that event, each Party shall have the obligation to cause the Directors or their proxies nominated and sent by it to attend the meeting of the Board of Directors and to vote affirmatively for the dissolution of the JVC or the Subsidiary.

 

	  	
(1)

	
Where the JVC or the Subsidiary recorded the losses continuously for three fiscal years (excepting the first fiscal year) or the enumerated amount of losses of the JVC or the Subsidiary exceed 50% of registered capital.

 

	  	
(2)

	
Any Party does not perform its obligations provided in this Agreement or the Articles of Association of the JVC or the Subsidiary pursuant to the principles of good faith and mutual trust, or materially breaches the provisions of this Agreement or those of the Articles of Association, so that the business of the JVC or the Subsidiary can no longer be carried out.

 

	  	
(3)

	
Force majeure provided in Article 49 of this Agreement occurred, as a result of which the JVC or the Subsidiary suffered substantial loss and the business cannot be continued.

 

	  	
(4)

	
A Party is filed against or files for an application for bankruptcy.

 

	
2.

	
When the Parties agree on the dissolution, an application for dissolution shall be pursued to wind up the business and affairs of the JVC in accordance with the applicable law.

 

  

17

  

	
3.

	
When the Parties agree on the dissolution, an application for dissolution shall be pursued to wind up the business and affairs of the Subsidiary in accordance with the applicable law and be submitted as well as be dissolved through approval of the approving authorities.

 

Article 41

 

	
1.

	
When the Parties face a dispute where the board of directors or the shareholder’s meeting cannot reach a special resolution regarding the operation and management issue, both Parties shall exercise good faith effort to come to an amicable resolution.

 

	
2.

	
If the board of directors or the shareholder’s meeting, of the JVC as well as of the Subsidiary, cannot reach a special resolution, and such unresolved condition continues for more than five (5) months (“Dead Lock”), then the following shall apply:

 

	  	
(1)

	
In principal, as soon as possible after the occurrence of a Dead Lock, the JVC or the Subsidiary, as the case may be, shall be dissolved through the resolution of the board of directors and shareholder’s meeting.

	  	  	  

 

Chapter 16. Disposition of Assets

 

Article 42

 

	
1.

	
When the JVC is dissolved upon expiration of the term of the joint venture or for other cause, the JVC shall be liquidated expeditiously in accordance with the relevant laws and regulations of Hong Kong. The assets of the JVC shall be caused to be appraised by an organization with the international reputation, which is recognized by the board of Directors and shall be sold according to the appraised amount at the most favorable prices. In the event that a Party desires to purchase the assets of the JVC, the sale will be made at the appraised amount after obtaining consent of the Parties. The right to use the land shall be disposed according to the laws and rules. All licenses issued among the Parties and JVC, shall automatically be terminated for no value.

 

	
2.

	
When dissolving, the JVC shall organize the liquidation committee and liquidate the properties. The details thereof shall follow the Articles of Association.

 

	
3.

	
When dissolving, the Subsidiary shall follow the same procedures as stated in this Article 42 but in accordance with the relevant laws and regulations of China. The Subsidiary shall organize the liquidation committee and liquidate the properties, where the assets of the Subsidiary shall be appraised and sold at the most favorable prices. The details thereof shall follow the Article of Association of the Subsidiary.

 

Article 43

 

The properties remaining after the liquidation shall be distributed to the Parties according to the then investment ratio of the Parties. The JVC shall calculate the amount of each Party to be distributed in USD.

 

  

18

  

Chapter 17. Insurance and Confidentiality

 

Article 44

 

Regarding the various insurances of the JVC, the Board of Directors of the JVC shall study and decide the objects to be insured, types of insurance, value to be insured, insurance term and the like.

 

Article 45

 

The Parties shall not disclose to any third party any confidential information of the other Party obtained in connection with this Agreement, and take measures to ensure that its employees, representatives, agents and consultants do not to disclose. The obligation above shall survive for two (2) years after the expiration or the termination of this Agreement.

 

Chapter 18. Amendment of the Agreement

 

Article 46

 

Amendment of this Agreement or documents attached hereto shall be valid only when agreed upon by the Parties, prepared the contents of the agreement in writing, signed, applied to the approving authorities and obtained approval.

 

Chapter 19. Liabilities for Breach

 

Article 47

 

In the event that a Party has failed to pay the entire amount of investment by the time limit provided in Article 10 of this Agreement, the failing Party shall pay to the JVC a penalty of 0.3% per day on the amount unpaid starting from the payment due date. If payment is not made until the lapse of one month from the payment due date, any of the non-failing Party may notify in writing asking for payment and if no payment is made until the lapse of one (1) month after the date of notice, the failing Party shall lose all the rights granted in this Agreement and may not demand the refund of investment already made. The failing Party shall be liable to the other Party and the JVC to compensate damages caused thereby.

 

Article 48

 

If a Party breaches this Agreement, as a result of which the other Party or the JVC or the Subsidiary suffered damages (including in the event of the dissolution according to Article 40), the breaching Party shall be liable to the other Party and the JVC or the Subsidiary to compensate damages.

 

Chapter 20. Force Majeure

 

Article 49

 

If the performance of this Agreement is directly affected or cannot be performed according to its provisions by the occurrence or consequences of force majeure which were unpreventable or unavoidable, such as earthquake, typhoon, fire, flood, strike, war (regardless whether declared or not), and other unforeseeable cause, the Party affected by force majeure shall notify the other Party of the force majeure situation and within fifteen (15) days submit the documents describing the details of the situation, and stating the reasons why this Agreement cannot be performed or cannot be performed partially, or why it is necessary to extend the entire or partial performance. The other Party shall study the measures according to the degree of influence the concerned force majeure will have on the performance of this Agreement, and shall decide whether the Party affected by force majeure should be exempt partially from performing the obligation, or whether only part or the entire Agreement should be postponed, and whether the JVC or the Subsidiary should continue considering Article 40, paragraph, item (3)

 

  

19

  

Chapter 21. Governing Law and Resolution of Disputes

 

Article 50

 

	
1.

	
The execution, validity, nullification, interpretation, performance and resolution of dispute shall be governed by the laws of Hong Kong.

 

	
2.

	
All disputes arising from the performance of this Agreement or in connection with this Agreement shall be resolved by the Parties through amicable consultation. If a dispute is not resolved within sixty (60) days, it should be settled by arbitration applying the Rules of HKIAC at Hong Kong.

 

Article 51

 

Pending the resolution of a dispute after the occurrence thereof, the responsibilities and obligations provided in this Agreement and the Articles of Association of the JVC and the Subsidiary shall be performed continuously.

 

Chapter 22. Languages

 

Article 52

 

This Agreement is prepared in English, Cantonese and Mandarin. The Agreement in such languages shall be equally valid. In case of conflict, the English version shall govern.

 

Chapter 23. Effectiveness of the Agreement and Others

 

Article 53

 

	
1.

	
This Agreement and the Articles of Association of the Subsidiary shall be subject to the authorization of the Chinese government of the approving authorities and shall become into effect as of the date of authorization.

 

	
2.

	
If conditions are attached in the authorization by the approving authorities, the Parties shall consult whether to accept such conditions.

 

Article 54

 

Notices to be given between the Parties and from the JVC as well as the Subsidiary to the Parties concerning this Agreement shall be given to the addresses below in writing or by telegraph, telex or facsimile. The Party shall notify the other Party of the change of address in writing, or by telegraph, telex or facsimile.

 

First party

 

	
Medical Care Technologies Inc.

	
 

	
Room 815, No. 2 Building Beixiaojie, Dongzhimen Nei, Beijing, China 10009

 

	  

	
Tel:

	
86 10 6407 0580

	
Fax:

	
86 10 6840 6067

 

  

20

  

	
Second

	
Party

 

	
Ocean Wise International Industrial Limited

	
 

	
1301 Bank of America Tower, 12 Harcourt Road, Central Hong Kong

	  

 

	
Tel:

	
(852) 8198 1095

	
Fax:

	
(852) 2115 9818

 

Article 55

 

When any of the provisions of this Agreement are held invalid under the relevant laws and regulations, all other provisions shall remain valid.

 

Article 56

 

The Article of Association of the JVC and the Subsidiary shall be written in accordance with the terms and conditions set forth in this Agreement. In case of discrepancy in interpreting the provisions of the Articles of Association of the JVC and/or the Subsidiary and those of this Agreement, the provisions of this Agreement shall govern.

 

Article 57

 

This Agreement shall not be nullified by the replacement of the legal representatives or authorized representatives of the Parties.

 

Article 58

 

This Agreement is executed on 28th of April, 2011 by the legal representatives or authorized representatives of the Parties.

 

Article 59

 

This Agreement shall be prepared in originals each in English and each Party shall keep one set and two sets shall be submitted to the approving authorities.

 

Article 60

 

The Parties shall cause the JVC and the Subsidiary to have the first meeting of the Board of Directors approve those items, which are made as the duties of the JVC and the Subsidiary in this Agreement.

 

Article 61

 

Neither shall provide to the JVC and the Subsidiary any illegal information, such as information collected or processed by using the illegal or unjust method; information which is immoral or harmful to good custom or the social order; information infringing intellectual property of others; information invading the honor, private life and character of others; and false or exaggerated information. If an action, claim, protest or criminal charges are brought by a third party against the JVC because of such information having been made available by either Party or its directors or employees, such Party shall at its expense and under its responsibility hold the JVC and the Subsidiary harmless and compensate damages caused thereby to the JVC and the Subsidiary.

 

  

21

  

Article 62

 

Other matters not provided in this Agreement and difference in interpreting the provisions of this Agreement, the Parties shall decide upon consultation.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives.

 

Date: April 28, 2011

 

	
Medical Care Technologies Inc.

	  	  	  	
Ocean Wise International Industrial Limited

	  	  	  	  	  
	By:  	
 

	  	  	  	 By: 	
 

	 	 	 	 	 	 	 
	
Name:

	
Ning C. Wu

	  	  	  	
Name:

	
Bei Shu

	
Title:

	
CEO

	  	  	  	
Title:

	
Authorized Signatory

 

 

 

 

22f8k021111a1ex4i_chinagri.htm

Exhibit 4.1

 

SUBSCRIPTION AGREEMENT

This Subscription Agreement (this “Agreement”) is made by and between China Agricorp, Inc., a Nevada corporation (the “Company”) and the undersigned (the “Subscriber”).

WHEREAS, in connection with a reorganization described below (the “Reorganization”) the Company is making a private offering (“Offering”) of up to $4,500,000 principal amount of its 10% convertible promissory notes (the “Notes”) due one year after the closing (or, if there shall be more than one closing, the initial closing) of the Offering (the “Repayment Date”) on a “best efforts” basis, which Notes (a) upon the closing of any equity or equity-related financing, prior to the Repayment Date, resulting in gross proceeds to the Company of at least fifteen million dollars ($15,000,000) (a “Qualified Financing”), automatically shall convert into the securities sold in the Qualified Financing at a 50% discount to the price at which such securities are sold in the Qualified Financing, (b) upon the closing of any equity or equity-related financing, prior to the Repayment Date, resulting in gross proceeds to the Company of more than $2,000,000 but less than fifteen million dollars ($15,000,000) (a “Non-Qualified Financing”), may, at the holder’s option, be converted into the securities sold in the Non-Qualified Financing at a 50% discount to the price at which such securities are sold in the Non-Qualified Financing, (c) if not converted prior to the Repayment Date, shall be repaid together with interest, and (c) shall be substantially in the form attached hereto as Exhibit A;

WHEREAS, the aggregate principal amount of the Notes in the Offering may be increased to up to $4,950,000 by the mutual consent of the Company and the Placement Agent (as defined below); and

 

 

WHEREAS, at the time of delivery of a Note to a Subscriber, the Company also will deliver to each Subscriber purchasing the Note, a common stock purchase warrant (the “Warrant”) exercisable only in the event the Note is not converted prior to the Repayment Date, which Warrant shall be substantially in the form attached hereto as Exhibit B: and

WHEREAS, the Notes, the securities issuable upon the conversion of the Notes, the Warrants and the shares of common stock issuable upon exercise of the Warrants are hereinafter referred to collectively as the “Securities”;

WHEREAS, as part of the Reorganization, (a) the Company, two to-be-formed BVI corporations (“BVI-1” and “BVI-2”) will enter into and consummate a share exchange agreement pursuant to which the Company will issue shares of its common stock in exchange for all of the capital stock of BVI-2 held by BVI-1; (b) immediately following the share exchange (i) BVI-1 will own part of the issued and outstanding capital stock of the Company, (ii) the Company will own all of the issued and outstanding capital stock of BVI-2, (iii) BVI-2 will own all of the outstanding capital stock of a to-be-formed Hong Kong corporation (“HK Corp.”), (iv) HK Corp. will own all of the outstanding capital stock of a wholly-owned foreign under the laws of the People’s Republic of China (“WOFE”), and (v) WOFE will have entered into and consummated a series of agreements (the “Contractual Agreements”), with certain equity owners of Jiaozuo Yida Vegetable Oil Co. Ltd. (“Yida” and, together with BVI-2, HK Corp. and the other direct and indirect subsidiaries of the Company, the “Subsidiaries”); and (c) under the Contractual Agreements, the business of Yida will be conducted by WOFE; and

 

  

1

  

 

WHEREAS, the Subscriber wishes to subscribe for and purchase, and the Company desires to sell to the Subscriber, a Note.

NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter set forth, the parties hereto agree as follows:

1.           Subscription.

(a)           Subject to the terms and conditions hereof, the Company agrees to sell to the Subscriber, and the Subscriber hereby subscribes for, and agrees to purchase from the Company, a Note in the principal amount set forth opposite the Subscriber’s signature at the end of this Agreement (the “Subscription Amount”).  The Subscriber understands that the Company may reject the Subscriber’s subscription in its sole discretion, and that the Company may accept the subscription for a Note in a lesser principal amount than was subscribed for.  This Agreement is not binding on the Company until it is countersigned by the Company, and, whether or not countersigned by the Company, is specifically subject to the provisions of Section 8 hereof.  Except as required under law, subsequent to delivery of the subscription funds and this Agreement to the Company or its designee, this subscription shall be irrevocable.  The Subscriber acknowledges that the Company will incur certain costs and undertake other actions in reliance on such irrevocability.

(b)           Concurrently with the Subscriber’s execution and delivery of this Agreement, the Subscriber is delivering to the Escrow Agent (as defined below) by bank or other good check in lawful funds of the United States, or by wire transfer, the Subscription Amount.  Such funds shall be held in a non-interest bearing escrow account until the closing for such subscription is held, the rejection of the subscription, or the termination the Offering, whichever is earlier, pursuant to an escrow agreement by and among Interwest Transfer Company, as escrow agent (the “Escrow Agent”), the Company, and the Placement Agent (as defined below), a copy of which is attached hereto as Exhibit F (the “Escrow Agreement”).

2.           Representations, Warranties and Covenants of the Subscriber.  The Subscriber hereby represents and warrants to, and agrees with, the Company that:

(a)   Organization and Standing of the Subscriber.   The Subscriber (if an entity) is a corporation, partnership or other entity duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.

(b)   Authorization and Power.   The Subscriber has the requisite power and authority (if an entity) or capacity (if an individual) to enter into and perform this Agreement and the other Transaction Documents (as defined in Section 4(c)) to which it is a party, and to purchase the Note.  The execution, delivery and performance of this Agreement and the other Transaction Documents to which such Subscriber is a party, and the consummation by the Subscriber of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate, partnership, or other entity action (if the Subscriber is an entity), and no further consent or authorization of by or on behalf of the Subscriber is required.  This Agreement and the other Transaction Documents to which the Subscriber is a party have been duly authorized, executed and delivered by the Subscriber and constitute a valid and binding obligation of the Subscriber enforceable against the Subscriber in accordance with its terms.

 

  

2

  

 

(c)   No Conflicts.   The execution, delivery and performance of this Agreement and the other Transaction Documents to which the Subscriber is a party, and the consummation by the Subscriber of the transactions contemplated hereby and thereby do not and will not (i) result in a violation of the Subscriber’s charter documents or bylaws or other organizational documents, if applicable, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument or obligation to which the Subscriber is a party or by which its properties or assets are bound, or result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to the Subscriber or its properties.  The Subscriber is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement and the other Transaction Documents to which it is a party, or to purchase the Note in accordance with the terms hereof, provided that for purposes of the representation made in this sentence, the Subscriber is assuming and relying upon the accuracy of the relevant representations and agreements of the Company herein.

(d)   Acquisition for Investment. The Subscriber is acquiring the Securities solely for the Subscriber’s own account for the purpose of investment and not with a view to, or for resale in connection with, a distribution.  The Subscriber does not have a present intention to sell the Securities, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of the Securities to or through any Person; provided, however, that by making the representations herein and subject to Section 3.2(h) below, the Subscriber does not agree to hold the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with federal and state securities laws applicable to such disposition.  The Subscriber acknowledges that the Subscriber (i) is able to bear the financial risks associated with an investment in the Securities, (ii) has received all information regarding the Company and the Subsidiaries (collectively, the “Combined Company”) as it has deemed necessary or appropriate to conduct the Subscriber’s due diligence investigation, and (iii) has sufficient knowledge and experience in investing in companies similar to the Combined Company, in terms of the Combined Company’s stage of development, so as to be able to evaluate the risks and merits of its investment in the Combined Company.  The Subscriber further acknowledges that the Subscriber understands the risks of investing in companies domiciled, or which operate primarily, in the People’s Republic of China and that the purchase of the Note involves substantial risks.

(e)   Information on the Combined Company.  The Subscriber has received in writing from the Company such information concerning the Combined Company’s operations, financial condition and other matters as the Subscriber has requested in writing (collectively, the “Written Information”), and considered all factors the Subscriber deems material in deciding on the advisability of purchasing the Note the Subscriber is purchasing hereunder.  In making the Subscriber’s investment decision to purchase the Note, the Subscriber is not relying on any oral or written representations or assurances from the Company or any other Person other than as set forth in this Agreement or the other Transaction Documents to which the Subscriber is a party.

 

  

3

  

 

(f)   Opportunities for Additional Information.  The Subscriber acknowledges that the Subscriber has had the opportunity to ask questions of and receive answers, or obtain additional information, from the executive officers of the Combined Company concerning the financial and other affairs of the Combined Company

(g)   Information on Subscriber.   The Subscriber is an “accredited investor” as such term is defined in Regulation D, is experienced in investments and business matters, has made investments of a speculative nature, and has purchased securities of United States publicly-owned companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable the Subscriber to utilize the information made available by the Company to evaluate the merits and risks of, and to make an informed investment decision with respect to, the proposed purchase, which represents a speculative investment.  The Subscriber has the authority and is duly and legally qualified to purchase and own the Note being purchased by the Subscriber hereunder.  The Subscriber is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof. The information set forth on the Subscriber’s signature page hereto regarding the Subscriber is accurate and complete in all respects.

(h)   Compliance with 1933 Act.   The Subscriber understands and agrees that the offer and sale of the Note and the other Securities, have not been registered under the 1933 Act or any applicable state securities laws by reason of their issuance in a transaction that does not require registration under the 1933 Act (based in part on the accuracy of the representations and warranties of the Subscriber contained herein), and that the Securities must be held indefinitely unless their subsequent disposition is registered under the 1933 Act and any applicable state securities laws or is exempt from such registration.  The Subscriber acknowledges that the Subscriber is familiar with Rule 144 promulgated pursuant to the 1933 Act (“Rule 144”), and understands that to the extent that Rule 144 is not available the Subscriber will be unable to sell any of the Securities without either registration of such sale under the 1933 Act or the existence of another exemption from such registration requirement.

(i)   Legend.  The Securities shall bear the following or similar legend:

“THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT, OR OTHERWISE.”

 

  

4

  

 

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

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

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

(m)   Correctness of Representations.  The Subscriber understands that the Note is being offered and sold in reliance on a transactional exemption from the registration requirement of federal and state securities laws, and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Subscriber set forth herein in order to determine the applicability of such exemptions and the suitability of the Subscriber to acquire the Note being purchased by the Subscriber hereunder.

(n)   Short Sales and Confidentiality. Other than the transaction contemplated hereunder, the Subscriber has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Subscriber, executed any disposition, including short sales, in the securities of the Company during the period commencing from the time that the Subscriber first received a term sheet from the Company or any other Person setting forth the material terms of the transactions contemplated hereunder until the date that the transactions contemplated by this Agreement are first publicly announced. The Subscriber covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company, it will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

 

  

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(o)   Regulation S Representations:  If the Subscriber is purchasing the Note pursuant to the exemption provided by compliance with Regulation S:

(i)           The Subscriber is not, and was not at the time the Subscriber was offered the Note, a U.S. Person (as defined in Regulation S);

(ii)           The Subscriber (A) as of the execution date of this Agreement is not located within the United States, and (B) is not purchasing the Note for the account or benefit of any U.S. person except in accordance with one or more available exemptions from the registration requirements of the 1933 Act or in a transaction not subject thereto.

(iii)           The Subscriber will not resell the Note, nor any of the other Securities, except in accordance with the provisions of Regulation S (Rule 901 through 905 and Preliminary Notes thereto), pursuant to a registration under the 1933 Act, or pursuant to an available exemption from registration; and will not engage in hedging transactions with regard to such Securities unless in compliance with the 1933 Act (including Regulation S), the 1934 Act, or the rules and regulations promulgated under either of the foregoing.

 

4.           Company Representations and Warranties.  The Company represents and warrants to the Subscriber that:

(a)           Due Incorporation.  The Company and each Subsidiary is a corporation or other entity duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, and has the requisite corporate power to own its properties and to carry on its business as presently conducted.  The Company and each Subsidiary is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have a Material Adverse Effect.  For purposes of this Agreement, a “Material Adverse Effect” means any material adverse effect on the business, operations, properties, or financial condition of the Company or the Subsidiaries, individually or in the aggregate, or any condition, circumstance, or situation that would prohibit or otherwise interfere with the ability of the Company to perform any of its obligations under this Agreement in any material respect.

(b)           Outstanding Stock; Subsidiaries.  All issued and outstanding shares of capital stock and equity interests in the Company and each Subsidiary have been duly authorized and validly issued and are fully paid and non-assessable.   Assuming the consummation of the Reorganization, except for the Subsidiaries, the Company does not (i) own of record or beneficially, directly or indirectly (or have any obligation, right or option to acquire) (A) any shares of capital stock of any other corporation, or (B) any participating, proprietary, or equity interest in any partnership, limited liability company, joint venture or other entity, or (ii) control, directly or indirectly, any other entity.

 

  

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(c)           Authority; Enforceability.  This Agreement, the Note, the Warrants, the Registration Rights Agreement, the Stock Pledge Agreement, the Non-Recourse Guaranty, and the Escrow Agreement, and any other documents or agreements executed in connection with the transactions contemplated hereunder (collectively, the “Transaction Documents”) have been duly authorized, executed and delivered by the Company and are valid and binding agreements of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity.  The Company has full corporate power and authority necessary to enter into and deliver the Transaction Documents and to perform its obligations thereunder.

 

(d)           Capitalization and Additional Issuances.   The authorized and outstanding capital stock of the Company and each of the Subsidiaries on a fully diluted basis are set forth on Schedule 4(d).  Except as set forth on Schedule 4(d), or otherwise disclosed in this Agreement, there are no options, warrants, or rights to subscribe to, securities, rights, understandings or obligations convertible into or exchangeable for or giving any right to subscribe for any shares of capital stock or other equity interest of the Company or any of the Subsidiaries.  The only officer, director, employee and consultant stock option or stock incentive plan or similar plan currently in effect or contemplated by the Company is described on Schedule 4(d).  There are no outstanding agreements or preemptive or similar rights affecting the Company’s common stock.

 

(e)   Consents.  No consent, approval, authorization or order of any court, governmental agency or body or arbitrator is required for the execution by the Company of the Transaction Documents and compliance and performance by the Company of its obligations under the Transaction Documents, including, without limitation, the issuance and sale of the Note.  The Transaction Documents and the Company’s performance of its obligations thereunder have been unanimously approved by the Company’s Board of Directors.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any governmental authority in the world, including without limitation, the United States, or elsewhere is required by the Company or any Affiliate of the Company in connection with the consummation of the transactions contemplated by this Agreement or the other Transaction Documents other than those which have been obtained.

 

(f)   No Violation or Conflict.  Assuming the representations and warranties of the Subscriber in Section 3 are true and correct, neither the issuance nor sale of the Note nor the delivery of the Warrant or any of the other Securities nor the performance of the Company’s obligations under this Agreement or the other Transaction Documents will:

 

(i)           violate, conflict with, result in a breach of, or constitute a default (or an event which with the giving of notice or the lapse of time or both would be reasonably likely to constitute a default) under (A) the articles or certificate of incorporation, bylaws or other organizational documents of the Company or any Subsidiary, (B) any decree, judgment, order, law, treaty, rule, regulation or determination of any court, governmental agency or body, or arbitrator, or (C) the terms of any bond, debenture, note or any other evidence of indebtedness, or any agreement, stock option or other similar plan, indenture, lease, mortgage, deed of trust or other instrument to which the Company or any of its Affiliates is a party, by which the Company or any of its Affiliates is bound, or to which any of the properties of the Company or any of its Affiliates is subject; or

 

  

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

 

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

 

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

 

(g)           The Securities.  The Securities have been duly authorized and, when issued and paid for (i) will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by or through the Company other than restrictions on transfer provided for in the Transaction Documents, (ii) will not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the Company or rights to acquire securities of the Company, and (iii) will not subject the holders thereof to personal liability by reason of being such holders.  The Company has reserved from its duly authorized capital stock the maximum number of shares of its common stock issuable pursuant to the exercise of the Warrants and the conversion of the Notes.  The Notes and the Warrants, when issued in accordance with this Agreement, will constitute the legal, valid, and binding obligations of the Company, enforceable in accordance with their terms, except as may be limited by bankruptcy, insolvency, or other similar laws affecting the enforcement of creditors' rights in general, and subject to general principles of equity (regardless of whether such enforceability is considered at a proceeding in equity or at law).

 

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

 

(i)   No Market Manipulation.  The Company and its Affiliates have not taken, and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Company’s common stock to facilitate the sale or resale of the Securities or affect the price at which the Securities may be issued or resold.

 

  

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(j)   Information Concerning Company.  Since December 31, 2009, there has been no Material Adverse Effect.

 

(k)           Defaults.  Neither the Company nor any Subsidiary is in violation of its articles of incorporation, bylaws, or other organizational documents.   Neither the Company nor any Subsidiary is (i) in default under or in violation of any other material agreement or instrument to which it is a party or by which it or any of its properties are bound or affected, (ii) in default with respect to any order of any court, arbitrator or governmental body or subject to or party to any order of any court or governmental authority arising out of any action, suit or proceeding under any statute or other law respecting antitrust, monopoly, restraint of trade, unfair competition or similar matters which default would have a Material Adverse Effect, or (iii) in violation of any statute, rule or regulation of any governmental authority which violation would have a Material Adverse Effect.

 

(l)   No Integrated Offering.   Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf, has directly or indirectly made any offers or sales of any security of the Company nor solicited any offers to buy any security of the Company under circumstances that would cause the offer of the Notes pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions.  No prior offering will impair the exemptions relied upon in this Offering or the Company’s ability to timely comply with its obligations hereunder.  Neither the Company nor any of its Affiliates will take any action or steps that would cause the offer or issuance of the Notes to be integrated with other offerings which would impair the exemptions relied upon in this Offering or the Company’s ability to timely comply with its obligations hereunder.  The Company will not conduct any offering other than the transactions contemplated hereby that may be integrated with the offer or issuance of the Notes that would impair the exemptions relied upon in this Offering or the Company’s ability to timely comply with its obligations hereunder.

 

(m)           No General Solicitation.  Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D/Regulation S) in connection with the offer or sale of the Notes.

 

(n)           No Undisclosed Liabilities.  Since December 31, 2009, neither the Company nor any Subsidiary has incurred any liabilities or obligations which are material, individually or in the aggregate, other than those incurred in the ordinary course of their businesses since December 31, 2009, except as disclosed on Schedule 4(n).

 

(o)           No Undisclosed Events or Circumstances.  Since December 31, 2009, no event or circumstance has occurred or exists with respect to the Combined Company or their respective businesses, properties, operations or financial condition, that, under applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof, but which has not been so publicly announced.

 

  

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(p)           Dilution.   The board of directors of the Company has concluded, in its good faith business judgment that the issuance of the Notes and Warrants is in the best interests of the Company. The Company specifically acknowledges that its obligation to issue the Notes, Warrants and the other Securities is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company or parties entitled to receive equity of the Company.

 

(q)           No Disagreements with Accountants and Lawyers.  There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise between the Company or any Subsidiary and the accountants and lawyers previously and presently employed thereby, including, but not limited to, disputes or conflicts over payment owed to such accountants and lawyers, nor have there been any such disagreements during the two years prior to the date hereof, in each case, that could cause a Material Adverse Effect

 

(r)           Foreign Corrupt Practices.  Neither the Company, nor any Subsidiary, nor any agent or other Person acting on behalf of the Company or any Subsidiary (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any Person acting on its behalf) which is  in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(s)           [intentionally left blank]

 

(t)           Environmental Compliance. Since their inception, neither the Company nor the Subsidiaries have been in violation of any applicable law relating to the environment or occupational health and safety, where such violation would have a Material Adverse Effect. The Company and the Subsidiaries (i) are in compliance with any and all Environmental Laws (as hereinafter defined), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval except where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. “Environmental Laws” shall mean all applicable laws relating to the protection of the environment including, without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or threatened releases of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether solid, liquid or gaseous in nature. Other than as disclosed on Schedule 4(t), the Company and each of the Subsidiaries are also in compliance with all other limitations, restrictions, conditions, standards, requirements, schedules and timetables required or imposed under all Environmental Laws.  There are no past or present events, conditions, circumstances, incidents, actions or omissions relating to or in any way affecting the Company or the Subsidiaries that violate or may violate any Environmental Law or that may give rise to any environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (x) under any Environmental Law, or (y) based on or related to the manufacture, processing, distribution, use, treatment, storage (including without limitation underground storage tanks), disposal, transport or handling, or the emission, discharge, release or threatened release of any hazardous substance where, in each of the foregoing clauses (x) and (y), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

  

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(u)           Independent Nature of Subscribers.  The Company acknowledges that the obligations of each Subscriber under the Transaction Documents are several and not joint with the obligations of any other Subscriber, and no Subscriber shall be responsible in any way for the performance of the obligations of any other Subscriber under the Transaction Documents.  The Company acknowledges that the decision of each Subscriber to purchase a Note pursuant to this Agreement has been made by such Subscriber independently of any other Subscriber and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, conditions (financial or otherwise) or prospects of the Company or of the Subsidiaries which may have been made or given by any other Subscriber or by any agent or employee of any other Subscriber, and no Subscriber or any of its agents or employees shall have any liability to any Subscriber (or any other Person) relating to or arising from any such information, materials, statements or opinions.  The Company acknowledges that nothing contained herein or in any of the other Transaction Documents, and no action taken by any Subscriber pursuant hereto or thereto, shall be deemed to constitute the Subscribers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Subscribers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  The Company acknowledges that each Subscriber shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Subscriber to be joined as an additional party in any proceeding for such purpose.

 

(v)           Solvency. Based on the financial condition of the Company after giving effect to the receipt by the Company of the proceeds from the Offering (i) the Company’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

 

  

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(w)           No Brokers.  Neither the Company nor any Subsidiary has taken any action which would give rise to any claim by any Person for brokerage commissions, finder’s fees or similar payments relating to this Agreement or the transactions contemplated hereby, except (i) the Company has retained Primary Capital, LLC as the placement agent for the Offering (the “Placement Agent”), whose commissions and fees will be paid by the Company, and (ii) as set forth on Schedule 4(w).

5.           Regulation D/Regulation S Offering.  The offer and issuance of the Notes, Warrants and other Securities to the Subscribers is being made pursuant to the exemption from the registration provisions of the 1933 Act afforded by Section 4(6) of the 1933 Act, Rule 506 of Regulation D, or Regulation S.  The Company shall approve, or have its designated counsel approve, Rule 144 legal opinion requests from Subscriber’s counsel for removal of restrictive legends to the Securities within three (3) business days of such request being provided to the Company’s transfer agent.

 

6.           Covenants of the Company.  The Company covenants and agrees with the Subscriber as follows:

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

(b)           Use of Proceeds.   The proceeds of the Offering will be employed by the Company for expenses of the Offering and general working capital and, except as described on Schedule 6(b), will not be used for accrued and unpaid officer and director salaries, payment of financing-related debt, redemption of outstanding notes or equity instruments of the Company or non-trade obligations outstanding.

 

 

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

 

  

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(d)           Insurance.  The Company will, and will cause each Subsidiary to, keep its assets which are of an insurable character insured by financially sound and reputable insurers against loss or damage by fire, explosion and other risks customarily insured against by companies in its line of business and location, in amounts and to the extent and in the manner customary for companies in similar businesses similarly situated and located and to the extent available on commercially reasonable terms.

(e)           Books and Records.  The Company will keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to its (and the Subsidiaries) business and affairs in accordance with generally accepted accounting principles applied on a consistent basis.

(f)           Governmental Authorities.  The Company shall, and shall cause each Subsidiary to, duly observe and conform in all material respects to all valid requirements of governmental authorities relating to the conduct of its business or to its properties or assets.

 

(g)           Properties.  The Company will, and will cause each Subsidiary to, keep its properties in good repair, working order and condition, reasonable wear and tear excepted, and from time to time make all necessary and proper repairs, renewals, replacements, additions and improvements thereto; and the Company will, and will cause each Subsidiary to, at all times comply in all material respects with each provision of all leases and claims to which it is a party or under which it occupies or has rights to property.  The Company will not, and will cause each Subsidiary not to, abandon any of its assets, except for those assets which have negligible or marginal value or for which it is prudent to do so under the circumstances.

(h)           Non-Public Information.  The Company covenants and agrees that except for the Written Information and schedules and exhibits to this Agreement and the Transaction Documents, and except for the information as to currently contemplated or negotiated financing transactions, neither it nor any other Person acting on its behalf will at any time provide the Subscriber or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the Subscriber shall have agreed in writing to accept such information.  The Company understands and confirms that the Subscriber shall be relying on the foregoing representations in effecting transactions in securities of the Company.

(i)           Negative Covenants.  From the date of this Agreement until none of the Notes are outstanding, the Company will not and will not permit any of the Subsidiaries, without the written consent of the Subscribers holding a majority in principal amount of outstanding Notes, to directly or indirectly:

(i)           engage in any business other than businesses engaged in or proposed to be engaged in by the Company and the Subsidiaries on the date hereof or businesses similar thereto;

(ii)           merge or consolidate with any Person (other than mergers with  its direct or indirect wholly-owned subsidiaries), or sell, lease or otherwise dispose of its assets other than in the ordinary course of business involving an aggregate consideration of more than ten percent (10%) of the book value of its assets on a consolidated basis in any 12-month period, or liquidate, dissolve, recapitalize or reorganize;

 

  

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(iii)           incur any indebtedness for borrowed money or become a guarantor or otherwise contingently liable for any such indebtedness in excess of one million dollars ($1,000,000), except for obligations incurred in the ordinary course of business, or incur any indebtedness for borrowed money which, by its terms, is senior in right of payment of principal or interest to the Notes;

(iv)           enter into any new agreement or make any amendment to any existing agreement, which by its terms would restrict the Company’s performance of its obligations to holders of the Notes pursuant to this Agreement or any of the other Transaction Documents; or

(v)           enter into any agreement with any holder or prospective holder of any securities of the Company providing for the granting to such holder of registration rights, preemptive rights, special voting rights or protection against dilution.

(j)           Non-Recourse Guaranty; Security for Guaranty.  The repayment of all indebtedness and obligations under the Notes shall be guaranteed by the shareholders set forth on Exhibit C (the “Management Shareholders”) pursuant to a Non-Recourse Guaranty substantially in the form of Exhibit D attached hereto (the “Non-Recourse Guaranty”).  The Management Shareholders’ obligations under the Non-Recourse Guaranty shall be secured by a pledge to Robert Brantl, Esq., as collateral agent for the Subscribers (the “Collateral Agent”), by the Management Shareholders of the number of shares of the Company’s common stock set forth opposite their names on Exhibit C.  The pledge shall be made pursuant to a Stock Pledge Agreement in the form of Exhibit E attached hereto (the “Stock Pledge Agreement”).

(k)           Interest and Expense Escrow.  At the closing of the Offering, $787,500 of the subscription proceeds shall continue to be held by the Escrow Agent in escrow pursuant to the Escrow Agreement to fund the first three interest payments with respect to the Notes and certain expenses associated with any Qualified Financing; provided, however, if less than $4,500,000 in principal amount of the Notes shall be sold at that closing, or if there shall be more than one closing for Notes in the aggregate principal amount of less than $4,500,000, then a pro-rata portion of such escrow amount shall be retained at such closing based on the aggregate principal amount of the Notes sold at such closing; and provided, further, if more than $4,500,000 in principal amount of the Notes shall be sold (at one closing or in the aggregate), then the amount to be retained in such escrow with respect such additional principal amount shall be increased only by the amount of the first three interest payments with respect to such additional principal amount.

(l)           Securities Laws; Disclosure; Press Release.  The Company shall file a Form D with respect to the Notes and the Warrants with the Commission as required under Regulation D.  The Company shall take such action as is necessary to sell the Note, and deliver the Warrant, to the Subscriber under applicable securities laws The Company and the Placement Agent shall consult with each other in connection with issuing any press releases with respect to the transactions contemplated hereby, and the Subscriber shall not issue any such press release or otherwise make any such public statement without the prior written consent of the Company, which consent shall not unreasonably be withheld, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.

 

  

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(m)           Board Seat.  For as long as the Notes are outstanding,  the Company and each of the Subsidiaries shall take all measures reasonably necessary and shall execute all documents required under PRC law to cause a designee of the Placement Agent (on behalf of the Noteholders) to be a member of the Board of Directors of Yida and the Corporate Secretary of HK Corp., with full authority to access the bank accounts of such entities upon the occurrence of, and during the continuance of, an Event of Default (as defined in the Notes).

(n)           Reservation of Common Stock. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, a sufficient number of the shares of its authorized common stock for the issuance upon conversion of all of the Notes (if applicable) and the exercise of all of the Warrants (if applicable).

7.           Survival; Indemnification.

(a)           Survival.  As between the Company and the Subscriber, the representations and warranties of each such party contained herein shall survive for a period of two years after the date on which the Subscriber purchases the Note hereunder.

(b)           Company Indemnity.  The Company agrees to indemnify, hold harmless, reimburse and defend the Subscriber and its officers, directors, agents, Affiliates, members, managers, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Subscriber or any such Person which results, arises out of or is based upon (i) any material misrepresentation by the Company or breach of any representation or warranty by the Company in this Agreement, in any Exhibits or Schedules attached hereto, or in any of the other Transaction Documents, or (ii) after any applicable notice and/or cure periods, any breach or default in performance by the Company of any covenant or undertaking to be performed by the Company hereunder or under any other Transaction Document.

(c)           Subscriber Indemnity.  The Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company, the Company’s officers, directors, agents, Affiliates, and control persons against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon them or any such Person which results, arises out of or is based upon any material misrepresentation by the Subscriber in this Agreement or in any of the other Transaction Documents to which the Subscriber is a party.  Notwithstanding the forgoing, in no event shall the liability of the Subscriber or its permitted successor hereunder, or under any of the other Transaction Documents, exceed such Subscriber’s Subscription Amount.

 

  

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(d)           Indemnity Procedures.  Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, demand, claim, suit or proceeding, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 7(d) and shall only relieve it from any liability which it may have to such indemnified party under this Section 7(d) if and to the extent the indemnifying party is prejudiced by such omission.  In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 7(d) for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected, provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnifying party shall have reasonably concluded that there may be reasonable defenses available to indemnified party which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties, as a group, shall have the right to select one separate counsel, reasonably satisfactory to the indemnified and indemnifying party, and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred.

8.           Conditions Precedent to the Sale and Purchase of a Note.

(a)           Conditions to Obligations of the Subscriber.  The obligation hereunder of the Subscriber to acquire and pay for the Note being purchased hereunder is subject to the satisfaction or waiver of each of the conditions set forth below. These conditions are for the Subscriber’s sole benefit and may be waived by the Subscriber at any time in its sole discretion.

(i)           The representations and warranties of the Company contained in this Agreement shall have been true and correct on the date of this Agreement and shall be true and correct on the date the Reorganization is effectuated (the “Effective Date”) as if given on and as of such Effective Date (except for representations given as of a specific date, which representations shall be true and correct as of such date), and on or before the Effective Date the Company shall have performed all covenants and agreements of the Company contained herein or in any of the other Transaction Documents required to be performed by the Company on or before the Effective Date;

(ii)           The Company shall have completed the Reorganization;

(iii)           The Company shall have executed and delivered to the Subscriber the Registration Rights Agreement in the form attached hereto as Exhibit G (the “Registration Rights Agreement), and the Stock Pledge Agreement;

 

  

16

  

 

(iv)           The Management Shareholders shall have executed and delivered to the Subscriber the Non-Recourse Guaranty and the Stock Pledge Agreement, and delivered the shares of the Company’s common stock being pledged by them pursuant to the Stock Pledge Agreement to the Collateral Agent;

(v)           The Company shall have delivered to the Subscriber a Note in the principal amount of the Subscription Amount, and a Warrant registered in the name of the Subscriber for the applicable number shares of the Company’s common stock; and

(vi)           The Company, the Placement Agent, and the Escrow Agent shall have executed and delivered to the Subscriber the Escrow Agreement, and the Escrow Agent shall have retained the applicable portion of the subscription proceeds for interest and certain expenses as provided in Section 6(k) hereof.

(b)           Conditions to Obligations of the Company. The obligation hereunder of the Company to issue and sell a Note to a Subscriber is subject to the satisfaction or waiver of each of the conditions set forth below.  These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.

(i)           The representations and warranties of the Subscriber in this Agreement and each of the other Transaction Documents to which the Subscriber is a party shall be true and correct in all material respects as of the date when made and as of the Effective Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all material respects as of such date;

(ii)           The Subscription Amount for the Note being purchased by such Subscriber has been delivered to the Escrow Agent; and

(iii)           The Transaction Documents to which the Subscriber is a party have been duly executed and delivered by the Subscriber to the Escrow Agent.

9.   Miscellaneous.

(a)           Notices.  All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service for next Business Day delivery with charges prepaid, or (iv) transmitted by facsimile, addressed as set forth below or to such other address as such party to whom notice is to be given may have furnished to the Company (in the case of notice being given to the Subscriber) or the Subscriber (in the case of notice being given to the Company) in writing in accordance herewith.  Any notice or other communication required or permitted to be given hereunder shall be deemed effective (w) upon hand delivery, (x) upon delivery by facsimile (if delivered on a Business Day during normal business hours where such notice is to be received), or the first Business Day following such delivery (if delivered other than on a Business Day during normal business hours where such notice is to be received), with accurate confirmation generated by the transmitting facsimile machine, (y) in the case of mailing, on the third Business Day following that on which the piece of mail containing such communications is posted, or (z) on the first Business Day following the date of mailing by express courier service. The addresses for such communications shall be:

 

  

17

  

 

If to the Company, to:

China Agricorp, Inc.

Attn: Mr. Feng Hexi, Chairman

Fengshou Road West, Jiefang District

Jiaozuo, He’nan 454000

With a copy by fax only to (which copy shall not constitute notice):

Darren L. Ofsink

GUZOV OFSINK, LLC

600 Madison Avenue

New York, New York  10022

Facsimile:  (212) 688-7273

If to the Subscriber, to the address of such Subscriber listed on its signature page of this Agreement.

(b)           Entire Agreement; Amendment. This Agreement and the other Transaction Documents contain the entire understanding and agreement of the parties with respect to the matters covered hereby and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein.  No provision of this Agreement nor any of the other Transaction Documents may be waived or amended other than by a written instrument signed by the Company and the holders of Notes having an aggregate principal amount of more than fifty percent (50%) of the total principal amount of Notes then outstanding (the “Majority Holders”), except that all of the holders of the Notes must approve an amendment of this Section 9(b).   No such amendment shall be effective to the extent that it applies to less than all of the holders of the Notes then outstanding. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to such Transaction Document.

(c)           Counterparts/Execution.  This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar electronic means with the same force and effect as if such signature page were an original thereof.

 

  

18

  

 

(d)           Law Governing this Agreement.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by any party hereto against another party hereto concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. 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 Documents by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement, and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

(e)           Specific Enforcement, Consent to Jurisdiction.  The Company and the Subscriber acknowledges and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.  Subject to Section 9(d) hereof, the Company and the Subscriber hereby irrevocably waive, and agree not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction in New York of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper.  Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.

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

(g)           Maximum Payments.   Nothing contained herein or in any document referred to herein or delivered in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law.  In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Subscriber and thus refunded to the Company.

(h)           Calendar Days.   All references to “days” in the Transaction Documents shall mean calendar days unless otherwise stated.  Except as used in Section 6(l), the term “business days” shall mean days that the New York Stock Exchange is open for trading for three or more hours. Time periods shall be determined as if the relevant action, calculation or time period were occurring in New York City. Any deadline that falls on a non-Business Day in any of the Transaction Documents shall be automatically extended to the next Business Day and interest, if any, shall be calculated and payable through such extended period.

 

  

19

  

 

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

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

(k)           Lock-up Agreement.  The Subscriber agrees that for 90 days after the effectiveness of the registration statement filed in connection with the initial public offering of the Company’s common stock, or such longer period of time as may agreed to with the Company or the principal underwriter managing such public offering, the Subscriber will not, upon the request of the Company or such underwriter managing, sell, offer for sale, pledge, or otherwise dispose of the shares of Company common stock owned by the Subscriber without the prior written consent of the Company or such underwriter, as the case may be.

[Signature Page Follows]

 

  

20

  

 

SIGNATURE PAGE

This page constitutes the signature page for the Subscription Agreement relating to the offering of 10% Convertible Notes by China Agricorp, Inc.

Principal Amount of Note     $    (the “Subscription Amount”) 

	
___________________________________

	
_____________________________________

	
Signature

	
Signature (if purchasing jointly)

	
 

___________________________________

	
 

_____________________________________

	
Name Typed or Printed

	
Name Typed or Printed

	  	  
	
___________________________________

	
_____________________________________

	
Entity Name

	
Entity Name

	  	  
	
___________________________________

	
_____________________________________

	
Address

	
Address

	  	  
	
___________________________________

	
_____________________________________

	
City, State and Zip Code

	
City, State and Zip Code

	  	  
	
___________________________________

	
_____________________________________

	
Telephone - Business

	
Telephone - Business

	  	  
	
___________________________________

	
_____________________________________

	
Telephone – Residence

	
Telephone – Residence

	  	  
	
___________________________________

	
_____________________________________

	
Facsimile – Business

	
Facsimile - Business

	  	  
	
___________________________________

	
_____________________________________

	
Email

	
Email

	  	  
	
___________________________________

	
_____________________________________

	
Tax ID # or Social Security #

	
Tax ID # or Social Security #

 

Name in which securities should be issued:                                                                           

 

Dated:           ___________, 2010

 

Accepted and agreed to:

 

	CHINA AGRICORP, INC.	 	Principal Amount of Note	 
	 	 	 	 	 
	 	 	 	Accepted:  $_________	 
	By: 	 	 	 	 
	 	Name:	 	Date of Acceptance:  ___________, 2010 	 
	 	Title:	 	 	 

 

                                            

  

21

  

 

SCHEDULE TO SUBSCRIPTION AGREEMENT

 

The following table sets forth for each purchaser, the names of the purchaser, the date of the Subscription Agreement signed by the purchaser and the principal amount of the Note purchase by the purchaser under the Subscription Agreement the purchaser signed:

	  	
Name of Purchaser

	
 Date of Agreement

	
 Principal Amount 

	
1

	
Atlas Tubular. L.P. 

	
8/26/2010

	
 $            50,000.00 

	
2

	
Barry A. Morguelan

	
8/26/2010

	
 $            50,000.00 

	
3

	
Billy or Edda Campbell

	
8/26/2010

	
 $            50,000.00 

	
4

	
Cheryl K. Browning

	
8/26/2010

	
 $            50,000.00 

	
5

	
Craig J. Gordon

	
8/26/2010

	
 $            50,000.00 

	
6

	
Dale Cripps

	
8/26/2010

	
 $            50,000.00 

	
7

	
Daniel W. Gottlieb, M.D.

	
8/26/2010

	
 $          100,000.00 

	
8

	
David J. Beyer

	
8/26/2010

	
 $            50,000.00 

	
9

	
Frank P. Cutrone / Barbara K. Cutrone

	
8/26/2010

	
 $            50,000.00 

	
10

	
Howard Reinsch

	
8/26/2010

	
 $            50,000.00 

	
11

	
John J. DiLorenzo

	
8/26/2010

	
 $            50,000.00 

	
12

	
RBC Capital Markets Corp. Custodian for Matthew Garren (IRA)

	
8/26/2010

	
 $            50,000.00 

	
13

	
RBC Capital Markets custodian for Bruce R. Schafer IRA

	
8/26/2010

	
 $            25,000.00 

	
14

	
Richard G. Kramer

	
8/26/2010

	
 $            50,000.00 

	
15

	
Robert T. Cleveland or Glenna Cleveland

	
8/26/2010

	
 $          100,000.00 

	
16

	
Robert V. Baylis

	
8/26/2010

	
 $            50,000.00 

	
17

	
Ron Dilks

	
8/26/2010

	
 $            50,000.00 

	
18

	
Scott Sammis

	
8/26/2010

	
 $            50,000.00 

	
19

	
Scott Sammis and Suzanne Patrola

	
8/26/2010

	
 $            50,000.00 

	
20

	
Steven Hribar

	
8/26/2010

	
 $            50,000.00 

	
21

	
Troy T. Palmer

	
8/26/2010

	
 $            50,000.00 

	
22

	
John W. Trone

	
8/26/2010

	
 $            50,000.00 

	
23

	
Ulif Sorvik

	
8/26/2010

	
 $            50,000.00 

	
24

	
Tommy I. Dilling

	
8/26/2010

	
 $            15,000.00 

	
25

	
Timothy O'Donnell

	
8/26/2010

	
 $            10,000.00 

	
26

	
PK Solutions AB

	
8/26/2010

	
 $            10,000.00 

	
27

	
Olive or Twist Limited

	
8/26/2010

	
 $            30,000.00 

	
28

	
Minti Global Investments

	
8/26/2010

	
 $          500,000.00 

	
29

	
Kentlof Holdings, Ltd. 

	
8/26/2010

	
 $          150,000.00 

	
30

	
Kari Ekholm

	
8/26/2010

	
 $            35,000.00 

	
31

	
J&J Ventures, Limited

	
8/26/2010

	
 $            40,000.00 

	
32

	
Joachim Jaginder

	
8/26/2010

	
 $            10,000.00 

	
33

	
Jan Eric Palmqvist

	
8/26/2010

	
 $            20,000.00 

 

  

22

  

 

 

	
34

	
Jakob Anders Lindquist

	
8/26/2010

	
 $            80,000.00 

	
35

	
Henrik Gumaelius

	
8/26/2010

	
 $            30,000.00 

	
36

	
Heinrich H. Foerster

	
8/26/2010

	
 $            25,000.00 

	
37

	
Garolf AB

	
8/26/2010

	
 $            50,000.00 

	
38

	
Enebybergs Revisionbyra AB

	
8/26/2010

	
 $            50,000.00 

	
39

	
Peter Gustafsson

	
8/26/2010

	
 $            10,000.00 

	
40

	
Peter J.L. Lawrence

	
8/26/2010

	
 $            40,000.00 

	41	Arthur A.Mitchell Jr.	9/30/2010	 $            25,000.00 
	 
42

	Richmond Capital LP	9/30/2010	 $          150,000.00 
	 
43

	Issc Management, Inc.	9/30/2010	 $            25,000.00 
	 
44

	Randall Toig Trust	9/30/2010	 $            50,000.00 
	45	Linda Alexander	9/30/2010	 $            25,000.00 
	46	RBC Capital Markets Corp. Custodian Craig Frankson IRA	9/30/2010	 $            25,000.00 
	47	RBC Capital Markets Corp. Custodian Charlene Frankson IRA	9/30/2010	 $            25,000.00 
	48	RBC Capital Markets Corp. Custodian Daniel & Deborah Gibson IRA	9/30/2010	 $            75,000.00 
	49	Vincent Cafici	9/30/2010	 $            25,000.00 
	
50

	
RBC Capital Markets Corp. Custodian William Scott Hine IRA

	
9/30/2010

	
 $            25,000.00 

	
51

	
Wade M. & Tracey L. Harris

	
9/30/2010

	
 $            50,000.00 

	
52

	
RBC Capital Markets Corp. Custodian Scott R. Schneider IRA

	
9/30/2010

	
 $            25,000.00 

	 
53

	Scott Forsberg	 
9/30/2010

	 
 $            50,000.00 

	 
54

	Steven T. & Renee B. Stubbs	 
10/8/2010

	 
 $            25,000.00 

 

 

23

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