Exhibit 10.4

 

SHAREHOLDER PLEDGE AGREEMENT

 

SHAREHOLDER PLEDGE AGREEMENT (this “Agreement”), dated as of May __, 2020, made
by Yongquan Bi, a natural person, with a principal address at 1-5-1 19 Wenxing
ST Ganjingzi district Dalian City Liaoning Province PR China (the “Pledgor”),
BOQI International Medical Inc., a Delaware corporation with offices located at
Room 3601, Building A, Harbour View Place, No. 2 Wuwu Road, Zhongshan District,
Dalian, Liaoning Province, P. R. China, 116000 (the “Company”) and the secured
parties listed on the signature pages hereof (collectively, the “Secured
Parties” and each, individually, a “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, the Company and each of the Secured Parties are parties to the
Securities Purchase Agreement, dated as of May 18, 2020 (as amended, restated or
otherwise modified from time to time, the “Securities Purchase Agreement”),
pursuant to which the Company has agreed to sell, and the Secured Parties has
agreed to purchase, the Notes (as defined in the Securities Purchase Agreement)
and the Warrants (as defined Securities Purchase Agreement); and

 

WHEREAS, in order to induce the Secured Parties to purchase, severally and not
jointly, the Notes and Warrants as provided for in the Securities Purchase
Agreement, the Pledgor has agreed to grant each Secured Party a separate,
continuing security interest in and to the Pledged Collateral (as defined below)
in order to secure the prompt and complete payment, observance and performance
of the Secured Obligations (as defined below).

 

NOW, THEREFORE, for and in consideration of the recitals made above and other
good and valuable consideration, the receipt, sufficiency and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1. Definitions and Rules of Interpretation.

 

(a) Definitions. Reference is made to the Securities Purchase Agreement and the
Notes for a statement of terms thereof. All terms used in this Agreement which
are defined in the Securities Purchase Agreement or the Notes or in Article 8 or
Article 9 of the Uniform Commercial Code as in effect from time to time in the
State of New York (the “Code”) and which are not otherwise defined herein shall
have the same meanings herein as set forth therein; provided, that terms used
herein which are defined in the Code as in effect in the State of New York on
the date hereof shall continue to have the same meaning notwithstanding any
replacement or amendment of such statute except as the Secured Parties holding a
majority of the Secured Obligations then outstanding (the “Required Holders”)
may otherwise determine. In the event that any such term is defined in both the
Securities Purchase Agreement, the Notes and the Code, the definition of such
term in the Securities Purchase Agreement or the Notes shall control.

 

(b) Rules of Interpretation. Except as otherwise expressly provided in this
Agreement, the following rules of interpretation apply to this Agreement: (i)
the singular includes the plural and the plural includes the singular; (ii) “or”
and “any” are not exclusive and “include” and “including” are not limiting;
(iii) a reference to any agreement or other contract includes permitted
supplements and amendments; (iv) a reference to a law includes any amendment or
modification to such law and any rules or regulations issued thereunder; (v) a
reference to a person includes its permitted successors and assigns; and (vi) a
reference in this Agreement to an Article, Section, Annex, Exhibit or Schedule
is to the Article, Section, Annex, Exhibit or Schedule of this Agreement.

 

 

 

 

SECTION 2. Pledge and Grant of Security Interest. As collateral security for all
of the Secured Obligations (as defined in Section 3 hereof), the Pledgor hereby
pledges and assigns and grants to each Secured Party a separate, continuing
security interest in, and Lien on, all of his right, title and interest in and
to the following (collectively, the “Pledged Collateral”):

 

(a) The Pledgor’s shares of Common Stock of the Company as set forth in Schedule
I (as such Schedule is amended from time to time in accordance with the terms
hereof), and all future, issued and outstanding share capital, or other equity
or investment securities of, or partnership, membership, or joint venture
interests in, the Company that are required to be pledged from time to time in
accordance with the terms hereof including without limitation, any Additional
Pledged Shares required to be pledged in accordance with Section 4(a) of this
Agreement, whether now owned or hereafter acquired by the Pledgor and whether or
not evidenced or represented by any share certificate, certificated security or
other instrument, together with the certificates representing such equity
interests, all options and other rights, contractual or otherwise, in respect
thereof and all dividends, distributions, cash, instruments, investment property
and any other property (including, but not limited to, any share dividend and
any distribution in connection with a share split) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the foregoing and all cash and noncash proceeds thereof (collectively, the
“Pledged Shares”);

 

(b) all present and future increases, profits, combinations, reclassifications,
and substitutes and replacements for all or part of the foregoing Pledged Shares
heretofore described;

 

(c) all investment property, financial assets, securities, share capital, other
equity interests, share options and commodity contracts of the Pledgor, all
notes, debentures, bonds, promissory notes or other evidences of indebtedness
payable or owing to the Pledgor, and all other assets now or hereafter received
or receivable with respect to the foregoing;

 

(d) all securities entitlements of the Pledgor in any and all of the foregoing;
and

 

(e) all proceeds (including proceeds of proceeds) of any and all of the
foregoing;

 

in each case, whether now owned or hereafter acquired by the Pledgor and
howsoever his interest therein may arise or appear (whether by ownership,
security interest, Lien, claim or otherwise).

 

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SECTION 3. Security for Secured Obligations. The security interest created
hereby in the Pledged Collateral constitutes continuing collateral security for
the prompt payment and due performance and observance of all of the following
Secured Obligations (the “Secured Obligations”):

 

(a) all liabilities, obligations, or undertakings owing by the Company to the
Secured Parties of any kind or description arising out of or outstanding under,
advanced or issued pursuant to, or evidenced by the Securities Purchase
Agreement, the Notes, the Warrants or any of the other Transaction Documents,
and

 

(b) all liabilities, obligations, or undertakings owing by Pledgor to the
Secured Parties under this Agreement, in each case with respect to the foregoing
liabilities, obligations or undertakings, irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, liquidated
or unliquidated, determined or undetermined, due or to become due, voluntary or
involuntary, whether now existing or hereafter arising, and including all
interest, costs, indemnities, fees (including attorneys fees), and expenses
(including interest, costs, indemnities, fees, and expenses that, but for the
provisions of the Bankruptcy Code, would have accrued irrespective of whether a
claim therefor is allowed) and any and all other amounts which Company or
Pledgor is required to pay pursuant to any of the foregoing, by law, or
otherwise.

 

SECTION 4. Delivery of the Pledged Collateral.

 

(a) The fair market value of the Pledged Shares held by any Secured Party as of
any time of determination shall equal the product of (i) the aggregate number of
shares of Common Stock pledged to such Secured Party hereunder and (ii) the
quotient of (x) the sum of the two (2) lowest VWAP (as defined in the Notes) of
the shares of Common Stock during the five (5) Trading Day period immediately
prior to such time of determination, divided by (y) two (2) (subject to
adjustment for any share splits, share dividends, share combinations,
recapitalizations and similar events during such measuring period) (the “Pledged
Share Value”) and shall at all times equal or exceed the aggregate principal
amount outstanding under the Note (whether or not then due and payable) of such
Secured Party. The Pledgor shall, within five business days following the
receipt of notice from such Secured Party that the Pledged Share Value is less
than the aggregate principal amount outstanding under the Note of such Secured
Party, deliver additional shares (“Additional Pledged Shares”) to such Secured
Party in accordance with the terms of this Section 4 such that the Pledged Share
Value (taking into account the fair market value of such Additional Pledged
Shares) shall be no less than the aggregate principal amount outstanding under
the Note.

 

(b) In accordance with the terms and conditions set forth in the Securities
Purchase Agreement, the Pledgor shall deliver to each of the Secured Parties as
of date hereof a certificate with respect to the Pledged Shares to be initially
held by such Security Party in such amounts as set forth on Schedule I attached
hereto. As of any given date, with respect to all other promissory notes,
certificates and instruments constituting Pledged Collateral from time to time
or required to be pledged to the Secured Parties pursuant to the terms of this
Agreement or the Securities Purchase Agreement, including without limitation,
any Additional Pledged Shares required to be pledged in accordance with Section
4(a) above (collectively the “Additional Collateral”) such amount equal to a
fraction (i) the numerator of which is the principal amount of such Secured
Party’s Note on such given date and (ii) the denominator of which is the
aggregate principal amount of all Notes outstanding as of such given date (the
“Secured Party Pro Rata Amount”) of such Additional Collateral shall be
delivered to each Secured Party promptly upon receipt thereof by or on behalf of
the Pledgor. All such promissory notes, certificates and instruments shall be
held by each Secured Party pursuant hereto and shall be delivered in suitable
form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment or undated share powers executed in blank,
all in form and substance reasonably satisfactory to the Secured Parties. If any
Pledged Collateral consists of uncertificated securities, unless the immediately
following sentence is applicable thereto, the Pledgor shall cause the applicable
Secured Party (or its designated custodian, nominee or other designee) to become
the registered holder thereof, or cause each issuer of such securities to agree
that it will comply with instructions originated by the applicable Secured Party
(or its designated custodian, nominee or other designee), with respect to such
securities without further consent by the Pledgor. If any Pledged Collateral
consists of securities entitlements, the Pledgor shall transfer the applicable
Secured Party Pro Rata Amount of such securities entitlements to each Secured
Party (or its designated custodian, nominee or other designee) or cause the
applicable securities intermediary to agree that it will comply with entitlement
orders by such Secured Party (or its designated custodian, nominee or other
designee) without further consent by the Pledgor.

 

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(c) Promptly upon the receipt by the Pledgor of any Additional Collateral and
contemporaneously with any delivery of Additional Pledged Shares in accordance
with Section 4(a), a Pledge Amendment, duly executed by the Pledgor, in
substantially the form of Annex I hereto (a “Pledge Amendment”), shall be
delivered to each Secured Party, in respect of the Additional Collateral which
is or are to be pledged pursuant to this Agreement and the Securities Purchase
Agreement, which Pledge Amendment shall from and after delivery thereof
constitute part of Schedule I hereto. The Pledgor hereby authorizes each Secured
Party to attach each Pledge Amendment to this Agreement and agrees that all
promissory notes, certificates or instruments listed on any Pledge Amendment
shall for all purposes hereunder constitute Pledged Collateral and the Pledgor
shall be deemed upon delivery thereof to have made the representations and
warranties set forth in Section 6 with respect to such Additional Collateral.

 

(d) If the Pledgor shall receive, by virtue of the Pledgor’s being or having
been an owner of any Pledged Collateral, any (i) share certificate (including,
without limitation, any certificate representing a share dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
share split, spin-off or split-off), promissory note or other instrument, (ii)
option or right, whether as an addition to, substitution for, or in exchange
for, any Pledged Collateral, or otherwise, (iii) dividends payable in cash
(except such dividends permitted to be retained by the Pledgor pursuant to
Section 8 hereof) or in securities or other property or (iv) dividends,
distributions, cash, instruments, investment property and other property in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus (collectively,
the “Distribution Collateral”), the Pledgor shall hold such Distribution
Collateral in trust for the benefit of the Secured Parties, shall segregate it
from the Pledgor’s other property and shall deliver the applicable Secured Party
Pro Rata Amount of such Distribution Collateral forthwith to each Secured Party
in the exact form received, with any necessary endorsement and/or appropriate
share powers duly executed in blank, to be held by the each Secured Party as
Pledged Collateral and as further collateral security for the Secured
Obligations.

 

(e) So long as no Event of Default (as defined in the Notes) or breach of any
covenant in any Transaction Document (as defined in the Securities Purchase
Agreement) has occurred or is continuing, on each six month anniversary of the
Closing Date (as defined in the Securities Purchase Agreement) each Secured
Party shall release the lesser of (x) 1/3rd of such aggregate number of Pledge
Shares initially pledged by Pledgor to such Secured Party hereunder and (y) the
aggregate number of Pledge Shares then held by such Secured Party, if any.

 

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SECTION 5. Taxes.

 

(a) All payments made by the Pledgor hereunder or under any other Transaction
Document shall be made in accordance with the terms of the respective
Transaction Document and shall be made without set-off, counterclaim, deduction
or other defense. All such payments shall be made free and clear of and without
deduction for any present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on the net income of any Secured Party by the jurisdiction in which such
Secured Party is organized or where it has its principal lending office (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively or individually, “Taxes”). If the Pledgor shall be
required to deduct or to withhold any Taxes from or in respect of any amount
payable hereunder or under any other Transaction Document:

 

(i) the amount so payable shall be increased to the extent necessary so that
after making all required deductions and withholdings (including Taxes on
amounts payable to any Secured Party pursuant to this sentence) each Secured
Party receives an amount equal to the sum it would have received had no such
deduction or withholding been made,

 

(ii) the Pledgor shall make such deduction or withholding,

 

(iii) the Pledgor shall pay the full amount deducted or withheld to the relevant
taxation authority in accordance with applicable law, and

 

(iv) as promptly as possible thereafter, the Pledgor shall send the Secured
Parties an official receipt (or, if an official receipt is not available, such
other documentation as shall be satisfactory to the Secured Parties, as the case
may be) showing payment.  In addition, the Pledgor agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, this Agreement or any other Transaction Document (collectively, “Other
Taxes”).

 

(b) The Pledgor hereby indemnifies and agrees to hold each Secured Party (each
an “Indemnified Party”) harmless from and against Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 5) paid by any Indemnified
Party  as a result of any payment made hereunder or from the execution,
delivery, registration or enforcement of, or otherwise with respect to, this
Agreement or any other Transaction Document, and any liability (including
penalties, interest and expenses for nonpayment, late payment or otherwise)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted.  This indemnification shall be paid
within 30 days from the date on which such Secured Party makes written demand
therefor, which demand shall identify the nature and amount of such Taxes or
Other Taxes.

 

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(c) If the Pledgor fails to perform any of its obligations under this Section 5,
the Pledgor shall indemnify each Secured Party for any taxes, interest or
penalties that may become payable as a result of any such failure. The
obligations of the Pledgor under this Section 5 shall survive the termination of
this Pledge Agreement and the payment of the Obligations and all other amounts
payable hereunder.

 

SECTION 6. Representations and Warranties. The Pledgor represents and warrants
as follows:

 

(a) The Pledgor has the legal capacity and all requisite power and authority to
execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly executed and delivered by the Pledgor and constitutes a
legal, valid and binding obligation of the Pledgor, enforceable against the
Pledgor in accordance with its terms, except (a) as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws now or hereafter in effect relating to,
or affecting generally, the enforcement of creditors’ and other obligees’ rights
and (b) where the remedy of specific performance or other forms of equitable
relief may be subject to certain equitable defenses and principles and to the
discretion of the court before which the proceeding may be brought.

 

(b) The Pledged Shares have been duly authorized and validly issued, are fully
paid and nonassessable and the holders thereof are not entitled to any
preemptive first refusal or other similar rights. All other shares constituting
Pledged Collateral will be, when issued, duly authorized and validly issued,
fully paid and nonassessable.

 

(c) The Pledgor is and will be at all times the legal and beneficial owner of
the Pledged Collateral free and clear of any Lien, security interest, option or
other charge or encumbrance except for the security interest and Lien created by
this Agreement or any Permitted Liens.

 

(d) The exercise by any Secured Party of any of its rights and remedies
hereunder will not contravene any law or any contractual restriction binding on
or affecting the Pledgor or any of the properties of the Pledgor and will not
result in or require the creation of any Lien, security interest or other charge
or encumbrance upon or with respect to any of the properties of the Pledgor
other than pursuant to this Agreement and the other Transaction Documents, as
defined in the Securities Purchase Agreement.

 

(e) No authorization or approval or other action by, and no notice to or filing
with, any governmental authority is required to be obtained or made by the
Pledgor for (i) the due execution, delivery and performance by the Pledgor of
this Agreement, (ii) the grant by the Pledgor, or the perfection, of the
security interest and Lien purported to be created hereby in the Pledged
Collateral or (iii) the exercise by any Secured Party of any of its rights and
remedies hereunder, except as may be required in connection with any sale of any
Pledged Collateral by laws affecting the offering and sale of securities
generally.

 

(f) This Agreement creates a valid security interest and Lien in favor of the
Secured Parties in the Pledged Collateral, as security for the Secured
Obligations. Each Secured Party having possession of the certificates
representing the Pledged Shares and all other certificates, instruments and cash
constituting Pledged Collateral from time to time results in the perfection of
such security interest and Lien. Such security interest and Lien is, or in the
case of Pledged Collateral in which the Pledgor obtains rights after the date
hereof, will be, a perfected Lien, subject only to the Permitted Liens. All
action necessary or desirable to perfect and protect such security interest and
Lien has been duly taken, except for such Secured Party’s having possession of
certificates, instruments and cash constituting Pledged Collateral after the
date hereof.

 

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SECTION 7. Covenants as to the Pledged Collateral. So long as any Secured
Obligations shall remain outstanding, the Pledgor will, unless the Required
Holders, shall otherwise consent in writing:

 

(a) keep adequate records concerning the Pledged Collateral and permit the
Secured Parties, or any designees or representatives thereof at any time or from
time to time during reasonable hours after prior written notice to examine and
make copies of and abstracts from such records;

 

(b) at the Pledgor’s expense, promptly deliver to each Secured Party a copy of
each material notice or other material communication received by the Pledgor in
respect of the Pledged Collateral;

 

(c) at the Pledgor’s expense, defend each Secured Party’s right, title and
security interest in and to the Pledged Collateral against the claims of any
Person;

 

(d) at the Pledgor’s expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or desirable or that any Secured Party may
reasonably request in order to (i) perfect and protect, or maintain the
perfection of, the security interest and Lien purported to be created hereby,
(ii) enable such Secured Party to exercise and enforce its rights and remedies
hereunder in respect of the Pledged Collateral or (iii) otherwise effect the
purposes of this Agreement, including, without limitation, delivering to such
Secured Party irrevocable proxies in respect of the Pledged Collateral;

 

(e) not sell, assign (by operation of law or otherwise), exchange or otherwise
dispose of any Pledged Collateral or any interest therein except as expressly
permitted by the Securities Purchase Agreement or the Notes;

 

(f) not create or suffer to exist any Lien, upon or with respect to any Pledged
Collateral except for the Lien created hereby or for any Permitted Lien;

 

(g) not make or consent to any amendment or other modification or waiver with
respect to any Pledged Collateral or enter into any agreement or permit to exist
any restriction with respect to any Pledged Collateral;

 

(h) except as expressly permitted by the Securities Purchase Agreement, not
permit the issuance of (i) any additional shares of any class of share capital,
partnership interests, member interests or other equity of the Company, (ii) any
securities convertible voluntarily by the holder thereof or automatically upon
the occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such shares of share capital or (iii) any warrants, options, contracts
or other commitments entitling any Person to purchase or otherwise acquire any
such shares of share capital;

 

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(i) not issue any share certificate, certificated security or other instrument
to evidence or represent any share capital, any partnership interest or
membership interest described in Schedule I hereto; and

 

(j) not take or fail to take any action which would in any manner impair the
validity or enforceability of each Secured Party’s security interest in and Lien
on any Pledged Collateral.

 

SECTION 8. Voting Rights, Dividends, Etc. in Respect of the Pledged Collateral.

 

(a) So long as no Event of Default shall have occurred and be continuing:

 

(i) the Pledgor may exercise any and all voting and other consensual rights
pertaining to any Pledged Collateral for any purpose not inconsistent with the
terms of this Agreement, the Securities Purchase Agreement or the Notes;

 

(ii) the Pledgor may receive and retain any and all dividends, interest or other
distributions paid in respect of the Pledged Collateral to the extent permitted
by the Securities Purchase Agreement; provided, however, that any and all (A)
dividends and interest paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise distributed in
respect of or in exchange for, any Pledged Collateral, (B) dividends and other
distributions paid or payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, and (C) cash
paid, payable or otherwise distributed in redemption of, or in exchange for, any
Pledged Collateral, together with any dividend, distribution, interest or other
payment which at the time of such dividend, distribution, interest or other
payment was not permitted by the Securities Purchase Agreement, shall be, and
shall forthwith be delivered to each Secured Party in proportion to their
Secured Party Pro Rata Amount to hold as, Pledged Collateral and shall, if
received by the Pledgor, be received in trust for the benefit of such Secured
Party, shall be segregated from the other property or funds of the Pledgor, and
shall be forthwith delivered to such Secured Party in the exact form received
with any necessary indorsement and/or appropriate share powers duly executed in
blank, to be held by such Secured Party as Pledged Collateral and as further
collateral security for the Secured Obligations; and

 

(iii) each Secured Party will execute and deliver (or cause to be executed and
delivered) to the Pledgor all such proxies and other instruments as the Pledgor
may reasonably request for the purpose of enabling the Pledgor to exercise the
voting and other rights which it is entitled to exercise pursuant to paragraph
(i) of this Section 8(a) and to receive the dividends, distributions, interest
and other payments which it is authorized to receive and retain pursuant to
paragraph (ii) of this Section 8(a), in each case, to the extent that such
Secured Party has possession of such Pledged Collateral.

 

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(b) Upon the occurrence and during the continuance of an Event of Default (as
defined in the Notes) (an “Event of Default”):

 

(i) all rights of the Pledgor to exercise the voting and other consensual rights
which he would otherwise be entitled to exercise pursuant to paragraph (i) of
subsection (a) of this Section 8, and to receive the dividends, distributions,
interest and other payments which he would otherwise be authorized to receive
and retain pursuant to paragraph (ii) of subsection (a) of this Section 8, shall
cease, and all such rights shall thereupon become vested in each Secured Party
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such dividends,
distributions, interest and other payments;

 

(ii) without limiting the generality of the foregoing, each Secured Party may at
his option exercise any and all rights of conversion, exchange, subscription or
any other rights, privileges or options pertaining to any of the Pledged
Collateral as if it were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all of the Pledged
Collateral upon the merger, consolidation, reorganization, recapitalization or
other adjustment of any issuer of the Pledged Collateral or upon the exercise by
any issuer of the Pledged Collateral of any right, privilege or option
pertaining to any Pledged Collateral, and, in connection therewith, to deposit
and deliver any and all of the Pledged Collateral with any committee,
depository, transfer agent, registrar or other designated agent upon such terms
and conditions as the Secured Parties may determine; and

 

(iii) all dividends, distributions, interest and other payments which are
received by the Pledgor contrary to the provisions of paragraph (i) of this
Section 8(b) shall be received in trust for the benefit of the Secured Parties,
shall be segregated from other funds of the Pledgor, and shall be forthwith paid
over to the Secured Parties in proportion to the applicable Secured Party Pro
Rata Amount as Pledged Collateral in the exact form received with any necessary
indorsement and/or appropriate share powers duly executed in blank, to be held
by such Secured Party as Pledged Collateral and as further collateral security
for the Secured Obligations.

 

SECTION 9. Additional Provisions Concerning the Pledged Collateral.

 

(a) The Pledgor hereby (i) authorizes the Secured Parties to file one or more
financing or continuation statements, and amendments thereto, relating to the
Pledged Collateral, without the signature of the Pledgor where permitted by law,
(ii) ratifies such authorization to the extent that the Secured Parties has
filed any such financing or continuation statements, or amendments thereto,
without the signature of the Pledgor prior to the date hereof and (iii)
authorizes each Secured Party to execute any agreements, instruments or other
documents in the Pledgor’s name and to file such agreements, instruments or
other documents that are related to the security interest and Lien of each
Secured Party in the Pledged Collateral or as provided under Article 8 or
Article 9 of the Code or any other applicable uniform commercial code or other
law in any appropriate filing office. Notwithstanding anything to the contrary
contained herein, no Secured Party shall have any responsibility for the
preparing, recording, filing, re-recording, or re-filing of any financing
statement, continuation statement or other instrument in any public office.

 

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(b) The Pledgor hereby irrevocably appoints each Secured Party as his
attorney-in-fact and proxy, with full authority in the place and stead and in
his name or otherwise, from time to time in the Secured Parties’ discretion to
take any action and to execute any instrument which the Secured Parties may deem
necessary or advisable to accomplish the purposes of this Agreement (subject to
the rights of the Pledgor under Section 8(a) hereof), including, without
limitation, to receive, indorse and collect all instruments made payable to the
Pledgor representing any dividend, interest payment or other distribution in
respect of any Pledged Collateral and to give full discharge for the same. This
power is coupled with an interest and is irrevocable until the termination of
this Agreement.

 

(c) If the Pledgor fails to perform any agreement or obligation contained
herein, each Secured Party may perform, or cause performance of, such agreement
or obligation, and the expenses of such Secured Party incurred in connection
therewith shall be payable by the Pledgor pursuant to Section 11 hereof and
shall be secured by the Pledged Collateral.

 

(d) Other than the exercise of reasonable care to assure the safe custody of the
Pledged Collateral while held hereunder, no Secured Party shall have any duty or
liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it or tendering
surrender of it to any of the Pledgor. Each Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which such Secured Party accords its own property,
it being understood that no Secured Party shall have responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether
or not such Secured Party has or is deemed to have knowledge of such matters, or
(ii) taking any necessary steps to preserve rights against any parties with
respect to any Pledged Collateral. Each Secured Party agrees that, with respect
to any Pledged Collateral at any time or times in its possession and in which
any other Secured Party has a Lien, the Secured Party in possession of any such
Pledged Collateral shall be the bailee of each other Secured Party solely for
purposes of perfecting (to the extent not otherwise perfected) each other
Secured Party’s Lien in such Pledged Collateral, provided that no Secured Party
shall be obligated to obtain or retain possession of any such Pledged
Collateral. Without limiting the generality of the foregoing, Secured Parties
and Pledgor hereby agree that any Secured Party that is in possession of any
Pledged Collateral at such time as the Secured Obligations owing to such Secured
Party have been paid in full may deliver such Pledged Collateral to the Company
or, if requested by any Secured Party prior to such delivery, may deliver such
Pledged Collateral (unless otherwise restricted by applicable law or court order
and subject in all events to the receipt of an indemnification of all
liabilities arising from such delivery) to the requesting Secured Party, without
recourse to or representation or warranty by the Secured Party in such
possession. No later than the third business day after the Company’s receipt of
such Pledged Collateral, the Company shall deliver to each Secured Party with
Secured Obligations then outstanding the applicable Secured Party Pro Rata
Amount of such Pledged Collateral.

 

(e) The powers conferred on each Secured Party hereunder are solely to protect
its interest in the Pledged Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Pledged Collateral
in its possession and the accounting for monies actually received by it
hereunder, no Secured Party shall have any duty as to any Pledged Collateral or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Pledged Collateral.

 

10

 

 

(f) Upon the occurrence and during the continuation of any Default or Event of
Default, each Secured Party may at any time in its discretion (i) without notice
to the Pledgor, transfer or register in the name of such Secured Party or any of
its nominees any or all of the Pledged Collateral, subject only to the revocable
rights of the Pledgor under Section 8(a) hereof, and (ii) exchange certificates
or instruments constituting Pledged Collateral for certificates or instruments
of smaller or larger denominations.

 

SECTION 10. Remedies Upon Default. If any Event of Default shall have occurred
and be continuing:

 

(a) Each Secured Party may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party on default under the
Code then in effect in the State of New York; and without limiting the
generality of the foregoing and without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker’s board or elsewhere, at such price or
prices and on such other terms as such Secured Party may deem commercially
reasonable. The Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days’ notice to any of the Pledgor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. No Secured Party shall be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. Each Secured Party may adjourn any public or private sale by
such Secured Party from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.

 

(b) The Pledgor recognizes that it may be impracticable to effect a public sale
of all or any part of the Pledged Shares or any other securities constituting
Pledged Collateral and that each Secured Party may, therefore, determine to make
one or more private sales of any such securities to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
securities for its own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that any such private
sale may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sales shall be deemed to
have been made in a commercially reasonable manner and that no Secured Party
shall have any obligation to delay sale of any such securities for the period of
time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act of 1933, as amended (the
“Securities Act”). The Pledgor further acknowledges and agrees that any offer to
sell such securities which has been (i) publicly advertised on a bona fide basis
in a newspaper or other publication of general circulation in the financial
community of New York, New York (to the extent that such an offer may be so
advertised without prior registration under the Securities Act) or (ii) made
privately in the manner described above to not less than fifteen (15) bona fide
offerees shall be deemed to involve a “public disposition” for the purposes of
Section 9-610 of the Code (or any successor or similar, applicable statutory
provision) as then in effect in the State of New York, notwithstanding that such
sale may not constitute a “public offering” under the Securities Act, and that
any Secured Party may, in such event, bid for the purchase of such securities.

 

11

 

 

(c) Any cash held by any Secured Party as Pledged Collateral and all cash
proceeds received by such Secured Party in respect of any sale of, collection
from, or other realization upon, all or any part of the Pledged Collateral shall
be applied (after payment of any amounts payable to such Secured Party pursuant
to Section 11 hereof) by such Secured Party against, all or any part of the
Secured Obligations in such order as such Secured Party shall elect consistent
with the provisions of the Securities Purchase Agreement.

 

(d) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which any Secured Party is legally
entitled, the Pledgor shall be jointly and severally liable for the deficiency,
together with interest thereon at the highest rate specified in the Notes for
interest on overdue principal thereof or such other rate as shall be fixed by
applicable law, together with the costs of collection and the reasonable fees,
costs and expenses of any attorneys employed by such Secured Party to collect
such deficiency.

 

SECTION 11. Indemnity and Expenses.

 

(a) The Pledgor hereby agrees to indemnify and hold each Secured Party (and all
of its officers, directors, employees, attorneys, consultants) harmless from and
against any and all claims, damages, losses, liabilities, obligations,
penalties, fees, costs and expenses (including, without limitation, reasonable
legal fees and disbursements of counsel) to the extent that they arise out of or
otherwise result from this Agreement (including, without limitation, enforcement
of this Agreement), except claims, losses or liabilities arising or resulting
directly from such Person’s gross negligence or willful misconduct as determined
by a court of competent jurisdiction.

 

(b) The Pledgor shall be obligated for, and will upon demand pay to each Secured
Party the reasonable amount of any and all out-of-pocket costs and expenses,
including the reasonable fees and disbursements of such Secured Party’s counsel
and of any experts which such Secured Party may incur in connection with (i) the
preparation, negotiation, execution, delivery, recordation, administration,
amendment, waiver or other modification or termination of this Agreement, (ii)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of such Secured Party hereunder, or (iv) the
failure by the Pledgor to perform or observe any of the provisions hereof.

 

SECTION 12. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), sent by Federal Express or other
recognized courier service (return receipt requested), telecopied or delivered,
if to the Pledgor, to him at the address specified in the Securities Purchase
Agreement or if to the Secured Parties, to it at the address specified in the
Securities Purchase Agreement; or as to either such Person at such other address
as shall be designated by such Person in a written notice to such other Person
complying as to delivery with the terms of this Section 12. All such notices and
other communications shall be effective (i) if sent by certified mail, postage
prepaid, return receipt requested, when received or three (3) Business Days
after mailing, whichever first occurs, (ii) if telecopied, when transmitted and
confirmation is received, provided same is on a Business Day and, if not, on the
next Business Day or (iii) if delivered or sent by Federal Express or other
recognized courier service (return receipt requested), upon delivery, provided
same is on a Business Day and, if not, on the next Business Day.

 

12

 

 

SECTION 13. Security Interest Absolute. All rights of the Secured Parties, all
Liens and all obligations of the Pledgor hereunder shall be absolute and
unconditional irrespective of: (i) any lack of validity or enforceability of the
Securities Purchase Agreement, the Notes or any other Transaction Document, (ii)
any change in the time, manner or place of payment of, or in any other term in
respect of, all or any of the Secured Obligations, or any other amendment or
waiver of or consent to any departure from the Securities Purchase Agreement,
the Notes or any other Transaction Document, (iii) any exchange or release of,
or non-perfection of any Lien on any Collateral, or any release or amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Secured Obligations, or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Pledgor in respect of
the Secured Obligations (other than the payment in full of the Secured
Obligations or complete conversion to equity securities of the Company of all
indebtedness obligations owed by the Company to the Secured Parties under the
Notes (including, without limitation, all principal, interest and fees related
to the Notes)). All authorizations and agencies contained herein with respect to
any of the Pledged Collateral are irrevocable and powers coupled with an
interest.

 

SECTION 14. Beneficial Ownership. Each Secured Party shall not have the right to
exercise its rights under this Agreement and any such exercise shall be null and
void and treated as if never made, to the extent that after giving effect to
such exercise, such applicable Secured Party together with its other Attribution
Parties collectively would beneficially own in excess of 4.99% (the “Maximum
Percentage”) of the shares of Common Stock outstanding immediately after giving
effect to such exercise. For purposes of the foregoing sentence, the aggregate
number of shares of Common Stock beneficially owned by a Secured Party and its
other Attribution Parties shall include the number of shares of Common Stock
held by such Secured Party and all its other Attribution Parties plus the number
of shares of Common Stock to be acquired by such Secured Party with respect to
which the determination of such sentence is being made, but shall exclude the
remaining shares of Common Stock pledged to such Secured Party that are not then
being acquired upon such Secured Party’s exercise of its right hereunder and any
shares of Common Stock which would be issuable upon (A) conversion of the
remaining, nonconverted portion of the Note beneficially owned by such Secured
Party or any its other Attribution Parties, (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any convertible notes or convertible preferred
shares or warrants, including, without limitation, the Warrants) beneficially
owned by such Secured Party or any its other Attribution Party subject to a
limitation on conversion or exercise analogous to the limitation contained in
this Section 14. For purposes of this Section 14, beneficial ownership shall be
calculated in accordance with Section 13(d) of the 1934 Act. For purposes of
determining the number of outstanding shares of Common Stock a Secured Party may
acquire upon exercise of its rights hereunder at any time of determination
without exceeding the Maximum Percentage, each Secured Party may rely on the
number of outstanding shares of Common Stock as reflected in (x) the Company’s
most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K or other public filing with the SEC, as the case may be, (y)
a more recent public announcement by the Company or (z) any other written notice
by the Company or the Transfer Agent, if any, setting forth the number of shares
of Common Stock outstanding (the “Reported Outstanding Share Number”). For any
reason at any time, upon the written or oral request of a Secured Party, the
Company shall within one (1) Business Day confirm orally and in writing or by
electronic mail to such Secured party the number of shares of Common Stock then
outstanding. In the event that the exercise of rights by a Secured Party
hereunder and transfer of shares of Common Stock from the Pledgor to such
Secured Party hereunder would result in such Secured Party and its other
Attribution Parties being deemed to beneficially own, in the aggregate, more
than the Maximum Percentage of the number of outstanding shares of Common Stock
(as determined under Section 13(d) of the 1934 Act), the transfer from the
Pledgor to such Secured Party of such number of shares by which such Secured
Party’s and its other Attribution Parties’ aggregate beneficial ownership
exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and
void and shall be cancelled ab initio, and such Secured Party shall not have the
power to vote or to transfer the Excess Shares. Upon delivery of a written
notice to the Company, a Secured Party may from time to time increase (with such
increase not effective until the sixty-first (61st) day after delivery of such
notice) or decrease the Maximum Percentage to any other percentage not in excess
of 9.99% as specified in such notice; provided that (i) any such increase in the
Maximum Percentage will not be effective until the sixty-first (61st) day after
such notice is delivered to the Company and (ii) any such increase or decrease
will apply only to such Secured Party and its other Attribution Parties and not
to any other Secured Party that is not an Attribution Party of such Secured
Party. For purposes of clarity, the shares of Common Stock in excess of the
Maximum Percentage shall not be deemed to be beneficially owned by such Secured
Party for any purpose including for purposes of Section 13(d) or Rule
16a-1(a)(1) of the 1934 Act. No prior inability of a Secured Party to exercise
its rights hereunder and acquire any shares of Common Stock from the Pledger to
such Secured Party pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of transferability. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 14 to the extent necessary to correct this paragraph
(or any portion of this paragraph) which may be defective or inconsistent with
the intended beneficial ownership limitation contained in this Section 14 or to
make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor Secured Party.

 

13

 

 

SECTION 15. Acknowledgment.

 

(a) Each Secured Party hereby agrees and acknowledges that no other Secured
Party has agreed to act for it as an administrative or collateral agent, and
each Secured Party is and shall remain solely responsible for the attachment,
perfection and priority of all Liens created by this Agreement or any other
Security Document in favor of such Secured Party. No Secured Party shall have by
reason of this Agreement or any other Transaction Document an agency or
fiduciary relationship with any other Secured Party. No Secured Party (which
term, as used in this sentence, shall include reference to each Secured Party’s
officers, directors, employees, attorneys, agents and affiliates and to the
officers, directors, employees, attorneys and agents of such Secured Party’s
affiliates) shall: (i) have any duties or responsibilities except those
expressly set forth in this Agreement and the other Security Documents or
(ii) be required to take, initiate or conduct any enforcement action (including
any litigation, foreclosure or collection proceedings hereunder or under any of
the other Security Documents). Without limiting the foregoing, no Secured Party
shall have any right of action whatsoever against any other Secured Party as a
result of such Secured Party acting or refraining from acting hereunder or under
any of the Security Documents except as a result and to the extent of losses
caused by such Secured Party’s actual gross negligence or willful misconduct. No
Secured Party assumes any responsibility for any failure or delay in performance
or breach by the Pledgor or any Secured Party of its obligations under this
Agreement or any other Transaction Document. No Secured Party makes to any other
Secured Party any express or implied warranty, representation or guarantee with
respect to any Secured Obligations, Pledged Collateral, Transaction Document or
the Pledgor. No Secured Party nor any of its officers, directors, employees,
attorneys or agents shall be responsible to any other Secured Party or any of
its officers, directors, employees, attorneys or agents for: (i) any recitals,
statements, information, representations or warranties contained in any of the
Transaction Documents or in any certificate or other document furnished pursuant
to the terms hereof; (ii) the execution, validity, genuineness, effectiveness or
enforceability of any of the Transaction Documents; (iii) the validity,
genuineness, enforceability, collectability, value, sufficiency or existence of
any Pledged Collateral, or the attachment, perfection or priority of any Lien
therein; or (iv) the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of the Pledgor. No
Secured Party nor any of its officers, directors, employees, attorneys or agents
shall have any obligation to any other Secured Party to ascertain or inquire
into the existence of any default or Event of Default, the observance or
performance by the Pledgor of any of the duties or agreements of the Pledgor
under any of the Transaction Documents or the satisfaction of any conditions
precedent contained in any of the Transaction Documents.

 

(b) Each Secured Party hereby acknowledges and represents that it has,
independently and without reliance upon any other Secured Party, and based upon
such documents, information and analyses as it has deemed appropriate, made its
own credit analysis of the Pledgor and the Company and its own decision to enter
into the Transaction Documents and to purchase the Notes and Warrants, and
each Secured Party has made such inquiries concerning the Transaction Documents,
the Pledged Collateral, the Company and the Pledgor as such Secured Party feels
necessary and appropriate, and has taken such care on its own behalf as would
have been the case had it entered into the Transaction Documents without any
other Secured Party. Each Secured Party hereby further acknowledges and
represents that the other Secured Parties have not made any representations or
warranties to it concerning the Pledgor, any of the Pledged Collateral or the
legality, validity, sufficiency or enforceability of any of the Transaction
Documents. Each Secured Party also hereby acknowledges that it will,
independently and without reliance upon the other Secured Parties, and based
upon such financial statements, documents and information as it deems
appropriate at the time, continue to make and rely upon its own credit decisions
in taking or refraining to take any other action under this Agreement or the
Transaction Documents. No Secured Party shall have any duty or responsibility to
provide any other Secured Party with any notices, reports or certificates
furnished to such Secured Party by the Pledgor or any credit or other
information concerning the affairs, financial condition, business or assets of
the Company (or any of its affiliates) or any Pledgor which may come into
possession of such Secured Party

 

14

 

 

SECTION 16. Miscellaneous.

 

(a) No amendment of any provision of this Agreement shall be effective unless it
is in writing and signed by the Pledgor and the Required Holders, and no waiver
of any provision of this Agreement, and no consent to any departure by the
Pledgor therefrom, shall be effective unless it is in writing and signed by the
Required Holders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

 

(b) No failure on the part of any Secured Party to exercise, and no delay in
exercising, any right hereunder or under any other Transaction Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies of the Secured Parties provided herein and
in the other Transaction Documents are cumulative and are in addition to, and
not exclusive of, any rights or remedies provided by law. The rights of the each
Secured Party under any Transaction Document against any party thereto are not
conditional or contingent on any attempt by such Secured Party to exercise any
of its rights under any other Transaction Document against such party or against
any other Person.

 

(c) Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.

 

(d) This Agreement shall create a continuing security interest in and Lien on
the Pledged Collateral and shall (i) remain in full force and effect until the
termination of this Agreement in accordance with the terms hereof and (ii) be
binding on the Pledgor and his heirs and assigns and shall inure, together with
all rights and remedies of each Secured Party and its successors, transferees
and assigns. Without limiting the generality of clause (ii) of the immediately
preceding sentence, each Secured party may assign or otherwise transfer its
rights and obligations under this Agreement and any other Transaction Document
to any other Person pursuant to the terms of the Securities Purchase Agreement,
and such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to such Secured Party herein or otherwise. Upon any such
assignment or transfer, all references in this Agreement to such Secured Party
shall mean the assignee of such Secured Party. None of the rights or obligations
of the Pledgor hereunder may be assigned or otherwise transferred without the
prior written consent of the Required Holders, and any such assignment or
transfer without such consent shall be null and void.

 

(e) Notwithstanding anything to the contrary in this Agreement, (i) this
Agreement (along with all powers of attorney granted hereunder) and the security
interests and Lien created hereby shall terminate and all rights to the Pledged
Collateral shall revert to the Pledgor upon the repayment in full and/or
complete conversion to equity securities of the Company of all indebtedness
obligations owed by the Company to the Secured Parties under the Notes
(including, without limitation, all principal, interest and fees related to the
Notes), and (ii) the Secured Parties will, upon the Pledgor’s request and at the
Pledgor’s expense, (A) return to the Pledgor such of the Pledged Collateral (to
the extent delivered to such Secured Party) as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof, and (B) execute
and deliver to the Pledgor, without recourse, representation or warranty, such
documents as the Pledgor shall reasonably request to evidence such termination.

 

(f) The internal laws, and not the laws of conflicts, of the State of New York
shall govern the enforceability and validity of this Agreement, the construction
of its terms and the interpretation of the rights and duties of the parties,
except as required by mandatory provisions of law and except to the extent that
the validity and perfection or the perfection and the effect of perfection or
non-perfection of the security interest and Lien created hereby, or remedies
hereunder, in respect of any particular Pledged Collateral are governed by the
law of a jurisdiction other than the State of New York.

 

15

 

 

(g) Each party to this Agreement hereby irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of the United States
District Court for the Southern District of New York sitting in Manhattan or the
Commercial Division, Civil Branch of the Supreme Court of the State of New York
sitting in New York County in connection with any suit, action or proceeding
directly or indirectly arising out of, under or in connection with this
Agreement or the other Transaction Documents or the transactions contemplated
hereby or thereby. No party to this Agreement may move to (i) transfer any such
suit, action or proceeding brought in such New York court or federal court to
another jurisdiction, (ii) consolidate any such suit, action or proceeding
brought in such New York court or federal court with a suit, action or
proceeding in another jurisdiction or (iii) dismiss any such suit, action or
proceeding brought in such New York court or federal court for the purpose of
bringing the same in another jurisdiction. Each party to this Agreement agrees
that a final judgment in any such suit, action or proceeding shall be conclusive
and may be enforced in any other jurisdiction by suit on the judgment or in any
other manner provided by law. Each party to this Agreement hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement,
or the other Transaction Documents in any New York court sitting in New York
County or any federal court sitting in the Southern District of New York. The
choice of laws of the State of New York as the governing law of this Agreement
will be honored by competent courts in the People’s Republic of China, subject
to compliance with relevant People’s Republic of China civil procedural
requirements. The Pledgor or any of its properties, assets (including, without
limitation, the Pledged Shares) or revenues does not have any right of immunity
under the People’s Republic of China or New York law, from any legal action,
suit or proceeding, from the giving of any relief in any such legal action, suit
or proceeding, from set-off or counterclaim, from the jurisdiction of the
People’s Republic of China, New York or United States federal court, from
service of process, attachment upon or prior to judgment, or attachment in aid
of execution of judgment, or from execution of a judgment, or other legal
process or proceeding for the giving of any relief or for the enforcement of a
judgment, in any such court, with respect to its obligations, liabilities or any
other matter under or arising out of or in connection with this Agreement; and,
to the extent that the Pledgor, or any of its properties, assets (including,
without limitation, the Pledged Shares) or revenues may have or may hereafter
become entitled to any such right of immunity in any such court in which
proceedings may at any time be commenced, the Pledgor hereby waives such right
to the extent permitted by law and hereby consents to such relief and
enforcement as provided in this Agreement and the other Transaction Documents.

 

(h) The Company hereby appoints Corporation Service Company as its agent for
service of process in New York. The Pledgor hereby appoints Corporation Service
Company as its agent for service of process in New York. Nothing contained
herein shall affect the right of each Secured Party to serve process in any
other manner permitted by law or commence legal proceedings or otherwise proceed
against the Pledgor or any property of the Pledgor in any other jurisdiction.

 

(i) The Pledgor irrevocably and unconditionally waives any right he may have to
claim or recover in any legal action, suit or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

 

16

 

 

(j) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR OTHER TRANSACTION DOCUMENTS.

 

(k) The headings herein are for convenience only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

 

(l) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together shall constitute one and the
same agreement.

 

[Signature Page Follows]

  

17

 

 

In Witness Whereof, the Pledgor, the Company and the Secured Parties have
executed and delivered this Agreement as of the date first above written.

 

  PLEDGOR:           Yongquan Bi

  

18

 

 

In Witness Whereof, the Pledgor, the Company and the Secured Parties have
executed and delivered this Agreement as of the date first above written.

 

  SECURED PARTY:         CVI INVESTMENTS, INC.         By:       Name:      
Title:

 

19

 

 

In Witness Whereof, the Pledgor, the Company and the Secured Parties have
executed and delivered this Agreement as of the date first above written.

 

  SECURED PARTY:       HUDSON BAY MASTER FUND LTD         By:       Name:      
Title:

 

 

20

 

 

In Witness Whereof, the Pledgor, the Company and the Secured Parties have
executed and delivered this Agreement as of the date first above written.

 

  COMPANY:       BOQI INTERNATIONAL MEDICAL INC.         By:       Name:  Tiewei
Song     Title:  CEO

 

 

21

 

 

SCHEDULE I TO PLEDGE AGREEMENT

 

Pledged Shares

Pledgor  Name of Issuer  Number of Shares   % Ownership of Outstanding Shares  
Class  Secured Party
 to Initially
Hold Certificate with respect to such
Pledged Shares Yongquan Bi  BOQI INTERNATIONAL MEDICAL INC.
   375,000    4.13%  Common Stock  CVI Investments Inc. Yongquan Bi  BOQI
INTERNATIONAL MEDICAL INC.
   375,000    4.13%  Common Stock  CVI Investments Inc. Yongquan Bi  BOQI
INTERNATIONAL MEDICAL INC.
   375,000    4.13%  Common Stock  Hudson Bay Master Fund Ltd Yongquan Bi  BOQI
INTERNATIONAL MEDICAL INC.
   375,000    4.13%  Common Stock  Hudson Bay Master Fund Ltd

 

22

 

 

ANNEX I

 

TO

 

PLEDGE AGREEMENT

 

PLEDGE AMENDMENT

 

This Pledge Amendment, dated ●, 20●, is delivered pursuant to Section 4 of the
Pledge Agreement referred to below. The undersigned hereby agrees that this
Pledge Amendment may be attached to the Amended and Restated Pledge Agreement,
dated as of April __, 2019, made by ___________ in favor of the secured parties
signatory thereto (the “Secured Parties”) as it may heretofore have been or
hereafter may be amended or otherwise modified or supplemented from time to time
and that the Pledged Shares (or other equity interest) listed on this Pledge
Amendment shall be hereby pledged and assigned to the Secured Parties and become
part of the Pledged Collateral referred to in such Pledge Agreement and shall
secure all of the obligations referred to in such Pledge Agreement.

 

Pledged Shares

 

Pledgor   Name of Issuer   Number of Shares   Class   Certificate No(s)        
         

 

  PLEDGOR:         [                    ]

 

 

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