Unassociated Document


     

    MAKE
      GOOD ESCROW AGREEMENT 

     

    This
      Make
      Good Escrow Agreement (the "Make
      Good Agreement"),
      dated
      effective as of May 30, 2008, is entered into by and among Genesis
      Pharmaceuticals Enterprises, Inc, a Florida corporation
      (the
      "Company"), the Investors (as defined below), Pope Investments LLC, a Delaware
      limited liability company, as representative of the Investors (the “Investor
      Representative”)
      Wubo
      Cao, in his individual capacity ("Make
      Good Pledgor")
      and
      Loeb & Loeb LLP, as escrow agent ("Escrow
      Agent").
      

     

    WHEREAS,
      each of the investors in the private offering of securities of the Company
      (the
      "Investors")
      has
      entered into a Securities Purchase Agreement, dated May 30, 2008 (the
      "SPA"),
      evidencing their participation in the Company's private offering (the
      "Offering")
      of
      securities;

     

    WHEREAS,
      as an inducement to the Investors to participate in the Offering and as set
      forth in the SPA, Make Good Pledgor has agreed to place certain shares of the
      Company’s common stock, par value $0.001 per share (the “Common
      Stock”)
      owned
      by him into escrow for the benefit of the Investors in the event the Company
      fails to satisfy certain financial thresholds;

     

    WHEREAS,
      pursuant to the requirements of the SPA, the Company and Make Good Pledgor
      have
      agreed to establish an escrow on the terms and conditions set forth in this
      Make
      Good Agreement; 

     

    WHEREAS,
      the Escrow Agent has agreed to act as escrow agent pursuant to the terms and
      conditions of this Make Good Agreement; and 

     

    WHEREAS,
      all capitalized terms used but not defined herein shall have the meanings
      assigned them in the SPA; 

     

    NOW,
      THEREFORE, in consideration of the mutual promises of the parties and the terms
      and conditions hereof, the parties hereby agree as follows: 

     

    1.
      Appointment of Escrow Agent.
      Make
      Good Pledgor and the Company hereby appoint Escrow Agent to act in accordance
      with the terms and conditions set forth in this Make Good Agreement, and Escrow
      Agent hereby accepts such appointment and agrees to act in accordance with
      such
      terms and conditions. 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.
      Establishment of Escrow.
      Within
      30 days following the Closing, Make Good Pledgor shall deliver, or cause to
      be
      delivered, to the Escrow Agent certificates evidencing an aggregate of
      150,000,000 shares of the Company’s Common Stock owned by him (the "Escrow
      Shares"),
      along
      with bank signature stamped stock powers executed in blank (or such other signed
      instrument of transfer acceptable to the Company’s Transfer Agent). As used in
      this Make Good Agreement, “Transfer
      Agent”
means
      Computershare Trust Company, or such other entity hereafter retained by the
      Company as its stock transfer agent as specified in a writing from the Company
      to the Escrow Agent. The Make Good Pledgor understands and agrees that the
      Investors’ right to receive 2008 Make Good Shares (as defined below), and the
      2009 Make Good Shares (as defined below) pursuant to Section 4.11 of the SPA
      and
      this Make Good Agreement shall continue to run to the benefit of each Investor
      even if such Investor shall have transferred or sold all or any portion of
      its
      Notes, and that each Investor shall have the right to assign its rights to
      receive all or any such shares of Common Stock to other Persons in conjunction
      with negotiated sales or transfers of any of its Notes. The Make Good Pledgor
      hereby irrevocably agrees that other than in accordance with Section 4.11 of
      the
      SPA and this Make Good Agreement, the Make Good Pledgor will not offer, pledge,
      sell, contract to sell, sell any option or contract to purchase, purchase any
      option or contract to sell, grant any option, right or warrant to purchase
      or
      otherwise transfer or dispose of, directly or indirectly, or announce the
      offering of any of the Escrow Shares (including any securities convertible
      into,
      or exchangeable for, or representing the rights to receive Escrow Shares).
      In
      furtherance thereof, the Company will (x) place a stop order on all Escrow
      Shares covered by any registration statements, (y) notify the Transfer Agent
      in
      writing of the stop order and the restrictions on such Escrow Shares under
      this
      Make Good Agreement and direct the Transfer Agent not to process any attempts
      by
      the Make Good Pledgor or the Company, as applicable to resell or transfer any
      Escrow Shares under such registration statements or otherwise in violation
      of
      Section 4.11 of the SPA and this Make Good Agreement . If within thirty (30)
      days following the Closing, the
      Make
      Good Pledgor and the Company each shall
      not
      have deposited the 2008 Make Good Shares and the 2009 Make Good Shares into
      escrow in accordance with this Make Good Agreement along with bank signature
      stamped stock powers executed in blank (or such other signed instrument of
      transfer reasonably acceptable to the Company’s transfer agent), then, upon
      written demand from an Investor, the Company shall promptly, and in any event
      within thirty (30) days from the date of such written demand, pay to that
      Investor, as liquidated damages, an amount (the liquidated damages payable
      under
      this Section 2 shall
      be
      independent of any other damages payable under this Make Good Agreement or
      any
      other Transaction Document)
      equal
      to that Investor’s entire Investment Amount without interest thereon. As a
      condition to the receipt of such payment, the Investor shall return to the
      Company for cancellation the certificates evidencing the Notes and the Warrants
      acquired by the Investor under the SPA. The Company shall notify the Investors
      as soon as the 2008 Make Good Shares and the 2009 Make Good Shares have been
      deposited with the Escrow Agent. 

     

    3. Representations
      of Make Good Pledgor and the Company.
      Make
      Good Pledgor and the Company hereby represent and warrant, severally and not
      jointly, as to itself only, to the Investors as follows: 

     

    (i)
      All
      of the Escrow Shares are validly issued, fully paid and nonassessable shares
      of
      the Company, free and clear of all pledges, liens and encumbrances. Upon any
      transfer of Escrow Shares to Investors hereunder, Investors will receive full
      right, title and authority to such shares as holders of Common Stock of the
      Company. 

     

    
      
        
        

      

      
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    (ii) Performance
      of this Make Good Agreement and compliance with the provisions hereof will
      not
      violate any provision of any applicable law and will not conflict with or result
      in any breach of any of the terms, conditions or provisions of, or constitute
      a
      default under, or result in the creation or imposition of any lien, charge
      or
      encumbrance upon, any of the properties or assets of Make Good Pledgor or the
      Company pursuant to the terms of any indenture, mortgage, deed of trust or
      other
      agreement or instrument binding upon Make Good Pledgor the Company , other
      than
      such breaches, defaults or liens which would not have a material adverse effect
      taken as a whole. 


     

    4.
      Disbursement of Escrow Shares.

     

    a. The
      Make
      Good Pledgor agrees
      that in
      the
      event that either (i) the earnings before taxes ,calculated in accordance with
      GAAP, as reported in the Annual Report on Form 10-K (or such other form
      appropriate for such purpose as promulgated by the Commission) of the Company
      for the fiscal year ending June 30, 2008, as filed with the Commission (the
      “2008
      Annual Report”)
      plus
      (w)
      non-cash charges associated with the Company’s previous convertible debt and
      warrant issuances, (x) all costs and expenses associated with the transactions
      contemplated by the SPA and the other Transaction Documents, including, all
      costs and non-cash charges associated with the exercise of the Warrants and
      (y)
      all costs and expenses associated with the settlement of all legal and other
      matters pertaining to the Company prior to or in connection with the completion
      of the Exchange (collectively, the “Exchange
      Costs”),
      if the
      Make Good Pledgor has delivered to the Investors shares of the Common Stock
      owned by him as and if required in accordance with Section 4.11A of the SPA
      less
      (z) all
      extraordinary gains, including but not limited to one time asset sales and
      accounting changes (“2008
      EBT”)
      is
      less than $26,700,000 (“2008
      Guaranteed EBT”),
      or
      (ii)
      the fully diluted earnings before taxes per share, calculated by dividing 2008
      EBT by the weighted average number of fully diluted shares of Common Stock
      outstanding (which number shall not include (x) the 20,000,000 shares of Common
      Stock held in escrow pursuant to the November 2007 Transaction Documents unless
      and until such shares are released from escrow to the investors parties to
      the
      November 2007 Securities Purchase Agreement and (y) shares of Common Stock
      which
      are issuable pursuant to any liquidated damages provision set forth in the
      November 2007 Transaction Documents unless and until an event occurs which
      requires the issuance of such shares of Common Stock) (“2008
      Diluted EBT”)
      is
      less than $0.040 (“2008
      Guaranteed Diluted EBT”),
      the
      Escrow Agent (on behalf of the Make Good Pledgor) will
      transfer all of the 2008 Make Good Shares to the Investors on a pro rata
      basis
      (determined by dividing each Investor’s Investment Amount by the aggregate of
      all Investment Amounts delivered to the Company by the Investors under the
      SPA)
      for no consideration other than payment of their respective Investment Amount
      paid at Closing.
      The
“2008
      Make Good Shares”
means
      the 60,000,000 shares of Common Stock (as
      equitably adjusted for any stock splits, stock combinations, stock dividends
      or
      similar transactions)
      required
      to be deposited with the Escrow Agent pursuant to the terms of this Make Good
      Agreement.
      The
      Make
      Good Pledgor agrees
      that in
      the
      event that either (i) the earnings before taxes ,calculated in accordance with
      GAAP, as reported in the Annual Report on Form 10-K (or such other form
      appropriate for such purpose as promulgated by the Commission) of the Company
      for the fiscal year ending June 30, 2009, as filed with the Commission (the
      “2009
      Annual Report”)
      plus
      (w)
      non-cash charges associated with the Company’s previous convertible debt and
      warrant issuances, (x) all costs and expenses associated with the transactions
      contemplated by the SPA and the other Transaction Documents, including, all
      costs and non-cash charges associated with the exercise of the Warrants and
      (y)
      all Exchange Costs, if the Make Good Pledgor has delivered to the Investors
      shares of the Common Stock owned by him as and if required in accordance with
      Section 4.11A of the SPA less
      , (z)
      all extraordinary gains, including but not limited to one time asset sales
      and
      accounting changes (“2009
      EBT”)
      is
      less than $38,400,000 (“2009
      Guaranteed EBT”),
      or
      (ii) the fully diluted earnings before taxes per share, calculated by dividing
      2009 EBT by the weighted average number of fully diluted shares of Common Stock
      outstanding (which number shall not include (x) the 20,000,000 shares of Common
      Stock held in escrow pursuant to the November 2007 Transaction Documents unless
      and until such shares have been released from escrow to the investors parties
      to
      the November 2007 Securities Purchase Agreement and (y) shares of Common Stock
      which are issuable pursuant to any liquidated damages provision set forth in
      the
      November 2007 Transaction Documents unless and until, an event occurs which
      requires the issuance of such shares of Common Stock) (“2009
      Diluted EBT”)
      is
      less than $0.058 (or $0.056 if such 20,000,000 shares of Common Stock held
      in
      escrow pursuant to the November 2007 Transaction Documents have been released
      from escrow to the investors parties to the November 2007 Securities Purchase
      Agreement) (“2009
      Guaranteed Diluted EBT”),
      the
      Escrow Agent (on behalf of the Make
      Good
      Pledgor)
      will
      transfer all of the 2009 Make Good Shares to the Investors on a pro rata basis
      (determined by dividing each Investor’s Investment Amount by the aggregate of
      all Investment Amounts delivered to the Company by the Investors under the
      SPA)
      for no consideration other than payment of their respective Investment Amount
      paid at Closing. The “2009 Make Good Shares” means the 90,000,000 shares of
      Common Stock (as
      equitably adjusted for any stock splits, stock combinations, stock dividends
      or
      similar transactions)
      required
      to be deposited with the Escrow Agent pursuant to the terms of this Make Good
      Agreement. Notwithstanding
      anything to the contrary contained herein, in determining
      whether the Company has achieved any of the 2008
      Guaranteed EBT, the 2008 Guaranteed Diluted EBT, the 2009 Guaranteed EBT or
      the
      2009 Guaranteed Diluted EBT,
      the
      Company may disregard any compensation charge or expense required to be
      recognized by the Company under GAAP resulting from
      the
      release of the 2008 Make Good Shares or 2009 Make Good Shares (as relevant)
      to
Make
      Good
      Pledgor if and to the extent such charge or expense is specified in the
      Company’s independent auditor’s report for the relevant year, as filed with the
      Commission.
      In
      the
      event that 2008 EBT is equal to or greater than 2008 Guaranteed EBT and 2008
      Diluted EBT is equal to or greater than the 2008 Guaranteed Diluted
      EBT,
      no
      transfer of the 2008 Make Good Shares shall be required by the Make
      Good
      Pledgor
      to the
      Investors under this Section and such 2008 Make Good Shares shall be returned
      to
      the Make
      Good
      Pledgor
      in
      accordance with this Make Good Agreement. In
      the
      event that 2009 EBT is equal to or greater than the 2009 Guaranteed EBT and
      2009
      EBT is equal to or greater than 2009 Guaranteed Diluted EBT,
      no
      transfer of the 2009 Make Good Shares shall be required by the Make
      Good
      Pledgor
      to the
      Investors under this Section and such 2009 Make Good Shares shall be returned
      to
      the Make
      Good
      Pledgor
      in
      accordance with this Make Good Agreement. 
      Any such
      transfer of the 2008 Make Good Shares or the 2009 Make Good Shares under this
      Section shall be made to the Investors or the Make Good Pledgor, as applicable,
      within 10
      Business Days after
      the date
which
      the
      2008
      Annual Report or 2009 Annual Report, as applicable, is filed with the Commission
      and otherwise in accordance with this Make Good Agreement. In
      the
      event that 2008 EBT is less than 2008 Guaranteed EBT, or 2008 Diluted EBT is
      less than 2008 Guaranteed Diluted EBT, the Company has agreed that the Investor
      Representative will provide prompt written instruction to the Escrow Agent
      with
      regard to the distribution of the 2008 Make Good Shares in an amount to each
      Investor as set forth on Exhibit
      A
      attached
      hereto (as determined as set forth above). In
      the
      event that 2009 EBT is less than 2009 Guaranteed EBT, or 2009 Diluted EBT is
      less than 2009 Guaranteed Diluted EBT, the
      Company has agreed that the Investor Representative will provide prompt written
      instruction to the Escrow Agent with regard to the distribution of the 2009
      Make
      Good Shares in an amount to each Investor as set forth on Exhibit
      A
      attached
      hereto (as determined as set forth above). The Escrow Agent need only rely
      on
      the letter of instruction from the Investor Representative in this regard and
      notwithstanding anything to the contrary contained herein will disregard any
      contrary instructions. In
      the
      event that 2008 EBT is equal to or greater than 2008 Guaranteed EBT and 2008
      Guaranteed Diluted EBT is equal to or greater than 2008 Guaranteed Diluted
      EBT,
      the Investor Representative shall provide prompt written instructions to the
      Escrow Agent for the release of the 2008 Make Good Shares to the Make Good
      Pledgor. In
      the
      event that 2009 EBT is equal to or greater than 2009 Guaranteed EBT and 2009
      Diluted EBT is equal to or greater than 2009 Guaranteed Diluted, the Investor
      Representative shall provide prompt written instructions to the Escrow Agent
      for
      the release of the 2009 Make Good Shares to the Make Good
      Pledgor.


    
      
        
        

      

      
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    b. Pursuant
      to Section 4(a) hereof, if the Investor Representative delivers a notice to
      the
      Escrow Agent that the Escrow Shares are to be transferred to the Investors,
      then
      the Escrow Agent shall immediately forward either the 2008 Make Good Shares
      or
      the 2009 Make Good Shares, as the case may be, to the Company’s Transfer Agent
      for reissuance to the Investors in an amount to each Investor as set forth
      on
Exhibit
      A
      attached
      hereto and otherwise in accordance with this Make Good Agreement. The Company
      covenants and agrees that upon any transfer of 2008 Make Good Shares or 2009
      Make Good Shares that are shares of Common Stock to the Investors in accordance
      with this Make Good Agreement, the Company shall promptly instruct its Transfer
      Agent to reissue such 2008 Make Good Shares or 2009 Make Good Shares in the
      applicable Investor’s name and deliver the same as directed by such Investor in
      an amount to each Investor as set forth on Exhibit
      A
      attached
      hereto. If the Company does not promptly provide such instructions to the
      Transfer Agent of the Company, then the Investor Representative is hereby
      authorized to give such re-issuance instruction to the Transfer Agent of the
      Company. If a notice from the Investor Representative pursuant to Section 4(a)
      hereof indicates that 2008 Make Good Shares or 2009 Make Good Shares, as
      applicable, are to be returned to the Make Good Pledgor, or the Company, then
      the Escrow Agent will promptly deliver either the 2008 Make Good Shares or
      the
      2009 Make Good Shares, as the case may be, to the Make Good Pledgor or the
      Company, as applicable.


    
      
        
        

      

      
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    c. The
      Company and Make Good Pledgor covenant and agree to provide the Escrow Agent
      with certified tax identification numbers by furnishing appropriate forms W-9
      or
      W-8 and such other forms and documents that the Escrow Agent may request,
      including appropriate W-9 or W-8 forms for each Investor. The Company and Make
      Good Pledgor understand that if such tax reporting documentation is not provided
      and certified to the Escrow Agent, the Escrow Agent may be required by the
      Internal Revenue Code of 1986, as amended, and the Regulations promulgated
      thereunder, to withhold a portion of any interest or other income earned on
      the
      investment of the Escrow Property. 

     

    5.
      Duration.
      This
      Make Good Agreement shall terminate upon the distribution of all the Escrow
      Shares in accordance with the terms of this Make Good Agreement. The Company
      agrees to promptly provide the Escrow Agent written notice of the filing with
      the Commission of any financial statements or reports referenced
      herein.

     

    6.
      Escrow Shares.
      If any
      Escrow Shares are deliverable to the Investors pursuant to the SPA and in
      accordance with this Make Good Agreement, (i) Make Good Pledgor and the Company
      each covenant and agree to execute all such instruments of transfer (including
      stock powers and assignment documents) as are customarily executed to evidence
      and consummate the transfer of the Escrow Shares from Make Good Pledgor or
      the
      Company, as applicable to the Investors, to the extent not done so in accordance
      with Section 2, and (ii) following its receipt of the documents referenced
      in
      Section 6(i), the Company and Escrow Agent covenant and agree to cooperate
      with
      the Transfer Agent so that the Transfer Agent promptly reissues such Escrow
      Shares that are shares of Common Stock in the applicable Investor’s name and
      delivers the same as directed by such Investor. Until such time as (if at all)
      the Escrow Shares are required to be delivered pursuant to the SPA and in
      accordance with this Make Good Agreement, any dividends payable in respect
      of
      the Escrow Shares and all voting rights applicable to the Escrow Shares shall
      be
      retained by Make Good Pledgor or the Company, as applicable, depending on who
      contributed such shares. Should the Escrow Agent receive dividends or voting
      materials, such items shall not be held by the Escrow Agent, but shall be passed
      immediately on to the Make Good Pledgor or the Company, as applicable, depending
      on who contributed such shares and shall not be invested or held for any time
      longer than is needed to effectively re-route such items to the Make Good
      Pledgor or the Company. In the event that the Escrow Agent receives a
      communication requiring the conversion of all or any of the Escrow
      Shares to cash or the exchange of all or any of the Escrow Shares for that
      of an
      acquiring company, the Escrow Agent shall solicit and follow the written
      instructions of the Make Good Pledgor or the Company, as applicable depending
      on
      who contributed such shares; provided,
      that
      the cash or exchanged shares are instructed to be redeposited into the Escrow
      Account. Make Good Pledgor shall be responsible for all taxes resulting from
      any
      such conversion or exchange of Escrow Shares contributed by the Make Good
      Pledgor.


    
      
        
        

      

      
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    7.
      Interpleader. 
      Should
      any controversy arise among the parties hereto with respect to this Make Good
      Agreement or with respect to the right to receive the Escrow Shares, Escrow
      Agent and/or the Investor Representative shall have the right to consult and
      hire counsel and/or to institute an appropriate interpleader action to determine
      the rights of the parties. Escrow Agent and/or the Investor Represntative are
      also each hereby authorized to institute an appropriate interpleader action
      upon
      receipt of a written letter of direction executed by the parties so directing
      either Escrow Agent or the Investor Representative. If Escrow Agent or the
      Investor Representative is directed to institute an appropriate interpleader
      action, it shall institute such action not prior to thirty (30) days after
      receipt of such letter of direction and not later than sixty (60) days after
      such date. Any interpleader action instituted in accordance with this Section
      7
      shall be filed in any court of competent jurisdiction in the State of New York,
      and the Escrow Shares in dispute shall be deposited with the court and in such
      event Escrow Agent and the Investor Representative shall be relieved of and
      discharged from any and all obligations and liabilities under and pursuant
      to
      this Make Good Agreement with respect to the Escrow Shares and any other
      obligations hereunder. 

     

    8. Exculpation
      and Indemnification of Escrow Agent and the Investor Representative


     

    a. Escrow
      Agent is not a party to, and is not bound by or charged with notice of any
      agreement out of which this escrow may arise. Escrow Agent acts under this
      Make
      Good Agreement as a depositary only and is not responsible or liable in any
      manner whatsoever for the sufficiency, correctness, genuineness or validity
      of
      the subject matter of the escrow, or any part thereof, or for the form or
      execution of any notice given by any other party hereunder, or for the identity
      or authority of any person executing any such notice. Escrow Agent will have
      no
      duties or responsibilities other than those expressly set forth herein. Escrow
      Agent will be under no liability to anyone by reason of any failure on the
      part
      of any party hereto (other than Escrow Agent) or any maker, endorser or other
      signatory of any document to perform such person's or entity's obligations
      hereunder or under any such document. Except for this Make Good Agreement and
      instructions to Escrow Agent pursuant to the terms of this Make Good Agreement,
      Escrow Agent will not be obligated to recognize any agreement between or among
      any or all of the persons or entities referred to herein, notwithstanding its
      knowledge thereof. The Investor Representative’s sole obligation under this Make
      Good Agreement is to provide written instruction to Escrow Agent (following
      such
      time as the Company files certain periodic financial reports as specified in
      Section 4 hereof) directing the distribution of the Escrow Shares. The Investor
      Representative will provide such written instructions upon review of the
      relevant earnings per share and/or earnings before taxes amount reported in
      such
      periodic financial reports as specified in Section 4 hereof.. The Investor
      Representative is not charged with any obligation to conduct any investigation
      into the financial reports or make any other investigation related thereto.
      In
      the event of any actual or alleged mistake or fraud of the Company, its auditors
      or any other person (other than the Investor Representative) in connection
      with
      such financial reports of the Company, the Investor Representative shall have
      no
      obligation or liability to any party hereunder.


    
      
        
        

      

      
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    b. Escrow
      Agent will not be liable for any action taken or omitted by it, or any action
      suffered by it to be taken or omitted, absent gross negligence or willful
      misconduct. Escrow Agent may rely conclusively on, and will be protected in
      acting upon, any order, notice, demand, certificate, or opinion or advice of
      counsel (including counsel chosen by Escrow Agent), statement, instrument,
      report or other paper or document (not only as to its due execution and the
      validity and effectiveness of its provisions, but also as to the truth and
      acceptability of any information therein contained) which is reasonably believed
      by Escrow Agent to be genuine and to be signed or presented by the proper person
      or persons. The duties and responsibilities of the Escrow Agent hereunder shall
      be determined solely by the express provisions of this Make Good Agreement
      and
      no other or further duties or responsibilities shall be implied, including,
      but
      not limited to, any obligation under or imposed by any laws of the State of
      New
      York upon fiduciaries. THE
      ESCROW AGENT SHALL NOT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES,
      LOSSES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN
      DAMAGES, LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY
      RESULTED FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II)
      SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER
      (INCLUDING, WITHOUT LIMITATION, LOST PROFITS), EVEN IF THE ESCROW AGENT HAS
      BEEN
      ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE
      FORM
      OF ACTION.

    


    c. The
      Company and Make Good Pledgor each hereby, jointly and severally, indemnify
      and
      hold harmless each of Escrow Agent, the Investor Representative and any of
      their
      principals, partners, agents, employees and affiliates from
      and
      against any expenses, including reasonable attorneys' fees and disbursements,
      damages or losses suffered by Escrow Agent or the Investor Representative in
      connection with any claim or demand, which, in any way, directly or indirectly,
      arises out of or relates to this Make Good Agreement or the services of Escrow
      Agent or the Investor Representative hereunder; except, that if Escrow Agent
      or
      the Investor Representative is guilty of willful misconduct or gross negligence
      under this Make Good Agreement, then Escrow Agent or the Investor Representative
      , as the case may be, will bear all losses, damages and expenses arising as
      a
      result of its own willful misconduct or gross negligence. Promptly after the
      receipt by Escrow Agent or the Investor Representative of notice of any such
      demand or claim or the commencement of any action, suit or proceeding relating
      to such demand or claim, Escrow Agent or the Investor Representative, as the
      case may be, will notify the other parties hereto in writing. For the purposes
      hereof, the terms "expense" and "loss" will include all amounts paid or payable
      to satisfy any such claim or demand, or in settlement of any such claim, demand,
      action, suit or proceeding settled with the express written consent of the
      parties hereto, and all costs and expenses, including, but not limited to,
      reasonable attorneys' fees and disbursements, paid or incurred in investigating
      or defending against any such claim, demand, action, suit or proceeding. The
      provisions of this Section 8 shall survive the termination of this Make Good
      Agreement, and the resignation or removal of the Escrow Agent. 


    
      
        
        

      

      
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    9.
      Compensation of Escrow Agent.
      Escrow
      Agent shall be entitled to compensation for its services as stated in the fee
      schedule attached hereto as Exhibit
      B,
      which
      compensation shall be paid by the Company. The fee agreed upon for the services
      rendered hereunder is intended as full compensation for Escrow Agent's services
      as contemplated by this Make Good Agreement; provided,
      however,
      that in
      the event that Escrow Agent renders any material service not contemplated in
      this Make Good Agreement, or there is any assignment of interest in the subject
      matter of this Make Good Agreement, or any material modification hereof, or
      if
      any material controversy arises hereunder, or Escrow Agent is made a party
      to
      any litigation pertaining to this Make Good Agreement, or the subject matter
      hereof, then Escrow Agent shall be reasonably compensated by the Company for
      such extraordinary services and reimbursed for all costs and expenses, including
      reasonable attorney's fees, occasioned by any delay, controversy, litigation
      or
      event, and the same shall be recoverable from the Company. Prior
      to
      incurring any costs and/or expenses in connection with the foregoing sentence,
      Escrow Agent shall be required to provide written notice to the Company of
      such
      costs and/or expenses and the relevancy thereof and Escrow Agent shall not
      be
      permitted to incur any such costs and/or expenses which are not related to
      litigation prior to receiving written approval from the Company, which approval
      shall not be unreasonably withheld.

     

    10.
      Resignation of Escrow Agent.
      At any
      time, upon ten (10) Business Days' written notice to the Company and the
      Investors, Escrow Agent may resign and be discharged from its duties as Escrow
      Agent hereunder. As soon as practicable after its resignation, Escrow Agent
      will
      promptly turn over to a successor escrow agent appointed by the Company the
      Escrow Shares held hereunder upon presentation of a document appointing the
      new
      escrow agent and evidencing its acceptance thereof. If, by the end of the
      10-Business Day period following the giving of notice of resignation by Escrow
      Agent, the Company shall have failed to appoint a successor escrow agent, Escrow
      Agent shall deposit the Escrow Shares as directed by the Investor Representative
      with the understanding that such Escrow Shares will continue to be subject
      to
      the provisions of this Make Good Agreement. 

     

    11.
      Records.
      Escrow
      Agent shall maintain accurate records of all transactions hereunder. Promptly
      after the termination of this Make Good Agreement or as may reasonably be
      requested by the parties hereto from time to time before such termination,
      Escrow Agent shall provide the parties hereto, as the case may be, with a
      complete copy of such records, certified by Escrow Agent to be a complete and
      accurate account of all such transactions. The authorized representatives of
      each of the parties hereto shall have access to such books and records at all
      reasonable times during normal business hours upon reasonable notice to Escrow
      Agent and at the requesting party’s expense. 

     

    12.
      Notice.
      All
      notices, communications and instructions required or desired to be given under
      this Make Good Agreement must be in writing and shall be deemed to be duly
      given
      if sent by registered or certified mail, return receipt requested, or overnight
      courier, to the addresses listed on the signature pages hereto.

     

    13.
      Execution in Counterparts.
      This
      Make Good Agreement may be executed in counterparts, each of which shall be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument. 


    
      
        
        

      

      
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    14.
      Assignment and Modification.
      This
      Make Good Agreement and the rights and obligations hereunder of the Company
      may
      be assigned by the Company only following the prior written consent of the
      holders of a majority in aggregate principal amount of the Notes (based on
      Investment Amounts made pursuant to the SPA) of the Investors (“Majority in
      Interest”). This Make Good Agreement and the rights and obligations hereunder of
      the Escrow Agent may be assigned by the Escrow Agent only with the prior consent
      of the Company. This Make Good Agreement and the rights and obligations
      hereunder of the Make Good Pledgor may not be assigned by the Make Good Pledgor.
      An Investor may assign its rights under this Make Good Agreement without any
      consent from any other party. This Make Good Agreement may not be changed orally
      or modified, amended or supplemented without an express written agreement
      executed by the Escrow Agent, the Company, the Make Good Pledgor and a Majority
      in Interest. This Make Good Agreement is binding upon and intended to be for
      the
      sole benefit of the parties hereto and their respective successors, heirs and
      permitted assigns, and none of the provisions of this Make Good Agreement are
      intended to be, nor shall they be construed to be, for the benefit of any third
      person. No portion of the Escrow Shares shall be subject to interference or
      control by any creditor of any party hereto, or be subject to being taken or
      reached by any legal or equitable process in satisfaction of any debt or other
      liability of any such party hereto prior to the disbursement thereof to such
      party hereto in accordance with the provisions of this Make Good Agreement.
      

     

    15.
      Applicable Law.
      This
      Make Good Agreement shall be governed by, and construed in accordance with,
      the
      internal laws of the State of New York. The representations and warranties
      contained in this Make Good Agreement shall survive the execution and delivery
      hereof and any investigations made by any party. Each party agrees that all
      legal proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Make Good Agreement shall be commenced
      exclusively in the state and federal courts sitting in the City of New York,
      Borough of Manhattan (the “New York Courts”). Each party hereto hereby
      irrevocably submits to the exclusive jurisdiction of the New York Courts for
      the
      adjudication of any dispute hereunder or in connection herewith, and hereby
      irrevocably waives, and agrees not to assert in any such proceeding, any claim
      that it is not personally subject to the jurisdiction of any such New York
      Court, or that such proceeding has been commenced in an improper or inconvenient
      forum. Each party hereto hereby irrevocably waives personal service of process
      and consents to process being served in any such proceeding 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
      Make Good 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 manner permitted
      by law. 

     

    16.
      Headings.
      The
      headings contained in this Make Good Agreement are for convenience of reference
      only and shall not affect the construction of this Make Good Agreement.



    
      
        
        

      

      
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    17.
      Attorneys' Fees.
      If any
      action at law or in equity, including an action for declaratory relief, is
      brought to enforce or interpret the provisions of this Make Good Agreement,
      the
      prevailing party shall be entitled to recover reasonable attorneys' fees from
      the other party (unless such other party is the Escrow Agent), which fees may
      be
      set by the court in the trial of such action or may be enforced in a separate
      action brought for that purpose, and which fees shall be in addition to any
      other relief that may be awarded.

    


    18.
      Merger or Consolidation.
      Any
      corporation or association into which the Escrow Agent may be converted or
      merged, or with which it may be consolidated, or to which it may sell or
      transfer all or substantially all of its corporate trust business and assets
      as
      a whole or substantially as a whole, or any corporation or association resulting
      from any such conversion, sale, merger, consolidation or transfer to which
      the
      Escrow Agent is a party, shall be and become the successor escrow agent under
      this Make Good Agreement and shall have and succeed to the rights, powers,
      duties, immunities and privileges as its predecessor, without the execution
      or
      filing of any instrument or paper or the performance of any further act.


    


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    IN
      WITNESS WHEREOF, the parties have duly executed this Make Good Agreement as
      of
      the date set forth opposite their respective names.

     

    
      	
              COMPANY:

            
	 
	
              GENESIS
                PHARMACEUTICALS ENTERPRISES, INC.

            
	 	 
	
              By:

            	
              /s/
                Cao Wubo

            
	 	
              Name:
                Cao Wubo

            
	 	
              Title:
                Chief Executive Officer

            
	 	 
	
              Address:

            
	 	 
	
              Facsimile:

            
	
              Attn.:

            
	 
	
              WUBO
                CAO

            
	 
	
              
                /s/
                  Wubo Cao

              

            
	 	 
	
              Address:

            
	 	 
	
              Facsimile:

            
	
              Attn.:

            


    

    


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              ESCROW
                AGENT:

            
	 
	
              LOEB
                & LOEB LLP, as Escrow Agent

            
	 	 
	
              By:

            	
              /s/
                Mitchell Nussbaum

            
	 	
              Name:
                Mitchell Nussbaum

            
	 	
              Title:
                Partner

            
	 	 
	
              Address:
                

            
	 	 
	
              Facsimile:

            
	
              Attn.:

            
	 
	
              INVESTOR
                REPRESENTATIVE

            
	 
	
              By:

            	
              /s/
                William P. Wells

            
	 	
              Name:
                William P. Wells

            
	 	
              Title:
                Managing Member/President

            
	 	 
	
              Address:
                

            
	 	 
	
              Facsimile:

            
	
              Attn.:

            


    


    
      
        
        

      

      
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