Document:

Dated 21 September 2011

GLOBAL PHARM HOLDINGS GROUP, INC.

MR. YIN YUN-LU

BLAZER DELIGHT LIMITED

INVESTOR RIGHTS DEED

 

Roome Puhar

in association with

Bingham McCutchen LLP

Suites 4901-4904

One Exchange Square

8 Connaught Place

Central Hong Kong

  

  

  

CONTENTS

	
Clause

	
   

	
Page

	  	  	  	  
	
1.

	
DEFINITIONS AND INTERPRETATION

	  	
1

	
2.

	
BONDHOLDER DIRECTOR AND OBSERVER

	  	
6

	
3.

	
RESTRICTED MATTERS

	  	
7

	
4.

	
FURTHER ISSUANCES OF EQUITY SECURITIES

	  	
8

	
5.

	
BONDHOLDER CALL OPTION

	  	
9

	
6.

	
LOCK-IN

	  	
10

	
7.

	
POST-QIPO IRR PAYMENTS

	  	
12

	
8.

	
INSPECTION AND INFORMATION RIGHTS

	  	
13

	
9.

	
COVENANTS AND UNDERTAKINGS

	  	
14

	
10.

	
CONFIDENTIALITY

	  	
14

	
11.

	
GENERAL

	  	
15

	
12.

	
GENERAL

	  	
16

	
13.

	
GOVERNING LAW

	  	
17

	
SCHEDULE 1

	  	
19

	
SCHEDULE 2

	  	
21

	
SCHEDULE 3

	  	
22

  

  

  

THIS INVESTOR RIGHTS DEED (this "Deed") is made on 21 September 2011

BY AND AMONG:

	
(1)

	
GLOBAL PHARM HOLDINGS GROUP, INC. a company incorporated in the State of Delaware, U.S.A. which is traded on the OTC Bulletin Board under the ticker symbol “GPHG” (the “Company");

	
(2)

	
MR. YIN YUN-LU, (PRC Permanent Resident Identity Card No. G54056922) of Room 2503-2505 New World Center, No.6009 Yitian Road, Futian District, Shenzhen, the PRC (the "Major Shareholder"); and

	
(3)

	
BLAZER DELIGHT LIMITED, a company incorporated under the laws of the British Virgin Islands under number 1631470 with its registered address at Sea Meadow House, Blackburne Highway, (P.O. Box 116), Road Town, Tortola, British Virgin Islands (the "Bondholder" which terms shall include any of its future permitted assignees and/or transferees as permitted under Clause 11.6 of this Deed),

(together, the "Parties", and each a "Party").

WHEREAS

	
(A)

	
On or about the date of this Deed, the Bondholder has entered into the Subscription Agreement with, inter alia, the Company, pursuant to which the Bondholder has agreed to subscribe for up to an aggregate amount of US$[•] in principal amount of the Bonds, on the terms and conditions set out in the Subscription Agreement.

	
(B)

	
It is a condition precedent to the obligations of the Bondholder under the Subscription Agreement that the Parties enter into this Deed to govern certain rights of the Bondholder, and the relationship amongst the Parties, with respect to the Company.

	
(C)

	
As at the date hereof, (i) the Major Shareholder is the legal and beneficial owner of 13,145,000 Shares, representing 50.558% of the total number of issued and outstanding Shares; and (ii) the Major Shareholder is a citizen of the PRC with full civil rights and capacity.

IT IS HEREBY AGREED as follows:

SECTION 1

INTERPRETATION

	
1.

	
DEFINITIONS AND INTERPRETATION

	
1.1

	
Definitions

	
  

	
In this Deed, the Schedules and the Recitals hereto, unless the context requires otherwise, terms defined in the Instrument shall have the same meaning when used in this Deed, and:-

	
“Actual Consideration”

 

	  	
has the meaning given to it in Clause 7.1;

	
“Actual NPAT”

	  	
means the NPAT of the Company as determined and reported by the Auditors in the FY 2011 Report;

  

  

  

	
“Appointed Broker”

	  	
means the Recognized Dealer nominated by the Company from time to time, the name and details of which are notified to the Bondholder in writing;

 

	
"Associate"

	  	
has the meaning ascribed to it in the Listing Rules;

 

	
“Auditors”

 

	  	
means Crowe Horwath LLP, or such other internationally recognised auditors as is appointed as the Company’s auditors in accordance with Clause 9.2;

 

	
"Board"

	  	
means the board(s) of directors of the Company from time to time;

 

	
“Bondholder Call Option”

 

	  	
means the call option granted to the Bondholder under Clause 5.1;

 

	
“Bondholder Call Option Share Price”

 

	  	
means such amount in US$ as is determined in accordance with Clause 5.9;

	
“Bondholder Call Option Shares”

 

	  	
means such number of Shares in the name of the Major Shareholder as is determined in accordance with Clause 5.3;

	
“Bondholder Cash Alternative”

 

	  	
has the meaning given to it in Clause 5.8;

	
“Bondholder Deed of Adherence”

	  	
means the deed substantially in the form set out in Schedule 3;

	  	  	  
	
“Bondholder Director”

	  	
has the meaning given to it in Clause 2.1;

	 	 	 
	
“Budget”

	  	
means the annual budget of the Company, in the form agreed by the Bondholder Director;

 

	
"Bylaws"

	  	
means the bylaws (or other equivalent constitutional document) of the Company as amended from time to time;

 

	
"Calendar Quarter Date"

	  	
means any of 31 March, 30 June, 30 September and 31 December in a calendar year;

 

	
“Call Option Notice”

 

	  	
means a notice substantially in the form set forth in Schedule 2;

 

	
“Confidential Information”

 

	  	
has the meaning given to it in Clause 10.1;

 

	
"Control"

	  	
means the power of a person (or persons acting in concert) to secure that the policies and affairs of another are conducted and decisions made directly or indirectly in accordance with the wishes of that person (or persons acting in concert) by means of the exercise of voting rights in that company (whether arising through the ownership of shares in that company or otherwise), or having the right to control the votes at board meetings of that company (whether arising through the ability to appoint any director of that company or otherwise) by virtue of any powers conferred by the articles of association, bylaws, shareholders' agreement or any other document regulating the affairs of that company, and "Controlled" shall be construed accordingly. For these purposes, "persons acting in concert", in relation to a person, are persons who actively co-operate, pursuant to an agreement or understanding (whether formal or informal), with a view to obtaining or consolidating Control of that person;

  

2

  

	
“Conversion Shares”

	  	
means Shares received by the Bondholder upon exercise of the conversion rights attaching to the Bonds;

 

	
“Designated Annual Discount Rate”

 

	  	
means twenty five per cent. (25%) per annum;

	
"Director"

	  	
means at any time a director of the Company at that time (including any duly appointed alternate director);

 

	
“Dispose”

	  	
means to sell, transfer, charge, encumber, or grant any option over or otherwise dispose of, and “Disposal” shall be construed accordingly;

 

	
“Drawdown Date”

	  	
means each date on which Bonds are subscribed for by the Bondholder in accordance with the terms of the Subscription Agreement;

 

	
“Encumbrance”

	  	
means any claim, charge, mortgage, security, lien, option, equity, power of sale, hypothecation or other third party right;

 

	
"Equity Securities"

	  	
means, with respect to any Person, such Person's shares, capital stock, membership interests, partnership interests, registered capital, joint venture or other ownership interests or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, such shares, capital stock, membership interests, partnership interests, registered capital or joint venture or other ownership interests (whether or not such derivative securities are issued by such Person);

 

	
"Financial Indebtedness"

	  	
means any indebtedness for or in respect of:

 

(a)       moneys borrowed;

(b)      any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;

(c)      any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(d)      the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with US GAAP, be treated as a finance or capital lease;

(e)       receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

(f)       any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

  

3

  

	  	  	
(g)       any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

(h)       any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution;

(i)       any guarantee or any Encumbrance of any nature whatsoever provided to secure any obligations of any other person; and

(j)       the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above.

	  	  	  
	
“Free To Trade Date”

 

	  	
means the date falling six (6) months from the Trading Date;

	
“FY 2011 Report”

 

	  	
means the unqualified report of the Auditors in respect of the financial year of the Company ending 31 December 2011, which report is prepared in accordance with US GAAP;

 

	
“Group”

	  	
means the Company and each of its Subsidiaries;

 

	
“Instrument”

 

	  	
means the instrument(s) constituting the Bonds;

	
“IRD Obligors”

	  	
means the Company and the Major Shareholder;

	  	  	  
	
“IRR”

	  	
means a compounded, cumulative internal rate of return, calculated at the Designated Annual Discount Rate, which, when applied to any amount, and discounted annually, produces a net present value of such amount equal to zero;

 

	
“IRR Notice”

 

	  	
has the meaning given to it in Clause 7.1;

	
"Listing Rules"

	  	
means the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited;

 

	
“NPAT”

 

	  	
means the consolidated and normalized profit after tax (excluding non-cash items that are not classified as operating cost/expenses under US GAAP, and one-off, non-recurring and extraordinary items) attributable to the shareholders of the Company;

	  	  	  
	
“Observer”

	  	
has the meaning given to it in Clause 2.1;

	  	  	  
	
“Offer”

	  	
has the meaning given to it in Clause 6.2(c);

	  	  	  
	
"Person"

	  	
means any natural person, firm, company, governmental authority, joint venture, partnership or other entity (whether or not having separate legal personality);

 

	
“Post QIPO Disposal”

	  	
has the meaning given to it in Clause 7.1;

  

4

  

	
“Recognised Dealer”

	  	
means a recognized dealer in securities of a type similar to the Shares selected, from time to time, by the Bondholder;

 

	
“Referenced Disposal”

 

	  	
has the meaning given to it in Clause 6.2;

 

	
"Restricted Matters"

 

	  	
has the meaning given to it in Clause 3.1;

 

	
“Share Alternative”

	  	
has the meaning given to it in Clause 7.3;

 

	
“Share Alternative Notice”

 

	  	
has the meaning given to it in Clause 7.3;

	
“Shares”

	  	
means shares of the common stock of par value US$0.001 each in the capital of the Company or shares of any class or classes resulting from any sub-division, consolidation or re-classification of such shares, which as between themselves have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation or distribution of the Company;

 

	
“Shortfall Amount”

 

	  	
has the meaning given to it in Clause 7.1;

	
“Subsidiary”

	  	
means a subsidiary undertaking within the meaning of the Companies Ordinance (Chapter 32 of the laws of Hong Kong);

 

	
“Target IRR Price”

	  	
means aggregate subscription price for the Bonds of US$15,000,000 plus an IRR of twenty five per cent. (25%) on such subscription price calculated over the period beginning on the date of completion of the Bondholder’s subscription in respect of the part of such subscription price then subscribed by the Bondholder, up to the date on which the Disposal in respect of the last of the Conversion Shares which are Disposed of is effected pursuant to a Post QIPO Disposal;

 

	
“Target NPAT”

 

	  	
means the NPAT of the Company for the financial year ending 31 December 2011 equal to twenty six million nine hundred thousand US Dollars (US$26,900,000);

 

	
“Trading Date”

	  	
means the first date on which the shares of the Company (or of such other entity as may be listed pursuant to any listing on a securities exchange) have started trading pursuant to any listing on a securities exchange;

 

	
“Trading Days”

	  	
Means days on which Shares are traded on a relevant securities exchange;

 

	
"Transfer"

 

	  	
means sell, transfer, give, assign, create any Encumbrance over (or suffer to exist any Encumbrance over) or otherwise dispose of, whether by operation of law or otherwise, any relevant asset, thing, matter or any right, title or interest therein or thereto;

 

	
“U.S.”

	  	
means the United States of America;

  

5

  

	
“US Dollars” and “US$”

	  	
means United States Dollars, the lawful currency of the United States of America;

 

	
“US GAAP”

	
  

	
means the Generally Accepted Accounting Principles in the United States of America from time to time.

	
1.2

	
In this Deed:

	
  

	
(a)

	
references to Recitals, Clauses, Sub-clauses and Schedules are to the clauses and sub-clauses of, and the recitals, schedules and exhibits to, this Deed;

	
  

	
(b)

	
references to any statutory provision or any rule or regulation (whether or not having the force of law) shall be construed as references to the same as amended, varied, modified, consolidated or re-enacted from time to time and to any subordinate legislation made under such statutory provision;

	
  

	
(c)

	
words importing the singular include the plural and vice versa, words importing one gender include every gender, and references to persons include bodies corporate and unincorporated;

	
  

	
(d)

	
headings are for ease of reference only and shall not affect the interpretation of this Deed; and

	
  

	
(e)

	
references to a document in the "agreed form" are references to a document the form of which has been or may from time to time be agreed among all parties hereto.

	
1.3

	
The Recitals and the Schedules form part of this Deed shall have the same force and effect as if expressly set out in the body of this Deed and any reference to this Deed shall include the Recitals and the Schedules.

	
1.4

	
All references to dates and time are, unless the context requires otherwise, to Hong Kong time.

SECTION 2

BONDHOLDER DIRECTOR AND OBSERVER

	
2.

	
BONDHOLDER DIRECTOR AND OBSERVER

	
2.1

	
The Bondholder shall have the right by notice in writing given to the Company to require the appointment of one Director to the Board (such Director being a "Bondholder Director") and one observer to the Board (such observer being an “Observer”) and by like notice given to the Company to require the removal of such Bondholder Director and/or Observer and the appointment of other person(s) to act in place of such Bondholder Director and/or Observer. As at the date of this Deed, the Bondholder Director is Lau Wang Chi, Barry with Hong Kong Identity Card number K574572(1) and the Observer is Tseng Hung Yan, Bruce with HKID No.D841914(1).  In the event that the Bondholder Director resigns solely for the reason that the Bondholder no longer wishes to have “affiliate” status under the U.S. Securities Act of 1933, then the Bondholder shall use all reasonable endeavours to ensure that the Bondholder Director states such reason in his letter of resignation. The Bondholder recognises, with reference to the Bondholder Director’s appointment, that continuity of management of the Company can be an important factor in achieving a QIPO.  However, neither this Clause or any other provision of this Agreement shall provide a basis for the Bondholder to be liable to any Group member or other person in respect of or in relation to the Bondholder Director.

  

6

  

	
2.2

	
The Observer shall have the right to attend and speak at all Board meetings and the Company shall deliver to the Observer, at the same time as the same is given to the Directors, all information and correspondence sent to or made available to members of the Board. The Observer shall not be entitled to vote at any Board meetings (and shall not be deemed to be a Director for any purpose), and the Bondholder shall use all reasonable endeavours to ensure that the Observer complies with such confidentiality obligations as the Board may reasonably impose on such Observer.

	
2.3

	
All notices of appointment and removal required under Clause 2.1 shall be given in writing to the Company. Upon receipt of such notice, the Company shall (and each of the Parties agrees that it shall do all such things as are necessary and within the respective power of the Parties to procure that the Company shall, including without limitation, by way of the exercise of all powers of Control as may be available to it), within seven (7) Business Days thereafter take all such actions that are necessary under the relevant Bylaws or relevant law or regulation to effect and register the relevant appointment or removal.

	
2.4

	
Meetings of the Board shall be held in such places and at such times as the Board may from time to time determine. Meetings of the Board shall be held either in Shenzhen, PRC or Hong Kong and/or by way of conference call where all attending directors can hear each other. All notices of all Board meetings shall be in writing and the agenda of each Board meeting shall be available to all Directors at least two (2) days before such Board meeting is held, provided always that if any resolution in respect of any of the Restricted Matters is to be considered at a Board meeting (each such meeting being a "Restricted Meeting"), the agenda of each Restricted Meeting shall be available to all Directors at least five (5) Business Days before such Restricted Meeting is held. All Board meetings shall be chaired by the chairman of the Board; provided that if the chairman of the Board is not present within thirty (30) minutes after the time appointed for holding such Board meeting, the Directors present may elect one of the Directors present to be the temporary chairman of such Board meeting.

	
2.5

	
The quorum for any Restricted Meeting shall be a majority of Directors, including the Bondholder Director. In the event that the Bondholder Director does not attend any such meeting for whatever reason, that meeting shall be adjourned to the following Business Day, at the same time and place as the original meeting. If the Bondholder Director does not attend such adjourned meeting for whatever reason, then such adjourned meeting shall be further adjourned to the next following Business Day, at the same time and place as the original meeting.  If the Bondholder Director does not attend such re-adjourned meeting for whatever reason, then a majority of Directors attending such re-adjourned Restricted Meeting shall constitute a quorum.

	
2.6

	
Neither the Bondholder Director nor the Observer shall be remunerated by the Company but they shall be reimbursed for their reasonable expenses of travelling to and attending Board meetings.

	
2.7

	
The Parties’ rights and obligations under Clauses 2.4 and 2.5 shall terminate upon the completion of a QIPO.

SECTION 3

RESTRICTED MATTERS

	
3.

	
RESTRICTED MATTERS

	
3.1

	
The Company agrees with and undertakes to the Bondholder that the Company shall not and the Major Shareholder agrees that the Company shall not and that he shall do all such things as are necessary and within his powers to procure that the Company and each other Group member shall not (including without limitation, by way of the exercise of all powers of Control as may be available to him), save with the prior specific written consent of the Bondholder Director, undertake any of the matters described in Schedule 1 (the "Restricted Matters").

  

7

  

	
3.2

	
The Parties’ rights and obligations under this Clause 3 shall terminate upon the completion of a QIPO.

SECTION 4

FURTHER ISSUANCES OF EQUITY SECURITIES

	
4.

	
FURTHER ISSUANCES OF EQUITY SECURITIES

	
4.1

	
The Company shall not, and the Major Shareholder undertakes to the Bondholder that he shall do all such things as are necessary and within his powers (including without limitation, by way of the exercise of all powers of Control as may be available to him) to procure that the Company shall not issue any Equity Securities in respect of the Company or in the capital of the Company of any type or class to any person (the “Proposed Recipient”), or agree or commit itself, whether conditionally or otherwise and by whatever agreement or instrument, to do so at any time in the future, unless in each case the Company has first offered the Bondholder in accordance with this Clause 4 the right to purchase its pro rata share as a shareholder (calculated on a fully-diluted and as-converted basis in respect of its holdings of Bonds as if all Bonds had at that time been converted in full) of such issuance for a per unit consideration, payable solely in cash, equal to the per unit consideration to be paid by the Proposed Recipient and on the same terms and conditions as are offered to the Proposed Recipient; provided that the foregoing restrictions shall not apply to (i) any issuance of any Equity Securities to any persons pursuant to transactions which have been contractually agreed by the Company prior to the date of this Deed and which transactions have been notified to the Bondholder by the Company in writing prior to the date hereof; (ii) any issuance of Equity Securities pursuant to and for the purposes of any stock option plan adopted by the Company for the benefit of its existing and future key employees; and (iii) pursuant to any offering of Equity Securities that are part of a QIPO and the subject of a registration statement for the QIPO which is declared effective by the U.S. Securities and Exchange Commission.

	
4.2

	
Not less than ten (10) Business Days before a proposed issuance of Equity Securities other than in connection with an issuance permitted under Clause 4.1 (a “Proposed Issuance”), the Company shall (and the Major Shareholder undertakes to the Bondholder that he shall do all such things as are necessary and within his powers (including without limitation, by way of the exercise of all powers of Control as may be available to him) to procure that the Company shall) deliver to the Bondholder written notice of the Proposed Issuance setting forth (a) the number, type and terms of the securities to be issued; (b) the consideration to be received by the Company in connection with the Proposed Issuance; and (c) the identity (in reasonable detail) of the Proposed Recipients and (where applicable) their controlling shareholders.  If the Company fails to fully comply with the notice requirement under this Clause 4.2, then no Equity Securities may be issued and any such issuance of Equity Securities (as the case may be) purported to be issued shall be void.

  

8

  

	
4.3

	
Within ten (10) Business Days following delivery of the notice referred to in Clause 4.2 (such ten (10) Business Day period of time being the “Response Period”), the Bondholder shall give written notice to the Company specifying the number of Equity Securities to be purchased by the Bondholder (based on the calculation by the Bondholder of its pro rata share as a shareholder (calculated on a fully-diluted and as-converted basis in respect of its holdings of Bonds as if all Bonds had at that time been converted in full).  Failure by the Bondholder to give such notice within the Response Period shall be deemed a waiver by the Bondholder of its rights under this Clause 4 with respect to such Proposed Issuance.  The Company shall have thirty (30) Business Days from the expiration of the Response Period to consummate any Proposed Issuance (to the extent not purchased by the Bondholder) to the Proposed Recipient on terms and conditions not more favorable than those offered to the Bondholder.  If such Proposed Issuance is not consummated within such thirty (30) Business Day period, the Company shall not conduct a Proposed Issuance without again first complying with each requirement in this Clause 4.

	
4.4

	
The Parties’ rights and obligations under this Clause 4 shall terminate upon the completion of a QIPO.

SECTION 5

BONDHOLDER CALL OPTION

	
5.

	
BONDHOLDER CALL OPTION

	
5.1

	
The Major Shareholder hereby grants to the Bondholder the option, which is exercisable at any time on or before the date falling 90 days after the publication of the audited consolidated financial statements for the Group for the financial year ending 31 December 2011 in accordance with Clause 5.2, on and subject to the terms of this Clause 5.

	
5.2

	
The Bondholder Call Option is only exercisable if the Actual NPAT is less than 90% of the Target NPAT, in which case the Bondholder shall be entitled to purchase (at the discretion of Investor) and the Major Shareholder shall be obliged to sell to the Bondholder all (but not part only) of that number of Bondholder Call Option Shares as is determined in accordance with Clause 5.3 at an aggregate consideration of one US Dollar (US$1), in accordance with Clauses 5.5 and 5.6 upon the Bondholder serving a Call Option Notice in accordance with Clause 5.4.

	
5.3

	
Based on the Initial Conversion Price of five US Dollars (US$5), the number of Bondholder Call Option Shares shall be three hundred and thirty three thousand, three hundred and thirty three (333,333).

	
5.4

	
In order to exercise the Bondholder Call Option, the Bondholder shall serve a Call Option Notice on the Major Shareholder.

	
5.5

	
Subject to Clause 5.8, service of a Call Option Notice under Clause 5.4 shall constitute a binding contract between the Bondholder on the one part and the Major Shareholder on the other part for the sale and purchase of the Bondholder Call Option Shares on the terms of this Deed.  The Bondholder Call Option shall only be exercised in whole and not in part only. Following the service of a Call Option Notice under Clause 5.4, the Bondholder shall purchase and the Major Shareholder shall sell all the Bondholder Call Option Shares for the aggregate consideration of one US Dollar (US$1) which is payable in US$ in cash, subject to and in accordance with the provisions of this Deed.

  

9

  

	
5.6

	
The transfer of the Bondholder Call Option Shares contemplated under a Call Option Notice served under Clause 5.4 shall be completed at 10.00am New York City, U.S. time on the fifth (5th) Business Day immediately following the date of the Call Option Notice which is served under Clause 5.4 at the location which is specified in such Call Option Notice and at that time, against delivery to the Bondholder of one or more instruments of transfer and the share certificates in respect of the Bondholder Call Option Shares (duly executed in each case by the Major Shareholder as the transferor thereof in favour of the Bondholder), the Bondholder shall pay or procure that there is paid to the Major Shareholder the aggregate consideration of one US Dollar (US$1) in cash in US$.  In addition, the Parties shall perform, and the Parties shall do all such things as are within the respective powers of those Parties to procure that the other Parties shall perform, including without limitation, by way of the exercise of all powers of Control (including without limitation the exercise of all powers of Control they may have as regards the Control of the composition of the Board) as may be available to it, all further acts and things, and execute and deliver (or procure the execution and delivery of) such further documents as a Party may reasonably require or as may be required by law to implement and/or give effect to the transfers contemplated under this Clause 5 for the purpose of vesting in that Party the full benefit of all these provisions.

	
5.7

	
Each Party shall bear its own respective costs arising out of or in connection with the exercise of the Bondholder Call Option, except that any stamp duty payable by it at law in connection with the transfer of the Bondholder Call Option Shares shall be borne by the transferee of such Shares.

	
5.8

	
The Major Shareholder may elect, in his sole and absolute discretion, following receipt of a valid Call Option Notice delivered to him pursuant to the exercise by the Bondholder of the Bondholder Call Option, as an alternative to the sale of the Bondholder Call Option Shares to the Bondholder, to pay an amount equal to the Bondholder Call Option Share Price to the Bondholder (the “Bondholder Cash Alternative”). In the event that the Major Shareholder elects to pay the Bondholder Cash Alternative (in place of the sale of the Bondholder Call Option Shares to the Bondholder), then the Major Shareholder shall pay, in cleared US$ funds to an account nominated by the Bondholder, the Bondholder Call Option Share Price to the Bondholder on or before the date originally scheduled for the completion of the Bondholder Call Option. In the event that the Bondholder receives the Bondholder Call Option Share Price in full in the manner contemplated by this Clause 5.8, then the Bondholder’s rights under the Bondholder Call Option shall cease.

	
5.9

	
The Bondholder Call Option Share Price shall be determined in accordance with the following formula:

Bondholder Call Option Share Price = the number of Bondholder Call Option Shares x (PA / Y)

where

PA is the principal amount of the Bonds of which the Bondholder is then the holder; and

	
  

	
Y is that number of Conversion Shares to which the Bondholder would be entitled assuming the exercise by the Bondholder of the Conversion Rights in full in respect of all of the Bonds of which it is then the holder, plus the number of Bondholder Call Option Shares.

SECTION 6

LOCK-IN

	
6.

	
LOCK-IN

	
6.1

	
Subject to Clause 6.2, the Bondholder undertakes to the IRD Obligors that, during the period beginning on the date of this Deed and ending on the Free To Trade Date, the Bondholder shall not:

	
  

	
(a)

	
Dispose of the legal, beneficial or any other interests in or rights over any Shares held by the Bondholder or its affiliates or assigns; or

  

10

  

	
  

	
(b)

	
enter into, or agree to enter into, any transaction with the same economic effect as any such transaction described in Clause 6.1(a);

	
  

	
(c)

	
and the Bondholder further undertakes to enter into with the underwriters for any initial public offering (“IPO”) which is a QIPO, at the same time as that at which the Major Shareholder provides a lock-up agreement to the underwriters in respect of the QIPO (the “MSLUA”), a lock-up agreement in what is in standard form for a U.S. public offering of the type of the QIPO, such lock-up agreement to have an initial term of one hundred and eighty (180) days from the completion of the QIPO (“Lock-up Period”) plus any extended period of not more than the MEP as defined below provided that the terms of such lock-up agreement shall be no less favourable to the Bondholder than those set out in any MSLUA.

The "MEP" is defined as follows: if (i) the Company issues an earnings release or material news, or a material event relating to the Company occurs, during the last 17 days of the Lock-up Period, or (ii) prior to the expiration of the Lock-up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-up Period, the restrictions imposed by the lock-up agreement with the Bondholder shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless the underwriter in whose favour the lock-up is given waives such extension.

	
6.2

	
The provisions of Clause 6.1 shall not apply to any Disposal of any Shares which is made:

	
  

	
(a)

	
with the prior written consent of the Company;

	
  

	
(b)

	
pursuant to the acceptance of a general offer made to all shareholders of the Company for the whole or part of the issued share capital of that entity ("Offer"), other than any shares already held by the offeror or persons acting in concert with the offeror;

	
  

	
(c)

	
pursuant to the execution of an irrevocable commitment to accept any Offer;

	
  

	
(d)

	
pursuant to any statutory or regulatory requirement; or

	
  

	
(e)

	
pursuant to an intervening court order made by a court of competent jurisdiction.

	
6.3

	
During the period beginning on the Free to Trade Date and ending on the date which is nine (9) months after the Trading Date, prior to any Disposal of any Conversion Shares (the “Referenced Disposal”) the Bondholder shall (save for any Disposal which would be permitted by any of the exceptions set out in Clause 6.2) request the Appointed Broker to effect the Disposal of the same number of Conversion Shares as is to be Disposed of in the Referenced Disposal, and if the Appointed Broker shall not have completed such a  Disposal on the terms and at the price required by the Bondholder within three (3) Trading Days of the Bondholder’s request, then the Bondholder may itself choose freely how to Dispose of the relevant Conversion Shares.

	
6.4

	
The Parties’ rights and obligations under this Clause 6 shall terminate on the date which is nine (9) months after the Trading Date.

  

11

  

SECTION 7

POST-QIPO IRR PAYMENTS

  

	
7.

	
POST-QIPO IRR PAYMENTS

	
7.1

	
In the event that the Bondholder (i) Disposes of some or all of its Conversion Shares in one or more transactions following the completion of a QIPO (the “Post QIPO Disposal”) but on or prior to the ninetieth (90th) day immediately following the Free to Trade Date; and (ii) receives an aggregate consideration (the “Actual Consideration”) for the Post QIPO Disposal which is less than the Target IRR Price in respect of that part of the principal amount of the Bonds which was converted into the Conversion Shares which are the subject of the Post QIPO Disposal, the Bondholder shall within ninety (90) days of the date on which the Bondholder completes the sale of its Post QIPO Disposal Conversion Shares notify the Major Shareholder in writing and specify in such notice (the “IRR Notice”) (i) the Target IRR Price; (ii) the Actual Consideration received by the Bondholder; (iii) the difference by which the Actual Consideration falls short of the Target IRR Price (the “Shortfall Amount”); and (iv) the date on which the last of the transactions pursuant to which the Post QIPO Disposal was effected.  Each IRR Notice shall be conclusive and binding on the Major Shareholder, absent any manifest error.

	
7.2

	
The Major Shareholder shall, on or before the date which is five (5) Business Days after he receives the IRR Notice, pay to the Bondholder to an account nominated by the Bondholder an amount in cleared US$ funds equal to Shortfall Amount.

	
7.3

	
The Major Shareholder may elect following receipt of a valid IRR Notice delivered to him pursuant to Clause 7.1, as an alternative to the payment of the of the Shortfall amount to the Bondholder, to sell such number of Share Alternative Shares to the Bondholder as is determined in accordance with Clause 7.4 for an aggregate consideration of one US Dollar (US$1) (the “Share Alternative”). In the event that the Major Shareholder elects to sell the Share Alternative Shares to the Bondholder (in place of the payment of the Shortfall Amount to the Bondholder in accordance with Clause 7.2), then the Bondholder shall serve a written notice (the “Share Alternative Notice”) on the Bondholder (i) notifying the Bondholder that he has elected to take the Share Alternative, and (ii) specifying the number of Share Alternative Shares (as determined in accordance with Clause 7.4) to be sold to the Bondholder, within two (2) Business Days of his receipt of the IRR Notice.

	
7.4

	
The number of Share Alternative Shares shall be determined by dividing the Shortfall Amount by the average of the closing prices for the Shares (as determined from the OTCBB Daily Trade and Quote Summary Report(s) available through www.otcbb.com at OTCBB (or NASDAQ if the Company is then NASDAQ listed) for the five (5) Trading Days immediately prior to the date of the IRR Notice.)

 

	
7.5

	
Service of a Share Alternative Notice under Clause 7.3 shall constitute a binding contract between the Major Shareholder on the one part and the Bondholder on the other part for the sale and purchase of the Share Alternative Shares on the terms of this Deed.  Following the service of a Share Alternative Notice under Clause 7.3, the Bondholder shall purchase and the Major Shareholder shall sell that number of Share Alternative Shares as is determined in accordance with Clause 7.4 for the aggregate consideration of one US Dollar (US$1) which is payable in US$ in cash, subject to and in accordance with the provisions of this Deed.

  

12

  

	
7.6

	
The transfer of the Share Alternative Shares contemplated under a Share Alternative Notice served under Clause 7.3 shall be completed at 10.00am Hong Kong time on the fifth (5th) Business Day immediately following the date of the Share Alternative Notice which is served under Clause 7.3 at the location which is specified in such Share Alternative Notice and at that time, against delivery to the Bondholder of one or more instruments of transfer and the share certificates in respect of the Share Alternative Shares (duly executed in each case by the Major Shareholder as the transferor thereof in favour of the Bondholder), the Bondholder shall pay or procure that there is paid to the Major Shareholder the aggregate consideration of one US Dollar (US$1) in cash in US$.  In addition, the Parties shall perform, and the Parties shall do all such things as are within the respective powers of those Parties to procure that the other Parties shall perform, including without limitation, by way of the exercise of all powers of Control (including without limitation the exercise of all powers of Control they may have as regards the Control of the composition of the Board) as may be available to it, all further acts and things, and execute and deliver (or procure the execution and delivery of) such further documents as a Party may reasonably require or as may be required by law to implement and/or give effect to the transfers contemplated under this Clause 7 for the purpose of vesting in that Party the full benefit of all these provisions.  If the Major Shareholder fails to deliver the Share Alternative Shares as required by this Clause on time, then the Major Shareholder shall immediately, at the time at which such share delivery was due, pay the Shortfall Amount to the Bondholder in US$ to an account nominated by the Bondholder.

 

SECTION 8

INSPECTION AND INFORMATION RIGHTS

	
8.

	
INSPECTION AND INFORMATION RIGHTS

	
8.1

	
The Investor shall have the right, upon giving the Company not less than five (5) Business Days prior written notice, to inspect such of the premises, books, files and records of the Company and/or any Group member as the Bondholder shall require in its sole and absolute discretion, and the IRD Obligors agree that they shall do all such things as are necessary and within their respective powers (including their respective powers of Control) to procure all necessary access is granted to the Bondholder.

	
8.2

	
The Company shall supply to the Bondholder (and the IRD Obligors shall do all such things as are necessary and within their respective powers to procure the following are supplied to the Bondholder by way of the exercise of all powers of Control as may be available to them):

	
  

	
(a)

	
as soon as the same become available, but in any event within one hundred (100) days after the end of each of its financial years the Company’s audited consolidated financial statements for that financial year;

	
  

	
(b)

	
as soon as the same become available, but in any event within forty five (45) days after the end of each quarter of the Company’s financial years, the Company’s financial statements for that financial quarter;

	
  

	
(c)

	
as soon as the same become available, but in any event within thirty (30) days after the end of each calendar month, the Company’s and its subsidiaries’ financial statements for the immediately prior month;

	
  

	
(d)

	
as soon as the same becomes available, but in any event within forty-five (45) days after the end of each of its previous financial years, the Budget for the then current financial year; and

	
  

	
(e)

	
any and all progress reports which relate to the listing of any part of the Group’s business on any stock exchange.

	
8.3

	
The Parties’ rights and obligations under this Clause 8 shall terminate upon the completion of a QIPO.

  

13

  

SECTION 9

COVENANTS AND UNDERTAKINGS

	
9.

	
COVENANTS AND UNDERTAKINGS

	
9.1

	
It is the intention of the Company to seek, and the Major Shareholder agrees and undertakes to the Bondholder that he shall use his reasonable efforts (including without limitation, by way of the exercise of all powers of Control as may be available to him) to procure that the Company shall effect, a QIPO and to list the Shares, or the shares of an entity formed or to be formed to hold the entire issued share capital of the Company or the business of the Group, prior to 30 June 2012.

	
9.2

	
The IRD Obligors agree with and undertake to the Bondholder that (and the IRD Obligors shall do all such things as are necessary and within their respective powers to procure the following by way of the exercise of all powers of Control as may be available to them) for so long as any amount remains outstanding in respect of the Finance Documents, the Auditors shall be Crowe Horwath LLP, or such other internationally recognised firm of auditors as the Bondholder may approve from time to time, such approval not to be unreasonably withheld or delayed.

	
9.3

	
The IRD Obligors agree with and undertake to the Bondholder that (and the IRD Obligors shall do all such things as are necessary and within their respective powers to procure the following by way of the exercise of all powers of Control as may be available to them) the Auditors shall deliver the final and executed FY 2011 Report on or before 31 March 2012.

	
9.4

	
The Bondholder shall, and shall use all reasonable endeavours to ensure that the Bondholder Director shall (for as long as the Bondholder Director remains a Director of the Company) cooperate in a reasonable manner with the Company (but without the Bondholder or the Bondholder Director having to enter into any agreements or compromise their respective legal rights or take on any additional obligations or liabilities) and furnish ownership, address and control information and similar information as may be reasonably necessary for the purposes of the QIPO, in the preparation of all relevant disclosure, filings and responses to the competent authorities, when so reasonably requested by the Company.

SECTION 10

CONFIDENTIALITY

	
10.

	
CONFIDENTIALITY

	
10.1

	
Subject to Clauses 10.2 and 10.3, each Party:-

	
  

	
(a)

	
shall treat as strictly confidential all information relating to, obtained or received by it as a result of negotiating, entering into or performing its obligations under this Deed which relates to the negotiation of, or the provisions or subject matter of, this Deed or to the other party ("Confidential Information"); and

	
  

	
(b)

	
shall not, except with the prior written consent of the other Party, publish or otherwise disclose to any Person (other than the Bondholder to any of its Associates) any Confidential Information.

	
10.2

	
Clause 10.1 shall not apply if and to the extent that a Party hereto disclosing Confidential Information can demonstrate that:

  

14

  

	
  

	
(a)

	
such disclosure is required by law or by any securities exchange or regulatory or governmental body having jurisdiction over it and whether or not the requirement has the force of law; or

	
  

	
(b)

	
the Confidential Information concerned was lawfully in its possession (as evidenced by written records) prior to its being obtained or received as described in Clause 10.1(a); or

	
  

	
(c)

	
the Confidential Information concerned has come into the public domain other than through its fault.

	
10.3

	
Subject to Clause 10.2, none of the Parties shall make any announcement concerning the provisions or subject matter of this Deed or containing any information about any other Party without the prior written approval of that Party.

SECTION 11

GENERAL

	
11.

	
GENERAL

	
11.1

	
Other than as otherwise specified herein, the provisions of this Deed and the respective rights and obligations of each of the Parties hereunder shall terminate on the date that all amounts which are now and/or may in the future become due and/or owing to the Bondholder pursuant to any and all of the Finance Documents have been irrevocably paid and discharged in full, provided that such termination shall be without prejudice to the respective rights and obligations of the Parties which have accrued up to the date of such termination.

	
11.2

	
Each of the Parties hereby warrants to the others that this Deed is a legal, valid and binding agreement on it, enforceable in accordance with its terms, and each Party undertakes to the others that it will do or procure to be done all such things within its power to ensure that all the provisions of this Deed are observed and performed.

	
11.3

	
The failure of any Party hereto at any time to require performance or observance by any other Party of any provision of this Deed shall in no way affect the right of such first Party to require performance of that provision and any waiver by any Party of any breach of any provision of this Deed shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself or a waiver of any other right under this Deed.

	
11.4

	
Should any provision of this Deed be declared null and void by any competent government agency or court, this shall not affect the other provisions of this Deed which are capable of severance and which shall continue unaffected.

	
11.5

	
Nothing herein shall be taken to constitute a partnership or agency relationship between the Bondholder on one hand and any of the other Parties on the other hand and none of the Bondholder on one hand and any of the other Parties on the other hand shall have any authority to bind Investor on one hand and any of the other Parties on the other hand in any way by reason of the provisions hereof.

  

15

  

	
11.6

	
The benefits and rights of the Parties hereunder are not capable of assignment in whole or in part by any Party hereto (other than the Bondholder) but the Bondholder may assign any of its benefits and/or rights or transfer any of its benefits and/or rights and obligations to any party to whom it may assign and/or transfer its rights and obligations under the Instrument without the prior consent of the other Parties, provided always that the Bondholder shall procure that such assignee or transferee shall enter into a Bondholder Deed of Adherence prior to such assignment or transfer so that the assignee or transferee shall be bound by the relevant Finance Documents under which the Bondholder has any obligations as if an original party thereto. This Deed shall be binding on the successors and permitted assigns of the Parties.

	
11.7

	
No purported variation of this Deed shall be effective unless made in writing and signed by or on behalf of all of the Parties.

	
11.8

	
Without prejudice to any provision provided to the contrary in this Deed, in the event of a default by any Party in the performance of their respective obligations under this Deed, the non-defaulting Parties (or any of them) shall have the right to specific performance of the defaulting Party's obligations. Such remedy shall be in addition to any other remedies provided under this Deed or at law.

	
11.9

	
Each Party shall forthwith on demand of any other execute all such documents and do all such things as may be necessary and incidental to give effect to the provisions of this Deed.

	
11.10

	
This Deed may be executed in one or more counterparts, and by the Parties hereto on separate counterparts but shall not be effective until all Parties have executed and exchanged at least one counterpart, and each such counterpart shall constitute an original of this Deed but all the counterparts shall together constitute one and the same instrument.

	
11.11

	
If any provision of any Bylaws at any time conflicts with any provision of this Deed, as between the parties hereto this Deed shall prevail and the Parties shall whenever necessary exercise all voting and other rights and powers of Control available to them to procure the amendment, waiver or suspension of the relevant provision of the relevant Bylaws to the extent necessary to permit the Company and its affairs to be administered as provided in this Deed.

SECTION 12

NOTICES

	
12.

	
GENERAL

	
12.1

	
All notices and other communications to a Party shall be effective only if made in writing (which shall not include any email or other electronic communications (other than facsimile)) and sent by hand delivery, domestic registered mail, international express courier or facsimile to such Party at the following address, or to such other address as such Party shall have designated by written notice to the other Parties:

	
  

	
To the Company:

	
  

	
25/F New World Center, No. 6009

	
  

	
Yitian road, Futian District, Shenzhen

	
  

	
People’s Republic of China

Attn: Mr. Yin Yun-lu

Fax No.: +86 755 8303 9671

Email: yunluyin@globalpharmholdings.com

  

16

  

	
  

	
To the Major Shareholder:

	
  

	
25/F New World Center, No. 6009

	
  

	
Yitian road, Futian District, Shenzhen

	
  

	
People’s Republic of China

Fax No.: +86 755 8303 9671

Email: yunluyin@globalpharmholdings.com

	
  

	
To the Bondholder:

c/o Gen2 Partners Limited

2101-02, 2/F Infinitus Plaza

199 Des Voeux Road Central

Hong Kong

Attn: Mr. Barry Lau

Fax No.: +852 2117 1410

Email: barry.lau@gen2partners.com

SECTION 13

GOVERNING LAW

	
13.

	
GOVERNING LAW

	
13.1

	
This Deed and any non-contractual obligations arising out of or in connection with it are governed by the laws of Hong Kong.

	
13.2

	
Any disputes arising out of this Deed, whether in tort, contract, under statute or otherwise, including any question regarding the existence, validity, interpretation, breach or termination of this Deed, shall be finally resolved by arbitration under the Hong Kong International Arbitration Centre Administered Arbitration Rules in force as at the date of this Deed (the “Rules”), which Rules are deemed to be incorporated by reference into this Deed, as amended herein.

	
13.3

	
The Tribunal shall consist of three (3) arbitrators, to be appointed in accordance with the Rules, as amended herein. The Parties agree that all three arbitrators can be selected from outside the panel of arbitrators of the Hong Kong International Arbitration Centre (“HKIAC”).

	
13.4

	
The appointing authority shall be HKIAC, which shall also administer any arbitration commenced under this Deed.

	
13.5

	
The seat of the arbitration shall be Hong Kong.

	
13.6

	
The language of the arbitration proceedings shall be English.

	
13.7

	
Any Award of the Tribunal shall be made in writing and shall be final and binding on the parties from the day it is made. The parties undertake to carry out the Award without delay.

  

17

  

	
13.8

	
The following provisions of the Arbitration Ordinance (chapter 609 of the laws of Hong Kong) shall apply to any arbitration hereunder:

	
  

	
(a)

	
Section 2 of Schedule 2 (“Consolidation of arbitrations”); and

	
  

	
(b)

	
Section 4 of Schedule 2 (“Challenging arbitral award on ground of serious irregularity”).

	
13.9

	
The following provisions of the Arbitration Ordinance (chapter 609 of the laws of Hong Kong) shall not apply to any arbitration hereunder:

	
  

	
(a)

	
Section 1 of Schedule 2 (“Sole Arbitrator”);

	
  

	
(b)

	
Section 3 of Schedule 2 (“Decision of preliminary question of law by Court”); and

	
  

	
(c)

	
Section 5 of Schedule 2 (“Appeal against arbitral award on question of law”).

	
13.10

	
Nothing in this Clause 13 shall be construed as preventing any Party from seeking conservatory or interim relief from any court of competent jurisdiction.

	
13.11

	
The Bondholder irrevocably appoints Gen2 Partners Limited of 2101-02, 2/F Infinitus Plaza, 199 Des Voeux Road Central, Hong Kong as its authorised agent for service of any legal process in Hong Kong. If for any reason such agent shall cease to be such agent for service of process, the Bondholder shall forthwith appoint a new agent for service of process in Hong Kong and deliver to the other Parties a copy of the new agent’s acceptance of that appointment within 30 days.  Nothing in this Deed shall affect the right to serve process in any other manner permitted by law.

	
13.12

	
The Major Shareholder irrevocably appoints Binomial BioPharm Group Limited of Flat E, 4/F, Valiant Industrial Centre, 2-12 Au Pui Wan Street, Fotan, Shatin, N.T., Hong Kong as his authorised agent for service of any legal process in Hong Kong. If for any reason such agent shall cease to be such agent for service of process, the Major Shareholder shall forthwith appoint a new agent for service of process in Hong Kong and deliver to the other Parties a copy of the new agent’s acceptance of that appointment within 30 days.  Nothing in this Deed shall affect the right to serve process in any other manner permitted by law.

 [The remainder of this page has been intentionally left blank.]

  

18

  

SCHEDULE 1

RESTRICTED MATTERS

The following matters, in respect of the Company and/or any other Group member, are "Restricted Matters":

	
(a)

	
Any amendment to the certificate of incorporation of the Company or the Bylaws or the rights attached to any class of shares.

 

	
(b)

	
Any material change to the nature or geographical area of the business of the Group or any Group member.

 

	
(c)

	
Any merger, demerger, consolidation, corporate reconstruction or amalgamation with any other company or any direct or indirect change of Control of the Company or any reorganization or restructuring of the Group, in each case other than in order to effect a Liquidity Event.

 

	
(d)

	
The acquisition of any shares or other interest or participation in any company or other undertaking for an aggregate consideration in each case of US$2,000,000 or more.

 

	
(e)

	
The incurrence of an aggregate capital expenditure in one fiscal year in excess of the amount which is 10% more than the total capital expenditure provided for in the Budget.

 

	
(f)

	
Any change in the share capital or registered capital or the creation, allotment or issue of any share capital or registered capital or the creation or grant of any Equity Securities or the creation of any security or the grant of any option or rights to subscribe for or to convert any instrument into shares or other securities (each of the foregoing being an “Issuance”), other than (i) any Issuance to any persons pursuant to transactions which have been agreed by the Company prior to the date of the Subscription Agreement and which transactions have been notified to the Bondholder by the Company in writing prior to the date thereof; (ii) any Issuance (so long as the aggregate amount of such Issuances do not exceed 10% of the Shares which are outstanding) pursuant to and for the purposes of any stock option plan adopted by the Company for the benefit of its existing and future key employees ; and (iii) pursuant to any IPO which is a QIPO in respect of a registration statement which is declared effective by the U.S. Securities and Exchange Commission.

 

	
(g)

	
The incurrence of Financial Indebtedness from the date of this Deed in an amount exceeding US$2,000,000 in aggregate.

	
(h)

	
Granting any Encumbrance over any asset other than any other Encumbrance which is expressly detailed in the latest financial statements of the Company.

 

	
(i)

	
The use of the proceeds from the issue and sale of the Bonds other than as expressly permitted pursuant to the Subscription Agreement.

 

	
(j)

	
The capitalisation of any profits or distributable reserves or the payment of any dividends or other distributions, or the capitalisation, repayment or distribution of any amount standing to the credit of the share capital, share premium account, capital redemption reserve or any other undistributable reserve or the reduction of any uncalled liability in respect of any partly paid shares.

 

  

19

  

	
(k)

	
Any actions in respect of the removal or potential removal of the Bondholder Director and/or the Observer except where (i) such removal is required as a mandatory matter by U.S. law or regulatory requirements which bind the Company; or (ii) the Bondholder Director is named in an alleged fraud by any regulatory authorities or is charged with or indicted for a criminal act which involves fraudulent misconduct, dishonesty or serious moral turpitude.  In the cases mentioned in the foregoing item (ii), the Bondholder Director concerned will be replaced by a new Bondholder Director.

  

20

  

SCHEDULE 2

FORM OF CALL OPTION NOTICE

	
To:

	
[insert addressee]

	
Date: 

	
[insert date]

BY [HAND/COURIER/FAX]

CALL OPTION NOTICE

We refer to the Investor Rights Deed dated [•] 2011 by and among Global Pharm Holdings Group, Inc., Mr. Yun-Lu Yin and Blazer Delight Limited (the “Deed”). Terms defined in the Deed shall have the same meaning in this Call Option Notice unless the context requires otherwise. References to a clause are to a clause of the Deed.

[We] hereby notify you pursuant to Clause [5] that we are exercising the [Bondholder Call Option] and [we] hereby direct [enter seller’s name] to sell [specify number of Shares required to be sold] Shares at the aggregate Call Option price of US$1 to [enter purchaser’s name], at completion which shall take place at [enter address at which completion will take place] pursuant to Clause [5] on [enter the date being the fifth (5th) Business Day following the date of the Call Option Notice] (the “Completion Date”). We shall pay the aggregate Call Option Price of US$1 to you in cash on the Completion Date.

	  
	
Signed [by] [for and on behalf of] [insert name]

  

21

  

SCHEDULE 3

BONDHOLDER DEED OF ADHERENCE

THIS DEED OF ADHERENCE is made the        day of

BY:

[Name and address of transferee] (the "New Investor")

FOR THE BENEFIT OF:

	
(1)

	
GLOBAL PHARM HOLDINGS GROUP, INC. a [company] incorporated in the State of Delaware, U.S.A. which is listed on [the OTC Bulletin Board with ticker symbol “GPHG”] (the “Company"); and

	
(2)

	
MR. YUN-LU YIN, (PRC Permanent Resident Identity Card No. •) of [•] (the "Major Shareholder").

WHEREAS:

	
1.

	
on [date], the Parties entered into an investor rights deed (the "Investor Rights Deed") to which a pro forma version of this Deed forms Schedule 2;

	
2.

	
the New Investor wishes to have transferred to it, pursuant to Clause 11.6 of the Investor Rights Deed, all of the benefits, rights and obligations (the "Interests") of the Bondholder under the Investor Rights Deed and the New Investor has agreed to enter into this Deed.

THIS DEED WITNESSES as follows:

INTERPRETATION

	
1.

	
In this Deed, except as the context may otherwise require, words and expressions defined in the Investor Rights Deed shall have the same meanings when used herein.

	
2.

	
COVENANT

	
  

	
The New Investor hereby confirms that it has been supplied with a copy of the Investor Rights Deed and hereby covenants with each of the original parties to the Investor Rights Deed themselves and to such parties as trustees for all other persons who may at any time become bound by the Investor Rights Deed, to adhere to and be bound by all the duties, burdens and obligations imposed on the Bondholder pursuant to the provisions of the Investor Rights Deed and all documents expressed in writing to be supplemental or ancillary thereto as if the New Investor were an original party to the Investor Rights Deed.

  

22

  

	
3. 

	
ENFORCEABILITY

	
  

	
Any or all of the parties other than the New Investor jointly and severally in their discretion shall be entitled to enforce the Investor Rights Deed against the New Investor and the New Investor shall be entitled to all rights and benefits of the Bondholder under the Investor Rights Deed as if the New Investor had been an original party to the Investor Rights Deed since the date hereof.

	
4. 

	
GOVERNING LAW

	
4.1

	
This Deed and any non-contractual obligations arising out of or in connection with it are governed by the laws of Hong Kong.

	
4.2

	
Any disputes arising out of this Deed, whether in tort, contract, under statute or otherwise, including any question regarding the existence, validity, interpretation, breach or termination of this Deed, shall be finally resolved by arbitration under the Hong Kong International Arbitration Centre Administered Arbitration Rules in force as at the date of this Deed (the “Rules”), which Rules are deemed to be incorporated by reference into this Deed, as amended herein.

	
4.3

	
The Tribunal shall consist of three (3) arbitrators, to be appointed in accordance with the Rules, as amended herein. The Parties agree that all three arbitrators can be selected from outside the panel of arbitrators of the Hong Kong International Arbitration Centre (“HKIAC”).

	
4.4

	
The appointing authority shall be HKIAC, which shall also administer any arbitration commenced under this Deed.

	
4.5

	
The seat of the arbitration shall be Hong Kong.

	
4.6

	
The language of the arbitration proceedings shall be English.

	
4.7

	
Any Award of the Tribunal shall be made in writing and shall be final and binding on the parties from the day it is made. The parties undertake to carry out the Award without delay.

	
4.8

	
The following provisions of the Arbitration Ordinance (chapter 609 of the laws of Hong Kong) shall apply to any arbitration hereunder:

	
  

	
(a)

	
Section 2 of Schedule 2 (“Consolidation of arbitrations”); and

	
  

	
(b)

	
Section 4 of Schedule 2 (“Challenging arbitral award on ground of serious irregularity”).

	
4.9

	
The following provisions of the Arbitration Ordinance (chapter 609 of the laws of Hong Kong) shall not apply to any arbitration hereunder:

	
  

	
(a)

	
Section 1 of Schedule 2 (“Sole Arbitrator”);

	
  

	
(b)

	
Section 3 of Schedule 2 (“Decision of preliminary question of law by Court”); and

	
  

	
(c)

	
Section 5 of Schedule 2 (“Appeal against arbitral award on question of law”).

  

23

  

	
4.10

	
Nothing in this Clause 4 shall be construed as preventing any Party from seeking conservatory or interim relief from any court of competent jurisdiction.

	
4.11

	
The New Investor irrevocably appoints [•] as its authorised agent for service of any legal process in Hong Kong. If for any reason such agent shall cease to be such agent for service of process, such Party shall forthwith appoint a new agent for service of process in Hong Kong and deliver to the other Parties a copy of the new agent’s acceptance of that appointment within 30 days.  Nothing in this Deed shall affect the right to serve process in any other manner permitted by law.

IN WITNESS WHEREOF this Deed has been executed on the date first before written.

	
EXECUTED as a DEED by

	
)

	
[NEW INVESTOR].

	
)

	
acting by

	
)

	
[Name of Authorised Signatory] and

	
)

	
[Name of Authorised Signatory]

	
)

	
being persons who, in accordance

	
)

	
with the laws of the territory in which the

	
)

	
company is incorporated are

	
)

	
acting under the authority of the company

	
)

	 	 
	  	  
	  	
Authorised Signatory

	 	 
	  	  
	  	
Authorised Signatory

  

24

  

IN WITNESS WHEREOF the undersigned have executed this Deed as a deed and it is delivered and effective as of the date first above written.

	
SIGNED, SEALED AND DELIVERED

	
)

	  	  
	
as a Deed by

	  	  	  
	
GLOBAL PHARM

	
)

	  	  
	
HOLDINGS GROUP, INC.

	
)

	  	  
	
acting by its attorney

	
)

	  	  
	
YIN YUN-LU

	
)

	
/s/ Yin Yun-Lu

	  
	  	  	
Title: Director

	  

	
Witness

	
/s/ Cynthia Tan

	  
	
Full name

	
Cynthia Tan

	  
	
Title

	
Lawyer

	  

	
SIGNED, SEALED and DELIVERED

	
)

	  
	
as a DEED by MR. YIN YUN-LU

	
)

	  
	
in the presence of :

	
)

	
/s/ Yin Yun-Lu

	
/s/ Cynthia Tan

	  
	
Signature of witness

	  

Name of Witness:  Cynthia Tan

Occupation:  Lawyer

Address:  Hong Kong

	
EXECUTED as a DEED by

	
)

	  
	
BLAZER DELIGHT LIMITED

	
)

	  
	
acting by

	
)

	  
	  	
)

	  
	
who, in accordance

	
)

	  
	
with the laws of the territory in which the

	
)

	  
	
company is incorporated is/are

	
)

	  
	
acting under the authority of the company

	
)

	
/s/ Bruce Tseng

	  	  	
Authorised Signatory

  

25DATED 21 September 2011

 

(1) GLOBAL PHARM HOLDINGS, INC.

 

(2) BLAZER DELIGHT LIMITED

	 	 	 
	  	
 

ASSIGNMENT AGREEMENT

 

	  

 

Roome Puhar

in association with

Bingham McCutchen LLP

Suites 4901-4904

One Exchange Square

8 Connaught Place

Central Hong Kong

 

  

  

  

 

TABLE OF CONTENTS

	  	  	
Page

	  	  	  
	
1.

	
DEFINITIONS AND INTERPRETATION

	
1

	  	  	  
	
2.

	
COVENANT TO PAY

	
4

	  	  	  
	
3.

	
GRANT OF SECURITY

	
4

	  	  	  
	
4.

	
FIXED CHARGES AND ASSIGNMENTS

	
4

	  	  	  
	
5.

	
CONTINUING SECURITY

	
5

	  	  	  
	
6.

	
LIABILITY OF THE CHARGOR RELATING TO CHARGED OBLIGATIONS

	
6

	  	  	  
	
7.

	
REPRESENTATIONS

	
6

	  	  	  
	
8.

	
UNDERTAKINGS BY THE CHARGOR

	
7

	  	  	  
	
9.

	
Power to Remedy

	
9

	  	  	  
	
10.

	
WHEN SECURITY BECOMES ENFORCEABLE

	
9

	  	  	  
	
11.

	
ENFORCEMENT OF SECURITY

	
10

	  	  	  
	
12.

	
RECEIVER

	
11

	  	  	  
	
13.

	
POWERS OF RECEIVER

	
12

	  	  	  
	
14.

	
APPLICATION OF PROCEEDS

	
13

	  	  	  
	
15.

	
SET-OFF

	
13

	  	  	  
	
16.

	
DELEGATION

	
14

	  	  	  
	
17.

	
FURTHER ASSURANCES

	
14

	  	  	  
	
18.

	
POWER OF ATTORNEY

	
15

	  	  	  
	
19.

	
CURRENCY CONVERSION

	
15

	  	  	  
	
20.

	
CHANGES TO THE PARTIES

	
15

	  	  	  
	
21.

	
MISCELLANEOUS

	
15

	  	  	  
	
22.

	
NOTICES

	
16

	  	  	  
	
23.

	
CALCULATIONS AND CERTIFICATES

	
17

	  	  	  
	
24.

	
PARTIAL INVALIDITY

	
17

	  	  	  
	
25.

	
REMEDIES AND WAIVERS

	
17

	  	  	  
	
26.

	
AMENDMENTS AND WAIVERS

	
18

	  	  	  
	
27.

	
COUNTERPARTS

	
18

	  	  	  
	
28.

	
RELEASE

	
18

	  	  	  
	
29.

	
GOVERNING LAW AND ENFORCEMENT

	
18

	  	  	  
	
SCHEDULE 1

	
21

 

  

  

  

 

THIS DEED is made on 21 September 2011

 

BETWEEN

 

	
(1)

	
GLOBAL PHARM HOLDINGS, INC., a company incorporated under the laws of the State of Delaware, the U.S.A. and having its registered office at 2711 Centerville Rd., Ste. 400, Wilmington, DE and its principal place of business at Room 2503-2505, New World Center, No. 6009 Yitian Road, Futian District, Shenzhen, China. (the “Chargor”); and

 

	
(2)

	
BLAZER DELIGHT LIMITED, a company incorporated under the laws of the British Virgin Islands under number 1631470 with its registered office at Sea Meadow House, Blackburne Highway, (P.O. Box 116), Road Town, Tortola, British Virgin Islands (the “Bondholder” which terms shall include any of its future permitted assignees and/or transferees).

 

IT IS AGREED as follows:

 

	
1.

	
DEFINITIONS AND INTERPRETATION

 

	
1.1

	
Definitions

 

Except as otherwise provided in this Deed, terms and expressions defined in the Instruments shall have the same meanings when used in this Deed.

 

	
“Assigned Assets”

	
means the Charged Obligations expressed to be assigned by way of security pursuant to Clause 4.1(a).

	  	  
	
“Bonds”

	
means up to US$15,000,000 aggregate principal amount of Convertible Bonds of the Chargor due 2013 and issued pursuant to the Instruments in registered form and convertible into shares of common stock of the Chargor.

	  	  
	
“Charged Assets”

	
means the Charged Obligations, the Relevant Documents and Related Rights.

	  	  
	
“Charged Obligations”

	
means any indebtedness owed by a Subsidiary to the Chargor for or in respect of: (a) moneys borrowed, (b) amounts raised pursuant to a credit or loan facility, (c) amounts raised pursuant to a note issuance, (d) amounts raised under any other transaction (including any forward sale, purchase agreement or derivative) that has the commercial effect of a borrowing or (e) any guarantee of any nature whatsoever provided in respect of any obligation of a type described in (a) through (d) of this definition owing by a Subsidiary to the Chargor.

	  	  
	
“Default Rate”

	
means the fixed rate identified in the Instruments as being the rate at which the principal amount of the Bonds shall be entitled to interest if the Bonds remain unpaid after they have become due and repayable.

	  	  
	
“Delegate”

	
means any delegate, sub-delegate, agent, attorney or co-trustee appointed by the Bondholder or by a Receiver.

 

  

1

  

 

	
“Delivery Date”

	
means each date on which Charged Obligations are incurred or created.

	  	  
	
“Encumbrance”

	
means any encumbrance or security interest of any kind whatsoever including without limitation a mortgage, charge, pledge, lien, hypothecation, restriction, right to acquire, right of pre-emption, warrant, option, conversion right, third party right or interest, right of set-off or counterclaim, equities, trust arrangement or any other type of preferential agreement (such as a retention of title arrangement) having similar effect or any other rights exercisable by or claims by third parties.

	  	  
	
“Finance Documents”

	
means the this Deed, the Instruments, the Bonds, the Investor Rights Deed, the Subscription Agreement, the Share Charge and the Individual Guarantee.

	  	  
	
“Hong Kong”

	
means the Hong Kong Special Administrative Region of the People’s Republic of China.

	  	  
	
“Instruments”

	
means the bond instruments relating to the issuance of up to US$15,000,000 aggregate principal amount of the Bonds (including the terms and conditions of the Bonds applicable thereto).

	  	  
	
“Party”

	
means a party to this Deed.

	  	  
	
“Receiver”

	
means any receiver, receiver and manager or administrative receiver appointed by the Bondholder under this Deed.

	  	  
	
“Related Rights”

	
means, in relation to any Charged Obligation

 

(a)      all amounts paid or payable on the relevant Charged Obligation or on any asset referred to in paragraph (b) of this definition; and

	  	  
	  	
(b)      all rights, monies or property accruing or offered at any time in relation to such Charged Obligation whether by way of redemption, substitution or exchange under option rights or otherwise.

	  	  
	
“Relevant Document”

	
means any contract or agreement entered into by the Chargor evidencing a Charged Obligation.

	  	  
	
“Secured Obligations”

	
means all present and future obligations and liabilities in favour of the Bondholder whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever of all or any of the Chargor, the Individual Guarantor or the Corporate Guarantors and/or their respective successors and/or permitted assigns under all and/or any of the Finance Documents to which any of the Chargor, the Individual Guarantor, the Corporate Guarantors and/or their respective successors and/or permitted assigns is a party.

 

  

2

  

 

	
“Security”

	
means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement have a similar effect.

	  	  
	
“Security Period”

	
means the period beginning on the date hereof and ending on the date on which the Bondholder has confirmed to the Chargor in writing that all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full as provided in Clause 28.1.

	  	  
	
“Subsidiary”

	
means any company Controlled by the Chargor.

	  	  
	
“$”, “US” and “US dollars”

	
means the lawful currency for the time being of the United States of America.

 

	
1.2

	
Interpretation

 

	
  

	
(a)

	
Unless a contrary indication appears, in this Deed the provisions of Clause 1 (Interpretation) of the Instruments, if relevant, apply to this Deed as though they were set out in full in this Deed, except that references to “this Agreement” will be construed as references to this Deed.

 

	
  

	
(b)

	
Unless a contrary indication appears, any reference in this Deed to:

 

	
  

	
(i)

	
a “Chargor” or the “Bondholder” or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees and, in the case of the Bondholder, any person for the time being a Bondholder in accordance with the Instruments.

 

	
  

	
(ii)

	
“this Deed”, the “Instruments”, any other “Finance Document” or any other agreement or instrument is a reference to this Deed, the Instruments, that other Finance Document or that other agreement or instrument as amended, supplemented, extended, restated, novated and/or replaced in any manner from time to.

 

	
  

	
(iii)

	
“Secured Obligations” includes obligations and liabilities which would be treated as such but for the winding up, liquidation, administration or dissolution of or similar event affecting the Chargor, the Individual Guarantor or any Corporate Guarantor.

 

	
  

	
(iv)

	
Each undertaking of the Chargor (other than a payment obligation) contained in this Deed:

 

	
  

	
(A)

	
must be complied with at all times during the Security Period; and

 

	
  

	
(B)

	
is given by the Chargor for the benefit of the Bondholder.

 

	
  

	
(c)

	
If the Bondholder reasonably considers that an amount paid by the Chargor, the Individual Guarantor or any Corporate Guarantor under a Finance Document is capable of being avoided or otherwise set aside on the liquidation or administration of the Chargor, the Individual Guarantor or any Corporate Guarantor (as applicable), then that amount shall not be considered to have been irrevocably paid for the purposes of this Deed.

 

  

3

  

 

	
  

	
(d)

	
The Parties intend that this document shall take effect as a deed notwithstanding the fact that a Party may only execute this document under hand.

 

	
  

	
(e)

	
Unless the context otherwise requires, references in this Deed to “Clauses” are to the clauses or sub-clauses of this Deed and references to “Paragraphs” are to paragraphs of this Deed.

 

	
  

	
(f)

	
A reference to a legal term for a legal document, court, judicial process, action, remedy, legal status, official or any other legal concept, in respect of a jurisdiction other than Hong Kong, deemed to be a reference to whatever most closely equates to the Hong Kong legal term in that jurisdiction.

 

	
  

	
(g)

	
The expression “including” shall be construed to mean “including without limitation”.

 

	
2.

	
COVENANT TO PAY

 

	
2.1

	
Covenant to pay

 

	
  

	
(a)

	
The Chargor covenants in favour of the Bondholder that it will pay and discharge the Secured Obligations from time to time when they fall due.

 

	
  

	
(b)

	
Every payment by the Chargor of a Secured Obligation which is made to or for the benefit of the Bondholder to which that Secured Obligation is due and payable in accordance with the Finance Documents under which such sum is payable to the Bondholder, shall operate in satisfaction to the same extent of the covenant contained in Clause 2.1(a).

 

	
2.2

	
Default interest

 

Any amount which is not paid under this Deed when due shall bear interest (both before and after judgment and payable on demand) from the due date until the date on which such amount is unconditionally and irrevocably paid and discharged in full on a daily basis at the Default Rate as in effect from time to time.  In such a case, default interest will accrue from day to day on a year of 365 days and will be compounded at such intervals as the Bondholder states are appropriate.

 

	
3.

	
GRANT OF SECURITY

 

	
3.1

	
Nature of security

 

All charges and assigns created or made by or pursuant to this Deed are created or made:

 

	
  

	
(a)

	
in favour of the Bondholder;

 

	
  

	
(b)

	
free from any Encumbrance; and

 

	
  

	
(c)

	
as continuing security for payment of the Secured Obligations.

 

	
4.

	
FIXED CHARGES AND ASSIGNMENTS

 

	
4.1

	
(a)

	
The Chargor, as legal and beneficial owner and as continuing security for the due and punctual payment and discharge of all Secured Obligations:

 

  

4

  

 

	
  

	
(i)

	
charges by way of first fixed charge and assigns by way of fixed security with first ranking security (and agrees to assign by way of fixed security with first ranking security) to the Bondholder, all its rights, title and interest present and future in and to the Charged Assets except to the extent that such rights are subject to a valid and effective assignment by way of fixed security with first ranking security under Clause 4.1(a)(ii); and

 

	
  

	
(ii)

	
assigns, and agrees to assign, by way of fixed security with first ranking security absolutely to the Bondholder all its rights (including those rights it may have against a nominee), present and future, relating to any of the Charged Assets including without limitation:

 

	
  

	
(A)

	
its rights relating to or against any depositary, nominee or similar person with whom any of the Charged Assets may be deposited;

 

	
  

	
(B)

	
all rights it may have against any person to require delivery to it of any of the Charged Assets;

 

	
  

	
(C)

	
all rights (contractually or otherwise) to give instructions relating to any of the Charged Assets; and

 

	
  

	
(D)

	
all claims for damages and rights to receive moneys due or to become due for any reason whatsoever in respect of any of the Charged Assets, including those rights it may have against a nominee.

 

	
  

	
(b)

	
If and to the extent that the law of any state of the United States of America applies to the Security created by this Deed (despite, and without prejudice to, Clause 29), the Security created or provided for in this Deed shall constitute a “Security Agreement” within the meaning of the Uniform Commercial Code (the “UCC”) of such state, and the Chargor hereby grants to the Bondholder a “Security” interest under the UCC in all right, title, interest and property of the Chargor referred to in Clause 4.1(a), whether now owned or hereafter acquired and wherever located, and all proceeds thereof, all as continuing security for the due and punctual payment and discharge of all Secured Obligations, with the Bondholder having (in addition to all other rights and remedies available under this Deed and applicable law) all rights and remedies of a secured party under the UCC of each such state.

 

	
4.2

	
Charged Obligations

 

The Bondholder is not obliged to take any steps necessary to preserve the Charged Assets or to make any enquiries as to the nature or sufficiency of any payment received by it pursuant to this Deed.

 

	
5.

	
CONTINUING SECURITY

 

	
5.1

	
Continuing security

 

The Security created by this Deed is continuing and will extend to the ultimate balance of the Secured Obligations regardless of any intermediate payment or discharge in whole or in part.  This Deed shall remain in full force and effect as a continuing security for the duration of the Security Period.

 

  

5

  

 

	
5.2

	
Additional and separate security

 

This Deed is in addition to, without prejudice to, and shall not merge with, any other right, remedy, guarantee or Security which the Bondholder may at any time hold for any Secured Obligation.

 

	
5.3

	
Right to enforce

 

This Deed may be enforced against the Chargor without the Bondholder first having recourse to any other right, remedy, guarantee or Security held by or available to it or any of them.

 

	
6.

	
LIABILITY OF THE CHARGOR RELATING TO CHARGED OBLIGATIONS

 

Notwithstanding anything contained in this Deed or implied to the contrary, the Chargor remains liable to observe and perform all conditions and obligations assumed by it in relation to the Charged Assets.  The Bondholder is under no obligation to perform or fulfil, any such condition or obligation or to make any payment in respect of any such condition or obligation.

 

	
7.

	
REPRESENTATIONS

 

	
7.1

	
General

 

The Chargor makes the representations and warranties set out in this Clause 7 to the Bondholder.

 

	
7.2

	
Ownership of Charged Obligations

 

The Chargor is the sole legal and beneficial owner of all of the Charged Obligations.

 

	
7.3

	
Incorporation, etc.

 

The Chargor is duly incorporated and validly existing under the laws of the State of Delaware and has full power and authority to carry on its business as it is now being conducted.

 

	
7.4

	
Compliance, etc.

 

	
  

	
(a)

	
The Chargor has the corporate power, authority and capacity to create the Security contained herein and to enter into this Deed on the terms and conditions set out herein and to perform and observe its obligations hereunder.

 

	
  

	
(b)

	
The obligations expressed to be assumed by the Chargor in this Deed are legal, valid, binding and enforceable.

 

	
  

	
(c)

	
The entry into and performance by the Chargor of this Deed, and the transactions contemplated by this Deed, and the enforcement of this Deed by the Bondholder, do not and will not conflict with (i) the certificate of incorporation or by-laws of the Chargor, (ii) any law or regulation applicable to the Chargor or (iii) any agreement or instrument by which the Chargor is bound.

 

	
  

	
(d)

	
The Chargor has the power to enter into, perform and deliver this Deed and the transactions contemplated by this Deed.

 

	
  

	
(e)

	
All approvals or authorisations required:

 

	
  

	
(i)

	
to enable the Chargor lawfully to enter into, exercise its rights and comply with its obligations in this Deed and the transactions contemplated by this Deed; and/or

 

  

6

  

 

	
  

	
(ii)

	
to enable the Chargor to create the Security created by this Deed and to ensure that such Security has the priority and ranking they are expressed to have,

 

have been obtained or effected and are in full force.

 

	
  

	
(f)

	
This Deed creates in favour of the Bondholder the Security over the Charged Assets with the ranking and priority it is expressed to have in this Deed.

 

	
  

	
(g)

	
There is no Encumbrance over all or any part of the Charged Assets.

 

	
  

	
(h)

	
As at the date of this Deed there are no Charged Obligations.

 

	
7.5

	
Time when representations made

 

	
  

	
(a)

	
All the representations and warranties in this Clause 7 (Representations) are made by the Chargor on the date of this Deed and are also deemed to be made by the Chargor on each date on which any amount due to the Bondholder from the Individual Guarantor, the Chargor or any Corporate Guarantor under the Finance Documents remains outstanding.

 

	
  

	
(b)

	
Each representation or warranty deemed to be made after the date of this Deed shall be deemed to be made by reference to the facts and circumstances existing at the date the representation or warranty is deemed to be made.

 

	
8.

	
UNDERTAKINGS BY THE CHARGOR

 

	
8.1

	
Negative pledge and Disposals

 

The Chargor undertakes to and agrees with the Bondholder throughout the continuance of this Deed and for so long as the Secured Obligations or any part thereof remains owing that it shall, unless the Bondholder otherwise agrees in writing and in any such case prior to the completion of a QIPO:

 

	
  

	
(a)

	
not to create or attempt or agree to create or permit to arise or exist any Encumbrance over any of the Charged Obligations or otherwise assign, deal with or dispose of the Charged Obligations; and

 

	
  

	
(b)

	
not to sell or dispose of (or agree conditionally or otherwise to sell or dispose of) nor grant in favour of any other person, the whole of or any interest in or any option, warrant or other rights in respect of any of the Charged Obligations.

 

	
8.2

	
Charged Obligations generally

 

The Chargor undertakes to and agrees with the Bondholder throughout the continuance of this Deed and so long as the Secured Obligations or any part thereof remains owing that it shall not do, or permit to be done, anything which would be calculated or intended to reduce, jeopardise or otherwise prejudice the value of the Security constituted by this Deed.

 

	
8.3

	
Deposit of documents and notices

 

	
  

	
(a)

	
The Chargor shall deliver or procure that there shall be delivered to the Bondholder the following documents (in a form and substance satisfactory to the Bondholder (acting reasonably)) on each Delivery Date:

 

  

7

  

 

	
  

	
(i)

	
valid and duly issued notes, instruments (or other negotiable document, so long as the perfection as to any security interest in respect thereof is governed by Hong Kong law when possession thereof is maintained in Hong Kong) in respect of such Charged Obligations;

 

	
  

	
(ii)

	
duly executed instruments of transfer or assignments in respect of such Charged Obligations but with the dates and names of the transferees left blank; and

 

	
  

	
(iii)

	
all other documents necessary or conducive to enable the Bondholder to register such Charged Obligations in its name or in the name of its nominees.

 

	
  

	
(b)

	
The Chargor shall promptly make all payments which may become due in respect of the Charged Obligations.

 

	
  

	
(c)

	
The Chargor shall not nominate another person to enjoy or exercise all or any specified rights of the Chargor in relation to the Charged Obligations.

 

	
  

	
(d)

	
Schedule 1 will set forth a true, correct and complete list of all Charged Obligations constituting Security owned or written in favour of the Chargor.  The Chargor authorizes the Bondholder to modify this Agreement to include Charged Assets delivered on a Delivery Date without the necessity of the Chargor's further approval or signature by amending Schedule 1 hereto.

 

	
8.4

	
Rights of the Parties in respect of Charged Obligations

 

	
  

	
(a)

	
Until an Event of Default occurs, but without prejudice to the other rights of the Bondholder, the Chargor shall be entitled to:

 

	
  

	
(i)

	
receive and retain all monies paid on or derived from the Charged Obligations; and

 

	
  

	
(ii)

	
exercise all voting and other rights and powers attaching to the Charged Obligations, provided that it must not do so in a manner which:

 

	
  

	
(A)

	
has the effect of changing the terms of such Charged Obligations (or any class of them) or of any Related Rights; or

 

	
  

	
(B)

	
is prejudicial to the interests of the Bondholder.

 

	
  

	
(b)

	
At any time following the occurrence of an Event of Default, the Bondholder may complete the instrument(s) of transfer or assignments for all or any Charged Assets on behalf of the Chargor in favour of itself or such other person as it may select.

 

	
  

	
(c)

	
At any time following the occurrence an Event of Default and any Charged Obligation is registered in the name of the Bondholder or its nominee, the Bondholder shall be under no duty to:

 

	
  

	
(i)

	
ensure that any monies payable in respect of the Charged Assets are duly and promptly paid or received by it or its nominee;

 

	
  

	
(ii)

	
verify that the correct amounts are paid or received; or

 

  

8

  

 

	
  

	
(iii)

	
take any action in connection with the taking up of any (or any offer of any) Related Rights in respect of or in substitution for, any such Charged Obligation.

 

	
8.5

	
Financing Statements

 

At the Bondholder’s cost and expense, the Chargor hereby irrevocably authorizes the Bondholder at any time and from time to time to file in any filing office in any jurisdiction any initial financing statements and amendments thereto that (a) indicate the Charged Obligations (and all proceeds thereof) as the pledged collateral or words of similar effect, or as being of equal or lesser scope or in greater detail, and (b) contain any other information required by part 5 of Article 9 of the UCC of the jurisdiction of the filing office for the sufficiency or filing office acceptance of any financing statement or amendment.  The Chargor agrees to furnish any such information to the Bondholder promptly upon request.

 

	
8.6

	
Books and Records

 

The Chargor will keep correct and accurate books and records concerning the Charged Assets and the Bondholder will be entitled to inspect the same at any reasonable time by giving written notice to the Chargor two Business Days in advance.

	
9.

	
POWER TO REMEDY

 

	
9.1

	
Power to remedy

 

If the Chargor does not comply with any of its obligations under this Deed, the Bondholder (without prejudice to any other rights arising as a consequence of such non-compliance) shall, following the occurrence of an Event of Default, be entitled (but not bound) to rectify that default.  The Chargor irrevocably authorises the Bondholder and its officers, employees and agents by way of security to do all such things which are necessary or desirable to rectify that default.

 

	
9.2

	
Mortgagee in possession

 

The exercise of the powers of the Bondholder under this Clause 9 (Power to Remedy) shall not render it liable as a mortgagee in possession.

 

	
9.3

	
Monies expended

 

The Chargor shall pay to the Bondholder on demand any monies which are expended by the Bondholder in exercising its powers under this Clause 9 (Power to Remedy), together with interest at the Default Rate from the date on which those monies were expended by the Bondholder (both before and after judgment) and otherwise in accordance with Clause 2.2 (Default interest).

 

	
10.

	
WHEN SECURITY BECOMES ENFORCEABLE

 

	
10.1

	
When enforceable

 

This Security created by this Deed shall become immediately enforceable upon the occurrence of an Event of Default.

 

  

9

  

 

	
10.2

	
Statutory powers

 

Any power of sale and other powers conferred by any applicable law relevant to the enforcement of the Security created by this Deed (as amended or extended by this Deed) shall be immediately exercisable upon and at any time after the occurrence of any Event of Default.

 

	
10.3

	
Enforcement

 

After the Security created by this Deed has become enforceable, the Bondholder may in its absolute discretion enforce all or any part of such Security in such manner as it sees fit.

 

	
11.

	
ENFORCEMENT OF SECURITY

 

	
11.1

	
General

 

For the purposes of all rights and powers implied by statute, the Secured Obligations are deemed to have become due and payable on the date of this Deed.

 

	
11.2

	
Powers of Bondholder

 

	
  

	
(a)

	
At any time after the Security created by this Deed becomes enforceable (or if so requested by the Chargor by written notice at any time), the Bondholder may without further notice (unless required by law):

 

	
  

	
(i)

	
appoint any person (or persons) to be a receiver, receiver and manager or administrative receiver of all or any part of the Charged Assets and/or of the income of the Charged Assets and/or

 

	
  

	
(ii)

	
appoint or apply for the appointment of any person who is appropriately qualified as administrator of the Chargor; and/or

 

	
  

	
(iii)

	
exercise all or any of the powers conferred by the applicable law (as amended or extended by this Deed) relevant for the enforcement of this Deed and/or all or any of the powers which are conferred by this Deed on a Receiver, in each case without first appointing a Receiver or notwithstanding the appointment of any Receiver; and/or

 

	
  

	
(iv)

	
exercise (in the name of the Chargor and without any further consent or authority of the Chargor) any voting rights and any powers or rights which may be exercised by any person(s) in whose name any Charged Obligation or Related Rights is registered or who is the holder of any of them.

 

	
11.3

	
Privileges

 

Each Receiver and the Bondholder is entitled to all the rights, powers, privileges and immunities conferred by the applicable law on mortgagee (or other holder of security) and receivers when such receivers have been duly appointed.

 

	
11.4

	
No liability

 

	
  

	
(a)

	
Neither the Bondholder nor any Receiver shall be liable (A) in respect of all or any part of the Charged Obligations or (B) for any loss or damage which arises out of the exercise or the attempted or purported exercise of, or the failure to exercise any of, its or his respective powers (unless such loss or damage is caused by its or his gross negligence or wilful misconduct).

 

  

10

  

 

	
  

	
(b)

	
Without prejudice to the generality of Clause 11.4(a), neither the Bondholder nor any Receiver shall be liable, by reason of entering into possession of a Charged Obligation, or Related Right to account as mortgagee in possession or for any loss on realisation or for any default or omission for which a mortgagee in possession might be liable.

 

	
11.5

	
Protection of third parties

 

No person (including a purchaser) dealing with the Bondholder or any Receiver or Delegate will be concerned to enquire:

 

	
  

	
(a)

	
whether the Secured Obligations have become payable; or

 

	
  

	
(b)

	
whether any power which the Bondholder or the Receiver is purporting to exercise has become exercisable; or

 

	
  

	
(c)

	
whether any money remains due under any Finance Document; or

 

	
  

	
(d)

	
how any money paid to the Bondholder or to the Receiver is to be applied.

 

	
12.

	
RECEIVER

 

	
12.1

	
Removal and replacement

 

The Bondholder may from time to time remove any Receiver appointed by it and, whenever it may deem appropriate, may appoint a new Receiver in the place of any Receiver whose appointment has terminated.

 

	
12.2

	
Multiple Receivers

 

If at any time there is more than one Receiver of all or any part of the Charged Assets and/or the income of the Charged Assets, each Receiver shall have power to act individually (unless otherwise stated in the appointment document).

 

	
12.3

	
Remuneration

 

Any Receiver shall be entitled to remuneration for his services at a rate to be fixed by agreement between him and the Bondholder (or, failing such agreement, to be fixed by the Bondholder).

 

	
12.4

	
Payment by Receiver

 

Only monies actually paid by a Receiver to the Bondholder in relation to the Secured Obligations shall be capable of being applied by the Bondholder in discharge of the Secured Obligations.

 

	
12.5

	
Agent of Chargor

 

Any Receiver shall be the agent of the Chargor.  The Chargor shall be solely responsible for his acts and defaults and for the payment of his remuneration.  The Bondholder shall incur not any liability (either to the Chargor or to any other person) by reason of the appointment of a Receiver or for any other reason.

 

  

11

  

 

	
13.

	
POWERS OF RECEIVER

 

	
13.1

	
General powers

 

Any Receiver shall have all powers which are conferred by any applicable law conferring power on receivers.

 

	
13.2

	
Additional powers

 

In addition to the powers referred to in Clause 13.1 (General powers), a Receiver shall have the following powers:

 

	
  

	
(a)

	
to take possession of, collect and get in all or any part of the Charged Assets and/or income in respect of which he was appointed;

 

	
  

	
(b)

	
to manage the Charged Assets as he thinks fit;

 

	
  

	
(c)

	
to redeem any Security and to borrow or raise any money and secure the payment of any money in priority to the Secured Obligations for the purpose of the exercise of his powers and/or defraying any costs or liabilities incurred by him in such exercise;

 

	
  

	
(d)

	
to sell or concur in selling, loaning or otherwise disposing of all or any part of the Charged Assets in respect of which he was appointed, and, without limitation;

 

	
  

	
(i)

	
the consideration for any such transaction may consist of cash, debentures or other obligations, shares, stock or other valuable consideration (and the amount of such consideration may be dependent upon profit or turnover or be determined by a third party); and

 

	
  

	
(ii)

	
any such consideration may be payable in a lump sum or by instalments spread over such period as he thinks fit;

 

	
  

	
(e)

	
to carry out any sale, loan or other disposal of all or any part of the Charged Assets by conveying, transferring, assigning or leasing the same in the name of the Chargor and, for that purpose, to enter into covenants and other contractual obligations in the name of, and so as to bind, the Chargor;

 

	
  

	
(f)

	
to take any such proceedings (in the name of the Chargor or otherwise) as he shall think fit in respect of the Charged Obligations and/or income in respect of which he was appointed;

 

	
  

	
(g)

	
to enter into or make any such agreement, arrangement or compromise as he shall think fit;

 

	
  

	
(h)

	
to appoint and employ such managers, officers and workmen and engage such professional advisers as he shall think fit (including, without prejudice to the generality of the foregoing power, to employ his partners and firm);

 

	
  

	
(i)

	
to:

 

	
  

	
(i)

	
give valid receipts for all monies and to do all such other things as may seem to him to be incidental or conducive to any other power vested in him or necessary or desirable for the realisation of any Charged Obligation or Related Rights;

 

  

12

  

 

	
  

	
(ii)

	
exercise in relation to each Charged Obligation and Related Rights all such powers and rights as he would be capable of exercising if he were the absolute beneficial owner of the Charged Obligations and Related Rights; and

 

	
  

	
(iii)

	
use the name of the Chargor for any of the above purposes.

 

	
14.

	
APPLICATION OF PROCEEDS

 

	
14.1

	
Application

 

All monies received by the Bondholder or any Receiver after the Security created by this Deed has become enforceable shall (subject to the rights and claims of any person having a security ranking in priority to such Security) be applied in the following order:

 

	
  

	
(a)

	
firstly, in satisfaction of, or provision for, all costs, charges and expenses incurred, and payments made, by the Bondholder or any Receiver or Delegate and of all remuneration due to the Receiver in connection with this Deed or the Charged Obligations;

 

	
  

	
(b)

	
secondly, in or towards satisfaction of the Secured Obligations; and

 

	
  

	
(c)

	
thirdly, in payment of any surplus to the Chargor.

 

	
14.2

	
Contingencies

 

If the Security created by this Deed is enforced at a time when no amounts are due under the Finance Documents (but at a time when amounts may become so due), the Bondholder or a Receiver may pay the proceeds of any recoveries effected by it into a blocked suspense account (bearing interest at such rate (if any)) as the Bondholder may determine.

 

	
14.3

	
Suspense account

 

All monies received, recovered or realised by the Bondholder under or in connection with this Deed may at the discretion of the Bondholder be credited to a separate suspense account for so long as the Bondholder determines (with interest accruing thereon at such rate (if any) as the Bondholder may determine without the Bondholder having any obligation to apply such monies and interest or any part of it in or towards the discharge of any of the Secured Obligations unless such monies would clear all Secured Obligations in full.

 

	
15.

	
SET-OFF

 

	
15.1

	
Set-off rights

 

	
  

	
(a)

	
The Bondholder may set off any matured obligation due from the Chargor (whether under the Finance Documents or which has been assigned to the Bondholder by the Chargor) against any matured obligation owed by the Bondholder to the Chargor, regardless of the place of payment, booking branch or currency of either obligation.

 

	
  

	
(b)

	
At any time after the Security created by this Deed has become enforceable (and in addition to its rights under Clause 15.1(a)), the Bondholder may (but shall not be obliged to) set-off any contingent liability owed by the Chargor under any Finance Document against any obligation (whether or not matured) owed by the Bondholder to the Chargor, regardless of the place of payment, booking branch or currency of either obligation.

 

  

13

  

 

	
  

	
(c)

	
If the obligations are in different currencies, the Bondholder may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

 

	
  

	
(d)

	
If either obligation is unliquidated or unascertained, the Bondholder may set off in an amount estimated by it in good faith to be the amount of that obligation.

 

	
16.

	
DELEGATION

 

Each of the Bondholder and any Receiver may delegate, by power of attorney (or in any other manner) to any person, any right, power or discretion exercisable by them under this Deed upon any terms (including power to sub-delegate) which it may think fit.  Neither the Bondholder nor any Receiver shall be in any way liable or responsible to the Chargor for any loss or liability arising from any act, default, omission or misconduct on the part of any Delegate.

 

	
17.

	
FURTHER ASSURANCES

 

	
17.1

	
Further action

 

The Chargor shall at its own expense, immediately do all acts and execute all documents as the Bondholder or a Receiver may reasonably specify (and in such form as the Bondholder or a Receiver may reasonably require) for:

 

	
  

	
(a)

	
creating, perfecting or protecting the Security intended to be created by this Deed;

 

	
  

	
(b)

	
facilitating the realisation of any Charged Obligation or Related Rights;

 

	
  

	
(c)

	
facilitating the exercise of any rights, powers and remedies exercisable by the Bondholder or any Receiver or any Delegate in respect of any Charged Obligation or Related Rights or provided by or pursuant to the Finance Documents or by law; or

 

	
  

	
(d)

	
creating and perfecting Security in favour of the Bondholder over any property and assets of that Chargor located in any jurisdiction outside Hong Kong equivalent or similar to the Security intended to be created by or pursuant to this Deed.

 

This includes:

 

	
  

	
(e)

	
the re-execution of this Deed;

 

	
  

	
(f)

	
the execution of any legal mortgage, charge, transfer, conveyance, assignment, assignation or assurance of any property, whether to the Bondholder or to its nominee; and

 

	
  

	
(g)

	
the giving of any notice, order or direction and the making of any filing or registration

 

	
  

	
(h)

	
which, in any such case, the Bondholder may think expedient.

 

	
17.2

	
Finance Documents

 

Except as provided in Clause 8.5, the Chargor shall at its own expense take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Bondholder by or pursuant to the Finance Documents.

 

  

14

  

 

	
17.3

	
Specific security

 

Without prejudice to the generality of Clause 17.1 (Further action), the Chargor will immediately upon request by the Bondholder execute any document contemplated by that clause over any Charged Obligation which is subject to or intended to be subject to any fixed security under this Deed.

 

	
18.

	
POWER OF ATTORNEY

 

The Chargor, by way of security, irrevocably and severally appoints the Bondholder, each Receiver and any Delegate to be its attorney to take any action which the Chargor is obliged to take under this Deed but which it has failed to take, including under Clause 17 (Further Assurances).  The Chargor ratifies and confirms whatever any attorney does or purports to do pursuant to its appointment under this clause.

 

	
19.

	
CURRENCY CONVERSION

 

All monies received or held by the Bondholder or any Receiver under this Deed may be converted from their existing currency into such other currency as the Bondholder or the Receiver considers necessary or desirable to cover the obligations and liabilities comprised in the Secured Obligations in that other currency.  The Chargor shall indemnify the Bondholder against all costs, charges and expenses incurred in relation to such conversion. Neither the Bondholder nor any Receiver shall have any liability to the Chargor in respect of any loss resulting from any fluctuation in exchange rates after any such conversion.

 

	
20.

	
CHANGES TO THE PARTIES

 

	
20.1

	
Chargor

 

The Chargor may not assign or transfer in any manner whatsoever any of its rights or obligations under this Deed.

 

	
20.2

	
Bondholder

 

The Bondholder may only assign or transfer any of its rights, benefits, duties or obligations hereunder in accordance with and on the same basis that it may assign or transfer any rights, benefits, duties or obligations which it has under the terms of the Instruments.

 

	
21.

	
MISCELLANEOUS

 

	
21.1

	
Protective Clauses

 

Neither the liability of the Chargor nor the validity or enforceability of this Deed shall be prejudiced, affected or discharged by:

 

	
  

	
(a)

	
the granting of any time or indulgence to the Chargor or any other person;

 

	
  

	
(b)

	
any variation or modification of any Finance Document or any other document referred to therein;

 

	
  

	
(c)

	
the invalidity or unenforceability of any obligation or liability of the Individual Guarantor, the Chargor or the Corporate Guarantors under any of the Finance Documents;

 

	
  

	
(d)

	
any invalidity or irregularity in the execution of any Finance Document or this Deed;

 

	
  

	
(e)

	
any deficiency in the powers of the Chargor, the Individual Guarantor or the Corporate Guarantors to enter into or perform any of its obligations under any Finance Document or any irregularity in the exercise thereof or any lack of authority by any person purporting to act on behalf of the foregoing;

 

  

15

  

 

	
  

	
(f)

	
the insolvency or liquidation or any incapacity, disability or limitation or any change in the constitution or status of the Chargor, Individual Guarantor or the Corporate Guarantors;

 

	
  

	
(g)

	
any Finance Document or right or remedy being or becoming held by or available to the Bondholder or by any of the same being or becoming wholly or partly void, voidable, unenforceable or impaired or by the Bondholder at any time releasing, refraining from enforcing, varying or in any other way dealing with any of the same or any power, right or remedy the Bondholder may now or hereafter have from or against the Chargor or any other person;

 

	
  

	
(h)

	
any waiver, exercise, omission to exercise, compromise, renewal or release of any rights against the Chargor or any other person or any compromise, arrangement or settlement with any of the same; or

 

	
  

	
(i)

	
any act, omission, event or circumstance which would or may but for this provision operate to prejudice, affect or discharge this Deed or the liability of the Chargor hereunder.

 

	
22.

	
NOTICES

 

	
22.1

	
Mode of Service

 

Any notice or other communication to be made under or in connection with this Deed shall, unless otherwise stated herein, be in writing and shall be sent by overnight prepaid courier, facsimile or hand delivery:

 

If to the Chargor to:

 

GLOBAL PHARM HOLDINGS GROUP, INC.

25/F New World Center, No. 6009

Yitian road, Futian District, Shenzhen

People’s Republic of China

Attn: Mr. Yin Yun-lu

 

Fax No.: +86 755 8303 9671

 

If to the Bondholder to:

 

BLAZER DELIGHT LIMITED

c/o Gen2 Partners Limited

2101-02, 2/F.,

Infinitus Plaza,

199 Des Voeux Road Central,

Hong Kong.

Attention: Barry Lau/Bruce Tseng

Fax No.: +852 2117 1410

 

  

16

  

 

or to such other address, facsimile number, Person or department as the Chargor or Bondholder (as the case may be) may designate for itself by not less than five Business Days' notice.

 

	
22.2

	
Delivery

 

	
  

	
(a)

	
Subject to Clause 22.2‎(c), any communication or document made or delivered by one Person to another under or in connection with this Deed will only be effectively made or delivered:

 

	
  

	
(i)

	
if sent by fax, when first received in legible form; or

 

	
  

	
(ii)

	
if sent by certified or registered post with return receipt requested, when delivered against receipt; or

 

	
  

	
(iii)

	
if delivered in Person, at the time of delivery;

 

and, if a particular department or officer is specified as part of its address details provided under Clause 22.1 (Mode of Service), if addressed to that department or officer.

 

	
  

	
(b)

	
Any communication or document given under paragraph (a) which is received after 5 p.m. in the place of receipt or on a day which is not a Business Day shall be deemed to have been received at 9 a.m. on the following Business Day.

 

	
  

	
(c)

	
Any communication or document to be made or delivered to the Bondholder under or in connection with this Deed will only be effectively made or delivered when actually received by the Bondholder and then only if it is expressly marked for the attention of the department or officer referred to in Clause 22.1 (Mode of Service) (or any substitute department or officer as the Bondholder shall specify for this purpose).

 

	
23.

	
CALCULATIONS AND CERTIFICATES

 

Any certificate or determination by the Bondholder specifying the amount of any Secured Obligation due from the Chargor (including details of any relevant calculation thereof) is, in the absence of manifest error, conclusive evidence against the Chargor of the matters to which it relates.

 

	
24.

	
PARTIAL INVALIDITY

 

If, at any time, any provision of this Deed is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of any of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

 

	
25.

	
REMEDIES AND WAIVERS

 

No failure to exercise, nor any delay in exercising, on the part of the Bondholder, any right or remedy under this Deed shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise, or the exercise of any other right or remedy.  The rights and remedies provided are cumulative and not exclusive of any rights or remedies provided by law.

 

  

17

  

 

	
26.

	
AMENDMENTS AND WAIVERS

 

Any provision of this Deed may be amended only if the Bondholder and the Chargor on their behalf so agree in writing and any breach of this Deed may be waived before or after it occurs only if the Bondholder so agrees in writing.  A waiver given or consent granted by the Bondholder under this Deed will be effective only if given in writing and then only in the instance and for the purpose for which it is given.

 

	
27.

	
COUNTERPARTS

 

This Deed may be executed in any number of counterparts, and this has the same effect as if the signatures (and seals, if any) on the counterparts were on a single copy of this Deed.

 

	
28.

	
RELEASE

 

	
28.1

	
Confirmation

 

The Bondholder shall, as soon as reasonably practicable after the Secured Obligations have been unconditionally and irrevocably repaid and discharged (and, in any event, within 14 days), deliver a confirmation in writing to the Chargor that all such Secured Obligations have been so repaid and discharged.

 

	
28.2

	
Release

 

Upon the expiry of the Security Period (but not otherwise) the Bondholder shall, at the request and cost of the Chargor, take whatever action is necessary to release or re-assign (without recourse or warranty) the Charged Obligations from the Security.

 

	
28.3

	
Reinstatement

 

Where any discharge (whether in respect of the obligations of the Chargor or any security for those obligations or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be restored on insolvency, liquidation or otherwise (without limitation), the liability of the Chargor under this Deed shall continue as if the discharge or arrangement had not occurred.  The Bondholder may concede or compromise any claim that any payment, security or other disposition is liable to avoidance or restoration.

 

	
29.

	
GOVERNING LAW AND ENFORCEMENT

 

	
  

	
(a)

	
This Deed is governed by, and shall be construed in accordance with, the laws of Hong Kong.

 

	
  

	
(b)

	
Any disputes arising out of this Deed, whether in tort, contract, under statute or otherwise, including any question regarding the existence, validity, interpretation, breach or termination of this Deed, shall be finally resolved by arbitration under the Hong Kong International Arbitration Centre Administered Arbitration Rules in force as at the date of this Deed (the “Rules”), which Rules are deemed to be incorporated by reference into this Deed, as amended herein.

 

	
  

	
(c)

	
The Tribunal shall consist of three (3) arbitrators, to be appointed in accordance with the Rules, as amended herein. The Parties agree that all three arbitrators can be selected from outside the panel of arbitrators of the Hong Kong International Arbitration Centre (“HKIAC”).

 

	
  

	
(d)

	
The appointing authority shall be HKIAC, which shall also administer any arbitration commenced under this Deed.

 

  

18

  

 

	
  

	
(e)

	
The seat of the arbitration shall be Hong Kong.

 

	
  

	
(f)

	
The language of the arbitration proceedings shall be English.

 

	
  

	
(g)

	
Any Award of the Tribunal shall be made in writing and shall be final and binding on the Parties from the day it is made. The Parties undertake to carry out the Award delay.

 

	
  

	
(h)

	
The following provisions of the Arbitration Ordinance (chapter 609 of the laws of Hong Kong) shall apply to any arbitration hereunder:

 

	
  

	
(i)

	
Section 2 of Schedule 2 (“Consolidation of arbitrations”); and

 

	
  

	
(ii)

	
Section 4 of Schedule 2 (“Challenging arbitral award on ground of serious irregularity”).

 

	
  

	
(i)

	
The following provisions of the Arbitration Ordinance (chapter 609 of the laws of Hong Kong) shall not apply to any arbitration hereunder:

 

	
  

	
(i)

	
Section 1 of Schedule 2 (“Sole Arbitrator”);

 

	
  

	
(ii)

	
Section 3 of Schedule 2 (“Decision of preliminary question of law by Court”); and

 

	
  

	
(iii)

	
Section 5 of Schedule 2 (“Appeal against arbitral award on question of law”).

 

	
  

	
(j)

	
Nothing in this Clause 29 shall be construed as preventing any Party from seeking conservatory or interim relief from any court of competent jurisdiction.

 

	
  

	
(k)

	
The Chargor irrevocably appoints Binomial Bio Pharm Group Limited of Flat E, 4/F, Valiant Industrial Centre, 2-12 Au Pui Wan Street, Fotan, Shatin, N.T., Hong Kong as his authorised agent for service of any legal process in Hong Kong. If for any reason such agent shall cease to be such agent for service of process, the Chargor shall forthwith appoint a new agent for service of process in Hong Kong and deliver to the Bondholder a copy of the new agent’s acceptance of that appointment within 30 days.  Nothing in this Deed shall affect the right to serve process in any other manner permitted by law.

 

	
  

	
(l)

	
The Bondholder irrevocably appoints Gen2 Partners Limited of 2101-02, 2/F Infinitus Plaza, 199 Des Voeux Road Central, Hong Kong as its authorised agent for service of any legal process in Hong Kong. If for any reason such agent shall cease to be such agent for service of process, the Bondholder shall forthwith appoint a new agent for service of process in Hong Kong and deliver to the Chargor a copy of the new agent’s acceptance of that appointment within 30 days.  Nothing in this Deed shall affect the right to serve process in any other manner permitted by law.

 

IN WITNESS of which this Deed has been duly executed by the Chargor as a deed and duly executed by the Bondholder and has been delivered on the first date specified on page 1 of this Deed by the Chargor.

 

  

19

  

 

EXECUTION

	
SIGNED, SEALED AND DELIVERED

	
)

	  	 
	
as a Deed by

	
)

	  	 
	
GLOBAL PHARM

	
)

	  	 
	
HOLDINGS GROUP, INC.

	
)

	  	 
	
acting by its attorney

	
)

	  	 
	
YIN YUN-LU

	
)

	
 /s/ Yin Yun-Lu

	 
	  	  	
Title: Director

	 

 

	
Witness

	
/s/ Cynthia Tan

	
Full name

	
Cynthia Tan

	
Title

	
Lawyer

 

	
EXECUTED as a DEED by

	
)

	  	 
	
BLAZER DELIGHT LIMITED

	
)

	  	 
	
acting by

	
)

	  	 
	  	
)

	  	 
	
who, in accordance

	
)

	  	 
	
with the laws of the territory in which the

	
)

	  	 
	
company is incorporated is/are

	
)

	  	 
	
acting under the authority of the company

	
)

	
/s/ Bruce Tseng

	 
	  	  	
Authorised Signatory

	 

 

  

20

  

 

SCHEDULE 1

 

CHARGED ASSETS

	
Date Incurred

or

Created

	 	
Amount

	
 

 

	
Nature of Obligation

	 	
Relevant Document

	 	 	 	 	 	 	 
	
1.  The date of this Deed

	 	
None

	 	
None

	 	
None

  

21

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