Document:

MERGER AND ACQUISITION AGREEMENT – SUPPLEMENTAL AGREEMENT

	
Party A:

	
Han Lingzhi    ID No.: 341602197208116069

Gu Quanhui    ID No.: 341281196905176058

	
Party B:

	
Bozhou Xinghe Pharmaceutical Co., Ltd.

	
Party C:

	
Shandong Global Pharm Group, Ltd.

Merger and Acquisition Agreement:

The Merger and Acquisition Agreement signed by Party A, Party B and Party C on July 5, 2011

 

Whereas:

Party A, Party B and Party C have entered into the Merger and Acquisition Agreement dated July 4, 2011 in respect of Party C’s acquisition of Party B in its entirety. Through mutual negotiation, the parties have entered into this supplemental agreement to address and supplement matters unaddressed in the Merger and Acquisition Agreement and hereby agree to comply with the obligations hereunder.

	
Clause 1:

	
Transfer of Rights

	
1.

	
Party A, Party B and Party C hereby agree on July 1, 2011 as the date of transfer of Party B’s rights. On such date, Party A shall transfer Party B’s management right, operating right, relevant seals, financial seal, contract seal and bank account seal to Party C or such person as designated by Party C. Thereafter, Party C shall have obtained the right of disposal in respect of Party B’s fixed assets, intangible assets, bank borrowings and shareholding interests, and shall assume the operation, management and relevant legal risks of Party B.

	
2.

	
Party C shall acquire the fixed assets (including, among others, comprehensive workshop, production workshop, power workshop, offices, buildings and ancillary facilities, pipelines, trenches and supporting facilities, machinery and equipment, electronic equipment and automobiles), intangible assets (including, among others, land use rights and GMP certificates), bank borrowings and the registered capital of Party B as of July 1, 2011. Party A shall be entitled to the bank deposits, accounts receivable, prepayments, other current assets, accounts payable, tax payable, wages payable and other current liabilities, and intangible assets including customers and sales network of Party B as of July 1, 2011.

	
Clause 2: 

	
Purchase Consideration and Commitments

	
1.

	
Through negotiation, other than the registered capital in the amount of RMB 20 million paid by Party C to Party A in accordance with Clauses 1 and 2 of the Merger and Acquisition Agreement, Party C shall pay another RMB 10 million to Party A within nine months after the date of transfer of Party B’s rights as compensation for its acquisition of Party B.

 

  

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2.

	
In the event Party A fails to settle Party B’s current liabilities incurred prior to the date of acquisition, excluding bank borrowings, within nine months after completion of the acquisition, Party C shall offset the fair value amount of such liabilities against the additional RMB 10 million paid. In the event the amount of RMB 10 million is insufficient to settle such liabilities, Party C is entitled to claim against Party A and all losses suffered shall be assumed by Party A.

	
3.

	
In the event Party B suffers any impact, within nine months after completion of the acquisition, which arises out of or in connection with any false representation, omission or concealment of any debt or liability by Party A as of the date of acquisition, Party C is entitled to claim against Party A and all losses suffered shall be assumed by Party A.

	
4.

	
In the event Party B suffers any loss, within nine months after completion of the acquisition, which arises out of or in connection with any false representation, omission or concealment of any mortgages, liens or other encumbrances on Party B’s fixed assets and intangible assets prior to the date of acquisition, Party C is entitled to claim against Party A and all losses suffered shall be assumed by Party A.

	
5.

	
In the event Party B suffers any impact and loss with respect to its production, operations or reputation, within nine months after completion of the acquisition, which arises out of or in connection with any false representation, omission or concealment of any litigation, dispute or risks relating to Party B as of the date of acquisition, Party C is entitled to claim against Party A and all losses suffered shall be assumed by Party A.

	
Clause 3:

	
Announcement obligation

	
1.

	
Party C shall only acquire the assets, liabilities and rights as stated under sub-clause 2 of Clause 1 herein.

	
2.

	
Upon effect of this Agreement, Party A shall assist Party C to publish an announcement in such media as designated by the local industry and commerce administration with respect to the matters agreed in sub-clause 1 of Clause 3 herein within 30 working days after completion of the procedures for the change in industrial and commercial registration. .

	
Clause 4:

	
Amendment of Agreement

Any amendment of this Agreement must be mutually negotiated and agreed by all parties hereto and in the form of a supplemental agreement.

	
Clause 5:

	
Applicable laws and dispute solution

	
1.

	
This Agreement is governed by the laws of the People’s Republic of China.

 

  

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2.

	
Any dispute or disagreement arising out of or in connection with this Agreement shall be resolved by the parties concerned through amicable negotiation, failing which, to be brought before the courts for settlement.

	
Clause 6:

	
Miscellaneous

	
1.

	
This Agreement shall be effective upon signature by all parties hereto.

	
2.

	
The Agreement is executed in six counterparts with each party to execute two counterparts. Each counterpart shall constitute an original of this Agreement and is equally effective upon execution.

 

  

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Party A

	
HAN Lingzhi

	
)

	  	  
	
GU Quanhui

	
)

Party B

	
Bozhou Xinghe

	
)

	
Pharmaceutical Co., Ltd.

	
)

	  	
Han Lingzhi

	  	
Representative

Party C

	
Shandong Global Pharm

	
)

	
Group, Ltd.

	
)

	  	
Song Yanliang

	  	
Representative

Signing place: Bozhou City of Anhui Province

Signing date: July 5, 2011

 

  

4EQUITY TRANSFER AGREEMENT OF TAIAN SENLIN PHARMACEUTICAL CO., LTD.

	
Party A (Transferor):

	
Kong Lingjin

	
Party B (Transferee):

	
Shandong Global Pharm Co., Ltd.

In accordance with the regulations of the Company Law of the People’s Republic of China, Party A and Party B hereto have entered into the agreement (the “Agreement”) on equity transfer agreed by all the shareholders based on the principle of equality and rationality.

Clause 1:

Party A (Kong Lingjin) holds the equity interest of Taian Senlin Pharmaceutical Co., Ltd. of RMB 1.2 million, which is hereto transferred to Party B (Shandong Global Pharm Co., Ltd.). Other shareholders agree to waive the preemptive rights.

Clause 2:

After Party A transfers the equity to Party B legally, the shareholders shall assume the rights and obligations of the Company by the respective contribution pro rata. Party B shall abide by and execute the Articles of Association of the Company.

Clause 3:

The Agreement is executed in three counterparts with each party to execute one counterpart; one counterpart shall be submitted to the Registration Organization.

Clause 4:

This Agreement shall be effective upon signature by all parties hereto and registration in the Administration Organization for Industry and Commerce.

  

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Party A

	
Kong Lingjin

	
)

Party B

	
Shandong Global Pharm

	
)

	
Co., Ltd.

	
)

	  	
Zhang Tao

	  	
Representative

Signing date: May 25, 2011

 

  

2EQUITY TRANSFER AGREEMENT OF TAIAN SENLIN PHARMACEUTICAL CO., LTD.

	
Party A (Transferor):

	
Lv Xinjuan

	
Party B (Transferee):

	
Shandong Global Pharm Co., Ltd.

In accordance with the regulations of the Company Law of the People’s Republic of China, Party A and Party B hereto have entered into the agreement (the “Agreement”) on equity transfer agreed by all the shareholders based on the principle of equality and rationality.

Clause 1:

Party A (Lv Xinjuan) holds the equity interest of Taian Senlin Pharmaceutical Co., Ltd. of RMB 3.8 million, which is hereto transferred to Party B (Shandong Global Pharm Co., Ltd.). Other shareholders agree to waive the preemptive rights.

Clause 2:

After Party A transfers the equity to Party B legally, the shareholders shall assume the rights and obligations of the Company by the respective contribution pro rata. Party B shall abide by and execute the Articles of Association of the Company.

Clause 3:

The Agreement is executed in three counterparts with each party to execute one counterpart; one counterpart shall be submitted to the Registration Organization.

Clause 4:

This Agreement shall be effective upon signature by all parties hereto and registration in the Administration Organization for Industry and Commerce.

  

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Party A

	
Lv Xinjuan

	
)

Party B

	
Shandong Global Pharm

	
)

	
Co., Ltd.

	
)

	  	
Zhang Tao

	  	
Representative

Signing date: May 25, 2011

 

  

2EQUITY TRANSFER AGREEMENT

	
Party A (Transferor):

	
Chen Hongsheng

	
Party B (Transferee):

	
Shandong Global Pharm Co., Ltd.

In accordance with the regulations of the Company Law of the People’s Republic of China and the provisions of the Articles of Association of the Company, Party A and Party B hereto have entered into the agreement (the “Agreement”) on equity transfer in the Company’s Meeting Room on May 31, 2011, agreed by all the shareholders based on the principle of equality and rationality.

	
Clause 1:

	
Equity Transfer Price and Payment Ways

	
1.

	
Party A hereto agrees to transfer its RMB 6 million’s equity interest in Zibo Hongmao Pharmaceutical Sales Co., Ltd. to Party B, and Party B hereto agrees to purchase the abovementioned equity interest with RMB 6 million. Other shareholders agree to waive the preemptive rights.

	
2.

	
Party B agrees to pay off the equity interest transferred by Party A in one-time cash on May 31, 2011.

	
Clause 2:

	
Guarantee

	
1.

	
Party A guarantees that the equity interest transferred to Party B is the actual and legal contribution of Party A in Zibo Hongmao Pharmaceutical Sales Co., Ltd. Party A owns the complete authority to dispose the equity interest, and the equity interests are free from any lien or hypothec, and without any third party recourse. Otherwise, Party A shall assume all the responsibilities aroused herein.

	
2.

	
After Party A transfers the equity to Party B, the original rights and obligations of Party A in Zibo Hongmao Pharmaceutical Sales Co., Ltd. shall be transferred and assumed by Party B.

	
3.

	
Party B hereby acknowledges the Articles of Association of Zibo Hongmao Pharmaceutical Sales Co., Ltd., and complies with the Articles to execute the obligations and responsibilities.

Clause 3: Effective Conditions and Date of the Agreement

	
1.

	
This Agreement shall be effective upon signature by all parties hereto and registration in the Administration Organization for Industry and Commerce.

	
2.

	
The Agreement is executed in four counterparts with each party to execute one counterpart; one counterpart shall be filed in the Company and one submitted to the Registration Organization. Each counterpart is equally effective upon execution.

 

  

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Party A

	
Chen Hongsheng

	
)

Party B

	
Shandong Global Pharm

	
)

	
Co., Ltd.

	
)

	  	                           
	  	
Representative

Signing date: May 31, 2011

 

  

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