Document:

EXH.
      10.7

     

    CEO
      SHARE PLEDGE AGREEMENT

     

    CEO
      SHARE PLEDGE AGREEMENT (this
      "Agreement"),
      dated
      as of February 12, 2007, made by Liu Zhong Yi, an individual with a principal
      place of residence at No. 3, Fengtai Yungang Town Gaonan Li, Beijing, China
      100074 (the "Pledgor"),
      in
      favor of S. Michael Rudolph, in his capacity as collateral agent (in such
      capacity, the "Collateral
      Agent")
      for
      the "Buyers" (as defined below) party to the Subscription Agreement, dated
      as of
      even date herewith (as amended, restated or otherwise modified from time to
      time, the "Subscription
      Agreement").

     

    WITNESSETH:

     

     

    WHEREAS,
      Lotus Pharmaceuticals, Inc. (the "Company")
      and
      each party listed as a "Buyer" on the Schedule of Buyers attached thereto
      (collectively, the "Buyers")
      are
      parties to a Subscription Agreement, pursuant to which the Company shall be
      required to sell, and the Buyers shall purchase or have the right to purchase
      the “Notes” (as defined therein);

     

    WHEREAS,
      the Pledgor has executed and delivered to the Buyers a Letter Agreement dated
      the date hereof (the “Letter
      Agreement”)
      requiring the Pledgor to deliver to the Collateral Agent, 18,782,400 (as
      adjusted for stock splits, stock dividends, reverse stock splits,
      reclassifications, recapitalizations and similar events) shares of the common
      stock of the Company owned by the Pledgor in the event of a payment default
      under the Notes (an “Event
      of Default”);

     

    WHEREAS,
      it is a condition precedent to the Buyers entering into the Subscription
      Agreement that the Pledgor shall have executed and delivered to the Collateral
      Agent for the benefit of itself and the Buyers this Agreement to secure all
      of
      the Pledgor’s obligations under the Letter Agreement;

     

    NOW,
      THEREFORE, in consideration of the premises and the agreements herein and in
      order to induce the Collateral Agent to perform under the Subscription
      Agreement, the Pledgor agrees with the Collateral Agent as follows:

     

    SECTION
      1. Definitions
      and Rules of Interpretation.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

    (a) The
      Pledgor’s shares of common stock of the Company as set forth in Schedule
      I,
      and all
      future, issued and outstanding shares of capital stock, or other equity or
      investment securities of, or partnership, membership, or joint venture interests
      in, the Company, whether now owned or hereafter acquired by the Pledgor and
      whether or not evidenced or represented by any stock certificate, certificated
      security or other instrument, together with the certificates representing such
      equity interests, all options and other rights, contractual or otherwise, in
      respect thereof and all dividends, distributions, cash, instruments, investment
      property and any other property (including, but not limited to, any stock
      dividend and any distribution in connection with a stock split) from time to
      time received, receivable or otherwise distributed in respect of or in exchange
      for any or all of the foregoing and all cash and noncash proceeds thereof
      (collectively, the "Pledged
      Shares");

     

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

     

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

     

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

     

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

     

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

     

    SECTION
      3. Security
      for Obligations.
      The
      security interest created hereby in the Pledged Collateral constitutes
      continuing collateral security for the due performance and observance by the
      Pledgor of any and all of his obligations under the Letter Agreement (the
      "Obligations"):

     

    
      
        
        

      

      
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    SECTION
      4. Delivery
      of the Pledged Collateral.

     

    (a) All
      other
      Pledged Collateral from time to time or required to be pledged to the Collateral
      Agent pursuant to the terms of this Agreement or the Subscription Agreement
      (the
      "Additional
      Collateral")
      shall
      be delivered to the Collateral Agent promptly upon receipt thereof by or on
      behalf of the Pledgor. All such certificates and instruments shall be held
      by
      the Collateral Agent pursuant hereto and shall be delivered in suitable form
      for
      transfer by delivery or shall be accompanied by duly executed instruments of
      transfer or assignment or undated stock powers executed in blank, all in form
      and substance reasonably satisfactory to the Collateral Agent. If any Pledged
      Collateral consists of uncertificated securities, unless the immediately
      following sentence is applicable thereto, the Pledgor shall cause the Collateral
      Agent (or its designated custodian, nominee or other designee) to become the
      registered holder thereof, or cause each issuer of such securities to agree
      that
      it will comply with instructions originated by the Collateral Agent (or its
      designated custodian, nominee or other designee) with respect to such securities
      without further consent by the Pledgor. If any Pledged Collateral consists
      of
      securities entitlements, the Pledgor shall transfer such securities entitlements
      to the Collateral Agent (or its designated custodian, nominee or other designee)
      or cause the applicable securities intermediary to agree that it will comply
      with entitlement orders by the Collateral Agent (or its designated custodian,
      nominee or other designee) without further consent by the Pledgor.

     

    (b) Promptly
      upon the receipt by the Pledgor of any Additional Collateral, a Pledge
      Amendment, duly executed by the Pledgor, in substantially the form of
Annex
      I
      hereto
      (a "Pledge
      Amendment"),
      shall
      be delivered to the Collateral Agent, in respect of the Additional Collateral
      which is or are to be pledged pursuant to this Agreement and the Subscription
      Agreement, which Pledge Amendment shall from and after delivery thereof
      constitute part of Schedules
      I
      hereto.
      The Pledgor hereby authorizes the Collateral Agent to attach each Pledge
      Amendment to this Agreement and agrees that all certificates listed on any
      Pledge Amendment shall for all purposes hereunder constitute Pledged Collateral
      and the Pledgor shall be deemed upon delivery thereof to have made the
      representations and warranties set forth in Section
      5
      with
      respect to such Additional Collateral.

     

    (c) If
      the
      Pledgor shall receive, by virtue of the Pledgor’s being or having been an owner
      of any Pledged Collateral, any (i) stock certificate (including, without
      limitation, any certificate representing a stock dividend or distribution in
      connection with any increase or reduction of capital, reclassification, merger,
      consolidation, sale of assets, combination of shares, stock split, spin-off
      or
      split-off), promissory note or other instrument, (ii) option or right, whether
      as an addition to, substitution for, or in exchange for, any Pledged Collateral,
      or otherwise, (iii) dividends payable in cash (except such dividends
      permitted to be retained by the Pledgor pursuant to Section
      7
      hereof)
      or in securities or other property or (iv) dividends, distributions, cash,
      instruments, investment property and other property in connection with a partial
      or total liquidation or dissolution or in connection with a reduction of
      capital, capital surplus or paid-in surplus, the Pledgor shall receive such
      stock certificate, promissory note, instrument, option, right, payment or
      distribution in trust for the benefit of the Collateral Agent, shall segregate
      it from the Pledgor’s other property and shall deliver it forthwith to the
      Collateral Agent in the exact form received, with any necessary endorsement
      and/or appropriate stock powers duly executed in blank, to be held by the
      Collateral Agent as Pledged Collateral and as further collateral security for
      the Obligations.

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    (a) keep
      adequate records concerning the Pledged Collateral and permit the Collateral
      Agent, or any designees or representatives thereof at any time or from time
      to
      time to examine and make copies of and abstracts from such records;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    (b) Upon
      the
      occurrence and during the continuance of an Event of Default:

     

    (i) all
      rights of the Pledgor to exercise the voting and other consensual rights which
      he would otherwise be entitled to exercise pursuant to paragraph (i) of
      subsection (a) of this Section
      7,
      and to
      receive the dividends, distributions, interest and other payments which he
      would
      otherwise be authorized to receive and retain pursuant to paragraph (ii) of
      subsection (a) of this Section 7,
      shall
      cease, and all such rights shall thereupon become vested in the Collateral
      Agent
      which shall thereupon have the sole right to exercise such voting and other
      consensual rights and to receive and hold as Pledged Collateral such dividends,
      distributions, interest and other payments;

     

    
      
        
        

      

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

     

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

     

    SECTION
      8. Additional
      Provisions Concerning the Pledged Collateral.

     

    (a) The
      Pledgor hereby (i) authorizes the Collateral Agent to file one or more financing
      or continuation statements, and amendments thereto, relating to the Pledged
      Collateral, without the signature of the Pledgor where permitted by law, (ii)
      ratifies such authorization to the extent that the Collateral Agent has filed
      any such financing or continuation statements, or amendments thereto, without
      the signature of the Pledgor prior to the date hereof and (iii) authorizes
      the
      Collateral Agent to execute any agreements, instruments or other documents
      in
      the Pledgor’s name and to file such agreements, instruments or other documents
      that are related to the security interest and Lien of the Collageral Agent
      in
      the Pledged Collateral or as provided under Article 8 or Article 9 of the UCC
      in
      any appropriate filing office. 

     

    (b) The
      Pledgor hereby irrevocably appoints the Collateral Agent as his attorney-in-fact
      and proxy, with full authority in the place and stead and in his name or
      otherwise, from time to time in the Collateral Agent’s discretion to take any
      action and to execute any instrument which the Collateral Agent may deem
      necessary or advisable to accomplish the purposes of this Agreement (subject
      to
      the rights of the Pledgor under Section
      7(a)
      hereof),
      including, without limitation, to receive, indorse and collect all instruments
      made payable to the Pledgor representing any dividend, interest payment or
      other
      distribution in respect of any Pledged Collateral and to give full discharge
      for
      the same. This power is coupled with an interest and is irrevocable until the
      termination of this Agreement in accordance with Section 13(e)
      hereof.

     

    
      
        
        

      

      
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    (c) If
      the
      Pledgor fails to perform any agreement or obligation contained herein, the
      Collateral Agent itself may perform, or cause performance of, such agreement
      or
      obligation, and the expenses of the Collateral Agent incurred in connection
      therewith shall be payable by the Pledgor pursuant to Section
      10
      hereof
      and shall be secured by the Pledged Collateral.

     

    (d) Other
      than the exercise of reasonable care to assure the safe custody of the Pledged
      Collateral while held hereunder, the Collateral Agent shall have no duty or
      liability to preserve rights pertaining thereto and shall be relieved of all
      responsibility for the Pledged Collateral upon surrendering it or tendering
      surrender of it to any of the Pledgor. The Collateral Agent shall be deemed
      to
      have exercised reasonable care in the custody and preservation of the Pledged
      Collateral in its possession if the Pledged Collateral is accorded treatment
      substantially equal to that which the Collateral Agent accords its own property,
      it being understood that the Collateral Agent shall not have responsibility
      for
      (i) ascertaining or taking action with respect to calls, conversions, exchanges,
      maturities, tenders or other matters relating to any Pledged Collateral, whether
      or not the Collateral Agent has or is deemed to have knowledge of such matters,
      or (ii) taking any necessary steps to preserve rights against any parties with
      respect to any Pledged Collateral.

     

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

     

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

     

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

     

    (a) The
      Collateral Agent may exercise in respect of the Pledged Collateral, in addition
      to other rights and remedies provided for herein or otherwise available to
      it,
      all of the rights and remedies of a secured party on default under the Code
      then
      in effect in the State of New York; and without limiting the generality of
      the
      foregoing and without notice except as specified below, sell the Pledged
      Collateral or any part thereof in one or more parcels at public or private
      sale,
      at any exchange or broker’s board or elsewhere, at such price or prices and on
      such other terms as the Collateral Agent may deem commercially reasonable.
      The
      Pledgor agrees that, to the extent notice of sale shall be required by law,
      at
      least ten (10) days’ notice to any of the Pledgor of the time and place of any
      public sale or the time after which any private sale is to be made shall
      constitute reasonable notification. The Collateral Agent shall not be obligated
      to make any sale of Pledged Collateral regardless of notice of sale having
      been
      given. The Collateral Agent may adjourn any public or private sale from time
      to
      time by announcement at the time and place fixed therefor, and such sale may,
      without further notice, be made at the time and place to which it was so
      adjourned.

     

    
      
        
        

      

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

     

    (c) Any
      cash
      held by the Collateral Agent as Pledged Collateral and all cash proceeds
      received by the Collateral Agent in respect of any sale of, collection from,
      or
      other realization upon, all or any part of the Pledged Collateral may, in the
      discretion of the Collateral Agent, be held by the Collateral Agent as
      collateral for, and/or then or at any time thereafter applied (after payment
      of
      any amounts payable to the Collateral Agent pursuant to Section
      10
      hereof)
      in whole or in part by the Collateral Agent against, all or any part of the
      Obligations in such order as the Collateral Agent shall elect consistent with
      the provisions of the Subscription Agreement. 

     

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

     

    SECTION
      10. Indemnity
      and Expenses.

     

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

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

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

     

    SECTION
      11. Notices,
      Etc.
      All
      notices and other communications provided for hereunder shall be in writing
      and
      shall be mailed (by certified mail, postage prepaid and return receipt
      requested), sent by Federal Express or other recognized courier service (return
      receipt requested), telecopied or delivered, if to the Pledgor, to him at the
      address specified in the preamble hereto or if to the Collateral Agent, to
      it at
      the address specified in the Subscription Agreement; or as to either such Person
      at such other address as shall be designated by such Person in a written notice
      to such other Person complying as to delivery with the terms of this
Section
      11.
      All
      such notices and other communications shall be effective (i) if sent by
      certified mail, postage prepaid, return receipt requested, when received or
      three (3) Business Days after mailing, whichever first occurs, (ii) if
      telecopied, when transmitted and confirmation is received, provided
      same is
      on a Business Day and, if not, on the next Business Day or (iii) if delivered
      or
      sent by Federal Express or other recognized courier service (return receipt
      requested), upon delivery, provided
      same is
      on a Business Day and, if not, on the next Business Day. 

     

    SECTION
      12. Security
      Interest Absolute.
      All
      rights of the Collateral Agent, all Liens and all obligations of the Pledgor
      hereunder shall be absolute and unconditional irrespective of: (i) any lack
      of
      validity or enforceability of the Letter Agreement, the Securites Purchase
      Agreement, the Notes or any other agreement or instrument relating thereto,
      (ii)
      any change in the time, manner or place of payment of, or in any other term
      in
      respect of, all or any of the Obligations, or any other amendment or waiver
      of
      or consent to any departure from the Letter Agreement, the Subscription
      Agreement, the Notes or any other Transaction Document, (iii) any exchange
      or
      release of, or non-perfection of any Lien on any Collateral, or any release
      or
      amendment or waiver of or consent to departure from any guaranty, for all or
      any
      of the Obligations, or (iv) any other circumstance which might otherwise
      constitute a defense available to, or a discharge of, the Pledgor in respect
      of
      the Obligations (other than the payment in full of the Obligations). All
      authorizations and agencies contained herein with respect to any of the Pledged
      Collateral are irrevocable and powers coupled with an interest.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    SECTION
      13. Miscellaneous.

     

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

     

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

     

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

     

    (d) This
      Agreement shall create a continuing security interest in and Lien on the Pledged
      Collateral and shall (i) remain in full force and effect until the termination
      of this Agreement in accordance with Section 13 (e) hereof and (ii) be
      binding on the Pledgor and his heirs and assigns and shall inure, together
      with
      all rights and remedies of the Collateral Agent, to the benefit of the
      Collateral Agent and its successors, transferees and assigns. Without limiting
      the generality of clause (ii) of the immediately preceding sentence, the
      Collateral Agent may assign or otherwise transfer its rights and obligations
      under this Agreement and any other Transaction Document to any other Person
      pursuant to the terms of the Subscription Agreement, and such other Person
      shall
      thereupon become vested with all of the benefits in respect thereof granted
      to
      the Collateral Agent herein or otherwise. Upon any such assignment or transfer,
      all references in this Agreement to the Collateral Agent shall mean the assignee
      of the Collateral Agent. None of the rights or obligations of the Pledgor
      hereunder may be assigned or otherwise transferred without the prior written
      consent of the Collateral Agent, and any such assignment or transfer shall
      be
      null and void.

     

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

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

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

     

    (g) Each
      party to this Agreement hereby irrevocably and unconditionally submits, for
      itself and its property, to the exclusive jurisdiction of the United States
      District Court for the Southern District of New York sitting in Manhattan or
      the
      commercial division, civil branch of the supreme court of the State of New
      York
      sitting in New York county in connection with any suit, action or proceeding
      directly or indirectly arising out of, under or in connection with the Letter
      Agreement or the transactions contemplated thereby. No party to this Agreement
      may move to (i) transfer any such suit, action or proceeding brought in such
      New
      York court or federal court to another jurisdiction, (ii) consolidate any such
      suit, action or proceeding brought in such New York court or federal court
      with
      a suit, action or proceeding in another jurisdiction or (iii) dismiss any such
      suit, action or proceeding brought in such New York court or federal court
      for
      the purpose of bringing the same in another jurisdiction. Each party to this
      Agreement agrees that a final judgment in any such suit, action or proceeding
      shall be conclusive and may be enforced in any other jurisdiction by suit on
      the
      judgment or in any other manner provided by law. Each party to this Agreement
      hereby irrevocably and unconditionally waives, to the fullest extent it may
      legally and effectively do so, any objection which it may now or hereafter
      have
      to the laying of venue of any suit, action or proceeding arising out of or
      relating to the Letter Agreement, the shares or the conversion shares in any
      New
      York court sitting in the county of New York or any federal court sitting in
      the
      southern district of New York. Each party to this agreement hereby consents
      to
      the service of process in any such suit, action or proceeding by notice in
      the
      manner specified in Section
      11.

     

    (h) The
      Pledgor irrevocably consents to the service of process of any of the aforesaid
      courts in any such action, suit or proceeding by the mailing of copies thereof
      by registered or certified mail (or any substantially similar form of mail),
      postage prepaid, to the Pledgor at his address provided herein, such service
      to
      become effective when received or 10 days after such mailing, whichever first
      occurs.

     

    (i) Nothing
      contained herein shall affect the right of the Collateral Agent to serve process
      in any other manner permitted by law or commence legal proceedings or otherwise
      proceed against the Pledgor or
      any
      property of the Pledgor in
      any
      other jurisdiction.

     

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

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    In
      Witness Whereof,
      the
      Pledgor has executed and delivered this Agreement as of the date first above
      written.

     

    
 

    
      	 	
              By: /s/
                Liu Zhong
                Yi                     
                

              LIU
                ZHONG YI

            

    

    

    ACCEPTED
      BY:

    

    S.
      MICHAEL RUDOLPH,

    as
      Collateral Agent

     

    

    /s/
      S.
      Michael Rudolph

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    SCHEDULE
      I TO PLEDGE AGREEMENT

     

    Pledged
      Shares

     

    
      	
              Pledgor

            	
               

              Name
                of Issuer

            	
              Number
                of 

              Shares

            	
               

              %
                of Shares

            	
               

              Class

            	
              Certificate

              No.(s)

            
	
              Liu
                Zhong Yi

            	
               

              Lotus
                

              Pharmaceuticals,
                Inc.

            	
               

               

              18,782,400

            	
               

               

              70%

            	
               

               

              Common
                

            	
               

               

              142

            

    

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
      I

     

    TO

     

    PLEDGE
      AGREEMENT

     

    

     

    PLEDGE
      AMENDMENT

     

    This
      Pledge Amendment, dated ●, 20●, is delivered pursuant to Section
      4
      of the
      Pledge Agreement referred to below. The undersigned hereby agrees that this
      Pledge Amendment may be attached to the Pledge Agreement, dated as of January
      23, 2007, made by Liu Zhong Yi in favor of S. Michael Rudolph, as Collateral
      Agent for the Buyers, (the "Collateral
      Agent")
      as it
      may heretofore have been or hereafter may be amended or otherwise modified
      or
      supplemented from time to time and that the promissory notes [and/or] shares
      or
      other equity interests listed on this Pledge Amendment shall be hereby pledged
      and assigned to the Collateral Agent and become part of the Pledged Collateral
      referred to in such Pledge Agreement and shall secure all of the obligations
      referred to in such Pledge Agreement.

     

    Pledged
      Shares

     

    
      	
              Pledgor

            	
              Name
                of Issuer

            	
              Number
                of Shares or 

              Other
                Equity Interests

            	
              Class

            	
              Certificate
                No(s)

            
	 	 	 	 	 

    

    

    

    

    

    
      	 	
              [PLEDGOR]

              

              By: /s/
                Liu Zhong
                Yi                       
                  

                 LIU
                ZHONG YIEXH.
      10.8

     

    DIRECTOR
      SHARE PLEDGE AGREEMENT

     

    DIRECTOR
      SHARE PLEDGE AGREEMENT (this
      "Agreement"),
      dated
      as of February 12, 2007, made by Song Zhenghong, an individual with a principal
      place of residence at __________________________________ (the "Pledgor"),
      in
      favor of S. Michael Rudolph, in his capacity as collateral agent (in such
      capacity, the "Collateral
      Agent")
      for
      the "Buyers" (as defined below) party to the Subscription Agreement, dated
      as of
      even date herewith (as amended, restated or otherwise modified from time to
      time, the "Subscription
      Agreement").

     

    WITNESSETH:

     

     

    WHEREAS,
      Lotus Pharmaceuticals, Inc. (the "Company")
      and
      each party listed as a "Buyer" on the Schedule of Buyers attached thereto
      (collectively, the "Buyers")
      are
      parties to a Subscription Agreement, pursuant to which the Company shall be
      required to sell, and the Buyers shall purchase or have the right to purchase
      the “Notes” (as defined therein);

     

    WHEREAS,
      the Pledgor has executed and delivered to the Buyers a Letter Agreement dated
      the date hereof (the “Letter
      Agreement”)
      requiring the Pledgor to deliver to the Collateral Agent, 6,708,000 (as adjusted
      for stock splits, stock dividends, reverse stock splits, reclassifications,
      recapitalizations and similar events) shares of the common stock of the Company
      owned by the Pledgor in the event of a payment default under the Notes (an
      “Event
      of Default”);

     

    WHEREAS,
      it is a condition precedent to the Buyers entering into the Subscription
      Agreement that the Pledgor shall have executed and delivered to the Collateral
      Agent for the benefit of itself and the Buyers this Agreement to secure all
      of
      the Pledgor’s obligations under the Letter Agreement;

     

    NOW,
      THEREFORE, in consideration of the premises and the agreements herein and in
      order to induce the Collateral Agent to perform under the Subscription
      Agreement, the Pledgor agrees with the Collateral Agent as follows:

     

    SECTION
      1. Definitions
      and Rules of Interpretation.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

    (a) The
      Pledgor’s shares of common stock of the Company as set forth in Schedule
      I,
      and all
      future, issued and outstanding shares of capital stock, or other equity or
      investment securities of, or partnership, membership, or joint venture interests
      in, the Company, whether now owned or hereafter acquired by the Pledgor and
      whether or not evidenced or represented by any stock certificate, certificated
      security or other instrument, together with the certificates representing such
      equity interests, all options and other rights, contractual or otherwise, in
      respect thereof and all dividends, distributions, cash, instruments, investment
      property and any other property (including, but not limited to, any stock
      dividend and any distribution in connection with a stock split) from time to
      time received, receivable or otherwise distributed in respect of or in exchange
      for any or all of the foregoing and all cash and noncash proceeds thereof
      (collectively, the "Pledged
      Shares");

     

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

     

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

     

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

     

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

     

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

     

    SECTION
      3. Security
      for Obligations.
      The
      security interest created hereby in the Pledged Collateral constitutes
      continuing collateral security for the due performance and observance by the
      Pledgor of any and all of his obligations under the Letter Agreement (the
      "Obligations"):

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    SECTION
      4. Delivery
      of the Pledged Collateral.

     

    (a) All
      other
      Pledged Collateral from time to time or required to be pledged to the Collateral
      Agent pursuant to the terms of this Agreement or the Subscription Agreement
      (the
      "Additional
      Collateral")
      shall
      be delivered to the Collateral Agent promptly upon receipt thereof by or on
      behalf of the Pledgor. All such certificates and instruments shall be held
      by
      the Collateral Agent pursuant hereto and shall be delivered in suitable form
      for
      transfer by delivery or shall be accompanied by duly executed instruments of
      transfer or assignment or undated stock powers executed in blank, all in form
      and substance reasonably satisfactory to the Collateral Agent. If any Pledged
      Collateral consists of uncertificated securities, unless the immediately
      following sentence is applicable thereto, the Pledgor shall cause the Collateral
      Agent (or its designated custodian, nominee or other designee) to become the
      registered holder thereof, or cause each issuer of such securities to agree
      that
      it will comply with instructions originated by the Collateral Agent (or its
      designated custodian, nominee or other designee) with respect to such securities
      without further consent by the Pledgor. If any Pledged Collateral consists
      of
      securities entitlements, the Pledgor shall transfer such securities entitlements
      to the Collateral Agent (or its designated custodian, nominee or other designee)
      or cause the applicable securities intermediary to agree that it will comply
      with entitlement orders by the Collateral Agent (or its designated custodian,
      nominee or other designee) without further consent by the Pledgor.

     

    (b) Promptly
      upon the receipt by the Pledgor of any Additional Collateral, a Pledge
      Amendment, duly executed by the Pledgor, in substantially the form of
Annex
      I
      hereto
      (a "Pledge
      Amendment"),
      shall
      be delivered to the Collateral Agent, in respect of the Additional Collateral
      which is or are to be pledged pursuant to this Agreement and the Subscription
      Agreement, which Pledge Amendment shall from and after delivery thereof
      constitute part of Schedules
      I
      hereto.
      The Pledgor hereby authorizes the Collateral Agent to attach each Pledge
      Amendment to this Agreement and agrees that all certificates listed on any
      Pledge Amendment shall for all purposes hereunder constitute Pledged Collateral
      and the Pledgor shall be deemed upon delivery thereof to have made the
      representations and warranties set forth in Section
      5
      with
      respect to such Additional Collateral.

     

    (c) If
      the
      Pledgor shall receive, by virtue of the Pledgor’s being or having been an owner
      of any Pledged Collateral, any (i) stock certificate (including, without
      limitation, any certificate representing a stock dividend or distribution in
      connection with any increase or reduction of capital, reclassification, merger,
      consolidation, sale of assets, combination of shares, stock split, spin-off
      or
      split-off), promissory note or other instrument, (ii) option or right, whether
      as an addition to, substitution for, or in exchange for, any Pledged Collateral,
      or otherwise, (iii) dividends payable in cash (except such dividends
      permitted to be retained by the Pledgor pursuant to Section
      7
      hereof)
      or in securities or other property or (iv) dividends, distributions, cash,
      instruments, investment property and other property in connection with a partial
      or total liquidation or dissolution or in connection with a reduction of
      capital, capital surplus or paid-in surplus, the Pledgor shall receive such
      stock certificate, promissory note, instrument, option, right, payment or
      distribution in trust for the benefit of the Collateral Agent, shall segregate
      it from the Pledgor’s other property and shall deliver it forthwith to the
      Collateral Agent in the exact form received, with any necessary endorsement
      and/or appropriate stock powers duly executed in blank, to be held by the
      Collateral Agent as Pledged Collateral and as further collateral security for
      the Obligations.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    (a) keep
      adequate records concerning the Pledged Collateral and permit the Collateral
      Agent, or any designees or representatives thereof at any time or from time
      to
      time to examine and make copies of and abstracts from such records;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    (b) Upon
      the
      occurrence and during the continuance of an Event of Default:

     

    (i) all
      rights of the Pledgor to exercise the voting and other consensual rights which
      he would otherwise be entitled to exercise pursuant to paragraph (i) of
      subsection (a) of this Section
      7,
      and to
      receive the dividends, distributions, interest and other payments which he
      would
      otherwise be authorized to receive and retain pursuant to paragraph (ii) of
      subsection (a) of this Section 7,
      shall
      cease, and all such rights shall thereupon become vested in the Collateral
      Agent
      which shall thereupon have the sole right to exercise such voting and other
      consensual rights and to receive and hold as Pledged Collateral such dividends,
      distributions, interest and other payments;

     

    
      
        
        

      

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

     

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

     

    SECTION
      8. Additional
      Provisions Concerning the Pledged Collateral.

     

    (a) The
      Pledgor hereby (i) authorizes the Collateral Agent to file one or more financing
      or continuation statements, and amendments thereto, relating to the Pledged
      Collateral, without the signature of the Pledgor where permitted by law, (ii)
      ratifies such authorization to the extent that the Collateral Agent has filed
      any such financing or continuation statements, or amendments thereto, without
      the signature of the Pledgor prior to the date hereof and (iii) authorizes
      the
      Collateral Agent to execute any agreements, instruments or other documents
      in
      the Pledgor’s name and to file such agreements, instruments or other documents
      that are related to the security interest and Lien of the Collageral Agent
      in
      the Pledged Collateral or as provided under Article 8 or Article 9 of the UCC
      in
      any appropriate filing office. 

     

    (b) The
      Pledgor hereby irrevocably appoints the Collateral Agent as his attorney-in-fact
      and proxy, with full authority in the place and stead and in his name or
      otherwise, from time to time in the Collateral Agent’s discretion to take any
      action and to execute any instrument which the Collateral Agent may deem
      necessary or advisable to accomplish the purposes of this Agreement (subject
      to
      the rights of the Pledgor under Section
      7(a)
      hereof),
      including, without limitation, to receive, indorse and collect all instruments
      made payable to the Pledgor representing any dividend, interest payment or
      other
      distribution in respect of any Pledged Collateral and to give full discharge
      for
      the same. This power is coupled with an interest and is irrevocable until the
      termination of this Agreement in accordance with Section 13(e)
      hereof.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (c) If
      the
      Pledgor fails to perform any agreement or obligation contained herein, the
      Collateral Agent itself may perform, or cause performance of, such agreement
      or
      obligation, and the expenses of the Collateral Agent incurred in connection
      therewith shall be payable by the Pledgor pursuant to Section
      10
      hereof
      and shall be secured by the Pledged Collateral.

     

    (d) Other
      than the exercise of reasonable care to assure the safe custody of the Pledged
      Collateral while held hereunder, the Collateral Agent shall have no duty or
      liability to preserve rights pertaining thereto and shall be relieved of all
      responsibility for the Pledged Collateral upon surrendering it or tendering
      surrender of it to any of the Pledgor. The Collateral Agent shall be deemed
      to
      have exercised reasonable care in the custody and preservation of the Pledged
      Collateral in its possession if the Pledged Collateral is accorded treatment
      substantially equal to that which the Collateral Agent accords its own property,
      it being understood that the Collateral Agent shall not have responsibility
      for
      (i) ascertaining or taking action with respect to calls, conversions, exchanges,
      maturities, tenders or other matters relating to any Pledged Collateral, whether
      or not the Collateral Agent has or is deemed to have knowledge of such matters,
      or (ii) taking any necessary steps to preserve rights against any parties with
      respect to any Pledged Collateral.

     

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

     

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

     

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

     

    (a) The
      Collateral Agent may exercise in respect of the Pledged Collateral, in addition
      to other rights and remedies provided for herein or otherwise available to
      it,
      all of the rights and remedies of a secured party on default under the Code
      then
      in effect in the State of New York; and without limiting the generality of
      the
      foregoing and without notice except as specified below, sell the Pledged
      Collateral or any part thereof in one or more parcels at public or private
      sale,
      at any exchange or broker’s board or elsewhere, at such price or prices and on
      such other terms as the Collateral Agent may deem commercially reasonable.
      The
      Pledgor agrees that, to the extent notice of sale shall be required by law,
      at
      least ten (10) days’ notice to any of the Pledgor of the time and place of any
      public sale or the time after which any private sale is to be made shall
      constitute reasonable notification. The Collateral Agent shall not be obligated
      to make any sale of Pledged Collateral regardless of notice of sale having
      been
      given. The Collateral Agent may adjourn any public or private sale from time
      to
      time by announcement at the time and place fixed therefor, and such sale may,
      without further notice, be made at the time and place to which it was so
      adjourned.

     

    
      
        
        

      

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

     

    (c) Any
      cash
      held by the Collateral Agent as Pledged Collateral and all cash proceeds
      received by the Collateral Agent in respect of any sale of, collection from,
      or
      other realization upon, all or any part of the Pledged Collateral may, in the
      discretion of the Collateral Agent, be held by the Collateral Agent as
      collateral for, and/or then or at any time thereafter applied (after payment
      of
      any amounts payable to the Collateral Agent pursuant to Section
      10
      hereof)
      in whole or in part by the Collateral Agent against, all or any part of the
      Obligations in such order as the Collateral Agent shall elect consistent with
      the provisions of the Subscription Agreement. 

     

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

     

    SECTION
      10. Indemnity
      and Expenses.

     

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

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

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

     

    SECTION
      11. Notices,
      Etc.
      All
      notices and other communications provided for hereunder shall be in writing
      and
      shall be mailed (by certified mail, postage prepaid and return receipt
      requested), sent by Federal Express or other recognized courier service (return
      receipt requested), telecopied or delivered, if to the Pledgor, to him at the
      address specified in the preamble hereto or if to the Collateral Agent, to
      it at
      the address specified in the Subscription Agreement; or as to either such Person
      at such other address as shall be designated by such Person in a written notice
      to such other Person complying as to delivery with the terms of this
Section
      11.
      All
      such notices and other communications shall be effective (i) if sent by
      certified mail, postage prepaid, return receipt requested, when received or
      three (3) Business Days after mailing, whichever first occurs, (ii) if
      telecopied, when transmitted and confirmation is received, provided
      same is
      on a Business Day and, if not, on the next Business Day or (iii) if delivered
      or
      sent by Federal Express or other recognized courier service (return receipt
      requested), upon delivery, provided
      same is
      on a Business Day and, if not, on the next Business Day. 

     

    SECTION
      12. Security
      Interest Absolute.
      All
      rights of the Collateral Agent, all Liens and all obligations of the Pledgor
      hereunder shall be absolute and unconditional irrespective of: (i) any lack
      of
      validity or enforceability of the Letter Agreement, the Securites Purchase
      Agreement, the Notes or any other agreement or instrument relating thereto,
      (ii)
      any change in the time, manner or place of payment of, or in any other term
      in
      respect of, all or any of the Obligations, or any other amendment or waiver
      of
      or consent to any departure from the Letter Agreement, the Subscription
      Agreement, the Notes or any other Transaction Document, (iii) any exchange
      or
      release of, or non-perfection of any Lien on any Collateral, or any release
      or
      amendment or waiver of or consent to departure from any guaranty, for all or
      any
      of the Obligations, or (iv) any other circumstance which might otherwise
      constitute a defense available to, or a discharge of, the Pledgor in respect
      of
      the Obligations (other than the payment in full of the Obligations). All
      authorizations and agencies contained herein with respect to any of the Pledged
      Collateral are irrevocable and powers coupled with an interest.

     

    
      
        
        

      

      
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    SECTION
      13. Miscellaneous.

     

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

     

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

     

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

     

    (d) This
      Agreement shall create a continuing security interest in and Lien on the Pledged
      Collateral and shall (i) remain in full force and effect until the termination
      of this Agreement in accordance with Section 13 (e) hereof and (ii) be
      binding on the Pledgor and his heirs and assigns and shall inure, together
      with
      all rights and remedies of the Collateral Agent, to the benefit of the
      Collateral Agent and its successors, transferees and assigns. Without limiting
      the generality of clause (ii) of the immediately preceding sentence, the
      Collateral Agent may assign or otherwise transfer its rights and obligations
      under this Agreement and any other Transaction Document to any other Person
      pursuant to the terms of the Subscription Agreement, and such other Person
      shall
      thereupon become vested with all of the benefits in respect thereof granted
      to
      the Collateral Agent herein or otherwise. Upon any such assignment or transfer,
      all references in this Agreement to the Collateral Agent shall mean the assignee
      of the Collateral Agent. None of the rights or obligations of the Pledgor
      hereunder may be assigned or otherwise transferred without the prior written
      consent of the Collateral Agent, and any such assignment or transfer shall
      be
      null and void.

     

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

     

    
      
        
        

      

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

     

    (g) Each
      party to this Agreement hereby irrevocably and unconditionally submits, for
      itself and its property, to the exclusive jurisdiction of the United States
      District Court for the Southern District of New York sitting in Manhattan or
      the
      commercial division, civil branch of the supreme court of the State of New
      York
      sitting in New York county in connection with any suit, action or proceeding
      directly or indirectly arising out of, under or in connection with the Letter
      Agreement or the transactions contemplated thereby. No party to this Agreement
      may move to (i) transfer any such suit, action or proceeding brought in such
      New
      York court or federal court to another jurisdiction, (ii) consolidate any such
      suit, action or proceeding brought in such New York court or federal court
      with
      a suit, action or proceeding in another jurisdiction or (iii) dismiss any such
      suit, action or proceeding brought in such New York court or federal court
      for
      the purpose of bringing the same in another jurisdiction. Each party to this
      Agreement agrees that a final judgment in any such suit, action or proceeding
      shall be conclusive and may be enforced in any other jurisdiction by suit on
      the
      judgment or in any other manner provided by law. Each party to this Agreement
      hereby irrevocably and unconditionally waives, to the fullest extent it may
      legally and effectively do so, any objection which it may now or hereafter
      have
      to the laying of venue of any suit, action or proceeding arising out of or
      relating to the Letter Agreement, the shares or the conversion shares in any
      New
      York court sitting in the county of New York or any federal court sitting in
      the
      southern district of New York. Each party to this agreement hereby consents
      to
      the service of process in any such suit, action or proceeding by notice in
      the
      manner specified in Section
      11.

     

    (h) The
      Pledgor irrevocably consents to the service of process of any of the aforesaid
      courts in any such action, suit or proceeding by the mailing of copies thereof
      by registered or certified mail (or any substantially similar form of mail),
      postage prepaid, to the Pledgor at his address provided herein, such service
      to
      become effective when received or 10 days after such mailing, whichever first
      occurs.

     

    (i) Nothing
      contained herein shall affect the right of the Collateral Agent to serve process
      in any other manner permitted by law or commence legal proceedings or otherwise
      proceed against the Pledgor or
      any
      property of the Pledgor in
      any
      other jurisdiction.

     

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

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

       

    

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

     

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

     

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

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    In
      Witness Whereof,
      the
      Pledgor has executed and delivered this Agreement as of the date first above
      written.

     

    

    
      	 	
              By: /s/
                Song
                Zhenghong                
                

              SONG
                ZHENGHONG

            

    

     

    
 

    ACCEPTED
      BY:

    

    S.
      MICHAEL RUDOLPH,

    as
      Collateral Agent

    
 

    /s/
      S.
      Michael
      Rudolph                     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I TO PLEDGE AGREEMENT

     

    Pledged
      Shares

     

    
      	
              Pledgor

            	
               

              Name
                of Issuer

            	
              Number
                of 

              Shares

            	
               

              %
                of Shares

            	
               

              Class

            	
              Certificate

              No.(s)

            
	
              Song
                Zhenghong

            	
               

              Lotus
                

              Pharmaceuticals,
                Inc.

            	
               

               

              6,708,000

            	
               

               

              16.25%

            	
               

               

              Common
                

            	
               

               

              157

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
      I

     

    TO

     

    PLEDGE
      AGREEMENT

     

     

    PLEDGE
      AMENDMENT

     

    This
      Pledge Amendment, dated ●, 20●, is delivered pursuant to Section
      4
      of the
      Pledge Agreement referred to below. The undersigned hereby agrees that this
      Pledge Amendment may be attached to the Pledge Agreement, dated as of January
      23, 2007, made by Song Zhenghong in favor of S. Michael Rudolph, as Collateral
      Agent for the Buyers, (the "Collateral
      Agent")
      as it
      may heretofore have been or hereafter may be amended or otherwise modified
      or
      supplemented from time to time and that the promissory notes [and/or] shares
      or
      other equity interests listed on this Pledge Amendment shall be hereby pledged
      and assigned to the Collateral Agent and become part of the Pledged Collateral
      referred to in such Pledge Agreement and shall secure all of the obligations
      referred to in such Pledge Agreement.

     

    Pledged
      Shares

     

    
      	
              Pledgor

            	
              Name
                of Issuer

            	
              Number
                of Shares 

              or Other
                Equity Interests

            	
              Class

            	
              Certificate
                No(s)

            
	 	 	 	 	 

    

    

    

    

    

    
      	 	
              [PLEDGOR]

              

              By:                                                          
                 

                SONG
                ZHENGHONG

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