NPD China Nepstar Chain Drugstore Ltd American Depositary Shares (delisted)

Name of Reporting Person

Simin Zhang

Check the Appropriate Box if A Member of A Group

(a) ☐

(b) ☐

Source of Funds

PF and BK

Citizenship or Place of Organization

People’s Republic of China

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person With

Sole Voting Power

0

Sole Dispositive Power

0

Shared Dispositive Power

157,000,000

Aggregate Amount Beneficially Owned by Each Reporting Person

157,000,000

Percent of Class Represented By Amount In Row (11)

79.5%*

Type of Reporting Person

IN

Name of Reporting Person

China Neptunus Drugstore Holding Ltd.

Check the Appropriate Box if A Member of A Group

(a) ☐

(b) ☐

Source of Funds

WC and BK

Citizenship or Place of Organization

British Virgin Islands

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person With

Sole Voting Power

0

Sole Dispositive Power

0

Shared Dispositive Power

157,000,000

Aggregate Amount Beneficially Owned by Each Reporting Person

157,000,000

Percent of Class Represented By Amount In Row (11)

79.5%*

Type of Reporting Person

CO

Name of Reporting Person

New Wave Developments Limited

Check the Appropriate Box if A Member of A Group

(a) ☐

(b) ☐

Source of Funds

WC

Citizenship or Place of Organization

British Virgin Islands

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person With

Sole Voting Power

0

Sole Dispositive Power

0

Shared Dispositive Power

50,000,000

Aggregate Amount Beneficially Owned by Each Reporting Person

50,000,000

Percent of Class Represented By Amount In Row (11)

25.3%*

Type of Reporting Person

CO

New Wave Developments Limited

By: /s/ Simin Zhang

Name: Simin Zhang

Title: Director

China Neptunus Drugstore Holding Ltd.

By: /s/ Simin Zhang

Name: Simin Zhang

Title: Director

Simin Zhang

/s/ Simin Zhang

Subject to Certain Funds set forth below, the Availability Period should run from and including the date of the Facility Agreement (the “Agreement Date”) until the earlier of: (i) the Termination Date (as defined in the Merger Agreement); and (ii) 5 August 2016 and (iii) the date on which the Merger Agreement is terminated in accordance with its terms.

Any amount of the Facility which is unutilised at the expiry of the Availability Period will be automatically cancelled.

To be repaid in one lump sum on the Final Maturity Date.

Amounts repaid or prepaid under the Facility shall not be available for re-borrowing.

1% on the Facility amount, payable on the Initial Utilisation Date.

The Arrangement Fee is non-refundable in all circumstances.

The Facility will be made available under a facility agreement (the “Facility Agreement”) in form and substance satisfactory to the Lender and Borrower (which terms shall include, without limitation, materiality thresholds, baskets, exceptions, qualifications and grace periods, in all cases consistent with customary practice for transactions of this kind and taking into account the terms of comparable transactions in the market and the terms of prior transactions (if any) involving affiliates of the Sponsor and the Lender). The Facility Agreement will be negotiated in good faith consistent with this Term Sheet. The Lender’s counsel will draft the Facility Agreement using the current recommended form of Senior Multicurrency Term and Revolving Facilities Agreement for leveraged acquisition finance transactions of the Loan Market Association (“LMA”) as a base.

“Finance Documents” will include the Facility Agreement, documentation relating to Transaction Security (“Transaction Security Documents”), the Fee Letter, the Commitment Letter, the Keep-well Letters, the Undertaking Letters, the Subordination Agreement and any other documents designated as such by the Borrower and the Lender.

Members of the Group that are established in the PRC (each an “Onshore Group Member”).

“PRC” means the People’s Republic of China (excluding Hong Kong, Macau and Taiwan).

A keep-well letter entered into by and between Shenzhen Neptunus Group and Lender.

(Sponsor Keep-well Letter and Shenzhen Neptunus Group Keep-well Letter, collectively the “Keep-well Letter” and each a “Keep-well Letter”.)

An undertaking letter entered into by and between Neptunus Commercial and Lender.

The Lender agrees that each of the Sponsor Undertaking Letter, Shenzhen Neptunus Group Undertaking Letter, Neptunus Commercial Undertaking Letter shall not be required to be registered with any PRC governmental authorities (including, but not limited to, SAFE and the Ministry of Commerce of the PRC).

(The Sponsor Undertaking Letter, the Shenzhen Neptunus Group Undertaking Letter and the Neptunus Commercial Undertaking Letter, collectively, the “Undertaking Letters” and each a “Undertaking Letter”)

The Borrower and, subject to the terms of this paragraph and to the extent legally permissible, Target, Neptunus Commercial, Neptunus Medicine and 深圳市海王医药电子技术有限公司(each an “Obligor”).

The Target, Neptunus Commercial, Neptunus Medicine and 深圳市海王医药电子技术有限公司, to the extent legally permissible, shall accede to the Facility Agreement as Obligor by no later than date falling 5 Business Days after the Closing Date.

The Facility shall be secured by first ranking security to be provided to the extent legally permissible and subject to the security principles (the “Security Principles”) to be agreed and detailed in the Facility Agreement (which Security Principles shall take into consideration the respective benefits and burdens of the granting of any particular security interest), as follows:

1. To be provided and take effect prior to the Initial Utilisation Date:

(a)          Charge over 17,000,000 ordinary shares of the Target granted by the Borrower; and

(b)         Charge over all the shares of the Merger Sub.

2. To be provided as soon as reasonably practicable and in any event within an agreed timeframe after the Closing Date:

(a)          Charge over 14,548 ordinary shares of the Target (amounting to approximately 29.0849% of the Equity Interests in the Target) granted by the Borrower.

3 To be provided as soon as reasonably practicable and in any event within 10 days (for signing) and 60 days (for perfection) after the Closing Date:

(b)     Pledge over all shares of深圳市海王医药电子技术有限公司held by the Target; and

(c)    Pledge over all shares of the Neptunus Commercial held by the Target.

During the Certain Funds Period, unless any Major Representation is untrue in any material respect or any Major Default is continuing and subject to (a) the satisfaction (or waiver by the Lender) of the Conditions Precedent and (b) the provisions on “Change of Control” and “Illegality”, the Lender shall not be entitled to: (i) cancel any of its commitments under the Facility to the extent that doing so would prevent or limit the making of a Certain Funds Utilisation; (ii) rescind, terminate or cancel the Facility or exercise any similar right or remedy or make or enforce any claim under the Finance Documents to the extent that doing so would prevent or limit the making of a Certain Funds Utilisation; (iii) refuse to fund any Certain Funds Utilisation; (iv) exercise any right of set-off or counterclaim in respect of any Certain Funds Utilisation or exercise any rights under any of the Transaction Security Documents (in each case) to the extent that doing so would prevent or limit the making of a Certain Funds Utilisation or (v) cancel, accelerate or cause the repayment of any Loans made under the Facility to the extent that doing so would prevent or limit the making of a Certain Funds Utilisation, in each case other than pursuant to any voluntary reduction or cancellation of the Facility by the Borrower; provided that subject to a clean-up period of 45 days after the Initial Drawdown Date immediately upon the expiry of the Certain Funds Period, all such rights, remedies and entitlements shall be available to the Lender (whether arising prior to, during or after the Certain Funds Period) notwithstanding that they may not have been used or been available for use during the Certain Funds Period.

For such purposes:

“Major Representation” means a representation insofar as it relates to the Borrower under any of paragraphs: (a) (status), (b) (binding obligations), (c) (non-conflict), (d) (power and authority), (e) (validity and admissibility in evidence), (g) (insolvency or insolvency proceedings), (t) (ranking), (x) (merger documents); (bb) (pari passu status of payment obligations), (cc) (holding company status of the Borrower), (dd) (sanctions, anti-money laundering and anti-corruption laws and regulations) and (ee) (anti-terrorism laws and regulations) of the section on “Representations” in this Term Sheet.

“Major Default” means any Default relating to:

(i)     any breach of any Major Representation;

(ii)    any breach by the Borrower of any undertakings set out in paragraphs (e) (restrictions on merger/ acquisitions/ reorganisation), (g) (restrictions on joint ventures), (h) (restrictions on activities of the Borrower as a holding company), (l) (negative pledge), (m) (restriction on disposals), (o) (restrictions on loans or credit), (r) (financial indebtedness) and (y) (restrictions on amendments/ waivers/ consents advise to the Lender of or under the Merger Documents) of the section on “General Undertakings” in this Term Sheet (each a “Major Undertaking“);

(iii)    any of paragraphs (a) (non-payment), (e) (insolvency), (f) (insolvency proceedings), (g) (creditors’ process), (h) (unlawfulness and invalidity) and/or (m) (repudiation) of the section on “Events of Default” in this Term Sheet, in each case insofar as such Events of Default relate to the Borrower and in the case of paragraph (m) of the section on “Events of Default” only insofar as such paragraph relates to any Finance Document.

(a)         Illegality

A Lender’s commitment in respect of the Facility shall be cancelled and its share of the utilisations under each Facility shall be prepaid in the event of illegality in relation to that Lender.

(b)         Voluntary Cancellation

Subject to a minimum amount and multiples to be agreed, and also subject to satisfactory evidence that sufficient funds are available to otherwise complete the Merger, the Borrower may, on not less than five (5) Business Days’ prior notice, cancel the whole or any part of the unutilised amount for the Facility.

Amounts cancelled cannot be reinstated.

(c)         Voluntary Prepayment

Subject to a minimum amount and multiples to be agreed, the Facility may be prepaid at any time after the last day of the Availability Period in whole or in part on not less than five (5) Business Days’ prior notice without penalty, but subject to payment of break funding costs in the event of any prepayment made otherwise than on the last day of an Interest Period.

(d)         Change of Control

Upon a Change of Control, the Facility shall be immediately repaid in full and cancelled.

“Change of Control” means

(a)          at any time before the Closing Date, the Sponsor ceasing, directly or indirectly, to beneficially own more than one hundred per cent. (100%) of the aggregate shares of the (1) Borrower and (2) Merger Sub; or ceasing to have the power to appoint or remove the majority of the directors (or, if there is no board of directors, other equivalent officers) of (1) Borrower and (2) Merger Sub (which such majority hold the right to cast the majority of the votes at any meeting of the board of directors (or equivalent body, as the case may be) of (1) Borrower and (2) Merger Sub;

(b)          at any time after the Closing, the Sponsor ceasing, directly or indirectly, to beneficially own more than seventy per cent. (70%) of the aggregate shares of (1) Borrower, (2) the Target, (3) Neptunus Commercial and (4) Neptunus Medicine and (5) 深圳市海王医药电子技术有限公司; or ceasing to have the power to appoint or remove the majority of the directors (or, if there is no board of directors, other equivalent officers) of (1) Borrower, (2) the Target, (3) Neptunus Commercial and (4) Neptunus Medicine and (5) 深圳市海王医药电子技术有限公司 (which such majority hold the right to cast the majority of the votes at any meeting of the board of directors (or equivalent body, as the case may be) of (1) Borrower, (2) the Target, (3) Neptunus Commercial and (4) Neptunus Medicine and (5) 深圳市海王医药电子技术有限公司.

(e)         Mandatory Prepayment - Flotation Proceeds

Upon any public offering of shares or equity interests (or securities relating thereto) of the Borrower or any holding company or subsidiary of the Borrower (“Flotation”), an amount equal to the applicable percentage (to be agreed) of the proceeds (less expenses and taxes incurred) shall be applied in prepayment of the Facility.

(f)          Mandatory Prepayment – Disposal Proceeds

Subject to customary exceptions, materiality thresholds and permitted baskets to be agreed and detailed in the Facility Agreement and to the extent not applied in reinvestment replacement or reinstatement of the relevant assets being disposed of within 12 months of receipt of the relevant disposal proceeds, such relevant disposal proceeds (less expenses and taxes incurred) shall be applied in prepayment of the Facility.

(g)         Mandatory Prepayment - Insurance Proceeds

Subject to customary exceptions, materiality thresholds and permitted baskets to be agreed and detailed in the Facility Agreement, and to the extent not applied to meet the relevant third party claim or to cover the relevant operating losses or in replacement or reinstatement of the relevant asset within, in each case, 12 months, all proceeds of any insurance claim (less expenses), subject to agreed thresholds, baskets and exceptions, shall be applied in prepayment of the Facility as set out below.

(h)         Mandatory Prepayment – Upstreaming Cash

The Borrower shall (a) procure that the Target shall make dividends, distributions or payment under the loans (in an amount of no less than 200 million RMB or equivalent US$) to the Borrower within 4 (four) months after the Initial Utilisation Date, and (b) apply 100% of proceeds of such proceeds in prepayment of the Facility within such 4 (four)-month period.

(i)           General

Any amount prepaid may not be redrawn.

Any prepayment shall be made with accrued interest on the amount prepaid and, subject to breakage costs, without premium or penalty.

Each Obligor in respect of itself (and where applicable, in respect of its Subsidiaries) will make the following representations (in each case, subject to customary materiality qualifications and other exceptions and taking into account the terms of comparable transactions in the market and the terms of prior transactions (if any) involving affiliates of the Sponsor and the Lender)):

(a)         Status; *

(b)         binding obligations; *

(c)         non-conflict with: *

(i) any applicable law or regulation;

(ii) its constitutional documents; or

(iii) any other agreement or instrument binding on it;

(d)         power and authority; *

(e)         validity and admissibility in evidence; *

(f)          governing law and enforcement; *

(g)         insolvency or insolvency proceedings;

(h)         no filing or stamp taxes;

(i)           no deduction of tax;

(j)           no Event of Default; *

(k)         no misleading information (with respect to any information provided since the last time such representation or warranty was made); *

(l)           the Original Financial Statements were prepared in accordance with the Accounting Principles consistently applied;

(m)       the Original Financial Statements give a true and fair view of the financial condition and results of operations of the Target Group as at the date of the Original Financial Statements and during the period to which such Original Financial Statements relate;

(n)         the most recent financial statements delivered: *

(i)      have been prepared in accordance with the Accounting Principles; and

(ii)     give a true and fair view of (if audited) or fairly represent in all material respects the consolidated financial condition and consolidated results of operations for the Target Group for the period to which they relate, subject to (in the case of unaudited statements) customary year-end adjustments;

(o)        no proceedings pending or threatened; *

(p)         no breach of laws; *

(q)         no breach of environmental laws and no environmental claims; *

(r)          taxation – no Obligor is overdue (taking into account any extension or grace period) in filing its tax returns, or is overdue in payment of taxes; *

(s)          subject to customary exceptions and baskets to be agreed, no financial indebtedness other than the indebtedness arising under the Finance Documents; *

(t)           ranking - the Transaction Security has the priority which it is expressed to have; *

(u)         good title to assets; *

(v)         ownership of the assets charged under the Transaction Security Documents; *

(w)       shares subject to Transaction Security (fully paid up and non-assessable, no restriction on transfer upon enforcement of the Transaction Security); *

(x)         Merger Documents – the Merger Documents provided to the Lender contain all the material terms of the Acquisition; there is no breach or default thereunder as at date of Commitment Letter (or thereafter to an extent that would entitle the Borrower, the Merger Sub or any relevant party thereto not to proceed with the Acquisition as agreed); no amendment/waiver/ consent adverse to the Lender thereunder and no termination (except as permitted);

(y)         the Group structure chart shows all Group members and contains a description of the corporate structure of the Group which is true, accurate and complete in all material respects (in each case assuming completion of the Acquisition);

(z)         accounting reference date;

(aa)      intellectual property rights subject to Material Adverse Effect qualifier;

(bb)     pari passu status of payment obligations (except for obligations mandatorily preferred by law applicable to companies generally); *

(cc)      holding company status of the Borrower; *

(dd)     sanctions, anti-money laundering and anti-corruption laws and regulations; *

(ee)      anti-terrorism laws and regulations; *

(ff)       Federal Reserve regulations; *

(gg)      Pensions subject to Material Adverse Effect qualifier; *

(hh)     Compliance with SAFE rules;* and

(ii)         no security interests granted by the Obligor other than the Transaction Security subject to exception to be agreed. *

All representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of the Facility Agreement, the date of each Utilisation Request and on, each Utilisation Date.

Representations marked with a * shall be repeating representations and shall be deemed to be made by the Borrower on the first day of each Interest Period.

Borrower shall supply each of the following commencing on the Closing Date:

(a)         as soon as reasonably practicable but in any event within 120 days (or 120 days in the first Financial Year ending after the Closing Date) of the end of each of its Financial Years the audited consolidated financial statements for the Group for that Financial Year (each, “Annual Financial Statements”);

(b)         as soon as reasonably practicable but in any event within 60 days of the end of each of the first three quarters of each of its Financial Years the consolidated unaudited financial statements for the Group for that quarterly financial period (each, “Quarterly Financial Statements”);

(c)         (promptly upon becoming aware of the same) details of any litigation, labour dispute, environmental claim, arbitration or administrative proceeding which are current, pending or threatened against the Borrower or any member of the Group which are reasonably likely to be adversely determined and, if adversely determined, are reasonably likely to have a Material Adverse Effect;

(d)         details of any material (and incapable of being rectified in accordance therewith) non-compliance or breach of a Merger Document by any relevant party thereunder;

(e)         details of any event or circumstance (promptly upon becoming aware of its occurrence) that would give rise to a mandatory prepayment;

(f)          all information provided to its shareholders (or any class of them) or its creditors generally at the same time as they are provided; and

(g)         promptly on request of the Lender, such further information regarding (a) the financial condition, material assets and operations of the Group and (b) the assets subject to Transaction Security.

The Borrower shall promptly notify the Lender of any default under the Finance Documents (each, a “Default”) which is continuing upon it becoming aware of that Default and, following request by the Lender, certify that no Default is continuing (or, if a Default is continuing, certify what steps are being taken to remedy such Default).

Provisions will be included relating to reconciliation and/or adjustment to financial statements on a change of accounting basis or reference date to give all parties comparable protection.

Customary undertakings relating to the provision by the Obligors of information requested for any “know your customer” checks required to be carried out by the Lender shall be included.

Each Obligor in respect of itself (and where applicable, in respect of its Subsidiaries) will make the following undertakings only (in each case, subject to agreed materiality qualifications and other exceptions and baskets to be agreed in the Facility Agreement and taking into account the terms of similar transactions in the market and the terms of prior transactions (if any) involving affiliates of the Sponsor and the Lender):

Authorisations and compliance with laws

(a)         authorisations and approvals;

(b)         compliance with laws;

(c)         environmental compliance;

(d)         taxation;

Restrictions on business focus

(e)         restriction on merger/acquisition/reorganisation (other than, among other exceptions to be agreed, the Acquisition);

(f)          no substantial change in nature of business of the Group taken as a whole;

(g)         restriction on joint ventures;

(h)         restriction on activities of the Borrower as a holding company.

Restrictions on dealing with assets and Security

(i)           preservation of assets;

(j)           pari passu ranking except for obligations mandatorily preferred by law;

(k)         payments of amounts payable and preservation of rights and pursuit of claims under the Merger Documents where the board of the directors of the Borrower believes (acting reasonably and in good faith) that the pursuit of that claim is commercially advantageous and appropriate;

(l)           negative pledge (other than the Transaction Security);

(m)       restriction on disposals;

(n)         transactions with affiliates to be on arm’s length basis or better;

Restrictions on movements of cash – cash out

(o)         restriction on loans or credit;

(p)         restriction on guarantees or indemnities;

(q)         restriction on dividends, distributions, share redemptions, payments under shareholder loans and other restricted payments (“Restricted Payments”) to any shareholder of the Obligors;

Restrictions on movements of cash - cash in

(r)          subject to customary exceptions and baskets to be agreed, restriction on Financial Indebtedness (except for the indebtedness incurred under the Finance Documents);

(s)          restriction on issuance of share capital and restrictions against agreements or arrangements (other than Finance Documents) that limit/restrict dividends/distributions from subsidiaries/other Group Members;

Miscellaneous

(t)           Maintenance of good and sustainable financial status, failure to do which would reasonably be expected to have a Material Adverse Effect;

(u)         insurance to be maintained against those material risks and to the extent usual for companies carrying on the same or substantially similar business with reputable insurers;

(v)         while an Event of Default is continuing or the Lender reasonably suspects that an Event of Default may have occurred, access for the Lender and its representatives and professional advisers on notice;

(w)       intellectual property to be maintained if failure to do so would reasonably be expected to have a Material Adverse Effect;

(x)         pensions funded to the extent required by local law and regulations where failure to do so would have or be reasonably likely to have a Material Adverse Effect;

(y)         restrictions on amendments/waivers/ consents adverse to the Lender of or under the Merger Documents (unless otherwise permitted);

(z)         restrictions on amendments to constitutional documents of any Group Member whose Equity Interests is subject to the Transaction Security.

(aa)      no speculative treasury transactions;

(bb)     [intentionally left blank];

(cc)      provision of Transaction Security in accordance with agreed grace periods;

(dd)     further assurance subject to the Security Principles;

(ee)      compliance with Federal Reserve regulations;

(ff)       SAFE Rules and PRC law compliance;

(gg)      sanctions, anti-money laundering, anti-corruption and anti-terrorism;

(hh)     no change in accounting reference date; and

(ii)         the Borrower and the Group will appoint reputable auditors of international standing acceptable to the Lender (acting reasonably).

The customary Event of Defaults limited to the following events (in each case, subject to customary materiality qualifications and other exceptions to be agreed in the Facility Agreement and taking into account the terms of comparable transactions in the market and the terms of prior transactions (if any) involving affiliates of the Sponsor and the Lender):

(a)         Non-payment: non-payment unless failure to pay is caused by administrative or technical error and payment is made within three (3) Business Days of its due date;

(b)         Other obligations: breach of any of the other terms and conditions of the Finance Documents unless such failure is capable of remedy and is remedied within 15 Business Days of the earlier of (i) Lender giving notice and (ii) the Borrower becoming aware provided that such remedy period does not apply to certain obligations (including Mandatory Prepayment – Upstreaming Cash);

(c)         Misrepresentation (unless the underlying circumstances (if capable of remedy) are remedied within 15 Business Days of the misrepresentation;

(d)         Cross-Default: cross default in respect of other financial indebtedness of any Obligor, subject to a minimum amount to be agreed;

(e)         Insolvency: insolvency in respect of Obligors;

(f)          Insolvency Proceedings: insolvency proceedings in respect of Obligors;

(g)         Creditors’ Process: creditors’ process in respect of Obligors affecting any asset of the Obligor which have an aggregate value of no less than an amount (to be agreed);

(h)         Unlawfulness and Invalidity: unlawfulness or invalidity of any provision of any Finance Document;

(i)           Subordination Agreement: Any party (other than the Lender) fails to comply with the terms of the Subordination Agreement;

(j)           Cessation of Ongoing Business: cessation of business by the Group (taken as a whole);

(k)         Audit Opinion is Qualified: the opinion of the auditors of the Financial Statements is qualified in a manner which is materially adverse to the interests of the Lender;

(l)           Expropriation: The authority or ability of any Obligor to conduct its business is materially limited or substantially curtailed by any seizure, expropriation or nationalisation;

(m)       Repudiation: repudiation and rescission by any Obligor of (i) any Finance Documents or (ii) any Merger Document;

(n)         Litigation: litigation proceedings with a real prospect of success are commenced against any Obligor by any third party and, in the reasonable opinion of the Lender are likely to result in a Material Adverse Effect;

(o)         Final Judgment: Failure to comply with any final judgment or order for amounts exceeding certain amount (to be agreed) in each isolated event against any Obligor or any Group Member; and

(p)         Material Adverse Effect: any event or circumstance which would reasonably be expected to have a Material Adverse Effect.

“Material Adverse Effect” means a material adverse effect on:

(a)         the business, operations, assets or financial condition of the Group taken as a whole; or

(b)         the ability of the Obligors (taken as a whole) to perform their payment obligations under the Finance Documents; or

(c)         the legality, validity or enforceability of, or the effectiveness or ranking of any security granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of the Lender under any of the Finance Documents.

No assignment or transfer shall be made to any person by the Borrower without consent from the Lender.

Upon occurrence of an Event of Default, assignment or transfer can be made to any person by the Lender without consent from the Borrower.

Documentary conditions precedent

Conditions precedent to the first Utilisation Request have been set out in Part 5 (each in form and substance satisfactory to the Lender (acting reasonably) save where otherwise expressly specified.

To consist of the following:

1.            Evidence of filing of the plan of merger and a certified copy of the certificate of merger issued by the competent authority in connection with the Acquisition;

2.            Any security perfection requirements in relation to the Transaction Security to be advised by local counsel;

3.            The execution of the Neptunus Commercial Undertaking Letter executed by Neptunus Commercial by no later than the Closing Date;

4.            Accession of the Target, Neptunus Commercial, Neptunus Medicine and 深圳市海王医药电子技术有限公司to the Facility Agreement as Obligors in compliance with the terms of the paragraph headed “Obligors” above; and

5.            Compliance with terms of sub-paragraphs 2 and 3 of the paragraph headed “Transaction Security” above.

The Borrower agrees to pay on demand all reasonable and duly documented costs and expenses (including legal fees) incurred by the Lender in connection with the negotiation, preparation, printing, execution and perfection of the Facility and the Finance Documents.

The Borrower agrees to pay on demand all reasonable and duly documented costs and expenses (including legal fees) incurred by the Lender in connection with the amendment, administration or preservation of any rights under or in respect of the Finance Documents and all duly documented costs and expenses (including legal fees up to a cap to be agreed) which the Lender incurs or becomes liable for in enforcing its rights or demanding or recovering any sum or sums of money due to the Lender under the Finance Documents.

English law.

Applicable law for Transaction Security Documents to be advised by local counsel.

Hong Kong Court

Applicable dispute resolution forum for Transaction Security Documents to be advised by local counsel.