Lease Contract
Lessor: General Tobacco Group Co., Ltd.
Address: No. 80 Jiangjun Road, Jinan City
Legal representative: Jiang Haiyan

Lessee: Shandong Yaoyuan Pharmaceutical Co., Ltd.
License No.
Address:
Legal representative: Song Yanliang

The two parties agree to conclude the contract with regards to the lease of the
workshop to the Lessee according to the Contract Law of the People’s Republic of
China and relevant regulations, on the principle of fairness and mutual
benefits.

Article 1: Status of house
 
(1)
The Lessor leases the house and attached facilities located in No. 80 Jiangjun
Road, Licheng District, Jinan City (hereinafter referred to as “The Leased
Property”) to the Lessee.

 
(2)
The leased area of the house is 13,936.948 m2.

 
(3)
The Lessor shall guarantee that the building quality of the Leased Property
meets the safety requirements of the Lessee.

 
(4)
The Leased Property is used for breeding and planting as well as office
administration of the Lessee, if it intends to change its purpose, it shall get
the written permission of the Lessor, and all the relevant procedures shall be
reported by the Lessee according to national regulations; all the fees payable
shall be assumed by the Lessee; the Lessor shall not be responsible for the
compensation of dissolution and termination of the contract owing to any
reasons.

 
(5)
It adopts the method of charter for the Leased Property.

 
(6)
See the detailed situation of the Leased Property in the attached drawings.

 
Article 2: Lease term and rent
 
(1)
The lease term isone year from July.1 2010 to June 30, 2011, with the rent of
1,335,333.8 Yuan (365 days).

 
(2)
After the lease term expires, the Lessor has right to take back the Leased
Property, and the Lessee shall return the Property and move out of the house in
advance of two weeks; if the Lessee needs to extend the lease term, it shall
propose within two months in advance of the expiry date; after the agreement of
the Lessor, the two parties shall sign a new contract. The Lessee has the
priority to lease the Property under the same conditions.

 
Article 3: Delivery
 
After taking effect of the Contract, the Lessor shall deliver the Property to
the Lessee, and the Lessee agrees to rent the Property and facilities based on
its current status (see the detailed delivery conditions in the attachment). The
two parties shall sign and confirm the infrastructure on the transfer list and
attach the photo when delivering the Property.

 
 
 

--------------------------------------------------------------------------------

 
Article 4: Lease fee
 
(1)
Lease deposit

 
The lease deposit of this contact is 200,000 Yuan.
 
(2)
Rent

 
The rent is 0.2625 Yuan/m2 for each day, and it shall calculate based on the
actual delivery area.
 
(3)
Water & electricity fees

 
The Lessee shall pay the water & electricity fees to Lessor according to the
actual use and charging standard of the Lessor. The unit price of water fee is
4.4 Yuan/m3, and the unit price of electricity fee is 1.05 Yuan/degree.
 
Article 5: Payment way of lease fee
 
(1)
The Lessee shall remit the deposit to the specified account of the Lessor
withinthree days after signing the contract.

 
After the expiry date of the contract, and the following conditions are
satisfied, the Lessor shall return the deposit to the Lessee within 15 working
days without the interests.
 
1.
The Lessee has paid off all the rents, water & electricity fees;

 
2.
The Lessee has settled all the charges generated from the lease (including but
not limited in fees of water, electricity, heat supply, telecom, environment &
health and public security);

 
3.
It shall comply with the contract regulations to return the Leased Property and
assume other responsibilities to the Lessee.

 
4.
The Leased Property, attached facilities and equipment shall have no abnormal
damage through the confirmation of the Lessor.

 
“Abnormal damage” refers to the situations except for the normal wearing and
aging.
 
If there is “abnormal damage”, the two parties shall confirm the direct fees of
the damage, and the deposit that deducted the direct fees shall be returned to
the Lessee, and the lacking part shall be supplemented by the Lessee.
 
(2)
This contract will be based on the principle to pay the rent first and then take
use of the Property, the Lessee shall pay the rent that is calculated by the
remaining period of the calendar first quarter within three days since the
effective date of the contract; after then, the Lessee shall pay the rent of
next quarter on 25 of last month before each calendar quarter or in advance of
this date, and it shall remit to the specified account of the Lessor, or it can
comply with other ways of payment agreed in the written form by the two parties.

 
Bank of deposit of Lessor: North Industry Road Branch of Industrial and
Commercial Bank of China
 
Account No: 1602003219223000216
 
If the Lessor changes the payment account No. or bank of deposit, it shall
promptly notify the Lessee.
 
The Lessee shall pay the liquidated damages to the Lessor if the rent is
overdue, with the amount of: delayed days ×5/10000 of total owed rent.
 
(3)
The Lessee shall pay the water & electricity fees of last month to the Lessor on
the tenth day of this month or before that day. The Lessee shall pay the
liquidated damages to the Lessor if the water & electricity fees are overdue,
with the amount of: delayed days×5/10000 of total owed rent.

 
 
 

--------------------------------------------------------------------------------

 
 
Article 6: relevant fees
 
(1)
During the lease term, the Lessee shall assume the water & electricity fees,
communication fees, decoration fees and all the fees needed for the normal use
of relevant supported facilities.

 
(2)
The use right of the Leased Property belongs to the Lessee during the lease
term.

 
Article 7: Repair and maintenance
 
(1)
The Lessor shall be responsible for the repair and maintenance of relevant
facilities in the Property or entrust the Lessee to maintain, and the
maintenance fees shall be assumed by the Lessor. The Lessor shall guarantee that
the Property can meet the use purpose in the Contract of the Lessee. If Lessor
intends to examine and maintain the Property, it shall notify the Lessee in
advance of three days. The Lessee shall coordinate the inspection and
maintenance works, and the Lessor shall try its best to reduce the probability
to affect the use of the Lessee.

 
(2)
During the lease term, if there are natural damage or roof leakage, etc. which
affect the normal use of the Lessee, the Lessee shall notify the Lessor promptly
in the written form, and adopt necessary measures, to avoid the loss, otherwise,
the Lessee shall assume the responsibility itself; the Lessor has no
responsibility for the loss formed before notifying of the Lessee.

 
The Lessor shall take the repair works within 30 working days after receiving
the written notice of the Lessee, and if it doesn’t repair in time, the Lessee
has right to repair itself.
 
(3)
During the lease term, if there are risks like house collapse, or water pipe
breakage, or electricity leakage, or other matters that prevent the normal use
of the Lessee, or threaten the safety of Lessee’s life and assets, the Lessee
shall promptly notify the Lessor in the written form and adopt necessary
measures to avoid the losses, otherwise, the Lessee shall assume the
responsibility itself; the Lessor has no responsibility for the loss formed
before notifying of the Lessee.

 
The Lessor shall promptly repair or remedy after receiving the written notice of
the Lessee, if the Lessor doesn’t care or neglect this matter, the Lessee has
right to terminate the lease or repair itself. The Lessor shall take the
positive, rational and necessary measures, and it shall not neglect the matter,
otherwise, it shall assume the relevant responsibility.
 
(4)
The Lessee has the use right of the Leased Property and the attached facilities.
The Lessee shall be responsible for the maintenance and repair of the relevant
facilities, and guarantee that the relevant facilities are in good state when
terminating the Contract. The Lessor has the right to inspect this matter.

 
The Lessee shall have the responsibility to use and maintain the Leased
Property, and it shall promptly eliminate the possible obstacles and dangers, so
as to avoid the potential risks.
 
(5)
The Lessee shall rationally use and be care for the Leased Property during the
lease term, and it shall be responsible for repairing for its improper use of
the properties, if the Lessee refuses to repair, the Lessor can take the repair
works, and the Lessee shall assume the relevant fees.

 
(6)
If the Lessee intends to decorate or increase the attached facilities and
equipment, it shall get the permission of the Lessor and submit to the relevant
department for approval, which shall not damage the main structure of the Leased
Property as well as damage the Property substantially; and it shall not damage
other building and facilities of the Lessor. Otherwise, the Lessee shall assume
the responsibility for compensation.

 
 
 

--------------------------------------------------------------------------------

 
Article 8: Water & burglar proofing and safety management
 
(1)
The Lessee shall seriously comply with theFire Protection Regulation of the
People's Republic of China and relevant system of the Lessor; it shall
coordinate the Lessor to prepare the relevant works, otherwise, all the
responsibilities and losses shall be assumed by the Lessee.

 
(2)
The Lessee shall allocate the fire control equipment according to the relevant
regulations; it forbids using fire control facilities for other use.

 
(3)
If it needs the fire operation owing to the maintenance (including welding and
gas welding, etc.), it shall get the permission of the principal department of
Lessor; and the issues that need the approval of the principal department shall
get the approval of fire control department.

 
(4)
The Lessee shall take charge of the fire and stealing control in the Leased
Property according to the relevant regulations of the fire control department,
and take self-examination and self-correction works. The Lessor has right to
examine the fire and stealing control safety in the reasonable time agreed by
the two parties, and it shall give the written notice to the Lessee; the Lessee
shall not refuse unreasonably or delay the approval. The safety examination
behaviors of the Lessor shall not exempt from the safety requirements like
safety examination of the Lessee.

 
(5)
During the lease term, the two parties shall observe national laws and
regulations, and it shall not use the Leased Property to engage in the illegal
activities; meanwhile, the Lessor has right to urge the Lessee to do well the
works with regards to fire control, safety and health.

 
(6)
The Lessee shall observe the safety management of the state and the Lessor, so
as to promptly eliminate the personal harms as well as the harms to the Lessor.
The Lessee shall take the security and protection for the properties, and assume
all the responsibilities.

 
(7)
The Lessee shall comply with the national regulations to use the relevant
equipment and facilities; otherwise, it will assume all the responsibilities as
well as the losses of the Lessor.

 
Article 9: Responsibility of insurance
 
During the lease term, the Lessee shall take charge of purchasing the insurance
of Lessor’s property and other necessary insurances (including the liability
insurance). If the Lessee doesn’t purchase the above insurance items, the Lessor
has right to terminate the contract, and the Lessee shall assume all the
compensations and responsibilities.
 
Article 10: Leased property and surrounding environment management
 
(1)
The Lessor shall take charge of the management works for the surrounding
environment. If the Lessee’s behavior affects or harms the surrounding
environment, it shall eliminate the effect and recover the original state, and
it shall bear the responsibility for the damage.

 
(2)
When the lease term expires or the lease terminates in advance, the Lessee shall
clean the Leased Property and move out of the Property, and return the property
to the Lessor before the expiry date or termination date. If the Lessee doesn’t
clean the house, it shall bear the fees related to cleaning of the Lessor.

 
(3)
The Lessee must comply with the laws and regulations of the People’s Republic of
China as well as the provisions relevant to property management of the Lessor,
if it violates the regulations, it shall bear the relevant responsibilities. If
the Lessee affects the normal works of other users owing to its violation of
above regulations, it shall assume the relevant losses.

 
 
 

--------------------------------------------------------------------------------

 
 
Article 11: Provisions of decoration
 
(1)
During the lease term, if the Lessee needs to decorate or rebuild the Leased
Property, it shall submit the relevant plans to the Lessor and get the approval;
meanwhile, it shall report to the relevant government department for approval.
If the decoration and rebuilding plans may affect the public building or other
adjacent users, the Lessor can propose the disputes on these plans, and the
Lessee shall revise promptly. The rebuilding and decoration fees shall be
assumed by the Lessee.

 
(2)
If the decoration and rebuilding plans may affect the main structure of the
Leased Property, it shall get the written approval of the Lessor and original
design unit.

 
(3)
The Lessor shall possess the property right for the facilities increased from
the decoration and rebuilding. The Lessee cannot enjoy the right or ask the
Lessor for subsidies.

 
Article 12: Lease transfer and sublease
 
(1)
After permitted by the Lessor in the written form, the Lessee can sublease part
of the Property, and it shall not transfer the entire property to be leased by
other party. The Lessee shall take charge of managing the subleased part,
including receiving the rent from the sublessee. The responsibility and rights
of the two parties in the Contract shall not be changed owing to the subleasing.

 
(2)
If there is subleasing, the Lessee shall comply with the following terms:

 
1.
The sublease term shall not exceed the lease period agreed in the Contract;

 
2.
The use purpose of the subleased party shall not exceed the purpose regulated in
the Contract;

 
3.
The Lessee shall list clearly in the sublease agreements that if the Lessee and
Lessor terminate the Contract in advance, the sublease contract shall also be
terminated.

 
4.
The Lessee shall request the sublessee to sign the guarantee letter, to perform
the regulations with regards to the sublease issues in the Contract of Lessor
and Lessee, and the sublessee shall guarantee to assume the associated
responsibilities with the Lessee. When the Lessee terminates the Contract, the
sublease contract is also terminated, and the sublessee shall move out of the
property without conditions.

 
5.
Whether the Lessee terminates the Contract or not, it shall handle all the
disputes aroused from the sublease behaviors.

 
6.
The Lessee shall assume the tax fees aroused from subleasing.

 
Article 13: Contract termination
 
(1)
During the lease term, if the Lessee owes the rent or water & electricity fees
over one month, and the Lessee doesn’t pay the relevant items within five days
after receiving the notice of the Lessor, the Lessor has right to prevent the
Lessee from using of relevant facilities. The Lessee shall assume all the losses
caused by this (incuding but not limited in the losses of Lessee and Sublessee).

 
(2)
If the Lessee owes the rent or water & electricity fees for two months, the
Lessor has right to terminate the contract in advance and execute in accordance
with the contract regulations. Since the date that the Lessor notifying the
Lessee by fax or letter, this Contact shall terminate automatically. The Lessor
has right to retain the assets of the Lessee in the property, and make auction
legally of the retained assets, for compensating all the fees resulted from the
lease behaviors of the Lessee, after five days of issuing the written
termination contract.

 
(3)
The Lessee shall not terminate the contract in advance without the permission of
the Lessor. If the Lessor needs to terminate the contract in advance, it shall
notify the Lessee in the written form in advance of two months, and finish the
following procedures:

 

 
 

--------------------------------------------------------------------------------

 
 
1. 
Return the Leased Property to the Lessor;

 
2. 
Pay off the rent and other relevant fees;

 
3.
It shall pay the item that is equal to 2 times of the rent of the current month
as the compensation fees for the Lessor at the day before the termination date
or in advance of this date.

 
Article 14: Exceptions
 
(1)
If the Lessee cannot perform the contract owing to the revision of national laws
and regulations or local government behaviors or policy regulations of higher
management department, the two parties will take no responsibilities, but they
shall notify each other in accordance with the regulations of item 2 of this
article.

 
(2)
If there are natural disasters, wars or other unpredictable and inevitable force
majeure factors, which causes the failure to perform the Contract, the relevant
party shall notify the other party by mailing or fax, and provide the detailed
situation as well as the certifying documents with regards to the failure of
performance, or failure to perform part of the obligations or delaying of
performance within 30 days; the certifying documents shall be issued by the
notary organ of the local area, if this documents cannot be issued, it shall
provide other effective documents. The party suffering from the force majeure
can be exempted from the responsibilities.

 
(3)
The Contract will terminate naturally if the above two reasons cause the failure
of performing the contract, and the Lessee shall return the deposit and
additional rent of the Lessee within 30 days after terminating the Contract,
other matters shall be handled in accordance with the relevant national
regulations.

 
Article 15: Relevant agreements after termination or dissolution
 
(1)
If the contract terminates in advance or expires, and the two parties don’t
continue the agreements, the Lessee shall move out of the Property at the
termination date or expiry date, and return the Property to the Lessor. If the
Lessee doesn’t move out of the Property or return the Property in time, it shall
pay the doubled rent to the Lessor; while the Lessor has right to notify for
refusing the doubled rent in the written form, and it has right to take back the
Leased Property and remove the properties forcibly; and it has no responsibility
to keep the properties. If there are still the properties of Lessee within five
days after moving, and the two parties have no agreements, it will be deemed as
wavier of the ownership, and the Lessor will dispose these properties. If the
Lessee has difficulties to find the workshop or there are other special reasons,
the Lessor shall allow for delaying the term for 20 days, but the Lessee shall
pay off the rent and relevant fees at one time according to the agreed rent in
the contract.

 
(2)
After the lease term expires, if the Lessee intends to continue the contract, it
shall notify the Lessor in advance of 30 working days, and the Lessor shall
propose the disputes or negotiate to continue the agreements with the Lessee
within 30 working days since receiving the notice; if it doesn’t reply within 30
working days since receiving the notice, it will be deemed as agreeing the
reletting; the contract will extend for half a year, which will be calculated
since the expiry date. After the lease term expires, if the Lessor intends to
continue leasing the Property, the Lessee has the priority to lease the Property
based on the same rent.

 
(3)
The Leased Property shall be in normal using state when returning; otherwise,
the Lessee shall assume the responsibility for the compensations.

 
 
 

--------------------------------------------------------------------------------

 
Article 16: Operation and advertisement
 
(1)
The Lessor shall not interfere in the legal operation and production of the
Lessee, and the production and operation behaviors and results have no relations
with the Lessor. The Lessee (sublessee) shall not use the Lessor’s name, word
size and image symbol in the self propaganda or operation activities; the Lessee
shall ensure that its or sublessee’s behaviors cannot harm the legal rights of
the Lessor. Otherwise, the Lessee shall take charge of the compensations and
bear the responsibilities according to the provisions for breach of the
contract.

 
(2)
If the Lessee needs to establish the billboard on the house surface, wall and
other parts or the places owned or managed by the Lessor surrounded the Leased
Property, it shall get the written permission of the Lessor; the relevant fees
shall be confirmed through negotiation of the two parties; the Lessee will be
responsible for completing the relevant procedures according to the government
regulations as well as submiting to the Lessor for filing.

 
Article 17: Relevant taxes
 
In accordance with the regulations of the local government, the relevant taxes
of this contract shall be assumed respectively by the two parties abiding by the
regulations. The Lessor shall handle the relevant procedures for registration.

 
Article 18: Notice
 
All the notices related to the contract or the documents related to the two
parties as well as the relevant requirements shall be in the written form.

 
Article 19: Responsibility for breach of contract and claim
 
(1)
Any party will be deemed as breach of the contract if it doesn’t execute any
clauses in the contract.

 
(2)
After receiving the written notice for the details of breach of contract of one
party, any party shall confirm or propose the written disputes or supplementary
notes within 15 working days. If it doesn’t reply in the written form within 15
working days, it will be deemed as acceptance of the contents; in this case, the
two parties shall negotiate the issue; if it fails to be solved in this way, it
shall be handled according to the clauses in this agreement. The default party
shall assume the economic losses of the observant party caused by its breach of
the contract.

 
(3)
Claim

 
1.
If the contract cannot be performed owing to illegal reasons of the Lessor, it
shall return the overpayments and deposits of the Lessee, and it will give the
Lessee 15 days for moving out of the Leased Property for free.

 
2.
If the contract cannot be performed owing to illegal reasons of the Lessee, the
Lessee shall pay the relevant rent in lump sum within 7 days since the invalid
date agreed in the contract as the compensations, which will be deemed as the
indirect compensation for the Lessor; otherwise, the Lessor has right to detain
the paid rent and deposit of the Lessee; meanwhile, the Lessor will not make any
compensations for all the fees invested by the Lessee based on the trust at the
beginning.

 
3.
If the disputes aroused from the contract cannot be solved through negotiation,
the default party shall assume the expenses of the observant party for
maintaining its rights, including but not limited in the travel fees, lawsuit
fees, investigation fees and lawyer’s fees.

 
 
 

--------------------------------------------------------------------------------

 
 
Article 20: Disputes solution
 
The disputes aroused from this contract shall be solved through negotiation of
the two parties; for failure of negotiation, it shall make the lawsuit to the
people’s court at the location of the Leased Property.

 
Article 21: Other clauses
 
(1)
After signing the contract, if the enterprise name is changed, the change party
shall provide the registration materials of industry and commerce related to the
change to the other party, if the change doesn’t comply with the contract, this
contract clauses will not be changed, and it will continue to be performed until
the contract expires.

 
(2)
The unsettled matters herein shall be negotiated by the two parties to sign the
supplementary agreement; this contract had six copies, with each party holding
three.

 
(3)
This contract will take effect after signing and sealing of the two parties as
well as receiving the deposit paid by the Lessee.

 
Lessor: General Tobacco Group Co., Ltd.
Authorized representative: Qin Ning
 
Lessee: Shandong Yaoyuan Pharmaceutical Co., Ltd.
Authorized representative: Song Yanliang
 
Date: June 19, 2010
 
 
 

--------------------------------------------------------------------------------