EXHIBIT 10.4
 
Ceiling amount security and loan contract
 
NXGDJZ [ ] No.
 
Lender:         Wuhan Xianfeng Rural Credit Cooperative
 
Borrower      Wuhan Fanya Peptide Material Research Ltd
 
Mortgager:   Wuhan Tallyho Biological Product Ltd
 
Upon reaching a consensus, the lender, the borrower and the mortgager hereby
enter into this contract for common observance according to relevant laws and
codes.
 
Article 1
According to the needs of the borrower and the possibility of the lender, the
lender shall loan the borrower the principal amount with a ceiling amount no
more than 5,000,000 CNY from 2008-01-25 to 2013-01-25 and no security for every
sum of loan will be conducted within the term and the ceiling amount.

 
Article 2
During the foregoing term, the expiry date of every sum of loan may not exceed
the expiry date as specified in Article 1. The amount, the application, the term
and the interest of every sum shall be subject to corresponding receipt for such
sum. The receipt forms a part of this contract and has equitable legal force.

 
Article 3
Security

 
 
1)
The mortgager is willing to mortgage the properties with value of 7,367,000 CNY
upon appraisal (the details are given in “list of collateral”), of which he can
dispose, to provide collateral to the borrower. If the borrower fails to repay
the loan on schedule as agreed in the contract, the mortgagee is entitled to
evaluate, auction, sell off or otherwise dispose of the collateral and acquire
repayment from received amount with preference according to laws of China.

 
 
2)
The scope of security includes the principal, the interest and the expenses to
implement creditor’s right.

 
 
3)
The force of the security involves the accessory things, accessory rights and
the fruits incurred thereby.

 
 
4)
The security term shall start from the date of mortgage and end when all the
liabilities within the security scope are paid off.

 
 
5)
The properties of collateral as listed in the List of Collateral are placed in
custody of the mortgager, used, maintained and preserved by the mortgager. The
certificate for property ownership is delivered to the mortgagee for custody.

 
 
 

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6)
The collateral hereunder may not be listed into the scope of bankruptcy. When
the principal & the interest of the loan and relevant expenses are paid by the
cost of the collateral, the remaining part of the cost may be listed into the
scope of bankruptcy.

 
Article 4  Undertaking of the borrower:
 
 
1)
Repay the principal and the interest of the loan on schedule.

 
 
2)
Use the load according to the agreed application.

 
 
3)
Provide the lender with true balance sheets, income statements, information on
all deposit banks, accounts and balance of deposit etc monthly.

 
 
4)
Accept check and supervision by the lender on its use of loan, relevant
production, operation and financial activities;

 
 
5)
Notify the lender timely for any change of legal representative, domicile of
legal entity or business location and registered capital.

 
 
6)
Notify the lender in advance, identify the liabilities and determine measures of
repayment in case of management system, such as contracting, leasing, merge
(acquisition), split, shareholding reform, external investments.

 
Article 5  Undertaking of the mortgager:
 
1)
The mortgager enjoys the right to dispose the collateral listed herein. If the
leased properties are mortgaged, the mortgagee shall be informed in written
form.

 
2)
Ensure the safety, intactness of the collateral within the security term and
bear the expenses for maintenance and preservation of the collateral.

 
3)
Cover for the collateral with property insurance. During the security term, the
lender shall be the first beneficiary; the insurance policy shall be kept by the
lender. The mortgager shall renew the insurance upon expiry of the said
insurance. For any loss incurred within the insurance coverage during the term
of insurance, the mortgage shall settle the claim with the said insurance and
repay corresponding principal and interest of the loan. If it not sufficient to
repay the principal and the interest of the loan, the mortgage shall make up for
it or provide security separately.

 
4)
If the value of the collateral reduces during the security term due to damage,
loss or other causes, the mortgager shall recover the value of the collateral or
provide security with value equitable to the reduced value.

 
 
 

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5)
The transfer of the collateral with compensation by the mortgager during the
security period shall be subject to approval by the mortgagee. The payment from
such transfer shall be used to pay off the debt to the mortgagee in advance or
be withdrawn upon agreement with the mortgagee.

 
 
6)
Accept check and supervision by the lender on the collateral.

 
Article 6  Undertaking of the lender:
 
 
1)
Provide the borrower with the loan of specified amount on schedule.

 
 
2)
Preserve the certificate for property ownership. Return the certificate
immediately after principal and interest of the loan are paid off.

 
 
3)
Not charge from the borrower for items other than those provided herein.

 
 
4)
Keep the documents provided by the borrower confidential.

 
Article 7
If the borrower can not repay the loan on schedule due to special causes, the
borrower may apply for grace 30 days before expiry date of the loan upon
fulfillment of relevant collateral security procedures. The repayment term may
be extended upon approval by the lender and signing of grace agreement, however,
the interest rate for the loan shall be determined according to accumulated term
level.

 
Article 8  Liability for breach:
 
 
1)
Breach of the borrower:

 
 
(1)
If the borrower fails repay the principal of the loan on schedule and fails to
acquire approval for a grace, additional interest at a rate of three in one
thousand of daily interest rate shall be charged since the expiry date.

 
 
(2)
If the borrower fails to repay the interest of the loan, compound interest shall
be charged according to relevant provisions.

 
 
(3)
If the borrow does not use the loan as specified, for the embezzled loan,
additional interest at a rate of five in one thousand of daily interest rate
shall be charged during the embezzlement period.

 
 
(4)
If the borrower violates the provisions in clause 3) through to clause 6) in
Article 3 herein, the lender is entitled to discontinue providing of the loan
not provided hereunder, reclaim the load not due.

 
 
2)
Breach of the lender

 
 
(1)
If the lender can not provide loan the borrower with the specified loan of
specified amount on schedule, the lender shall reimburse penalties at a rate of
three in ten thousand of daily interest rate for the amount of breach and delay.

 
 
 

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(2)
If the certificate for property ownership is lost, the lender shall register in
relevant authority at the expense of the lender until such certificate is made
up.

 
 
(3)
If the lender violates clause 3) in Article 6 herein, the borrower is entitled
to reject. If the lender violates clause 4) in Article 6 herein, the borrower is
entitled to complaint to the People's Bank of China.

 
 
3)
Breach of the mortgager

 
If the mortgager violates any provisions in Article 5, the lender can not
realize the right for the collateral and suffers loss accordingly; the mortgager
shall be liable for compensation.
 
Article 9
When the lender recovers the loan upon expiry, or recover the loan in advance
according to Article 8, it may directly deduct from the deposit account of the
borrower.

 
Article 10
The registration shall be handled by the borrower or the mortgager. All
appraisal, evaluation and registration necessary for the mortgage shall be at
the expense of the borrower.

 
Article 11
Others to be agreed

 
Article 12
Any dispute arising from the contract shall be governed by local people’s court
of the lender.

 
Article 13
For matters not exhausted herein, relevant national laws, codes and provisions
of banks on security and loan shall be followed.

 
Article 14
The contract shall become effective upon stamping by the parties as of the date
of mortgaging according to laws.

 
Article 15
The contract shall be executed in three counterparts; the borrower, the lender
and the mortgager each hold one counterpart.

 
 
 

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Borrower
         
Borrower: Wuhan Fanya Peptide Material Research Ltd
 
(seal)
     
Domicile: No. 20, Yucailu, Shamao Street, Hannan District
         
Legal representative (authorized agent): Hu Lirong
 
(seal)
     
Deposit bank and account number:
   
Wuhan Xianfeng Rural Credit Cooperative 200583728710024
         
Lender
         
Lender: Wuhan Xianfeng Rural Credit Cooperative
 
(seal)
     
Legal representative:  Wang Hongling
 
(seal)
     
Handled by:
 
(seal)
     
Mortgager
         
Mortgager:  Wuhan Tallyho Biological Product Ltd
 
(seal)
     
Domicile:  Hannan Economic Development Zone, Wuhan
         
Legal representative: (authorized agent): Chen Dongliang
 
(seal)
     
Deposit bank and account number:
   
Wuhan Xianfeng Rural Credit Cooperative 200583408610015
   

 
Signing on:
 
Signing at:
 
Appendix of the contract:
 
1.
List of collateral

 
2.

 
 

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