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Exhibit 10.18
 
 
Mortgage & Guarantee & Borrowing Contract
 
(2007)No.011

Lender: Rural Cooperative Bank of Xixiang, Shaanxi
Borrower: Xi’an Qinba Pharmaceutical Co.,Ltd
Mortgagor: Xi’an Qinba Pharmaceutical Co.,Ltd

This contract is entered by and between the three parties above via negotiation
pursuant to relevant laws and regulations.

Article 1 The Lender agreed to lend the following loan to the borrower.
1.   Type of loan: Mid-term loan
2.   Purpose of loan: Floating capital
3.   Currency and sum of loan: RMB THREE MILLION YUAN
4.   Loan period: April 28th 2007 to April 27th 2009
 
Specific fund and repayment plan as following:
 
Periodic fund plan
Periodic repayment plan
Date
Amount (Yuan)
Date
Amount (Yuan)
April 28th 2007
3000000.00
Apirl 27th 2009
3000000.00

 
5.   Interest rate of loan: (1) Interest rate of short term loan  ∕  ; (2)
Interest rate of long and medium term loan is fixed annually. The rate of the
first year is 8.55‰ ; The rate of the second year is executived according to the
provisions of RMB interest rate.
6.   Repayment method: pay when expiring.    Interest settlement method: pay by
the quarter.
 
Article 2 Mortgagor agrees to offer properties valued 4,802,000 Yuan (see
mortgage list) after evaluation as collaterals to guarantee for the borrower.

1.
If any of the debt fulfillment periods under the main contract expires but the
mortgagee is not paid off, the mortgagee has the legal right to convert the
collateral into money or auction or sell off the collateral for liquidation in
priority.
2.
Range of mortgage guarantees includes debt principal, interest and all expenses
for creditors to realize creditor’s rights, as legal cost, retaining fee,
working hours lost, travelling expense and executive fee.
3.
Effect of mortgage right involves auxiliary object, secondary right, right of
subrogation, processed object and yield, etc.
4.
The period of mortage guarantees is from the date mortage is created to the pay
off of all the debt in the range of guarantees.
5.
The listed assets in collateral list during the mortgage term should be
preserved, use, maintained, secured by mortgagor. Certificate of property rights
be preserved by mortgagor as well.
6.
Collaterals under this contract should not be included within the range of
bankruptcy properties, the exceeded portion of collaterals after paid off all
debts, interests and relative expenses could be included into range of
bankruptcy.

 
 
 
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Article 3. Borrower’s commitment
 
1.
Repay loan and interests by term;
2.
Use the loan by engaged purpose under this contract, do not change purpose
without permission;
3.
Provide the Lender with real balance sheet, income statement, opening account
bank and accounts monthly;
4.
Accept the inspection and supervision of financial credit status, operation, and
financial activities by Party B;
5.
May the scope of business, premises or registration funds of legal
representatives, legal person changed, Party A should inform Party B
immediately;
6.
In event of contract lease, shareholding reform, joint operation, merger,
acquisition, shareholding reform, joint venture, and other behaviors that could
influence the realization of rights and benefits of Party B, Party A should
inform Party B and make sure repay loan on time.

 
Article 4. Mortgagor’s commitment
 
1.
The mortgagor reserves sufficient and undisputable right of ownership and
disposition of the collateral.
2.
The collateral can be circulated or transferred according to law.
3.
The collateral is not sealed up, detained or re-mortgaged.
4.
Insure the collaterals. During the mortgage term, Party B will be the first
beneficial person of collaterals, the insurance sheet shall be preserved by
Party B, Party A should keep insure the collaterals when expiry date pass; if
collaterals damaged within the period of insurance, Party A should repay the
loan and interests ahead of time in use of settlements of claim, when the
settlements of claim is not sufficient to compensate the loan and interests,
Party A should response for compensation and provide other insurance;
5.
Accept inspection and supervision of collaterals by Party B;

Article 5. Lender’s commitment
 
1.
Provide borrower with loan by term and engaged amount;
2.
preserve the certificate of property rights, return after paid off of all loan
3.
Do not charge other fees from Party A excluded from this contract;
4.
Maintain secrecy of materials provided by Party A.

 
Article 6. In case of Party A could not repay the loan on time due to special
reason, Party A could apply for repayment delay no late than 30 days prior to
the expiry date. Party A could then delay the repayment with permission of Party
B, but the corresponding interests shall be calculated based on the
corresponding interest rate level, Party A shall continuously mortgage the
collaterals till the end of payment of loan.
 
Article 7. Responsibilities of Breach of Contract

1.
Breach of Contract by Party A:
 
1.1
If not paid on time nor applied for delay, will be charged for 30% in addition
to the basic interest rate;
 
1.2
If not pay interests on time, will be charge for additional interests.
 
1.3
If not use loan on purpose by this contract, will be treated as embezzled, the
embezzled part will be charged for 50% in addition to the basic interest rate
during this period;

 
 
 
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1.4
The Lender shall have the authority to suspend the loan under leasing and charge
for repayment ahead of due time if Borrower breached the 2nd and 6th of Article
3.
 
1.5
In case of Borrower breached the 1, 2, 3, 4 of this Article, that caused
lawsuit, will be charged for additional legal cost, execute cost, attorney fee,
travel expenses and compensation.
2.
Breach of Contract by Party B:
 
2.1
If Party A could not lease on time or due amount to Party B, Party B shall pay
penalties according to days and amount by rate of ______ten thousand percent per
day.
 
2.2
Lost of certificate of property rights, shall response for registration and post
register and relative expenses.
 
2.3
In event of breach of 3rd of Article 5, Borrower could refuse, could lodge
complaint to People’s Bank of China;
3.
Breach of Contract by Mortgagors:
In case of breach of Article 4 under this contract, that made Lender suffer
losts due to failure in realization of its rights, shall make indemnification.

Article 8. Lender shall deduct from the account of Borrower directly when Lender
charge for repayment or charge for repayment ahead of time according to Article
7.  Borrower could not afford to payoff the debt in time before expiry date,
Lender could dispose the collaterals, benefit with prior payment, if can not
payoff, Lender could keep recourse.
 
Article 9. Lender shall responsible for mortgage registration, Borrower shall
responsible for expenses cost of appraisal, evaluation, registration and
warrants.
 
Article 10. In event of dispute happens, the court under jurisdiction shall
responsible for it.

Article 11. Other Issues:
 
1.
During the effective period of mortgage, if the collateral is destroyed, lost or
expropriated, the mortgagor shall restore the collateral’s value or provide a
recognized guarantee within 30 days.

2.
This contract has been entitled the enforcement by the notary office, permitted
by both borrower and mortgagor. If there is no extension contract after the
expiry of the borrowing, lender has the right to require the court to enforce
the property of both borrower and mortgagor about the loan principal (including
interest and compound interest).

3.
During the implementation of this contract, if the state interest rate is
adjusted, the interest rate will be carried out as the adjusted rate.

 
Article 12 Deal with matters not mentioned in this contract in accordance with
the relevant laws, regulations and provisions.
 
Article 13 The contract is made out in triplicate. Lender, borrower and
mortgagor holds one original respectively.
 
Article 14 This contract becomes valid and effective from the date that parties
sign and chop.

 
 
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Lender
 
Lender: Xi’an Qinba Pharmaceuticals Co.,Ltd (seal)
ID No.:
Education level: university
Sex: male     Age: 41
Address: No.48 of Ke Ji Road, Hi-Tech Development Zone, Xi’an City
Legal representative: Guiping Zhang (seal)
(Entrusted agent):                 (seal)
Trustee: Jiang Yang                (seal)
Account bank and No.
Borrower
 
Borrower: Rural Cooperative Bank of Xixiang, Shaanxi (seal)
 
Legal representative:               (seal)
 
(Entrusted agent): Wang Yuanbin      (seal)
 
Trustee: Yuanbin Wang             (seal)
 
Mortgagor
 
Mortgagor: Xi’an Qinba Pharmaceuticals Co.,Ltd (seal)
ID No.:
Education level:
Sex:              Age:
Address: No.48 of Ke Ji Road, Hi-Tech Development Zone, Xi’an City
Legal representative: Guiping Zhang (seal)
(Entrusted agent):                (seal)
Trustee: Jiang Yang              (seal)
Account bank and No.
Mortgagor
 
Mortgagor:                         (seal)
 
ID No.:
Education level:
Sex:           Age:
Address:
 
 
Legal representative:                (seal)
(Entrusted agent):                   (seal)
Trustee:                           (seal)
Account bank and No.

The attachment of this contract:   1. List of mortgage
2. Mortgage license of land tenure and other rights licenses
3.
 
Signing date: Apirl 28th , 2007
 
Signed at: Rural Cooperative Bank of Xixiang, Shaanxi

 
 
 

 
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Loan Extension Agreement
 

          No.:
Borrowing unit:
Xi’an Qinba Pharmaceuticals, Co.,Ltd.
Original loan use
Working capital
 
Original loan interest rate(monthly)
10.2‰
Original loan category
Mid-term loan
Original contract No.
 
Original borrowing date
April 28, 2007
Original loan amount
RMB 3,000,000
Original repayment date
April 28, 2009
Applied
Extension
amount
RMB 3,000,000
Interest rate after extension(monthly)
9‰
Application
date&
Repayment plan
date
April 27, 2009
date
 
amount
RMB 3,000,000
amount
 
Applying reason
Due to shortage of working capital, company couldn’t afford repayment; hereby
apply for one-year extension repayment of RMB 3,000,000.
Legal Representative: Guozhu Wang
Xi’an Qinba Pharmaceuticals, Co.,Ltd.
(seal & signature)
Date: March 25,2009
Guarantor’s opinion
Agree to one year extension, and continue to use real estate (appraisal value:
RMB 4,800,000 as mortgage guarantee.
Legal Representative: Guozhu Wang
Xi’an Qinba Pharmaceuticals, Co.,Ltd.
(seal & signature)
Date: March 25,2009
Lender’s opinion
In accordance with 2009 06 comment letter, agree to one-year extension; continue
to use original collateral as mortgage guarantee.
Guangzhu Fu
Legal Representative: Yuanbin Wang
Rural Cooperative Bank of Xixiang,
(seal & signature)
Date: April 6,2009

Notes:
1.
Loan Extension Agreement shall be applied in written form on the basis of
lender’s agreement, and then Loan Extension Agreement may be filled in;

2.
Loan Extension Agreement constitutes the supplementary document of the main
contract;

3.
This agreement is executed in triplicate, borrower, guarantor, bank/loan
managing person shall retain their respective agreement.

 

 
 
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