Contract No. 3260402009610000000

MAXIMUM AMOUNT LOAN AGREEMENT

Bank of Communications
Printed in Sep. 2007

 
 

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Contract No. 3260402009610000000

Maximum amount Loan agreement

Important notice
 
Please be advised to read carefully of this agreement, especially for the Clause
that marked as **. Should the borrower have any question, please contact with
lender for more information as soon as possible.

Borrower:                                 Dongying (Jiangsu) Pharmaceutical Co.,
Ltd.
Legal representative:
Huang Lequn
Legal Address:
8 Zhong Tian Road, Nantong Economical Development Zone
Mailing address:
as above.

Lender:
Bank of Communications Nantong branch
Major Manager:
Zhu Weiping
Mailing Address:
27 Renmin Zhong Road, Nantong.

The Borrower and Lender, after reaching an agreement through negotiations,
hereby enter into this contract pursuant to Borrower's application to Lender for
bank loan.

Article 1. Quota

1.1 “quota” means the maximum amount of loan the lender can release to the
borrower in accordance with the contract. “Remaining loan” means the net loan
principle obtained by the borrower which is still outstanding. “Remaining quota”
means the “quota” deduct the “remaining loan”. “Credit term” means the time that
the lender releases loan to the borrower, it’s the term during which the lender
will release the loan, not the term during which the borrower will use the loan.
The loan term shall be confirmed by both parties.

1.2. Type of currency: RMB;         Amount: Five million

1.3. The Loan under this agreement shall be solely for current capital use only
and type of quota is revolving quota.

1.4 In case there are multi currencies listed in the Clause above, each currency
shall not exceed its quota.

1.5. Loan term: from January 19, 2009 to January 19, 2010

 
 

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1.6 under this contract, the quota is revolving quota. The borrower can apply
the loan in multi times in accordance with the contract. However, the remaining
loan shall not exceed the quota.

Article 2. Using the Quota

2.1 When the borrower needs to use the quota, the borrower has to apply from the
lender 5 working day’s advance. The borrower needs to fill the “Quota
Utilization Application” form. After the lender approval the application, the
borrower can start using it.

2.2 The using of the quota has to meet all the conditions below:

 
(1)
the remaining loan shall not exceed the quota

 
(2)
applied loan amount shall not exceed the remaining quota

 
(3)
application must be within credit term

 
(4)
The purpose of using the loan shall be only for current capital

 
(5)
The loan term shall be less than 12 months and the due day for all the loans
shall be no later than April 19, 2010.

 
(6)
The related guarantee contract is currently in effect and shall maintain
effective. In case the guarantee contact is mortgage contract, the guarantee
right shall be establish and maintain effective.

 
(7)
The borrower has performed all legally-required procedures such as obtaining
government licenses, approvals and registration and other procedures Lender may
require of Borrower

 
(8)
There is no big change of borrower’s financial situation and operation situation
after this agreement is in effect.

 
(9)
The borrower’s application meets all the related policy and constitution’s needs
requested by lender.

(10)
The borrower conducts no default activity.

2.3 If the lender agrees to release the loan to borrower, the lender needs to
stamp and sign on “Quota Utilization Application” form. The information of
currency, amount, and purpose of using the quota, interest rate, loan term,
releasing date, and returning date shall be base on the actual signed “Quota
Utilization Application” form.

2.4 The using of quota will be monitored base on file, voucher and receipt
generated during performing the contract.

2.5 If the currency shown in the application form is different from quota, Bank
of Communications’ daily foreign exchange rate shall be used for calculation.

Article 3. Interest Rate and Interest Calculation

3.1. The interest shall be defined during each transaction in accordance with
the lender’s interest system policy. Daily interest rate = monthly interest
rate/30, monthly interest rate = annual interest rate/12

 
 

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In case interest defined in the Quota Utilization Application form is fixed
interest, this fixed interest rate will be used for this loan.

In case interest defined in the Quota Utilization Application form is variable
interest, the variable interest rate will be used for this loan, and this rate
will be adjusted in accordance with the published rate by the People’s Bank of
China.

3.2 The calculation of interest

3.2.1 Regular interest= (the prescribed interest rate under this Loan Contract)
x (Loan principle amount) x (actual days of use), where actual days of use is
calculated from the day the Loan is issued.

3.2.2 In case the borrower fails in returning the loan on time, the penalty
interest calculation depends on amount and actual overdue days. If the currency
of loan is RMB, the penalty interest rate for delay of repaying the loan shall
be 50% on top of interest rate; if it is foreign currency, the penalty interest
rate for delay of repaying the loan shall ____ on top of interest rate from
“Quota Utilization Application” form requested.

3.2.3 In case the borrower uses the loan for other purpose than intended,
penalty interest calculation depends on amount and actual overdue days. If the
currency of loan is RMB, the penalty interest rate for delay of repaying the
loan shall be 100% on top of interest rate; if it is foreign currency, the
penalty interest rate for delay of repaying the loan shall be _____ on top of
interest rate from “Quota Utilization Application” form requested.

3.2.4 In case the interest rate is adjusted by the People’s Bank of China during
the period when the borrower is in default activities described in the above two
clauses, the penalty interest shall be adjusted accordingly. The effective date
shall be the day when the rate is adjusted.

3.3 Interest rate should be calculated and paid on monthly basis. Cut off day is
20th of the each month.

**Article 4. Borrower’s declaration and guarantee

4.1
Borrower shall be legally registered enterprise which will legally exist during
the loan period, and has the authority to sign and perform the obligation of
this contract.

4.2
Signing and performing this agreement is borrower’s true intention, and doesn’t
violate any applicable law, order and regulation.

4.3
The borrower shall make sure all the documents, financial statements and
information provided are accurate, correct and complete. The borrower shall not
hide any information that may affect borrower’s financial condition and
capability to return the loan.

 
 

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4.4
When signing this contract, the borrower shall not be the shareholder or the
actual controlling party of the guarantor, as well as no plan to be the
shareholder or the actual controlling party of the guarantor.

Article 5. The lender’s right and liability

5.1 The lender has right to withdraw loan principle, interest (including
compound interest, overdue interest and penalty for misusing of loan); request
for some related charge from borrower; perform some other rights legally.

5.2 keep confidential of borrower’s financial and operation information, unless
allowed otherwise by law or other contractual conditions

Article 6. The borrower’s liability

6.1 The Borrower shall repay the principles and interest in accordance with the
time, currency and amount defined in the agreement. Without lender’s written
approval, the borrower is not allowed to return the loan ahead of due day.

6.2 The Borrower shall not use the loan for the other purpose other than
intended as defined in the Quota Utilization Application.

**6.3 the Borrower shall bear the expenditures under this Contract.
The expenditures include but not limit to notarization cost, appraisal cost,
evaluation cost, registration cost and so on.

**6.4 the Borrower shall follow the procedure, including but not limited to
cooperate with lender to audit the operation condition and using of loan.
Borrower shall provide all the financial statements and other documents as
lender requested. Borrower shall make sure all the documents provided are
accurate and complete.    

** 6.5 if Borrower has any occurrence or possible occurrence of the following
events, borrower shall give the written notice to lender 30 days thereof in
advance; and borrower shall not take any action before receiving approval from
lender:
 
(1)
sale, give, lease, transfer, mortgage or other way to dispose of major assets;

 
(2)
occurrence or possible occurrence of big change of business organization,
including but not limited to contract, lease, in alliance with other companies,
merging, buy other companies, establish joint venture with other companies,
company separation, reduce capital, change stock right,

 
** 6.6 the borrower shall inform lender within 7 days with written notice for
following events :

 
 

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(1)
Modify the constitution, change the enterprise name, change of legal
representative, change of location, mailing address or Industrial and commercial
registration, any decision could affect the financial situation;

 
(2)
The borrower apply for bankrupt or surety apply for bankrupt;

 
(3)
Any litigation or arbitration involved or major assets get seized

 
(4)
warrant for the third party and has the big effect of liability under this
agreement

 
(5)
Sign some other agreement which could affect company’s operation and finance.

 
(6)
major financial entanglement, liquidation, financial conditions deterioration
and Borrower goes out of business, dismissed, production is stopped, production
permit is revoked or canceled

 
(7)
The legal representative or major manager involved in criminal charges

 
(8)
The difficulty of operation, financial condition become worse or any events
which may affect the normal operation or cause negative impact on borrower’s
liabilities in returning the loan

 
(9)
Any alliance deal which amount involved in the deal reaches or exceeds 10% of
the audited net asset.

 
(10)
Before returning the full amount of loan to the Lender, the Borrower will become
or has possibility to become the shareholder or actual controlling party of the
guarantor..

 
**6.7 if any change as following affect the lender’s right, the borrower has to
provide the other guarantee that lender recognize：

The “change” includes but not limited: surety stop business, dismissed,  major
financial entanglement, liquidation, financial conditions deterioration and
production is stopped, production permit is revoked or canceled, apply for
bankrupt; material legal suit or its main assets have been put under property
preservation or other orders; The financial position has undergone a material
change or the value of collateral has been markedly reduced; other matters which
will produce a material adverse effect on its financial position or ability to
repay its debt and other events.

Article 7. Other Contractual Items

N/A

**Article 8.  Adjustment of quota and return the loan ahead of due date
The lender reserves the rights to withdraw the loan ahead of the due date by
directly deduct money from borrower’s banking account should anyone of the
following events happens:

 
 

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(1)
The borrower can’t repay the principle and interest under this agreement

(2)
The borrower’s declaration and guarantee is not correct under the Article 4.

(3)
The borrower break the other clause under this agreement

(4)
Any events happened under clause 6.6 that may endanger the safety of the ability
of returning the loan.

(5)
The borrower has default activities such as delaying in payment, and takes no
corrective action after receiving warning notice from the Lender.

**Article 9. Events of Default

9.1 If borrower can’t repay the principle and interest before due day or
misusing of loan, Lender will impose penalty interest and compounded interest
according to the regulations of the People's Bank of China in the event that
Borrower has not fully repaid the principal or interest under the Loan agreement
in a timely manner.

9.2 The borrower shall pay for notarization cost, notice cost, perform cost,
legal cost; travel cost and so on in case of borrower can’t repay the full
amount of principle and interest on time.

9.3 If the borrower refuses the lender to monitor and inspect its operation and
financial conditions, or the borrower refuses to pay the principle and interest
to lender, the lender has right to notify some related governmental office and
some news Media.

** Article 10 withdraw the loan

10.1 For the recovery of the principal, interest, penalty interest, compounded
interest and other fees unpaid by Borrower, Borrower hereby irrevocably
authorizes Lender to withdraw funds from its any account in the Bank of
Communications.

10.2 After money has been withdraw from borrower’s bank account, the lender
shall provide these information of withdraw account number, loan agreement
number, withdraw voucher, and withdraw amount and the rest of unpaid amount to
borrower.

10.3 When the total withdraw amount is not enough to pay the liability, the
withdraw amount shall pay the unpaid expense first. If the overdue date less 90
days for principle and interest, the withdraw amount shall pay the interest or
penalty, compound interest, then can be used for paying principle; if the
overdue date more than 90 days for principle and interest, after paying for
unpaid expense, then the withdraw amount can be used to pay principle first,
then interest or penalty, compound interest.

10.4 if the withdraw amount has the different currency than the loan, the
calculation shall base on daily foreign exchange rate of Bank of Communications.

 
 

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Article 11 dispute settlement

Should any dispute concerning this Loan agreement arise, it shall be resolved
under the jurisdiction of the local people's court where Lender is located.
During this dispute period, the undisputed clauses shall be performed as usual.

Article 12 Other Clause

12.1 The Loan Voucher, “Quota Utilization Application” under this Loan agreement
and related documents and materials confirmed by both parties are inseparable
components of this Loan Agreement.

12.2 This Loan agreement shall become effective upon signature (or seal) by
legal representatives or authorized representatives of both parties and upon the
affixing of the official seals of both parties.

12.3 This agreement has  six originals, which are identical to each other, with
each of the parties and surety party holding one copy.

Please be advised that the borrower has read the above all the articles and
lender has made all the explanation to borrower as borrower request. The
borrower doesn’t have any question on this agreement.

Stamp of borrower
Stamp of lender
   
Dongying (Jiangsu) Pharmaceutical Co., Ltd
Bank of Communications Nantong branch
   
Signature of Huang Lequn
Signature of  Zhu Weiping
   
Agreement signed date: Jan. 19, 2009
Jan. 19, 2009

 
 

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