EXHIBIT 10.2

Legal Person’s Loan Contract of Qilu Bank

Contract No. 2009 J.B.W.E.F.J.Z. No. 010

 
 

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Borrower (Party A): Shandong Yaoyuan Pharmaceutical Company
Residence: No. 80 Jiangjun Road, Jinan
Legal representative (principal): Song Yanliang
Bank of deposit and account No:
Tel or fax:
Postal code:

Lender (Party B): Jinan City Jingbawei Second Branch of Qilu Bank Co., Ltd.
Residence: No. 176 Dawei Second Road, Jinan City
Legal representative (principal): Liu Wei
Tel or fax: 82905066
Postal code: 250001

Party A applies for the loan from Party B, and Party B agrees to issue the loan.
In accordance with provisions of Contract Law of the Peoples Republic of China,
Real Right Law of the People's Republic of China and Guarantee Law of The
People's Republic of China, Party A and Party B have made the following
agreement through amicable negotiation, to make clear the respective rights and
obligations.

Article 1: Amount of loan
Party A borrows the loan of 1.5 million Yuan (for the equivalent foreign
currency business, it shall be converted by the selling rate of that day) from
Party B.
Article 2: Purpose of loan
Party A borrows for business operation.
Article 3: Term of loan
From Dec. 23, 2009 to Dec. 21, 2010
Article 4: Loan interest rate and interest
(1)
The loan interest rate during the contract performance period floats upward 40%
based on benchmark interest rate, namely, 7 .434%. During the period from
signing the contract to issuing the actual loan, if there is the legal
adjustment of interest rate, it will float with the same rate based on the
benchmark interest rate after adjustment, and Party B will not notify Party A
separately.

(2)
The loan interest will be calculated since transferring the loan to Party A’s
account, and the loan shall be adjusted according to the following method if
there is the legal interest rate adjustment; and it shall float with the rate in
(1) of this Article:

1.
If the loan term is within one year (including one year), it shall execute
according to the agreed interest rate of this contract, without calculating
interest on multi-stage;

2.
If the loan term is above one year, it shall execute the new rate since the
first day of next calendar year since the adjustment day, and it will not notify
Party A separately.

 
 

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(3)
If the state cancels the benchmark interest rate, Party B has right to
re-determine the contract interest rate according to the current national
interest rate policy and principle of fairness and credibility as well as
referring to the industrial rules and interest rate status. Party A shall
promptly negotiate with Party B if it has question. If the negotiation is
failed, Party B has right to receive loan in advance, and Party A shall promptly
pay off the principal& interest of loan.

(4)
Party A agrees to comply with the item 1 below to pay off the principal&
interest of loan:

1.
The middle and short term loan within five years (including five years) shall be
calculated the interest by day, and settle the interest by month, in the form of
matching the principal repayment.

2.
The long term loan above five years shall be calculated the interest by day, and
settle the interest by month, in the form of matching the principal repayment.

3.
The formula of the method for matching the repayment of principal and decreasing
the repayment of interest is as follows:

Monthly repayment of principal plus interest= loan principal/months of loan term
+ (loan principal- returned accumulated loan principal) ×monthly rate ×1/30
×actual days each month

4.
The formula of the method for matching the repayment of principal and interest
is as follows:

(1+monthly rate) total months of repayment            
(1+monthly rate) total months of repayment — 1
Monthly repayment of principal plus interest= loan principal × monthly rate ×
5.
Other methods of repayment:

Article 5: The actual loan issuing date and payment date under this contract are
based on the loan certificate, which is the part of the contract, covering the
same legal effect of this contract.
Article 6: Payment method of principal and interest
Party A shall guarantee to remit the payable loan principal and interest in the
settlement account opened at Party B’s location before 20 of the payment month,
and Party B will directly withhold and receive the amount; the detail is as
follows:
Account name: Shandong Yaoyuan Pharmaceutical Company
Account No: 000000709003800002467
Article 7: Other withholding method
If Party A cannot return the loan principal and interest, Party B has right to
directly withhold the loan principal, interest and relevant charges from any
bank accounts opened by Party A in the system of Qilu Bank.
Article 8: Change or termination of the contract
(1)
After the effective date of the contract, any party shall not change or
terminate the contract separately.

(2)
If the loan expires, and owing to the change of objective circumstances, Party A
cannot pay off the loan through efforts, it can apply for extending from Party
B; Party A shall propose the written application to Party B within 10 days
before the loan expires, and submit the written guarantee for agreeing the
extending period of the guarantor and/or pledgor; after Party B approves and
handles the guarantee procedures for extending the loan, the two parties shall
handle the extending procedures; the contract interest rate during the extending
period shall comply with the relevant regulations.

 
 

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(3)
If Party A transfers the rights and obligations under this contract to the third
party, it shall get the written permission of Party B and guarantor; and the
transfer will take effect after the transferee unit signs the loan contract with
Party B and handles the guarantee procedures.

(4)
When there are changes of merger, dividing, contracting and shareholding reform
for one party, the main body after change will enjoy the rights and assume the
obligations of this contract.

Article 9: Loan guarantee
To guarantee paying off the loans under this contract, Party A/the third person
shall provide the guarantee according to item 1 below to Party B:
(1)
Guarantee (see detail in 2009 J.B.W.E.F.J.B.Z. No. 010 Legal Person’s Loan
Contract of Qilu Bank)

(2)
Mortgage (see detail in No. ________  _________________of Qilu Bank)

(3)
Pledge (see detail in No. _________  _____________of Qilu Bank)

(4)
Others:

Before handling the above agreed guarantee procedures, Party B has right to
refuse issuing the loan to Party A without conditions.
Article 10: If Party A needs to change its system or operation modes like
contract, lease, merger & acquisition, joint venture, dividing, joint operation,
shareholding reform, it shall notify Party B in advance of 30 days in the
written form. After the written approval of disposal method of contract bond of
Party B, Party A can execute the above behaviors.
Article 11: Guarantee of Party A
(1)
Before paying off the loan principal and interest of Party B, it doesn’t
mortgage/pledge to the third party with the assets formed by Party B’s loan.

(2)
Before paying off the loan principal and interest of Party B, it shall not
provide the overburdening guarantee to others.

Article 12: Major rights and obligations of Party A and Party B
(1)
Rights and obligations of Party A:

1.
Party A has right to require Party B to issue the loan according to the
contract;

2.
Party A shall return the entire loan principal and interest within the greed
period of contract;

3.
Party A shall use the loan according to the agreed purpose, and it shall not use
for other purpose without the written permission of Party B;

4.
Party B shall provide the relevant plans, statistics and financial statement
according to the requirements of Party B;

5.
Party A seriously looked up and knew the responding clauses of the guarantee
contract, and agreed to accept the restriction and assume the relevant
responsibility.

(2)
Rights and obligations of Party B:

1.
Party B has right to receive and withhold the loan principal and interest
according to the contract;

2.
Party B has right to examine the using situation of loan;

3.
Party B has right to supervise the assets of Party A and its operation status;

4.
If one of the following situations occurred to the mortgage, pledge, warrant or
other guarantees provided by Party A/ the third person, Party B has right to
require Party A eliminating the relevant bad effect, and/or require Party A
increasing and changing the guarantee conditions:

 
 

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(1)
The guarantor violates the warrant contract or loses the ability to assume and
guarantee the responsibility;

(2)
The mortgagor violates the mortgage contract or the mortgaged property is
derogated or damaged;

(3)
The pledgor violates the pledge contract or the mortgaged property is derogated
or damaged;

(4)
There are other situations that affect its guarantee ability.

5.
Party B shall promptly issue the loans according to the period regulated in the
contract.

Article 13: Responsibility for breach of contract
(1)
Party B violates the contract agreement to use the misappropriation or diversion
of loan, Party B has right to calculate the interest for the misappropriation or
diversion of loan with floating upward 100% for the interest rate agreed in the
contract during this period.

(2)
The loan that Party A doesn’t play off on schedule is regarded as the overdue
loan, Party B has right to calculate the interest for the overdue part with
floating upward 50% for the interest rate agreed in the contract during this
period.

(3)
The interest that Party B cannot pay in time for Party A shall be calculated the
compound interest quarterly (short-term loan shall be calculated monthly) by
floating upward of 50% agreed in the contract; the interest that cannot be paid
in time during the period of misappropriation or diversion of loan shall be
calculated the compound interest quarterly (short-term loan shall be calculated
monthly) by floating upward 100% agreed in the contract; if it is the same loan,
covering both overdue and misappropriation or diversion features, it shall
handle with one aspect of more serious effect.

(4)
It shall execute by the adjusted regulations if there is policy adjustment in
people’s court for penalty interest rate.

(5)
If one of the following situations occurred, Party B has right to stop issuing
the unpaid loan, taking back the issued loan principal and interest in advance
and realizing the guarantee right in advance; it has right to require Party A to
assume 5% of loan as the liquidated damages; it also has right to directly
withhold the loan principal, interest, liquidated damages, damages and other
payable items from any bank accounts opened by Party A in the system of Qilu
Bank; it has right to terminate the contract.

1.
Party A doesn’t comply with the contract to use the loan;

2.
Party A doesn’t comply with the contract to pay the interest;

3.
Party A provides false plans, statistics and financial statements to Party B;

4.
For the loan contract with the third party guarantee or (and) mortgage (pledge),
the guarantor violates the guarantee contract or loses the ability to assume the
responsibility; the mortgagor (pledgor) violates the mortgage (pledge) contract
or the mortgaged (pledged) property is sealed up, detained or damaged; or there
are losses to other guarantee rights and the guarantee right is restricted;

5.
Party A is involved or will be involved in important lawsuit or arbitration
procedure and other legal disputes;

6.
Party A acts to affect the debt paying ability or lacks of sincerity for debt
paying;

7.
The guarantor is dismissed;

8.
The guarantor violates any of the agreed obligations in the contract or it leads
to other violation behaviors;

9.
After the mortgage registration takes effect, there are disputes on application
or the easement is restricted or may be restricted.

 
 

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(6)
Party B complies with the law or the contract to realize the principal
creditor's right and/or guarantee right, the obtained items shall be paid off
according to the following order:

1.
Charges for realizing the guarantee right;

2.
Charges for realizing the principal creditor's right;

3.
Principal creditor's right, penalty interest and compound interest;

4.
Other payable items like liquidated damages and damages.

Article 14: Assumed charges
The charges like lawyer’s charges, announcement charges, delivery charges,
registration charges, inquiry charges, insurance charges and drawing charges
used to perform the contract, handle the guarantee procedures, realize Party B’s
creditor's rights and/or guarantee right shall be assumed by Party B.
Article 15: Disputes solution
The disputes relevant to this contract shall be solved through negotiation; if
it fails to be solved in this way, it shall lodge the lawsuit for the people’s
court at Party B’s location; the two parties shall perform the other clauses
with no relation with the disputes during the lawsuit period.
Article 16: Other agreed matters
(1)
This contract is signed for No. 2009 J.B.W.E.F.J.Z. No. 010 Legal Person’s Loan
Contract of Qilu Bank, and it is the specified part of this contract.

(2)
 

(3)
 

Article 17: The contract will take effect after meeting the following
conditions:
(1)
It is sealed or made the special seal for contract by Party A;

(2)
It is sealed or made the special seal for contract by the principal or
authorized agent of Party B.

Article 18: The contract has copies, with Party A and Party B holding .

Party A (seal): Shandong Yaoyuan Pharmaceutical Company
       
Party B (seal): Jinan City Jingbawei Second
Legal representative (principal) or authorized
agent (seal): Song Yanliang
 
Branch of Qilu Bank Co., Ltd.
   
Legal representative (principal) or authorized
agent (seal):  Liu Wei
   
Operator (signature):
         
Date: Dec. 23, 2009

 
 
 

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