ABCS(2004)1001
Loan Contract
 
( Shuanglong Sub-branch) Nong Ying Jie Zi (2008) No. （003 ）

Borrower (Full Name): Kunming Shenghuo Pharmaceutics (Group) Co., Ltd.
 
Lender (Full Name): Agricultural Bank of China Kunming Shuanglong Sub-branch
 
Pursuant to the relevant PRC laws and regulations, the two parties, following
consultations, mutually agree to enter into this Contract (“Contract”) as
follows.
 
Article 1 Loan
 
1.  Type of loan: Loan toward mid-term current capital;
 
2.  Purpose of loan: Current Capital;
 
3.  Currency and amount of loan (in Capital): RMB TEN MILLION YUAN
 
4.  Term of loan
 
 
(1)
As shown in the following table:

 
From
 
To
Year
 
Month
 
Day
 
Amount
 
Year
 
Month
 
Day
 
Amount
2008
 
March
 
26
 
¥
10,000,000.00
 
2010
 
March
 
25
 
¥
10,000,000.00
                                                                   

 
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(In case of insufficient space therein, additional paper can be attached thereto
as supplement to form an integral part hereof.)
 
 
(2)
If any inconsistency exists between the amount and the from-to dates of the loan
recorded herein and those recorded in the loan certificate, the latter shall
prevail. As an integral part hereof, the loan certificate has equal legal force
and effect as this Contract;

 
 
(3)
If the loan hereunder is in foreign exchange, the Borrower shall repay the
principal and interest of the loan in the original currency as per the schedule.

 
5.  Loan Interest Rate
 
The interest rate of loans in RMB is determined as per Method 1 below:
 
 
(1)
Floating Interest Rate

 
The loan interest rate floats by 10% based on the benchmark interest rate, and
it executes the annual interest rate of 8.316%. The benchmark interest rate for
loans with a term of five years or less shall be the benchmark RMB interest rate
for the same term announced by the People’s Bank of China, while that for loans
with a term of more than five years shall be the above benchmark interest rate
plus _______/______ (in words) percentage point(s).
 
Adjustment to the interest rate shall be made once in every TWELVE-month period.
In case of adjustment made to benchmark RMB interest rate by the People’s Bank
of China, the Borrower shall, starting from the corresponding day of loan in the
first month of the next 12-month period after the adjustment, pay interest
according to the adjusted benchmark interest rate for the relevant term and the
new interest rate determined as per the above calculation method, without
further notice. If the adjustment day of benchmark interest rate falls on the
same day as the loan issuance day or the corresponding day of loan in the first
month of the 12-month period, the new loan interest rate shall apply starting on
the adjustment day of benchmark interest rate. If there is no corresponding day
of loan, the last day of such month shall be deemed as the corresponding day of
loan.
 
 
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(2)
Fixed Interest Rate

 
The loan interest rate floats upward/downward by   /  % to stand at _/__% per
annum. The benchmark interest rate for loans with a term of five years or less
is the benchmark RMB interest rate for the same term announced by the People’s
Bank of China, while that for loans with a term of more than five years is the
above interest rate plus _/__ (in words) percentage point(s).
 
The interest rate of loans in foreign currency shall be determined as per Method
__/___ below:
 
(1)
The interest rate of the loan, which consists of __/__-month _/__ (LIBOR/HIBOR)
+ _/__ % interest margin shall equal to the floating interest rate for loan with
a term of __/__ months.
LIBOR/HIBOR is the interbank offered rate of London/Hong Kong announced by
Reuters for the corresponding term two working days prior to the interest
bearing date.

 
(2)
An annual interest rate of __/___ % shall apply till the loan expiration date.

 
(3)
Other methods:               /               .

 
6.
Interest Settlement

 
The interest on the loan hereunder shall be settled on a quarterly basis, with
the date of settlement falling on the 20th day of each quarter-end month. The
Borrower shall pay up the interest on every interest settlement day. If the last
repayment day of the loan principal is not an interest settlement day, the
outstanding interest shall be paid up immediately together with the principal
(daily interest rate = monthly interest rate/30).
 
Article 2 Where the Borrower fails to meet the following conditions, the Lender
shall have the right to refuse granting the loan hereunder:
 
1.
The Borrower opens a general account with the Lender.

2.
The Borrower neither provides required related documents and materials, nor
completes relevant procedures.

 
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3.
The Borrower has completed the related approval, registration and other
statutory procedures if the loan under this contract is in foreign currency.

4.
If the loan under this contract is pledged, the pledge of this contract and
statutory procedures of some relevant registration and /or insurance have been
completed according to Lender’s requirements, and the pledge and the insurance
both are effective.

Article 3 Lender’s rights and obligations

 
1.
The lender has the rights to know the conditions of the Borrower’s operation
condition, financial activity, inventory and the usage of the loan, and require
the Borrower to provide documents, materials and information such as financial
statements.

 
2.
When adverse matters set forth in the NO. 7, 8 and 10 under the Article 4 occur,
which may have sufficient impact on the security of the loan, the Lender can
stop lending and then recover the loan before the maturity date of the loan.

 
3.
When the Lender recover the loan according to the contract or recover in advance
the loan principal, interest, penalty, compound interest and other fees the
Borrower should pay, the Lender can pull out money from any of the Borrower’s
accounts.

 
4.
If the funds the Borrower repaid are not sufficient to cover all the amounts
payable, the Lender can use the funds to recover the loan principal, interest,
penalty, compound interest and fees.

 
5.
If the Borrower doesn’t repay the loan, the Lender can publicly disclose the
Borrower’s nonperformance.

 
6.
The Lender should issue sufficient loan to the Borrower in time according to
this contract.

Article 4 Borrower’s rights and obligations

 
1.
The Borrower has the right to get and use the loan according to this contract.

 
2.
The Borrower can settle the current account and make deposit which are relating
to the loan through the account which is set forth in Article 2.

 
3.
If the loan under this contract is in foreign currency, the Borrower has
completed the related approval, registration and other statutory procedures.

 
4.
The Borrower should repay the loan principal and interest in time. If the
Borrower intends to extent the loan, the Borrower should submit writing
application to the Lender 15 days ahead of the expiration date of the loan.

 
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5.
The Borrower should use the loan according to the agreed purpose of the loan
under this contract, and shouldn’t embezzle the loan.

 
6.
The Borrower should provide true, complete and effective financial statements
and other related materials and information to the Lender every month, and then
assist the Lender to review its operation, financial activity and the use of the
loan.

 
7.
If the Borrower have the activities about contracting, leasing, shareholding
reform, jointing operation, merging, separating, jointing venture, assert
transferring, applying for stopping operation for correction, applying for
dissolving, applying for bankrupting and other activities which will
sufficiently cause the changes in the relationship of the rights and obligations
under this contract, or effect the reality of the Lender’s rights, the Borrower
should inform the Lender by writing notice and get the Lender’s approval.
Simultaneously, the Borrower should commit the obligation or repay the loan in
advance, otherwise, all activities above can’t be implemented.

 
8.
Besides the activities set forth above, if there are other conditions, which
will have material adverse impact on Borrower’s ability to perform the
obligation under this contract, such as stopping operation, closure of business,
cancel of registration, revocation of license, or the legal representative or
the main leader violates the laws or involves in significant lawsuit or
arbitration, or the operation suffers significant difficulties or the financial
condition deteriorates, the Borrower should inform the Lender of this by writing
notice, and then take the steps which are accepted by Lender to ensure the
security of the loan.

 
9.
If the Borrower wants to provide guarantee for other obligation or pledge to the
third party with its main asserts, and these behaviors may affect the Borrower’s
ability to repay the loan under this contract, the Borrower should inform the
Lender by writing notice in advance and then get the Lender’s approval.

 
10.
The Borrower shouldn’t withdraw capital, transfer asserts or transfer shares
without authorization to avoid its obligation.

 
11.
If there are changes in the Borrower’s name, legal representative, location and
business scope, the Borrower should inform the Lender in time by writing notice.

 
12.
If the warrantor under this contract has the conditions like stopping operation,
closure of business, cancel of registration, revocation of license, bankruptcy
and loss, and then lose part of or the whole warranting ability related to this
loan, or the worth of the mortgage under this contract decreases or impairs, the
Borrower should provide other warranting information which is accepted by the
Lender.

 
13.
The Borrower should burden the fees about legal service, insurance,
transportation, assessment, registration, reservation, evaluation and notarizing
and so on.

 
 
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Article 5 Repay the loan in advance

If the Borrower intends to repay the loan in advance, it must get the Lender’s
approval; if the Lender agrees, the interest of the part the Borrower wants to
repay in advance is determined as per Method    /  below.
 
1.
The interest will be charged per as the agreed term of the loan and agreed
executive interest rate.

 
2.
The interest will be charged using the interest which floats upward
by   /   percentage on the base of the agreed executive rate.

Article 6 liability for breach of contract

 
1.
If the Lender doesn’t issue loan with full amount to the Borrower according to
the contract, which cause the Borrower’s loss, the Lender should pay liquidated
damages to the Borrower according to the liquidated amount and days, which will
be calculated under the same method to calculate the interest of overdue loan.

 
2.
If the Borrower doesn’t repay the loan principal, the Lender will charge
interest which floats upward by   THIRTY on the base of the executive interest
rate agreed under the contract. During the overdue period, if the loan is in
RMB, the rate of interest penalty shall rise correspondingly since the date on
which the benchmark interest rate rises in case of adjustment made to benchmark
RMB interest rate by the People’s Bank of China.

 
3.
If the Borrower doesn’t use the loan according to the agreed purpose of the
loan, the Lender will charge penalty with the interest rate which floats upward
by   FIFTY percentage on the base of the benchmark interest rate agreed under
the contract towards the unfulfilled part from the date when noncompliance
behavior happens to the date the loan principal and interest are repay up.
During this period, if the loan is in RMB, the rate of interest penalty shall
rise correspondingly since the date on which the benchmark interest rate rises
in case of adjustment made to benchmark RMB interest rate by the People’s Bank
of China.

 
4.
As to past due interest, the Lender charges compound interest according to the
People’s Bank of China’s stipulations.

 
5.
If the Borrower violate the obligations under this contract, the Lender has the
right to require the Borrower to correct the noncompliance behaviors within a
limited period, and to cease to lending and recover the issued loan, and also
has the right to announce the loan under other loan contract entered into
between the Borrower and the Lender matures immediately or take other steps to
ensure the security of the asserts.

 
6.
If any warrantor of the Borrower under this contract violate the agreed
obligation in the guarantee contract, the Lender has the right to cease to issue
the loan, recover the issued loan, take other steps to ensure the security of
asserts.

 
 
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7.
If the Lender has to take lawsuit or arbitration to realize its claims, the
Borrower should burden the legal fees, travelling expense and other fees the
Lender spends to realize its claims.

Article 7 Security for loan
 
The loan under this contract is secured by pledge of equity and the Pledge
Agreement will be entered into separately. If it’s secured at the highest
amount, the No. of the Pledge Agreement is  /  .
 
Article 8 Settlement of dispute

If there is any dispute in the process of implementing this contract, the two
parties can negotiate to settle it, and also can settle it as per the
method  1  below:
 
1.
Lawsuit. The People’s Court in the Lender’s residence has the jurisdiction.

 
 
2.
Arbitration. Submit the dispute to      /      （the name of the arbitration
organization）and arbitrate it according to its arbitration rules.

During the lawsuit or the arbitration, the terms under this contract which have
not been involved in the dispute still need to be executed.
 
Article 9 other items
 
Plan of repayment of Kunming Shenghuo Pharmaceutical (group) Co., Ltd:
 
Repay ￥2 million on or before May 20, 2010;
 
Repay ￥8 million on or before the due date in 2010;
 
Article 10 Contract Effectiveness
 
This Contract shall come into force as of the date of execution and sealing by
both parties.
 
Article 11 Counterparts
 
This Contract shall be executed in Five original copies, each for each party,
  /  for each guarantor, and each for Notary office and Registration office,
which shall have equal force and effect.
 
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Article 12 Reminder
 
The Lender has reminded the Borrower of the need to have a complete and accurate
understanding of the provisions hereof and, at the request of the Borrower,
explained the provisions as necessary. The signing parties have a common
understanding of the meanings hereof.
 
Borrower (Seal & Signature):   
 
“KUNMING SHENGHUO PHARMACEUTICS (GROUP) CO., LTD.” (Seal)
 
Legal Representative: Lan Guihua (Signature)   
 
Lender (Seal & Signature):
 
“AGRICULTURAL BANK OF CHINA KUNMING SHUANGLONG SUB-BRANCH” (Seal)
 
Governor: Zhou Zuowu (Signature)
 
Date of Execution:
Place of Execution: Agricultural Bank of China Kunming Shuanglong Sub-branch
 
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