ABCS(2007)2004


Rights
Pledge Contract


Contract
No.: 53904200900004472





Pledgee(full name): Agricultural Bank of China,
Kunming Shuanglong Branch




Pledgeor:China Shenghuo
Pharmaceutical Holdings, Inc.





This
Pledge Contract is entered into by and among the two parties in accordance
with relevant Chinese laws and regulations for purpose of ensuring that Kunming
Shenghuo Pharmaceutical (group) Co., Ltd. (“Kunming Shenghuo”) will repay the
loan under the Loan Contract between Kunming Shenghuo and the Pledgee, dated
August 24, 2009(“Principal Contract”).





1.
Type and Amount of the Creditor’s Principal Claim




The
creditor’s principal claim guaranteed is the loan borrowed for medium-term
current capital in the amount of RMB50 million.




2.
The Scope of Guaranty of Pledge




The scope
of this guaranty of pledge includes the amount of creditor’s principal claim and
the interest thereof, default fine, compensation for damage and all kinds of
relevant expenses incurred by the pledgee to recover its claim and the
pledged right.





3.
The Pledged Right




The
pledgor agrees on the pledge of stock right, as to the details of pledged right
please find the List of Pledge
of Rights(equity/fund/bond), No.: 53904200900004472 (Name
and No. of the list) as attached, which constitutes the integral part of this
Contract and has same legal force and effect as in the Contract;
and




The
provisional price of the above mentioned pledged right is RMB 101.86 million
while the terminal value will be determined by its actual disposing
price.




4.
Covenants of the Pledgor




4.1 The
pledgor has obtained authrization necessary to enter into this Contract pursant
to relavent regulations and procedures.




4.2 The
full and undisputed ownership and disposition right of the pledged right is
entitled to the pledgor.




4.3 The
pledged right is transferable according to law.




4.4 The
pledged right has not been cancelled upon application, been declared null and
void upon application, facing objection, seal-up, freezing, supervision,
litigation, arbitration, reporting lost and stop of payment.




4.5 The
pledgor has obtained approval from co-owners of the right to be pledged under
this Contract.





4.6 The
pledgor promises to pay all kinds of expenses related to the pledged right
according to laws and regulations, perform the legal obiligations, expand the
term of right as per the requirement of the pledgee and have the pledged right
remain in force and effect at duration period.




4.7 At
the duration period of the pledged right, the pledgor shall inform the pledgee
in written for any of following cases:




4.7.1
The pledged right has been cancelled upon application, been declared null and
void upon application, facing objection, seal-up, freezing, supervision,
litigation, arbitration, reporting lost and stop of payment or other cases that
would affect the realization of pledged right.




4.7.2 The
business license of the pledgor has been cancelled or revoked, the pledgor was
ordered to close down or was terminated for other causes.




4.7.3 The
pledgor applies for bankruptcy, reorganization, reconciliation or is the subject
of bankruptcy and reorganization applications.




4.8 There
is no existence of other cases that would affect the realization of pledged
right.




5.
Effect of the Pledged Right




The
effect of pledged right is extended to the incidental right associated with the
pledged right, yield and property and rights according to laws and
regulations.





6.
Delivery and Storage of the Document of Title




6.1 If
necessary, the pledgor shall deliver relevant document of title to the pledgee
within specified days from the date of this Contract. The pledgee shall keep the
delivered document of title in good condition.




6.2 Where
a bill of exchange, promissory note, cheque, warehouse receipt, bill of lading,
bond or other document of title that needs to be negotiated by endorsement is
pledged, the words of “value in pledge” are required to be written in the
endorsement.




6.3 If
necessary, the pledgor shall register the pledge contract with the registration
authorities within specified days from the date of this Contract and the
original registration certificate shall be kept by the pledgee. The pledgor
shall assist the pledgee in case that the registration of transferred pledged
right or of other issues need to be changed.




6.4 At
the duration period of the pledged right, the pledgor may not grant or transfer
the pledged right, permit other person to use the pledged right or dispose the
pledged right in other ways without the written approval of the pledgee. Where
the written approval is available, the proceeds from the pledged right
disposition shall firstly be used to liquidate the creditor’s principal claim
secured by the stock right and the escrow.




6.5 At
the duration period of the pledged right, where the value of pledged right is
decreased, the pledgee is entitled to ask the pledgor offering a guranty which
is equivalent to the decreased value and needs to be recognized by the
pledgee.





7.
      Transfer of the Pledged Right


Where
      part of the creditor’s claim is transferred by the pledgee, the pledgee is
      entitled not to transfer the corresponding pledged
  right.


8.
      The Realization of Pledged Right


8.1 Under
any of the following circumstances, the pledgee has the right to exercise the
pledged right:




8.1.1 The
pledgee is not paid at the maturity of the obiligation under the Principal
Contract.




8.1.2 The
business licenses of the debtor or pledgor has been cancelled or revoked, or he
is ordered to close down or was terminated for other causes.




8.1.3 The
People’s Court has accepted the bankruptcy application of the debtor or pledgor
or has made the determination of a settlement.




8.1.4 The
debtor or pledgor was dead or was declared lost or dead.




8.1.5 The
pledged right has been cancelled upon application, been declared null and void
upon application, facing objection, litigation, arbitration, seal-up, freezing,
supervision or other enforcement actions have been taken.




8.1.6 The
pledgor has not offered corresponding guranty as per the requirements of the
pledgee.





8.1.7 The
pledgor has violated the obligations under this Contract.




8.1.8 The
existence of other circumstances that have materially affected the realization
of pledged right.




8.2 Where
a pledged bill of exchange, cheque, promissory note, bond, certificate of
deposit, warehouse receipt or bill of lading can be honoured or taken delivery
before the creditor’s claim under the Principal Contract expires, the pledgee is
entitled to do so first and the proceeds therefrom can be firstly used to
liquidate the creditor’s principal claim secured by the stock right and
escrow.




8.3  Where
more than two material guarantors for the creditor’s claim under this Contract
exist in the mean time, the pledgee is entitled to exercise the security right
to any one of the collateral or both of them.




8.4 Where
the pledgor is the third person other than the debtor, meanwhile the debtor has
offered material guranty for the creditor’s claim under the Principal Contract,
and the pledgor has waived this security right, the pledgor agrees to offer a
guaranty of pledge for the creditor’s claim under the Principal
Contract.




9.
Return of the Document of Title




9.1 Where
all the debts under the Principal Contract have been performed, or all the
creditor’s claims secured by the pledged right under the Principal Contract
have been liquidated, the pledgee shall timely return the document of title to
the pledgor.





9.2 The
pledgor shall accept the returned document of title timely.




10.
Liability for Breach of Contract




10.1 The
pledgor shall indemnify the pledgee in case of commiting any of the following
acts:




10.1.1
Haven’t obtained legal and valid authorization which is necessary for the
guaranty under this Contract.




10.1.2
Haven’t performed his obligation of making a full and accurate disclosure to the
extent that there is a existence of co-ownership of the pledged right and a
dispute over the pledged right, or the pledged right has been cancelled upon
application, been declared null and void, facing objection, seal-up, freezing,
supervision, litigation, arbitration, reporting lost and stop of
payment.




10.1.3
Haven’t delivered the document of title, or made a pledge endorsement or
registered the pledge contract according to this Contract.




10.1.4
Have disposed the pledged right without the written approval of the
pledgee.




10.1.5
Haven’t offered the corresponding guranty as per the requirement of the
pledgee.




10.1.6
Other activites that have violated the agreement under this Contract or affected
the realization of pledged right.




10.2
Where the pledgee is involved in any of the following acts, which results in a
loss for the pledgor, then the pledgee shall be liable to pay compensatory
damages:





10.2.1
The document of title is damaged or destructed, or is lost resulting from the
pledgee’s negligence in storage.




10.2.2
Where the pledgee delayed in exercising the pledged right at the written request
of the pledgor when the time limit for the performance of debts
expires.




11.
Liability for Expenses




The
pledgor shall be liable for incurred costs in the course of pledged right
appraisement, evaluation, storage, registration, notarization and
escrow.




12.
Resolution of Disputes




Any
dispute arising from this Contract shall be resolved by both parties through
friendly discussion, or




12.1
Shall be resolved by litigation which falls within the jurisdiction of People’s
Court in the Pledgee’s place of residence.




12.2
During the course of the litigation, this Contract shall be performed except for
the part under dispute.




13.
Other Matters




13.1 The
pledgor hereby acknowledges the receipt of the Principal Contract and have read
and understood this contract secured by the pledgor.




14. This
Contract shall take effect from the date of its execution.





15. This
Contract is made out in 5 copies and each one for the Pledgee, the Pledgor, the
Administration for Industry and Commerce, Ministry of Commerce and the Public
Notary Office. Each copy has same legal force and effect.




16. The
pledgee has notified the pledgor to make a complete and accurate understanding
for each provision under this Contract and have made explanations for
corresponding provisions as per the requirement of the pledgor. Both parties
reached an agreement on this Contract.





Pledgee:




Agricultual
Bank of China, Kunming Shuanglong Branch




Signature: Zuo Wu
Zhou




Pledgor:




China
Shenghuo Pharmaceutical Holdings, Inc




Signature: Gui Hua
Lan





Date:







ABCS(2007)2010-3




List
of Pledge of Rights(equity/fund/bond)




Pledgee
(full name):




Agricultural
Bank of China, Kunming Shuanglong Branch




Pledgeor:




China
Shenghuo Pharmaceutical Holdings, Inc.




No.:53904200900004472





Pledged
with:  94.95% shares of Kunming Shenghuo Pharmaceutical Co.,
Ltd. held by China Shenghuo Pharmaceutical Holdings, Inc.





Provisional price of those
shares: RMB101.86 million





This List
constitutes a integral part of the Pledge Contract, No.: 53904200900004472. Both
parties have reached the following special agreement besides the above mentioned
Contract:




1. At the
duration period of the pledged right, the effect of pledged right is extended to
the such yields as bond interest, fund dividend, return on equity including
stock dividend and transfer, bonus, coupon and etc., which may not be taken by
the pledgor.





2. Where
the fund shares are pledged, when the fund contract was changed or terminated,
the pledgor shall timely notify the pledgee. At the duration period of the
pledged right, the pledgor may not apply to redeem or transfer the pledged fund
shares.




3. When
the market value of the pledged right accounts for less than  % of the
provisional price when it was pledged, the pledgee is entitiled to ask the
pledgor offering a guaranty deposit or other guaranty that is recognized by the
pledgee.




4. The
pledgor has delivered the document of title to the pledgee, if
necessary.





Pledgee:




Agricultual
Bank of China, Kunming Shuanglong Branch




Signature:Zuo Wu
Zhou




Pledgor:




China
Shenghuo Pharmaceutical Holdings, Inc.




Signature:Gui Hua
Lan





Date:August 19,
2009





Notary
Certificate


No.:14789


Applicant:




Pledgee:




Agricultual
Bank of China, Kunming Shuanglong Branch




Place of
redidence: No.199 Shuang Tang Road, Kunming City




Person-in-charge:
Zuo Wu Zhou




Position:
Governor of the Bank




Pledgor:
  China
Shenghuo Pharmaceutical Holdings, Inc.
 Place
of residence: No.2 Jing You Road, Kunming National Economy and Technology
Developing District
 Legal
representative: Gui Hua Lan
 Notarization:
The Right Pledge Contract
 Both
parties agree on the notarization application for the above mentioned
Contract.
 
 We
hereby prove that both parties have signed the above mentioned Right Pledge
Contract upon consensus. The pledgee is
a qualified Financial institution engaging in loan bussiness(RMB)
and its governor is entitled to sign this Contract on behalf of his bank;
while the pledgor is a qualified entity to sign this
Contract.







This
Pledge Contract is entered into by those two parties according to relevant
laws and regulations of China for purpose of ensuring that Kunming Shenghuo
Pharmaceutical (group) Co., Ltd. will repay the loan under Loan Agreement,
No.53101200900004676 as above mentioned. This Contract is secured by the pledge
of 94.95% shares of Kunming Shenghuo Pharmaceutical Co., Ltd. Held by the
pledgor. Upon examination, the pledgee agrees to accept the guarany of pledge
offered by the pledgor. Specific provisions such as Amount of Guaranty, Term of
Guaranty, Way of Payment, Rights and Obligations of Both Parties, Liability for
Breach of Contract have been clarified therein.





Based
upon the above mentioned facts, we hereby certify that the above Right Pledge
Contract is dated August 19, 2009, and is entered into at Kunming City, Yunnan
Province by and among Zuo Wu Zhou, the governor of Agricultual Bank of China,
Kunming Shuanglong Branch and Gui Hua Lan, the legal representative of China
Shenghuo Pharmaceutical Holdings, Inc. This Contract entered into by both
parties is in compliance with Article 55 of The General Principles of the Civil
Law of the People’s Republic of China; the signatures and seals of both parties
are found to be authentic; the contents of this Contract are in compliance with
regulations of The Contract Law of the People’s Republic of China, The Property
Law of the People’s Republic of China and The Guaranty Law of the People’s
Republic of China, respectively.







Pursuant
to Article 226 of The Property Law of the People’s Republic of China, where the
stock right is pledged, the pledged right is established from the date of
registration with the Administraion of Commerce and Industry.





Issued
      by:Ju
      Ming Feng,of
      Zhenyuan Public Notary Office, of Kunming City, Yunnan Province,
      P.R.C.Date:
      August 19,
2009