ABCS(2007)2002
 
 Mortgage
Contract
 
 Mortagee (full name):
Agricultural Bank of China, Kunming Shuanglong Branch
 
 Mortgagor:Kunming Shenghuo
Pharmaceutical (group) Co., Ltd
 
 This
Mortgage Contract is entered into by and between the two parties in accordance
with relevant Chinese laws and regulations for purpose of ensuring that Kunming
Shenghuo Pharmaceutical (group) Co., Ltd. will repay the loan under the Loan
Contract, dated May 11, 2010 between the above two parties.
 
 1.
Type and Amount of the Creditor’s Principal Claim
 
 The
creditor’s principal claim guaranteed is the loan borrowed for liquid capital in
the amount of RMB17.6Million.
 
 2.
The Scope of Guaranty of Mortgage
 
 The scope
of this guaranty of mortgage includes the amount of creditor’s principal claim
and the interest thereof, default fine, compensation for damage and all kinds of
relevant expenses on for the mortgagee to realize the creditor’s claim and the
mortgaged right.
 
 3.
Collateral
 
 The
mortgagor agrees on the mortgagor of Real estate and its land use right, as
to the details of collateral please find the List of
Mortgage of Real Estateas 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 collateral is RMB26.16 millionwhile the
terminal value will be determined by its actual disposing price.
 
 4.
Covenants of the Mortgagor
 
 4.1 The
Mortgagor has obtained authorization necessary to enter into this Contract
pursuant to relevant regulations and procedures.
 
 4.2 The
full and undisputed ownership or disposition right of the collateral is entitled
to the mortgagor.
 
 4.3 The
collateral is negotiable or transferable according to law.
 
 4.4 Such
cases as the collateral has been sealed up, distrained or supervised would not
happen.
 
 4.5 The
mortgagor shall make a full and accurate disclosure to the extent that the money
and collateral such as tax in default, construction mortgages have been
mortgaged or rented.
 
 4.6 The
Mortgagor has obtained approval from co-owners of the right to be pledged under
this Contract.
 
 4.7
During the term of mortgage, the mortgagor shall notify the mortgagee in written
for any of following cases:
 
 4.7.1 The
collateral has been sealed up, distrained, supervised or has been taken other
enforcement actions.
 
 4.7.2 The
mortgagor changed the capital structure or operation system, include but not
limited to contract operation, leasing, shareholding system transformation,
joint operation, merger, separation, partnership, asset transferring, and
etc.
 
 4.7.3 The
business licenses of the mortgagor has been cancelled or revoked, or he is
ordered to close down or was terminated for other causes.
  
  4.7.4 The
mortgagor 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
collateral.
 
 5.
Effect of the Collateral
 
 The
effect of collateral is extended to the ancillary component, incidental right,
subrogation of mortgage or other property and rights associated with the
collateral according to laws and regulations.
 
 6.
Management and Utility of the Collateral
 
 6.1 The
collateral under this Contract shall be kept by the mortgagor; the mortgagor
shall be liable for the management of utility of the collateral. And the
mortgagee shall be entitled to supervise and review how the collateral is
managed and used.
 
 6.2
During the term of mortgage, the mortgagor may not grant or transfer, rent,
remortgage the collateral or dispose it in other ways without the written
approval of the mortgagee. Where the written approval is available, the proceeds
from the collateral disposition shall firstly be used to liquidate the secured
creditor’s principal claim and the escrow.
 
 6.3 Where
the collateral was damaged, lost, expropriated, or was owned by the third party
resulted from the affiliation, mixture or process of the collateral, the
mortgagor shall take active measures to prevent the loss from increasing,
meanwhile shall notify the mortgagee in written. The mortgagee is entitled to
obtain the indemnity at first priority. Where the performance term of the
secured creditor’s claim has not elapsed, the mortgagee is entitled to liquidate
the debt or to escrow in advance.
 
 6.4
During the term of mortgage, where the value of collateral is decreased, the
mortgagee is entitled to ask the mortgagor resuming original value of the
collateral or offering a guaranty which is equivalent to the decreased value and
needs to be recognized by the mortgagee.
  
  7.
Insurance of the Collateral
 
 7.1
      The mortgagor shall effect the insurance for the collateral at the request
      of the mortgagee and designate the mortgagee as the first beneficiary. The
      original insurance document shall be delivered to the mortgagee for
      storage.
 
 7.2
      The mortgagor shall be liable for the insurance premiums and pay it in
      full amount and on time, and also shall perform other obligations under
      the insurance contract (including the insurance document or other
      insurance certificate). During the term of mortgage, where the mortgagor
      doesn’t pay the insurance premiums or effect (or renew) the insurance
      contract on time, the mortgagee is entitled to make advance payment of the
      insurance premiums or effect the insurance contract on behalf of the
      mortgagor, while the mortgagor shall be liable for those expenses. The
      mortgagor agrees that the mortgagee could collect the above mentioned
      expenses from its account opened at the
  mortgagee.
 
 7.3
      During the term of mortgage, the mortgagor may not unilaterally or
      negotiate with the insurer to change or terminate the insurance contract
      without the written approval of mortgagee; neither should he waive the
      right to insurance claims nor the right to claim compensation against the
      third party.
 
 7.4
      During the term of mortgage, where an insurance incident incurred to the
      collateral, the mortgagor shall immediately inform the insurer and
      mortgagee, and shall be responsible for claiming compensation. Where the
      mortgagee doesn’t perform his obligation of notification or claiming
      compensation, causing the loss of the mortgagee, the mortgagor shall be
      liable for indemnity.
  
  8.
Registration of Mortgage
 
 8.1
      The mortgagor shall register this Mortgage Contract with relevant
      registration authorities within 5 days from the date of its execution; all
      of those certificates, mortgage registration document associated with the
      collateral shall be kept by the
mortgagee.
 
 8.2
      During the term of mortgage, where the registration needs to be changed,
      the mortgagor shall be liable to do
so.
 
 8.3
      During the term of mortgage, where the mortgaged right is transferred by
      the mortgagor according to this Contract; the mortgagor shall be in
      assistance with the mortgagee and transferee on the change of
      registration.
 
 9.
Transfer of Mortgaged Right
 
 Where
part of the creditor’s claim is transferred by the mortgagee, he is entitled not
to transfer the corresponding mortgaged right.
 
 10.
Realization of Mortgaged Right
 
 10.1
Under any of the following circumstances, the mortgagee has the right to
exercise the mortgaged right and is entitled to obtain the payment at first
priority by the agreed value of collateral with mortgagor  or by the
funds of auction, and sale of the collateral.  If the funds are not
sufficient to cover all mortgage right according to this contract, the Mortgagee
can use the funds to recover the loan principal, interest, penalty, compound
interests and fees, etc.
 
 10.1.1
The mortgagee is not paid at the maturity of the obligation under the principal
contract.
 
 10.1.2
The business licenses of the debtor or mortgagor has been cancelled or revoked,
or he is ordered to close down or was terminated for other causes.
 
 10.1.3
The People’s Court has accepted the bankruptcy application of the debtor or
mortgagor or has made the determination of a settlement.
 
 10.1.4
The debtor or mortgagor was dead or was declared lost or
dead.
  
  10.1.5
The collateral has been sealed up, distrained, supervised or has been taken
other enforcement actions.
 
 10.1.6
The collateral was damaged, lost or expropriated.
 
 10.1.7
The mortgagor didn’t resume the value of the collateral or offer the
corresponding guaranty at the request of mortgagee.
 
 10.1.8
The mortgagor violates those obligations under this Contract.
 
 10.1.9
Other circumstances that have material effect on the realization of mortgaged
right.
 
 10.2
Where more than two material guarantors for the creditor’s claim  (
including creditor’s material guarantor)  under this Contract exist in
the mean time, the mortgagee is entitled to exercise the security right to any
one of the collateral or both of them.
 
 10.3
Where the mortgagor is the third person other than the debtor, meanwhile the
debtor has offered material guaranty for the creditor’s claim under the
principal contract, and the mortgagor has waived this security right, the
mortgagor agrees to offer a guaranty of mortgage for the creditor’s claim under
the principal contract.
 
 11.
Liability for Breach of Contract
 
 11.1
After this Contract takes effect, where the mortgagee doesn’t perform his
obligations, resulting in the loss of mortgagor, the mortgagee shall be liable
for the indemnity.
 
 11.2 The
mortgagor shall indemnify the mortgagee in case of committing any of the
following acts:
 
 11.2.1
Didn’t obtain legal and effect authorization which is necessary for the guaranty
under this Contract.
 
 11.2.2
Didn’t perform his obligation of making a full and accurate disclosure to the
extent that there is a existence of tax in default, construction mortgage,
co-ownership of the collateral and a dispute over the collateral, or the
collateral was mortgaged or rented, or the collateral has been sealed up,
distrained or supervised.
  
  11.2.3
Didn’t register the Mortgage Contract according to the provisions
herein.
 
 11.2.4
Disposed the collateral without the written approval of the
mortgagee.
 
 11.2.5
Didn’t resume the value of the collateral or offer the corresponding guaranty at
the request of the mortgagee.
 
 11.2.6
Other activities that have violated the agreement under this Contract or
affected the realization of mortgaged right.
 
 12.
Liability for Expenses
 
 The
mortgagor shall be liable for incurred costs in the course of collateral
appraisement, evaluation, storage, registration, notarization and
escrow.
 
 13.
Resolution of Disputes
 
 Any
dispute arising from this Contract shall be resolved by both parties through
friendly discussion, and also can be solved as per the method  1below
 
 13.1
Lawsuit. The litigation falls within the jurisdiction of People’s Court in the
mortgagee’s place of residence.
 
 13.2  Arbitration.  Submit
the dispute to  _____________ (the name of the arbitration
organization) and arbitrate it according to its arbitration rules.
 
 During
the course of the litigation or arbitration, this Contract shall be performed
except for the part under dispute.
 
 14.
Other Matters
 
 14.1 The
mortgagor hereby acknowledged the receipt of the principal contract and have
read and understood this contract secured by the mortgagor.
 
  
  15.  Effect
of the Contract
 
 This
Contract shall take effect from the date of signing or sealing by both
parties.
 
 16. This
Contract is made out in Five copies and each
one for the Mortgagee, the Mortgagor, the Debtor, the Authority of Land
Registration and the Public Notary Office. Each copy has same legal force and
effect.
 
 17.
Reminder
 
 The
mortgagee has notified the mortgagor 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 mortgagor. Both
parties have reached an agreement on this Contract.
 
 Mortgagee(Seal):
 
 Agricultural
Bank of China, Kunming Shuanglong Branch
 
 Legal
Representative and Signature: Zuowu Zhou
 
 Mortgagor
(Seal):
 
 Kunming
Shenghuo Pharmaceutical (group) Co., Ltd.
 
 Legal
Representative and Signature: Qionghua
Gao
 
 Date of
signing: May 11, 2010
 
 Place of
signing: Agricultural Bank of China, Kunming Shuanglong
Branch
  
  List
of Mortgage of Real Estate
 
 Mortgagee
(full name):
 
 Agricultural
Bank of China, Kunming Shuanglong Branch
 
 Mortgagor:
 
 Kunming
Shenghuo Pharmaceutical (group) Co., Ltd.
 
 Collateral:  land use
right
 
 Owner of the Land: Kunming
Shenghuo Pharmaceutical (group) Co., Ltd.
 
 Certificate No.: Kun Guo Yong
(2006) 00206
 
 Location: Kunming Economic
Technology Development Zone land 11-2
 
 Type of land: for
transfer
 
 Housing Ownership Certificate:
Kunming Housing Ownership 200705823
 
 Valid terms: from 2006 until
August 2048
 
 Year it was built: March
2007
 
 Land use:
industryial
 
 Housing use:
non-residential
 
 Total square meters of the land:
13,338.23
 
 Total square meters of the
house: 5,303
 
 Total square meters of the land for
collateral: 13,338.23
 
 Total square meters of the house for
collateral: 5,303
 
  
  Provisional price of the collateral: RMB
26,160,000
 
 This List
constitutes an integral part of the Mortgage Contract.
 
 Mortgagee:
 
 Agricultural
Bank of China, Kunming Shuanglong Branch
 
 Signature:Zuowu
Zhou
 
 Mortgagor:
 
 Kunming
Shenghuo Pharmaceutical (group) Co., Ltd.
 
 Signature:Qionghua
Gao
 
 Date:May 11,
2010