Document:

fs12010ex4ii_chinabct.htm

    Exhibit
4.2

     

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.

     

     

    CHINA
BAICAOTANG MEDICINE LIMITED

    (formerly,
Purden Lake Resource Corp.)

     

    WARRANT
TO PURCHASE

             
    SHARES

    OF
COMMON STOCK

    (SUBJECT
TO ADJUSTMENT)

    
    

     

    
      	Warrant
      No.:        
          	 February 5,
      2010

    

     

    This
certifies that for value,                                    
  or its registered and permitted assigns (the "Holder"),
is entitled, subject to the terms set forth below, at any time from and after
February 5, 2010 (the "Original
Issuance Date") and before 5:00 p.m., Eastern Time, on February 5, 2015
(the "Expiration
Date"), to purchase from CHINA BAICAOTANG MEDICINE LIMITED (formerly, Purden
Lake Resource Corp.), a Delaware corporation (the "Company"),              
    shares (subject
to adjustment as described herein), of common stock of the Company, par value
$0.001 per share (the "Common
Stock"), upon surrender hereof, at the principal office of the Company
referred to below, with a duly executed exercise notice (the "Exercise
Notice") in the form attached hereto as Exhibit
A and simultaneous payment therefor in lawful, immediately available
money of the United States, at an initial exercise price per share of $3.05 (the
"Exercise
Price"). The Exercise Price is subject to adjustment as provided below,
and the term "Common
Stock" shall include, unless the context otherwise requires, the stock
and other securities and property at the time receivable upon the exercise of
this Warrant. The term "Warrants,"
as used herein, shall mean this Warrant and any other Warrants delivered in
substitution or exchange therefor as provided herein.

     

    This
Warrant is issued to the placement agent as partial consideration in connection
with the Company's private placement (the "Offering"),
pursuant to the Company's Confidential Private Offering Memorandum dated October
23, 2009 (the "Memorandum").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.            Definitions.
In addition to the terms defined elsewhere in this Warrant, capitalized terms
that are not otherwise defined herein have the meanings given to such terms in
the Memorandum.

     

    2.            Exercise.

     

    A.   Method
of Exercise. This Warrant may be exercised at any time or from time to
time from and after the Original Issuance Date and before 5:00 p.m., Eastern
Time, on the Expiration Date, on any Business Day (as defined below), for the
full number of shares of Common Stock called for hereby, by surrendering it at
the Company's principal office, at No. 102, Chengzhan Road, Liuzhou City,
Guangxi Province, PRC (the "Principal
Office"), Attention: Xiao Yan Zhang, with the Exercise Notice duly
executed, together with payment in an amount equal to (a) the number of shares
of Common Stock called for on the face of this Warrant, as adjusted in
accordance with the preceding paragraph of this Warrant multiplied (b) by the
Exercise Price then in effect. Payment of the Exercise Price must be made by
payment in immediately available funds. This Warrant may be exercised for less
than the full number of shares of Common Stock at the time called for hereby,
except that the number of shares of Common Stock receivable upon the exercise of
this Warrant as a whole, and the sum payable upon the exercise of this Warrant
as a whole, shall be proportionately reduced. Upon a partial exercise of this
Warrant in accordance with the terms hereof, this Warrant shall be surrendered
to the Company, and a new Warrant of the same tenor and for the purchase of the
number of such shares not purchased upon such exercise shall be issued by the
Company to Holder without any charge therefor. A Warrant shall be deemed to have
been exercised immediately prior to the close of business on the date of its
surrender for exercise (the "Exercise
Date") as provided above, and the person entitled to receive the shares
of Common Stock issuable upon such exercise shall be treated for all purposes as
the holder of such shares of record as of the close of business on the Exercise
Date. Within ten (10) Business Days after the Exercise Date, the Company shall
issue and deliver to the person or persons entitled to receive the same a
certificate or certificates for the number of full shares of Common Stock
issuable upon such exercise. For purposes of this Wan-ant,
"Business
Day" means any day that is not a Saturday, a Sunday, or a day on which
banks are required or permitted to be closed in the State of New
York.

     

    B.   Cashless
Exercise. Notwithstanding any provision herein to the contrary and
commencing six (6) months following the Original Issuance Date, if a
registration statement under the Securities Act providing for the resale of the
Warrant Stock is not then in effect by the date such registration statement is
required to be effective pursuant to the terms of the Offering or not effective
at any time thereafter, in lieu of exercising this Warrant by payment of cash,
the Holder may elect to exercise this Warrant by a cashless exercise and shall
receive the number of shares of Common Stock equal to an amount (as determined
below) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:

     

     

    
      
        	 	 X =
      Y - f
      A)(Y) 

                B

              
	 	 
	Where	X the number of
      shares of Common Stock to be issued to the
      Holder.
	 	 

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	Y the number of
      shares of Common Stock issuable upon exercise
      of this Warrant in accordance with the terms of this Warrant by means of a
      cash exercise rather than a cashless exercise.
	 	 
	 	A the Exercise
      Price.
	 	 
	 	B the
      Per Share Market Value of one share of Common Stock
      on the Business Day immediately preceding the date of such
      election.

    

     

    For the
purpose of this Warrant, "Per
Share Market Value" means on any particular date (a) the last closing
price per share of the Common Stock on such market that the Common Stock is then
listed, or if there is no closing price on such date, then the closing bid price
on such date, or if there is no closing bid price on such date, then the closing
price on such exchange or quotation system on the date nearest preceding such
date, or (b) if the Common Stock is not listed then on a market or any
registered national stock exchange, the last closing price for a share of Common
Stock in the over-the-counter market, as reported by Bloomberg at the close of
business on such date, or if there is no closing price on such date, then the
closing bid price on such date, or (c) if the Common Stock is not then reported
by the trading market or any registered national stock exchange or in the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the five (5) Business Days preceding such date of
determination, or (d) if the Common Stock is not then publicly traded the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Company; provided,
however, that the Company, after receipt of the determination by such
independent appraiser, shall have the right to select an additional independent
appraiser, in which case, the fair market value shall be equal to the average of
the determinations by each such independent appraiser; and provided,
further, that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other similar
transactions during such period. The determination of fair market value by an
independent appraiser shall be based upon the fair market value of the Company
determined on a going concern basis as between a willing buyer and a willing
seller and taking into account all relevant factors determinative of value, and
shall be final and binding on all parties. In determining the fair market value
of any shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by federal
or state securities laws, or to the existence or absence of, or any limitations
on, voting rights.

     

    C.   Limitation
on Exercise. Notwithstanding any provisions herein to thecontrary,
the number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
such Holder and its affiliates and any other persons whose beneficial ownership
of Common Stock would be aggregated with the Holder's for purposes of Section
13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), doesnot
exceed 4.9% (the "Maximum
Percentage") of the total number of issued and outstanding shares of
Common Stock. For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. This restriction may not be waived.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    D.   Exercise
Disputes. In the case of any dispute with respect to the
numberof shares
of Common Stock to be issued upon exercise of this Warrant and/or the Exercise
Price in effect at the time of exercise, the Company shall promptly submit the
disputed determinations or arithmetic calculations to the Holder via fax (or, if
the Holder has not provided the Company with a fax number, by overnight courier)
within five (5) Business Days of receipt of the Holder's Exercise Notice. If the
Holder and the Company are unable to agree as to the determination of the number
of shares of Common Stock to be issued upon exercise of this Warrant and/or the
Exercise Price within five (5) Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder by the Company, then the
Company shall in accordance with this Section, on the next Business Day submit
the disputed determination to its independent auditor. The Company shall cause
its independent auditor to perform the determinations or calculations and notify
the Company and the Holder of the results promptly, in writing and in sufficient
detail to give the Holder and the Company a clear understanding of its
determinations and calculations. The determination by the Company's independent
auditor shall be binding upon all parties absent manifest error. The Company
shall then on the next Business Day instruct its transfer agent to issue
certificate(s) representing the appropriate number of shares of Common Stock in
accordance with the independent auditor's determination and this Section. The
prevailing party shall be entitled to reimbursement of all fees and expenses of
such determination and calculation, but in no event shall the Company be liable
to the Holder for any diminution of value or damages therefrom during the period
that such exercise is disputed.

     

    3.            Shares
Fully Paid; Payment of Taxes. All shares of Common Stock issued upon the
exercise of this Warrant, in accordance with the terms of this Warrant, shall be
validly issued, fully paid and non-assessable, and the Company shall pay all
taxes and other governmental charges (other than income taxes to the holder)
that may be imposed in respect of the issue or delivery
thereof.

     

    4.            Transfer
and Exchange.

     

    A.   Transfer.
This Warrant and all rights hereunder are transferable, in whole or in
part, on the books of the Company maintained for such purpose at the Principal
Office by the Holder in person or by duly authorized attorney, upon surrender of
this Warrant at the Principal Office together with: (i) a completed and executed
form of assignment, a form of which is attached hereto as Exhibit
B,
(ii) payment of any necessary transfer tax or other governmental charge imposed
upon such transfer, and (iii) an opinion of counsel reasonably acceptable to the
Company stating that such transfer is exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Securities
Act").
Upon any partial transfer of this Warrant, the Company will issue and
deliver to Holder a new Warrant or Warrants with respect to the portion of this
Warrant not so transferred. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that this Warrant when endorsed in blank
shall be deemed negotiable and that when this Warrant shall have been so
endorsed, the holder hereof may be treated by the Company and all other persons
dealing with this Wan-ant
as the absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented hereby, or to the transfer hereof on
the books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered Holder hereof
as the owner for all purposes.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    B.   Exchange This Warrant
is exchangeable at the Principal Office for two (2) or
more new Warrants, each in the form of this Warrant, to purchase the same
aggregate number of shares of Common Stock, each new Warrant to represent the
right to purchase such number of shares as the Holder shall designate at the
time of such exchange, but which shall not exceed the total number of shares for
which this Warrant may be from time to time exercisable.

     

    5.     Certain Adjustments.
The Exercise Price in effect at any time and the number and

    kind of
securities issuable upon exercise of this Warrant shall be subject to adjustment
from time to time upon the happening of certain events as follows:

     

    A.   Adjustment for Stock Splits
and Combinations. If the Company at any time or from time to time on or
after the Original Issuance Date effects a stock split or subdivision of the
outstanding Common Stock, the Exercise Price then in effect immediately before
that stock split or subdivision shall be proportionately decreased and the
number of shares of Common Stock theretofore receivable upon the exercise of
this Warrant shall be proportionately increased. If the Company at any time or
from time to time effects a reverse stock split or combines the outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price then
in effect immediately before that reverse stock split or combination shall be
proportionately increased and the number of shares of Common Stock theretofore
receivable upon the exercise of this Warrant shall be proportionately decreased.
Each adjustment under this Section
5A shall become effective at the close of business on the date the stock
split, subdivision, reverse stock split or combination becomes
effective.

     

    B.   Adjustment for Certain
Dividends and Distributions. If the Company at any time or from time to
time on or after the Original Issuance Date makes or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Conunon Stock, then and in
each such event the Exercise Price then in effect shall be decreased as of the
time of such issuance or, in the event such record date is fixed, as of the
close of business on such record date, by multiplying the Exercise Price then in
effect by a fraction (1) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date and (2) the denominator of
which shall be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in payment of
such dividend or distribution; provided, however,
that if such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Exercise Price
shall be recomputed accordingly as of the close of business on such record date
and thereafter the Exercise Price shall be adjusted pursuant to this Section
5B as of the time of actual payment of such dividends or
distributions.

     

    C.   Adjustments for Other
Dividends and Distributions. In the event the Company at any time or from
time to time on or after the Original Issuance Date makes, or fixes a record
date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in securities of the Company other than
shares of Common Stock, then 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      and in
each such event provision shall be made so that the Holder of this Warrant shall
receive upon conversion thereof, in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of the Company which the
Holder would have received had this Warrant been exercised on the date of such
event and had Holder thereafter, during the period from the date of such event
to and including the conversion date, retained such securities receivable by the
Holder as aforesaid during such period, subject to all other adjustments called
for during such period under this Section
5 with respect to the rights of the Holder of this
Warrant.

    

     

    D.   Adjustment for
Recapitalization, Reorganization, Reclassification, Consolidation, Merger or
Sale. In case the Company after the Original Issue Date shall do any of
the following (each, a "Recap Event"): (a)
consolidate or merge with or into any other Person and the Company shall not be
the continuing or surviving corporation of such consolidation or merger, or (b)
permit any other Person to consolidate with or merge into the Company and the
Company shall be the continuing or surviving Person but, in connection with such
consolidation or merger, any Common Stock of the Company shall be changed into
or exchanged for securities of any other Person or cash or any other property,
or (c) transfer all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or reclassification of its
Common Stock, then, and in the case of each such Recap Event, proper provision
shall be made to the Exercise Price and the number of shares of Common Stock
that may be purchased upon exercise of this Warrant so that, upon the basis and
the terms and in the manner provided in this Warrant, the Holder of this Warrant
shall be entitled upon the exercise hereof at any time after the consummation of
such Recap Event, to the extent this Warrant is not exercised prior to such
Recap Event, to receive at the Exercise Price in effect at the time immediately
prior to the consummation of such Recap Event, in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Recap Event, the
securities, cash and property to which such Holder would have been entitled upon
the consummation of such Recap Event if such Holder had exercised the rights
represented by this Warrant immediately prior thereto (including the right of a
shareholder to elect the type of consideration it will receive upon a Recap
Event), subject to adjustments (subsequent to such corporate action) as nearly
equivalent as possible to the adjustments provided for elsewhere in this
Section; provided,
however, the Holder at its option may elect to receive an amount in
tunegistered shares of the common stock of the surviving entity equal to the
value of this Warrant calculated in accordance with the Black-Scholes formula;
provided,
further, such shares of Common Stock shall be valued at a twenty percent
(20%) discount to the VWAP of the Common Stock for the twenty (20) Trading Days
immediately prior to the Recap Event. Immediately upon the occurrence of a Recap
Event, the Company shall notify the Holder in writing of such Recap Event and
provide the calculations in determining the number of shares of Warrant Stock
issuable upon exercise of the new warrant and the adjusted Warrant Price. Upon
the Holder's request, the continuing or surviving corporation as a result of
such Recap Event shall issue to the Holder a new warrant of like tenor
evidencing the right to purchase the adjusted number of shares of Warrant Stock
and the adjusted Warrant Price pursuant to the terms and provisions of this
Section 4(a)(i). In the event that the surviving entity pursuant to any such
Recap Event is not a public company that is registered pursuant to the Exchange
Act of 1934, as amended, or its common stock is not listed or quoted on a
national securities exchange, national automated quotation system or the OTC
Bulletin Board, then the Holder at its option may elect to receive an amount in
unregistered shares of the common
stock of the surviving entity equal to the value of this Warrant calculated in
accordance with the Black-Scholes formula.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In the
event that the Holder has elected not to exercise this Warrant prior to the
consummation of a Recap Event and has also elected not to receive an amount in
unregistered shares equal to the value of this Warrant calculated in accordance
with the Black-Scholes formula, so long as the surviving entity pursuant to any
Recap Event is a company that has a class of equity securities registered
pursuant to the Exchange Act and its common stock is listed or quoted on a
national securities exchange, national automated quotation system or the OTC
Bulletin Board, the surviving entity and/or each Person (other than the Company)
which may be required to deliver any Securities, cash or property upon the
exercise of this Warrant as provided herein shall assume, by written instrument
delivered. to, and reasonably satisfactory to, the Holder of this Warrant, (A)
the obligations of the Company under this Warrant (and if the Company shall
survive the consummation of such Recap Event, such assumption shall be in
addition to, and shall not release the Company from, any continuing obligations
of the Company under this Warrant) and (B) the obligation to deliver to such
Holder such Securities, cash or property as, in accordance with the foregoing
provisions of this subsection (a), such Holder shall be entitled to receive, and
the surviving entity and/or each such Person shall have similarly delivered to
such Holder an opinion of counsel for the surviving entity and/or each such
Person, which counsel shall be reasonably satisfactory to such Holder, or in the
alternative, a written acknowledgement executed by the President or Chief
Financial Officer of the Company, stating that this Warrant shall thereafter
continue in full force and effect and the terms hereof (including, without
limitation, all of the provisions of this subsection (a)) shall be applicable to
the Securities, cash or property which the surviving entity and/or each such
Person may be required to deliver upon any exercise of this Warrant or the
exercise of any rights pursuant hereto.

     

    E.   Certificate as to
Adjustments. Upon the occurrence of each adjustment or readjustment
of the Exercise Price pursuant to this Section
5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of a
Warrant a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon the written request at any time of any holder of a Warrant,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) Exercise Price at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the exercise of the
Warrant.

     

    6.     Notices of Record
Date. In case:

     

    A. the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of the Warrants) for the
purpose of entitling them to receive any dividend or other distribution, or any
right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right, or

     

    B. of any
capital reorganization of the Company, any reclassification of the capital stock
of the Company, any consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the assets of the
Company to another corporation, or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    C. of any
voluntary dissolution, liquidation or winding-up of the Company, then, and
in each such case, the Company will mail or cause to be mailed to each holder of
a Warrant at the time outstanding a notice specifying, as the case may be, (a)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (b) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is expected to take place, and the time, if any is to be fixed, as of
which the holders of record of Common Stock (or such stock or securities at the
time receivable upon the exercise of the Warrants) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up, such
notice shall be mailed at least ten (10) days prior to the date therein
specified.

     

    7.   Loss or
Mutilation. Upon receipt by the Company of evidence satisfactory to it
(in the exercise of reasonable discretion) of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and (in the case of loss, theft
or destruction) of indemnity satisfactory to it (in the exercise of reasonable
discretion), and (in the case of mutilation) upon surrender and cancellation
thereof, the Company will execute and deliver in lieu thereof a new Warrant of
like tenor.

     

    8.   Reservation
of Common Stock. The Company shall at all times reserve and keep
available for issue upon the exercise of Warrants such number of its authorized
but unissued shares of Common Stock as will be sufficient to permit the exercise
in full of all outstanding Warrants. All of the shares of Common Stock issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all preemptive rights, rights of first refusal or first offer, taxes,
liens and charges of whatever nature, with respect to the issuance
thereof.

     

    9.   Registration
Rights. All shares of Common Stock issuable upon exercise of this Warrant
shall have the registration rights set forth in the Subscription Agreement,
subject to any applicable limitations, by and between the Holder and the
Company, which rights are expressly incorporated and made a part of this
Warrant.

     

    10.   Notices.
All notices and other communications from the Company to the Holder of this
Warrant shall be mailed by first class, registered or certified mail, postage
prepaid, to the address furnished to the Company in writing by the
Holder.

     

    11.   Change;
Modifications; Waiver. No terms of this Warrant may be amended, waived or
modified except by the express written consent of the Company and the
Holder.

     

    12.   Headings.
The headings in this Warrant are for purposes of convenience in reference only,
and shall not be deemed to constitute a part hereof.

     

    13.   Governing
Law, Etc. This Warrant shall be governed by and construed solely and
exclusively under and pursuant to the laws of the State of New York as applied
to agreements among New York residents entered into and to be performed entirely
within New York. Each of the parties hereto expressly and irrevocably (1) agree
that any legal suit, action or proceeding arising out of or relating to this
Warrant will be instituted exclusively in either the New York 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (2) waive any objection they may have now or
hereafter to the venue of any such suit, action or proceeding, and (3) consent
to the in personam
jurisdiction of either the New York State Supreme Court, County of New York, or
the United States District Court for the Southern District of New York in any
such suit, action or proceeding. Each of the parties hereto further agree to
accept and acknowledge service of any and all process which may be served in any
such suit, action or proceeding in either the New York State Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York and agree that service of process upon it mailed by
certified mail to its address will be deemed in every respect effective service
of process upon it, in any such suit, action or proceeding. THE PARTIES HERETO
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS WARRANT OR ANY DOCUMENT OR AGREEMENT
CONTEMPLATED HEREBY. THE PARTY PREVAILING THEREIN SHALL BE ENTITLED TO PAYMENT
FROM THE OTHER PARTY HERETO OF ALL OF ITS REASONABLE COUNSEL FEES AND
DISBURSEMENTS.

    

     

    [Signature
page to follow]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [Signature
page to Warrant]

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.

     

    
       

      
        	 	PIJRDEN
      LAKE RESOURCE CORP.
	 	
                 

                By:

              
	 	Name: Hutian
      Tang
	 	Title: Chief
      Executive Officer
	 	 

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

    SUBSCRIPTION
FORM

    (To be
executed by the Holder only upon exercise of Warrant)

     

    The
undersigned registered owner of this Warrant irrevocably exercises this Wan-ant
and purchases  shares of Common Stock of Purden Lake Resource Corp.
purchasable with this Warrant, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant.

     

    The
Holder shall make payment of the Exercise Price as follows (check
one):

     

     "Cash
Exercise" pursuant to Section 2.A of the Warrant

     

     "Cashless
Exercise" pursuant to Section 2.B of the Warrant

     

    Notwithstanding
anything to the contrary contained herein, this Exercise Notice shall constitute
a representation by the Holder that, after giving effect to the exercise
provided for in this Exercise Notice, the Holder (together with its affiliates)
will not have beneficial ownership (together with the beneficial ownership of
such Person's affiliates) of a number of shares of Common Stock which exceeds
the Maximum Percentage of the total outstanding shares of Common Stock as
determined pursuant to the provisions of Section
2C of the Warrant.

     

    The
Holder represents to the Company that, as of the date of exercise:

     

    i. the
shares of Common Stock being purchased pursuant to this Exercise
Notice
are being acquired solely for the Holder's own account and not as a nominee for
any other party, for investment, and not with a view toward distribution or
resale; and

     

    ii. the
Holder is an "accredited investor" as such term is defined in Rule
501(a)(1)
of Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

     

    If the
Holder cannot make the representations required above because they are factually
incorrect, it shall be a condition to the exercise of the Warrant that the
Company receive such other representations as the Company considers necessary,
acting reasonably, to assure the Company that the issuance of securities upon
exercise of this Warrant shall not violate any United States or other applicable
securities laws.

     

    
      	
              Dated:

            	 
      	
              Name
      of Holder:

            	 
      
	 
      	 
      	 
      	
              (Print)

            
	 
      	 
      	
              By:

              Name:

              Title:

              (Signature
      must conform in all respects to name of holder as specified on the face of
      the Warrant)

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

    FORM
OF ASSIGNMENT

     

    FOR VALUE
RECEIVED the undersigned registered owner of this Warrant hereby sells,
assigns and transfers unto the Assignee named below all of the rights of the
undersigned under the within Warrant, with respect to the number of shares of
Common Stock set forth below:

     

     

    
      	
              Name
      of Assignee

            	
              Address                                                                                 Number
      of Shares

            
	 
      	 
      	 
      	 
      

    

     

     

    and does
hereby irrevocably constitute and appoint               
 Attorney to make such
transfer on the books of Pruden Lake Resource Corp. maintained for the purpose,
with full power of substitution in the premises.

     

    
    

     

    
      	 Dated:	 
	 	(Signature)
	 	 
	 	 
	 	(Witness)

    

     

     

    The
undersigned Assignee of the Warrant hereby makes to Pruden Lake Resource Corp.,
as of the date hereof, with respect to the Assignee, all of the representations
and warranties made by the Holder, and the undersigned Assignee agrees to be
bound by all the terms and conditions of the Wan-ant.

     

    
    

     

    
      	 Dated:	 
	 	(Signature)fs12010ex10xiv_chinabct.htm

    Exhibit
10.14

    

    Translation
of Individual Loan/ Security Contract

    

    Industrial
and Commercial Bank of China Guangxi Branch

    

    No. B:
Gejing Zi Liuzhou Branch Longcheng Sub-branch Year 2007 No.4

    

    

    

    

    

    

    

    Borrower:
Tang Huitian                            

     

    
      Lender:
Liuzhou City Longcheng
Sub-branch of Industrial and Commercial Bank of China

    

    

    
      Mortgagor:
Guigang Sub-station of
Guangxi Liuzhou Medicinal Materials Wholesale Station

    

    

    
      Pledgor:                                                                                                                        
      

    

    

    
      Guarantor:                                                                                                                      
      

    

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Special
Reminder: Prior to signing this contract, the Borrower and the security provider
shall carefully read all provisions of this contract; please pay special
attention to the part in black letter. If you have any questions or any part
that you do not understand, please promptly consult the Lender and
professionals. Once this contract is executed, it is deemed that each party
understands and agrees all provisions of this contract.

    

    Each
party of this contract, in accordance with relevant laws and regulations, on the
equal and voluntary basis, in order to stipulating obligations, hereby executes
this contract and agrees to comply with the provision of this
contract.

    

    Terms
of Loan

    

    Article 1
Type and Amount of Loan

    The
Lender, according to the application of the Borrower, agrees to issue
category       loan listed as below,
the amount is RMB1,600,000. (Amount in
words: RMB One Million Six Hundred Thousand). (In the event of any discrepancy
between the word and Arabic numerals amount, the word shall
prevail).

     

    A.  Individual
Automobile Consumptive Loan.

    B.   Individual
Comprehensive Consumptive Loan

    C.   Individual
Pledge Loan

    D.   Individual
Credit Loan

    E.   Individual
Business Loan

    F.   General
Commercial Student Loan

    G.  
Other:    Blank                                   
                               

     
 

    Article 2
Purpose of Loan

    The Loan
hereunder shall be used for the business and
turnover. Without written consent of the Lender, the Borrower shall not
use the loan for the other purposes. The Lender has the right to supervise the
use of loan.

    

    Article 3
Term of Loan

    The term
of loan hereunder is
96 months. The actual launch date and the maturity date shall be based on
the borrowing certificate. The borrowing certificate shall be a part of this
contract, and has the same legal effect.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Article 4
Interest Rate

     

    
      	
              4.1

            	
              The
      interest rate of the Contract is calculated at upwards/ 30%
      from the benchmark interest rate of the corresponding grade of the
      People’s Bank of China, accordingly the annual interest rate is 8.92%, and
      according to the formula as below:

            

    

     

    Monthly
Interest Rate = Annual Interest Rate/12, Daily Interest Rate = Annual Interest
Rate/360.

     

    
      	
              4.2

            	
              In
      case the People’s Bank of China adjusts the benchmark interest rate and
      such adjustment is applicable to the loan hereunder, the interest rate
      hereunder shall apply the new benchmark interest, and the interest rate of
      loan hereunder shall be re-calculated according to the terms set forth in
      Article 4.1; in case the benchmark interest rate is adjusted after the
      loan is issued, the interest rate of loan is calculated in accordance with
      category A set forth
      below:

            

    

     

    
      	
               
      

            	
              A.

            	
              In
      the event the term of loan is (or less than) one year, the interest rate
      stipulated in this contract shall prevail for loans with a life; in the
      event the term of loan is longer than one year, commencing January 1 of
      the next year after the date the benchmark interest rate was adjusted, the
      interest rate hereunder shall be based on the adjusted benchmark rate (in
      case the benchmark interest rate is adjusted twice or more than twice
      within one calendar year, the interest rate hereunder shall be base on the
      last adjusted benchmark rate) and the interest floating percentage set
      forth in Article 4.1, and the new interest rate shall be
      applied;

            

    

     

    
      
        	
                 
      

              	
                B.

              	The interest rate shall not be
      adjusted within the term of loan;

      

    

     

    
      
        	
                 
      

              	
                C.

              	
                In
      the event the term of loan is (or less than) one year, the interest rate
      stipulated in this contract shall prevail for loans with a life; in the
      event the term of loan is longer than one year, commencing January 1 of
      the next year after the date the benchmark interest rate was adjusted, the
      interest rate hereunder shall be based on the adjusted benchmark rate (in
      case the benchmark interest rate is adjusted twice or more than twice
      within one calendar year, the interest rate hereunder shall be base on the
      last adjusted benchmark rate) and the interest floating percentage set
      forth in Article 4.1, and the new interest rate shall be
      applied;

              

      

    

     

    Article 5
Issuance of Loan

     

    
      	
              5.1

            	
              The
      condition precedent for the Lender to issue or continue to issue the loan
      is: the security hereunder has effectuated and continues to be effective
      (excluding the credit loan), and the Borrower does not breach this
      contract.

            

    

     

    
      	
              5.2

            	
              The
      Borrower authorizes the Lender to issue the whole amount of loan into the
      account listed below. The interest of loan shall be calculated commencing
      the date of the actual date of
issuance.

            

    

     

    Account
Name: Tang
Huitian                                                                                                                          

     

    Account
No.: 2105454101207825877                                                                                                                                    

     

    Bank:
Longcheng Sub-branch
of Industrial and Commercial Bank of China   

     

    Article 6
Repayment:

     

    
      
        	
                6.1

              	
                Through
      consultation of both parties, the Borrower shall repay the loan in
      category    A   listed
      below:

              

      

       

    

     

    
       

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    A.     To
repay the same amount of principal and interest monthly (the interest calculated
monthly);

     

    
      	Monthly Amount of Principal and Interest Repayment =
      	 Principal of Loan x Monthly Interest Rate x
      (1+Monthly Interest Rate)Mo. For
      Repayment
	 	 (1+Monthly Interest Rate)Mo. For
      Repayment  - 1

    

                                                                                                                            

    B.     To
repay the same amount of principal monthly (the interest calculated
monthly);

     

    
      	Monthly Amount of Principal and Interest Repayment
      =	 Principal of Loan	
               

              + (Principal of Loan – Repaid Principal of Loan) x
      Monthly Interest Rate

            
	 	
               Months of Term of Loan

            	 

    

     

    C.     Repay
the same amount of principal monthly (the interest calculated
daily);

     

    
      
        	Monthly Amount of Principal and Interest Repayment
      =	 Principal of Loan	
                 

                + (Principal of Loan – Repaid Principal of Loan) x
      Daily Interest Rate x Actual days

              
	 	
                 Months of Term of Loan

              	 

      

    

     

    D.     One-off
repayment when due;

     

    E.     To
repay monthly, in accordance with Blank (month/
three month/ six month/ one-off).

     

    F.     Other:
Blank                                                                         

     

    
      	
              6.2

            	
              The
      Borrower is entitled a grace period. The grace period is 12 months,
      commencing the actual date of issuing loan. Within the grace period, the
      Borrower shall pay the interest monthly, and not repay the principal of
      loan; after the expiration of the grace period, the Borrower shall repay
      the principal and interest monthly.

            

    

     

    
      	
              6.3

            	
              The
      repayment date of every installment commences on the corresponding date of
      every installment of the next month after the actual date of issuance of
      loan; in the event there is no corresponding date, the repayment date
      shall be the last day of such installment. The repayment date of the last
      installment is the maturity date of
loan.

            

    

     

    
      	
              6.4

            	
              The
      Borrower designates a personal account opened with the Lender listed below
      to be the account for repayment:

            

    

     

    Account
Name: Tang
Huitian                                                                                                                          

     

    Account
No.: 2105454101207825877                                                                                                                                    

     

    Bank:
Longcheng Sub-branch
of Industrial and Commercial Bank of China   

     

    
      	
              6.5

            	
              Prior
      to the repayment date of every installment, the Borrower shall deposit
      full amount of the principal and interest of loan that shall be repaid,
      and authorize the Lender to withdraw from the account for repayment on the
      repayment date of every installment; in the event the Borrower has
      principal and interest of loan or other expenses that have not been
      repaid, the Borrower shall timely deposit the aforesaid into the account
      for repayment, and authorize the Lender to withdraw at any time. In the
      event the amount in the account for repayment is not enough for the
      payment due hereunder, the Lender shall withdraw in the sequence of
      expenses, interests and then the
principal.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              6.6

            	
              In
      the event the account for repayment is reported loss, frozen, ceased
      paying, closed, or the Borrower needs to change the account for repayment,
      the Borrower shall conduct a procedure of change of account for repayment
      with the Lender. Prior to the effectuation of the change of account for
      repayment, if the original account for repayment has no adequate amounts
      in it for withdrawal, the Borrower shall repay the loan at the counter of
      the Lender. In case the Borrower does not conduct the procedure of change
      of account for repayment, or repays the loan at the counter of the Lender
      in time, and does not repay the adequate amount of the principal and
      interest due and other expenses, the Borrower shall be liable for default
      liabilities.

            

    

     

    Article 7
Early Repayment

     

    
      	
              7.1

            	
              In
      the event the Borrower earlier repays the loan in whole or in part, it
      shall submit a 15-day written notice prior to the proposed earlier
      repayment date.

            

    

     

    
      	
              7.2

            	
              The
      Borrower shall fulfill the following conditions for the earlier
      repayment:

            

    

     

    
      	
               
      

            	
              A.

            	
              The
      Borrower shall pay the Lender the indemnification in accordance with the
      standard: Indemnification for
      earlier repayment = (Every time) Actual amount of earlier repayment x Monthly interest
      rate.

            

    

     

    
      	
               
      

            	
              B.

            	
              In
      the event the earlier repayment is partial repayment, the amount of
      repayment shall not be less than:  RMB10,000.

            

    

     

    
      	
               
      

            	
              C.

            	
              When
      the Borrower earlier repays the loan, no payment due but not yet being
      repaid shall exist, including but not limited to the principal, interest,
      punitive interest, default penalty, indemnification and other
      expense.

            

    

     

    
      
        	
                 
      

              	
                D.

              	Blank                                     
      

      

    

     

    
      	
              7.3

            	
              The
      interest of the earlier repayment shall be calculated based on the agreed
      interest rate set forth in Article 4 and the actual days using the loan;
      if the Borrower earlier repays the full amount of the principal of loan,
      it shall repay full amount of
interest.

            

    

     

    
      
        	
                7.4

              	
                In
      the event the term of loan changes due to the earlier repayment, the
      interest of loan that is not repaid shall be based on category   
      A    listed
      below:

              

      

       

    

    
      
        	
                 
      

              	
                A.

              	To be calculated in accordance
      with the original interest rate of the
loan;

      

    

     

    
      	
               
      

            	
              B.

            	
              Commencing
      the date the term of loan is shortened, the interest rate shall be
      calculated in accordance with the benchmark interest rate corresponding to
      the actual term after being adjusted, and the floating percentage set
      forth in Article 4.1, provided that the interest already received before
      the term is shortened shall not be retroactively
  adjusted.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Article 8
Extension of Term

     

    In the
event the Borrower cannot repay the loan hereunder on schedule and needs to
extend the term of loan, it shall submit to the Lender a 30-day written notice
prior to the maturity date of loan. After the Lender reviews and agrees the
extension of term, both parties shall enter into a extension agreement. If the
Lender does not agree to extend the term, the Borrower shall still repay the
principal and interest of loan in accordance with the contract.

     

    Article 9
Punitive Interest

     

    
      	
              9.1

            	
              In
      the event the Borrower does not repay the loan pursuant to the agreed date
      (including the situation that the maturity date of the loan is
      accelerated), the Lender has the right to charge a daily interest based on
      the punitive interest rate; with respect to the interest that cannot be
      paid on schedule, the Borrower shall pay a compound interest calculated
      based on the punitive interest rate. The punitive interest rate shall be
      calculated in accordance with the interest set forth in Article 4 plus
      50%.

            

    

     

    
      	
              9.2 

            	
              The
      loan that the Borrower does not use in accordance with the contract, the
      Lender has the right to charge a daily interest calculated in accordance
      with the punitive interest rate; with respect to the interest that cannot
      be paid on schedule, the Borrower shall pay a compound interest calculated
      based on the punitive interest rate. The punitive interest rate shall be
      calculated in accordance with the interest set forth in Article 4 plus
      50%.

            

    

     

    
      	
              9.3

            	
               In
      the event the interest of loan is adjusted in accordance with Article 4.2,
      the punitive interest rate shall be adjusted accordingly; its circle of
      adjustment shall be consist with the adjusted circle of
      interest.

            

    

    

    Article
10 Security to Loan

    

    
      	
              10.1

            	
              Except
      for the credit loan, the security provider voluntarily provides the Lender
      with a legal and valid mortgage
      (Guarantee/ Mortgage/ Pledge) to secure the loan. The specific
      agreements shall be stipulated in the relevant terms of security
      hereunder. In the event the security of loan is a maximum security, the
      Lender and the security provider shall enter into a maximum security
      agreement; in such case the relevant security terms in this contract shall
      no longer apply.

            

    

    

    
      	
              10.2

            	
              In
      case any adverse change of the security hereunder occurs, the Borrower
      shall, as per the Lender’s request, timely provides legal and valid
      security that is acceptable to the
Lender.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
 

    Article
11 Default and Liability of Default

    

    
      	
              11.1

            	
              If
      any or several of the events set forth below occur, the Borrower
      constitutes default:

            

    

    
      	
               
      

            	
              A.

            	
              The
      Borrower does not fully comply with or fulfill any commitment, guarantee,
      obligation or liability hereunder;

            

    

    
      
        	
                 
      

              	
                B.

              	The Borrower or the
      security provides false information or conceals material
  facts;

      

    

    
      
        	
                 
      

              	
                C.

              	The Borrower died or is
      declared dead, missing or is declared missing, or becomes a person with
      the limited capability or lost the civil capability, and has no heirs,
      devisees, custodians or property trustees, or his heirs, devisees,
      custodians or property trustees refuse to fulfill obligations hereunder on
      behalf of the Borrower;

      

    

    
      	
               
      

            	
              D.

            	
              The
      Borrower is involved in criminal cases, lawsuits, arbitrations, disputes,
      and the aforesaid cause adverse effects to his ability of
      repayment;

            

    

    
      	
               
      

            	
              E.

            	
              The
      Borrower’s any other debts are not repaid when due (including being
      declared due prior to its maturity date), or the Borrower does not fulfill
      his security liability or other obligations, and has affected or mat
      affect the Borrower to fulfill his obligations
  hereunder;

            

    

    
      
        	
                 
      

              	
                F.

              	If the event set
      forth in Article 10.2 occurs, but the Borrower does not provide a new
      security acceptable to the Lender;

      

    

    
      	
               
      

            	
              G.

            	
              With
      respect to the individual business loan, the Borrower’s business entity
      refuses or does not coordinate with the Lender’s investigation, inquiry
      and examination on the Borrower’s financial condition and business
      operation;

            

    

    
      
        	
                 
      

              	
                H.

              	Other events affect
      or may affect the full repayment of the principal and interest of loan on
      schedule.

      

    

     

    
      	
              11.2

            	
              If
      the Borrower does not repay the full amount of principal and interest of
      loan for consecutively three months, or the aforesaid situation has
      occurred six times, or other default events occur, the Lender has the
      right to cease issuing the loan that has not been issued, declare the
      maturity date of loan accelerated, request the Borrower to earlier repay
      the whole or part of loan, and the accrued interests, punitive interest
      and other fees until the cancellation of the
  contract.

            

    

    

    
      	
              11.3

            	
              In
      the event the Borrower defaults, except as otherwise specified in Article
      11.2, the Lender has the right to adopt other measures in accordance with
      the contract and laws.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Article
12 Debit

    

    
      	
              12.1

            	
              In
      the event the Borrower does not repay the principal, interest, punitive,
      default penalty, indemnification or other expenses when due (including the
      maturity date of loan is accelerated), the Lender has the right to debit a
      corresponding payments in all accounts the Borrower opened with Industrial
      and Commercial Bank of China and its branches, provided that the Lender
      shall notify the Borrower.  In the event the Borrower’s contact
      information changes and the Lender cannot notify the Borrower by phone or
      mail, the Lender may use notarized delivery and other measures acceptable
      in accordance with law to fulfill the obligation of
      notification.

            

    

    

    
      	
              12.2

            	
              In
      the event the Lender debits the time deposit prior to its maturity, if the
      whole amount needs to be debited prior to the maturity, the interest shall
      be calculated in accordance with the published interest rate of the demand
      deposit on the date of debiting; if only a part of amount needs to be
      debited prior to its maturity, the interest of such part shall be
      calculated in accordance with the published interest rate of the demand
      deposit, the interest of remaining amount shall be calculated in
      accordance with the interest of the date when such time deposit was
      deposited. The loss arising from the debiting shall be assumed by the
      Borrower.

            

    

    

    Article
13 Expenses

    

    The expenses of registration,
notarization, appraisal in connection with the execution and performance of this
contract, and the legal counsel expenses, appraisal expenses, and auction
expenses that the Lender pays to exercise its rights as the Borrower and the
security provider do not fulfill their obligations in accordance with the
contract shall be assumed by the Borrower. The Lender may claim fees it
prepays for protecting its own interest on behalf of the Borrower at any time,
and charges interests in accordance with the interest rate of demand deposit,
commencing the date such fees were paid.

    

    Article
14 Joint Borrowing

    

    In the
event there are two or more persons jointly borrow money, any of the borrowers
shall comply with the obligations hereunder, and assumes the joint and several
liabilities to repay the full amount of loan. The Lender has the right to
request any of the borrowers to repay the principal and interest that has not
been repaid and other expenses that have not been paid.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Terms
of Mortgage

    

    In the
event the Borrower or a third party provides a mortgage, the Mortgagor shall
comply with the terms as follows:

    

    Article
15 Mortgaged Properties

    

    
      	
              15.1

            	
              The
      Mortgagor voluntarily provides the mortgage to the Lender. The mortgaged
      properties are listed in the “Mortgaged Property List”. The “Mortgaged
      Property List” as an appendix of this contract has the same legal effect
      as this contract.

            

    

    

    
      	
              15.2

            	
              The
      value of the mortgaged properties stipulated in the “Mortgaged Property
      List” shall not be the appraisal basis when the Lender disposes such
      mortgaged properties, and shall not constitute any limit to the Lender to
      exercise its mortgage right.

            

    

    

    
      	
              15.3

            	
              The
      fructus arising from the mortgaged properties, the ancillary objects and
      rights, fixtures of mortgaged properties, and the insurance compensations,
      compensations, indemnifications or other form of substitutes shall be with
      the scope when the Lender exercises its mortgage
  right.

            

    

    

    
      	
              15.4

            	
              The
      Mortgagor shall carefully retain and use the mortgaged properties, and
      guarantees the completeness of the mortgaged properties. The Lender has
      the right to examine the use and management of the mortgaged properties at
      any time. During the term of the mortgage, if the Mortgagor leases the
      mortgaged properties, it shall notify the Lender and inform the lessee the
      fact of the mortgage, and the term of the lease shall not be longer than
      the term of the loan. In the event the mortgaged properties are disposed
      with other measures, the Mortgagor shall obtain a prior written consent of
      the Lender and disclose the fact of mortgage to the purchaser and other
      relevant persons. The proceeds obtained from selling the mortgaged
      properties shall be handled in accordance with Article
    15.7.

            

    

    

    
      	
              15.5

            	
              In
      the event the mortgaged properties is or may be damaged or lost, the
      Mortgagor shall timely notify the Lender, and adopt measures to prevent
      the loss from increasing, and timely submit to the Lender the certificate
      of damage or loss issued by the competent
  authorities.

            

    

    

    
      	
              15.6

            	
              In
      the event the activities of the Mortgagor will cause the value of the
      mortgaged properties decreased, the Mortgagor shall timely cease such
      activities; if the value of mortgaged properties decreases, the Mortgagor
      shall timely restore the value of mortgaged properties, or provide the
      mortgaged properties, of which the value equals to the decreased
      value.

            

    

    

    
      	
              15.7

            	
              With
      respect to the compensations, indemnifications, insurance compensations
      the Mortgagor received and the proceeds from disposing the mortgaged
      properties, the Lender has the right to choose the following measures to
      handle them:

            

    

        

    
      	 	A. To
      repay or earlier repay the Borrower’s debts hereunder;
	
               
      

            	
              B.
      To deposit them into the Lender’s designated account to secure the
      fulfillment of the Borrower’s debt
obligations;

            

    

    
      	
               
      

            	
              C.
      To repair the mortgaged properties, in order to regain its
      value;

            

    

    
      	
               
      

            	
              D.
      Other measures both parties agree.

            

    

    If the
Mortgagor or the Borrower provides a new mortgaged property that reaches the
Lender’s requirements, the Mortgagor may freely dispose the proceeds listed
above.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              15.8

            	
              In
      the event the Mortgagor conceals the dispute in regard to the ownership of
      the mortgaged properties, the facts that the mortgaged properties is
      seized, attached, or has been mortgaged or leased  to a third
      party, and causes the Lender’s loss, the Mortgagor shall indemnify the
      full amount of the Lender’s loss.

            

    

    

    Article
16 Scope of Mortgage

    

    The scope
of mortgage shall include: the principal, interest, punitive interest, compound,
and default penalty, indemnification under this contract, and the expenses of
the Lender for exercising its rights under this contract, and all other expenses
shall be paid.

    

    Article
17 Registration of Mortgage

    

    
      	
              17.1

            	
              After
      the execution of this contract, the Mortgagor and the Lender shall timely
      register the mortgage with the competent authority, the mortgage
      registration certificate shall be held by the Lender before the loan is
      fully repaid; any change on the mortgage registration that requires a
      change registration to be completed, the Mortgagor and the Lender shall
      conduct a change registration.

            

    

    

    
      	
              17.2

            	
              After
      all of obligations hereunder have been fulfilled in accordance with the
      contract; the Lender shall proactively assist the Mortgagor to conduct a
      cancellation registration.

            

    

    

    Article
18 Disposition of Mortgaged properties

    

    
      	
              18.1

            	
              If
      any of the following events occurs, the Lender has the right to auction,
      sell, the mortgaged properties, and has the priority to take the proceed
      or handles such proceed in accordance with Article 15.7; or set off the
      debt the Borrower owed after the Lender negotiate with the
      Mortgagor:

            

    

    
      	
              A.

            	
              
                 The
      Borrower does not repay the debt when the loan due (including the maturity
      being accelerated);

              

            

    

    
      	
               
      B.

            	
               If
      any of events stipulated in Article 15.6 occurs, the Mortgagor does not
      timely restore the value of mortgaged properties or provide the
      corresponding mortgaged properties, of which its value equals to the
      decreased value;

            

    

    
      
        	
                 
      C. 

              	 Other situation that the
      Lender may legally dispose the mortgaged
properties.

      

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
              18.2

            	
              If
      after repaying all debts the Borrower owed within the scope of mortgage by
      using the proceeds of disposing the mortgaged properties, and there is
      still reaming proceed, the Lender shall return the remaining proceed to
      the Mortgagor.

            

    

    

    
      	
              18.3

            	
              The
      Mortgagor shall proactively coordinate with the Lender when the Lender
      disposes the mortgaged properties. With respect to the mortgaged house of
      Mortgagor and the family member he supports, after the People’s Court
      decides that such house to be auctioned, sold or to be set off the debt,
      the Mortgagor shall empty such house within 6 months. In the event the
      Lender agrees to provide temporary housing to the Mortgagor, the Mortgagor
      shall pay the rent; the accrued rent shall be first deducted from the
      auction or sales proceed of the
house.

            

    

    

    
      	
              18.4

            	
              The
      expense for the Lender to realize its claim shall be first deducted from
      the auction or sales proceed.

            

    

    

    Terms
of Pledge

    

     In the event the
Borrower or the third party provides a pledge, the Pledgor shall comply with the
terms as follows:

    

    Article
19 Collateral

    

    
      	
              19.1
      

            	
              The
      Pledgor voluntarily provides the pledge to the Lender. The collateral is
      listed in the “Collateral List”. The “Collateral List” as an appendix of
      this contract has the same legal effect as this
  contract.

            

    

    

    
      	
              19.2

            	
              The
      value of the collateral stipulated in the “Collateral List” shall not be
      the appraisal basis when the Lender disposes such collateral, and shall
      not constitute any limit to the Lender to exercise his pledge
      right.

            

    

    

    
      	
              19.3

            	
              The
      fructus arising from the collateral, and the insurance compensations,
      compensations, indemnifications or other form of substitutes shall be with
      the scope when the Lender exercises its pledge
  right.

            

    

    

    
      	
              19.4

            	
              In
      the event the value of collateral has adverse changes, the Lender has the
      right to request the Borrower or the Pledgor to make up the value to the
      collateral. The Borrower and the Pledgor shall make up the value within
      the required time frame.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    
 

    
      	
              19.5

            	
              In
      the event the collateral is delivered to the Lender, the Lender shall be
      obligated to carefully retain the collateral. In the event the collateral
      is lost or damaged, the Lender shall be liable for the civil liabilities.
      If the Lender is not able to carefully retain the collateral and may cause
      its loss or damage, the Pledgor may request the Lender to deposit the
      collateral or request to earlier repay the debt and the Lender shall
      return the collateral.

            

    

     

    
      	
              19.6

            	
              With
      respect to the compensations, indemnifications, insurance compensations
      the Pledgor received and the proceeds from disposing the collateral, the
      Lender has the right to dispose them in the following
      measures:

            

    

    
      
        	 A.	 To
      repay or earlier repay the Borrower’s debts hereunder;
	
                 
      B.

              	 To
      deposit them into the Lender’s designated account to secure the
      fulfillment of the Borrower’s debt
obligations;

      

    

    
      
        	 C.	 To
      repair the collateral, in order to regain its value;
	
                 
      D.

              	 Other
      measures both parties agree.

      

    

    In the
event the Pledgor or the Borrower provides the new collateral that reaches the
Lender’s requirements, the Pledgor may freely dispose the proceeds listed
above.

    

    Article
20 Scope of Pledge

     

    The scope
of pledge shall include: the principal, interest, punitive interest, compound,
and default penalty, indemnification under this contract, the expenses for
retaining the collateral, and for exercising the Lender’s rights under this
contract, and all other expenses shall be paid by the Borrower.

    

    Article
21 Delivery and Registration

    

    
      	
              21.1

            	
              After
      the execution of the contract, the Pledgor shall deliver the collateral or
      the certificate of right to the Lender, after the Lender inspects and
      accepts the collateral or certificate of right, it shall convey the
      certificate for receipt of pledge. The fees for retaining the collateral
      shall be assumed by the Pledgor.

            

    

    

    
      	
              21.2

            	
              If
      the collateral hereunder shall be registered in accordance with laws, the
      Pledgor and the Lender shall timely conduct the procedure of pledge
      registration with the relevant registration agency; any change on the
      pledge registration that requires a change registration to be completed in
      accordance with laws, the Pledgor and the Lender shall timely conduct a
      change registration. After all of obligations hereunder have been
      fulfilled by the Borrower in accordance with the contract; the Lender
      shall proactively assist the Pledgor to conduct a cancellation
      registration and return the relevant ownership documents to the
      Pledgor.

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Article
22 Disposition of Collateral

    

    
      	
              22.1

            	
              If
      any of the following events occurs, the Lender has the right to auction,
      sell, cash in, withdraw the collateral, and take the proceed with
      priority, or handle the proceed with other measures set forth in
      accordance with Article 19.6; or after negotiate with the Pledgor to set
      off the debt the Borrower owed with the
  collateral:

            

    

    
      	
              A.

            	
               The
      Borrower does not repay the debt when the loan due (including the maturity
      being accelerated);

            

    

    
      	
               
      B.

            	
               If
      any of events stipulated in Article 19.4 occurs, the Pledgor or the
      Borrower does not timely make up the value of
  collateral;

            

    

    
      
        	
                C.

              	 The
      Lender and the Pledgor agree to cash in or withdraw the collateral to
      repay the debt due;

      

      
        	
                 
      D. 

              	 Other
      situation that the Lender may legally dispose the
  collateral.

      

    

     

    
      	
              22.2

            	
              In
      the event the date of the cash-in or withdrawal to the collateral is prior
      to the expiration of the period for fulfilling debt obligations, the
      Lender may cash in or withdraw on the maturity date of the collateral, and
      negotiates with the Pledgor to earlier repay the secured debt with the
      proceed or deposit such proceed into the Lender’s designated account to
      secure the fulfillment the debt obligation of the
  Borrower.

            

    

    

    
      	
              22.3

            	
               In
      the event the date of the cash-in or withdrawal to the collateral is later
      than the expiration of period for fulfilling debt obligations, and the
      Borrower has not repaid the debt 30 days after the expiration of the
      period for fulfilling the debt obligations, the Lender has the right to
      cash in or withdraw prior to the maturity date of the collateral, and use
      the proceed to repay the secured debt with the proceed. The loss arising
      from the earlier cash-in or withdrawal shall be assumed by the Pledgor; if
      the maturity date of collateral is within 30 days upon the expiration of
      the period for fulfilling the debt obligations, the Lender shall dispose
      the collateral on the maturity date of collateral in accordance with
      Article 21.1.

            

    

    

    
      	
              22.4

            	
              If
      after repaying all debts the Borrower owed within the scope of pledge by
      using the proceeds of disposing the collateral, and there is still reaming
      proceeds, the Lender shall timely return the remaining proceed to the
      Pledgor.

            

    

    

    Terms
of Guarantee

    

    In the
event the loan hereunder is guaranteed by a third party, the guarantor agrees to
comply with the terms as follows:

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Article
23: Method of Guarantee

    

    The
Guarantor voluntarily provides the Lender with the joint and several liability
guarantee.

    

    Article
24 Scope of Guarantee

    

    The scope
of guarantee shall include: the principal, interest, punitive interest,
compound, and default penalty, indemnification under this contract, the expenses
for exercising the Lender’s rights under this contract, and all other expenses
shall be paid by the Borrower.

    

    Article
25 Term of Guarantee

    

    The term
of guarantee is 2 years commencing the maturity date of loan hereunder; in the
event the Lender announces that the maturity date of loan is accelerated, the
term of guarantee is 2 years commencing the accelerated maturity
date.

    

    Article
26 Debit

    

    In
the event the Guarantor does not fulfill the guarantee obligation in accordance
with the contract, the Guarantor authorizes the Lender to debit the
corresponding amount from all accounts the Guarantor opened with Industrial and
Commercial Bank of China and its branches. If the Lender debits the Guarantor’s
time deposit, such debit shall be exercised in accordance with Article 12.2. The
Lender shall notify the Guarantor when conducting the debit.

    

    Other
Terms

    

    Article
27 Transfer

    

    
      	
              27.1

            	
              The
      Lender may transfer its rights hereunder to the other party without
      obtaining consents of the Borrower and the security provider. The Lender
      shall notify the Borrower and the security provider such transfer. The
      aforesaid notification may be conducted by a written notice or public
      press release. In the event the mortgage registration or pledge
      registration needs to be changed due to the Lender’s transfer of right,
      the Mortgagor and Pledgor shall coordinate with the
  Lender.

            

    

    

    
      	
              27.2

            	
              Without
      the written consent of the Lender, the Borrower and the Guarantor shall
      not transfer any rights and obligations under the contract to other
      parties.

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Article
28 Covenant of Guarantor

    

    The
Guarantor covenants: In case any of the following events occurs, the Guarantor
shall continue to fulfill the guarantee obligation in accordance with the
contract without obtaining the Guarantor’s consent:

    

    
      	
              28.1

            	
              The
      Borrower and the Lender negotiate to change the borrowing terms, but the
      liabilities of the Borrower do not
increase;

            

    

    

    
      	
              28.2

            	
               The
      Lender announces that the maturity date of loan is
      accelerated;

            

    

    

    
      	
              28.3

            	
               The
      interest is increased due to the adjustments of interest rate of loan
      pursuant to Article 4;

            

    

     

    
      
        	
                28.4

              	
                 The
      Lender transfers his rights under this contract to any other
      party.

              

      

    

    
Article
29 Insurance

    

    
      	
              29.1

            	
              If
      the Lender requires, the Mortgagor/ Pledgor shall obtain insurances for
      mortgaged properties/ collateral. The term of insurance shall not be
      shorter than the term of loan, and the amount of insurance shall not lower
      than the amount of loan. The insurance premium shall be
      assumed by the insurance
applicant.

            

    

    

    
      	
              29.2
      

            	
              The
      Lender shall be specified to be the first beneficiary in the insurance
      policy, and there shall not be any terms in the insurance to restrain the
      Lender’s interests. A special agreement shall be stipulated in the
      insurance policy that once the insured event occurs, the insurer shall
      directly pay the insurance compensation to the Lender’s designated
      account. The insurance compensation shall be handled pursuant to Article
      15.7 or Article 19.6 hereunder.

            

    

    

    
      	
              29.3

            	
              Before
      Lender’s claims under this contract have not been paid in full, the
      Mortgagor/ Pledgor shall not cease or rescind the insurance for any
      reason; in case the insurance is ceased or rescinded, the Lender has the
      right to conduct the insurance procedure on behalf of the Mortgagor/
      Pledgor, and the relevant expenses shall be assumed by the Borrower and
      the Mortgagor/Pledgor.

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Article
30 Notarization

    

    If the
Lender requires, each party shall conduct an enforcement notarization to this
contract. The Borrower and the security provider agree that after being
notarized, this contract has the effect of enforcement. In case the Borrower or
the security doe not perform obligations hereunder, the Lender may apply for the
execution to the competent People’s Court in accordance with laws.

    

    Article
31 Notice

    

    In case
any of the following events occurs, the Borrower and the security provider shall
immediately notify the Lender:

     

    
      	
              31.1

            	
              The
      Borrower does not repay any other debts when due (including the maturity
      date being declared accelerated), or the Borrower does not fulfill the
      security liability or other obligations he shall
  assume;

            

    

    

    
      	
              31.2

            	
              To
      be involved in the criminal case, litigation, arbitration, disputes, and
      such event adversely affects his ability to repay
  debts;

            

    

     

    
      
        	
                31.3

              	Changes of the address, contact information and company
      occur;

      

    

    

    
      	
              31.4

            	
              The
      mortgaged properties or collateral is seized, frozen, confiscated, and
      included in the demolition area or a dispute of ownership
      occurs;

            

    

    

    
      	
              31.5

            	
              In
      the event the security provider is a legal entity or other origination,
      changes on its operation system occur, including but not limited to:
      shareholding reform, contracting, leasing, merger, separation, joint
      operating, joint venture or cooperation; cessation of business,
      dissolution, suspension of business for reform, cancellation of business
      license, revocation of registration of administration for industry and
      commerce; changes on the articles of association, legal representative,
      and shareholding.

            

    

     

    
      
        	
                31.6

              	Other events affect or may affect the full repayment of
      principal and interest of loan on
schedule.

      

    

     

    Article
32 Confidentiality

    

    The
Lender shall, in accordance with laws, keep the non-public information provided
by the Borrower and security provider for execution and performance of this
contract confidential, except as otherwise listed as below:

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	
              32.1

            	
              The
      Lender has the right, in accordance with the relevant laws, regulations or
      other regulatory documents or requests of the financial supervisory
      institute, to provide the information in connection with this contract and
      other relevant information to the  Personal Credit Information
      Database, Enterprise Credit Information Database of People’s Bank of Chin,
      and other credit information database established in accordance with laws,
      for the qualified organizations and individuals to search and use. The
      Lender also has the right for the purpose of execution and performance of
      this contract, through the  Personal Credit Information
      Database, Enterprise Credit Information Database of People’s Bank of Chin,
      and other credit information database established in accordance with laws,
      to search the relevant information of the Borrower and the security
      provider.

            

    

    

    
      	
              32.2

            	
              In
      the event the Borrower and  the security provider default under
      this contract, the Lender has the right, based on the situation of
      default,  to disclose the information related to default to the
      public, or for the purpose of collection of debts, to provide the relevant
      information to the collecting
organizations.

            

    

    

    Article
33 Severability

    

    In the
event any provision of this contract is void or unenforceable, that provision
shall not to cause the invalidity or unenforceability of the remainder of this
contract, nor affect the enforceability of the entire contract. Among which, if
the section of Terms of Loan is void/ rescinded or canceled, in whole or in
part, the enforceability of section of Terms of Mortgage, Terms of Pledge or
Terms of Guarantee shall not be affected, the security provider shall assume the
security liabilities.

    

    Article
32 Dispute Resolution

    

    If any
dispute arising from the performance of this contract, each party shall
proactively negotiate to reach solution; in the event the parties fail to reach
any solution,   the dispute shall be solved in accordance with
Article 34.2:

    
       

      
        
          	
                  34.2

                	
                  
                    To
      submit such dispute to Blank         
      . The
      arbitration commission will conduct the arbitration in Blank                 
      .

                  

                

        

      

       

    

    34                      Blank                               

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    Article
35 Miscellaneous

    

    
      	
              35.1

            	
              The
      Lender’s non-exercise, partial exercise or deferring exercise of any right
      under this contract shall not constitute a waiver or change to such right
      or other rights, nor affect the Lender’s further exercise of such right or
      any other right.

            

    

    

    
      	
              35.2

            	
              The
      title of the provisions of this contract is solely for easy search, and
      shall not constitute any limitation and effect to the content and
      interpretation of terms of this contract. The “security provider”
      hereunder refers to the Mortgagor, Pledgor and Guarantor, respectively; in
      the event there are two or more  types of security under this
      contract, the “security provider” refers to all parties providing the
      security under this contract.

            

    

    

    
      	
              35.3

            	
              This
      contract becomes effective upon the execution of each party. In case the
      mortgage or pledge needs to be registered or delivered to effectuate as
      required by laws, the relevant terms are formed upon the execution, and
      become effective upon the date of registration or
  delivery.

            

    

    

    
      	
              35.4

            	
              This
      contract consists of four original
      copies, the parties of this contract and the mortgage registration
      authority each holds one copy. All original copies of this contract have
      the same legal effect.

            

    

    

    Article
36 Supplemental Provisions

     

                      Blank                    

                      Blank                    

                      Blank                    

                      Blank                    

                                      

    The
Lender had brought attention to the Borrower and the security provider that with
respect to each provision, especially to the provisions in black letter, they
have comprehensive and accurate understanding; the Lender has explained the
relevant provisions as per requests of the Borrower and the security provider.
The Borrower and the security provider confirm that they have no
misunderstanding or doubts to the content of this contract.

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    Mortgaged
Property List

    

    Real
Estate Mortgage

    Mortgagor:
Guangxi Liuzhou Medicinal Materials Wholesale Station Guigang
Sub-station

    Coverage:
877.61 square meters

    Value:
RMB3,410,991

    Address:
Building 1, Liuzhou Medicinal Materials Wholesale Station Guigang Sub-station,
Zhenjing North Ave, Gui Town, Gangbei District, Guigang city

     

     

    
 

    
      Lender:
Liuzhou City Longcheng Sub-branch of Industrial and Commercial Bank of China
(with signature and seal)

    

    

    Borrower:
Tang Huitian (with signature)

    

    
      Mortgagor:
Guigang Sub-station of Guangxi Liuzhou Medicinal Materials Wholesale Station
(with signature and seal)

    

    

     Date
of Execution: February 8, 2007

     

    
 

     

     

    19

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