Document:

EXHIBIT
10.6

     

    LEASE
CONTRACT

    

    Lessor: General
Tobacco Group Corporation.

    Business
License No:

    Address:
No. 80 Jiangjun Road, Jinan

    Legal
representative: Jiang Haiyan

    

    Lessee:
Shandong Yaoyuan Pharmaceutical Company

    Business
License No.:

    Address:

    Legal
representative: Song Yanliang

    

    Party A
and Party B agree to conclude the contract through friendly negotiation with
regards to the lease of workshop according to the Contract Law of the People’s
Republic of China and relevant regulations.

     

    
      	
              I.

            	
              Status
      of leased workshop

            

    

     

    
      
        	
                (1)

              	
                The
      Lessor leases the workshop and relevant facilities located in No 80
      Jiangjun Road, Licheng District, Jinan (hereinafter referred to as “The
      Property”) to the Lessee.

              

      

    

     

    
      
        	
                (2)

              	
                The
      leased area of the workshop is 15532.548 square
  meters.

              

      

    

     

    
      
        	
                (3)

              	
                The
      Lessor shall guarantee that the quality of The Property complies with the
      safety conditions needed by the
Lessee.

              

      

    

     

    
      
        	
                (4)

              	
                The
      Property is used as the warehouse and office administration of the Lessee.
      If the Lessee intends to transfer the using purpose, it shall get the
      written permission of the Lessor, and the transfer charges shall be
      reported by the Lessee according to the relevant national regulations; the
      Lessee shall assume all the charges owing the change of the functions;
      besides, the Lessor will not compensate for the termination caused by any
      reasons.

              

      

    

     

    
      	
              (5)

            	
              It
      adopts the method of chartering for The
  Property.

            

    

     

    
      	
              (6)

            	
              See
      the detailed conditions of The Property in the attached
      drawings.

            

    

     

    
      	
              II.

            	
              Cooperation
      term

            

    

     

    
      	
              (I)

            	
              The
      cooperation term is set as three years temporarily, and the contract shall
      be signed once a year. The lease term of this contract is one year, from
      July 1, 2009 to June 30, 2010. The contract covers the validity period of
      one year, and it shall be continued through the negotiation of the two
      parties after one year, and the rent shall be increased by 5%
      annually.

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              (II)

            	
              The
      Lessor has right to take back the workshop after the lease term expires,
      and the Lessee shall return The Property in time and move out of workshop
      in advance of two weeks; if the Lessee needs to extend the lease term, it
      shall propose within two months in advance of the expiry date, and the two
      parties shall resign the contract about the lease matters after approved
      by the Lessor. The Lessee has the priority to lease The Property under the
      same conditions.

            

    

     

    
      	
              III.

            	
              Delivery

            

    

     

    After the
effective date of the contract, the Lessor shall deliver The Property by stages
to the Lessee (see the detailed delivery plan in the attachment), and the Lessee
agrees to lease according to the status of The Property and relevant facilities.
The two parties shall sign the transfer list for the status of the
infrastructure when transferring and attach the photos.

     

    
      	
              IV.

            	
              Rent

            

    

     

    
      	
              (1)

            	
              The
      deposit for lease of the contract is 200,000 Yuan (Say Two Hundred
      Thousand Only).

            

    

     

    
      	
              (2)

            	
              Rent

            

    

     

    The rent
is 0.25 Yuan for each square meter one day, and is calculated by the actual
delivered area.

     

    
      	
              (3)

            	
              Water
      & electricity fees

            

    

     

    The
Lessee shall pay the water & electricity fees according to the actual usage
and unified charging standard of the Lessor. The unit price of water is 3.8
Yuan/Cubic Meter, and the unit price of electricity is 1.05
Yuan/Degree.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      List
of Leased Warehouse Area of Old Plant Area

    

     

    
      
        
          
            
              
                	
                        No. 

                      	 	
                        Name of building

                      	 	
                        Usable lease area (square meter)

                      
	 
      	 	 
      	 	 
      
	
                        1

                      	 	
                        1/F
      Finished Product Warehouse (molding workshop)

                      	 	
                        1337.42

                      
	 
      	 	 
      	 	 
      
	
                        2

                      	 	
                        2/F
      Finished Product Warehouse

                      	 	
                        1543.99

                      
	 
      	 	 
      	 	 
      
	
                        3

                      	 	
                        3/F
      Finished Product Warehouse

                      	 	
                        1195.148

                      
	 
      	 	 
      	 	 
      
	
                        4

                      	 	
                        4/F
      Finished Product Warehouse

                      	 	
                        1463.828

                      
	 
      	 	 
      	 	 
      
	
                        5

                      	 	
                        5/F
      Finished Product Warehouse

                      	 	
                        1463.828

                      
	 
      	 	 
      	 	 
      
	
                        6

                      	 	
                        1-4/F
      Material Warehouse

                      	 	
                        5690.62

                      
	 
      	 	 
      	 	 
      
	
                        7

                      	 	
                        Wrapped
      Box Workshop

                      	 	
                        858.28

                      
	 
      	 	 
      	 	 
      
	
                        8

                      	 	
                        Jiuzhou
      Paper Warehouse

                      	 	
                        903.834

                      
	 
      	 	 
      	 	 
      
	
                        9

                      	 	
                        Bicycle
      Shed

                      	 	
                        1075.6

                      
	 
      	 	 
      	 	 
      
	
                        10

                      	 	
                        Total

                      	 	
                        15532.548EXHIBIT 10.7

House Ownership Certificate

J.F. (L.C)Z.No. 50775

 

 

 

To whom it may concern:

  

According to Constitution of the PRC, this is to protect the legal interest of the house owner who applied to register for the listed house; it is the truth through investigation, and thus is issued this certificate.

Jinan Real Estate Administration

 

 

 

	

House owner

	

 

	

 

	

 

	
 
	

 

	

By the

	

Co-owner of

ownership

	

 

	

Jinan Cigarette Factory

	

 

	

Nature of ownership

Property type

	

 

	

entire

people

	

Address: 

	

 

	

 

	

 

	

No. 80, Daqiao Road, Jinan City

	

 

	

Land No.

	

 

	

 

	

Status of

house

 

	

 

	

Building

No.

	

 

	

Rm. No.

   

 

	

 

	

Number 

of 

rooms

	

 

	

Architectural

structure

	

 

	

Floor

	

 

	

Building

area 

(square

meters)

	

 

	

Note 

	

 

	

 

	

16

	

 

	

 

	

 

	

9

	

 

	

Mixture

	

 

	

01

	

 

	

958.46

	

 

	

 

	

 

	

 

	

17

	

 

	

 

	

 

	

15

	

 

	

Mixture

	

 

	

04

	

 

	

432.11

	

 

	

 

	

 

	

 

	

18

	

 

	

 

	

 

	

88

	

 

	

Mixture

	

 

	

04

	

 

	

2427.79

	

 

	

 

	

 

	

 

	

19

	

 

	

 

	

 

	

2

	

 

	

Mixture

	

 

	

01

	

 

	

42.55

	

 

	

 

	

 

	

 

	

20

	

 

	

 

	

 

	

3

	

 

	

Mixture

	

 

	

01

	

 

	

71.59

	

 

	

 

	

 

	

 

	

21

	

 

	

 

	

 

	

8

	

 

	

Mixture

	

 

	

01

	

 

	

620.94

	

 

	

 

	

 

	

 

	

22

	

 

	

 

	

 

	

215

	

 

	

Mixture

	

 

	

05

	

 

	

9429.36

	

 

	

 

	

 

	

 

	

23

	

 

	

 

	

 

	

215

	

 

	

Mixture

	

 

	

05

	

 

	

9429.36

	

 

	

 

	

 

	

 

	

24

	

 

	

 

	

 

	

23

	

 

	

Mixture

	

 

	

02

	

 

	

502.13

	

 

	

 

	

 

	

 

	

25

	

 

	

 

	

 

	

20

	

 

	

Mixture

	

 

	

01

	

 

	

1238.80

	

 

	

 

	

 

	

 

	

26

	

 

	

 

	

 

	

1

	

 

	

Mixture

	

 

	

01

	

 

	

34.10

	

 

	

 

	

 

	

 

	

27

	

 

	

 

	

 

	

5

	

 

	

Mixture

	

 

	

01

	

 

	

149.98

	

 

	

 

	

 

	

 

	

28

	

 

	

 

	

 

	

2

	

 

	

Mixture

	

 

	

01

	

 

	

76.89

	

 

	

 

	

 

	

 

	

29

	

 

	

 

	

 

	

7

	

 

	

Mixture

	

 

	

01

	

 

	

495.85

	

 

	

 

	

 

	

 

	

30

	

 

	

 

	

 

	

1

	

 

	

Mixture

	

 

	

01

	

 

	

21.12

	

 

	

 

	

Remarks

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	

 

Issued by: Jinan City Licheng District Rural and Urban House Ownership Registration Office

Issued on:

 

 

 

Lease Contract

 

Lessor: Jiangjun Trading Co., Ltd.

Address: No. 80 Jiangjun Road, Jinan City

Legal representative: Jiang Haiyan

Lessee: Shandong Yaoyuan Pharmaceutical Company

Address: No. 80 Jiangjun Road, Jinan City

Legal representative: Song Yanliang

The two parties agree to conclude the contract with regards to the lease of the workshop to the Lessee according to the Contract Law of the People’s Republic of China and relevant regulations, on the principle of fairness and mutual benefits.

Article 1: Status of house

	

(1)

	

The       Lessor leases the house and attached facilities located in Dawang County,       Licheng district, Jinan City (hereinafter referred to as “The Leased       Property”) to the Lessee for breeding and planting as well as office       administration.

	

(2)

	

The       leased area of the house is 1160.46 square   meters.

	

(3)

	

The       Lessor shall guarantee that the building quality of the Leased Property       meets the safety requirements of the Lessee.

	

(4)

	

The       Leased Property is used for breeding and planting as well as office       administration of the Lessee, if it intends to change its purpose, it       shall get the written permission of the Lessor, and all the relevant       procedures shall be reported by the Lessee according to national       regulations; all the fees payable shall be assumed by the Lessee; the       Lessor shall not be responsible for the compensation of dissolution and       termination of the contract owing to any   reasons.

	

(5)

	

The       Lessee shall guarantee that the current house and plants will not be       damaged, and the disposal right of plants is held by the Lessor. The       Lessee is responsible for the maintenance and repair of the over-ground       house and supported facilities like water &     electricity.

	

(6)

	

It       adopts the method of charter for the Leased   Property.

Article 2: Cooperation period

	

(1)

	

The       cooperation period is temporarily five years, and the contract will be       signed once a year; the contract term of the first year is from Mar. 1,       2010 to Feb. 28, 2011.

	

(2)

	

After       the contract term expires, the Lessor has right to take back the Leased       Property, and the Lessee shall return the Property and move out of the       house in advance of two weeks; if the Lessee needs to extend the lease       term, it shall propose within two months in advance of the expiry date;       after the agreement of the Lessor, the two parties shall sign a new       contract. The Lessee has the priority to lease the Property under the same       conditions.

Article 3: Delivery

After taking effect, the Lessor shall deliver the Property to the Lessee, and the Lessee agrees to rent the Property and facilities based on its current status. The two parties shall sign and confirm the infrastructure on the transfer list when deliver the Property.

 

 

 

Article 4: Lease fee

	

(1)

	

Lease       deposit

The lease deposit of this contact is 10,000 Yuan (Say Ten Thousand Yuan Only).

	

(2)

	

Rent

The rent is 30,000 Yuan each year, and it will increase 5% year by year since the second year.

	

(3)

	

Water       & electricity fees

The Lessee shall pay the water & electricity fees to the relevant management department independently, and the Lessee shall take charge of the coordination.

Article 5: Payment way of lease fee

	

(1)

	

The       Lessee shall remit the deposit to the specified account within three days       after signing the contract.

After the expiry date of the contract, and the following conditions are satisfied, the Lessor shall return the deposit to the Lessee within 15 working days without the interests.

	

1.

	

The       Lessee has settled all the charges generated from the lease (including but       not limited in fees of water, electricity, heat supply, telecom,       environment & health and public security);

	

2.

	

It       shall comply with the contract regulations to return the Leased Property       and assume other responsibilities to the Lessee.

	

3.

	

The       Leased Property, attached facilities and equipment shall have no abnormal       damage through the confirmation of the Lessor.

“Abnormal damage” refers to the situations except for the normal wearing and aging.

If there is “abnormal damage”, the two parties shall confirm the direct fees of the damage, and the deposit that deducted the direct fees shall be returned to the Lessee, and the lacking part shall be supplemented by the Lessee.

	

(2)

	

This       contract will be based on the principle to pay the rent first and then       take use of the Property, the Lessee shall pay the first-year rent and       deposit within three days since the effective date of the contract; after       then, the Lessee shall pay the rent of next year on 25 of last month       before each calendar year or in advance of this date, and it shall remit       to the specified account of the Lessor, or it can comply with other ways       of payment agreed in the written form by the two   parties.

Bank of deposit of Lessor:

Account No:

If the Lessor changes the payment account No. or bank of deposit, it shall promptly notify the Lessee.

The Lessee shall pay the liquidated damages to the Lessor if the rent is overdue, with the amount of: delayed days

×

5/10000 of total owed rent.

Article 6: relevant fees

	

(1)

	

During       the contract term, the Lessee shall assume the water & electricity       fees, communication fees, decoration fees and all the fees needed for the       normal use of relevant supported facilities.

	

(2)

	

The       use right of the Leased Property belongs to the Lessee during the lease       term.

 

 

 

Article 7: Repair and maintenance

	

(1)

	

The       Lessee shall enjoy the use right of the Leased Property and attached       facilities during the lease term, and it shall be responsible for the       repair and maintenance of relevant facilities in the Property; it shall       guarantee that the relevant facilities are in the good state and it can be       returned together with the Leased Property during the lease term when the       contract terminates. The Lessee has right to examine and       supervise.

The Lessee has responsibility to properly use and maintain the Leased Property, and it shall eliminate the possible faults and dangers promptly, so as to avoid all the possible troubles.

	

(2)

	

If       the Lessee intends to decorate or increase the attached facilities and       equipment, it shall get the permission of the Lessor and submit to the       relevant department for approval, which shall not damage the main       structure of the Leased Property as well as damage the Property       substantially; and it shall not damage other building and facilities of       the Lessor. Otherwise, the Lessee shall assume the responsibility for       compensation.

Article 8: Safety management

	

(1)

	

The       Lessee shall seriously comply with the

Fire Protection Regulation of       the People's Republic of China

 and relevant system of the Lessor;       it shall coordinate the Lessor to prepare the relevant works, otherwise,       all the responsibilities and losses shall be assumed by the       Lessee.

	

(2)

	

The       Lessee shall allocate the fire control equipment according to the relevant       regulations; it forbids using fire control facilities for other       use.

	

(3)

	

If       it needs t works owing to the maintenance (including welding and gas       welding, etc.), it shall get the permission of the principal department of       Lessor; and the issues that need the approval of the principal department,       it shall get the approval of fire control   department.

	

(4)

	

The       Lessee shall take charge of the fire and stealing control in the Leased       Property according to the relevant regulations of the fire control       department, and take self-examination and self-correction works. The       Lessee has right to examine the fire and stealing control safety in the       reasonable time agreed by the two parties, and it shall give the written       notice to the Lessee; the Lessee shall not refuse unreasonably or delay       the approval. The safety examination behaviors of the Lessor shall not       exempt from the safety requirements like safety examination of the       Lessee.

	

(5)

	

During       the contract term, the two parties shall observe national laws and       regulations, and it shall not use the Leased Property to engage in the       illegal activities; meanwhile, the Lessor has right to urge the Lessee to       do well the works with regards to fire control, safety and       health.

	

(6)

	

The       Lessee shall observe the safety management of the state and the Lessor, so       as to promptly eliminate the personal harms as well as the harms to the       Lessor. The Lessee shall take the security and protection for the       properties, and assume all the responsibilities.

	

(7)

	

The       Lessee shall comply with the national regulations to use the relevant       equipment and facilities; otherwise, it will assume all the       responsibilities as well as the losses of the   Lessor.

Article 9: Responsibility of insurance

During the lease term, the Lessee shall take charge of purchasing the insurance of Lessor’s property and other necessary insurances (including the liability insurance). If the Lessee doesn’t purchase the above insurance, the Lessor has right to terminate the contract, and the Lessee shall assume all the compensations and responsibilities.

 

 

 

Article 10: Leased property and surrounding environment management

	

(1)

	

If       the Lessee’s behavior affects or harms the surrounding environment, it       shall eliminate the effect and recover the original state, and it shall       bear the responsibility for the damage.

	

(2)

	

When       the lease term expires or the contract terminates in advance, the Lessee       shall clean the Leased Property and move out of the Property, and return       the property to the Lessor. If the Lessee doesn’t clean the house, it       shall bear the fees related to cleaning of the   Lessor.

	

(3)

	

The       Lessee must comply with the laws and regulations of the People’s Republic       of China as well as the provisions relevant to property management of the       Lessor, if it violates the regulations, it shall bear the relevant       responsibilities. If the Lessee affects the normal works of other users       owing to its violation of above regulations, the losses shall be assumed       by the Lessor.

Article 11: Provisions of decoration

	

(1)

	

During       the contract term, if the Lessee needs to decorate or rebuild the Leased       Property, it shall submit the relevant plans to the Lessor and get the       approval; meanwhile, it shall report to the relevant government department       for approval. If the decoration and rebuilding plans may affect the public       building or other adjacent users, the Lessor can propose the disputes on       these plans, and the Lessee shall revise promptly. The rebuilding and       decoration fees shall be assumed by the Lessor.

	

(2)

	

If       the decoration and rebuilding plans may affect the main structure of the       Leased Property, it shall get the written approval of the Lessor and       original design unit.

	

(3)

	

The       Lessee shall handle the acceptance procedures after second decoration as       well as the relevant fees; the Lessee shall recover the original state for       free after the contract expires.

Article 12: Termination

The Lessee shall not terminate the contract in advance without the written permission of the Lessor. If the Lessee needs to terminate the contract in advance, it shall notify the Lessor in the written form before two months, and it can terminate the contract after completing the following procedures:

	

1.

	

Return       the Leased Property to the Lessor;

	

2.

	

Pay       off the rent and other relevant fees;

	

3.

	

It       shall pay the item that is equal to 2 times of the rent of the current       month as the compensation for the Lessor at the day before the termination       date or in advance of this date.

Article 13: Exception clauses

	

(1)

	

The       two parties will not assume the responsibilities for breach of the       contract if the Lessor cannot perform the contract owing to the revision       of relevant national laws and regulations or local government behavior or       the policy regulations of higher-level principal department of the Lessor.       But they shall comply with the regulated period of Article 2 to perform       the obligations of notification.

 

 

 

	

(2)

	

If       one party cannot perform the contract owing to natural disaster, wars or       other unforeseeable force majeure factors that cannot be prevented or       avoided, the relevant party shall notify the other party by means of main       or fax; and it shall provide the detail of force majeure and the       certificates for the non-performing of the contract or demand for delaying       the performance within 30 days. These certificates shall be issued by the       notary public of the place encountered from force majeure, if it cannot       obtain the certificates issued by the notary public, it can provide other       forcible certificates. The party suffered from the force majeure can be       exempted from the responsibilities.

	

(3)

	

The       contract will terminate if it cannot be executed owing to the above two       reasons; the Lessor shall return the deposits and overpayments to the       Lessee within 30 working days since the termination date,, and other       matters shall be handled in accordance with the national       regulations.

Article 14: Relevant agreements of contract termination or dissolution

	

(1)

	

If       the contract terminates in advance or the contract expires, and the two       parties don’t continue the agreements, the Lessee shall move out of the       house at the termination date or expiry date, and return the Property to       the Lessor. If the Lessee doesn’t move out of the Property or return the       Property in time, it shall pay the doubled rent to the Lessor; while the       Lessor has right to notify for refusing the doubled rent in the written       form, and it has right to take back the Leased Property and remove the       properties forcibly; and it has no responsibility to keep the properties.       If there are still the properties of Lessee within five days after moving,       if the two parties have no agreements, it will be deemed as wavier of the       ownership, and the Lessor will dispose these properties. If the Lessee has       difficulties to find the workshop or there are other special reasons, the       Lessor shall allow for delaying the term for 20 days, but the Lessee shall       pay off the rent and relevant fees at one time according to the agreed       rent in the contract.

	

(2)

	

After       the contract term expires, if the Lessee intends to continue the contract,       it shall notify the Lessor in advance of 30 days, and the Lessor shall       propose the disputes or negotiate to continue the agreements with the       Lessee within 30 working days since receiving the notice; if it doesn’t       reply within 30 working days since receiving the notice, it will be deemed       as agreeing the reletting; the contract will extend for half a year, which       will be calculated since the expiry date. After the lease term expires, if       the Lessor intends to continue leasing the Property, the Lessee has the       priority to lease the Property based on the same   rent.

	

(3)

	

The       Leased Property shall comply with the normal using state when returning;       otherwise, the Lessee shall assume the responsibility for the       compensations.

Article 15: Operation and advertisement

	

(1)

	

The       Lessor shall not interfere in the legal operation and production of the       Lessee, and the production and operation behaviors and results have no       relations with the Lessor. The Lessee (sublessee) shall not use the       Lessor’s name, word size and image symbol in the self propaganda or       operation activities; the Lessee shall ensure that its or the sublessee’s       behaviors cannot harm the legal rights of the Lessor. Otherwise, the       Lessee shall take charge of the compensations and bear the       responsibilities according to the provisions for breach of the       contract.

	

(2)

	

If       the Lessee needs to establish the billboard on the house surface, wall and       other parts or the places owned or managed by the Lessor surrounded the       Leased Property, it shall get the written permission of the Lessor; the       relevant fees shall be confirmed through negotiation of the two parties;       the Lessee will be responsible for completing the relevant procedures       according to the government regulations as well as submit to the Lessor       for filing.

 

 

 

Article 16: Relevant taxes

In accordance with the regulations of the local government, the relevant taxes of this contract shall be assumed respectively by the two parties abiding by the regulations. The Lessor shall handle the relevant procedures for registration.

Article 17: Notice

All the notices related to the contract or the documents related to the two parties as well as the relevant requirements shall be in the written form.

Article 18: Responsibility for breach of contract and claim 1

	

(1)

	

Any       party will be deemed as breach of the contract if it doesn’t execute any       clauses in the contract.

	

(2)

	

After       receiving the written notice for the details of breach of contract of one       party, any party shall confirm or propose the written disputes or       supplementary notes within 15 working days. If it doesn’t reply in the       written form within 15 working days, it will be deemed as acceptance of       the contents; in this case, the two parties shall negotiate the issue; if       it fails to be solved in this way, it shall be handled according to the       clauses in this agreement. The default party shall assume the economic       losses of the observant party caused by its breach of the       contract.

	

(3)

	

Claim

	

1.

	

If       the contract cannot be performed owing to illegal reasons of the Lessor,       it shall return the overpayments and deposits of the Lessee, and it will       give the Lessee 15 days for moving out of the Leases property for       free.

	

2.

	

If       the contract cannot be performed owing to illegal reasons of the Lessee,       the Lessee shall pay the relevant rent in lump sum within 7 days since the       invalid date agreed in the contract as the compensations, which will be       deemed as the indirect compensation for the Lessor; otherwise, the Lessor       has right to detain the paid rent and deposit of the Lessee; meanwhile,       the Lessor will not make any compensations for all the fees invested by       the Lessee based on the trust at the beginning.

	

3.

	

If       the disputes aroused from the contract cannot be solved through       negotiation, the default party shall assume the expenses of the observant       party for maintaining its rights, including but not limited in the travel       fees, lawsuit fees, investigation fees and lawyer’s   fees.

Article 19: Disputes solution

The disputes aroused from this contract shall be solved through negotiation of the two parties; for failure of negotiation, it shall make the lawsuit to the people’s court at the location of the Leased Property.

Article 20: Other clauses

	

(1)

	

After       signing the contract, if the enterprise name has change, the change party       shall provide the registration materials of industry and commerce related       to the change to the other party, if the change doesn’t comply with the       contract, this contract clauses will not be changed, and it will continue       to be performed until the contract expires.

	

(2)

	

The       unsettled matters herein shall be negotiated by the two parties to sign       the supplementary agreement.

	

(3)

	

This       contract will take effect after signing and sealing of the two parties as       well as receiving the deposit paid by the   Lessee.

 

 

 

Lessor: Jiangjun Trading Co., Ltd.

Authorizes representative (signature):

Date: Mar. 1, 2010

Lessee: Shandong Yaoyuan Pharmaceutical Company

Authorizes representative (signature):

Date: Mar. 1, 2010

Contract

 

Lessor: Jiangjun Trading Co., Ltd.

Address: No. 80 Jiangjun Road, Licheng District, Jinan City

Legal representative: Jiang Haiyan

Lessee: Shandong Yaoyuan Pharmaceutical Company

Address: No. 80 Jiangjun Road, Licheng District, Jinan City

Legal representative: Song Yanliang

The two parties agree to conclude the contract with regards to the lease of the land (owned by the Lessor) to the Lessee according to the Contract Law of the People’s Republic of China and relevant regulations, on the principle of fairness and mutual benefits.

Article 1: Status of land

	

(1)

	

The       Lessor leases the land located in Dawang County, Licheng District, Jinan       City (land certificate No: (Licheng) G.Y.(95) No. 0539018, hereinafter       referred to as “The Land”) to the Lessee.

	

(2)

	

The       Land covers the area of 156020 square   meters.

	

(3)

	

The       Lessee shall notify the Lessor in the written form if it needs new       facilities demanded by the breeding and planting, and get the permission       of the Lessor.

	

(4)

	

The       Land is only used for breeding and planting the agricultural and       byproducts, and it shall seriously comply with the land use scope       regulated in the land certificate, and it is forbidden to make the waste       of land; otherwise, the Lessee shall assume the relevant       responsibilities.

	

(5)

	

It       adopts the method of charter for the Land.

	

(6)

	

The       Lessee shall guarantee that the current house and plants will not be       damaged, and the disposal right of plants is held by the       Lessor.

 

 

 

Article 2: Lease term

	

(1)

	

The       cooperation period is temporarily five years, and the contract will be       signed once a year; the contract term of the first year is from Mar. 1,       2010 to Feb. 28, 2011.

	

(2)

	

After       the contract term expires, the Lessor has right to take back the Leased       Property, and the Lessee shall return the Property and move out of the       house in advance of two weeks; if the Lessee needs to extend the lease       term, it shall propose within two months in advance of the expiry date;       after the agreement of the Lessor, the two parties shall sign a new       contract. The Lessee has the priority to lease the Property under the same       conditions.

Article 3: Rent and other fees

	

(1)

	

Deposit

The deposit is 100,000 Yuan totally.

	

(2)

	

Rent

The rent is 180,000 Yuan each year, and it will increase 5% year by year since the second year.

	

(4)

	

Water       & electricity fees

The Lessee shall pay the water & electricity fees to the relevant management department independently, and the Lessee shall take charge of the coordination.

Article 4: Payment of rent and other fees as well as land delivery

	

(1)

	

The       Lessee shall remit the deposit and the rent of the first year to the       specified bank account of the Lessor within three days after signing the       contract, and the Lessor shall deliver the Land to the Lessee within three       days after receiving the above items.

After the expiry date of the contract, and the following conditions are satisfied, the Lessor shall return the deposit to the Lessee within 15 working days without the interests.

	

1.

	

The       Lessee has paid off all the rent and water & electricity fees to the       Lessor.

	

2.

	

The       Lessee has settled all the charges generated from the lease (including but       not limited in fees of water, electricity, heat supply, telecom,       environment & health and public security);

	

3.

	

It       shall comply with the contract regulations to return the Land and assume       other responsibilities to the Lessee.

	

4.

	

The       Land, house, power and plants shall have no abnormal damage through the       confirmation of the Lessor.

“Abnormal damage” refers to the situations except for the normal wearing and aging.

If there is “abnormal damage”, the two parties shall confirm the direct fees of the damage, and the deposit that deducted the direct fees shall be returned to the Lessee, and the lacking part shall be supplemented by the Lessee.

	

(2)

	

This       contract will be based on the principle to pay the rent first and then       take use of the Land, the Lessee shall pay the first-year rent and deposit       within three days since the effective date of the contract; after then,       the Lessee shall pay the rent of next year on 25 of last month before each       calendar year or in advance of this date, and it shall remit to the       specified account of the Lessor, or it can comply with other ways of       payment agreed in the written form by the two   parties.

 

 

 

Bank of deposit of Lessor: Jinan City Industrial Road Branch of Industrial Bank

Account No: 1602003209002600646

If the Lessor changes the payment account No. or bank of deposit, it shall promptly notify the Lessee.

The Lessee shall pay the liquidated damages to the Lessor if the rent is overdue, with the amount of: delayed days

×

5/10000 of total owed rent.

Article 5: relevant fees

	

(3)

	

During       the contract term, the Lessee shall assume the water & electricity       fees, communication fees, decoration fees and all the fees needed for the       normal use of relevant supported facilities.

	

(4)

	

The       use right of the Leased Property belongs to the Lessee during the lease       term.

Article 6: Safety management

	

(1)

	

The       Lessee shall seriously comply with the

Fire Protection Regulation of       the People's Republic of China

 and relevant system of the Lessor;       it shall coordinate the Lessor to prepare the relevant works, otherwise,       all the responsibilities and losses shall be assumed by the       Lessee.

	

(2)

	

The       Lessee shall comply with all the safety management system and implement       the safety inspection regularly, so as to eliminate the safety dangers;       the Lessee shall comply with the relevant regulations to allocate the fire       control equipment.

	

(3)

	

If       it needs t works owing to the maintenance (including welding and gas       welding, etc.), it shall get the permission of the principal department of       Lessor; and the issues that need the approval of the principal department,       it shall get the approval of fire control   department.

	

(4)

	

The       Lessee shall take charge of the fire and stealing control in the Leased       Property according to the relevant regulations of the fire control       department, and take self-examination and self-correction works. The       Lessee has right to examine the fire and stealing control safety in the       reasonable time agreed by the two parties, and it shall give the written       notice to the Lessee; the Lessee shall not refuse unreasonably or delay       the approval. The safety examination behaviors of the Lessor shall not       exempt from the safety requirements like safety examination of the       Lessee.

	

(5)

	

During       the contract term, the two parties shall observe national laws and       regulations, and it shall not use the Leased Property to engage in the       illegal activities; meanwhile, the Lessor has right to urge the Lessee to       do well the works with regards to fire control, safety and       health.

	

(6)

	

The       Lessee shall observe the safety management of the state and the Lessor, so       as to promptly eliminate the personal harms as well as the harms to the       Lessor. The Lessee shall take the security and protection for the       properties, and assume all the responsibilities.

	

(7)

	

The       Lessee shall comply with the national regulations to use the relevant       equipment and facilities, otherwise, it will assume all the       responsibilities as well as the losses of the   Lessor.

Article 7: Responsibility of insurance

During the lease term, the Lessee shall take charge of purchasing the insurance of Lessor’s property and other necessary insurances (including the liability insurance). If the Lessee doesn’t purchase the above insurance, it shall assume all the compensations and responsibilities.

 

 

 

Article 8: The Land and surrounding environment management

	

(1)

	

If       the Lessee’s behavior affects or harms the surrounding environment, it       shall eliminate the effect and recover the original state, and it shall       bear the responsibility for the damage.

	

(2)

	

When       the lease term expires or the contract terminates in advance, the Lessee       shall clean the Land and move out, and return the Land to the Lessor. If       the Lessee doesn’t clean the Land, it shall bear the fees related to       cleaning of the Lessor.

	

(3)

	

The       Lessee must comply with the laws and regulations of the People’s Republic       of China as well as the provisions relevant to property management of the       Lessor, if it violates the regulations, it shall bear the relevant       responsibilities. If the Lessee affects the normal works of other users       owing to its violation of above regulations, the losses shall be assumed       by the Lessor.

Article 9: Contract termination

	

(1)

	

During       the lease term, if the Lessee doesn’t pay the rent or water &       electricity management fees exceeding one month’s valid date, within five       days since the Lessor notifies the Lessee of the payments in the written       form, the Lessee doesn’t pay the relevant items; in this case, the Lessor       has right to terminate the contract, and the Lessee shall take all the       responsibilities.

	

(2)

	

If       the Lessee doesn’t pay the rent or water & electricity management fees       exceeding two months’ valid date, the Lessor has right to terminate the       contract in advance and execute according to this contract. Since the date       that the Lessor notifies the Lessee by means of fax or letter, this       contract will terminate. The Lessor has right to detain the properties of       the Lessee in the leased area, and after five days since sending the       termination notice, the Lessor has right to auction the detained       properties, and the obtained fees will be used to compensate for all the       fees generated from the leasing behaviors of the   Lessee.

	

(3)

	

The       Lessee shall not terminate the contract in advance without the written       permission of the Lessor. If the Lessee needs to terminate the contract in       advance, it shall notify the Lessor in the written form before two months,       and it can terminate the contract after completing the following       procedures:

	

1.

	

Return       the Land to the Lessor;

	

2.

	

Pay       off the rent and other relevant fees;

	

3.

	

It       shall pay the item that is equal to 2 times of the rent of the current       month as the liquidated damages for the Lessor at the day before the       termination date or in advance of this date.

Article 10: Exception clauses

	

(1)

	

The       two parties will not assume the responsibilities for breach of the       contract if the Lessor cannot perform the contract owing to the revision       of relevant national laws and regulations or local government behavior. If       the state and government makes land acquisition, the two parties shall       abide by the national regulations to take the relevant responsibilities;       but they shall comply with the regulated period of Article 2 to perform       the obligations of notification.

	

(2)

	

If       one party cannot perform the contract owing to natural disaster, wars or       other unforeseeable force majeure factors that cannot be prevented or       avoided, the relevant party shall notify the other party by means of main       or fax; and it shall provide the detail of force majeure and the       certificates for the non-performing of the contract or demand for delaying       the performance within 30 days. These certificates shall be issued by the       notary public of the place encountered from force majeure, if it cannot       obtain the certificates issued by the notary public, it can provide other       forcible certificates. The party suffered from the force majeure can be       exempted from the responsibilities.

 

 

 

	

(3)

	

The       contract will terminate if it cannot be executed owing to the above two       reasons; the Lessor shall return the deposits and the rent during the       period that the contract is not executed to the Lessee within 30 working       days since the termination date, and other matters shall be handled in       accordance with the national regulations.

Article 11: Relevant agreements of contract termination or dissolution

	

(1)

	

If       the contract terminates in advance or the contract expires, and the two       parties don’t continue the agreements, the Lessee shall move out of the       house at the termination date or expiry date, and return the Land to the       Lessor. If the Lessee doesn’t move out of the Land or returnit in time, it       shall pay the doubled rent to the Lessor; while the Lessor has right to       notify for refusing the doubled rent in the written form, and it has right       to take back the Land and remove the properties forcibly; and it has no       responsibility to keep the properties. If there are still the properties       of Lessee within five days after moving, if the two parties have no       agreements, it will be deemed as wavier of the ownership of the Lessee,       and the Lessor will dispose these properties. If the Lessee has       difficulties to find the workshop or there are other special reasons, the       Lessor shall allow for delaying the term for 20 days, but the Lessee shall       pay off the rent and relevant fees in a lump sum according to the agreed       rent in the contract.

	

(2)

	

After       the contract term expires, if the Lessee intends to continue the contract,       it shall notify the Lessor in advance of 30 days, and the Lessor shall       propose the disputes or negotiate to continue the agreements with the       Lessee within 30 working days since receiving the notice; if it doesn’t       reply within 30 working days since receiving the notice, it will be deemed       as agreeing the reletting; the contract will extend for half a year, which       will be calculated since the expiry date. After the lease term expires, if       the Lessor intends to continue leasing the Land, the Lessee has the       priority to lease the Land based on the same   rent.

	

(3)

	

The       Land shall comply with the normal using state when returning; otherwise,       the Lessee shall assume the responsibility for the       compensations.

Article 12: Operation and advertisement

	

(3)

	

The       Lessor shall not interfere in the legal operation and production of the       Lessee, and the production and operation behaviors and results have no       relations with the Lessor. The Lessee (sublessee) shall not use the       Lessor’ name, word size and image symbol in the self propaganda or       operation activities; the Lessee shall ensure that its or the sublessee’s       behaviors cannot harm the legal rights of the Lessor. Otherwise, the       Lessee shall take charge of the compensations and bear the       responsibilities according to the provisions for breach of the       contract.

	

(4)

	

If       the Lessee needs to establish the billboard on the house surface, wall and       other parts or the places owned or managed by the Lessor surrounded the       Land, it shall get the written permission of the Lessor; the relevant fees       shall be confirmed through negotiation of the two parties; the Lessee will       be responsible for completing the relevant procedures according to the       government regulations as well as submit to the Lessor for       filing.

 

 

 

Article 13: Relevant taxes

In accordance with the regulations of the state and local government, the relevant taxes of this contract shall be assumed respectively by the two parties.

Article 14: Notice

All the notices related to the contract or the documents related to the two parties as well as the relevant requirements shall be in the written form.

Article 15: Responsibility for breach of contract and claim

	

(1)

	

Any       party will be deemed as breach of the contract if it doesn’t execute any       clauses in the contract.

	

(2)

	

After       receiving the written notice for the details of breach of contract of one       party, any party shall confirm or propose the written disputes or       supplementary notes within 15 working days. If it doesn’t reply in the       written form within 15 working days, it will be deemed as acceptance of       the contents; in this case, the two parties shall negotiate the issue; if       it fails to be solved in this way, it shall be handled according to the       clauses in this agreement. The default party shall assume the economic       losses of the observant party caused by its breach of the       contract.

	

(3)

	

Claim

	

1.

	

If       the contract cannot be performed owing to illegal reasons of the Lessor,       the rent will be settled by the contract standard and actual using time of       the Lessee, and any excess payment shall be refunded and any deficiency       shall be repaid; it shall return the overpayments and deposits of the       Lessee, and it will give the Lessee 15 days for moving out of the Land for       free.

	

2.

	

If       the contract cannot be performed owing to illegal reasons of the Lessee,       the Lessee shall move out of the Land and pay off the relevant fees within       15 days since receiving the written notice of the Lessor, and it will       charge 5/10000 fees each day as the liquidated damages.  The       Lessor will return the deposit without interests within three days after       the Lessee completing the above obligations.

	

3.

	

If       the disputes aroused from the contract cannot be solved through       negotiation, the default party shall assume the expenses of the observant       party for maintaining its rights, including but not limited in the travel       fees, lawsuit fees, investigation fees and lawyer’s   fees.

Article 16: Disputes solution

The disputes aroused from this contract shall be solved through negotiation of the two parties; for failure of negotiation, it shall make the lawsuit to the people’s court at the location of the Land.

Article 17: Other clauses

	

(1)

	

After       signing the contract, if the enterprise name has change, the change party       shall provide the registration materials of industry and commerce related       to the change to the other party.

	

(2)

	

The       unsettled matters herein shall be negotiated by the two parties to sign       the supplementary agreement. The contract has 6 copies, with each party       holding three.

	

(3)

	

This       contract will take effect after signing and sealing of the two parties as       well as receiving the deposit paid by the   Lessee.

 

 

 

Lessor: Jiangjun Trading Co., Ltd.

Legal representative:

Lessee: Shandong Yaoyuan Pharmaceutical Company

Legal representative: Song Yanliang

Date: Mar. 1, 2010

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