SALE & PURCHASE AGREEMENT

Execution Copy

Schedule I

Organisation Chart

(When the transfer of the 49% of shares in the Company has been effected)

Before Completion

After Completion

Execution Copy

Information of the Company

Before Completion

Company Name		Hong Kong Fly International Health Care Limited
Company Number		871043
Registered Office		Unit D, 10/F., China Overseas Building, 139 Hennessy
		Road, Wanchai, Hong Kong.
Day of Incorporation		November 17th, 2003
Registered Capital		HK$20,000,000 divided into 20,000,000 ordinary shares
Issued Capital		HK$20,000,000 divided into 20,000,000 ordinary shares
Shareholders		Han Zhiqiang: 5,100,000 ordinary shares
		Tong Zhijun: 5,100,000 ordinary shares
		BMP: 9,800,000 ordinary shares (registration is pending)
Directors		Han Zhiqiang, Tong Zhijun, Wang Yibing, Gao Xiaoying,
		Zhao Yanping

Information of Sunstone

Company Name		Sunstone (Tangshan) Pharmaceuticals Co., Ltd.
Company Number		130200100377
Place of Incorporation		Tangshan Hi-tech Development Zone, Hebei Province, PRC.
Day of Incorporation		March 28th, 1996
Total Investment		US$12,000,000
Registered Capital		US$6,000,000
Registered Shareholders		Hong Kong Fly International Health Care Limited
Directors		Han Zhiqiang, Tong Zhijun, Wang Yibing, Gao Xiaoying, Zhao Yanping

Execution Copy

Schedule II

Closing Deliveries of the Vendors

	(1)		The instruments of transfer and the bought and sold notes in respect of the transfer of the Sale Shares duly executed by the Vendors.
	(2)		The original share certificates in respect of the Sale Shares including relevant documents indicating the title thereof since their allotment, including without limitation to declaration of trust (if any), instruments of transfer in respect of the transfer of the Sale Shares before the date of this Agreement.
	(3)		A certified true copy of the resolutions of board of directors of the Company, unanimously approving the execution and performance of this Agreement, the transfer of the Sale Shares in accordance with this Agreement and subject to the due payment of stamp duty, registration of such transfer of shares in the registers of the Company and issuance of share certificate in respect of the Sale Shares to the Purchaser.
	(4)		The Employment Contract as referred to in Clause 7.1(5) duly executed.
	(5)		The duly executed Custodian Agreement and other documents required to be delivered under the Custodian Agreement.
	(6)		The Accounts as required to be provided as Conditions Precedent.
	(7)		A Letter of Confirmation, certifying the fulfillment of the Conditions Precedent 7.1(1), (2), (6) and (8).

Execution Copy

Schedule III

Warranties of the Vendors

Unless otherwise expressly stated, all representations, warranties and undertakings of the Vendors set out in this Agreement and this Schedule III apply to Each Group Company; the Vendors shall procure and ensure that Each Group Company shall perform their obligations and responsibilities in accordance with the representations, warranties and undertakings herein.

1.		Information
1.1		All information which has been given by the directors, senior officers, auditors, financial advisers, legal advisers or executives of each Group Company to the Purchaser or to the legal advisers, accountants or agents of the Purchaser in the course of the negotiation leading to this Agreement, all information contained in this Agreement and the Vendor’s Warranties are true and accurate in all respects and not misleading in any respect.
1.2		All facts and circumstances concerning the Sale Shares and the Business of Each Group Company which may affect the willingness of an intending purchaser of the Sale Shares have been disclosed to the Purchaser.
2.		Authorization and Group Company
2.1		Each Group Company is duly incorporated with limited liability in accordance with the laws of the place of its incorporation and validly existing.
2.2		All approval, permission, consent and authorization of the decision-making body of the Vendors and other parties necessary for the execution and performance of this Agreement have been obtained and the Vendors have all necessary power, authority and capacity to enter into and perform all duties and obligations under this Agreement. Once executed, this Agreement is legally binding on the Vendors with full force and effect.
2.3		The execution and performance of this Agreement does not violate or conflict with any laws, regulations, enactments, orders or decrees of any competent legislative, judiciary and government authorities having jurisdiction over the Vendors, Each Group Company and its Business, finance, operation, assets or its ability of performing its duty, or any interpretations of the foregoing as well as any provisions of the memorandum and articles of association or other constitutional documents of Each Group Company; nor does it violate or conflict with any major contract or agreement to which it is a party or is otherwise binding on it or its assets.

Execution Copy

2.4		Save for the authorization to authorize its employees to execute ordinary trading contracts within his ordinary duty, none of the Group Company gives any authorization to any person which will enable that person to execute any contract or undertake any obligation on behalf of the Company or other authorization which is still valid and not yet revoked.
3.		Share Capital
3.1		All issued share capital or registered capital (if applicable) of Each Group Company has been fully paid up and legally and beneficially owned by its shareholders.
3.2		No share or registered capital of any of the Group Companies is subject to any Encumbrance or any arrangement or obligation having a similar effect.
4.		Accounting Statement
4.1		The accounting statements (the “Accounts”) of Each Group Company have been prepared in accordance with the law and in compliance with the applicable accounting principles and practice of the place of its incorporation and have been audited in accordance with the applicable accounting standard thereof.
4.2		Except for those expressly stated in the audited balance sheet and the profit and loss accounts for the relevant accounting period, there is no change in the financial policy of Each Group Company during the last three accounting periods of the relevant Group Company ending on the Audited Accounts Date and the Accounts have not been affected by an extraordinary or exceptional or non-recurring matter or by any other circumstances rendering the profits or losses for the relevant accounting period unusually high or low.
4.3		The Accounts (i) give a true and fair view of the assets, liabilities, capital commitments and the state of affairs of Each Group Company as at the Audited Accounts Date and of the profits and losses of the Company for the relevant period; (ii) reserve or provide in full for depreciation, all bad and doubtful debts and all other liabilities, whether actual, contingent or otherwise, and all financial commitments in existence as at the Audited Accounts Date; and (iii) reserve or provide in full for all Taxation for which the Company may be liable as at the Audited Accounts Date, whether contingent or deferred, and whether the Company is entitled or may be entitled to be reimbursed by any other party.
4.4		The Management Accounts have been prepared in accordance with the disclosed accounting policies of the Group Company and on a consistent basis and show a fair view of the assets and liabilities, profits and losses of the Company as at or up to f the Management Accounts Date or the date of preparation.. The Management Accounts provide in full for all actual liabilities and make appropriate provision (or otherwise explained in its notes in accordance with good accounting practice) for all contingent liabilities, all bad and doubtful debts.

Execution Copy

4.5		All the accounts, books, registers, ledgers, any financial and other records of whatsoever kind of Each Group Company have been fully, properly and accurately maintained.
5.		Change since the Audited Accounts Date
		Since the Audited Accounts Date:
5.1		The Business of each Group Company has been carried on consistently in the ordinary course and an on-going basis;
5.2		There has been no change in substance in the assets and liabilities (whether actual or contingent) shown in the Accounts and there has been no reduction of the value of the net assets of Each Group Company on the basis of valuation adopted in the Accounts; there has been no adverse change in the financial position or trading prospects of Each Group Company; and there has been no circumstances which may result in any of the foregoing;
5.3		No of business of any Group Company has been adversely affected by the loss of any important contract, customer, source of supply or any abnormal factor, and after reasonable investigation, the Vendors are not aware of any factors which may give rise to any such effects;
5.4		The Accounts of the Group Companies contain no reference to declaration or payment of dividends, bonuses or other distributions nor do they contain any exceptional item and no resolution of shareholders or directors relating to the aforesaid has been passed;
5.5		The Vendors are not in breach of the provisions concerning the Transitional Period as set out in Clause 13;
5.6		None of the Group Companies has any trade, debts or Taxation liability other than those incurred in the ordinary course of its Business.
6.		Taxation
6.1		Each Group Company has duly and timely submitted accurate and complete tax returns and other relevant documents to relevant competent Taxation authorities in accordance with applicable laws and the requirements of such taxation authorities and save as otherwise already disclosed to the Purchaser during the due diligence investigation on Sunstone before the execution of this Agreement has duly paid all applicable tax.

Execution Copy

6.2		None of the Group Companies has any current, contingent, or deferred Taxation liability other than those occurred in the ordinary course of its Business.
6.3		Save as those already disclosed to the Purchaser during the due diligence investigation on Sunstone before the execution of this Agreement, none of the Group Companies has in existence any violation of any relevant tax laws and regulations, nor received any notice of or has in existence any risks of any inquiry, investigation, or penalty by any relevant governmental authorities in relation to the Taxation issues.
7.		Assets
		The assets included in the Accounts or acquired as at the Audited Accounts Date and all other assets used by each Group Company (the “Assets”) are all assets that are required by the full and continuous operation of its Business and are legally and beneficially owned and effectively controlled by such Group Company and save as those already disclosed to the Purchaser during the due diligence investigation on Sunstone before the execution of this Agreement such assets are free from any Encumbrance, and none of the Assets are the subject of any agreement of lease, sale and purchase agreement the consideration of which is to be paid by installments or on deferred terms, conditional lease, agency arrangement or loan agreement.
8.		Intellectual Property Rights
		Each Group Company has a complete title (including but not limited to the right of use, obtaining benefit, disposal, transfer and mortgage) or lawful right of use of any intellectual property used or being used by it. Such Intellectual Property Rights constitute sufficient know-how, rights and permission for the operation of its current Business. Each Group Company has not in carrying on its business in the past used or been required to use any intellectual property rights or similar rights that it does not own or legally own. None of the Group Companies nor any of their staff or employees has infringed any third party’s Intellectual Property Rights or is subject to any claims for infringement of Intellectual Property Right. There is no judgment or order prohibiting or restricting the use obtaining benefits, licensing or transfer of such rights by any Group Company. Neither is there any allegation against infringement or legal proceedings that remains to be determined.. Nor is there any incident which may give rise to allegation against infringement.
9.		Insurance
		Details of all current insurance policies in respect of which the Group Companies have an interest have been disclosed in writing to the Purchaser; all such policies are in full force and effect and are not void or voidable; there is no outstanding claim under any of such policies and no event or circumstances has occurred which may give rise to any claim; nothing has been done or omitted to be done which may result in an increase in the premium; and nothing has been done or omitted to be done which would make any such policy of insurance void or voidable.

Execution Copy

10.		Real Estate
10.1		The real estate owned by each Group Company comprises all the land and premises owned, leased, used or occupied by the Group Company and all the rights vested in the Group Company (“Property”).
10.2		Save as those already disclosed to the Purchaser during the due diligence investigation on Sunstone before the execution of this Agreement, the full and accurate particulars of all title deeds and documents, tenancy, lease or license agreement or other rights of occupation relating to the Property or any other similar right-conferring agreements (whether written or oral) of each Group Company have been disclosed to the Purchaser and are in all respects consistent with the provisions of all such deeds, documents, tenancies, leases and agreements.
10.3		Each Group Company has made all such payment as payable according to the grant of State-Owned Land Use Right, the assignment of the property, the lease agreement or other relevant agreement and there is no outstanding liability for making any payment to the government or any Third Party.
10.4		Each Group Company is the legal and registered owner of its Property and has the good and merchantable title, legal title, usage right, all such permission for the planning, construction and development thereof and is free from any Encumbrance. No notice has been received and no event has occurred which may have an adverse effect on the Property.
11.		Company Contract
11.1		None of the Group Companies is a party to any of the following contracts: (i) contracts under which any party is in default; (ii) contracts which may be affected by the sale and purchase of the Sale Shares; (iii) contracts which may be rescinded, avoided or terminated by any party thereto.
11.2		None of the Group Companies is bound by any material, long term, onerous or unusual contract or undertaking; nor is a party to any contract concluded other than on an arms length basis or in the ordinary course of business.
11.3		None of the Group Companies has given any guarantee, warranty or made any representation in respect of goods or services supplied or contracted to be supplied by it or accepted any obligation that could give rise to any liability after any such goods or services have been supplied by it.

Execution Copy

12.		Business
12.1		Each Group Company has obtained and maintained in force and complied with all necessary licenses and consents required for the proper operation of its Business and to the best of the information and belief of the Vendors, there are no circumstances which indicate that any such licenses or consents will be revoked or will not be renewed. In particular, those governmental approvals, licence, permission and certificates required to conduct the ordinary Business of Sunstone within its legal Business scope, including but not limited to Manufacturing Certificate, GMP Certificate, New Drug Certificate and its approval number, relevant environmental impact assessment report and the approval thereof, official project assessment and acceptance for the construction in process in accordance with relevant laws and regulations as well as the requirements of the authorities in charge will not be revoked, renewed or adversely affected.
12.2		Each Group Company has complied with all applicable laws and regulations and is not in breach of any laws and regulations in Hong Kong, China or the United States or any other country. Save as those already disclosed to the Purchaser during the due diligence investigation on Sunstone before the execution of this Agreement, the marketing network, marketing mode, distribution conduct and any other relevant commercial conducts in relation to each Group Company have not been penalized or claimed by any relevant competent governmental authorities as of the date of this Agreement. After execution of this Agreement, there will not be any claim or penalty against any Group Company by any relevant governmental authorities due to the marketing network, marketing mode, distribution conduct and any other relevant commercial conducts of the Group Companies that occurred before the Completion of the Sale Shares under this Agreement.
12.3		Each Group Company’s records, systems, management data and information are all under the exclusive ownership and direct control of that Group Company.
12.4		Each Group Company and its Connected Persons, directors, management, employees and authorized agents have complied and continue to comply with all applicable anti-corruption law and shall not cause the Purchaser or its Connected Persons to violate any anti-corruption law or any provisions thereof; No monetary payment or luxury products have been given or will be given directly or indirectly to any public officers or public bodies or otherwise obtain benefits by improper means.
13.		Connected Transactions
		All transactions, transfer of any resources or obligations, or any other commercial conducts of Each Group Company with its Connected Persons have been fully disclosed to the Purchaser and are carried out on a fair and reasonable basis without any violation of applicable laws and regulations, nor is there any warning, recourse or penalties from competent governmental authorities.

Execution Copy

14.		Debt
14.1		Save as those already disclosed to the Purchaser during the due diligence investigation on Sunstone before the execution of this Agreement and except the debts recorded in the Auditor’s Report or the Management Accounts of the Group Companies, the Group Companies do not have any other outstanding borrowing or indebtedness.
14.2		Save as those already disclosed to the Purchaser during the due diligence investigation on Sunstone before the execution of this Agreement, Each Group Company has not entered into and is not bound by any guarantee, indemnity or other agreement to secure an obligation of a third party under which any liability or contingent liability has not been discharged.
15.		Environmental Protection
15.1		The plants, facilities, production lines, the buildings and its designs of each Group Company are in full compliance with the applicable Laws in force for the time being, and with the laws, regulations and rules relating to land administration, environmental protection, water and soil conservation, construction standards, fire prevention and work safety in effect as of the date of this Agreement; have obtained all necessary and valid licence and there is no circumstances which may lead to the revocation thereof.
15.2		There is no pre-existing environmental contamination under, above or around the plants, facilities, production lines and the buildings of the Group Companies, whether due to the operation of the machinery and facilities or otherwise.
15.3		Each Group Company has no impediment or difficulty in obtaining and maintaining for the plants, facilities, production lines and the buildings all necessary services in respect of waste disposal, waste water treatment and other similar services in full compliance with all relevant laws, regulations and rules relating to land administration, environmental protection, water and soil conservation, construction standards, fire prevention and work safety.
15.4		The plants, facilities, production lines and the buildings of the Group Companies are not subject to any liabilities and obligation in respect of environmental protection and each Group Company is unaware of any claims, investigation, penalty and other proceedings from both government and non-government authorities.
16.		Labour Dispute and Employment Contract
16.1		Each Group Company has entered into lawful, effective and enforceable

Execution Copy

		employment contracts with its employees. Each Group Company is not involved in any dispute, arbitration or litigation with its employees. There are no material change in the terms of the employment contracts and the execution and performance thereof within two years before the date of the Completion; nor is there any outstanding payment.
16.2		Each Group Company has made proper social or other insurances for its employees in accordance with the applicable laws and all payment for the relevant insurance premiums has been timely made in full. Each Group Company has made all necessary contributions (including without limitation to the pension scheme) or arrangement for its employees in accordance with the applicable laws.
16.3		As of the date of this Agreement, each Group Company has not set up any incentive share scheme, share option scheme, bonus or other similar incentive scheme for any of its directors, senior officers or employees.
17.		Litigation and Breach
17.1		Neither the Group Companies nor any person for whose acts or defaults any Group Company may be vicariously liable is involved in any civil, criminal or arbitration proceedings. No such proceeding, claim, prosecution, judgment, order or fine has been instituted or threatened against the Group Companies or any such person and to the best information and belief of the Vendors, there is no event that may give rise to any such proceedings.
17.2		There is no investigation, credit inquiry or disciplinary proceeding by any governmental, judicial or other competent authorities instituted, pending or threatened against any Group Company and to the best information and belief of the Vendors, there is no fact which may give rise to such investigation, inquiry or proceedings.
18.		Single Investment
		Save as those already disclosed to the Purchaser during the due diligence investigation on Sunstone before the execution of this Agreement, the Group Companies have never conducted or engaged in any business of any Third Party or entered into any agreements or contracts with or contributed or invested in any Third Party, nor has any of the Group Companies held any             shares, equity, property or interests (whether holding any such shares, equity, property or interests in the name of the Company or by or for any other party) in any companies, institutions or firms except in Sunstone.
19.		Compliance
		Each Group Company has carried out its business in accordance with the applicable laws and regulations, rules of regulatory authorities and its articles of association at

Execution Copy

		all time in all respects and is not in breach of any of such laws and regulations, rules or articles of association.
20.		Product
21.1		No Group Company has designed, manufactured, sold, distributed or supplied any products or services which are, or were, or may become or be alleged to be faulty, defective, harmful or contaminated, or which do not comply with any warranties or representations expressly or impliedly made by the relevant Group Company or with any relevant law.
21.2		There have not been any product recalls (except those on the book only), accusation, after-sale warning issued by any Group Company or by agents acting on its behalf in relation to any products designed, manufactured, distributed or sold by it or any fact which may give rise to any of the foregoing.
21.3		There is no investiation, penalty, dispute or litigation in respect of product liability, current or potential, against any Group Company..
22.		Effect of the Transaction Documents
		The conclusion, compliance or completion of this Agreement or other transactions documents or plans will not cause or are unlikely to cause any loss of income of the Group Companies, prejudice the business relationship or confidence in the ordinary course of Business of the Group Companies, cause any management or senior officers to leave the employment of any Group Company or otherwise adversely affect the attitude or conduct of the government, customers, suppliers, employees and other people of Each Group Company when dealing with the Group Companies.
23.		Winding-up and Receivership
		No order, petition or judgment of cessation of business, liquidation, winding up or dissolution has been received by any Group Company.
24.		Others
24.1		Each Vendor represents and warrants to, and covenants with, the Purchaser that: (A) the Vendor is an “accredited investor” as defined in Regulation D under the Securities Act and the Vendor is also knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares presenting an investment decision like that involved in the purchase of the Consideration Shares, and has requested, received, reviewed and considered all

Execution Copy

		information it deemed relevant in making an informed decision to purchase the Consideration Shares; (B) each Vendor is acquiring the number of Consideration Shares in the ordinary course of its business and for his own account for investment only and with no present intention of distributing any of the Consideration Shares or any arrangement or understanding with any other persons regarding the distribution of such Consideration Shares; (C) each Vendor will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Consideration Shares except in compliance with the Securities Act and the rules and regulations promulgated thereunder; and (D) each Vendor has, in connection with his decision to purchase the number of Consideration Shares, relied only upon Purchaser’s filings with the Securities and Exchange Commission and the representations and warranties of the Purchaser contained herein. Each Vendor understands that the acquisition of the Consideration Shares has not been registered under the Securities Act in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of the Vendor’s investment intent as expressed herein .
24.3		Each Vendor and his advisors, if any, have been furnished with all publicly available materials relating to the business, finances and operations of the Purchaser. Each Vendor and his advisors, if any, have been afforded the opportunity to ask questions of the Purchaser. Each Vendor understands that its investment in the Consideration Shares involves a high degree of risk.
24.4		Each Vendor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Consideration Shares or the fairness or suitability of the investment in the Shares.